UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549





FORM
10-Q





(Mark
One)


[X]
            QUARTERLY
      REPORT UNDER SECTION 13 OR 15(D) OF THESECURITIES
      EXCHANGE ACT OF 1934.





For the
quarterly period ended February 28, 2009.





[  
      ]
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(D) OF THESECURITIES
      EXCHANGE ACT OF 1934.





For the
transition period from ______________________
to ______________________.





Commission
file number 0-4465





Pervasip
Corp.


(Exact
name of registrant as specified in its charter)




New
      York
                        13-2511270(State
      or other jurisdiction
                        (I.R.S.
      Employerof
      incorporation or organization)
                        Identification
      No.)75
      South Broadway, Suite 400, White Plains, New York
                        10601(Address
      of principal executive offices)
                        (Zip
      Code)




Registrant’s
telephone number, including area
code:            914-620-1500


(Former
name, former address and former fiscal year, if changed since last
report)





Indicate by check whether the
registrant (1) filed all reports required to be filed by Section 13 or 15(d) of
the Securities and 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 X   No
__.





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):




Large Accelerated
      Filero
                Non-Accelerated FileroAccelerated
      Filero
                Smaller Reporting Companyx





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes __   No X




State the number of shares outstanding
of each of the issuer’s classes of common equity as of the latest practicable
date:  26,326,172  shares
of common stock, par value $.10 per share, as of April 10,
2009.








PART 1. FINANCIAL
INFORMATION


Item
1.         Financial
Statements





Pervasip
Corp. and Subsidiaries


Condensed
Consolidated Balance Sheets




Assets
                              
                              Feb.
      28, 2009
                              
                              
                              Nov.
      30, 2008(Unaudited)Current
      assets:Cash
      and cash equivalents
                              
                              $
                              108,906
                              
                              
                              $
                              130,338Restricted
      cash
                              
                              
                              431,147
                              
                              
                              
                              7,085Accounts
      receivable, net
                              
                              
                              292,988
                              
                              
                              
                              205,294Prepaid
      expenses and other current assets
                              
                              
                              149,370
                              
                              
                              
                              459,511Total
      current assets
                              
                              
                              982,411
                              
                              
                              
                              802,228Property,
      plant and equipment, net
                              
                              
                              547,073
                              
                              
                              
                              610,606Deferred
      finance costs, net
                              
                              
                              474,226
                              
                              
                              
                              547,940Other
      assets
                              
                              
                              160,700
                              
                              
                              
                              192,659Total
      assets
                              
                              $
                              2,164,410
                              
                              
                              $
                              2,153,433Liabilities
      and Stockholders’ Equity DeficiencyCurrent
      liabilities:Current
      maturities of long-term debt and capital lease obligations
                              
                              $
                              92,503
                              
                              
                              $
                              93,549Accounts
      payable and accrued expenses
                              
                              
                              2,019,570
                              
                              
                              
                              2,083,182Total
      current liabilities
                              
                              
                              2,112,073
                              
                              
                              
                              2,176,731Long-term
      debt and capital lease obligations, less current
maturities
                              
                              
                              5,493,407
                              
                              
                              
                              4,341,369Accrued
      pension obligation
                              
                              
                              882,332
                              
                              
                              
                              882,332Warrant
      liabilities
                              
                              
                              3,478,606
                              
                              
                              
                              5,621,070Total
      liabilities
                              
                              
                              11,966,418
                              
                              
                              
                              13,021,502Stockholders’
      equity deficiency:Preferred
      stock, $. 10 par value; 1,000,000 shares authorized, none issued and
      outstanding
                              
                              
                              -
                              
                              
                              
                              -Common
      stock, $. 10 par value; 150,000,000 shares authorized, 26,326,172 and
      26,026,172 shares issued and outstanding in 2009 and 2008
                              
                              
                              2,632,617
                              
                              
                              
                              2,602,617Capital
      in excess of par value
                              
                              
                              28,337,798
                              
                              
                              
                              28,461,538Deficit
                              
                              
                              (40,767,756
                              )
                              
                              
                              (41,929,608
                              )Accumulated
      other comprehensive loss
                              
                              
                              (4,667
                              )
                              
                              
                              (2,616
                              )Total
      stockholders’ equity deficiency
                              
                              
                              (9,802,008
                              )
                              
                              
                              (10,868,069
                              )Total
      liabilities and stockholders’ equity deficiency
                              
                              $
                              2,164,410
                              
                              
                              $
                              2,153,433
   See
      notes to the condensed consolidated financial statements.


2


Pervasip
Corp. and Subsidiaries


Condensed
Consolidated Statements of Operations and Comprehensive Income
(Loss)


(Unaudited)




For
      the Three Months EndedFeb
      28, 2009
                                                                          
                                                                          
                                                                          Feb.
      29, 2008Revenues
                                                                          
                                                                          $
                                                                          593,243
                                                                          
                                                                          
                                                                          $
                                                                          430,704Costs
      and expenses:Costs
      of services
                                                                          
                                                                          
                                                                          523,003
                                                                          
                                                                          
                                                                          
                                                                          453,050Selling,
      general and administrative
                                                                          
                                                                          
                                                                          861,596
                                                                          
                                                                          
                                                                          
                                                                          699,257Depreciation
      and amortization
                                                                          
                                                                          
                                                                          137,386
                                                                          
                                                                          
                                                                          
                                                                          121,977Total
      costs and expenses
                                                                          
                                                                          
                                                                          1,521,985
                                                                          
                                                                          
                                                                          
                                                                          1,274,284Loss
      from operations
                                                                          
                                                                          
                                                                          (928,742
                                                                          )
                                                                          
