**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**





**FORM
      10-QSB**




(Mark
      one)


**x**
              **QUARTERLY
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF
                  1934**
  For
        the
        quarterly period ended: **September 30, 2007**
  ** ̈**
              **TRANSITION
                  REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
                  ACT**




Commission
      file number 000-08924





**TWL
      Corporation**


Formerly
      Trinity Learning Corporation


(Exact
      name of small business issuer as specified in its charter)





**Utah**
              **73-0981865**(State
                  or other jurisdiction of incorporation or organization)
              (IRS
                  Employer Identification No.)





**4101
      International Parkway, Carrollton, Texas 75007**


(Address
      of principal executive offices)





**(972)
      309-4000**


(Issuer’s
      telephone number)






Check
        whether the issuer (1) filed all reports required to be filed by sections
        13 or
        15(d) of the Exchange Act during the past 12 months (or such shorter period
        that
        the issuer was required to file such reports), and (2) has been subject to
        such
        filing requirements for the past 90 days.  Yes **x**
        No ** ̈**
 
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).   Yes ** ̈**  
        No **x**
 
 
 As
        of
        September 30, 2007;****188,878,008
        shares of the issuer’s common stock, were outstanding.









**TWL
      CORPORATION AND SUBSIDIARIES**





Throughout
      this report, we refer to TWL Corporation, together with its subsidiaries, as
      “we”, “us”, “our company”, “TWL” or “the Company.”





THIS
      FORM
      10-QSB FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007, CONTAINS FORWARD-LOOKING
      STATEMENTS, INCLUDING STATEMENTS ABOUT THE CONTINUED STRENGTH OF OUR BUSINESS
      AND OPPORTUNITIES FOR FUTURE GROWTH. IN SOME CASES, YOU CAN IDENTIFY
      FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS “MAY”, “WILL”, “SHOULD”,
“EXPECT”, “PLAN”, “INTEND”, “ANTICIPATE”, “BELIEVE”, “ESTIMATE”, “PREDICT”,
“POTENTIAL” OR “CONTINUE”, THE NEGATIVE OF SUCH TERMS OR OTHER COMPARABLE
      TERMINOLOGY. WE BELIEVE THAT OUR EXPECTATIONS ARE REASONABLE AND ARE BASED
      ON
      REASONABLE ASSUMPTIONS.  HOWEVER, SUCH FORWARD-LOOKING STATEMENTS BY
      THEIR NATURE INVOLVE RISKS AND UNCERTAINTIES.





WE
      CAUTION THAT A VARIETY OF FACTORS, INCLUDING BUT NOT LIMITED TO THE FOLLOWING,
      COULD CAUSE OUR BUSINESS AND FINANCIAL RESULTS TO DIFFER MATERIALLY FROM THOSE
      EXPRESSED OR IMPLIED IN FORWARD-LOOKING STATEMENTS:  DETERIORATION IN
      CURRENT ECONOMIC CONDITIONS; OUR ABILITY TO PURSUE BUSINESS STRATEGIES; PRICING
      PRESSURES; CHANGES IN THE REGULATORY ENVIRONMENT; OUR ABILITY TO ATTRACT AND
      RETAIN QUALIFIED PROFESSIONALS; INDUSTRY COMPETITION; CHANGES IN INTERNATIONAL
      TRADE; MONETARY AND FISCAL POLICIES; OUR ABILITY TO INTEGRATE FUTURE
      ACQUISITIONS SUCCESSFULLY; AND OTHER FACTORS DISCUSSED MORE FULLY IN
      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS AND RISK FACTORS BELOW, AS WELL AS IN OTHER REPORTS SUBSEQUENTLY
      FILED FROM TIME TO TIME WITH THE SECURITIES AND EXCHANGE
      COMMISSION.  WE ASSUME NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING
      STATEMENTS.


2





**TABLE
      OF CONTENTS**







PART
                I. FINANCIAL INFORMATIONITEM 1.
            Consolidated
                Financial StatementsConsolidated
                Balance Sheet at September 30,
                2007
            4Consolidated
                Statements of Operations and Comprehensive Loss
                for the Three Months Ended September 30, 2007 and 2006
            5Consolidated
                Statements of Cash Flows for the Three Months
                Ended September 30, 2007 and 2006
            6Notes
                To Consolidated Financial
                Statements
            7ITEM 2.
            Management’s
                Discussion and Analysis or Plan of
                Operation
            16ITEM 3.
            Controls
                and Procedures
            21PART
                II. OTHER INFORMATIONITEM 1.
            Legal
                Proceedings
            22ITEM 2.
            Unregistered
                Sales of Equity Securities and Use of
                Proceeds
            22ITEM 3.
            Defaults
                Upon Senior Securities
            22ITEM 4.
            Submission
                of Matters to a Vote of Security
                Holders
            22ITEM 5.
            Other
                Information
            22ITEM 6.
            Exhibits
            22




3
 ***Table
          Of Contents***


**TWL
                    Corporation and Subsidiaries****Consolidated
                    Balance Sheet**UnauditedSeptember
                    30, 2007ASSETSCurrent
                    assetsCash
                    and cash equivalents
                
                $
                351,426Accounts
                    receivable, net of allowance for doubtful accounts of
                    $483,344
                
                
                2,660,799Inventory,
                    net
                
                
                773,451Prepaid
                    expenses and other current assets
                
                
                674,262Total
                    current assets
                
                
                4,459,938Property
                    and equipment, net
                
                
                5,292,250Loan
                    origination costs
                
                
                827,614Other
                    assets
                
                
                70,590Total
                    assets
                
                $
                10,650,392LIABILITIES
                    AND STOCKHOLDERS' DEFICITCurrent
                    liabilitiesLine
                    of credit
                
                $
                942,290Notes
                    payable, net of unamortized discount of $288,889
                
                
                809,404Notes
                    payable - related parties, net of unamortized discount of
                    $255,036
                
                
                723,981Accounts
                    payable
                
                
                3,940,184Accrued
                    expenses
                
                
                6,999,052Interest
                    payable including amount due to related parties of
                    $1,178,185
                
                
                1,473,555Deferred
                    revenue
                
                
                4,600,562Current
                    portion of obligations under capital leases
                
                
                1,312,698Total
                    current liabilities
                
                
                20,801,726Long-term
                    liabilitiesObligations
                    under capital leases - less current portion
                
                
                10,417,313Notes
                    payable - less current portion, net of unamortized discount of
                    $264,815
                
                
                1,162,682Notes
                    payable - related parties, less current portion, net of unamortized
                    discount of $637,355
                
                
                4,284,520Other
                    long-term liabilities
                
                
                62,750Total
                    long-term liabilities
                
                
                15,927,265Total
                    liabilities
                
                
                36,728,991Commitments
                    and contingenciesStockholders'
                    deficitPreferred
                    stock:Series
                    A, 10,000,000 shares authorized, no par value; 1,500,000 shares
                    issued and
                    outstanding; liquidated preference of $1.00 per share, plus accrued
                    unpaid
                    dividends
                
                
                1,875,000Series
                    B, 2,800,000 shares to be issued and outstanding; liquidated
                    preference of
                    $1.00 per share, plus accrued unpaid dividends
                
                
                6,533,333Common
                    stock, 750,000,000 shares authorized; 188,878,008 shares issued
                    and
                    outstanding
                
                
                48,242,698Accumulated
                    deficit
                
                
                (82,708,396
                )Other
                    comprehensive loss
                
                
                (21,234
                )Total
                    stockholders' deficit
                
                
                (26,078,599
                )Total
                    liabilities and stockholders' deficit
                
                $
                10,650,392
  The
                  accompanying notes are an integral part of this consolidated financial
                  statement




4
 ***Table
          Of Contents***




**TWL
                    Corporation and Subsidiaries****Consolidated
                    Statements of Operations and Comprehensive
                    Loss**UnauditedThree
                    Months endedSeptember
                    30,2007
                
                
                2006Revenues,
                    net:Subscription
                
                $
                2,614,908
                
                
                $
                2,951,466Single
                    event
                
                
                1,636,715
                
                
                
                2,988,691Production
                
                
                427,627
                
                
                
                333,964Other
                
                
                575,258
                
                
                
                504,569Total
                    revenues, net
                
                
                5,254,508
                
                
                
                6,778,690Cost
                    and Expenses:Royalty,
                    printing, delivery and communications costs
                
                
                1,167,646
                
                
                
                1,125,183Salaries
                    and benefits
                
                
                4,965,310
                
                
                
                4,270,878Selling,
                    general & administrative excluding salaries and
                    benefits
                
                
                1,366,067
                
                
                
                1,549,695Amortization
                    of program inventory
                
                
                -
                
                
                
                2,142,145Depreciation
                    & amortization
                
                
                251,417
                
                
                
                249,871Total
                    costs and expenses
                
                
                7,750,440
                
                
                
                9,337,772Loss
                    from operations
                
                
                (2,495,932
                )
                
