UNITED
STATES





SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
              for
      the quarterly period ended June 30, 2009ORo
            TRANSITION
      REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934for
      the Transition Period from    toCommission
      file number: 001-16781





MICROHELIX,
      INC.(Exact
      Name of Registrant as Specified in its
Charter)





Oregon
            
            91-1758621(State
      or Other Jurisdiction of
            
            (I.R.S.
      Employer Identification No.)Incorporation
      or Organization)





5300
      Meadows Rd, Suite 400, Lake Oswego, Oregon
            
            97035(Address
      of Principal Executive
            
            (Zip
      Code)Offices)





(Registrant’s
Telephone Number, Including Area Code): 503-419-3564





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days.


Yes o No x





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


Yes o No o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, a non-accelerated filer, or a
smaller reporting company.


Large accelerated filer o                                                                            Accelerated
filer o


Non-accelerated
filer   o                                                                            Smaller
reporting company x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes x No o





As of
August 14, 2009, there were 1,974,088 shares of the issuer’s common stock
outstanding.





At a
special meeting of the shareholders on March 19, 2008, the Company’s Amended and
Restated Articles of Incorporation, as amended, were amended to affect a reverse
split of the Company’s Common Stock in which every 15 shares of Common Stock
held by a shareholder were reduced to one share of Common Stock.  The
consolidated financial statements, notes, and other references to share and per
share data contained in this Report have been retroactively restated to reflect
such reverse stock split for all periods presented.





microHelix,
Inc.


Quarterly
Report on Form 10-Q


Quarter
Ended June 30, 2009





TABLE
OF CONTENTS





PagePART
      I — FINANCIAL INFORMATION
                          
                          
                          3ITEM
      1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED
                          
                          
                          3Consolidated
      balance sheets as of June 30, 2009 and December 31, 2008
                          
                          
                          3Consolidated
      statements of operations for the three and six months ended June 30, 2009
      and 2008
                          
                          
                          4Consolidated
      statements of cash flows for the six months ended June 30, 2009 and
      2008
                          
                          
                          5Notes
      to consolidated financial statements
                          
                          
                          6ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS
                          
                          
                          9ITEM
      4T. CONTROLS AND PROCEDURES
                          
                          
                          12PART
      II — OTHER INFORMATION
                          
                          
                          13ITEM
      1A. RISK FACTOR
                          
                          
                          13ITEM
      6. EXHIBITS
                          
                          
                          15SIGNATURE
                          
                          
                          15CERTIFICATIONEXHIBIT
      31.1EXHIBIT
      32




2


PART
I — FINANCIAL INFORMATION





ITEM 1. FINANCIAL STATEMENTS —
UNAUDITED





MICROHELIX,
INC.





CONDENSED
CONSOLIDATED BALANCE SHEETS


(UNAUDITED)


June
30, 2009 and December 31, 2008





2009
                                      
                                      
                                      2008AssetsCurrent
      Assets:Cash
                                      
                                      $
                                      12,441
                                      
                                      
                                      $
                                      98,433Prepaid
      expenses
                                      
                                      
                                      10,417
                                      
                                      
                                      
                                      —Total
      assets
                                      
                                      $
                                      22,858
                                      
                                      
                                      $
                                      98,433Liabilities
      and Shareholders' DeficitCurrent
      Liabilities:Accounts
      payable
                                      
                                      $
                                      744,542
                                      
                                      
                                      $
                                      744,542Accrued
      liabilities
                                      
                                      
                                      232,259
                                      
                                      
                                      
                                      257,515Current
      maturities of notes payable, net of debt discount
                                      
                                      
                                      984,738
                                      
                                      
                                      
                                      694,161Total
      liabilities
                                      
                                      
                                      1,961,539
                                      
                                      
                                      
                                      1,696,218Shareholders'
      Deficit:Preferred stock, convertible, no
      par value, 10,000,000 shares authorized,279,070 Series C Preferred Stock
      issued and outstanding, convertible, liquidation preference
      $600,000
                                      
                                      
                                      533,000
                                      
                                      
                                      
                                      533,000Common
      stock, no par value 75,000,000 shares authorized, 1,974,088 and 1,973,421
      issued and outstanding at June 30, 2009 and December 31, 2008,
      respectively
                                      
                                      
                                      17,477,917
                                      
                                      
                                      
                                      17,477,917Additional
      paid-in capital
                                      
                                      
                                      10,437,636
                                      
                                      
                                      
                                      10,342,521Accumulated
      deficit
                                      
                                      
                                      (30,387,234
                                      )
                                      
                                      
                                      (29,951,223
                                      )Total
      shareholders' deficit
                                      
                                      
                                      (1,938,681
                                      )
                                      
                                      
                                      (1,597,785
                                      )Total
      liabilities and shareholders' deficit
                                      
                                      $
                                      22,858
                                      
                                      
                                      $
                                      98,433


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


3


MICROHELIX,
INC.





CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(UNAUDITED)





Three
      Months Ended
                              June 30
                            
                            
                            Six
      Months Ended
                              June 302009
                            
                            
                            2008
                            
                            
                            2009
                            
                            
                            2008Operating
      Expenses:General and
      administrative
                            
                            
                            108,127
                            
                            
                            
                            3,720,312
                            
                            
                            
                            240,028
                            
                            
                            
                            3,822,806Loss
      from operations
                            
                            
                            (108,127
                            )
                            
                            
                            (3,720,312
                            )
                            
                            
                            (240,028
                            )
                            
                            
                            (3,822,806
                            )Other
      income (expense):Interest and other
      income
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            3,414Warrant
      valuation gain
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            62,822Debt
      forgiveness
                            
                            
                            —
                            
                            
                            
                            132,157
                            
                            
                            
                            —
                            
                            
                            
                            335,881Interest expense
                            
                            
                            (118,213
                            )
                            
                            
                            (23,604
                            )
                            
                            
                            (195,983
                            )
                            
                            
                            (44,079
                            )Other income (expense) –
      net
                            
                            
                            (118,213
                            )
                            
                            
                            108,553
                            
                            
                            
                            (195,983
                            )
                            
                            
                            358,038Net
      loss
                            
                            $
                            (226,340
                            )
                            
                            $
                            (3,611,759
                            )
                            
                            $
                            (436,011
                            )
                            
                            $
                            (3,464,768
                            )Net
      loss  per shareBasic
      and diluted
                            
                            $
                            (.11
                            )
                            
                            $
                            (1.83
                            )
                            
                            $
                            (.22
                            )
                            
                            $
                            (2.07
                            )Weighted
      average number of shares outstanding –Basic
      and diluted
                            
                            
                            1,974,088
                            
                            
                            
                            1,972,568
                            
                            
                            
                            1,973,791
                            
                            
                            
                            1,676,506





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


4


MICROHELIX,
INC.





CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(UNAUDITED)








Six
      Months Ended
                                                      June
      302009
                                                    
                                                    
                                                    2008Cash
      Flows Used In Operating Activities:Net
      loss
                                                    
                                                    $
                                                    (436,011
                                                    )
                                                    
                                                    $
                                                    (3,464,768
                                                    )Adjustments
      to reconcile net loss to cash used in operating
activities:Common
      stock issued for services
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    —Warrants
      issued for advisory services
                                                    
                                                    
                                                    1,001
                                                    
                                                    
                                                    
                                                    3,598,971Warrant
      valuation gain
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    (62,822
                                                    )Debt
      forgiveness
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    (335,881
                                                    )Amortization
      of debt discount
                                                    
                                                    
                                                    84,703
                                                    
                                                    
                                                    
                                                    —Change
      in assets and liabilities:(Increase)
      Decrease in assets:Prepaid
      expenses
                                                    
                                                    
                                                    (10,417
                                                    )
                                                    
                                                    
                                                    (25,881
                                                    )Increase
      (Decrease) in liabilities:Accounts
      payable
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    (50,501
                                                    )Accrued
      liabilities
                                                    
                                                    
                                                    174,732
                                                    
                                                    
                                                    
                                                    50,612Net
      cash used in operating activities
                                                    
                                                    
                                                    (185,992
                                                    )
                                                    
                                                    
                                                    (290,270
                                                    )Cash
      Flows Provided By Financing Activities:Proceeds
      from exercise of warrants
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    15,094Proceeds
      from issue of notes payable to shareholders
                                                    
                                                    
                                                    100,000
                                                    
                                                    
                                                    
                                                    269,449Net
      cash provided by financing activities
                                                    
                                                    
                                                    100,000
                                                    
                                                    
                                                    
                                                    284,543Change
      in cash
                                                    
                                                    
                                                    (85,992
                                                    )
                                                    
                                                    
                                                    (5,727
                                                    )Cash,
      beginning of period
                                                    
                                                    
                                                    98,433
                                                    
                                                    
                                                    
                                                    5,797Cash,
      end of period
                                                    
                                                    $
                                                    12,441
                                                    
                                                    
                                                    $
                                                    70Supplemental
      Disclosure of Non-cash Financing Activities:Warrants
      issued to lenders-recorded as debt discount
                                                    
                                                    $
                                                    94,114
                                                    
                                                    
                                                    $
                                                    659,981Refinance
      of accrued interest to note payable
                                                    
                                                    $
                                                    —
                                                    
                                                    
                                                    $
                                                    283,224Refinance
      of accrued liability to note payable
                                                    
                                                    $
                                                    199,988
                                                    
                                                    
                                                    $
                                                    —Reclassification
      of note payable to accounts payable
                                                    
                                                    $
                                                    —
                                                    
                                                    
                                                    $
                                                    63,137





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


5


MICROHELIX,
INC.





NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Three
and Six Months Ended June 30, 2009 and 2008





1.   Summary
of Significant Accounting Policies and Basis of Presentation





Nature of Operations— Until
September 28, 2007, when microHelix, Inc. (“we,” “us,” “ the Company,” or
“microHelix”) suspended manufacturing operations and concluded the disposition
of its assets to its secured creditors, the Company was a manufacturer of custom
cable assemblies and mechanical assemblies for the medical and commercial
original equipment manufacturer (OEM) markets.  On May 31, 2007,
the Company surrendered substantially all its assets to its secured creditors
and concluded the disposition of all the Company's assets September 28,
2007, after which microHelix became a shell company (see "Going Concern") that
will seek out suitable business combinations.  Management believes
that presentation of discontinued operations would not be appropriate since
substantially all of the Company’s operations have been
discontinued.