                                                                          
                                                                          (843,580
                                                                          )Other
      income (expense):Interest
      expense
                                                                          
                                                                          
                                                                          (462,000
                                                                          )
                                                                          
                                                                          
                                                                          (243,478
                                                                          )Interest
      and other income
                                                                          
                                                                          
                                                                          1,179
                                                                          
                                                                          
                                                                          
                                                                          10,953Change
      in warrant valuation
                                                                          
                                                                          
                                                                          2,551,415
                                                                          
                                                                          
                                                                          
                                                                          (2,714,096
                                                                          )Total
      other income (expense)
                                                                          
                                                                          
                                                                          2,090,594
                                                                          
                                                                          
                                                                          
                                                                          (2,946,621
                                                                          )Net
      income (loss)
                                                                          
                                                                          
                                                                          1,161,852
                                                                          
                                                                          
                                                                          
                                                                          (3,790,021
                                                                          )Other
      comprehensive loss –foreign
      currency translation adjustment
                                                                          
                                                                          
                                                                          (2,051
                                                                          )
                                                                          
                                                                          
                                                                          -unrealized
      loss on marketable securities
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          (15,000
                                                                          )Comprehensive
      income (loss)
                                                                          
                                                                          $
                                                                          1,159,801
                                                                          
                                                                          
                                                                          $
                                                                          (3,805,201
                                                                          )Basic
      earnings (loss) per share:
                                                                          
                                                                          $
                                                                          0.04
                                                                          
                                                                          
                                                                          $
                                                                          (0.15
                                                                          )Diluted
      earnings (loss) per share
                                                                          
                                                                          $
                                                                          0.02
                                                                          
                                                                          
                                                                          $
                                                                          (0.15
                                                                          )Shares
      used in per share computation:Basic
                                                                          
                                                                          
                                                                          26,242,839
                                                                          
                                                                          
                                                                          
                                                                          25,835,458Diluted
                                                                          
                                                                          
                                                                          76,495,046
                                                                          
                                                                          
                                                                          
                                                                          25,835,458See
      notes to the condensed consolidated financial statements.




3


Pervasip
Corp. and Subsidiaries


Condensed
Consolidated Statements of Cash Flows


(Unaudited)




For
      the Three Months EndedFeb.
      28, 2009
                
                
                Feb.
      29, 2008Net
      cash used in operating activities:
                
                $
                (664,117
                )
                
                $
                (1,321,815
                )Cash
      flows from investing activities:Purchase
      of property and equipment
                
                
                -
                
                
                
                (46,652
                )Cash
      flows from financing activities:Repayment
      of long-term debt
                
                
                (15,057
                )
                
                
                (12,603
                )Inflow
      from restricted cash
                
                
                657,742
                
                
                
                1,274,858Net
      cash provided by financing activities
                
                
                642,685
                
                
                
                1,262,255Decrease
      in cash and cash equivalents
                
                
                (21,432
                )
                
                
                (106,212
                )Cash
      and cash equivalents at beginning of period
                
                
                130,338
                
                
                
                132,078Cash
      and cash equivalents at the end of period
                
                $
                108,906
                
                
                $
                25,866See
      notes to the condensed consolidated financial statements.







4


PERVASIP
CORP.





Notes To Condensed
Consolidated Financial Statements (Unaudited)








Note 1-Basis of
Presentation





The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and in accordance with the rules and regulations of the
Securities and Exchange Commission for Form 10-Q.  Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included.  Operating results for the three-month period ended February
28, 2009 are not necessarily indicative of the results that may be expected for
the year ended November 30, 2009.  For further information, refer to
the consolidated financial statements and footnotes thereto included in our
Annual Report on Form 10-KSB for the year ended November 30, 2008.





Note 2 – Going Concern
Matters and Realization of Assets





The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the ordinary course of business.  However, we have sustained
substantial losses from continuing operations in recent years and we have
negative working capital and a stockholders’ equity deficiency.  In
addition, we are experiencing difficulty in generating sufficient cash flow to
meet our obligations and sustain our operations. We expect our operating losses
and cash deficits to continue through fiscal 2009.





Based on
our current business plans, we believe our existing cash resources will be
sufficient to fund our operating losses, capital expenditures, lease and debt
payments and working capital requirements only through the second quarter of
fiscal 2009.  As a result, we will need to raise additional cash
through some combination of borrowings, sale of equity or debt securities or
sale of assets to enable us to meet our cash requirements.





We may
not be able to raise sufficient additional debt, equity or other cash on
acceptable terms, if at all.  We have been trying to raise equity or
borrow funds from sources other than our principal lender without success to
date.  Failure to generate sufficient revenues, achieve certain other
business plan objectives or raise additional funds could have a material adverse
effect on the Company’s results of operations, cash flows and financial
position, including our ability to continue as a going concern, and may require
us to significantly reduce, reorganize, discontinue or shut down our
operations.





In view
of the matters described above, recoverability of a major portion of the
recorded asset amounts shown in the accompanying balance sheet is dependent upon
continued operations of the company which, in turn, is dependent upon our
ability to meet our financing requirements on a continuing basis, and to succeed
in our future operations.  The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or amounts and classification of liabilities that might be necessary
should we be unable to continue operating.





5


Our plans
include (1) seeking additional financing to cover our operating deficit or
purchase target businesses that are generating positive cash flow, (2)
continuing to grow our operations as a VoIP carrier and (3) increasing our sales
to existing wholesale customers, especially in the Mobile VoIP arena, where one
customer is projecting significant growth.  We have already cut
salary, consulting and rent expense and reduced our operating costs by
approximately $100,000 a month beginning in March 2009.





