UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549


____________________





FORM
10-Q








(Mark
One)




T
              QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For
quarterly period ended February 28, 2009
 
 o
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934






For the
transition period from _____ to _____





Commission File Number
333-146404


____________________





MICROCHANNEL
TECHNOLOGIES CORPORATION


(Exact
name of registrant as specified in its charter)





Nevada
                98-0539775(State
      or other jurisdiction of incorporation or organization)
                (I.R.S.
      Employer Identification Number)3905
      National Drive, Suite 110
                20866Burtonsville,
      MD
                (Zip
      Code)(Address
      of principal executive offices)





(888)
522-6422


(Registrant's
telephone number, including area code)


___________________





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes T   No
o.





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.





Large
      accelerated filer
                  o
                  Accelerated
      filer
                  oNon-accelerated
      filer (Do not check if a smaller reporting company)
                  o
                  Smaller
      reporting company
                  T





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




Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: 53,864,600 shares of Common Stock, par
value $0.0001, were outstanding on April 1, 2009.













MICROCHANNEL TECHNOLOGIES CORPORATION


FORM
10-Q





For
the Quarterly Period Ended February 28, 2009





Table
of Contents











PART
I    FINANCIAL INFORMATION





Item
      1.
                      Financial
      Statements (Unaudited)Balance Sheets (Unaudited)
                      3Statements of Operations (Unaudited)
                      4Statement of Stockholders’ Equity (Deficit)
      (Unaudited)
                      5Statements of Cash Flows (Unaudited)
                      6Notes to Financial Statements (Unaudited)
                      7Item
      2.
                      Management's Discussion and Analysis of Financial Condition and
      Results of Operations.
                      11Item
      4T.
                      Controls and Procedures.
                      15PART
      II   OTHER INFORMATIONItem
      1.
                      Legal Proceedings.
                      16Item
      2.
                      Unregistered Sales of Equity Securities and Use of
      Proceeds.
                      16Item
      3.
                      Defaults Upon Senior Securities.
                      16Item
      4.
                      Submission of Matters to a Vote of Security
      Holders.
                      16Item
      5.
                      Other Information.
                      16Item
      6.
                      Exhibits.
                      16SignaturesCertifications





Table of Contents





PART I—FINANCIAL
INFORMATION





Item 1. Financial Statements
(Unaudited)





MICROCHANNEL TECHNOLOGIES CORPORATION


(A
Development Stage Company)





BALANCE
SHEETS


FEBRUARY
28, 2009 AND AUGUST 31, 2008


(Expressed
in U.S. Dollars)


(Unaudited)





February 28,
                    
                    
                    August 31,2009
                    
                    
                    2008ASSETSCurrent
      assetsCash and cash equivalents
                    
                    $
                    280,918
                    
                    
                    $
                    328,260Total
      current assets
                    
                    
                    280,918
                    
                    
                    
                    328,260Total assets
                    
                    $
                    280,918
                    
                    
                    $
                    328,260LIABILITIES
      AND STOCKHOLDERS' EQUITYLiabilitiesCurrent
      liabilitiesAccounts
      payable
                    
                    $
                    8,849
                    
                    
                    $
                    3,840Accrued payable
                    
                    
                    -
                    
                    
                    
                    10,000Total
      current liabilities
                    
                    
                    8,849
                    
                    
                    
                    13,840Commitments
      and ContingenciesStockholders'
      equityCommon
      stock: $0.0001 par value; 300,000,000 shares authorized, 53,864,600 issued
      and outstanding at February 28, 2009 and August 31, 2008
                    
                    
                    5,386
                    
                    
                    
                    5,386Additional
      paid-in capital
                    
                    
                    556,711
                    
                    
                    
                    556,711Deficit accumulated during the development
      stage
                    
                    
                    (290,028
                    )
                    
                    
                    (247,677
                    )Total stockholders' equity
                    
                    
                    272,069
                    
                    
                    
                    314,420Total liabilities and stockholders'
      equity
                    
                    $
                    280,918
                    
                    
                    $
                    328,260





(The
accompanying notes are an integral part of these financial
statements)





3
 Table of Contents





MICROCHANNEL TECHNOLOGIES CORPORATION


(A
Development Stage Company)





STATEMENTS
OF OPERATIONS


FOR
THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29,
2008


AND
FOR THE PERIOD FROM INCEPTION (FEBRUARY 28, 2005) TO FEBRUARY 28,
2009


(Expressed
in U.S. Dollars)


(Unaudited)





CumulativeThree
      Months Ended
                  
                  
                  Six
      Months Ended
                  
                  
                  February 28,
      2005February 28,
                  
                  
                  February 29,
                  
                  
                  February 28,
                  
                  
                  February 29,
                  
                  
                  (inception)
      to2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008
                  
                  
                  February 28, 2009Revenue
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Operating
      expenses (income)Option
      fee (Note 5)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,000Research
      and development (Note 5)
                  
                  
                  -
                  
                  
                  
                  10,000
                  
                  
                  
                  (10,000
                  )
                  
                  
                  10,000
                  
                  
                  