                
                (2,559,082
                )Other
                    income (expense):Interest,
                    net
                
                
                (464,731
                )
                
                
                (4,200,499
                )Interest,
                    net - related party
                
                
                (281,180
                )
                
                
                -Loss
                    in non-consolidated affiliate
                
                
                (34,686
                )
                
                
                -Loss
                    on refinancing of debt
                
                
                -
                
                
                
                (1,633,840
                )Other
                    income
                
                
                55,836
                
                
                
                56,885Total
                    other expense
                
                
                (724,761
                )
                
                
                (5,777,454
                )Loss
                    from operations
                
                
                (3,220,693
                )
                
                
                (8,336,536
                )Provision
                    for income taxes
                
                
                -
                
                
                
                -Net
                    loss attributable to common stockholders
                
                $
                (3,220,693
                )
                
                $
                (8,336,536
                )Net
                    loss per common share - basic and dilutive
                
                $
                (0.02
                )
                
                $
                (0.19
                )Weighted
                    average shares outstanding
                
                
                180,530,179
                
                
                
                42,965,513
 
 Components
                    of other comprehensive loss for the three months ended September
                    30, 2007
                    and 2006:Three
                    Months endedSeptember
                    30,2007
                
                
                2006Net
                    loss attributable to common stockholders
                
                $
                (3,220,693
                )
                
                $
                (8,336,536
                )Foreign
                    currency translation loss
                
                
                (6,379
                )
                
                
                (2,276
                )Comprehensive
                    loss
                
                $
                (3,227,072
                )
                
                $
                (8,338,812
                )


The
                  accompanying notes are an integral part of this consolidated financial
                  statement


5
 ***Table
          Of Contents***




**TWL
                    Corporation and Subsidiaries****Consolidated
                    Statements of Cash
                    Flows**UnauditedThree
                    Months endedSeptember
                    30,2007
                
                
                2006Cash
                    flows from operating activities:Net
                    loss
                
                $
                (3,220,693
                )
                
                $
                (8,336,536
                )Adjustments
                    to reconcile net loss to net cash used in operating
                    activities:Depreciation
                    on property and equipment
                
                
                251,417
                
                
                
                249,897Foreign
                    currency translation adjustments
                
                
                (6,379
                )
                
                
                (2,276
                )Amortization
                    of program inventory
                
                
                -
                
                
                
                2,142,145Common
                    stock issued for services
                
                
                -
                
                
                
                126,000Employee
                    stock based compensation
                
                
                442,102
                
                
                
                206,813Amortization
                    of debt origination costs
                
                
                107,945
                
                
                
                32,231Amortization
                    of debt discount
                
                
                136,215
                
                
                
                5,370,580Gain
                    on settlement of accounts payable
                
                
                (55,337
                )
                
                
                (56,885
                )Changes
                    in current assets and liabilities:Accounts
                    receivable
                
                
                (22,068
                )
                
                
                (2,566,963
                )Prepaid
                    expenses and other current assets
                
                
                (108,477
                )
                
                
                (67,012
                )Other
                    assets
                
                
                -
                
                
                
                (327,000
                )Accounts
                    payable and accrued expenses
                
                
                (195,615
                )
                
                
                483,651Inventory
                
                
                11,696
                
                
                
                86,305Deferred
                    revenue
                
                
                710,380
                
                
                
                656,098Interest
                    payable
                
                
                283,489
                
                
                
                234,198Net
                    cash used in operating activities
                
                
                (1,665,325
                )
                
                
                (1,768,754
                )Cash
                    flows from investing activities:Purchases
                    of property and equipment
                
                
                (61,516
                )
                
                
                -Net
                    cash used in investing activities
                
                
                (61,516
                )
                
                
                -Cash
                    flows from financing activities:Capital
                    lease payments
                
                
                (313,615
                )
                
                
                (291,746
                )Net
                    payments on line of credit
                
                
                (117,825
                )
                
                
                521,683.00Borrowings
                    under notes
                
                
                -
                
                
                
                2,500,000Payments
                    on notes payable
                
                
                (128,690
                )
                
                
                (25,785
                )Sale
                    of common stock
                
                
                1,290,000
                
                
                
                -Net
                    cash provided by financing activities
                
                
                729,870
                
                
                
                2,704,152Net
                    increase (decrease) in cash
                
                
                (996,971
                )
                
                
                935,398Cash
                    at beginning of period
                
                
                1,348,397
                
                
                
                181,339Cash
                    at end of period
                
                $
                351,426
                
                
                $
                1,116,737Supplemental
                    information:Interest
                    paid
                
                $
                305,894
                
                
                $
                239,754Common
                    stock issued for conversion of notes payable
                
                
                280,000
                
                
                
                -Beneficial
                  conversion on convertible debentures
                
                
                -
                
                
                
                3,725,166Preferred
                  stock issued for debt origination costs
                
                
                -
                
                
                
                833,333Deemed
                  dividend on preferred stock
                
                
                -
                
                
                
                250,000Series
                  A preferred stock issued in connection with debt transactions
                
                
                -
                
                
                
                3,210,000Warrants
                  surrendered in debt transaction
                
                
                -
                
                
                
                (326,160
                )




The
      accompanying notes are an integral part of these consolidated financial
      statements


6
 ***Table
          Of Contents***
 **TWL
          Corporation and Subsidiaries** **Notes
            to Consolidated Financial Statements**
 **September
            30, 2007**
 (unaudited)


**Note
      1 - Business and Basis of Presentation**





TWL
      Corporation (the “Company”) is creating a global learning company by acquiring
      operating subsidiaries that specialize in educational and training content,
      delivery, and services for particular industries or that target a particular
      segment of the workforce.  The Company believes that there are product
      and service synergies between and among our various subsidiaries that position
      us to create a global learning company that can provide integrated learning
      services to corporations, organizations, educational institutions, and
      individual learners, using a variety of delivery technologies, platforms and
      methods to meet the growing need for global learning solutions.  The
      Company believes that it will be one of the first companies to be able to serve
      major multinational employers at multiple levels of their organizations and
      assist these customers to meet the challenges of a major turnover in the world’s
      workforce over the coming decade. Factors such as demographics, technology,
      and
      globalization will require enterprises, organizations and governments around
      the
      world to invest in human capital to remain competitive.




We
      operate through our primary operating subsidiary, TWL Knowledge Group, Inc.,
      formerly Trinity Workplace Learning Corporation, located in our 205,000 square
      foot digital multimedia production center in Carrollton, Texas, in the greater
      Dallas metropolitan area.  At this Global Learning Center we create,
      distribute and archive rich media for workplace learning and certification
      for
      approximately 2,000 corporate, institutional and government customers in
      healthcare, industrial services, and public safety including homeland security,
      first responders, and federal agencies.  We distribute content to our
      customers through a variety of learning media including satellite, broadband,
      e-learning, CD-ROM, and DVDs.  Our proprietary brands include the Law
      Enforcement Training Network, HomelandOne, the Fire and Emergency Training
      Network, and others.  In our healthcare division we participate in 17
      distinct accreditations for medical-related continuing professional education
      and certification.  While our strategic focus is to grow our assets
      and operations in North America, we continue to maintain ownership positions
      in
      small operating subsidiaries in Australia and Norway.





The
      information furnished herein was taken from the books and records of the Company
      without audit.  However, in the opinion of management, the
      accompanying unaudited interim consolidated financial statements reflect all
      adjustments that are necessary for a fair presentation of the financial
      position, results of operations and cash flows for the interim periods
      presented. This includes normal and recurring adjustments.





The
      accompanying unaudited interim consolidated financial statements and related
      notes have been prepared in accordance with accounting principles generally
      accepted in the United States of America for interim financial information
      and
      with the instructions to Form 10-QSB and Item 310 of Regulation
      S-B.  Accordingly, they do not include all the information and
      footnotes required by accounting principles generally accepted in the United
      States of America for complete financial statements.  These financial
      statements include the accounts of TWL and its consolidated
      subsidiaries.  All significant intercompany transactions and accounts
      have been eliminated in consolidation.





These
      unaudited interim consolidated financial statements should be read in
      conjunction with the audited financial statements and related notes thereto
      included in the Company’s Annual Report on Form 10-KSB for the year ended June
      30, 2007.  The results of operations for the three months ended
      September 30, 2007, are not necessarily indicative of the results to be expected
      for the full year.





**Loss
      Per Share**





Basic
      loss per common share is computed by dividing net loss available for common
      stockholders by the weighted average number of common shares outstanding for
      the
      period.  Diluted loss per share is computed by dividing net loss
      available for common stockholders by the weighted-average common shares and
      dilutive common share equivalents outstanding during the period.  As
      all common stock equivalents would be anti-dilutive, basic loss per share is
      the
      same as dilutive loss per share. Potential shares from the conversion of notes
      and exercise of options and warrants total 112,586,520 at September 30,
      2007.