There can
be no assurance that we will be able to achieve our business plan objectives or
that we will achieve or maintain cash flow positive operating
results.  If we are unable to generate adequate funds from operations
or raise additional funds, we may not be able to repay our existing debt,
continue to operate our network, respond to competitive pressures or fund our
operations.  As a result, we may be required to significantly reduce,
reorganize, discontinue or shut down our operations.  Our financial
statements do not include any adjustments that might result from this
uncertainty.





Note 3 – Recent Accounting
Pronouncements





In March
2008, the FASB issued statement No. 161, “Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133”(SFAS 161). SFAS 161
requires entities that use derivative instruments to provide qualitative
disclosures about their objectives and strategies for using such instruments, as
well as any details of credit-risk-related contingent features contained within
derivatives.  SFAS 161 also requires entities to disclose additional
information about the amounts and location of derivatives located within the
financial statements, how the provisions of SFAS 133 have been applied, and the
impact that hedges have on an entity’s financial position, financial
performance, and cash flows.  The Company adopted the provisions of
SFAS 161 effective December 1, 2008. See Note 10 for the Company’s disclosures
about its derivative instruments.





Note 4-Major
Customers





During
the three-month periods ended February 28, 2009 and February 29, 2008, one
customer accounted for approximately 32% and 36%, respectively, of our
revenues.  A second customer accounted for approximately 24% of our
revenues for the three-month period ended February 29, 2008.  At
February 28, 2009 and November 30, 2008, monies owed to us from our major
customers accounted for 23% and 32%, respectively, of our total accounts
receivable balances.





Note 5-Net Income (Loss) Per
Common Share





Basic
income (loss) per common share is calculated by dividing net income (loss) by
the weighted average number of common shares outstanding during the
period.





Approximately
20,109,991 and 149,136,000 shares of common stock issuable upon the exercise of
our outstanding stock options or warrants were excluded from the calculation of
diluted net income (loss) per share for the three-month periods ended February
28, 2009 and February 29, 2008, respectively, because the effect would be
anti-dilutive.





6


Note 6-Risks and
Uncertainties





We have
created a proprietary Internet Protocol (“IP”) telephony network and have
transitioned from being a reseller of traditional wireline telephone services
into a voice over IP service provider to take advantage of the network cost
savings that are inherent in an IP network.  While the IP telephony
business continues to grow, we face strong competition.  We have built
our IP telephony business with significantly less financial resources than many
of our competitors.  The survival of our business currently is
dependent upon the success of our IP operations.  Future results of
operations involve a number of risks and uncertainties.  Factors that
could affect future operating results and cash flows and cause actual results to
vary materially from historical results include, but are not limited
to:





·
            The
      availability of additional funds to successfully pursue our business
      plan;


·
            The
      performance of Unified Technologies Group Inc. under its wholesale master
      service agreement with us, including its performance of its minimum number
      of customer lines commitment and the payment of any required shortfall
      penalties;


·
            The
      cooperation of industry service partners that have signed agreements with
      us;


·
            Our
      ability to market our services to current and new customers and generate
      customer demand for our products and services in the geographical areas in
      which we operate;


·
            The
      impact of changes the Federal Communications Commission or State Public
      Service Commissions may make to existing telecommunication laws and
      regulations, including laws dealing with Internet
    telephony;


·
            The
      ability to comply with provisions of our financing
    agreements;


·
            The
      highly competitive nature of our
industry;


·
            The
      acceptance of telephone calls over the Internet by mainstream
      consumers;


·
            Our
      ability to retain key personnel;


·
            Our
      ability to maintain adequate customer care and manage our churn
      rate;


·
            Our
      ability to maintain, attract and integrate internal management, technical
      information and management information
systems;


·
            Our
      ability to manage rapid growth while maintaining adequate controls and
      procedures;


·
            The
      availability and maintenance of suitable vendor relationships, in a timely
      manner, at reasonable cost;


·
            The
      decrease in telecommunications prices to consumers;
  and


·
            General
      economic conditions.




Note 7-Stock-Based
Compensation Plans





We issue
stock options to our employees, consultants and outside directors pursuant to
stockholder-approved and non-approved stock option programs and record the
applicable expense in accordance with the Financial Accounting Standards Board
SFAS No. 123R, “Share-Based Payment”.  For the three-month periods
ended February 28, 2009 and February 29, 2008, we recorded approximately $27,000
and $27,000, respectively, in employee stock-based compensation expense, which
was included in our selling, general and administrative expenses.  As
of February 28, 2009, there was approximately $188,000 of unrecognized
stock-compensation expense for previously granted unvested options that will be
recognized over a three-year period.





7


Note 8-Accounts Payable and
Accrued Expenses





At
February 28, 2009 and November 30, 2008, included in the caption accounts
payable and accrued expenses, are liabilities of approximately $796,000 for
items with which we are negotiating settlements in conjunction with transactions
related to the sale of former subsidiaries.  We believe the total
remaining liability is significantly less, based upon public disclosures made by
the entity that purchased our former subsidiaries. However, the purchaser has
not confirmed the reduction to us directly, and accordingly, we have not reduced
the amount of the liability.  One of our former subsidiaries filed for
bankruptcy protection on September 23, 2008, and is now in a Chapter 7
liquidation.  We believe the bankruptcy filing further decreases our
potential liability to the purchaser.  However, there can be no
assurance that we will be successful in reducing such potential liabilities and,
ultimately, we may have to pay such amounts.