                  175,839Director
      and officer fees- related party (Note 6)
                  
                  
                  6,750
                  
                  
                  
                  3,700
                  
                  
                  
                  13,500
                  
                  
                  
                  6,700
                  
                  
                  
                  30,700Professional
      fees
                  
                  
                  21,596
                  
                  
                  
                  14,218
                  
                  
                  
                  33,742
                  
                  
                  
                  20,655
                  
                  
                  
                  69,024Other operating expenses
                  
                  
                  3,104
                  
                  
                  
                  2,831
                  
                  
                  
                  5,527
                  
                  
                  
                  4,586
                  
                  
                  
                  21,405Total operating expenses
                  
                  
                  31,450
                  
                  
                  
                  30,749
                  
                  
                  
                  42,769
                  
                  
                  
                  41,941
                  
                  
                  
                  298,968Operating
      loss
                  
                  
                  (31,450
                  )
                  
                  
                  (30,749
                  )
                  
                  
                  (42,769
                  )
                  
                  
                  (41,941
                  )
                  
                  
                  (298,968
                  )Other
      incomeInterest income
                  
                  
                  -
                  
                  
                  
                  2,676
                  
                  
                  
                  418
                  
                  
                  
                  6,406
                  
                  
                  
                  8,940Total other income
                  
                  
                  -
                  
                  
                  
                  2,676
                  
                  
                  
                  418
                  
                  
                  
                  6,406
                  
                  
                  
                  8,940Net loss
                  
                  $
                  (31,450
                  )
                  
                  $
                  (28,073
                  )
                  
                  $
                  (42,351
                  )
                  
                  $
                  (35,535
                  )
                  
                  $
                  (290,028
                  )Net loss per common share:basic
                  
                  $
                  (0.00
                  )
                  
                  $
                  (0.00
                  )
                  
                  $
                  (0.00
                  )
                  
                  $
                  (0.00
                  )Weighted average number
      ofcommon shares
      outstanding:basic
                  
                  
                  53,864,600
                  
                  
                  
                  53,864,600
                  
                  
                  
                  53,864,600
                  
                  
                  
                  53,864,600





(The
accompanying notes are an integral part of these financial
statements)





4
 Table of Contents





MICROCHANNEL TECHNOLOGIES CORPORATION


(A
Development Stage Company)





STATEMENTS
OF STOCKHOLDERS' EQUITY (DEFICIT)


FROM
INCEPTION (FEBRUARY 28, 2005) TO FEBRUARY 28, 2009


(Expressed
in U.S. Dollars)


(Unaudited)





Deficit
      accumulatedCommon Stock
                                            
                                            Additional
                                            
                                            
                                            during
      the
                                            
                                            
                                            Total
      stockholders'Shares
                                            
                                            
                                            Amount
                                            
                                            paid-in capital
                                            
                                            
                                            development stage
                                            
                                            
                                            equity (deficit)Common
      stock issued at $0.0001 per share
                                            
                                            
                                            53,864,600
                                            
                                            
                                            $
                                            5,386
                                            
                                            $
                                            (5,286
                                            )
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            100Net loss for the period ended August 31,
      2005
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (52,898
                                            )
                                            
                                            
                                            (52,898
                                            )Balance,
      August 31, 2005
                                            
                                            
                                            53,864,600
                                            
                                            
                                            
                                            5,386
                                            
                                            
                                            (5,286
                                            )
                                            
                                            
                                            (52,898
                                            )
                                            
                                            
                                            (52,798
                                            )Net loss for the year ended August 31,
      2006
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (82,739
                                            )
                                            
                                            
                                            (82,739
                                            )Balance,
      August 31, 2006
                                            
                                            
                                            53,864,600
                                            
                                            
                                            
                                            5,386
                                            
                                            
                                            (5,286
                                            )
                                            
                                            
                                            (135,637
                                            )
                                            
                                            
                                            (135,537
                                            )Conversion
      of debt to equity on August 31, 2007
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            561,997
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            561,997Net loss for the year ended August 31,
      2007
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (27,405
                                            )
                                            
                                            
                                            (27,405
                                            )Balance,
      August 31, 2007
                                            
                                            
                                            53,864,600
                                            
                                            
                                            
                                            5,386
                                            
                                            
                                            556,711
                                            
                                            
                                            
                                            (163,042
                                            )
                                            
                                            
                                            399,055Net loss for the year ended August 31,
      2008
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (84,635
                                            )
                                            
                                            
                                            (84,635
                                            )Balance,
      August 31, 2008
                                            
                                            
                                            53,864,600
                                            
                                            
                                            $
                                            5,386
                                            
                                            $
                                            556,711
                                            
                                            
                                            $
                                            (247,677
                                            )
                                            
                                            $
                                            314,420Net loss for the six months ended February 28,
      2009
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (42,351
                                            )
                                            
                                            
                                            (42,351
                                            )Balance, February 28, 2009
                                            
                                            
                                            53,864,600
                                            
                                            
                                            $
                                            5,386
                                            
                                            $
                                            556,711
                                            
                                            
                                            $
                                            (290,028
                                            )
                                            
