UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C.  20549 ____________________ FORM 10-Q  (Mark One)  XQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For quarterly period ended May 31, 2010  ___        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from _____ to _____  Commission File Number333-146404   MICROCHANNEL TECHNOLOGIES CORPORATION (Exact name of registrant as specified in its charter)  Nevada
     98-0539775(State or other jurisdiction of
     (I.R.S. Employerincorporation or organization)
     Identification No.)3905 National Drive, Suite 110Burtonsville, Maryland
     20866(Address of principal executive offices)
     (Zip Code)
  (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.  YesTNoo. 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). YesoNooNot ApplicableT. 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
     
     
     Accelerated filer
     Non-accelerated filer (Do not check if a smaller reporting company)
     
     
     Smaller reporting company
     x


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Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Exchange Act.)  YesTNoo. 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 July 9, 2010.


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MICROCHANNEL TECHNOLOGIES CORPORATION FORM 10-Q  For the Quarterly Period Ended May 31, 2010  Table of Contents  PART I FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Balance Sheets (Unaudited)
     3Statements of Operations (Unaudited)
     4Statements 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 andResults of Operations
     11Item 4T. Controls and Procedures
     16PART II OTHER INFORMATIONItem 1.
     Legal Proceedings
     17Item 2.
     Unregistered Sales of Equity Securities and Use of Proceeds
     17Item 3.
     Defaults Upon Senior Securities
     17Item 4.
     Submission of Matters to a Vote of Security Holders
     17Item 5.
     Other Information
     17Item 6.
     Exhibits
     17SignaturesCertifications


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PART IFINANCIAL INFORMATION  Item 1. Financial Statements (Unaudited)  MICROCHANNEL TECHNOLOGIES CORPORATION(A Development Stage Company)BALANCE SHEETSMAY 31, 2010 AND AUGUST 31, 2009(Expressed in U.S. Dollars)(Unaudited)May 31,
     
     August 31,2010
     
     2009ASSETSCurrent assetsCash and cash equivalents
     
     $       186,588
     
     $       241,845Total current assets
     
     186,588
     
     241,845Total assets
     
     $       186,588
     
     $       241,845LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilitiesAccounts payable
     
     $           4,975
     
     $           5,018Total current liabilities
     
     4,975
     
     5,018Stockholders' equityCommon stock: $0.0001 par value; 300,000,000 shares authorized, 53,864,600 issued and outstanding at May 31, 2010 and August 31, 2009
     
     5,386
     
     5,386Additional paid-in capital
     
     556,711
     
     556,711Deficit accumulated during the development stage
     
     (380,484)
     
     (325,270)Total stockholders' equity
     
     181,613
     
     236,827Total liabilities and stockholders' equity
     
     $       186,588
     
     $       241,845(The accompanying notes are an integral part of these financial statements)
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MICROCHANNEL TECHNOLOGIES CORPORATION(A Development Stage Company)STATEMENTS OF OPERATIONSFOR THE THREE AND NINE MONTHS ENDED MAY 31, 2010 AND 2009AND FOR THE PERIOD FROM INCEPTION (FEBRUARY 28, 2005) TO MAY 31, 2010(Expressed in U.S. Dollars)(Unaudited)CumulativeThree Months Ended
     
     Nine Months Ended
     
     February 28, 2005May 31,
     
     May 31,
     
     (inception) to2010
     
     2009
     
     2010
     
     2009
     
     May 31, 2010Revenue
     
     $                       -
     
     $                -
     
     $                       -
     
     $                -
     
     $                            -Operating expenses (income)Option fee
     
     -
     
     -
     
     -
     
     -
     
     2,000Research and development
     
     -
     
     -
     
     -
     
     (10,000)
     
     175,839Director and officer fees
     
     6,750
     
     6,750
     
     20,250
     
     20,250
     
     64,450Professional fees
     
     6,694
     
     9,338
     
     34,369
     
     43,804
     
     122,679Other operating expenses
     
     95
     
     2,126
     
     595
     
     6,929
     
     24,456Total operating expenses
     
     13,539
     
     18,214
     
     55,214
     
     60,983
     
     389,424Loss from operations
     
     (13,539)
     
     (18,214)
     
     (55,214)
     
     (60,983)
     
     (389,424)Other incomeInterest income
     
     -
     
     -
     
     -
     
     418
     
     8,940Total other income
     
     -
     
     -
     
     -
     
     418
     
     8,940Net loss
     
     $            (13,539)
     
     $     (18,214)
     
     $            (55,214)
     
     $     (60,565)
     