Note 9-Defined Benefit
Plan





We
sponsor a defined benefit plan covering a number of former
employees.  Our funding policy with respect to the defined benefit
plan is to contribute annually not less than the minimum required by applicable
law and regulation to cover the normal cost and to fund supplemental costs, if
any, from the date each supplemental cost was incurred.  Contributions
are intended to provide not only for benefits attributable to service to date,
but also for those expected in the future.





For the
three-month periods ended February 28, 2009 and February 29, 2008, we recorded
pension expense of $12,000 and $50,000, respectively. In the first quarters of
fiscal 2009 and 2008, we contributed approximately $12,000 and $20,000,
respectively, to our defined benefit plan.  The expected long-term
rate on plan assets is 8%.





We also
sponsor a 401(k) profit sharing plan for the benefit of all eligible employees,
as defined.  The plan provides for the employees to make voluntary
contributions not to exceed the statutory limitation provided by the Internal
Revenue Code.  We may make discretionary contributions.





8


Note 10 – Principal
Financing Arrangements





We have
executed seven financings agreements with our principal lender and its
affiliates.  The first financing was repaid in full in connection with
the sale of two subsidiaries, and the second, third and fourth financings were
amended upon the signing of the fifth financing on May 28, 2008. The fourth
financing, in the amount of $4,000,000, requires that we make principal payments
of $100,000 each month, beginning in October 2009, and a balloon payment, of the
remaining principal and interest, when the note is due on September 30,
2010.  The second, third and fifth financings are also due on
September 30, 2010, and there are no principal payments required to be made
until the notes mature.  Interest on the fifth financing is set at
20%. The interest rate on our fourth financing is set at prime plus 2%, subject
to a minimum of 9.75% per annum, and was 9.75% per annum at February 28,
2009.  Interest on the second and third notes is set at prime plus 2%
per annum, or 5.25% per annum at February 28, 2009.  In conjunction
with the fifth financing, all interest payments for the next twelve months are
accrued and added to the principal balances of the notes.  Cash
interest payments begin again on a monthly basis commencing in June
2009.  We remain dependent on our principal lender to fund our cash
needs and we have no assurances that they will continue to fund such
needs.





On
October 15, 2008, we entered into a sixth financing arrangement with our
principal lender and an affiliate of the lender (the “October 2008 Financing”).
This financing consisted of a note totaling $500,000 that matures on September
28, 2010.   Interest is calculated on the basis of a 360 day
year, and is payable monthly, in arrears, on the first business day of each
month through and including the maturity date.  Interest accrues at a
rate of 15% per annum.  There are no prepayment penalties on the
note.





On
December 12, 2008, we amended the October 2008 Financing and borrowed an
additional $600,000 from our lender.  This financing consisted of
amending the $500,000 note to a $1,100,000 note that matures on September 28,
2010.  Interest is calculated on the basis of a 360 day year, and is
payable monthly, in arrears, on the first business day of each month through and
including the maturity date.  Interest accrues at a rate of 15% per
annum.  There are no prepayment penalties on the note.





On
February 18, 2009, we consummated a private placement (the “February 2009
Financing”) pursuant to which we issued to two affiliates of our lender
(“Affiliates”), secured term notes in the aggregate principal amount of $600,000
and common stock purchase warrants (the “Warrants”) that entitle the Affiliates
to purchase in the aggregate up to 26,500,000 shares of our common
stock.





Proceeds
of the February 2009 Financing were deposited in a restricted cash account and
will be released to us to pay operating expenses upon our request and in the
sole discretion of our principal lender, similar to the arrangement we have had
with our lender with prior financings.  Absent earlier redemption with
no redemption premium payable by us, the loan matures on September 28, 2010 (the
“Maturity Date”).  Interest will accrue on the unpaid principal on the
notes issued in the February 2009 Financing at a rate equal to twenty percent
(20%) per annum calculated on the basis of a 360-day year.





Interest
accruing at the rate of fifteen percent (15%) per annum will be payable monthly
in arrears, on the first business day of each calendar month through and
including the Maturity Date.  Interest accruing at the rate of five
percent (5%) per annum will be accrued and added to the principal balances of
the notes issued in the February 2009 Financing.  Principal payments
are due and payable on the Maturity Date.





9


Similar
to the other financings entered into with our principal lender, the notes issued
in the February 2009 Financing are secured by a blanket lien on substantially
all of the Company’s assets pursuant to a master security
agreement.





In
connection with the February 2009 Financing, we issued Warrants to the
Affiliates to purchase up to an aggregate of 26,500,000 shares of common stock
at a price of $0.10 per share.  We determined, in accordance with SFAS
133, “Accounting for Derivative Instruments and Hedging Activities,” that the
warrants issued to our principal lender and the Affiliates in connection with
all financings represented derivatives. Accordingly, we recorded the fair value
of these derivatives as a debt discount and a liability on our consolidated
balance sheet. The discounts are being amortized to interest expense using the
“Effective Interest Method” of amortization over the term of the related
indebtedness.  For the quarter ended February 28, 2009, the value of
the derivatives was decreased by approximately $2,551,000 to the then-current
fair value of $3,478,606 with a corresponding credit to other
income.  For the quarter ended February 29, 2008, the value of the
derivatives was increased by approximately $2,714,000 to the then-current fair
value of $7,462,276 with a corresponding charge to other income. The warrant
liability for all of the above warrants is adjusted to fair market value at each
reporting date using the Black-Scholes.  Warrant income or expense
will continue to fluctuate in future periods primarily as the price of our
common stock fluctuates.