                                            $
                                            272,069





(The
accompanying notes are an integral part of these financial
statements)





5
 Table of Contents





MICROCHANNEL TECHNOLOGIES CORPORATION


(A
Development Stage Company)





STATEMENTS
OF CASH FLOWS


FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008, AND FOR
THE


PERIOD
FROM INCEPTION (FEBRUARY 28, 2005) TO FEBRUARY 28, 2009


(Expressed
in US Dollars)


(Unaudited)





CumulativeSix
      Months Ended
                    
                    
                    February 28,
      2005February 28,
                    
                    
                    February 29,
                    
                    
                    (inception)
      to2009
                    
                    
                    2008
                    
                    
                    February 28, 2009Cash
      flows from operating activitiesNet
      loss
                    
                    $
                    (42,351
                    )
                    
                    $
                    (35,535
                    )
                    
                    $
                    (290,028
                    )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Changes
      in operating assets and liabilities:Increase
      in accounts payable
                    
                    
                    5,009
                    
                    
                    
                    -
                    
                    
                    
                    8,849Increase (decrease) in accrued
      payable
                    
                    
                    (10,000
                    )
                    
                    
                    11,000
                    
                    
                    
                    -Net cash flows used in operating
      activities
                    
                    
                    (47,342
                    )
                    
                    
                    (24,535
                    )
                    
                    
                    (281,179
                    )Cash
      flows from financing activitiesIncrease
      in payable - related party
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    561,997Proceeds from the issuance of common
      stock
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    100Net cash flows provided by financing
      activities
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    562,097Increase
      (decrease) in cash and cash equivalents
                    
                    
                    (47,342
                    )
                    
                    
                    (24,535
                    )
                    
                    
                    280,918Cash
      and cash equivalents at beginning of period
                    
                    
                    328,260
                    
                    
                    
                    399,055
                    
                    
                    
                    -Cash and cash equivalents at end of
      period
                    
                    $
                    280,918
                    
                    
                    $
                    374,520
                    
                    
                    $
                    280,918Supplemental
      cash flow information:Interest
      paid in cash
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Income
      taxes paid in cash
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Supplemental
      non-cash transaction:Conversion
      of debt to equity
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    561,997





(The
accompanying notes are an integral part of these financial
statements)





6
 Table of Contents





MICROCHANNEL TECHNOLOGIES CORPORATION


(A
Development Stage Company)





NOTES
TO FINANCIAL STATEMENTS





February
28, 2009


(Expressed
in US Dollars)


(Unaudited)





Note
1.  Organization and Nature of Operations





MicroChannel
Technologies Corporation (“the Company”) was formed as a wholly-owned subsidiary
of Octillion Corp. Octillion Corp. spun off the Company’s issued and outstanding
shares to Octillion’s shareholders on December 18, 2007, the date on which a
registration statement was declared effective by the United States Securities
and Exchange Commission (“SEC”). The Company was incorporated under the name
MultiChannel Technologies Corporation on February 28, 2005 in the State of
Nevada, and changed to its existing name on April 4, 2005. On October 2, 2007,
the Company executed a forward split of its issued and outstanding shares of
common stock on the basis of 53.8646 for 1, resulting in 53,864,600 common
shares to be issued and outstanding.  The effects of the stock split have
been retroactively applied to all periods presented.





On April
29, 2005, an Option Agreement (the “ISURF Agreement”) was executed between Iowa
State University Research Foundation Inc., (“ISURF”) and the Company, pursuant
to which the Company acquired an option to obtain a license to certain nerve
regeneration technologies being developed by ISURF. On September 30, 2008, the
ISURF Agreement expired, thereby concluding the Company’s research and
development of technologies and products for peripheral and optic nerve damage
and nerve regeneration.  Upon conclusion of the ISURF Agreement,
researchers were unable to identify suitable, commercially-available cells for
use in this technology.  The Company did not renew the ISURF Agreement
or the Sponsored Project Agreement related to the ISURF Nerve Regeneration
Technology.  The Company is currently undertaking efforts to identify
new commercial opportunities, including other innovative medical and health care
technologies.





Note
2.  Going Concern Uncertainties





The
Company is a development stage company, has not generated any revenues, has an
accumulated deficit of $290,028 as of February 28, 2009, and does not have
positive cash flows from operating activities.  The accompanying financial
statements have been prepared in conformity with generally accepted accounting
principles in the United States of America, which contemplates continuation of
the Company as a going concern, which is dependent upon the Company’s ability to
establish itself as a profitable business.





Due to
the start-up nature of the Company’s business, the Company expects to incur
additional losses as it continues to identify and develop new technologies. To
date, the Company’s cash flow requirements have been met by $400,000 received
from Octillion Corp., its former parent company.  Management
recognizes that in order to meet the Company’s capital requirements, and
continue to operate, additional financing will be necessary.  The
Company expects to raise additional funds through private or public equity
investments in order to expand the range and scope of its business operations.
The Company will seek access to private or public equity but there is no
assurance that such additional funds will be available for the Company to
finance its operations on acceptable terms, if at all.  Furthermore,
there is no assurance that the net proceeds received from any successful
financing arrangement will be sufficient to cover cash requirements during the
initial stages of the Company’s operations. If the Company is unable to
raise additional capital or generate positive cash flow, it is unlikely that the
Company will be able to continue as a going concern.