On June
27, 2008 the Company entered into an advisory services agreement with Aequitas
Capital Management, Inc. (“Aequitas”) under which Aequitas began to provide
strategy development, strategic planning, marketing, corporate development and
other services that the Company reasonably requests from time to time, under
direction of the Company’s Board of Directors for a monthly fee of $10,000 and
reimbursement of expenses.  In connection with the advisory services
agreement the Company issued a warrant for 1,066,667 shares of common stock with
an exercise price of $0.001 per share to Aequitas in 2008 (see Note
3).  Under a separate agreement the Company has an obligation to pay
Aequitas $5,000 per month for certain services related to occupancy of Aequitas
facilities and information technology support.  In addition to
advising and servicing the Company, Aequitas is also manager of MH Financial
Associates, LLC (“MH Financial”) and Aequitas Catalyst Fund, LLC which are two
of the Company’s largest shareholders.





Basis of Presentation— The
unaudited consolidated financial statements have been prepared by the Company,
pursuant to the rules and regulations of the Securities and Exchange Commission
("SEC").  The information furnished herein reflects all adjustments
(consisting of normal recurring accruals and adjustments), which are, in the
opinion of management, necessary to fairly represent the operating results for
the respective periods.





Use of Estimates— The
preparation of consolidated 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 date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period.  Actual results
could differ from those estimates.





Principles of Consolidation—
These consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, Moore Electronics, Inc. ("Moore”).  All
material inter-company accounts have been eliminated in
consolidation.





Going Concern—These consolidated financial
statements have been prepared on a going concern basis which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business.  The Company has incurred recurring losses from
operations, had an accumulated deficit of $30,387,234 at June 30, 2009, and has
no current business operations.  These conditions raise substantial
doubt about the Company’s ability to continue as a going concern for a
reasonable period of time.  These consolidated financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities that may
be necessary should the Company be unable to continue as a going
concern.





Financial Instruments—The fair value of the
Company’s liabilities approximates cost due to the short-term nature of the
obligations.





Subsequent Events—Subsequent events have been
considered through August 14, 2009 for purposes of these accompanying financial
statements.


6


Net Income/(Loss) per Share—
The Company uses SFAS No. 128, "Earnings per Share" for calculating the basic
and diluted income/(loss) per share.  Basic income/(loss) per share is
computed by dividing net income/(loss) attributable to common stockholders by
the weighted average number of common shares outstanding.  Since there
was a loss for the three and six months ended June 30, 2009 and 2008, the
issuance of shares from the conversion of preferred stock or warrants would be
anti-dilutive.  The Company computes dilutive shares using the
treasury method.




For the
three and six months ended June 30, 2009, the outstanding number of potentially
dilutive common shares totaled 10,910,178 shares of Common Stock, consisting of
Series C Preferred Stock convertible to 186,047 shares of Common Stock and
warrants to purchase 10,724,131 shares of Common Stock.  For the three
and six months ended June 30, 2008, the outstanding number of potentially
dilutive common shares totaled 8,776,843 shares of Common Stock, consisting
Series C Preferred Stock convertible to 186,047 shares of Common Stock and
warrants to purchase 8,590,796 shares of Common Stock.




On
January 2, 2008 MH Financial exercised warrants to purchase 133,333 shares of
Common Stock for $2,000.





On
February 17, 2008 a related party to MH Financial exercised warrants to purchase
73,915 shares of Common Stock for $1,109.





On March
3, 2008 MH Financial exercised warrants to purchase 798,981 shares of Common
Stock for $11,985.





On March
19, 2008 at a special meeting of the shareholders the Company’s Amended and
Restated Articles of Incorporation, as amended, were amended to effect a
15-for-1 reverse split of the Company’s Common Stock.  The
accompanying condensed consolidated financial statements, notes, and other
references to share and per share data have been retroactively restated to
reflect the reverse stock split for all periods presented.





On
February 9, 2009 the Company issued 667 shares of Common Stock with a value of
$1,001 to a former member of the Company’s Board of Directors.





2.
Summary of Recent Accounting Pronouncements





In
December 2007, the FASB issued SFAS no. 141(R), “Business Combinations” (“SFAS
141(R)”), which replaces SFAS No. 141. SFAS No. 141(R) establishes principles
and requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any
non-controlling interest in the acquiree and the goodwill
acquired.  The Statement also establishes disclosure requirements
which will enable users to evaluate the nature and financial effects of the
business combination.  SFAS 141 (R) is effective for fiscal years
beginning after December 15, 2008.  The adoption of SFAS 141(R) will
have an impact on accounting for business combinations but the effect is
dependent upon the acquisitions at that time.





In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements-an amendment of Accounting Research Bulletin
No. 51” (“SFAS 160”), which establishes accounting and reporting
standards for ownership interests in subsidiaries held by parties other than the
parent, the amount of consolidated net income attributable to the parent and to
the non-controlling interest, changes in a parent’s ownership interest and the
valuation of retained non-controlling equity investments when a subsidiary is
deconsolidated.  The Statement also establishes reporting requirements
that provide sufficient disclosures that clearly identify and distinguish
between the interest of the parent and the interests of the non-controlling
owners.  SFAS 160 is effective for fiscal years beginning after
December 15, 2008.  The adoption of SFAS 160 did not have an effect on
the Company’s consolidated financial statements.