7
 ***Table
          Of Contents***




**TWL
      Corporation and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


**September
      30, 2007**


(unaudited)


**Use
      of Estimates**





The
      preparation of the Company’s financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and disclosure of contingent assets and liabilities
      at
      the balance sheet date and the reported amounts of revenues and costs during
      the
      reporting periods.  Actual results could differ from those
      estimates.  On an ongoing basis, the Company reviews its estimates
      based on information that is currently available.  Changes in facts
      and circumstances may cause the Company to revise its
      estimates.  Significant estimates include revenue recognition,
      valuation and allocation of the purchase consideration of the assets and
      liabilities and assets acquired in business combinations and equity investments
      in associated companies, our determination of fair value of common stock issued
      in business combinations and equity investments in associated companies, and
      the
      annual valuation and review for impairment of assets acquired and of long-lived
      assets.





**Note
      2 – Going Concern Uncertainty**





During
      the three month period ended September 30, 2007 the Company incurred a net
      loss
      of $3,220,693 and experienced a cash flow deficit from its operations, in the
      amount of $1,665,325. As of September 30, 2007 the Company had a cash balance
      of
      $351,426 and a negative working capital balance of $16,341,788.  The
      negative working capital is attributable to extending payments to vendors,
      increased accrued expenses and increased short-term borrowings. It is
      anticipated that such losses and cash flow deficits will continue in the near
      future. The Company plans to raise additional funds through the sale of its
      common stock. The proceeds will be used for general working capital purposes.
      There can be no assurance that this effort will be successful.





Currently,
      we do not have an established source of revenues sufficient to cover our
      operating costs and to allow us to continue as a going concern.  We
      cannot be certain that our existing sources of cash will be adequate to meet
      our
      liquidity requirements.  Based on our cash balance at November 1,
      2007, we will not be able to sustain operations for more than two months without
      additional sources of funding.  To meet our present and future
      liquidity requirements, we will continue to seek additional funding through
      private placements, conversion of outstanding loans and payables into common
      stock and collections on accounts receivable. There can be no assurance that
      we
      will be successful in obtaining more debt and/or equity financing in the future
      or that our results of operations will materially improve in either the short-
      or the long-term. If we fail to obtain such financing and improve our results
      of
      operations, we will be unable to meet our obligations as they become
      due.  This raises substantial doubt about our ability to continue as a
      going concern.





Our
      financial statements are prepared using accounting principles generally accepted
      in the United States of America generally applicable to a going concern, which
      contemplates the realization of assets and liquidation of liabilities in the
      normal course of business.  Accordingly, our consolidated financial
      statements do not include any adjustments relating to the recoverability of
      assets and classification of liabilities that might be necessary should we
      be
      unable to continue as a going concern.





**Note
      3 – Related Party Transactions**





On
      April
      26, 2007, the board of directors of the Company appointed Laird Q. Cagan (Mr.
      Cagan) as a director of the Company.  There are no understandings or
      arrangements between Mr. Cagan and any other person pursuant to which Mr. Cagan
      was selected as a director.  Mr. Cagan is the cousin of Dennis J.
      Cagan, the Company’s Chief Executive Officer, President and a member of the
      board of directors.  Mr. Cagan is the general partner of Trinity
      Investments GP, an entity which, in March 2007, acquired the debt previously
      issued to Palisades Master Fund, Ltd., (Palisades) with a face value of
      $4,500,000.  This entity also entered into a debt financing
      transaction pursuant to which the Company received proceeds totaling $1,125,000
      through September 30, 2007.  In connection with this transaction and
      the transfer of the Palisades notes payable, the Company also transferred
      2,800,000 preferred shares and reduced the conversion into common stock price
      to
      $0.03 per share.  In fiscal 2007, the Company recorded a deemed
      dividend for the reduction in conversion price totaling
      $3,725,000.  Interest expense on the notes for the three months ended
      September 30, 2007 totaled $281,180.




8
 ***Table
          Of Contents***


**TWL
        Corporation and Subsidiaries**
 **Notes
        to Consolidated Financial Statements**
 **September
        30, 2007**
 (unaudited)


**Note
      4 –  Notes Payable**







**Laurus**




On
      August
      31, 2006, the Company entered into agreements with Laurus Master Fund, Ltd.,
      (Laurus), pursuant to which the Company sold debt and issued preferred stock
      of
      the Company to Laurus in a private offering pursuant to exemption from
      registration under Section 4(2) of the Securities Act of 1933 as
      follows:




-
      A
      secured three-year term note (the Secured Note) with a principal amount of
      $2,500,000 (the Secured Note Amount), which matures on August 31, 2009 (the
      Maturity Date);




-
      A
      secured three-year revolving note with maximum amount of $5,000,000, which
      matures on August 1, 2009 (the Revolving Note; the Revolving Note and the
      Secured Note are collectively referred to as the Notes).




-  Issued
      1,500,000 preferred Series A shares which are convertible into common shares
      at
      $0.10 per share, subject to anti-dilution adjustments.




Net
      proceeds of $2,173,000 were received by the Company under the Secured
      Note.  We also agreed to pay, out of the Loan proceeds, the sum of
      $270,000 to Laurus Capital Management, LLC, the manager of Laurus, the sum
      of
      $60,000 to Laurus as reimbursement for Laurus' legal fees, due diligence fees
      and expenses incurred in connection with the transaction.




The
      Notes
      are secured by a blanket lien on all of the Company's assets and the assets
      of
      the Company's subsidiaries.  The Company pledged its ownership
      interests in TWL Knowledge Group, Inc., its subsidiary, to Laurus in connection
      with the aforementioned financing.  In the event of a default, Laurus
      has the right to accelerate payments under the Notes and, in addition to any
      other remedies available to it, to foreclose upon the assets securing the
      Notes.




The
      principal amount of the Secured Note carries an interest rate of prime plus
      three percent (the Secured Note Rate), subject to adjustment. We must make
      monthly amortizing payments of $42,500 commencing January 1, 2007 and with
      said
      monthly amortizing payments increasing to $62,500 commencing on January 1,
      2008,
      toward the outstanding principal amount.  Furthermore, the Secured
      Note Rate shall not at any time be less than nine percent (9.0%).  The
      Company may prepay the Secured Note at any time by paying Laurus 105% of the
      Secured Note Amount, if such prepayment occurs prior to the first anniversary
      of
      the Closing Date, 103% if such prepayment occurs on or after the first
      anniversary of the Closing Date and prior to the second anniversary of the
      Closing Date, or 101% of the Secured Note Amount outstanding at such time if
      such prepayment occurs thereafter but prior to the Maturity Date, plus any
      accrued but unpaid interest thereon.




The
      Company accounted for the Laurus transaction by allocating proceeds to the
      preferred stock, the secured note, and the revolving note, pro rata based upon
      each instrument’s relative fair value. Based upon this allocation proceeds in
      the amount of $1,250,000 were allocated to the preferred
      stock.  Proceeds in the amount of $2,083,333 were allocated to the
      secured note resulting in a debt discount in the amount of
      $416,667.  Also, in connection with the transaction the Company
      recorded $833,333 in loan origination costs related to the revolving note.
      The
      Company is amortizing the debt discount and loan origination fees over the
      term
      of the respective notes.




As
      of
      September 30, 2007, the balance owed on the Laurus Secured Note was
      $2,117,500.




The
      principal amount of the Revolving Note carries an interest rate of prime plus
      two percent (the Revolving Note Rate) subject to adjustment, and we must make
      said monthly interest payments, payable in arrears, commencing September 1,
      2006.  Furthermore, the Revolving Note Rate shall not at any time be
      less than nine percent (9.0%).  The Company may prepay the Revolving
      Note at any time without penalty.  The availability under the
      Revolving Note is subject to a borrowing base formula based on eligible
      inventory and accounts receivable.




9
 ***Table
          Of Contents***




**TWL
      Corporation and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


**September
      30, 2007**


(unaudited)




We
      also
      have granted Laurus a right of first refusal with respect to any debt or equity
      financings, with such restriction being in effect for no longer than 2 years
      after the closing date, of the Laurus financing.




**Notes
      Payable To Related Party**




**TIGP**




In
      March
      2007, Palisades transferred its note and the preferred stock to Trinity
      Investments GP (TIGP), a related party. See note 3.





On
      March
      13, 2007, the Company entered into a Purchase and Amendment Agreement with
      TIGP
      (the "Agreement") for the issuance of up to an aggregate of $4,000,000 in face
      amount of 15% Senior Secured Convertible Debentures (the Debentures) maturing
      March 31, 2011, and warrants (the Warrants; the Warrants and the Debentures
      are
      collectively referred to as the Securities), to purchase up to an aggregate
      of
      56,250,000 shares of common stock of the Company (the Financing).  The
      Company sold $1,125,000 (with 15,000,000 warrants) of the debentures as of
      June
      30, 2007 and intends selling the remaining Securities on the same terms as
      the
      15% Senior Secured Convertible Debentures sold on March 31, 2006 (to Palisades)
      and the accompanying four year warrants, with the exception of the following
      terms: (i) the Debentures are convertible into shares of the Company's common
      stock at a price equal to $0.03 per share (the Conversion Price), (ii) the
      Warrants shall be exercisable at $0.03 per share, have a six month termination
      period and do not have a cashless exercise provision, (iii) the Company's
      obligation to redeem 1/24th of the face amount of the Debentures on the first
      of
      every month (the Rate), starting March 31, 2008 (the Dates), shall be
      conditional on the Holders of the Debentures electing to have the Company redeem
      the Debentures at the scheduled Rate on the scheduled Dates which payment can
      be
      made in cash or in common stock of the Company; if in stock at the lower of
      the
      Conversion Price or 80% of the volume weighted average price of the Company's
      stock for the twenty trading days prior to the repayment date; and (iv) the
      Securities are subject to Modified Registration Rights (as defined further
      below).