In view
of these conditions, the ability of the Company to continue as a going concern
is in substantial doubt and dependent upon achieving a profitable level of
operations and on the ability of the Company to obtain necessary financing to
fund ongoing operations. Management believes that its current and future plans
provide the opportunity for the Company to continue as a going concern for the
next twelve months. These financial statements do not give effect to any
adjustments which will be necessary should the Company be unable to continue as
a going concern and therefore be required to realize its assets and discharge
its liabilities in other than the normal course of business and at amounts
different from those reflected in the accompanying financial
statements.





7
 Table of Contents





Note
3.  Presentation of Interim Information





The
accompanying unaudited interim financial statements have been prepared in
accordance with Form 10-Q instructions and in the opinion of management of
MicroChannel Technologies Corporation, include all adjustments (of a normal
recurring nature) considered necessary to present fairly the financial position
of the Company as of February 28, 2009 and August 31, 2008 and the related
results of operations, stockholders’ equity (deficit), and cash flows for the
three and six months ended February 28, 2009 and February 29, 2008 and for the
cumulative period from February 28, 2005 (inception), to February 28, 2009.
These results have been determined on the basis of generally accepted accounting
principles and practices in the United States and applied consistently with
those used in the preparation of the Company’s 2008 Annual Report on Form
10-K.





Certain
information and footnote disclosures normally included in the quarterly
financial statements presented in accordance with generally accepted accounting
principles in the United States have been condensed or omitted. It is suggested
that the accompanying unaudited interim financial statements be read in
conjunction with the financial statements and notes thereto incorporated by
reference in the Company’s 2008 Annual Report on Form 10-K.





Recently
Issued Accounting Standards





In
September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
No. 157, “Fair Value Measurements” (SFAS 157), which establishes a framework for
measuring fair value and requires expanded disclosures regarding fair value
measurements. In February 2008, the FASB issued FASB Staff Position No. 157-2,
“Effective Date of FASB Statement 157” (FSP 157-2), which allows for the
deferral of the adoption date of SFAS 157 for all nonfinancial assets and
nonfinancial liabilities, except those that are recognized or disclosed at fair
value in the financial statements on a recurring basis. The Company is required
to adopt SFAS 157 for the assets and liabilities within the scope of FSP 157-2
on March 1, 2009, the beginning of its fiscal year 2010. In October 2008, the
FASB issued SFAS Staff Position No. 157-3, “Determining the Fair Value of a
Financial Asset in a Market That Is Not Active” (FSP 157-3), which
clarifies the application of SFAS 157 when the market for a financial asset
is inactive. The adoption of SFAS 157 for those assets and liabilities not
subject to the deferral permitted by FSP 157-2 did not have a material impact on
the Company’s financial statements. The Company does not expect the adoption of
SFAS 157 for non-financial assets and liabilities to have a material impact on
its financial statements.  The guidance in FSP 157-3 is effective
immediately and did not have a material effect on the Company’s financial
statements.





In June
2008, the FASB issued Staff Position EITF 03-06-1, “Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities” (FSP EITF 03-06-1). FSP EITF 03-06-1 provides that unvested
share-based payment awards that contain non-forfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) are participating securities and
shall be included in the computation of earnings per share pursuant to the
two-class method in SFAS No. 128, “Earnings per Share.”   FSP
EITF 03-06-1 must be adopted for reporting periods beginning after December 15,
2008.  FSP EITF 03-06-1 will not have any impact on the Company’s
financial statements.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an Amendment of Accounting Research Bulletin
No 51” (SFAS 160). SFAS 160 establishes accounting and reporting standards for
ownership interests in subsidiaries held by parties other than the parent,
changes in a parent’s ownership of a noncontrolling interest, calculation and
disclosure of the consolidated net income attributable to the parent and the
noncontrolling interest, changes in a parent’s ownership interest while the
parent retains its controlling financial interest and fair value measurement of
any retained noncontrolling equity investment. SFAS 160 is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years. Early adoption is prohibited. The
Company must adopt SFAS 160 on September 1, 2009, the beginning of its fiscal
year 2010.  The Company does not expect the application of SFAS No.
160 to have a material effect on its financial statements.





In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (SFAS
141R), which establishes principles and requirements for the reporting entity in
a business combination, including recognition and measurement in the financial
statements of the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree. SFAS 141R applies prospectively to
business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008, and interim periods within those fiscal years. The Company must adopt
SFAS 141R on September 1, 2009, the beginning of its fiscal year
2010.  The Company does not expect the application of SFAS 141R to
have a material effect on its financial statements.





8
 Table of Contents





Note
4.  Net Loss Per Share





Basic net
loss per share is computed by dividing the net loss by the weighted average
number of common shares outstanding during the period. The Company does not have
any stock options or warrants outstanding that would be
anti-dilutive.





For
purposes of earnings per share computations, shares of common stock that are
issuable at the end of a reporting period are included as
outstanding.