     $               (380,484)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


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MICROCHANNEL TECHNOLOGIES CORPORATION(A Development Stage Company)STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)FROM INCEPTION (FEBRUARY 28, 2005) TO MAY 31, 2010(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 year ended August 31, 2009
     -
     
     -
     
     -
     
     (77,593)
     
     (77,593)Balance, August 31, 2009
     53,864,600
     
     5,386
     
     556,711
     
     (325,270)
     
     236,827Net loss for the nine months ended May 31, 2010
     -
     
     -
     
     -
     
     (55,214)
     
     (55,214)Balance, May 31, 2010
     53,864,600
     
     $         5,386
     
     $        556,711
     
     $              (380,484)
     
     $                181,613(The accompanying notes are an integral part of these financial statements)
   
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MICROCHANNEL TECHNOLOGIES CORPORATION(A Development Stage Company)STATEMENTS OF CASH FLOWSFOR THE NINE MONTHS ENDED MAY 31, 2010 AND 2009AND FOR THE PERIOD FROM INCEPTION (FEBRUARY 28, 2005) TO MAY 31, 2010(Expressed in U.S. Dollars)(Unaudited)CumulativeNine Months Ended
     
     February 28, 2005May 31,
     
     (inception) to2010
     
     2009
     
     May 31, 2010Cash flows from operating activitiesNet loss
     
     $               (55,214)
     
     $      (60,565)
     
     $               (380,484)Adjustments to reconcile net loss to net cash used in operating activities:Changes in operating assets and liabilities:Increase (decrease) in accounts payable
     
     (43)
     
     536
     
     4,975Decrease in accrued payable
     
     -
     
     (10,000)
     
     -Net cash used in operating activities
     
     (55,257)
     
     (70,029)
     
     (375,509)Cash flows from financing activitiesIncrease in payable - related party
     
     -
     
     -
     
     561,997Proceeds from the issuance of common stock
     
     -
     
     -
     
     100Net cash provided by financing activities
     
     -
     
     -
     
     562,097Increase (decrease) in cash and cash equivalents
     
     (55,257)
     
     (70,029)
     
     186,588Cash and cash equivalents at beginning of period
     
     241,845
     
     328,260
     
     -Cash and cash equivalents at end of period
     
     $               186,588
     
     $      258,231
     
     $                186,588Supplemental disclosure of cash flow information:Interest paid in cash
     
     $                           -
     
     $                 -
     
     $                            -Income taxes paid in cash
     
     -
     
     -
     
     -Supplemental disclosure of non-cash transaction:Conversion of debt to equity
     
     $                           -
     
     $                 -
     
     $                561,997(The accompanying notes are an integral part of these financial statements)
  
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MICROCHANNEL TECHNOLOGIES CORPORATION (A Development Stage Company)  NOTES TO FINANCIAL STATEMENTS May 31, 2010 (Expressed in U.S. Dollars) (Unaudited)  Note 1.  Organization and Description of Business  MicroChannel Technologies Corporation (the Company) was formed as a wholly-owned subsidiary of Octillion Corp. (Octillion).  Octillion 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, includingother 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 $380,484 as of May 31, 2010, 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. 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.
  
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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 May 31, 2010 and August 31, 2009 and the related results of operations, stockholders equity (deficit), and cash flows for the three and nine months ended May 31, 2010 and 2009 and for the cumulative period from February 28, 2005 (inception) to May 31, 2010. 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 2009 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 2009 Annual Report on Form 10-K.  Note 4.  Summary of Significant Accounting Policies Estimates The preparation of the Companys financial statements requires management to make estimates and use assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses.  These estimates and assumptions are affected by managements application of accounting policies.   Critical accounting policies for the Company include accounting for research and development costs. On an on-going basis, the Company evaluates its estimates.  Actual results and outcomes may differ materially from these estimates and assumptions. Research and Development  Research and development costs represent costs incurredto develop the Companys technology, includingsalaries and benefits for research and development personnel, allocated overhead and facility occupancy costs, supplies, equipment purchase and repair and other costs.Research and development costs are expensed when incurred,except for nonrefundable advance payments for future research and development activities which are capitalized and recognized as expense as the related services are performed.  During the three and nine months ended May 31, 2010 and the three months ended May 31, 2009, the Company did not incur any research and development expense.  During the nine months ended May 31, 2009, the Company recordeda reversal of $10,000 previously accrued during the quarter ended May 31, 2008 pursuant to the Amended ISURF Agreement.  See Note 6.  Option Interest in Nerve Regeneration Technologies.  Recently Adopted Accounting Pronouncements In January 2010, the FASB issuedASUNo. 2010-06, Fair Value Measurements and Disclosures, which amends the disclosure requirements related to recurring and nonrecurring fair value measurements  The guidance requires disclosure of transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy, including the reasons and the timing of the transfers and information on purchases, sales, issuance, and settlements on a gross basis in the reconciliation of the assets and liabilities measured under Level 3 of the fair value measurement hierarchy. The guidance is effective for annual and interim reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which are effective for annual and interim periods beginning after December 15, 2010. The Company adopted this guidance at the beginning of its third quarter of fiscal 2010, except for the Level 3 reconciliation disclosures on the rollforward activities, which it will adopt at the beginning of its third quarter of fiscal 2011. Other than requiring additional disclosures, the adoption of this standard did not and will not have a material impact on the Companys  financial position and results of operations.  Note 5.  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.
  