To secure
the payment of all obligations to our lenders, including under any warrants, we
entered into a master security agreement that assigns and grants to an agent for
the lender a continuing security interest and first lien on all of our assets
including the assets of our subsidiaries.  In the aggregate, the seven
financing agreements are recorded on our balance sheet at $5,493,407, which is a
discount to their face amount of $11,100,193.





Note 11-Income
Taxes





At
November 30, 2008, we had net operating loss carryforwards for Federal income
tax purposes of approximately $30,000,000 expiring in the years 2009 through
2028.  There is an annual limitation of approximately $187,000 on the
utilization of approximately $2,000,000 of such net operating loss carryforwards
under the provisions of Internal Revenue Code Section 382.  We have
provided an allowance for the full value of the related deferred tax asset since
it is more likely than not that any such benefit would not be
realized.





Note 12 – Related Party
Transactions





In
connection with use of software development costs, we paid fees to a third-party
intellectual property development firm (the “Consultant”) for the three-month
periods ended February 28, 2009 and February 29, 2008, of $63,000 and $109,500,
respectively.  One of our officers has performed work for the
Consultant, including the function of distributing such funds to appropriate
vendors. Our officer received fees from the Consultant of $15,000 during the
three-month period ended February 28, 2009. The funds paid to the Consultant
resulted in the capitalization of internal use software costs and equipment of
$43,000 in the three months ended February 29, 2008.  There was no
capitalization of software costs in the three months ended February 28, 2009.
The fees for services that were not deemed to be capitalizable software costs
for the three-month periods ended in February 28, 2009 and February 29, 2008 of
$63,000 and $66,500, respectively, were deemed to be operating
costs.





10





Note 13 –
Equity





On June
15, 2008 we contracted with Nationwide Solutions, Inc. (“Nationwide”) to perform
consulting, financing and acquisition services.  In addition to a
monthly cash fee, Nationwide was granted warrants to purchase up to 2 million
shares of our common stock. The warrants were exercisable through April 30, 2012
at a price of $0.25 per share.  We valued the warrants at $243,000
using the Black-Scholes method with an interest rate of 2.29%, volatility of
165%, zero dividends and expected term of 3.8 years.  We were
amortizing the consulting expense over the life of the contact, and recorded
expense of $28,699 in fiscal 2008.  The remaining value of $214,301
was recorded as a prepaid expense at November 30, 2008.  Effective
February 20, 2009, by mutual agreement, the consulting agreement with Nationwide
was terminated and Nationwide surrendered the warrants to us, resulting in a
reduction in prepaid expenses and equity of the remaining book balance of the
warrants at such date of $200,209.





In
December 2008, we issued 300,000 shares of common stock to a company in
conjunction with a contractual obligation for investor relation
services.  The stock was valued at its fair market value of $0.27 a
share, or $81,000, on the date a one-year services contract was signed and is
being amortized over the one-year period.








11





Item
2.       Management’s Analysis and Discussion of
Financial Condition and Results of Operations





The
statements contained in this Report that are not historical facts are
“forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995 with respect to our financial condition, results
of operations and business, which can be identified by the use of
forward-looking terminology, such as “estimates,” “projects,” “plans,”
“believes,” “expects,” “anticipates,” “intends,” or the negative thereof or
other variations thereon, or by discussions of strategy that involve risks and
uncertainties.  Management wishes to caution the reader of the
forward-looking statements that such statements, which are contained in this
Report, reflect our current beliefs with respect to future events and involve
known and unknown risks, uncertainties and other factors, including, but not
limited to, economic, competitive, regulatory, technological, key employee, and
general business factors affecting our operations, markets, growth, services,
products, licenses and other factors discussed in our other filings with the
Securities and Exchange Commission, and that these statements are only estimates
or predictions.  No assurances can be given regarding the achievement
of future results, as actual results may differ materially as a result of risks
facing us, and actual events may differ from the assumptions underlying the
statements that have been made regarding anticipated events.  Factors
that may cause our actual results, performance or achievements, or industry
results, to differ materially from those contemplated by such forward-looking
statements include, without limitation those factors set forth under Note 6 –
Risks and Uncertainties.





These
forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause our actual results to be materially different from
any future results expressed or implied by us in those
statements.  These risk factors should be considered in connection
with any subsequent written or oral forward-looking statements that we or
persons acting on our behalf may issue. All written and oral forward looking
statements made in connection with this Report that are attributable to us or
persons acting on our behalf are expressly qualified in their entirety by these
cautionary statements.  Given these uncertainties, we caution
investors not to unduly rely on our forward-looking statements. We do not
undertake any obligation to review or confirm analysts’ expectations or
estimates or to release publicly any revisions to any forward-looking statements
to reflect events or circumstances after the date of this Report or to reflect
the occurrence of unanticipated events.  Further, the information
about our intentions contained in this Report are statements of our intentions
as of the date of this Report and are based upon, among other things, the
existing regulatory environment, industry conditions, market conditions and
prices, the economy in general and our assumptions as of such date. We may
change our intentions, at any time and without notice, based upon any changes in
such factors, in our assumptions or otherwise.





Overview





We are a
provider of local, long distance and international voice telephone
services.  We provide these services using a proprietary Linux-based
open-source softswitch that utilizes an Internet Protocol (“IP”) telephony
product.  IP telephony is the real time transmission of voice
communications in the form of digitized “packets” of information over the
Internet or a private network, which is analogous to the way in which e-mail and
other data is transmitted.  We provide our IP telephone services
primarily on a wholesale basis to other service providers, such as cable
operators, Internet service providers, WiFi and fixed wireless broadband
providers, data integrators, value-added resellers, and satellite broadband
providers. Our technology enables these carriers to quickly and inexpensively
offer premiere broadband telephone services, complete with order flow management
for efficient provisioning, billing and support services and user interfaces
that are easily customized to reflect the carrier’s unique brand.