In April
2009, the FASB issued three related Staff Positions which will be effective for
interim and annual periods ending after June 15, 2009.  The Staff
Positions are: (1) FSP FAS No. 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (FSP FAS No. 157-4); (2) FSP
FAS No. 115-2 and FSP FAS No. 124-2 “Recognition and Presentation of Other-Than
Temporary Impairments” (FSP FAS 115-2 and FAS No. 124-2); and (3) FSP FAS No.
107-1 and APB No. 28-1, “Interim Disclosures about Fair Value of Financial
Instruments” (FSP No. 107 and APB No. 28-1).  FSP FAS No. 157-4
provides guidance on how to determine fair value of assets and liabilities under
SFAS No. 157 when there is no active market, and reaffirms the FSAS No. 157
objective to reflect an asset’s sale price in an orderly transaction at the date
of the financial statements.  FSP FAS No. 115-2 and FAS No. 124-2
modify the requirements for recognizing other-than-temporarily impaired debt
securities and revise the existing impairment model for such securities, by
distinguishing between credit and noncredit components of impaired debt
securities that are not expected to be sold.  FSP FAS No. 107-1 and
APB No. 28-1 enhance disclosures about fair value for instruments under the
scope of SFAS 157 for both interim and annual periods.  The impact
that the adoption of these Staff Positions had on the Company’s financial
position and results of operations was not material.


7


3.
Notes Payable and Warrants





A summary
of the Company’s notes payable outstanding as of June 30, 2009 and December 31,
2008 is as follows:





2009
                    
                    
                    2008MH
      Financial Associates, LLC
                    
                    $
                    877,743
                    
                    
                    $
                    777,743Aequitas
      Capital Management, Inc.
                    
                    
                    199,988
                    
                    
                    
                    —Other
                    
                    
                    10,532
                    
                    
                    
                    10,532Total
      notes payable
                    
                    $
                    1,088,263
                    
                    
                    $
                    788,275Note
      discount
                    
                    
                    (103,525
                    )
                    
                    
                    (94,114
                    )Total
      notes payable-net of discount
                    
                    $
                    984,738
                    
                    
                    $
                    694,161




On June
27, 2008 the Company obtained a loan from MH Financial in the amount of
$977,743.  The loan amount includes $477,743 that was owed to MH
Financial as of June 27, 2008 and an additional loan of up to
$500,000.  The Company was advanced $200,000 on June 27, 2008,
$100,000 on December 31, 2008, $100,000 on February 25, 2009, and has received
no additional advances against the $500,000 loan amount.  Effective as
of the date of this loan, interest will accrue on the outstanding principal
balance of the loan at a rate of 20% per annum.  The original due date
of the loan was December 27, 2008 and, as a condition of the December 31, 2008
advance, the due date was extended to December 27, 2009.  As a
condition of the initial disbursement on June 27, 2008, the Company also issued
warrants to purchase 7,466,666 shares of Common Stock at $0.001 per
share.  The warrants expire June 27, 2013. The warrants have a fair
value relative to the fair value of the associated debt of $659,981 calculated
using the Black-Scholes option pricing model with the following
assumptions:





Expected
      life (in years)
                  
                  
                  1Expected
      volatility
                  
                  
                  202.46
                  %Risk-free
      interest rate
                  
                  
                  1.15
                  %Expected
      dividend
                  
                  
                  —





The
Company also issued warrants on June 27, 2008 that grant Aequitas Capital
Management the right to purchase 1,066,667 shares of Common Stock with an
exercise price of $0.001 per share as consideration for financial advisory
services.  The warrants expire on June 27, 2013.  The
warrants have a fair value of $3,598,971 (recorded as general and administrative
expense) calculated using the Black-Scholes option pricing model with the
following assumptions:





Expected
      life (in years)
                    
                    
                    1Expected
      volatility
                    
                    
                    202.46
                    %Risk-free
      interest rate
                    
                    
                    1.15
                    %Expected
      dividend
                    
                    
                    —





On
December 31, 2008 the Company received a $100,000 advance against the loan the
Company obtained from MH Financial on June 27, 2008.  As additional
consideration for this $100,000 disbursement, the Company also issued warrants
to purchase 1,066,667 shares of Common Stock at $0.001 per share.  The
warrants expire December 31, 2013.  The warrants have a fair value
relative to the fair value of the associated debt of $94,114 calculated using
the Black-Scholes option pricing model with the following
assumptions:





Expected
      life (in years)
                  
                  
                  1Expected
      volatility
                  
                  
                  285.29
                  %Risk-free
      interest rate
                  
                  
                  0.37
                  %Expected
      dividend
                  
                  
                  —


8


On
December 31, 2008 the Company issued a new note payable to Aequitas Capital
Management in the amount of $101,834.  The loan has a due date of
December 31, 2009 and interest will accrue on the outstanding principal balance
of the loan at a rate of 20% per annum.  The loan amount included
$90,000 owed to Aequitas Capital Management for rent and advisory services and
$11,834 for travel and legal services paid for by Aequitas Capital Management on
behalf of the Company.  The $90,000 had been accrued (in accrued
liabilities) for during 2008 and the $11,834 was recorded as general and
administrative expenses during the three month period ending March 31,
2009.  During the six months ended June 30, 2009 Aequitas Capital
Management paid an additional $90,000 for rent and advisory services and $8,154
for travel and legal services on behalf of the Company.





