UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-Q
 
 [X]
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
 For
the quarterly period ended: March 31, 2009
  OR
 
 [  ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
 For
the transition period from ______ to ______
 
 Commission
File No. 333-145134
 
 WiTel
Corp.
 (Exact
Name of Registrant as Specified in its Charter)
 
 Nevada
                (State
      or other Jurisdiction of Incorporation or Organization)
                
                1800
      Century Park East, Suite 600
                Los
      Angeles, CA
                (Address
      of Principal Executive Offices)
              20-8734462
                (I.R.S.
      Employer Identification No.)
                
                
                90067
                (Zip
      Code)
 
 Issuer’s
telephone number: (403)
998-1677
  Indicate
by check mark whether the Registrant (1) has filed all reports required 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  
    No  
  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 [_] No
[_]
 
 Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non–accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b–2 of the Exchange Act. (Check
one):
 
 Large
accelerated filer   ̈                    Accelerated
filer   ̈                    Non–Accelerated
filer   ̈ Small Business
Issuer  x
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b–2 of the Exchange Act).  Yes   ̈    No  x
 
 Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
 
 Class
                  
                  Outstanding at  May 13,  2009Common stock,
      $0.001 par value
                  
                  7,008,333
 
  1
  WITEL
CORP.
 INDEX
TO FORM 10-Q FILING
  FOR
THE THREE MONTHS ENDED MARCH 31, 2009
  
 TABLE
OF CONTENTS
  
  PagePART
      I - FINANCIAL INFORMATIONItem 1.
                                        
                                        Financial
      Statements (unaudited)Balance
      Sheets
                                        
                                        4Statements
      of Operations
                                        
                                        5Statements
      of Cash Flows
                                        
                                        6Notes
      to Financial Statements
                                        
                                        7Item 2.
                                        
                                        Management
      Discussion & Analysis of Financial Condition and Results of
      Operations
                                        
                                        10Item 3
                                        
                                        Quantitative
      and Qualitative Disclosures About Market Risk
                                        
                                        14Item 4.
                                        
                                        Controls
      and Procedures
                                        
                                        14PART
      II - OTHER INFORMATIONItem 1.
                                        
                                        Legal
      Proceedings
                                        
                                        16Item 1A
                                        
                                        Risk
      Factors
                                        
                                        16Item 2.
                                        
                                        Unregistered
      Sales of Equity Securities and Use of Proceeds
                                        
                                        18Item 3.
                                        
                                        Defaults
      Upon Senior Securities
                                        
                                        18Item 4.
                                        
                                        Submission
      of Matters to a Vote of Security Holders
                                        
                                        18Item 5.
                                        
                                        Other
      information
                                        
                                        18Item 6.
                                        
                                        Exhibits
                                        
                                        19SignaturesCERTIFICATIONSExhibit
      31 – Management certification
                                        
                                        20-21Exhibit
      32 – Sarbanes-Oxley Act
                                        
                                        22-23
   
 2
  PART
I FINANCIAL INFORMATION
 
 General
 
 The
accompanying reviewed financial statements have been prepared in accordance with
the instructions to Form 10-Q. Therefore, they do not include all information
and footnotes necessary for a complete presentation of consolidated financial
position, results of operations, cash flow, and stockholders' equity in
conformity with generally accepted accounting principles. Except as disclosed
herein, there has been no material change in the information disclosed in the
notes to the financial statements included in the Company's registration
statement on Form 10-K for the year ended December 31, 2008 (audited). In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature. Operating
results for the quarter ended March 31, 2009 are not necessarily indicative of
the results that can be expected for the year ending December 31,
2009.
   3
 PART
I – FINANCIAL INFORMATION
  ITEM
1 – FINANCIAL STATEMENTS
 
 WITEL
CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 Balance
Sheet
   March
      31, 2009
                      (unaudited)
                    
                    
                    December
      31, 2008
                      (audited)ASSETSCURRENT
      ASSETSCash
                    
                    $
                    99
      288
                    
                    
                    $
                    138
      280Inventories
      (Note 2)
                    
                    
                    109
      000
                    
                    
                    
                    109
      000Total
      current assets
                    
                    
                    208
      288
                    
                    
                    
                    247
      280TOTAL
      ASSETS
                    
                    $
                    208
      288
                    
                    
                    $
                    247
      280LIABILITIES
      AND SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable
                    
                    
                    33
      468
                    
                    
                    
                    33
      468Total
      current liabilities
                    
                    
                    33
      468
                    
                    
                    
                    33
      468TOTAL
      LIABILITIES
                    
                    
                    33
      468
                    
                    
                    
                    33
      468Stockholders’
      equityCommon
      stock - $.001 par value; 75,000,000 shares authorized,
                    
                    
                    7
      008
                    
                    
                    
                    7
      0087,008,333
      shares issued and outstanding as of March 31, 2009  and December
      31, 2008Additional
      paid-in capital
                    
                    
                    392
      342
                    
                    
                    
                    392
      342Deficit
      accumulated during the development stage
                    
                    
                    (224
      530
                    )
                    
                    
                    (185
      538
                    )TOTAL
      STOCKHOLDERS’ EQUITY
                    
                    
                    174
      820
                    
                    
                    
                    213
      812TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                    
                    $
                    208
      288
                    
                    
                    $
                    247
      280
 
 The accompanying notes are an integral part of these financial
statements.
  4
 WITEL
CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 Statements
of Operations
 (unaudited)
  FrominceptionThree
      months
                    
                    
                    Three
      months
                    
                    
                    February
      20, 2007EndedMarch
      31,
                    
                    
                    EndedMarch
      31,
                    
                    
                    through2009
                    
                    
                    2008
                    
                    
                    March
      31, 2009REVENUES
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    17
      500EXPENSESGeneral
      and administrative
                    
                    $
                    2
      392
                    
                    
                    $
                    7
      533
                    
                    
                    $
                    60
      797Research
      and Development
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    9
      000Website
      development
                    
                    2
      000
                    
                    
                    2
      000
                    
                    
                    
                    19
      933Software
      development
                    
                    
                    -
                    
                    
                    
                    5
      000
                    
                    
                    
                    18
      150Professional
      fees
                    
                    
                    34
      600
                    
                    
                    
                    17
      000
                    
                    
                    