The
      Company’s obligation to repay the Debentures is secured by all of its assets
      (junior position to Laurus), and the assets of its wholly owned subsidiary,
      TWL
      Knowledge Group, Inc.





In
      addition, the Company has agreed to the following registration rights, which
      shall equally be applicable to the Holders, additional purchasers of the
      Securities, if any, and the current holders of the securities sold by the
      Company in the March 2006 Financing: the Company has agreed to file a
      registration statement (the Registration Statement) with the Commission the
      60th
      calendar day (the Filing Date) following the date the Company receives a written
      notice from the Holders holding at least the majority of the Registrable
      Securities (as defined in the Agreement) requesting the Company to file an
      initial Registration Statement (the Initial Filing Date) and use its best
      efforts to have it declared effective the 120th calendar day following the
      Initial Filing Date (or 150th if reviewed by the SEC). If the Registration
      Statement is not filed, or effective on time, or the Company fails to maintain
      the effectiveness of the Registration Statement, the Company shall pay 1.0%
      of
      the amount of the Debentures sold in liquidated damages until such default
      is
      cured, subject to an overall limit of up to three months of partial liquidated
      damages. The Registration Statement also will cover the future sale by (i)
      placement agent of the shares issuable on exercise of the Warrants issued to
      the
      placement agent in connection with the transaction, (ii) shares of common stock
      of the Company underlying the securities sold in the March 2007 Financing,
      and
      (iii) the rest of the Registrable Securities (as defined in the Agreement).
      These registration rights shall collectively be referred to as the "Modified
      Registration Rights."





In
      addition, the holder (Laurus) of the Company’s term note (the “Term Note”) and
      revolving note issued by the Company on August 31, 2006 (the August 2006
      Holder), has agreed to the following terms of consents and waivers with the
      Company: (i) consent to the Company entering into the Financing and related
      agreements entered into in March, 2007, (ii) consent to the Modified
      Registration Rights, (iii) consent to a reduction of the conversion price of
      the
      15% Senior Secured Convertible Debentures sold in the March 2007 Financing
      to
      $0.03, a reduction of the exercise price of the warrants sold in the March
      2007
      Financing to $0.03, and a reduction of the conversion price of the shares of
      the
      Series A Preferred Stock issued by the Company in connection with the March
      2007
      Financing to $0.08, (iv) waiver of all liquidated damages that may have accrued
      through the Closing Date under the registration rights agreement (the “RR
      Agreement”) entered into by and between the Company and the August 2006 Holder,
      as a result solely of the Company’s failure to file a registration statement
      (the “August 2006 Registration Statement”) on or prior to the Filing Date, each
      as defined in the RR Agreement, (iv) waiver of participation rights to the
      extent available to the August 2006 Holders as a result of the Financing, (v)
      agreement to have the Company file the August 2006 Registration Statement no
      later than 210 days of the Closing Date, and have the Commission declare it
      effective no later than 365 days following the Closing Date. Furthermore, to
      the
      extent that the Company receives (x) gross proceeds of no less than $2,000,000
      and no greater than $4,000,000 from the issuance of the Securities and such
      gross proceeds are used by the Company solely for working capital and payment
      of
      accounts payable purposes and not to repay indebtedness of the Company or any
      of
      its Subsidiaries (collectively the “Purposes”), the August 2006 Holder and the
      Company agreed that for the three consecutive Amortization Dates (as defined
      in
      the Term Note) following the first date of receipt of the Company of no less
      than $2,000,000 of gross proceeds (the “Initial Deferral Term”) from the
      issuance of such Securities, the principal portion of the Monthly Amount (as
      defined in the Term Note) due on each such Amortization Date shall be postponed
      to, and repaid to the August 2006 Holder on the Maturity Date (as defined in
      the
      Term Note), or (y) gross proceeds of no less than $4,000,000 from the issuance
      of the Securities and such gross proceeds are used by the Company solely for
      the
      Purposes, the August 2006 Holder and the Company agreed that for the three
      consecutive Amortization Dates (as defined in the Term Note) following the
      Initial Deferral Term (the “Additional Deferral Term”), the principal portion of
      the Monthly Amount (as defined in the Term Note) due on each such Amortization
      Date shall be postponed to, and repaid to the August 2006 Holder on, the
      Maturity Date (as defined in the Term Note).




10
 ***Table
          Of Contents***




**TWL
        Corporation and Subsidiaries**
 **Notes
        to Consolidated Financial Statements**
 **September
        30, 2007**
 (unaudited)


The
      above
      consents and waivers entered into by and between the Company and the August
      2006
      Holder, were granted in consideration of the Company reducing the exercise
      price
      of the shares of the Series A Preferred Stock issued by the Company to these
      holders, from its current amount to $0.08 per share of common
      stock.  The reduction in the conversion price per share was recorded
      as additional debt discount of $375,000 as is being amortized to interest
      expense over the remaining term of the debt (to the extent such original
      exercise price is prior to such reduction greater than or equal to $0.08).
      Except as set forth above, all of the terms and provisions of the security
      agreement and the various transaction documents entered into by and between
      the
      Company and the August 2006 Holder, are, and shall remain, in full force and
      effect.





The
      Company claims an exemption from the registration requirements of the Act for
      the private placement of these securities pursuant to Section 4(2) of the Act
      and/or Regulation D promulgated thereunder since, among other things, the
      transaction did not involve a public offering, the investors were accredited
      investors and/or qualified institutional buyers, the investors had access to
      information about the Company and their investment, the investors took the
      securities for investment and not resale, and the Company took appropriate
      measures  to  restrict  the  transfer  of  the
 securities.





The
      Company recorded the fair value of the 15,000,000 warrants as a debt discount
      of
      $294,000 and is amortizing this discount over the term of the
      debt.  Additionally, a beneficial conversion feature of $731,000 was
      recorded and is being amortized to interest over the debt term.  The
      conversion price per share for the $4,500,000 note held by TIGP was adjusted
      to
      $0.03 per share in accordance with the debt agreement.  As 100% of the
      note has already been recorded as debt discount, no incremental debt discount
      or
      beneficial conversion feature amount for the reduction in conversion price
      was
      recorded.





In
      April,
      2007, the Company cancelled the 2,800,000 Series A preferred stock to TIGP
      and
      is in the process of  issuing 2,800,000 Series B preferred
      shares.  All terms of the Series B preferred remain the same except
      the conversion into common shares price as $0.03 per share.  The fair
      value of the additional consideration totaling $4,573,000 was recorded as
      preferred stock deemed dividend.





As
      of
      September 30, 2007, the balance owed on the TIGP convertible notes due March
      31,
      2010 was $4,500,000 and the balance owed on the TIGP convertible notes due
      March
      31, 2011 was $1,125,000.




11
 ***Table
          Of Contents***




**TWL
        Corporation and Subsidiaries**
 **Notes
        to Consolidated Financial Statements**
 **September
        30, 2007**
 (unaudited)


As
                  of September 30, 2007, convertible debt and notes payable consists
                  of the
                  following:September
                  30, 2007Bank
                  notes payable; secured by Company vehicle, interest at 9.5% per
                  anum,
                  monthly payment of $574, matures October 2006
              
              $
              8,290Junior
                  secured convertible note payable to a related party, due March
                  31, 2010,
                  interest at 15% per annum, convertible at $0.03 per share
              
              
              4,500,000Junior
                  secured convertible note payable to a related party, due March
                  31, 2011,
                  interest at 15% per annum, convertible at $0.03 per share, four
                  year
                  warrants to purchase 15,000,000 shares of common stock at $0.03
                  per
                  share
              
              
              1,125,000Senior
                  secured term note payable, due August 31, 2009, interest at prime
                  + 3%;
                  Rate as of June 30, 2007 is 11.25%
              
              
              2,117,500Convertible
                  notes payable to third parties, interest at 9% per annum, principal
                  and
                  interest due January 7, 2006, past due, convertible at $0.45 per
                  share,
                  warrants are for three years to purchase 1,476,027 shares of common
                  stock
                  at $0.25 per share
              
              
              400,000Note
                  payable to related party, due December 31, 2004, past due, unsecured,
                  interest at 6% per annum
              