On
February 25, 2009 the Company received a $100,000 advance against the loan the
Company obtained from MH Financial on June 27, 2008.  As additional
consideration for this $100,000 disbursement, the Company also issued warrants
to purchase 1,066,667 shares of Common Stock at $0.001 per share.  The
warrants expire February 25, 2014.  The warrants have a fair value
relative to the fair value of the associated debt of $94,114 calculated using
the Black-Scholes option pricing model with the following
assumptions:





Expected
      life (in years)
                  
                  
                  1Expected
      volatility
                  
                  
                  278.42
                  %Risk-free
      interest rate
                  
                  
                  0.75
                  %Expected
      dividend
                  
                  
                  —





4.
Liability for Potentially Dilutive Securities in Excess of Authorized Number of
Common Shares





In
accordance with EITF 00-19, the Company accounts for potential shares that
can be converted to Common Stock that are in excess of authorized shares, as a
liability that is recorded at fair value.  Total potential outstanding
Common Stock exceeded the Company’s authorized shares on March 12, 2007 when the
Company restructured its debt with MH Financial.  In this process the
Company issued warrants to purchase 860,000 shares of Common
Stock.  At that time outstanding warrants allowed the holders the
right to purchase approximately 579,867 shares over the current authorized
amount. The fair value of the warrants in excess of the authorized shares at
March 12, 2007 was $1,818,200 and was recognized as a liability on March 12,
2007.  This liability was required to be evaluated at each reporting
date with any change in value included in other income/ (expense) until such
time as enough shares were authorized to cover all potentially convertible
instruments.  As of December 31, 2007 the Company had recorded
$1,755,378 in income related to the change in the fair value of its potential
liability.  In January 2008 the Company’s shareholders voted to amend
the Company’s Amended and Restated Articles of Incorporation, as amended, to
increase the number of authorized shares of Preferred Stock to 10 million and
Common Stock to 75 million.  As a result of this action the
potentially dilutive securities no longer exceeded the authorized number of
common shares.  As such the Company reversed the remaining $62,822
liability to income during the three month period ending March 31,
2008.





ITEM
2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS





The
following discussion provides information that management believes is relevant
to an assessment and understanding of the Company's operations and financial
condition.  This discussion should be read in conjunction with the
unaudited consolidated financial statements and accompanying notes.





Forward-Looking
Statements





This
Quarterly Report on Form 10-Q contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
reflect management's current view and estimates of future economic and market
circumstances, industry conditions, company performance and financial results.
Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates" and variations of such words and similar expressions are intended to
identify such forward-looking statements.  These statements are
subject to risks and uncertainties that could cause our future results to differ
materially from the results discussed herein.  Factors that might
cause such a difference include, but are not limited to, those discussed
elsewhere in this Quarterly Report on Form 10-Q.  We do not intend,
and undertake no obligation, to update any such forward-looking statements to
reflect events or circumstances that occur after the date of this
filing.


9


Critical
Accounting Policies and Estimates





The
discussion and analysis of the Company’s financial condition and results of
operations is based upon the Company’s consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States.  The preparation of these financial statements
requires the Company to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities.  The Company based the estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which formed the basis for
making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources.  Actual results may differ from
those estimated.





RESULTS
OF OPERATIONS





Overview





Until
September 2007, microHelix manufactured custom cable assemblies for the medical
and commercial Original Equipment Manufacturer ("OEM")
markets.  Typical cable assemblies included cable, connectors,
contacts, flex reliefs and housings; sub-components of medical devices and
commercial electronic systems.  The Company operated the business in a
single operating segment through two units: the Moore subsidiary and the
MicroCoax Assembly Solutions division.





On May
31, 2007 the Company surrendered its assets to its secured creditors and
concluded the disposition of all the Company’s assets on September 28, 2007
after which it became a shell company.





The
Company’s current business objective is to locate appropriate opportunities for
a business combination.  The Company does not currently engage in any
activity that provides cash flow.  The Company anticipates incurring
costs related to the filing of Exchange Act reports, officers’ and directors’
salaries and transaction costs related to a business
combination.  There is no assurance that the Company will be able to
raise sufficient capital to cover those expenses.  Until the Company
consummates a business combination, it does not anticipate any future
expenditures for research and development or the purchase or sale of any
property, plant, or equipment.





Certain
types of business combinations may be completed without having to first submit
the transaction to our shareholders for approval.  If a business
combination transaction is structured such that the approval by the Company’s
shareholders is not required, our shareholders will not be provided with
financial or other information relating to the other party to the business
combination prior to the completion of the transaction.





Because
of the disposition of substantially all of the Company’s assets and the
subsequent winding up of the business, the Company has no ongoing
operations.  The Company’s Board of Directors has determined to
maintain the Company as a “shell” corporation, which will seek suitable business
combination opportunities.  The Company’s Board of Directors believes
that a business combination with an operating company has the potential to
create value for the Company’s shareholders.





The
Company completed its initial public offering in November 2001.  As of
the date of this report the Company’s Common Stock trades on the Pink Sheets
under the symbol MHLN.PK.  On June 11, 2007 the Company filed a Form
15 with the Securities and Exchange Commission terminating its registration
under Section 12(g) of the Securities Exchange Act of 1934 and the suspension of
its duty to file reports under Sections 13 and 15(d) of the Securities Exchange
Act of 1934.  On March 16, 2009, the Company voluntarily recommenced
filing reports due under the Securities Exchange Act of 1934.





The
following discussion should be read in the context of the above
overview.