                    130
      400Stock
      based compensation
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    3
      750Provision
      for Income Taxes
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Net
      loss
                    
                    $
                    (38
      992
                    )
                    
                    $
                    (31
      533
                    )
                    
                    $
                    (224
      530
                    )Basic
      and diluted loss per common share
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.006
                    )
                    
                    
                    (0.01
                    )Weighted
      average number of common shares outstanding used to calculate basic and
      diluted loss per share
                    
                    
                    7 008
      000
                    
                    
                    
                    5
      573 856
 
  The
accompanying notes are an integral part of these financial
statements
 
 5
 WITEL
CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 Statements
of Cash Flows
 (unaudited)
  From
      InceptionFor
      the Three
                          
                          
                          For
      the Three
                          
                          
                          February
      20, 2007Months
      Ended
                          
                          
                          Months
      Ended
                          
                          
                          throughMarch
      31,
                          
                          
                          March
      31,
                          
                          
                          March
      31,2009
                          
                          
                          2008
                          
                          
                          2009OPERATING
      ACTIVITIES:Net
      loss
                          
                          $
                          (38
      992
                          )
                          
                          $
                          (31
      533
                          )
                          
                          $
                          (224
      530
                          )Adjustments
      to reconcile net loss to cashprovided
      by (used for) operating activities:Depreciation
      and amortization
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Stock
      based compensation
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          3
      750Changes
      in assets and liabilities:Inventories
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (109
      000
                          )Accounts
      payable
                          
                          
                          -
                          
                          
                          
                          7
      100
                          
                          
                          
                          33
      468Net
      cash provided (used) by operating activities
                          
                          
                          (38
      992
                          )
                          
                          
                          (24
      433
                          )
                          
                          
                          (296
      312
                          )INVESTING
      ACTIVITIES:Website
      development
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Accumulated
      amortization, website
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Net
      cash provided by (used for) investing activities
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -FINANCING
      ACTIVITIES:Capital
      stock
                          
                          
                          -
                          
                          
                          
                          150
                          
                          
                          
                          7
      008Stock
      based compensation
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (3
      750
                          )Paid-in
      capital
                          
                          
                          -
                          
                          
                          
                          49
      850
                          
                          
                          
                          392
      342Net
      cash used for financing activities
                          
                          
                          -
                          
                          
                          
                          50
      000
                          
                          
                          
                          395
      600Net
      increase (decrease) in cash and cash equivalents
                          
                          
                          38
      992
                          
                          
                          
                          25
      567
                          
                          
                          
                          99
      288Cash and cash
      equivalents, beginning of period
                          
                          
                          138
      280
                          
                          
                          
                          13
      936
                          
                          
                          
                          -Cash and cash
      equivalents, end of period
                          
                          $
                          99
      288
                          
                          
                          $
                          39
      503
                          
                          
                          $
                          99
      288Supplemental
      disclosure of cash flow informationCash
      paid during the period for Interest
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -Income
      taxes
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
 
 The
accompanying notes are an integral part of these financial
statements
  6
  WITEL
CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES TO FINANCIAL
STATEMENTS (Unaudited)
 March
31, 2009
 
 
 NOTE
1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
  
 WiTel
Corp. (the "Company") is in the initial development stage and has incurred
losses since inception totaling $224,530. The Company was incorporated on
February 20, 2007 in the State of Nevada. The fiscal year end of the Company is
December 31. The Company intends to sell wireless phones that utilizes wireless
internet (Wi-Fi) to deliver calls to its subscribers wherever they are in the
world.
 
 The
ability of the Company to continue as a going concern is dependent on raising
capital to fund its business plan and ultimately to attain profitable
operations. Accordingly, these factors raise substantial doubt as to the
Company's ability to continue as a going concern. The Company is funding its
initial operations by way of issuing Founders' shares and entering into a
private placement offering for 2,250,000 shares at $0.02 per share for proceeds
of $48,600 and 100,000 shares at $0.50 per share for proceeds of $50,000. As of
December 31, 2007, the Company had issued 3,750,000 Founders shares at $0.001
per share for services rendered in the amount of $3,750 and 2,250,000 shares at
$0.02 per share for proceeds of $48,600, which $48,600 has been received by the
Company and 100,000 shares at $0.50 per share for proceeds of $50,000, which has
been received by the Company. As of December 31, 2008, the Company had issued
300,000 shares at $0.33 per share for proceeds of $100,000, which $100,000 has
been received by the Company; 200,000 shares at $0.25 per share for proceeds of
$50,000, which has been received by the Company and 408,000 shares at $0.36 per
share for proceeds of $147,000, which has been received by the
Company.
 
 NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   BASIS
OF PRESENTATION
 
 These
financial statements are presented in United States dollars and have been
prepared in accordance with accounting principles generally accepted in the
United States.
 
 USE
OF ESTIMATES AND ASSUMPTIONS
 
 Preparation
of the financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
 
 INTERIM
FINANCIAL STATEMENTS
 
 The
financial statements for the three months ended March 31, 2009 and March 31,
2008 and for the period from February 20, 2007 (inception) through March 31,
2009, are unaudited. In the opinion of management, such financial statements
include all adjustments (consisting of normal recurring accruals) necessary for
the fair presentation of the financial position and the results of operations.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. These interim
financial statements should be read in conjunction with our audited financial
statements for the period ended December 31, 2008 as reflected in our Form 10-K
filed with the Securities and Exchange Commission.
 
 INVENTORIES
 
 Inventories
are stated at the lower of cost or market. The Company uses the first-in,
first-out method for inventory.
  INCOME
TAXES
 
 The
Company follows the liability method of accounting for income taxes in
accordance with Statements of Financial Accounting Standards ("SFAS") No.109, "Accounting for Income
Taxes." Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax balances. Deferred tax assets and liabilities are measured
using enacted or substantially enacted tax rates expected to apply to the
taxable income in the years in which those differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the date
of enactment or substantive enactment.
 
 7
 NET
LOSS PER SHARE
 
 Basic
loss per share includes no dilution and is computed by dividing loss available
to common stockholders by the weighted average number of common shares
outstanding for the period. Dilutive loss per share reflects the potential
dilution of securities that could share in the losses of the Company. Because
the Company does not have any potentially dilutive securities, diluted loss per
share is equal to basic loss per share.
 