Following
is the computation of basic net loss per share for the three and six months
ended February 28, 2009 and February 29, 2008:





Three Months Ended
                  
                  
                  Six Months EndedFebruary 28,
                  
                  
                  February 29,
                  
                  
                  February 28,
                  
                  
                  February 29,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008Numerator
      - net loss
                  
                  $
                  (31,450
                  )
                  
                  $
                  (28,073
                  )
                  
                  $
                  (42,351
                  )
                  
                  $
                  (35,535
                  )Denominator
      - weighted average number of common shares outstanding
                  
                  
                  53,864,600
                  
                  
                  
                  53,864,600
                  
                  
                  
                  53,864,600
                  
                  
                  
                  53,864,600Basic
      net loss per common share
                  
                  $
                  (0.00
                  )
                  
                  $
                  (0.00
                  )
                  
                  $
                  (0.00
                  )
                  
                  $
                  (0.00
                  )





Note
5.  Option Interest in Nerve Regeneration Technologies





On April
29, 2005, an Option Agreement (the “ISURF Agreement”) was executed between Iowa
State University Research Foundation Inc., (“ISURF”) and the Company, pursuant
to which the Company acquired an option to obtain a license to certain nerve
regeneration technologies being developed by ISURF. On October 13, 2005, the
ISURF Agreement was amended to modify the payment due dates.   On
November 12, 2007, the ISURF Agreement was amended to extend the ISURF Agreement
to September 30, 2008 and increase the total amount due pursuant to the ISURF
Agreement by $50,000 (the “Amended ISURF Agreement”). On September 30, 2008, the
Amended ISURF Agreement expired, thereby concluding the Company’s research and
development of technologies and products for peripheral and optic nerve damage
and nerve regeneration.  Upon conclusion of the Amended ISURF
Agreement, researchers were unable to identify suitable, commercially-available
cells for use in this technology.  The Company did not renew the
Amended ISURF Agreement or the Sponsored Project Agreement related to the ISURF
Nerve Regeneration Technology.


The
consideration payable pursuant to the Amended ISURF Agreement is summarized
as follows:





-
            Payment
      of $2,000 in option fees upon execution of the ISURF
      Agreement;





-
            Payment
      of $155,839 to support the research project entitled “Conduits with
      Micropatterned Film for Peripheral Nerve   Regeneration” of
      which $50,000 was due within 90 days of execution of the ISURF Agreement,
      and four subsequent equal payments of $26,460 each due quarterly,
      beginning on January 31, 2006.  An additional $50,000 was
      payable in five equal installments of $10,000 each due every two months
      upon the execution of the Amended ISURF Agreement on November 12,
      2007.  As of February 28, 2009, the Company had paid $155,839
      pursuant to the original ISURF Agreement and $20,000 pursuant to the
      Amended ISURF Agreement.





-
            Contingent
      upon satisfactory progress and success of the above project, provide an
      additional $73,166 for the project entitled “Conduits with
      Micropatterned Films for Optic Nerve Regeneration”. The Company did
      not initiate the second research
project.





Due to
the inability of the researchers to identify suitable, commercially-available
cells for use in the peripheral and optic nerve damage and nerve regeneration
technologies it was determined that the Company was not obligated to make the
remaining $30,000 in payments pursuant to the terms of the Amended ISURF
Agreement.  Accordingly, during the three months ended February 28,
2009, the Company did not record any research and development expense pursuant
to the Amended ISURF Agreement.  During the six months ended February
28, 2009, the Company recorded a reversal of $10,000 previously accrued during
the quarter ended May 31, 2008 pursuant to the Amended ISURF
Agreement.  During the three and six months ended February 29, 2008
the Company recorded research and development expense of $10,000 pursuant to the
Amended ISURF Agreement. During the period from inception (February 28, 2005) to
February 28, 2009, the Company recorded $175,839 as research and development
expense and $2,000 as option fee expense pursuant to the Amended ISURF
Agreement.





9
 Table of Contents





Note 6.  Related
Party Transactions





Director
and officer fees





During
the three and six months ended February 28, 2009, the Company incurred $6,000
and $12,000 as compensation for services that executive officers provided to the
Company. During the three and six months ended February 29, 2008, the
Company incurred $3,000 and $6,000 as compensation for services that executive
officers provided to the Company.





During
the three and six months ended February 28, 2009, the Company incurred $750 and
$1,500 as compensation for services that a non-employee director provided to the
Company.  During the three and six months ended February 29, 2008, the
Company incurred $700 and $700 as compensation for services that a non-employee
director provided to the Company.





As of
February 28, 2009, the Company owed $2,500 to executive officers and a
non-employee director for services rendered to the Company, which is included in
accounts payable.





Related
party transactions are in the normal course of operations and are recorded at
amounts established and agreed between the related parties.