THREE
AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008





Total
operating expenses in the second quarter of 2009 were $108,127, compared to
$3,720,312 for the same period one year ago.  For the six month period
ending June 30, 2009 the total operating expenses were $240,028 compared to
$3,822,806 for the first six months of 2008.  The decrease is due to
the $3,598,971 of professional services expense in the second quarter of 2008
related to the warrants issued in conjunction with the advisory services
agreement and was partially offset by the professional service expenses related
to the preparation of the Company’s 2008 and 2009 quarterly and annual
reports.


10


Net other
expense for the second quarter of 2009 was ($118,213) compared to net other
income of $108,553 for the second quarter of 2008.  For the six month
period ending June 30, 2009 the net other income (expense) was ($195,983) as
compared to $358,038 for the first six months of 2008.  The difference
was primarily the income associated with the change in the warrant valuation in
the first quarter of 2008 and debt forgiveness recorded in 2008.





The
Company recorded a net loss of ($226,340) in the second quarter of 2009 compared
to a net loss of ($3,611,759) in the second quarter of 2008.  On a
year to date basis for the six months ended June 30, 2009 the Company recorded a
net loss of ($436,011) compared to a net loss of ($3,464,768) recorded during
the first six months of 2008.  The decrease is due to the $3,598,971
of professional services expense in the second quarter of 2008 related to the
warrants issued in conjunction with the advisory services agreement and was
partially offset by the professional service expenses related to the preparation
of the Company’s 2008 and 2009 quarterly and annual reports.





LIQUIDITY
AND CAPITAL RESOURCES





Asof June 30, 2009 the
Company had $12,441 of cash.  Cash used in operating activities during
the six-month period ended June 30, 2009 was $185,992 compared to cash used in
operating activities of $290,270 in the same period a year ago. The use of funds
during the first six months of 2009 included a net loss of $436,011, a net
increase in prepaid expenses of $10,417, offset by an increase in accrued
liabilities of $174,732 and amortization of debt discount of
$84,703.





For the
six months ending June 30, 2009 financing activities provided the Company with
$100,000 of cash as compared to $284,543 of cash used in financing activities
during the first six months of 2008.  The primary source of the cash
from financing activities for the three and six month periods ending June 30,
2009 and 2008 were advances on notes payable from the Company’s secured
creditor.





The
following description of the Company's principal debt at June 30, 2009 should be
read in the context of the overview above and Note 3 of Notes to Consolidated
Financial Statements.




On June
27, 2008 the Company obtained a loan (the “MH Financial Loan”) from MH
Financial, Inc. (“MH Financial”) in the amount of $977,743.  The MH
Financial Loan is secured by a lien against substantially all of the assets of
microHelix and Moore, including all of the outstanding common stock of
Moore.  MH Financial may accelerate all amounts due under the MH
Financial Loan in the event of default.  In addition, all amounts
outstanding under the MH Financial Loan are due and payable upon the sale of all
or substantially all of the Company’s assets to anyone other than MH Financial,
or upon the transfer of ownership of more than 50% of the Company’s Common
Stock.  The MH Financial Loan replaces the prior notes payable to MH
Financial, and includes $477,743 that was owed to MH Financial as of June 27,
2008 and an additional loan of up to $500,000.  The Company was
advanced $200,000 on June 27, 2008, $100,000 on December 31, 2008, $100,000 on
February 25, 2009 and has received no additional advances against the $500,000
loan amount.  Effective as of the date of this loan, interest will
accrue on the outstanding principal balance of the loan at a rate of 20% per
annum.  The original due date of the loan was December 27, 2008 and,
as a condition of the December 31, 2008 advance, the due date was extended to
December 27, 2009.  As additional consideration of the initial
disbursement on June 30, 2008, the Company also issued warrants to purchase
7,466,666 shares of Common Stock at $0.001 per share to MH
Financial.  MH Financial has assigned these warrants to certain of its
investors as follows: (i) Aequitas Catalyst Fund LLC: warrants to purchase
1,166,601 shares; (ii) Thurman Holdings 1, Limited Partnership: warrants to
purchase 2,822,867 shares; (iii) Fiserv Trust Company fbo Robert J. Jesenik:
warrants to purchase 59,957 shares and (iv) CTK Capital Corporation, a
corporation controlled by James M. Williams, former Chairman of the Company’s
Board of Directors; warrants to purchase 332,384 shares.  The warrants
expire on June 27, 2013.  The Company was in default under the MH
Financial Loan and entered into a Forbearance Agreement with MH Financial on
March 31, 2009.





As a
condition of the December 31, 2008 advance under the MH Financial Loan, MH
Financial required the Company to issue warrants to Aequitas Catalyst Fund, LLC
to purchase 1,066,667 shares of Common Stock at $0.001 per
share.  Aequitas Catalyst Fund, LLC participated as a lender in the MH
Financial Loan pursuant to a participation agreement with MH
Financial.


11


As a
condition of the February 25, 2009 advance under the MH Financial Loan, MH
Financial required the Company to issue warrants to Aequitas Catalyst Fund, LLC
to purchase 1,066,667 shares of Common Stock at $0.001 per share. Aequitas
Catalyst Fund, LLC participated as a lender in the MH Financial loan pursuant to
a participation agreement with MH Financial.





In
addition the Company signed a financial advisory agreement with Aequitas Capital
Management on June 27, 2008.  The Company issued warrants to purchase
1,066,667 shares of Common Stock at $0.001 per share to Aequitas Capital
Management in connection with the financial advisory agreement.