 STOCK-BASED
COMPENSATION
 
 The
Company has not adopted a stock option plan and has not granted any stock
options. The Company granted stock awards, at par value, to its officers,
directors and advisors for services rendered in its formation. Accordingly,
stock-based compensation has been recorded to date. In December 2004, the
Financial Accounting Standards Board ("FASB") issued SFAS No. 123R,
"SHARE-BASED PAYMENT."
SFAS No. 123R establishes standards for the accounting for transactions in which
an entity exchanges its equity instruments for goods or services. It also
addresses transactions in which an entity incurs liabilities in exchange for
goods or services that are based on the fair value of the entity's equity
instruments or that may be settled by the issuance of those equity instruments.
SFAS No. 123R focuses primarily on accounting for transactions in which an
entity obtains employee services in share-based payment transactions. SFAS No.
123R requires that the compensation cost relating to share-based payment
transactions be recognized in financial statements. That cost will be measured
based on the fair value of the equity or liability instruments issued. Public
entities that file as small business issuers will be required to apply SFAS No.
123R in the first interim or annual reporting period that begins after December
15, 2005.
 
 In March
2005, the SEC staff issued Staff Accounting Bulletin ("SAB") No. 107, "SHARE-BASED PAYMENT," to
give guidance on the implementation of SFAS No. 123R. Management will consider
SAB No. 107 during the implementation of SFAS No. 123R.
 
 RESEARCH
AND DEVELOPMENT COSTS
 
 Research
and development costs are expenses as incurred.
 
 RECENT
ACCOUNTING PRONOUNCEMENTS
 
 In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
“Accounting for Financial Guarantee Insurance Contracts-and interpretation of
FASB Statement No. 60”.  SFAS No. 163 clarifies how Statement 60
applies to financial guarantee insurance contracts, including the recognition
and measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 has no effect on the
Company’s financial position, statements of operations, or cash flows at this
time.
 
 In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162,
“The Hierarchy of Generally Accepted Accounting Principles”.  SFAS No.
162 sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB’s amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on
the Company’s financial position, statements of operations, or cash flows at
this time.
 
 In March
2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging Activities—an amendment of
FASB Statement No. 133.  This standard requires companies to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Company has not yet
adopted the provisions of SFAS No. 161, but does not expect it to have a
material impact on its financial position, results of operations or cash
flows.
 
 In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51.  This
statement amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This statement improves
comparability by eliminating that diversity. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 (that is, January 1, 2009, for entities with calendar
year-ends). Earlier adoption is prohibited. The effective date of this statement
is the same as that of the related Statement 141 (revised 2007). It is not
believed that this will have an impact on the Company’s financial position,
results of operations or cash flows.
 
 8
 NOTE
3 - FAIR VALUE OF FINANCIAL INSTRUMENTS
   In
accordance with the requirements of SFAS No. 107, the Company has determined the
estimated fair value of financial instruments using available market information
and appropriate valuation methodologies. The fair value of financial instruments
classified as current assets or liabilities approximate their carrying value due
to the short-term maturity of the instruments.
 
 NOTE
4 - CAPITAL STOCK
   The
Company's capitalization is 75,000,000 common shares with a par value of $0.001
per share. No preferred shares have been authorized or issued.
 
 As of
February 28, 2007, the Company issued 3,750,000 shares of its common stock at
$0.001 per share for services rendered in the amount of $3,750 to its directors,
professionals and others.
 
 PRIVATE
PLACEMENTS
 
 In April
2007, the Company authorized a private placement offering of up to 2,250,000
shares of common stock at a price of $0.02 per share for a total amount of
$48,600. As of May 1, 2007, the Company had issued 2,250,000 shares at $0.02 per
share and received $48,600 from the sale of its private placement stock to 18
accredited investors in a transaction that is exempt from the registration
requirements of the Securities Act of 1933, as amended (the “Act”) in reliance
on Section 4(2) of the Act. In October 2007, the Company authorized and issued
100,000 shares at $0.50 per share for total proceeds of $50,000 to an
institutional investor in an exempt transaction in reliance on Section 4(2) and
Regulation S of the Act. In March 2008, the Company authorized and issued
150,000 shares at $0.33 per share for total proceeds of $50,000 to an
institutional investor in an exempt transaction in reliance on Section 4(2) and
Regulation S of the Act. In July 2008, the Company authorized and issued 150,000
shares at $0.33 per share for total proceeds of $50,000 to an institutional
investor in an exempt transaction in reliance on Section 4(2) and Regulation S
of the Act. In August 2008, the Company authorized and issued 200,000 shares at
$0.25 per share for total proceeds of $50,000 to an institutional investor in an
exempt transaction in reliance on Section 4(2) and Regulation S of the Act. In
December 2008, the Company authorized and issued 408,000 shares at $0.36 per
share for total proceeds of $147,000 to an institutional investor in an exempt
transaction in reliance on Section 4(2) and Regulation S of the
Act.
 
 NOTE
5 - INCOME TAXES
   As of
March 31, 2009, the Company had net operating loss carry forwards of
approximately $224,530 that may be available to reduce future years' taxable
income and will expire commencing in 2026. Availability of loss usage is subject
to change of ownership limitations under Internal Revenue Code 382. Future tax
benefits which may arise as a result of these losses have not been recognized in
these financial statements, as their realization is determined not likely to
occur and, accordingly, the Company has recorded a full valuation allowance for
the deferred tax asset relating to these tax loss carry forwards.
 
 9
 ITEM
2 – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS
 
 The
following is management's discussion and analysis of certain significant factors
that have affected our financial condition, results of operations and cash flows
during the periods included in the accompanying unaudited financial statements.
This discussion should be read in conjunction with the financial statements and
notes included in our Annual Report on Form 10-K (SEC file no.
333-145134).
 
 Special
Note Regarding 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. The Act
provides a safe harbor for forward-looking statements to encourage companies to
provide prospective information about themselves so long as they identify these
statements as forward-looking and provide meaningful cautionary statements
identifying important factors that could cause actual results to differ from the
projected results. All statements, other than statements of historical fact,
that we make in this Quarterly Report on Form 10-Q are forward-looking. The
words "anticipates," "believes," "expects," "intends," "will continue,"
"estimates," "plans," "projects," the negative of these terms and similar
expressions are intended to identify forward-looking
statements.  However, the absence of these words does not mean the
statement is not forward-looking.
 