12


We are
currently enhancing the reach of our IP telephony services by preparing to use
the data side of the cell phone network to run our telephone
calls.  Cell phone networks provide both voice and data
services.  In a traditional cell phone service, the users speak over
the voice side of the network and receive email messages and obtain Internet
access over the data side of the network.  With our service, the voice
transmission runs over the data side of the cell phone network, and the voice
side is not used.  The data side of the cell phone network is simply
another avenue upon which we can run our IP telephony
services.  However, it is a low-cost method of delivering telephone
service and we believe it will attract a significant number of subscribers to
our service from the larger and more expensive cell phone
carriers.  We refer to our use of the data side of the cell phone
networks as voice-over-IP enabled mobile phone service (“Mobile
VoIP”).





We
believe Mobile VoIP will be a telephone service that experiences rapid
growth.  We will continue to use a wholesale model with Mobile VoIP,
just as we are a wholesaler of IP telephony.  In October 2008, we
entered into a wholesale agreement to sell Mobile VoIP services to Unified
Technologies Group, Inc. (“UTGI”), a diversified technology company that intends
to sell our Mobile VoIP service directly to end-users, or indirectly to
end-users via cell phone distributors.   UTGI utilizes the Global
System for Mobile (“GSM”) communications standard for the Mobile VoIP
calls.  GSM is the most popular standard for mobile phones in the
world, with more than 3 billion users in more than 200 countries and
territories.  According to UTGI, it has access to the data side of the
GSM network in approximately 130 countries, and usage of the product does not
generate roaming charges to end-users who travel to any of those countries, as
the entire call stays on the UTGI data network.   UTGI believes
it will be able to provide a high-quality call to hundreds of thousands of
customers because it uses its own virtual private network over the GSM network
to provide the high-speed Internet access to the mobile phone.  By
placing software on the mobile phone to create a dynamic virtual stabilized
network, UTGI intends to ensure the highest level of quality by enhancing the
call with services such as bandwidth limitation correction, compression,
sampling, jitter correction, echo cancellation and buffering.  When
the consumer uses the mobile device and makes a Mobile VoIP telephone call, the
entire operation is intended to be seamless to the cell phone user, who receives
no indication that the call is a VoIP call. On April 1, 2009, UTGI launched a
beta test for its Mobile VoIP product.  We believe the wireless
communications industry recognizes that UTGI’s Mobile VoIP product is a
significant development in the industry, as evidenced by UTGI receiving the
award at the 2009 CTIA wireless show for “best overall
product.”  There can be no assurance that we will be successful with
our plan with UTGI, and our future revenue from UTGI depends upon, in part,
UTGI’s success in selling its product and retaining customers.  We
cannot control the timing of UTGI’s marketing efforts or the speed with which it
signs up customers.





Plan
of Operation





Our
objective is to build a profitable IP telephone company on a stable and scalable
platform with minimal network costs.  We want to be known for our high
quality of service, robust features and ability to deliver any new product to a
wholesale customer or a web store without delay.   We believe
that to achieve our objective we need to have “cradle to grave” automation of
our back-office web and billing systems.  We have written our software
for maximum automation, flexibility and changeability.





13


We know
from experience in provisioning complex telecom orders that back-office
automation is a key factor in keeping overhead costs low.  Technology
continues to work for 24 hours a day and we believe that the fewer people a
company has in the back office, the more efficiently it can run, which should
drive down the cost per order.





Furthermore,
our strategy is to grow rapidly by leveraging the capital, customer base and
marketing strength of companies that sell broadband services, such as UTGI,
which sells a broadband service over GSM cell phone networks.  Many of
our targeted wholesale customers and some of our existing wholesale customers
have significant financial resources to market a private-labeled digital voice
product to their existing customer base or to new customers.  We
believe our strength is our technology-based platform.  In providing
our technology on a wholesale basis, our goal is to obtain and manage 500,000
individual end-users, or lines in service, by leveraging the sales, marketing,
financial and other resources of our wholesale customers.  Our
strategy is to focus on the Mobile VoIP product this year as a driving force to
accelerate our efforts to reach the level of 500,000 lines in service. We
believe UTGI will become our largest wholesale customer over the next twelve
months, as UTGI has represented to us that it has commitments from cell phone
distributors to purchase approximately 540,000 Mobile VoIP lines within 12
months of the commercial launch of its Mobile VoIP product.  Many of
our resources are focused on working with UTGI to ensure a successful commercial
launch of its Mobile VoIP product by July 1, 2009.





Three Months Ended February
28, 2009 vs. Three Months Ended February 29, 2008





Our
revenue for the three-month period ended February 28, 2009 increased by
approximately $162,000, or approximately 38%, to approximately $593,000 as
compared to approximately $431,000 reported for the three-month period ended
February 29, 2008.  The increase in our revenues was due to a
combination of an increase in the number of wholesale VoIP customers and an
increase in the average revenue per wholesale VoIP customer.  We have
numerous wholesale customers who have signed a contract with us but who are not
generating revenue yet, and we have other potential wholesale customers in
trial.  We believe the customers that we have already identified and
with which we have already signed agreements will continue to add to our sales
growth.  Our largest opportunity with an existing customer is with
UTGI, which signed a wholesale services agreement with us in October 2008 that
requires them to pay us for a minimum of 50,000 Mobile VoIP lines within one
year of the commercial launch of their Mobile VoIP product.  We
anticipate they will sell significantly more than 50,000 lines based upon
commitments they have received from cell phone distributors for approximately
540,000 lines, and based upon the positive industry reaction and publicity they
have received from winning the “best overall product” award at the CTIA wireless
trade show on April 3, 2009.  We do not believe that UTGI will
generate significant revenues for us in our second fiscal quarter.  We
believe we will see a significant revenue increase in our fourth fiscal quarter
because UTGI plans to take advantage of the year-end holiday selling season to
drive its mobile phone product into the hands of
consumers.   However, our projection assumes UTGI will launch its
commercial Mobile VoIP product by July 1, 2009 and there can be no assurance it
will do so.