              
              24,444Notes
                  payable to a related party; unsecured, interest at 8% per annum
                  on
                  $94,777; non-interest bearing on $76,447, payable on
                  demand
              
              
              186,448Note
                  payable to a related party, unsecured, non-interest bearing, due
                  December
                  31,2006, past due
              
              
              25,000Convertible
                  note payable to a related party for IRCA purchase; due December
                  31, 2005,
                  past due, unsecured, non-interest bearing convertible at $0.01
                  per
                  share
              
              
              20,000Convertible
                  note payable to a related party for Riverbend purchase, due December
                  31,
                  2006, past due, unsecured, non-interest bearing convertible at
                  $0.01 per
                  share
              
              
              20,000Total
                  notes payable
              
              
              8,426,682Less:
                  current maturities
              
              
              2,077,310Long-term
                  notes payable
              
              $
              6,349,372
 
 Maturity
                  schedule for notes payable:Fiscal
                  Year2008
              
              $
              2,077,3102009
              
              
              3,375,0002010
              
              
              2,974,372Total
              
              $
              8,426,682




**Note
      5 – Line of Credit**





**Terms**





The
      balance of the revolving note (LOC) at September 30, 2007 totaled
      $942,290.  The LOC has a maximum facility of $5,000,000 subject to
      borrowing base computations.  The LOC bears interest at prime plus 2%
      (9.75 at September 30, 2007).  The LOC is secured by substantially all
      the assets of the Company.








**Note
      6 – Stock Option Plan**




As
      of
      September 30, 2007, an aggregate of 100,000,000 shares of our common stock
      are
      currently authorized for issuance pursuant to our 2002 Stock Plan. This plan
      was
      approved on December 2, 2002, at a special meeting of our shareholders. The
      Plan
      allowed for a maximum aggregate number of shares that may be optioned and sold
      under the plan of (a) 3,000,000 shares, plus (b) an annual 500,000 increase
      to
      be added on the last day of each fiscal year beginning in 2003 unless a lesser
      amount is determined by the board of directors. The plan became effective with
      its adoption and remains in effect for ten years unless terminated earlier.
      On
      December 30, 2003, the board of directors amended the 2002 Stock Plan to allow
      for a maximum aggregate number of shares that may be optioned and sold under
      the
      plan of (a) 6,000,000 shares, plus (b) an annual 1,000,000 increase to be added
      on the last day of each fiscal year beginning in 2004 unless a lesser amount
      is
      determined by the board of directors. Options granted under the plan vest pro
      rata over a 48 month period and are typically issued with a four to seven year
      term.  In some cases, selected officers and directors have been given
      accelerated vesting schedules.








The
      Company issued stock options to employees, officers and directors. The following
      schedule summarizes the activity for the three months ended September 30,
      2007:




12
 ***Table
          Of Contents***


**TWL
        Corporation and Subsidiaries**
 **Notes
        to Consolidated Financial Statements**
 **September
        30, 2007**
 (unaudited)


WeightedAverageExerciseShares
              
              
              PriceOutstanding
                  at June 30, 2007
              
              
              70,930,148
              
              
              $
              0.09Granted
              
              
              14,779,409
              
              
              
              0.06Exercised
              
              
              -
              
              
              
              -Canceled
              
              
              (1,869,388
              )
              
              
              0.10Outstanding
                  at September 30, 2007
              
              
              83,840,169
              
              
              $
              0.08Exercisable
                  at September 30, 2007
              
              
              20,049,100
              
              
              $
              0.14


The
      following schedule summarizes information at September 30, 2007:




Options
                  Outstanding
              Options
                  ExercisableRange
                  of Exercise Price
              
              
              Number
                  of Options Outstanding
              
              
              Weighted
                  Average Exercise Price
              
              
              Average
                  Remaining Contractual Life (Yrs)
              
              
              Number
                  of Options
              
              
              Weighted
                  Average Exercise Price$
              0.05
                  - 0.09
              
              
              
              77,851,180
              
              
              $
              0.07
              
              
              7
              
              
              
              14,823,705
              
              
              $
              0.06$
              0.16
                  - 0.27
              
              
              
              3,719,989
              
              
              
              0.21
              
              
              3
              
              
              
              3,008,627
              
              
              
              0.21$
              0.50
              
              
              
              2,169,000
              
              
              
              0.50
              
              
              2
              
              
              
              2,116,768
              
              
              
              0.50$
              0.85
              
              
              
              100,000
              
              
              
              0.85
              
              
              2
              
              
              
              100,000
              
              
              
              0.8583,840,169
              
              
              $
              0.08
              
              
              
              
              
              
              
              20,049,100
              
              
              $
              0.14




Effective
      July 1, 2005, the Company adopted the fair value based method of accounting
      for
      stock-based employee compensation in accordance with Statement of Financial
      Accounting Standards Number 123(R). SFAS 123(R) requires stock based
      compensation expense to be recognized for all share based
      payments.  Stock based compensation expense of $442,102 and $206,813
      was recognized for the three months ended September 30, 2007 and 2006,
      respectively.  The estimated fair value of options and warrants is
      amortized to expense using the straight-line method over the vesting
      period.  The expense was calculated using the Black-Scholes option
      pricing model with the following assumptions:





Three
                  months ended September 30,2007
              
              
              2006Risk-free
                  interest rate
              
              4.05-4.68%
              
              
              3.61%Dividend
                  yield
              
              Nil
              
              
              NilVolatility
              
              186-193%
              
              
              120%Expected
                  life
              
              2
                  -
                  7 years
              
              
              4
                  years




13
 ***Table
          Of Contents***


**TWL
        Corporation and Subsidiaries**
 **Notes
        to Consolidated Financial Statements**
 **September
        30, 2007**
 (unaudited)


**Note
      7 – Warrants**





The
      Company has issued warrants for purchase of its common stock to investors and
      service providers in connection with its financing activities. The activity
      for
      the three months ended September 30, 2007 and the principal terms of the
      warrants are summarized below:





WeightedAverageExerciseShares
              
              
              PriceOutstanding
                  at June 30, 2007
              
              
              45,017,684
              
              
              $
              0.29Granted
              
              
              -Exercised
              
              
              -Canceled
              
              
              (16,271,333
              )
              
              
              0.07Outstanding
                  at September 30, 2007
              
              
              28,746,351
              
              
              $
              0.42





Range
                  of Exercise Price
              
              
              Number
                  of Warrants Outstanding
              
              
              Average
                  Exercise Price
              
              Exercisable
                  Through$
              0.03
                  - 0.14
              
              
              
              1,666,667
              
              
              $
              0.03
              
              October
                  2007$
              0.15
                  - 0.19
              
              
              
              250,000
              
              
              $
              0.15
              
              March
                  2008$
              0.20
                  - 0.24
              
              
              
              937,500
              
              
              $
              0.20
              
              March
                  2008 - March 2010$
              0.25
                  - 0.29
              
              
              
              17,817,066
              
              
              $
              0.26
              
              October
                  2007 - July 2010$
              0.30
                  - 0.34
              
              
              
              601,818
              
              
              $
              0.31
              
              March
                  2008 - July 2010$
              0.80
                  - 1.00
              
              
              
              7,473,300
              
              
              $
              0.96
              
              November
                  2007 - October 201028,746,351
              
              
              $
              0.42




**Note
      8 – Common Stock and Preferred Stock**





Common
      Stock:





We
      are
      authorized to issue up to 750,000,000 shares of common stock.





Preferred
      Stock:





We
      are
      authorized to issue up to 10,000,000 shares of preferred stock.





We
      executed an agreement to exchange 2,800,000 Series B preferred shares for the
      return of 2,800,000 Series A preferred shares.  The Series A preferred
      shares bear 7% per annum cumulative dividends and are convertible into common
      shares at $0.08 per share.  The Series B preferred shares bear 7%
      cumulative dividends and are convertible into common shares at $0.03 per
      share.  The Series B shares are non-voting.  The preferred
      shares are non-voting.  Dividends accrued, but were not paid on the
      Series A and B shares totaled $342,417 at September 30, 2007.





As
      of
      September 30, 2007, the Company has sold 135,566,667 shares of no par value
      common stock at a price of $0.03 per share pursuant to its private placement
      offering. As of September 30, 2007, the Company has received aggregate gross
      proceeds of $4,067,000 pursuant to this offering. During the quarter ended
      September 30, 2007 the Company received $1,290,000 in gross proceeds from the
      sale of its common stock.





On
      July
      7, 2007, a note holder converted $280,000 into 9,333,333 common
      shares.