10
 Table of Contents





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





Forward-Looking
Statements





Except
for the historical information presented in this document, the matters discussed
in this Form 10-Q for the three and six months ended February 28, 2009 and
February 29, 2008, and specifically in the items entitled "Management’s
Discussion and Analysis of Financial Condition and Results of Operations," or
otherwise incorporated by reference into this document, contain "forward-looking
statements" (as such term is defined in the Private Securities Litigation Reform
Act of 1995). These statements are identified by the use of forward-looking
terminology such as "believes," "plans," "intend," "scheduled," "potential,"
"continue," "estimates," "hopes," "goal," "objective," expects," "may," "will,"
"should," or "anticipates" or the negative thereof or other variations thereon
or comparable terminology, or by discussions of strategy that involve risks and
uncertainties.





The safe
harbor provisions of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended, apply to
forward-looking statements made by the Company. The reader is cautioned that no
statements contained in this Form 10-Q should be construed as a guarantee or
assurance of future performance or results. These forward-looking statements
involve risks and uncertainties, including those identified within this Form
10-Q. The actual results that the Company achieves may differ materially from
any forward-looking statements due to such risks and uncertainties. These
forward-looking statements are based on current expectations, and the Company
assumes no obligation to update this information. Readers are urged to carefully
review and consider the various disclosures made by the Company in this Form
10-Q and in the Company's other reports filed with the Securities and Exchange
Commission that attempt to advise interested parties of the risks and factors
that may affect the Company's business.





Overview





MicroChannel
Technologies Corporation (the “Company”) was formed as a wholly-owned subsidiary
of Octillion Corp. Octillion Corp. spun off the Company’s issued and outstanding
shares to Octillion’s shareholders on December 18, 2007.  The Company
was incorporated under the name MultiChannel Technologies Corporation on
February 28, 2005 in the State of Nevada, and changed to its existing name on
April 4, 2005.





The
Company is a development stage technology company focused on the identification,
acquisition, and development of technologies and products which it believes have
the potential for commercialization. The Company’s strategy is to initially
acquire rights to technologies and products that are being developed by third
parties, primarily universities and government agencies, through cooperative
research and development agreements.  Until September 30, 2008, the
Company’s research and development activities were focused on technologies and
products for peripheral and optic nerve damage and nerve regeneration,
specifically the development of the Iowa State University Research Foundation
Inc. (“ISURF”) Nerve Regeneration Technology. On September 30, 2008, the
Option Agreement and Sponsored Project Agreement between the Company and ISURF
expired, thereby concluding the Company’s research and development of
technologies and products for peripheral and optic nerve damage and nerve
regeneration.  Upon conclusion of these agreements with ISURF,
researchers were unable to identify suitable, commercially-available cells for
use in this technology.  The Company did not renew these agreements
with ISURF.





The
Company is currently undertaking efforts to identify new commercial
opportunities, including other innovative medical and health care
technologies.





The ISURF Nerve Regeneration
Technology





On April
29, 2005, the Company entered into an Option Agreement with ISURF (the
“ISURF Agreement”), pertaining to ISURF Nerve Regeneration
Technology.  The ISURF Agreement granted the Company an exclusive
worldwide option to obtain a license to make, use, and sell nerve regeneration
products developed from the ISURF Nerve Regeneration Technology.  On
October 13, 2005, the ISURF Agreement was amended to modify the payment due
dates.   On November 12, 2007, the ISURF Agreement was amended to
extend the ISURF Agreement to September 30, 2008 and increase the total amount
due pursuant to the ISURF Agreement by $50,000 (the “Amended ISURF Agreement”).
On September 30, 2008, the Amended ISURF Agreement expired, thereby concluding
the Company’s research and development of technologies and products for
peripheral and optic nerve damage and nerve regeneration.  Upon
conclusion of the Amended ISURF Agreement, researchers were unable to identify
suitable, commercially-available cells for use in this
technology.  The Company did not renew the Amended ISURF Agreement or
the Sponsored Project Agreement related to the ISURF Nerve Regeneration
Technology.





11
 Table of Contents





Pursuant
to the terms of the Amended ISURF Agreement, the Company had the right to
negotiate the terms of its license with ISURF upon payment of a flat fee of
$2,000 (which was paid) and provide funding for two research projects that were
being conducted at ISU through the Company’s Sponsored Project
Agreement.





Under
terms of the Amended ISURF Agreement, the Company agreed to fund two research
projects at ISU, the first of which was titled “Conduits with Micropatterned
Films for Peripheral Nerve Regeneration”, in the amount of
$205,839.  As of September 30, 2008, the expiration date of the
Amended ISURF Agreement, the Company had paid $175,839 pursuant to the Amended
ISURF Agreement.  Due to the inability of the researchers to identify
suitable, commercially-available cells for use in the peripheral and optic nerve
damage and nerve regeneration technologies it was determined that the Company
was not obligated to make the remaining $30,000 in payments pursuant to the
terms of the Amended ISURF Agreement.  Upon termination of the Amended
ISURF Agreement, the Company recorded a reversal of $10,000 previously accrued
during the quarter ended May 31, 2008 pursuant to the Amended ISURF
Agreement.





Contingent
upon satisfactory progress of the above project, the Company also agreed to
provide an additional $73,166 for the second project, titled “Conduits with
Micropatterned Films for Optic Nerve Regeneration,” which would test the
efficacy of biodegradable micropatterned conduits on optic nerve regeneration.
The Company did not
initiate the second research project.