 Forward-looking
statements involve risks, uncertainties or other factors which may cause actual
results to differ materially from the future results, performance or
achievements expressed or implied by the forward-looking statements. These
statements are based on our management's beliefs and assumptions, which in turn
are based on currently available information. Certain risks, uncertainties or
other important factors are detailed in this Quarterly Report on Form 10-Q and
may be detailed from time to time in other reports we file with the Securities
and Exchange Commission, including on Forms 8-K and 10-K.
 
 Examples
of forward looking statements in this Quarterly Report on Form 10-Q include, but
are not limited to, our expectations regarding our ability to generate
operating  cash flows and to fund our working capital and capital
expenditure requirements. Important assumptions relating to the forward-looking
statements include, among others, assumptions regarding demand for our products,
pricing levels, the timing and cost of capital expenditures, competitive
conditions and general economic conditions. These assumptions could prove
inaccurate. Although we believe that the estimates and projections reflected in
the forward-looking statements are reasonable, our expectations may prove to be
incorrect. Important factors that could cause actual results to differ
materially from the results and events anticipated or implied by such
forward-looking statements include:
 
 ·
              the
      risks of a development stage
company;
 ·
              management’s
      plans, objectives and budgets for its future operations and future
      economic performance;
 ·
              capital
      budget and future capital
requirements;
 ·
              meeting
      future capital needs;
 ·
              our
      dependence on management and the need to recruit additional
      personnel;
 ·
              limited
      trading for our common stock
 ·
              the
      level of future expenditures;
 ·
              impact
      of recent accounting
pronouncements;
 ·
              the
      outcome of regulatory and litigation matters;
  and
 ·
              the
      assumptions described in this report underlying such forward-looking
      statements. Actual results and developments may materially differ from
      those expressed in or implied by such statements due to a number of
      factors, including:
 ·
              those
      described in the context of such forward-looking
    statements;
 ·
              future
      product development and marketing
costs;
 ·
              changes
      in our pricing plans;
 ·
              timely
      development and acceptance of our
products;
 ·
              the
      markets of our domestic operations;
 ·
              the
      impact of competitive products and
pricing;
 ·
              the
      political, social and economic climate in which we conduct operations;
      and
 ·
              the
      risk factors described in other documents and reports filed with the
      Securities and Exchange Commission, including our Registration Statement
      on Form SB-2/A (SEC File No.
333-145134).
 
 We
operate in a very competitive and rapidly changing environment. New risks emerge
from time to time. It is not possible for us to predict all of those risks, nor
can we assess the impact of all of those risks on our business or the extent to
which any factor may cause actual results to differ materially from those
contained in any forward-looking statement. We believe these forward-looking
statements are reasonable. However, you should not place undue reliance on any
forward-looking statements, which are based on current expectations. Further,
forward-looking statements speak only as of the date they are made, and unless
required by law, we expressly disclaim any obligation or undertaking to update
publicly any of them in light of new information or future events.
 
 In this
Quarterly Report on Form 10-Q, "Company," "the Company," "us," and "our" refer
to WiTel Corp., a Nevada corporation, unless the context requires
otherwise.
 
 10
 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 normal course of business. The 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 might be necessary
should we be unable to continue as a going concern. Our continuation as a going
concern is dependent upon our ability to generate sufficient cash flows to meet
our obligations on a timely basis.
 
 We are
embarking on efforts to raise equity financing. However, there can be no
assurance that we will be able to obtain financing or that if such financing
were available, whether the terms or conditions would be acceptable to
us.
 
 Although
we believe the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, performance or achievement. We
undertake no obligation to revise or publicly release the results of any
revisions to these forward-looking statements. If we do update or correct one or
more forward-looking statements, investors and others should not conclude that
we will make additional updates or corrections to other forward-looking
statements.
 
 We intend
the following discussion to assist in the understanding of our financial
position and our results of operations for the three months ended March 31, 2009
and March 31, 2008 and for the period from February 20, 2007 (inception) through
March 31, 2009. You should refer to the Financial Statements and related Notes
in conjunction with this discussion.
 
 Results
of Operations
 
 We are a
development-stage company organized to enter into the wireless services industry
by selling wireless phones, accessories and services, worldwide, utilizing
“Wi-Fi.” We have recently commenced business operations and have not generated
any revenues from operations but only minimal revenue from the discharge of
related party indebtedness.
 
 In our
annual report on Form 10-K, our auditors have issued a "going concern" opinion.
This means that there is substantial doubt that we can continue as an on-going
business for the next twelve months unless we obtain additional capital to pay
our bills. This is because we have not generated any revenues from operations
and we do not anticipate any revenues from operations until we have completed
our business plan and have raised additional financing. Accordingly, we must
raise cash from sources other than from the sale of our products and services.
Our only other source for cash at this time is investments by others in us. We
must raise cash to implement our business strategy and stay in business. Our
ability to develop new products and services will determine our success or
failure.
 
 As of
March 31, 2009, we had $99,288 cash on hand and in the bank. Management does not
believe this amount will satisfy our cash requirements for the next three
months. We plan to satisfy our future cash requirements - primarily the working
capital required for the development of our e-commerce systems and marketing
campaign and to offset legal and accounting fees - by additional equity
financing.  This will likely be in the form of private placements of
common stock.
 
 Management
believes that if subsequent private placements are successful, we will generate
sales revenue within the following twelve months thereof. However, additional
equity financing may not be available to us on acceptable terms or at all, and
thus we could fail to satisfy our future cash requirements.
 
 If we are
unsuccessful in raising the additional proceeds through a private placement
offering, we will then have to seek additional funds through debt financing,
which would be highly difficult for a new development stage company with nominal
assets to secure. Therefore, we are highly dependent upon the success of a
future private placement offering and failure thereof would result in our having
to seek capital from other resources such as debt financing, which may not even
be available to us. However, if such financing were available, because we are a
development stage company with no operations to date, we would likely have to
pay additional costs associated with high risk loans and be subject to an above
market interest rate. At such time these funds are required, management would
evaluate the terms of such debt financing and determine whether the business
could sustain operations and growth and manage the debt load. If we cannot raise
additional proceeds via a private placement of our common stock or secure debt
financing we would be required to cease business operations. As a result,
investors in our common stock would lose all of their investment.
 