14
 ***Table
          Of Contents***


**TWL
        Corporation and Subsidiaries**
 **Notes
        to Consolidated Financial Statements**
 **September
        30, 2007**
 (unaudited)


**Note
      9 – Subsequent Events**





On
      October 19, 2007 TWL Corporation (the “Company”) filed a preliminary information
      statement – Schedule PRE14C with the Securities and Exchange Commission. The
      Company gave notice that it intends to take the following actions pursuant
      to
      the written consent of a stockholders holding a majority of the outstanding
      shares of common stock, in lieu of a special meeting of the stockholders. The
      Company is expected to take the following actions during the second quarter
      of
      2008:


1.
            Amend
                the Certificate of Incorporation to effect a 1-for-20 reverse stock
                split
                of TWL Corporation’s outstanding common
                stock


2.
            Change
                the Company’s domicile from Utah to
                Nevada.





From
      October 1, 2007 thru October 30, 2007, the Company raised an additional $500,000
      from the sale of common stock to accredited investors.


15
 ***Table
          Of Contents***


**ITEM
      2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**





Our
      fiscal year ends on June 30.  This management's discussion and
      analysis of financial condition and results of operations and other portions
      of
      this Quarterly Report on Form 10-QSB (the “Quarterly Report”) contain forward
      looking information that involves risks and uncertainties.  Our actual
      results could differ materially from those anticipated by this forward looking
      information.  Factors that could cause or contribute to such
      differences include, but are not limited to, those discussed or referred to
      in
      the Annual Report on Form 10-KSB for the fiscal year ended June 30, 2007 under
      the heading Information Regarding Forward-Looking Statements and
      elsewhere.  Investors should review this Quarterly Report in
      combination with our Annual Report on Form 10-KSB in order to have a more
      complete understanding of the principal risks associated with an investment
      in
      our common stock.  This management's discussion and analysis of
      financial condition and results of operations should be read in conjunction
      with
      our unaudited condensed consolidated financial statements and related notes
      included elsewhere in this document.





**Overview**




Our
      financial statements are prepared using accounting principles generally accepted
      in the United States of America generally applicable to a going concern, which
      contemplates the realization of assets and liquidation of liabilities in the
      normal course of business.  Currently, we do not have an established
      source of revenues sufficient to cover our operating costs and to allow us
      to
      continue as a going concern.  We cannot be certain that our existing
      sources of cash will be adequate to meet our liquidity
      requirements.  Based upon our cash balance at November 1, 2007, we
      will not be able to sustain operations for more than two months without
      additional sources of funding.  To meet our present and future
      liquidity requirements, we will continue to seek conversion of outstanding
      loans
      and payables into common stock, development of the business of our
      newly-acquired subsidiaries and collections on accounts
      receivable.  There can be no assurance that we will be successful in
      obtaining more debt and/or equity financing in the future or that our results
      of
      operations will materially improve in either the short- or the
      long-term.  If we fail to obtain such financing and improve our
      results of operations, we will be unable to meet our obligations as they become
      due.  This raises substantial doubt about our ability to continue as a
      going concern.





**Results
      of Operations**





**Comparison
      of the three months ended September 30, 2007 to the three months ended September
      30, 2006**





*Results
      of Operations for the Quarters ended September 30, 2007 and
      2006*




**Statement
                  of Operations for****Three
                  Months Ending September 30**
              
              **2007**
              
              
              2006
              
              
              Change
              
              
              %Revenues,
                  net
              
              **$**
              **5,254,508**
              
              
              $
              6,778,690
              
              
              $
              (1,524,182
              )
              
              
              22
              %Cost
                  and expenses:Royalty,
                  printing, delivery and communication costs
              
              ****
              **1,167,646**
              
              
              
              1,125,183
              
              
              
              42,463
              
              
              
              4
              %Salaries
                  and benefits
              
              ****
              **4,965,310**
              
              
              
              4,270,878
              
              
              
              694,432
              
              
              
              16
              %Selling,
                  general & administrative excluding salaries and
                  benefits
              
              ****
              **1,366,067**
              
              
              
              1,549,695
              
              
              
              (183,628
              )
              
              
              12
              %Amortization
                  of program inventory
              
              ****
              **-**
              
              
              
              2,142,145
              
              
              
              (2,142,145
              )
              
              
              -Depreciation
                  and amortization
              
              ****
              **251,417**
              
              
              
              249,871
              
              
              
              1,546
              
              
              
              1
              %Total
                  expenses
              
              **$**
              **7,750,440**
              
              
              $
              9,337,772
              
              
              $
              (1,587,332
              )
              
              
              17
              %Loss
                  from operations
              
              **$**
              **(2,495,932**
              **)**
              
              $
              (2,559,082
              )
              
              $
              63,150
              
              
              
              2
              %Other
                  income (expense):Interest,
                  net
              
              ****
              **(464,731**
              **)**
              
              
              (4,200,499
              )
              
              
              3,735,768
              
              
              
              89
              %Interest,
                  net - related party
              
              ****
              **(281,180**
              **)**
              
              
              -
              
              
              
              (281,180
              )
              
              
              -Loss
                  on non-consolidated affiliate
              
              ****
              **(34,686**
              **)**
              
              
              -
              
              
              
              (34,686
              )
              
              
              -Loss
                  on refinance of debt
              
              ****
              **-**
              
              
              
              (1,633,840
              )
              
              
              1,633,840
              
              
              
              -Other
                  income
              
              ****
              **55,836**
              
              
              
              56,885
              
              
              
              (1,049
              )
              
              
              2
              %Total
                  other income (expense)
              
              **$**
              **(724,761**
              **)**
              
              $
              (5,777,454
              )
              
              $
              5,052,693
              
              
              
              87
              %Net
                  loss
              
              **$**
              **(3,220,693**
              **)**
              
              $
              (8,336,536
              )
              
              $
              5,115,843
              
              
              
              61
              %




16
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Revenue


The
      Company has experienced a decrease in its subscription customer base as well
      as
      reduced single event sales. The combination of these factors and price
      discounting has resulted in the overall decline in revenue.  The
      Company has modified its sales and marketing efforts in order to prevent further
      erosion of the customer base.





Cost
      and expenses


The
      Company has been discounting many of its product offerings in order to retain
      existing customers. Consequently, the Company is experiencing lower profit
      margins on some of its products.


Salaries
      and benefit costs have increased this year over last year due to increased
      headcount and related benefits primarily because of additions to our sales
      and
      marketing divisions. On September 28, 2007 the Company reduced its workforce
      by
      29 individuals. The reduction in force should reflect cost savings in future
      periods estimated at $2.4 million annually.


Selling,
      general and administrative are less this year due to decreased property and
      real
      estate taxes, occupancy expenses and contract labor.


Amortization
      of program inventory decreased $2,142,145 due to the unamortized balance at
      June
      30, 2006 being fully amortized during the first quarter of fiscal 2007.
      Capitalized amounts related to the purchase price allocation in connection
      with
      a purchase transaction in fiscal 2005 and no additional amounts have been
      capitalized.


Interest
      expense in the prior year included non-cash recording of $3,600,055 for debt
      discount on a note payable. Net cash interest expense of $295,814 and $262,779
      was paid in the three months ended September 30, 2007 and 2006,
      respectively.


The
      loss
      on refinancing of debt in the prior year is for the value of preferred stock
      issued for an agreement to subordinate debt.


The
      gain
      on settlement of accounts relates to trade vendor payables settled for amounts
      less than owed. We do not anticipate continued gain on settlement of trade
      vendor accounts..





**Liquidity
      and Capital Resources**





Our
      expenses are currently greater than our revenue.





During
      the three month period ended September 30, 2007 the Company incurred a net
      loss
      of $3,220,693 and experienced a cash flow deficit from its operations, in the
      amount of $1,665,325. As of September 30, 2007 the Company had a cash balance
      of
      $351,426 and a negative working capital balance of $16,341,788.  The
      negative working capital is attributable to extending payments to vendors,
      increased accrued expenses and increased short-term borrowings. In an effort
      to
      preserve cash, the Company has delayed scheduled payments to many of its trade
      vendors. It is anticipated that such losses and cash flow deficits will continue
      in the near future. The Company plans to raise additional capital through the
      sale of its common stock. There can be no assurance that these efforts will
      provide sufficient working capital.





**Working
                  Capital at September 30**
              
              **2007**Current
                  assets
              
              $
              4,459,938Current
                  liabilities
              
              
              20,801,726Working
                  Capital
              
              
              (16,341,788
              )




We
      continue to have negative cash flow from our operations, but have been able
      to
      raise additional capital this year by selling our common stock. Proceeds were
      used for general working capital purposes.





**Cash
                  Flows for the Three Months****Ending
                  September 30**
              
              **2007**
              
              
              2006
              
              
              Change
              
              
              %Cash
                  flows used in operating activities
              
              **$**
              **(1,665,325**
              **)**
              
              $
              (1,768,754
              )
              
              $
              103,429
              
              
              
              6
              %Cash
                  flows used in investing activities
              
              ****
              **(61,516**
              **)**
              
              
              -
              
              
              
              (61,516
              )
              
              
              -Cash
                  flows provided by financing activities
              
              ****
              **729,870**
              
              
              
              2,704,152
              
              
              
              (1,974,282
              )
              
              
              73
              %




As
      a
      professional services organization we are not capital
      intensive.  Capital expenditures historically have been for
      computer-aided instruction, accounting and project management information
      systems, and general-purpose computer equipment to accommodate our
      growth.