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Following is the computation of basic net loss per share for the three and nine months ended May 31, 2010 and 2009:   Three Months Ended
     
     
     Nine Months EndedMay 31,
     
     
     May 31,2010
     
     2009
     
     
     2010
     
     2009Numerator - net loss
     
     $
     (13,539)
     $
     (18,214)
     
     $
     (55,214)
     $
     (60,565)Denominator - weighted average numberof common shares outstanding - basic
     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 6.  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, 2010, 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 theperipheral and optic nerve damage and nerve regenerationtechnologies 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 nine months ended May 31, 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 period from inception (February 28, 2005) to May 31, 2010, the Company recorded research and development expense of $175,839 pursuant to the Amended ISURF Agreement.  Note 7.  Related Party Transactions  During both of the three month periods ended May 31, 2010 and 2009, the Company incurred $750 as compensation for services that a non-employee director provided to the Company.  During both of the nine month periods ended May 31, 2010 and 2009, the Company incurred $2,250 as compensation for services that a non-employee director provided to the Company.
  
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As of May 31, 2010, the Company owed $250 to the non-employee director for services rendered to the Company, which is included in accounts payable.  The Company's corporate office is located at 3905 National Drive, Suite 110, Burtonsville, MD, 20866.  This premise is leased by the MVP Law Group, P.A, of which the Chief Executive Officer of the Company is the founder.  The MVP Law Group, P.A. does not currently charge the Company rent to utilize this space.  Related party transactions are in the normal course of operations and are recorded at amounts established and agreed between the related parties.
  
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.  Forward-Looking Statements  This Report on Form 10-Q contains forward-looking statements which involve assumptions and describe our future plans, strategies, and expectations, and are generally identifiable by use of the words may, will, should, expect, anticipate, estimate, believe, , intend, or project or the negative of these words or other variations on these words or comparable terminology. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished.  Such forward-looking statements include statements regarding, among other things, (a) the potential markets for our technologies, our potential profitability, and cash flows (b) our growth strategies, (c) expectations from our ongoing sponsored research and development activities (d) anticipated trends in the technology industry, (e) our future financing plans and (f) our anticipated needs for working capital. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under Managements Discussion and Analysis of Financial Condition and Results of Operations as well as in this Form 10-Q generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various and matters described in this Form 10-Q generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. In addition to the information expressly required to be included in this filing, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.  Although forward-looking statements in this report reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.  The following Managements Discussion and Analysis (MD&A) is intended to help the reader understand our results of operations and financial condition. The MD&A is provided as a supplement to, and should be read in conjunction with our financial statements and the accompanying notes to the financial statements included in this Form 10-Q.  Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosures. We review our estimates on an ongoing basis.  Overview  We were formed as a wholly-owned subsidiary of Octillion Corp. Octillion Corp. spun off our issued and outstanding shares to Octillions shareholders on December 18, 2007.  We were incorporated under the name MultiChannel Technologies Corporation on February 28, 2005 in the State of Nevada, and changed to our existing name, MicroChannel Technologies Corporation, on April 4, 2005.  We are a development stage technology company focused on the identification, acquisition, and development of technologies and products which we believe have the potential for commercialization. Our 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, ourresearch and development activities were focused ontechnologies and products for peripheral and optic nerve damage and nerve regeneration, specificallythe development of theIowa State University Research Foundation Inc. (ISURF)Nerve Regeneration Technology.On September 30, 2008, the Option Agreement and Sponsored Project Agreement between us and ISURF expired, thereby concluding our research and development of technologies and products for peripheral and optic nerve damage and nerve
  