 The
staged procurement of our wireless systems will continue over the next 12
months. Other than purchasing our products and services, we do not anticipate
obtaining any further products or services. We do not expect the purchase or
sale of plant or any significant equipment and we do not anticipate any change
in the number of our employees.
 
 We have
no current plans, preliminary or otherwise, to merge with any other
entity.
 
 Management
does not plan to hire additional employees at this time. Our officers and
directors will be responsible for the initial product and service sourcing. We
have hired an independent consultant to build the site. We also intend to hire
sales representatives initially on a commission only basis to keep
administrative overhead to a minimum.
 
 11
  Three
months ended March 31, 2009 compared with the three months ended March 31,
2008
 
 Net sales
for the three months ended March 31, 2009 were $0, with a change of $0 or 0%
from net sales of $0 for the three months ended March 31, 2008. The lack of
change is due to our development stage and that we have yet to commence
sales.
 
 Operating
expenses include general and administrative expenses, research and development
expenses, website development expenses, software development expenses and
professional fees. In total, operating expenses increased $7,459 or 23.6% to
$38,992 for the three months ended March 31, 2009 from $31,533 for the three
months ended March 31, 2008. The components of operating expenses are discussed
below.
 
 
 ·
                  General and administrative
      expenses decreased by $5,141 between 2009 and 2008 to $2,392 from $7,533.
      General and administrative expenses as a percentage of net sales in not
      meaningful. The decrease between 2009 and 2008 is primarily attributable
      to decreases in various office expenses.·
                  Research and development expenses
      were not incurred in the three months ended March 31, 2009 or
      2008.
 
 ·
              Website development increased $0,
      to $2,000 in 2009 from $2,000 in 2008. Website development expenses as a
      percent of net sales are not
meaningful.
  ·
              Software development decreased
      $5,000 between 2009 and 2008 to $5,000 from $0. This decrease was
      primarily due to costs associated with development our operating system
      for our telephones. Software development expenses as a percent of net
      sales is not meaningful.
 
 ·
              Professional fees increased
      $17,600 between 2009 and 2008 to $34,600 from $17,000. This increase was
      primarily due to the increase in our regulatory filings in 2009.
      Professional fees as a percentage of net sales is not
      material.
 
 ·
                  Stock based compensation was not
      incurred in the comparable periods in 2009 and
  2008·
                  Net loss increased by $7,459
      resulting in a loss of $38,992 for the three months ended March 31, 2009
      from a net loss of $31,533 for the three months ended March 31, 2008. As a
      percentage of net sales, net loss is not
  meaningful.
 
 Income
Tax Expense (Benefit)
 
 We have a
prospective income tax benefit resulting from a net operating loss carryforward
and start up costs that may offset any future operating profit.
 
 Impact
of Inflation
 
 Management
believes that inflation has had a negligible effect on operations over the past
quarter.
 
 Capital
Expenditures
 
 We  expended
no amounts on capital expenditures for the three months ended March 31, 2009 and
March 31, 2008, respectively.
 
 Liquidity
and Capital Resources
 
 We had
net losses of $38,992, $31,533 and $224,530 for the three months ended March 31,
2009, March 31, 2008 and for the period from February 20, 2007 (inception)
through March 31, 2009, respectively.
 
 Cash flow
used in operating activities was $38,992, $24,433 and $296,312 for the three
months ended March 31, 2009, March 31, 2008 and for the period from February 20,
2007 (inception) through March 31, 2009, respectively. Cash flow used in
operating activities in the current period can be attributed to our purchase of
inventory.
  Cash
flows used in investing activities was $0, $0 and $0 for the three months ended
March 31, 2009, March 31, 2008 and for the period from February 20, 2007
(inception) through March 31, 2009, respectively. Cash flow used in investing
activities in the prior comparable period was for website
development.
 
 Cash flow
provided from financing activities was $0, $50,000 and $395,600 for the three
months ended March 31, 2009, March 31, 2008 and for the period from February 20,
2007 (inception) through March 31, 2009, respectively. Cash flow provided by
financing activities in the current period can be attributed to subscriptions
for shares of common stock.
 
 12
 We do not
now have funds sufficient for pursuing our plan of operation, but we are in the
process of trying to procure funds sufficient to fund our operations until we
are able to finance our operations through cash flow. There can be no assurance
that we will be able to procure funds sufficient for such purpose. If operating
difficulties or other factors (many of which are beyond our control) delay our
realization of revenues or cash flows from operations, we may be limited in our
ability to pursue our business plan. Moreover, if our resources from obtaining
additional capital or cash flows from operations, once we commence them, do not
satisfy our operational needs or if unexpected expenses arise due to
unanticipated pressures or if we decide to expand our business plan beyond its
currently anticipated level or otherwise, we will require additional financing
to fund our operations, in addition to anticipated cash generated from our
operations. Additional financing might not be available on terms favorable to
us, or at all. If adequate funds were not available or were not available on
acceptable terms, our ability to fund our operations, take advantage of
unanticipated opportunities, develop or enhance our business or otherwise
respond to competitive pressures would be significantly limited. In a worst case
scenario, we might not be able to fund our operations or to remain in business,
which could result in a total loss of our stockholders' investment. If we raise
additional funds through the issuance of equity or convertible debt securities,
the percentage ownership of our stockholders would be reduced, and these newly
issued securities might have rights, preferences or privileges senior to those
of existing stockholders.
 
 We have
had no formal long term lines of credit or other bank financing arrangements as
of March 31, 2009.
 
 We have
no current plans for the purchase or sale of any plant or
equipment.
 
 We have
no current plans to make any changes in the number of employees.
 
 Off-Balance
Sheet Arrangements
 
 None.
 
 CRITICAL
ACCOUNTING POLICIES
 
 The
Securities and Exchange Commission issued Financial Reporting Release No. 60,
"Cautionary Advice Regarding Disclosure about Critical Accounting Policies"
suggesting that companies provide additional disclosure and commentary on their
most critical accounting policies. In Financial Reporting Release No. 60, the
Securities and Exchange Commission has defined the most critical accounting
policies as the ones that are most important to the portrayal of a company's
financial condition and operating results, and require management to make its
most difficult and subjective judgments, often as a result of the need to make
estimates of matters that are inherently uncertain. Based on this definition, we
have identified the following significant policies as critical to the
understanding of our condensed financial statements. The preparation of our
condensed financial statements 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 condensed
financial statements and the reported amounts of expenses during the reporting
periods. Areas where significant estimation judgments are made and where actual
results could differ materially from these estimates are the carrying amount of
our intangible assets.
 