17
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We
      continued to seek equity and debt financing in fiscal 2008 to support our growth
      and to finance proposed acquisitions.





To
      meet
      our present and future liquidity requirements, we are continuing to seek
      additional funding through private placements, conversion of outstanding loans
      and payables into common stock, development of the businesses of our
      newly-acquired subsidiaries, collections on accounts receivable, and through
      additional acquisitions that have sufficient cash flow to fund subsidiary
      operations.  There can be no assurance that we will be successful in
      obtaining more debt and/or equity financing in the future or that our results
      of
      operations will materially improve in either the short- or the long-term. If
      we
      fail to obtain such financing and improve our results of operations, we will
      be
      unable to meet our obligations as they become due.  This raises
      substantial doubt about our ability to continue as a going concern.





*Debt
      owed to unrelated parties*




On
      August
      31, 2006, the Company entered into agreements with Laurus Master Fund, Ltd.,
      (Laurus), pursuant to which the Company sold debt and issued preferred stock
      of
      the Company to Laurus in a private offering pursuant to exemption from
      registration under Section 4(2) of the Securities Act of 1933 as
      follows:




-
      A
      secured three-year term note (the Secured Note) with a principal amount of
      $2,500,000 (the Secured Note Amount), which matures on August 31, 2009 (the
      Maturity Date);




-
      A
      secured three-year revolving note with maximum amount of $5,000,000, which
      matures on August 1, 2009 (the Revolving Note; the Revolving Note and the
      Secured Note are collectively referred to as the Notes).




-  Issued
      1,500,000 preferred Series A shares which are convertible into common shares
      at
      $0.10 per share, subject to anti-dilution adjustments.




Net
      proceeds of $2,173,000 were received by the Company under the Secured
      Note.  We also agreed to pay, out of the Loan proceeds, the sum of
      $270,000 to Laurus Capital Management, LLC, the manager of Laurus, the sum
      of
      $60,000 to Laurus as reimbursement for Laurus' legal fees, due diligence fees
      and expenses incurred in connection with the transaction.




The
      Notes
      are secured by a blanket lien on all of the Company's assets and the assets
      of
      the Company's subsidiaries.  The Company pledged its ownership
      interests in TWL Knowledge Group, Inc., its subsidiary, to Laurus in connection
      with the aforementioned financing.  In the event of a default, Laurus
      has the right to accelerate payments under the Notes and, in addition to any
      other remedies available to it, to foreclose upon the assets securing the
      Notes.




The
      principal amount of the Secured Note carries an interest rate of prime plus
      three percent (the Secured Note Rate), subject to adjustment. We must make
      monthly amortizing payments of $42,500 commencing January 1, 2007 and with
      said
      monthly amortizing payments increasing to $62,500 commencing on January 1,
      2008,
      toward the outstanding principal amount.  Furthermore, the Secured
      Note Rate shall not at any time be less than nine percent (9.0%).  The
      Company may prepay the Secured Note at any time by paying Laurus 105% of the
      Secured Note Amount, if such prepayment occurs prior to the first anniversary
      of
      the Closing Date, 103% if such prepayment occurs on or after the first
      anniversary of the Closing Date and prior to the second anniversary of the
      Closing Date, or 101% of the Secured Note Amount outstanding at such time if
      such prepayment occurs thereafter but prior to the Maturity Date, plus any
      accrued but unpaid interest thereon.




The
      Company accounted for the Laurus transaction by allocating proceeds to the
      preferred stock, the secured note, and the revolving note, pro rata based upon
      each instrument’s relative fair value. Based upon this allocation proceeds in
      the amount of $1,250,000 were allocated to the preferred
      stock.  Proceeds in the amount of $2,083,333 were allocated to the
      secured note resulting in a debt discount in the amount of
      $416,667.  Also, in connection with the transaction the Company
      recorded $833,333 in loan origination costs related to the revolving note.
      The
      Company is amortizing the debt discount and loan origination fees over the
      term
      of the respective notes.




18
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As
      of
      September 30, 2007, the balance owed on the Laurus Secured Note was
      $2,117,500.




The
      principal amount of the Revolving Note carries an interest rate of prime plus
      two percent (the Revolving Note Rate) subject to adjustment, and we must make
      said monthly interest payments, payable in arrears, commencing September 1,
      2006.  Furthermore, the Revolving Note Rate shall not at any time be
      less than nine percent (9.0%).  The Company may prepay the Revolving
      Note at any time without penalty.  The availability under the
      Revolving Note is subject to a borrowing base formula based on eligible
      inventory and accounts receivable.




We
      also
      have granted Laurus a right of first refusal with respect to any debt or equity
      financings, with such restriction being in effect for no longer than 2 years
      after the closing date, of the Laurus financing.







*Debt
      owed to related parties*





In
      March
      2007, Palisades transferred its note and the preferred stock to Trinity
      Investments GP (TIGP), a related party. .





On
      March
      13, 2007, the Company entered into a Purchase and Amendment Agreement with
      TIGP
      (the "Agreement") for the issuance of up to an aggregate of $4,000,000 in face
      amount of 15% Senior Secured Convertible Debentures (the Debentures) maturing
      March 31, 2011, and warrants (the Warrants; the Warrants and the Debentures
      are
      collectively referred to as the Securities), to purchase up to an aggregate
      of
      56,250,000 shares of common stock of the Company (the Financing).  The
      Company sold $1,125,000 (with 15,000,000 warrants) of the debentures as of
      June
      30, 2007 and intends selling the remaining Securities on the same terms as
      the
      15% Senior Secured Convertible Debentures sold on March 31, 2006 (to Palisades)
      and the accompanying four year warrants, with the exception of the following
      terms: (i) the Debentures are convertible into shares of the Company's common
      stock at a price equal to $0.03 per share (the Conversion Price), (ii) the
      Warrants shall be exercisable at $0.03 per share, have a six month termination
      period and do not have a cashless exercise provision, (iii) the Company's
      obligation to redeem 1/24th of the face amount of the Debentures on the first
      of
      every month (the Rate), starting March 31, 2008 (the Dates), shall be
      conditional on the Holders of the Debentures electing to have the Company redeem
      the Debentures at the scheduled Rate on the scheduled Dates which payment can
      be
      made in cash or in common stock of the Company; if in stock at the lower of
      the
      Conversion Price or 80% of the volume weighted average price of the Company's
      stock for the twenty trading days prior to the repayment date; and (iv) the
      Securities are subject to Modified Registration Rights (as defined further
      below).





The
      Company’s obligation to repay the Debentures is secured by all of its assets
      (junior position to Laurus), and the assets of its wholly owned subsidiary,
      TWL
      Knowledge Group, Inc.




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In
      addition, the Company has agreed to the following registration rights, which
      shall equally be applicable to the Holders, additional purchasers of the
      Securities, if any, and the current holders of the securities sold by the
      Company in the March 2006 Financing: the Company has agreed to file a
      registration statement (the Registration Statement) with the Commission the
      60th
      calendar day (the Filing Date) following the date the Company receives a written
      notice from the Holders holding at least the majority of the Registrable
      Securities (as defined in the Agreement) requesting the Company to file an
      initial Registration Statement (the Initial Filing Date) and use its best
      efforts to have it declared effective the 120th calendar day following the
      Initial Filing Date (or 150th if reviewed by the SEC). If the Registration
      Statement is not filed, or effective on time, or the Company fails to maintain
      the effectiveness of the Registration Statement, the Company shall pay 1.0%
      of
      the amount of the Debentures sold in liquidated damages until such default
      is
      cured, subject to an overall limit of up to three months of partial liquidated
      damages. The Registration Statement also will cover the future sale by (i)
      placement agent of the shares issuable on exercise of the Warrants issued to
      the
      placement agent in connection with the transaction, (ii) shares of common stock
      of the Company underlying the securities sold in the March 2007 Financing,
      and
      (iii) the rest of the Registrable Securities (as defined in the Agreement).
      These registration rights shall collectively be referred to as the "Modified
      Registration Rights."