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regeneration.  Upon conclusion of these agreements with ISURF, researchers were unable to identify suitable, commercially-available cells for use in this technology.  We did not renew these agreements with ISURF.  We are currently undertaking efforts to identify new commercial opportunities, includingother innovative medical and health care technologies.  Because we are a smaller reporting company, we are not required to make certain disclosures otherwise required to be made on a Form 10-Q.  The ISURF Nerve Regeneration Technology  On April 29, 2005, we entered into an Option Agreement withISURF (the ISURF Agreement), pertaining to ISURF Nerve Regeneration Technology.  The ISURF Agreement granted us 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 our 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.  We did not renew the Amended ISURF Agreement or the Sponsored Project Agreement related to the ISURF Nerve Regeneration Technology.  Pursuant to the terms of the Amended ISURF Agreement, we had the right to negotiate the terms of our 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 our Sponsored Project Agreement.  Under terms of the Amended ISURF Agreement, we 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, we 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 theperipheral and optic nerve damage and nerve regenerationtechnologies it was determined that we were 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, we 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, we 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.We did not initiate the second research project.  Results of Operation  A summary of our operating expenses for the three and nine months ended May 31, 2010 and 2009 was as follows:  Three Months EndedMay 31,
     
     Increase /
     
     Percentage2010
     
     2009
     
     (Decrease)
     
     ChangeOperating expensesDirector and officer fees
     $
     6,750
     $
     6,750
     $
     -
     
     -
     %Professional fees
     
     6,694
     
     9,338
     
     (2,644)
     
     (28)Other operating expenses
     
     95
     
     2,126
     
     (2,031)
     
     (96)Total operating expenses
     $
     13,539
     $
     18,214
     $
     (4,675)
     
     (26)
     %
  
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Nine Months EndedMay 31,
     
     Increase /
     
     Percentage2010
     
     2009
     
     (Decrease)
     
     ChangeOperating expenses (income)Research and development
     $
     -
     $
     (10,000)
     $
     10,000
     
     *
     %Director and officer fees
     
     20,250
     
     20,250
     
     -
     
     -Professional fees
     
     34,369
     
     43,804
     
     (9,435)
     
     (22)Other operating expenses
     
     595
     
     6,929
     
     (6,334)
     
     (91)Total operating expenses
     $
     55,214
     $
     60,983
     $
     (5,769)
     
     (9)
     %
  * Not meaningful  Research and development  Research and development costs represent costs incurred to develop our technology incurred pursuant to our former research agreement with ISURF. The ISURF Agreement includes salaries and benefits for research and development personnel, allocated overhead and facility occupancy costs, supplies, equipment purchase and repair, and other costs. We charge 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 of $10,000 during the nine months ended May 31, 2009, due to the reversal of $10,000 previously accrued during the quarter ended May 31, 2008 pursuant to the Amended ISURF Agreement.  Director and officer fees  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 both of the three month periods ended May 31, 2010 and 2009, we incurred $6,000 as compensation for services provided to us by our executive officers. During both of the nine month periods ended May 31, 2010 and 2009, we incurred $18,000 as compensation for services provided to us by our executive officers.  Non-employee directors receive $250 per month for their services as directors.  During both of the three month periods ended May 31, 2010 and 2009, we incurred $750 as compensation for services provided to us by our non-employee director.  During both of the nine month periods ended May 31, 2010 and 2009, we incurred $2,250 as compensation for services provided to us by our non-employee director.  Professional fees  Professional fees primarily consist of accounting, audit, tax, legal, and transfer agent fees and fees related to the filing of documents with the Securities and Exchange Commission.  Professional fees decreased $2,644 during the three months ended May 31, 2010 compared to the same period in 2009 substantially as a result of decreases in legal fees of approximately $1,200 and accounting fees of approximately $1,500.  Professional fees decreased $9,435 during the nine months ended May 31, 2010 compared to the same period in 2009 primarily as a result of decreases in legal fees of approximately $5,600 and accounting and tax fees of approximately $4,200.  The overall decrease in professional fees during the three and nine months ended May 31, 2010 compared to the same periods in the prior year is due to the decrease in the level of services we require while we are in the process of identifying new commercial opportunities, includingother innovative medical and health care technologies.
  