On
December 31, 2008 the Company issued a new note payable to Aequitas Capital
Management in the amount of $101,834.  The loan amount included
$90,000 owed to Aequitas Capital Management for rent and advisory services and
$11,834 for travel and legal services paid for by Aequitas Capital Management on
behalf of the Company.  The $90,000 had been accrued for during 2008
and the $11,834 was recorded as general and administrative expenses during the
three month period ending March 31, 2009.  During the six months ended
June 30, 2009 the Company was advanced $90,000 for rent and advisory services
and $8,154 for travel and legal services paid by Aequitas Capital Management on
behalf of the Company. The loan has a due date of December 31, 2009 and interest
will accrue on the outstanding principal balance of the loan at a rate of 20%
per annum.





On
January 2, 2008 MH Financial exercised warrants to purchase 133,333 shares of
Common Stock for $2,000.





On
February 17, 2008 a related party to MH Financial exercised warrants to purchase
73,915 shares of Common Stock for $1,109.





On March
3, 2008 MH Financial exercised warrants to purchase 798,981 shares of Common
Stock for $11,985.





On March
19, 2008 at a special meeting of the shareholders the Company’s Amended and
Restated Articles of Incorporation, as amended, were amended to effect a
15-for-1 reverse split of the Company’s Common Stock.  The
accompanying condensed consolidated financial statements, notes, and other
references to share and per share data have been retroactively restated to
reflect the reverse stock split for all periods presented.





On
February 9, 2009 the Company issued 667 shares of Common Stock with a value of
$1,001 to a former member of the Company’s Board of Directors.





In all of
the above cases, the warrants to purchase Common Stock and the shares of Common
Stock issued upon exercise of the warrants were issued in reliance on Regulation
D promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), and the Company obtained representations from the investors as to their
status as "accredited investors" as that term is defined in
Regulation D.




ITEM
4T.   CONTROLS AND PROCEDURES





The
Company’s President and Chief Financial Officer evaluated the effectiveness of
our disclosure controls and procedures pursuant to Rule 13a-15 under the
Securities Exchange Act of 1934 as of June 30, 2009.  Based on that
evaluation, our President and Chief Financial Officer concluded that the
Company’s disclosure controls and procedures are not designed at a reasonable
assurance level nor are they effective to give reasonable assurance that the
information the Company must disclose in reports filed with the Securities and
Exchange Commission are properly recorded, processed, summarized, and reported
as required, and that such information is not accumulated and communicated to
our management, including the Company’s President and Chief Financial Officer,
to allow timely decisions regarding required disclosure.





The
Company’s disclosure controls and procedures are subject to material weaknesses
resulting from the Company’s loss of key personnel and the Company’s surrender
of all of its assets to its creditors.  Because of the limited number
of personnel available for accounting duties, there is an inadequate segregation
of duties related to accounting controls.  The accounting department
consists only of the Company’s Chief Financial Officer.  Due to the
Company’s current lack of financial resources it has not been reasonable or cost
beneficial for the Company to hire extra accounting personnel who would have no
other purpose, duties, or workload than to provide formal segregation of duties
under internal control principles.




There
have been no changes in the Company’s internal controls over financial reporting
that occurred during the Company’s most recent fiscal quarter that have material
affected, or are reasonably likely to materially affect , the Company’s internal
control over financial reporting.


12


PART
II.  OTHER INFORMATION





ITEM
1A. RISK FACTORS





Risk
Factors





The
Company is subject to various risks that could have a negative effect on the
Company and its financial condition, including the following.





Minimal
assets





The
Company has no significant assets or financial resources. It is likely the
Company will sustain operating expenses without corresponding
revenues until it consummates a business combination with a target
company. There is no assurance that the Company can identify such a target
company and consummate such a business combination.





Adequate
financing may not be available when needed





Additional
sources of funding would be required for the Company to continue operations.
There is no assurance that the Company can raise working capital or if any
capital would be available at all. Failure to obtain financing when needed could
result in curtailing operations, acquisitions or mergers and investors could
lose some or all of their investment.





Speculative
nature of the Company's proposed operations





The
success of the Company's proposed plan of operation will depend to a great
extent on the operations, financial condition and management of the identified
target company. While management will prefer business combinations with entities
having established operating histories, there can be no assurance that the
Company will be successful in locating candidates meeting such criteria. In the
event the Company completes a business combination, of which there can be no
assurance, the success of the Company's operations will be dependent upon
management of the target company and numerous other factors beyond the Company’s
control.





Scarcity
of and competition for business opportunities and combinations





The
Company is and will continue to be an insignificant participant in the business
of seeking mergers with and acquisitions of business entities. A large number of
established and well-financed entities, including venture capital firms, are
active in mergers and acquisitions of companies which may be merger or
acquisition target candidates for the Company. Nearly all such entities have
significantly greater financial resources, technical expertise and managerial
capabilities than we do.  The Company will therefore be at a competitive
disadvantage in identifying possible business opportunities and successfully
completing a business combination. Moreover, the Company will also compete with
numerous other small public companies in seeking merger or acquisition
candidates.





No
agreement for business combination or other transaction – No standards for
business combination





As of
this filing, the Company has not reached any definitive understanding with any
person or entity concerning a merger or acquisition. There can be no assurance
that the Company will be successful in identifying and evaluating suitable
business opportunities or in concluding a business combination. Management has
not identified any particular industry or specific business within an industry
for evaluation by the Company. There is no assurance that the Company will be
able to negotiate a business combination on terms favorable to the Company. The
Company has not established a specified level of earnings, assets, net worth or
other criteria that the Company will require a target company to have achieved,
or that would prevent the Company from considering a business combination with
such business entity. Accordingly, the Company may enter into a business
combination with a business entity having no significant operating history,
losses, limited or no potential for immediate earnings, limited assets, negative
net worth or other negative characteristics.