In
      addition, the holder (Laurus) of the Company’s term note (the “Term Note”) and
      revolving note issued by the Company on August 31, 2006 (the August 2006
      Holder), has agreed to the following terms of consents and waivers with the
      Company: (i) consent to the Company entering into the Financing and related
      agreements entered into in March, 2007, (ii) consent to the Modified
      Registration Rights, (iii) consent to a reduction of the conversion price of
      the
      15% Senior Secured Convertible Debentures sold in the March 2007 Financing
      to
      $0.03, a reduction of the exercise price of the warrants sold in the March
      2007
      Financing to $0.03, and a reduction of the conversion price of the shares of
      the
      Series A Preferred Stock issued by the Company in connection with the March
      2007
      Financing to $0.08, (iv) waiver of all liquidated damages that may have accrued
      through the Closing Date under the registration rights agreement (the “RR
      Agreement”) entered into by and between the Company and the August 2006 Holder,
      as a result solely of the Company’s failure to file a registration statement
      (the “August 2006 Registration Statement”) on or prior to the Filing Date, each
      as defined in the RR Agreement, (iv) waiver of participation rights to the
      extent available to the August 2006 Holders as a result of the Financing, (v)
      agreement to have the Company file the August 2006 Registration Statement no
      later than 210 days of the Closing Date, and have the Commission declare it
      effective no later than 365 days following the Closing Date. Furthermore, to
      the
      extent that the Company receives (x) gross proceeds of no less than $2,000,000
      and no greater than $4,000,000 from the issuance of the Securities and such
      gross proceeds are used by the Company solely for working capital and payment
      of
      accounts payable purposes and not to repay indebtedness of the Company or any
      of
      its Subsidiaries (collectively the “Purposes”), the August 2006 Holder and the
      Company agreed that for the three consecutive Amortization Dates (as defined
      in
      the Term Note) following the first date of receipt of the Company of no less
      than $2,000,000 of gross proceeds (the “Initial Deferral Term”) from the
      issuance of such Securities, the principal portion of the Monthly Amount (as
      defined in the Term Note) due on each such Amortization Date shall be postponed
      to, and repaid to the August 2006 Holder on the Maturity Date (as defined in
      the
      Term Note), or (y) gross proceeds of no less than $4,000,000 from the issuance
      of the Securities and such gross proceeds are used by the Company solely for
      the
      Purposes, the August 2006 Holder and the Company agreed that for the three
      consecutive Amortization Dates (as defined in the Term Note) following the
      Initial Deferral Term (the “Additional Deferral Term”), the principal portion of
      the Monthly Amount (as defined in the Term Note) due on each such Amortization
      Date shall be postponed to, and repaid to the August 2006 Holder on, the
      Maturity Date (as defined in the Term Note).





The
      above
      consents and waivers entered into by and between the Company and the August
      2006
      Holder, were granted in consideration of the Company reducing the exercise
      price
      of the shares of the Series A Preferred Stock issued by the Company to these
      holders, from its current amount to $0.08 per share of common
      stock.  The reduction in the conversion price per share was recorded
      as additional debt discount of $375,000 as is being amortized to interest
      expense over the remaining term of the debt (to the extent such original
      exercise price is prior to such reduction greater than or equal to $0.08).
      Except as set forth above, all of the terms and provisions of the security
      agreement and the various transaction documents entered into by and between
      the
      Company and the August 2006 Holder, are, and shall remain, in full force and
      effect.





The
      Company claims an exemption from the registration requirements of the Act for
      the private placement of these securities pursuant to Section 4(2) of the Act
      and/or Regulation D promulgated thereunder since, among other things, the
      transaction did not involve a public offering, the investors were accredited
      investors and/or qualified institutional buyers, the investors had access to
      information about the Company and their investment, the investors took the
      securities for investment and not resale, and the Company took appropriate
      measures  to  restrict  the  transfer  of  the
 securities.





The
      Company recorded the fair value of the 15,000,000 warrants as a debt discount
      of
      $294,000 and is amortizing this discount over the term of the
      debt.  Additionally, a beneficial conversion feature of $731,000 was
      recorded and is being amortized to interest over the debt term.  The
      conversion price per share for the $4,500,000 note held by TIGP was adjusted
      to
      $0.03 per share in accordance with the debt agreement.  As 100% of the
      note has already been recorded as debt discount, no incremental debt discount
      or
      beneficial conversion feature amount for the reduction in conversion price
      was
      recorded.





In
      April,
      2007, the Company cancelled the 2,800,000 Series A preferred stock to TIGP
      and
      is in the process of  issuing 2,800,000 Series B preferred
      shares.  All terms of the Series B preferred remain the same except
      the conversion into common shares price as $0.03 per share.  The fair
      value of the additional consideration totaling $4,573,000 was recorded as
      preferred stock deemed dividend.





As
      of
      September 30, 2007, the balance owed on the TIGP convertible notes due March
      31,
      2010 was $4,500,000 and the balance owed on the TIGP convertible notes due
      March
      31, 2011 was $1,125,000.




20
 ***Table
          Of Contents***




Our
      financial statements are prepared using generally accepted accounting principles
      in the United States of America applicable to a going concern, which
      contemplates the realization of assets and liquidation of liabilities in the
      normal course of business. Currently, we do not have significant
      cash.  To sustain operations our material assets are pledged as
      security for the Laurus credit facility.  We do not have an
      established source of revenues sufficient to cover our operating costs that
      will
      allow us to continue as a going concern.  We do not currently possess
      a financial institution source of financing and we cannot be certain that our
      existing sources of cash will be adequate to meet our liquidity requirements.
      Based upon our cash balance at November 1, 2007, we will not be able to sustain
      operations for more than 2 months without additional sources of
      financing.





**Off
      Balance Sheet Arrangements**





We
      do not
      have any off balance sheet arrangements that will have a current or future
      effect on our financial condition, revenues, operating results, liquidity or
      capital expenditures




**ITEM
      3.  CONTROLS AND PROCEDURES**





*(a)
      Management’s Evaluation of Disclosure Controls and
      Procedures*




Our
      Chief
      Executive Officer and Chief Financial Officer, after conducting an evaluation,
      together with other members of management, of the effectiveness of the design
      and operation of our disclosure controls and procedures at the end of the period
      covered by this report, have concluded that our disclosure controls and
      procedures were effective to ensure that information required to be
      disclosed by us in our reports filed or submitted under the Exchange Act is
      recorded, processed, summarized, and reported within the time
      periods specified in the rules and forms of the SEC.  There were
      no significant changes in our internal controls or in other factors that could
      significantly affect these controls subsequent to that evaluation, and there
      were no significant deficiencies or material weaknesses in such controls
      requiring corrective actions.




*(b)  Changes
      In Internal Controls*




There
      were no significant changes in our internal controls or in other factors that
      could significantly affect these controls subsequent to that evaluation, and
      there were no significant deficiencies or material weaknesses in such controls
      requiring corrective actions.




21
 ***Table
          Of Contents***




PART
      II






**OTHER
      INFORMATION**





**ITEM
      1.  LEGAL PROCEEDINGS**


See
      section Item 3 “Legal Proceedings” in our Annual Report filed with the SEC on
      Form 10-KSB on October 12, 2007.





**ITEM
      2.**


*Issuance
      of Unregistered Securities*


All
      of
      the above offerings and sales were deemed to be exempt under rule 506 of
      Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.
      No
      advertising or general solicitation was employed in offering the securities.
      The
      offerings and sales were made to a limited number of persons, all of whom were
      accredited investors, business associates of TWL Corporation or executive
      officers of TWL Corporation and transfer was restricted by TWL Corporation
      in
      accordance with the requirements of the Securities Act of 1933. In addition
      to
      representations by the above-referenced persons, we have made independent
      determinations that all of the above-referenced persons were accredited or
      sophisticated investors, and that they were capable of analyzing the merits
      and
      risks of their investment, and that they understood the speculative nature
      of
      their investment. Furthermore, all of the above-referenced persons were provided
      with access to our Securities and Exchange Commission filings.





*Purchases
      of Equity Securities by the Issuer and Affiliated Purchasers.*


None.





**ITEM
      3.  DEFAULTS UPON SENIOR
      SECURITIES**


None.





**ITEM
      4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS**


See
      section Item 4 “Submission of Matters to a Vote of Security Holders” in our
      Annual Report filed with the SEC on Form 10-KSB on  October 12,
      2007.





**ITEM
      5.  OTHERINFORMATION**


None.





**ITEM
      6.  EXHIBITS**


The
      following exhibits are filed herewith:





31.1  Certification
      of Periodic Financial
      Reports by Dennis J. Cagan, the Company’s Chief Executive Officer, in
      satisfaction of Section 302 of the Sarbanes-Oxley Act of 2002. *





31.2  Certification
      of Periodic Financial
      Reports by Patrick R. Quinn, the Company’s Chief Financial Officer, in
      satisfaction of Section 302 of the Sarbanes-Oxley Act of 2002. *





32.1  Certification
      of Periodic Financial
      Reports by Dennis J. Cagan, the Company’s Chief Executive Officer, in
      satisfaction of Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C.
      Section 1350. *





32.2  Certification
      of Periodic Financial
      Reports by Patrick R. Quinn, the Company’s Chief Financial Officer, in
      satisfaction of Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C.
      Section 1350. *





*
      Filed
      Herewith


22
 ***Table
          Of Contents***


**SIGNATURES**





In
      accordance with the
      requirements of the Exchange Act of 1934, the registrant caused this report
      to
      be signed on its behalf by the undersigned, thereunto duly
      authorized.







TWL
                CORPORATIONNovember
                14, 2007
            By:
            */s/
                Dennis J. Cagan*Dennis
              J. CaganChief
              Executive OfficerNovember
                14, 2007
            By:
            /*s/
                Patrick R. Quinn*Patrick
              R. QuinnChief
              Financial Officer






23