 We
believe the following is among the most critical accounting policies that impact
our financial statements:
 
 We
evaluate impairment of our long-lived assets by applying the provisions of SFAS
No. 144. In applying those provisions, we have not recognized any impairment
charge on our long-lived assets during the three-months ended March 31,
2009.
 
 We
suggest that our significant accounting policies, as described in our financial
statements in the Summary of Significant Accounting Policies, be read in
conjunction with this Management's Discussion and Analysis of Financial
Condition and Results of Operations.
 
 -
Revenue Recognition
 
 Once
sales commence, the Company will recognize revenue from the sale of its products
upon shipment, at which time title passes. The Company will estimate an
allowance for sales returns based on historical experience with product returns
once products sales commence.
 
 -
Inventory
 
 We value
our inventory at the lower of the actual cost to purchase the inventory or the
current estimated market value of the inventory. We regularly review inventory
quantities on hand and record a provision for excess and obsolete inventory
based primarily on our estimated forecast of product demand and production
requirements for the future.
 
 Additionally,
our estimates of future product demand may prove to be inaccurate, in which case
we may have understated or overstated the provision required for excess and
obsolete inventory. In the future, if our inventory is determined to be
overvalued, we would be required to recognize such costs in our cost of goods
sold at the time of such determination. Likewise, if our inventory is determined
to be undervalued, we may have over-reported our costs of goods sold in previous
periods and would be required to recognize such additional operating income at
the time of sale.
 
 13
 Although
we make every effort to ensure the accuracy of our forecasts of future product
demand, any significant unanticipated changes in demand or technological
developments could have a significant impact on the value of our inventory and
our reported operating results. We have experienced, and may continue to
experience, significant fluctuations in sales and operating - results from
quarter to quarter.
 
 -
Contingencies
 
 We
determine whether to disclose and accrue for loss contingencies based on an
assessment of whether the risk of loss is remote, reasonably possible or
probable and where reasonable estimates can be made of the amount of potential
loss, of the materiality of the loss contingency, in accordance with Statement
of Financial Accounting Standards No. 5 ("SFAS 5"), "Accounting for
Contingencies." We develop our assessment in consultation with outside advisors
and is based on an analysis of possible outcomes under various strategies. Loss
contingency assumptions involve judgments that are inherently subjective and
frequently involve matters that are in litigation, which by its nature is
unpredictable. We believe that our loss contingency assumptions are sound, but
because of the subjectivity involved and the unpredictable nature of the subject
matter at issue, our assumptions may prove to be incorrect, which could
materially impact our consolidated financial statements in future
periods.
 
 WHERE YOU CAN FIND MORE
INFORMATION
 
 You are
advised to read this Form 10-Q in conjunction with other reports and documents
that we file from time to time with the SEC. In particular, please read our
Quarterly Reports on Form 10-Q, Annual report on Form 10-K, and Current Reports
on Form 8-K that we file from time to time. You may obtain copies of these
reports directly from us or from the SEC at the SEC’s Public Reference Room at
100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about
obtaining access to the Reference Room by calling the SEC at 1-800-SEC-0330. In
addition, the SEC maintains information for electronic filers at its website
http://www.sec.gov.
 
 Item
3. Quantitative and Qualitative Disclosures about Market Risk
 
 We do not
hold any derivative instruments and do not engage in any hedging
activities.
 
 Item
4. Controls and Procedures
 
 a)
Evaluation of Disclosure Controls and Procedures
 
 Our Chief
Executive Officer and Chief Financial Officer evaluated the effectiveness of our
disclosure controls and procedures as of the end of the period covered by this
report. Based on that evaluation, Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures as of the end of
the period covered by this report were effective such that the information
required to be disclosed by us in reports filed under the Securities Exchange
Act of 1934 is (i) recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms and (ii) accumulated and
communicated to the Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding disclosure. A controls system
cannot provide absolute assurance, however, that the objectives of the controls
system are met, and no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within a company have
been detected.
 
 Our Chief
Executive Officer and Chief Financial Officer is responsible for establishing
and maintaining adequate internal control over financial reporting (as defined
in Rule 13a-15(f) under the Exchange Act). Our internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with accounting principles generally
accepted in the United States.
 
 Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance of achieving their control
objectives. Furthermore, smaller reporting companies face additional
limitations. Smaller reporting companies employ fewer individuals and find it
difficult to properly segregate duties. Often, one or two individuals control
every aspect of the Company's operation and are in a position to override any
system of internal control. Additionally, smaller reporting companies tend to
utilize general accounting software packages that lack a rigorous set of
software controls.
 
 Our Chief
Executive Officer and Chief Financial Officer evaluated the effectiveness of the
Company's internal control over financial reporting as of March 31, 2009. In
making this assessment, our Chief Executive Officer and Chief Financial Officer
used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control -- Integrated Framework. Based on
this evaluation, our Chief Executive Officer and Chief Financial Officer,
concluded that, as of March 31, 2009, our internal control over financial
reporting was effective.
 
 14
 
 b)
Changes in Internal Control over Financial Reporting.
 
 During
the Quarter ended March 31, 2009, there was no change in our internal control
over financial reporting (as such term is defined in Rule 13a-15(f) under the
Exchange Act) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
 
 LACK
OF INDEPENDENT BOARD OF DIRECTORS AND AUDIT COMMITTEE
 
 Management
is aware that an audit committee composed of the requisite number of independent
members along with a qualified financial expert has not yet been
established.  Considering the costs associated with procuring and
providing the infrastructure to support an independent audit committee and the
limited number of transactions, Management has concluded that the risks
associated with the lack of an independent audit committee are not
justified.  Management will periodically reevaluate this
situation.
 
 LACK
OF SEGREGATION OF DUTIES
 
 Management
is aware that there is a lack of segregation of duties at the Company due to the
small number of employees dealing with general administrative and financial
matters. However, at this time management has decided that considering the
abilities of the employees now involved and the control procedures in place, the
risks associated with such lack of segregation are low and the potential
benefits of adding employees to clearly segregate duties do not justify the
substantial expenses associated with such increases.  Management will
periodically reevaluate this situation
 
 15
 PART
II -- OTHER INFORMATION
 
 Item
1. Legal Proceedings
 
 The
Company is not a party to any litigation and, to its knowledge, no action, suit
or proceeding has been threatened against the Company.
 