13


Continued
management control, limited time availability





While
seeking a business combination, the Company’s officers anticipate devoting only
a limited amount of time per month to the Company’s business. The Company’s
ability to attract and retain key personnel is critical to the Company’s future
success.  There is no guarantee that the Company will be able to hire and
retain qualified officers.





Conflicts
of interest





The
Company's officers and directors participate in other business ventures which
may compete directly with the Company.





Reporting
requirements may delay or preclude acquisitions





Section
13 of the Securities Exchange Act of 1934 (the "Exchange Act") requires
companies subject thereto to provide certain information about significant
acquisitions including certified financial statements for the company acquired
covering one or two years, depending on the relative size of the acquisition.
The time and additional costs that may be incurred by some target companies to
prepare such financial statements may significantly delay or essentially
preclude consummation of an otherwise desirable acquisition by the Company.
Acquisition prospects that do not have or are unable to obtain the required
audited statements may not be appropriate for acquisition if the reporting
requirements of the Exchange Act are applicable the Company.





No
public trading market





There is
no public trading market for the Company’s securities and there can be no
assurance that a trading market for the Company’s securities will develop if the
Company completes a business combination.  Until such time as the
Company’s securities are eligible for quotation on a public market, the Company
will be at a competitive disadvantage with other companies, including shell
companies, who have publicly traded securities, in attracting suitable
candidates to participate in a business combination with the
Company.





Lack
of diversification





The
Company’s activities will be limited to the operations engaged in by the
business entity with which the Company merges or acquires. The Company’s
inability to diversify the Company’s activities into a number of areas may
subject the Company to economic fluctuations within a particular business or
industry and therefore increase the risks associated with the Company’s
operations.





Regulation
under Investment Company Act





Although
the Company will be subject to regulation under the Exchange Act, management
believes the Company will not be subject to regulation under the Investment
Company Act of 1940 because the Company will not be engaged in the business of
investing or trading in securities. In the event the Company engages in business
combinations which result in the Company holding passive investment interests in
a number of entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required to
register as an investment company and could be expected to incur significant
registration and compliance costs. The Company has not obtained a formal
determination from the Securities and Exchange Commission as to the Company’s
status under the Investment Company Act of 1940.  Consequently, any
violation of such Act could subject the Company to material adverse
consequences.





Possible
change in control and management





A
business combination involving the issuance of the Company's equity securities
could result in shareholders of a target company obtaining a controlling
interest in the Company. Any such business combination may require the Company’s
shareholders to sell or transfer all or a portion of the Company's equity
securities held by them. The resulting change in control will likely result
in removal of the present officers and directors of the Company and a
corresponding reduction in or elimination of their participation in the future
affairs of the Company.


14


Reduction
of percentage share ownership following business combination





The
Company's primary plan of operation is based upon a business combination with a
business entity which, in all likelihood, will result in the Company issuing
securities to shareholders of such business entity. The issuance of previously
authorized and unissued equity securities of the Company would result in
reduction in percentage of shares owned by the Company’s present shareholders
and would most likely result in a change in control or management of the
Company.





Taxation





Federal
and state tax consequences will, in all likelihood, be major considerations in
any business combination the Company may undertake.  Currently, such
transactions may be structured so as to result in tax-free treatment to both
companies, pursuant to various federal and state tax provisions. The Company
intends to structure any business combination so as to minimize the federal and
state tax consequences to both the Company and the target company; however,
there can be no assurance that such business combination will meet the statutory
requirements of a tax-free reorganization or that the parties will obtain the
intended tax-free treatment upon a transfer of stock or assets. A non-qualifying
reorganization could result in the imposition of both federal and state taxes
which may have an adverse effect on both parties to the
transaction.





ITEM
6.   EXHIBITS





(a) Exhibits:


3.1(1)
              
              Amended
      and Restated Articles of Incorporation of microHelix, Inc., as amended
      November 16, 2001, December 5, 2003, April 8, 2008, October 28, 2008,
      October 17, 2006, January 16, 2008, and March 19, 2008.3.2(2)
              
              Bylaws
      of microHelix, Inc.31.1(3)
              
              Certification
      of Principal Executive Officer and Principal Financial Officer pursuant to
      18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200232.1(3)
              
              Certification
      of Principal Executive Officer and Principal Financial Officer pursuant to
      18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002





(1)
              
              Incorporated
      by reference to the Company's Annual Report on Form 10-KSB for the year
      ended December 31, 2004, filed on April 21, 2005 and to the Company’s Form
      8-K/A filed on April 14, 2005, and the Company’s Forms 8-K filed on
      October 31, 2005, October 20, 2006 and the Company’s Annual Report on Form
      10-K for the year ended on December 31, 2008 filed on April 16,
      2009.(2)
              
              Incorporated
      by reference to the Company's Form SB-2 filed on July 26,
      2001.(3)
              
              Filed
      herewith.





SIGNATURE





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





Signature
              
              Title
              
              Date/s/
      James E. Horswill
              
              President
      and Chief Financial Officer
              
              August
      14, 2009James
      E. Horswill


15