For the
three-month period ended February 28, 2009, our gross profit amounted to
approximately $70,000, which was an improvement of approximately $92,000 over
the negative gross profit of approximately ($22,000) reported in the three-month
period ended February 29, 2008.  Our IP telephony facilities have
significant unused capacity and we have therefore only recently been able to
generate a positive gross profit on a quarterly basis.  We anticipate
we can continue to achieve higher sales volumes to cover fixed costs and to
negotiate lower variable costs with vendors, so that our gross profit and gross
profit percentage should continue to increase.  We have already
identified new carriers and routes and we plan to incur lower domestic
termination costs commencing in April 2009.





14


Selling,
general and administrative expenses increased by approximately $163,000, or
approximately 23%, to approximately $862,000 for the three-month period ended
February 28, 2009 from approximately $699,000 reported in the same prior-year
fiscal period. Additional personnel and consulting costs accounted for the
majority of the increase.  We made significant reductions to our
salary and consulting expense during February 2009 and, consequently, our costs
in March 2009 were substantially lower than in February 2009.  The
reduction in March 2009 for salary and consulting expense, as compared to
February 2009, was approximately $95,000.  We anticipate that we will
be able to hold down our salary expense until we need to hire more personnel in
conjunction with the commercial launch of the UTGI product.





Depreciation
and amortization expense increased by approximately $15,000 for the three-
months ended February 28, 2009 to approximately $137,000 as compared to
approximately $122,000 for the same period in fiscal 2008.  The
increase was a result of slightly higher depreciation expense due to software
and equipment additions and slightly higher amortization due to additions to
deferred finance costs associated with recent financings.





Interest expense increased by
approximately $219,000 to approximately $462,000 for the three-months ended
February 28, 2009 as compared to approximately $243,000 for the three-months
ended February 29, 2008.  The increase was due to additional
borrowings in May, October and December 2008, and in February 2009.





Interest and other income for the
three-month period ended February 28, 2009 amounted to approximately $1,000, as
compared to $11,000 for the three-month period ended February 29,
2008.  In both fiscal periods, the income was primarily due to
interest earned on amounts on deposit in a restricted cash account.





The mark-to-market adjustment to our
warrant liability resulted in warrant income for the three-month period ended
February 28, 2009 of approximately $2,551,000, which was due to the decrease in
the market value of our common stock from November 30, 2008 to February 28,
2009. During the comparable period of fiscal 2008, we recorded warrant expense
of approximately $2,714,000, which resulted from an increase in the price of our
common stock at February 29, 2008, as compared to the value at November 30,
2007.  We anticipate that our warrant income or expense will continue
to fluctuate in future fiscal periods as the price of our common stock in the
market continues to fluctuate.





Liquidity and Capital
Resources





At February 28, 2009, we had cash and
cash equivalents of approximately $109,000 and negative working capital of
approximately $1,130,000.





Net cash
used in operating activities aggregated approximately $664,000 and $1,322,000 in
the three-month periods ended February 28, 2009 and February 29, 2008,
respectively.  The principal use of cash in the quarter ended February
28, 2009 was a loss from operations of approximately $929,000.  The
principal uses of cash in the quarter ended February 29, 2008 was a loss from
operations of approximately $844,000 and an increase in deposits to suppliers of
approximately $300,000.





15


Net cash
used in investing activities in the three-month period ended February 29, 2008
aggregated approximately $47,000 resulting primarily from expenditures related
to enhancements to our IP telephony software.  There were no such
expenditures in the three-month period ended February 28, 2009.





Net cash
provided by financing activities aggregated approximately $643,000 and
$1,262,000 in the three-month periods ended February 28, 2009 and February 29,
2008, respectively. In fiscal year 2009, cash provided by financing activities
resulted from cash received from a restricted bank account that was funded in
connection with financings on October 15, 2008 and February 18, 2009. In fiscal
year 2008, cash provided by financing activities resulted from cash received
from a restricted bank account that was funded in connection with a financing on
September 28, 2007.





For the
three-months ended February 28, 2009, we had no capital expenditures. We expect
to make equipment purchases of less than $50,000 in the second fiscal quarter of
2009; however such purchases will be dependent on our growth and the
availability of cash or equipment financing.  We expect that other
capital expenditures over the next 12 months will relate primarily to a
continued roll-out of our IP telephony network that will be required to support
our Mobile VoIP customer.