Results of
Operation





A summary
of the Company’s operating expense for the three and six months ended February
28, 2009 and February 29, 2008 was as follows:





Three Months Ended
                
                
                
                
                
                Six Months EndedFebruary 28,
                
                
                February 29,
                
                
                Percentage
                
                
                February 28,
                
                
                February 29,
                
                
                Percentage2009
                
                
                2008
                
                
                Change
                
                
                2009
                
                
                2008
                
                
                ChangeOperating
      expenses (income)Research
      and development
                
                $
                -
                
                
                $
                10,000
                
                
                
                (100
                )%
                
                $
                (10,000
                )
                
                $
                10,000
                
                
                
                *
                %Director
      and officer fees - related party
                
                
                6,750
                
                
                
                3,700
                
                
                
                82
                
                
                
                13,500
                
                
                
                6,700
                
                
                
                101Professional
      fees
                
                
                21,596
                
                
                
                14,218
                
                
                
                52
                
                
                
                33,742
                
                
                
                20,655
                
                
                
                63Other
      operating expenses
                
                
                3,104
                
                
                
                2,831
                
                
                
                10
                
                
                
                5,527
                
                
                
                4,586
                
                
                
                21Total
      operating expenses
                
                $
                31,450
                
                
                $
                30,749
                
                
                
                2
                %
                
                $
                42,769
                
                
                $
                41,941
                
                
                
                2
                %





* Not
meaningful





Research
and development





Research
and development costs represent costs incurred to develop the Company’s
technology incurred pursuant to its research agreement with ISURF. The agreement
includes salaries and benefits for research and development personnel, allocated
overhead and facility occupancy costs, supplies, equipment purchase and repair
and other costs. The Company charges all research and development expenses to
operations as they are incurred except for prepayments which are capitalized and
amortized over the applicable period.





Research
and development resulted in income during the six months ended February 28,
2009, due to the reversal of $10,000 previously accrued during the quarter ended
May 31, 2008 pursuant to the Amended ISURF Agreement.  Research and
development for the three and six months ended February 29, 2008 is comprised
entirely of payments made pursuant to the ISURF Research Agreement.





Director
and officer fees – related party





The Chief
Executive Officer receives $1,250 per month for his services as an executive
officer. The Chief Financial Officer receives $750 per month for his services as
an executive officer.





During
the three and six months ended February 28, 2009, the Company incurred $6,000
and $12,000 as compensation for services that executive officers provided to the
Company. During the three and six months ended February 29, 2008, the
Company incurred $3,000 and $6,000 as compensation for services that executive
officers provided to the Company.





12
 Table of Contents





Non-employee
directors receive $250 per month for their services as directors.





During
the three and six months ended February 28, 2009, the Company incurred $750 and
$1,500 as compensation for services that a non-employee director provided to the
Company.  During the three and six months ended February 29, 2008, the
Company incurred $700 and $700 as compensation for services that a non-employee
director provided to the Company.





Professional
fees





Professional
fees primarily consist of accounting, audit, tax, legal, and transfer agent
fees.





Professional
fees increased during the three and six months ended February 28, 2009 compared
to the same periods in 2008 substantially as a result of the Company closing its
administrative office in Vancouver, British Columbia, Canada, effective August
31, 2008, terminating all of the employees in Vancouver, Canada.  Due
to this downsizing, as of September 1, 2008, the Company began outsourcing its
accounting function to third parties resulting in an increase in accounting fees
of approximately $4,100 and $9,900 for the three and six months ended February
28, 2009 compared to the same periods in 2008.  Legal fees increased
approximately $5,700 and $7,800 during the three and six months ended February
28, 2009 compared to the same periods in 2008 due to the increased utilization
of legal counsel for preparation and review of required filings with the
Securities and Exchange Commission.  These increases were offset by
decreases in transfer agent fees of approximately $2,900 and $2,700 for the
three and six months ended February 28, 2009 compared to the same periods in
2008. Transfer agent fees incurred during the three and six months ended
February 29, 2008 were substantially due to fees incurred related to the spin
off of MicroChannel from Octillion Corp. on December 18, 2007.





Other
operating expenses





Other
operating expenses includes travel and entertainment, rent, office supplies,
information technology related fees and other administrative costs.





Other
income





Interest
income





Interest
income was $0 and $418 for the three and six months ended February 28, 2009
compared to $2,676 and 6,406 during the same periods in 2008.  The
decrease in interest income is due to the Company closing its
administrative office in Vancouver, British Columbia, Canada.  As of
December 31, 2008, the Company transferred all of the funds in its interest
bearing cash account maintained at a Canadian owned financial institution to a
non-interest bearing bank account at a U.S. financial institution.