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Other operating expenses  Other operating expenses includes travel and entertainment, rent, office supplies, information technology related fees and other administrative costs.  Other operating expenses decreased $2,031 during the three months ended May 31, 2010 compared to the same period in 2009 substantially as a result of a decrease in information technology related fees of approximately $1,900 as a result of a reduction in web hosting fees.  Other operating expenses decreased $6,334 during the nine months ended May 31, 2010 compared to the same period in 2009 substantially as a result of a decrease in information technology related fees of approximately $3,000 as a result of a reduction in web hosting fees and a decrease of approximately $1,900 in travel and entertainment related expense.  Other income  Interest income  Interest income was $0 for both of the three month periods ended May 31, 2010 and 2009. Interest income was $0 and $418 for the nine months ended May 31, 2010 and 2009. The decrease in interest income is due to the closing of our administrative office in Vancouver, British Columbia, Canada, effective August 31, 2008.  As of December 31, 2008,we transferred all of the funds in our 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 we will continue as a going concern.  We incurred cumulative losses of $380,484 through May 31, 2010.Due to the "start up" nature of our business, we expect to incur losses as we continue to identify and develop new technologies.These conditions raise substantial doubt about our ability to continue as a going concern.  Management recognizes that in order to meet our capital requirements, and continue to operate, additional financing will be necessary.  We are evaluating alternative sources of financing to improve our cash position and are undertaking efforts to raise capital, but there is no assurance that such additional funds will be available for us to finance our operations on acceptable terms, if at all.  If we are unable to raise additional capital or generate positive cash flow, it is unlikely that we 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.  Our principal source of liquidity is cash in the bank.  At May 31, 2010, we had a cash and cash equivalents balance of $186,588. We have financed our operations primarily from $400,000 received from Octillion Corp., our 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 $55,257 for the nine months ended May 31, 2010 compared to net cash used of $70,029for the nine months ended May 31, 2009.  The decrease in cash used in operating activities of $14,772 is primarily due to decreases in professional fees and other operating expenses (please refer to explanations above).  Related Party Transactions  During both of the three month periods ended May 31, 2010 and 2009, we incurred $750 as compensation for services that a non-employee director provided to us.  During both of the nine month periods ended May 31, 2010 and 2009, we incurred $2,250 as compensation for services that a non-employee director provided to us.  As of May 31, 2010, we owed $250 to the non-employee director for services rendered to us, which is included in accounts payable.  Our corporate office is located at 3905 National Drive, Suite 110, Burtonsville, MD, 20866.  This premise is leased by the MVP Law Group, P.A, of which our Chief Executive Officer is the founder.  The MVP Law Group, P.A. does not currently charge us rent to utilize this space.  Related party transactions are in the normal course of operations and are recorded at amounts established and agreed between the related parties.
  
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Other Contractual Obligations  At May 31, 2010, wedo not have any contractual obligations.  Off-Balance Sheet Arrangements  We have no off-balance sheet arrangements.  Recent Accounting Pronouncements  SeeNote 4.  Summary of Significant Accounting Policies to the Financial Statements in this Form 10-Q.
  
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Item 4T.   Controls and Procedures  (a) Disclosure Controls and Procedures  Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our 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, our Chief Executive Officer and Chief Financial Officer concluded as of May 31, 2010 that our disclosure controls and procedures were effective such that the information required to be disclosed in our 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 our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.  (b) Internal Control over Financial Reporting  There were no changes in our 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, our internal control over financial reporting.
  
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PART II  OTHER INFORMATION  Item 1.   Legal Proceedings.  None.  Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds.  None.  Item 3.   Defaults Upon Senior Securities  None.  Item 4.   Submission of Matters to a Vote of Security Holders  None.  Item 5.   Other Information  None.  Item 6.   Exhibits  3.1          Articles of Incorporation, as amended.(3)  3.2          By Laws. (1)  10.1        Option Agreement, dated April 29, 2005, between MicroChannel Technologies Corporation and Iowa State Research Foundation, Inc. (1)  10.2        Amended Option Agreement No. 1 between MicroChannel Technologies Corporation and Iowa State Research Foundation, Inc. dated October 13, 2005.(1)  10.3        Amended Option Agreement No. 2 between MicroChannel Technologies Corporation and Iowa State Research Foundation, Inc. dated February 8, 2007.(1)  10.4        Amended Option Agreement No. 3 between MicroChannel Technologies Corporation and Iowa State Research Foundation, Inc. dated November 12, 2007.(2)  31.1Certification 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. *  32.1Certification of Principal Executive Officer Pursuant to 18 USC. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *  32.2Certification 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.  (1)Incorporated by reference to the exhibits filed as part of the report on Form SB-2 filed by MicroChannel Technologies Corporation on October 1, 2007.
  
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(2)Incorporated by reference to the exhibits filed as part of the report on Form SB-2/A filed by MicroChannel Technologies Corporation on November 16, 2007.  (3)Incorporated by reference to the exhibits filed as part of the report on Form 10-Q filed by MicroChannel Technologies Corporation on April 8, 2010.
  
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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)July 15, 2010
     By:/s/ Meetesh PatelMeetesh PatelPresident, Chief Executive Officer, DirectorJuly 15, 2010
     By:/s/ David GamacheDavid GamacheChief Financial Officer, Treasurer, Secretary,Director
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