The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of our
company as a going concern.  However, we have sustained net losses
from operations during the past three years, and we have limited
liquidity.  Management anticipates that we will be dependent, for the
near future, on additional capital to fund our operating expenses and
anticipated growth.  The audit report of our independent registered
public accounting firm on our financial statements for the year ended November
30, 2008 contained a paragraph expressing doubt about our ability to continue as
a going concern.  Our operating losses have been funded through the
sale of non-operating assets, the issuance of equity securities and borrowings,
including borrowings from our primary lender on eight separate occasions over
the past four years.  We continually evaluate our cash needs and
growth opportunities and we believe we will require additional equity or debt
financing in order to achieve our overall business objectives. We completed a
$600,000 round of funding with our primary lender on February 18, 2009, that
added an additional $578,755 to our restricted cash account, which amount will
be available to us to fund our operating expenses, subject to certain
restrictions, through June 2009. In connection with such funding, our lender
required us to reduce our overhead and to eliminate certain salaried employees
to cut our negative cash flow before interest and debt payments to approximately
$75,000 a month beginning in March 2009.  As in the past, cash is
released to us from a restricted cash account solely in the discretion of our
lender so that our lender can evaluate the individual items upon which we make
cash expenditures.  Although we are not yet profitable and we are not
generating cash from operations, our lender has indicated verbally that it plans
to continue funding us.  However, such commitment is not in writing,
and we cannot rely on our lender to continue to fund us in the
future.  While we continually look for other financing sources, in the
current economic environment, the procurement of outside funding is extremely
difficult and there can be no assurance that such financing will be available,
or, if available, that such financing will be at a price that will be acceptable
to us.  Our failure to generate sufficient revenues, raise additional
capital, or renegotiate payment terms of our debt would have an adverse impact
on our ability to achieve our longer-term business objectives, and would
adversely affect our ability to continue operating as a going
concern.





16


Item
4.          Controls and
Procedures





(a) Disclosure Controls and
Procedures.   Our management, with the participation of
our chief executive officer/chief financial officer, has evaluated the
effectiveness of our disclosure controls and procedures (as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended  (the  "Exchange Act")) as of the end of the period
covered by this Report.  Based on such evaluation, our chief executive
officer/chief financial officer has concluded that, as of the end of such
period, for the reasons set forth below, our disclosure controls and procedures
were not effective.





(b) Internal Control Over Financial
Reporting.  There have not been any changes in our internal
control over financial reporting  (as such term is defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended
February 28, 2009, except that in February 2009 we terminated our controller as
part of a cost-reduction plan, which could have an adverse effect on our
internal control over financial reporting.  We have no full-time
bookkeeping or financial reporting personnel and we are attempting to cover this
function with temporary consultants and our Chief Executive
Officer.  As initially reported in fiscal 2005, we already had a lack
of staffing within our accounting department, both in terms of the small number
of employees performing our financial and accounting functions and their lack of
experience to account for complex financial transactions.  This lack
of staffing continued throughout fiscal 2008 and, as of the date of this Report,
we have fewer employees in our accounting department than we had at the end of
our fiscal year, resulting in a further decrease in our ability to segregate
duties among our employees.  Management believes the lack of
qualified, accounting and financial personnel amounts to a material weakness in
our internal control over financial reporting and, as a result, at November 30,
2008 and on the date of this Report, our internal control over financial
reporting is not effective. We will continue to evaluate the employees involved,
the need to engage outside consultants with technical and accounting-related
expertise to assist us in accounting for complex financial transactions and the
hiring of additional accounting staff with complex financing
experience.  However, we will be unable to remedy this material
weakness in our internal controls until we have the financial resources that
allow us to hire additional qualified employees.





Our
management, including our chief executive officer/chief financial officer, does
not expect that our disclosure controls and procedures or our internal control
over financial reporting are or will be capable of preventing or detecting all
errors or all fraud.  Any control system, no matter how well designed
and operated, can provide only reasonable, not absolute, assurance that the
control system’s objectives will be met. The design of a control system must
reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Further, because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that misstatements, due to error or fraud will not
occur or that all control issues and instances of fraud, if any, within the
company have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty and that breakdowns may occur
because of simple error or mistake. Controls can also be circumvented by the
individual acts of some persons, by collusion of two or more people, or by
management override of controls. The design of any system of controls is based
in part on certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions. Projections of any evaluation of controls
effectiveness to future periods are subject to risk.





17




PERVASIP
CORP.


PART II-OTHER
INFORMATION





Item
2.     Unregistered Sales of Equity Securities and Use
of Proceeds





On
February 18, 2009 we issued secured promissory notes in an aggregate principal
amount of $600,000 and warrants to purchase 26,500,000 shares of our common
stock, which is incorporated by reference to our Current Report on Form 8-K
dated February 18, 2009.  The notes and the warrants were issued in
reliance on the exemption from registration provided by Section 4(2) of the
Securities Act of 1933 (the “Act”) to investors that each represented to us that
they were an “accredited investor,” as defined in the Act.











Item
6.     Exhibits





Exhibit
                      Number
                    Description31.1
                    Certification
      of our Chief Executive Officer and Chief Financial Officer, Paul H. Riss,
      Pursuant to 18 U.S.C. 1350 (Section 302 of the Sarbanes-Oxley Act of
      2002)32.1
                    Certification
      of our Chief Executive Officer and Chief Financial Officer, Paul H. Riss,
      Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of
      2002)













18








SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.




Pervasip
      Corp.Date:  April 20,
      2009
                  By:
                  /s/ Paul
      H. RissPaul
      H. Riss
                    Chief
      Executive Officer
                    (Principal
      Financial and
                    Accounting
      Officer)




19




EXHIBIT
INDEX







Exhibit
                        Number
                      Description31.1
                      Certification
      of our Chief Executive Officer and Chief Financial Officer, Paul H. Riss,
      Pursuant to 18 U.S.C. 1350 (Section 302 of the Sarbanes-Oxley Act of
      2002)32.1
                      Certification
      of our Chief Executive Officer and Chief Financial Officer, Paul H. Riss,
      Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of
      2002)
    20