Liquidity and Capital
Resources





The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern.  The Company incurred cumulative losses
of $290,028 through February 28, 2009.  Due to the "start up" nature
of the Company's business, the Company expects to incur losses as it continues
to identify and develop new technologies.  These conditions raise
substantial doubt about the Company’s ability to continue as a going
concern.  Management recognizes that in order to meet the Company’s
capital requirements, and continue to operate, additional financing will be
necessary.  The Company is evaluating alternative sources of financing
to improve its cash position and is undertaking efforts to raise capital, but
there is no assurance that such additional funds will be available for the
Company to finance its operations on acceptable terms, if at all.  If
the Company is unable to raise additional capital or generate positive cash
flow, it is unlikely that the Company will be able to continue as a going
concern.  The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.





The
Company's principal source of liquidity is cash in the bank, which the Company
anticipates will be sufficient to fund its operations for the next twelve
months.  The Company's future funding requirements will depend on
numerous factors, including: the time and investment required to invest in the
Company’s future research and development projects; to recruit and train
qualified management personnel; and the Company's ability to compete against
other, better capitalized corporations in similar businesses.





13
 Table of Contents





As of
February 28, 2009, the Company had a cash balance of $280,918. The Company has
financed its operations primarily from $400,000 received from Octillion Corp.,
its former parent company.  This amount was subsequently converted to
equity as part of the spin-off in December 2007.





Net cash
used in operating activities was $47,342 for the six months ended February 28,
2009 compared to net cash used of $24,535 for the same period in
2008.  The increase in cash used in operating activities is
substantially attributable to the Company closing its administrative office in
Vancouver, British Columbia, Canada, effective August 31, 2008, terminating all
of the employees in Vancouver, Canada.  Due to this downsizing, as of
September 1, 2008, the Company began outsourcing its accounting function to
third parties resulting in an increase in accounting fees.  In
addition, there was an increase in legal fees as well as non-employee director
and executive officer fees.  See “Related Party Transactions”
below.





Related Party
Transactions





Director
and officer fees





During
the three and six months ended February 28, 2009, the Company incurred $6,000
and $12,000 as compensation for services that executive officers provided to the
Company. During the three and six months ended February 29, 2008, the
Company incurred $3,000 and $6,000 as compensation for services that executive
officers provided to the Company.





During
the three and six months ended February 28, 2009, the Company incurred $750 and
$1,500 as compensation for services that a non-employee director provided to the
Company.  During the three and six months ended February 29, 2008, the
Company incurred $700 and $700 as compensation for services that a non-employee
director provided to the Company.





As of
February 28, 2009, the Company owed $2,500 to executive officers and a
non-employee director for services rendered to the Company, which is included in
accounts payable.





Related
party transactions are in the normal course of operations and are recorded at
amounts established and agreed between the related parties.





Other Contractual
Obligations





As of
February 28, 2009, the Company does not have any contractual
obligations.





Off-Balance Sheet
Arrangements





The
Company has no off-balance sheet arrangements.





Recent Accounting
Pronouncements





See Note
3. “Presentation of Interim Information” to the Financial Statements in
this Form 10-Q.





14
 Table of Contents





Item
4T.   Controls and Procedures





(a)
Evaluation of Disclosure Controls and Procedures





Under the
supervision and with the participation of the Company’s management, including
its Chief Executive Officer and Chief Financial Officer, the Company conducted
an evaluation of the effectiveness of the design and operation of its disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the
period covered by this quarterly report. Based on this evaluation, the Company’s
Chief Executive Officer and Chief Financial Officer concluded as of February 28,
2009 that the Company’s disclosure controls and procedures were effective such
that the information required to be disclosed in the Company’s United States
Securities and Exchange Commission (the “SEC”) reports is recorded, processed,
summarized and reported within the time periods specified in SEC rules and
forms, and is accumulated and communicated to the Company’s management,
including its Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required
disclosure.





(b)
Changes in Internal Control over Financial Reporting





There
were no changes in the Company’s internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred
during the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.





15
 Table of Contents





PART
II – OTHER INFORMATION





Item1.
            Legal
      Proceedings.





None





Item2.
            Unregistered
      Sales of Equity Securities and Use of
Proceeds.





None





Item3.
            Defaults
      Upon Senior Securities





None





Item4.
            Submission
      of Matters to a Vote of Security
Holders





None





Item
      5.
            Other
      Information





None





Item
      6.
            Exhibits





31.1
            Certification
      of Principal Executive Officer Pursuant to Rule 13a-14 of the Securities
      Exchange Act of 1934, As Adopted Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002. *





31.2
            Certification
      of Principal Financial Officer Pursuant to Rule 13a-14 of the Securities
      Exchange Act of 1934, As Adopted Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002. *





32.1
            Certification
      of Principal Executive Officer Pursuant to 18 USC. Section 1350, As
      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
      *





32.2
            Certification
      of Principal Financial Officer Pursuant to 18 USC. Section 1350, As
      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
      *





____________________





*Filed
herewith.





16
 Table of Contents





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  thereunto duly  authorized.








MicroChannel Technologies
      Corporation(Registrant)April
      13, 2009
                    By:/s/ Meetesh PatelMeetesh
      PatelPresident,
      Chief Executive Officer, DirectorApril
      13, 2009
                    /s/ David GamacheDavid
      GamacheChief
      Financial Officer, Treasurer, Secretary,Director






17