 Item
1A. Risk Factors
  An investment in our common stock
involves a high degree of risk. You should carefully consider the following
information about these risks, together with the other information contained in
this Quarterly Report on Form 10-Q, before investing in our common stock. If any
of the events anticipated by the risks described below occur, our results of
operations and financial condition could be adversely affected which could
result in a decline in the market price of our common stock, causing you to lose
all or part of your investment.We have updated the risk factors
previously disclosed in our Annual Report on Form 10–K for the year ended
December 31, 2008, which was  filed with the Securities and Exchange
Commission on April 3, 2009 (the “Fiscal 2008 10–K”). We believe there are no
changes that constitute material changes from the risk factors previously
disclosed in the Fiscal 2008 10–K except as updated and disclosed
below.
 
 Our
Common Stock Is Subject To Penny Stock Regulation
 
 Our
shares are subject to the provisions of Section 15(g) and Rule 15g-9 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly
referred to as the "penny stock" rule. Section 15(g) sets forth certain
requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates
the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.
The Commission generally defines penny stock to be any equity security that has
a market price less than $5.00 per share, subject to certain exceptions. Rule
3a51-1 provides that any equity security is considered to be penny stock unless
that security is: registered and traded on a national securities exchange
meeting specified criteria set by the Commission; authorized for quotation on
the NASDAQ Stock Market; issued by a registered investment company; excluded
from the definition on the basis of price (at least $5.00 per share) or the
registrant's net tangible assets; or exempted from the definition by the
Commission. Since our shares are deemed to be "penny stock", trading in the
shares will be subject to additional sales practice requirements on
broker/dealers who sell penny stock to persons other than established customers
and accredited investors.
 
 FINRA
Sales Practice Requirements May Also Limit A Stockholder's Ability To Buy And
Sell Our Stock.
  In
addition to the “penny stock” rules described above, the Financial Industry
Regulatory Authority (FINRA) has adopted rules that require that in recommending
an investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior to
recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer's financial status, tax status, investment objectives and
other information. Under interpretations of these rules, FINRA believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. FINRA requirements make it more difficult
for broker-dealers to recommend that their customers buy our common stock, which
may limit your ability to buy and sell our stock and have an adverse effect on
the market for our shares.
 
 We
May Not Have Access To Sufficient Capital To Pursue Our Business And Therefore
Would Be Unable To Achieve Our Planned Future Growth.
  We intend
to pursue a growth strategy that includes development of the Company business
and technology.  Currently we have limited capital which is
insufficient to pursue our plans for development and growth.  Our
ability to implement our growth plans will depend primarily on our ability to
obtain additional private or public equity or debt financing.  We are
currently seeking additional capital.  Such financing may not be
available at all, or we may be unable to locate and secure additional capital on
terms and conditions that are acceptable to us.  Our failure to obtain
additional capital will have a material adverse effect on our
business.
 
 Nevada  Law
And Our Articles Of Incorporation Protect Our Directors From Certain Types Of
Lawsuits, Which Could Make It Difficult For Us To Recover Damages From Them In
The Event Of A Lawsuit.
  Nevada
law provides that our directors will not be liable to our company or to our
stockholders for monetary damages for all but certain types of conduct as
directors. Our Articles of Incorporation require us to indemnify our directors
and officers against all damages incurred in connection with our business to the
fullest extent provided or allowed by law. The exculpation provisions may have
the effect of preventing stockholders from recovering damages against our
directors caused by their negligence, poor judgment or other circumstances. The
indemnification provisions may require our company to use our assets to defend
our directors and officers against claims, including claims arising out of their
negligence, poor judgment, or other circumstances.
  16
  Because We Are Quoted On The OTCBB
Instead Of An Exchange Or National Quotation System, Our Investors May Have A
Tougher Time Selling Their Stock Or Experience Negative Volatility On The Market
Price Of Our Stock.
  Our
common stock is traded on the OTCBB. The OTCBB is often highly
illiquid.  There is a greater chance of volatility for securities that
trade on the OTCBB as compared to a national exchange or quotation system. This
volatility may be caused by a variety of factors, including the lack of readily
available price quotations, the absence of consistent administrative supervision
of bid and ask quotations, lower trading volume, and market conditions.
Investors in our common stock may experience high fluctuations in the market
price and volume of the trading market for our securities. These fluctuations,
when they occur, have a negative effect on the market price for our securities.
Accordingly, our stockholders may not be able to realize a fair price from their
shares when they determine to sell them or may have to hold them for a
substantial period of time until the market for our common stock
improves.
  Failure To Achieve And Maintain
Effective Internal Controls In Accordance With Section 404 Of The
Sarbanes-Oxley Act Could Have A Material Adverse Effect On Our Business And
Operating Results.
  It may be
time consuming, difficult and costly for us to develop and implement the
additional internal controls, processes and reporting procedures required by the
Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal
auditing and other finance staff in order to develop and implement appropriate
additional internal controls, processes and reporting procedures. If we are
unable to comply with these requirements of the Sarbanes-Oxley Act, we may not
be able to obtain the independent accountant certifications that the
Sarbanes-Oxley Act requires of publicly traded companies.
  If we
fail to comply in a timely manner with the requirements of Section 404 of
the Sarbanes-Oxley Act regarding internal control over financial reporting or to
remedy any material weaknesses in our internal controls that we may identify,
such failure could result in material misstatements in our financial statements,
cause investors to lose confidence in our reported financial information and
have a negative effect on the trading price of our common stock.
  Pursuant
to Section 404 of the Sarbanes-Oxley Act and current SEC regulations,
beginning with our annual report on Form 10-K for our fiscal period ending May
31, 2008, we will be required to prepare assessments regarding internal controls
over financial reporting and beginning with our annual report on Form 10-K for
our fiscal period ending May 31, 2009, furnish a report by our management on our
internal control over financial reporting. We have begun the process of
documenting and testing our internal control procedures in order to satisfy
these requirements, which is likely to result in increased general and
administrative expenses and may shift management time and attention from
revenue-generating activities to compliance activities. While our management is
expending significant resources in an effort to complete this important project,
there can be no assurance that we will be able to achieve our objective on a
timely basis. There also can be no assurance that our auditors will be able to
issue an unqualified opinion on management’s assessment of the effectiveness of
our internal control over financial reporting. Failure to achieve and maintain
an effective internal control environment or complete our Section 404
certifications could have a material adverse effect on our stock
price.
  In
addition, in connection with our on-going assessment of the effectiveness of our
internal control over financial reporting, we may discover “material weaknesses”
in our internal controls as defined in standards established by the Public
Company Accounting Oversight Board, or the PCAOB. A material weakness is a
significant deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected. The PCAOB
defines “significant deficiency” as a deficiency that results in more
than a remote likelihood that a misstatement of the financial statements
that is more than inconsequential will not be prevented or
detected.
  In the
event that a material weakness is identified, we will employ qualified personnel
and adopt and implement policies and procedures to address any material
weaknesses that we identify. However, the process of designing and implementing
effective internal controls is a continuous effort that requires us to
anticipate and react to changes in our business and the economic and regulatory
environments and to expend significant resources to maintain a system of
internal controls that is adequate to satisfy our reporting obligations as a
public company. We cannot assure you that the measures we will take will
remediate any material weaknesses that we may identify or that we will implement
and maintain adequate controls over our financial process and reporting in the
future.
  Any
failure to complete our assessment of our internal control over financial
reporting, to remediate any material weaknesses that we may identify or to
implement new or improved controls, or difficulties encountered in their
implementation, could harm our operating results, cause us to fail to meet our
reporting obligations or result in material misstatements in our financial
statements. Any such failure could also adversely affect the results of the
periodic management evaluations of our internal controls and, in the case of a
failure to remediate any material weaknesses that we may identify, would
adversely affect the annual auditor attestation reports regarding the
effectiveness of our internal control over financial reporting that are required
under Section 404 of the Sarbanes-Oxley Act. Inadequate internal controls
could also cause investors to lose confidence in our reported financial
information, which could have a negative effect on the trading price of our
common stock.
  17
 Operating
History And Lack Of Profits Which Could Lead To Wide Fluctuations In Our Share
Price. The Price At Which You Purchase Our Common Shares May Not Be Indicative
Of The Price That Will Prevail In The Trading Market. You May Be Unable To Sell
Your Common Shares At Or Above Your Purchase Price, Which May Result In
Substantial Losses To You. The Market Price For Our Common Shares Is
Particularly Volatile Given Our Status As A Relatively Unknown Company With A
Small And Thinly Traded Public Float, Limited
  The
market for our common shares is characterized by significant price volatility
when compared to seasoned issuers, and we expect that our share price will
continue to be more volatile than a seasoned issuer for the indefinite future.
The volatility in our share price is attributable to a number of factors. First,
as noted above, our common shares are sporadically and thinly traded. As a
consequence of this lack of liquidity, the trading of relatively small
quantities of shares by our shareholders may disproportionately influence the
price of those shares in either direction. The price for our shares could, for
example, decline precipitously in the event that a large number of our common
shares are sold on the market without commensurate demand, as compared to a
seasoned issuer which could better absorb those sales without adverse impact on
its share price. Secondly, we are a speculative or “risky” investment due to our
limited operating history and lack of profits to date, and uncertainty of future
market acceptance for our potential products. As a consequence of this enhanced
risk, more risk-adverse investors may, under the fear of losing all or most of
their investment in the event of negative news or lack of progress, be more
inclined to sell their shares on the market more quickly and at greater
discounts than would be the case with the stock of a seasoned issuer. Many of
these factors are beyond our control and may decrease the market price of our
common shares, regardless of our operating performance. We cannot make any
predictions or projections as to what the prevailing market price for our common
shares will be at any time, including as to whether our common shares will
sustain their current market prices, or as to what effect that the sale of
shares or the availability of common shares for sale at any time will have on
the prevailing market price.
  Shareholders
should be aware that, according to SEC Release No. 34-29093, the market for
penny stocks has suffered in recent years from patterns of fraud and abuse. Such
patterns include (1) control of the market for the security by one or a few
broker-dealers that are often related to the promoter or issuer;
(2) manipulation of prices through prearranged matching of purchases and
sales and false and misleading press releases; (3) boiler room practices
involving high-pressure sales tactics and unrealistic price projections by
inexperienced sales persons; (4) excessive and undisclosed bid-ask
differential and markups by selling broker-dealers; and (5) the wholesale
dumping of the same securities by promoters and broker-dealers after prices have
been manipulated to a desired level, along with the resulting inevitable
collapse of those prices and with consequent investor losses. Our management is
aware of the abuses that have occurred historically in the penny stock market.
Although we do not expect to be in a position to dictate the behavior of the
market or of broker-dealers who participate in the market, management will
strive within the confines of practical limitations to prevent the described
patterns from being established with respect to our securities. The occurrence
of these patterns or practices could increase the volatility of our share
price.
  SHOULD
ONE OR MORE OF THE FOREGOING RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD THE
UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY
FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED, INTENDED OR
PLANNED.
 
 Item 2. Changes in securities and small
business issuer purchases of equity securities
 
 There
were no changes in securities and small business issuer purchases of equity
securities during the period ended March 31, 2009
 
 Item
3. Defaults Upon Senior Securities
  There
were no defaults upon senior securities during the period ended March 31,
2009.
  Item
4. Submission Of Matters To A Vote Of Security Holders
 
 There
were no matters submitted to the vote of securities holders during the period
ended March 31, 2009.
  Item
5. Other Information
  There is
no information with respect to which information is not otherwise called for by
this form.
  18
 Item
6. Exhibits
 
 (d)
              The
      following exhibits are filed with this Quarterly Report or are
      incorporated herein by reference:
  Exhibit
                          Number
                        Description31.1
                        Certification
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act31.2
                        Certification
      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act.32.1
                        Certification
      of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act.32.2
                        Certification
      of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act.
 
 
 
 SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934 the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
  Date:
      May 13, 2009
              
              By:
      /s/ Gary TsitronGary TsitronPresident
      and Chief Executive Officer (Principal Executive Officer) and Chief
      Financial Officer (Principal Accounting and Financial
    Officer)
 
   19