UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


_______________




FORM
10-Q


_______________




x
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
the quarterly period ended March 31, 2009




o
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the transition period from
______to______.




SONASOFT
CORP.


(Exact
name of registrant as specified in Charter)




California
              
              333-150750
              
              51-0439372(State
      or other jurisdiction of
                incorporation
      or organization)
              
              (Commission
      File No.)
              
              (IRS
      Employee Identification No.)





6489
Camden Avenue, Suite 105


San
Jose, CA  95120


(Address
of Principal Executive Offices)


_______________




(408)
927-6200


(Issuer
Telephone number)


_______________




(Former
Name or Former Address if Changed Since Last Report)




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


Yes x No o




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


Yes o No o





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




Large
Accelerated Filer o    Accelerated
Filer o     Non-Accelerated
Filer o     Smaller
Reporting Company x





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


Yes o No x





State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of May 15, 2009:  182,284,000 shares of Common Stock.













SONASOFT
CORP.





FORM
10-Q


March
31, 2009


INDEX






PART
I-- FINANCIAL INFORMATION




Item
      1.
            Financial
      StatementsItem
      2.
            Management’s
      Discussion and Analysis of Financial ConditionItem
      3
            Quantitative
      and Qualitative Disclosures About Market RiskItem
      4T.
            Control
      and Procedures




PART
II-- OTHER INFORMATION




Item
      1
            Legal
      ProceedingsItem
      1A
            Risk
      FactorsItem
      2.
            Unregistered
      Sales of Equity Securities and Use of ProceedsItem
      3.
            Defaults
      Upon Senior SecuritiesItem
      4.
            Submission
      of Matters to a Vote of Security HoldersItem
      5.
            Other
      InformationItem
      6.
            Exhibits
      and Reports on Form 8-K




SIGNATURE













Item
1. Financial Information





SONASOFT
CORPORATION
 
 
 
 
 CONTENTS
 
 
 PAGE
                1
                CONDENSED
      BALANCE SHEETS AS OF MARCH 31, 2009 (UNAUDTIED) AND DECEMBER 31, 2008
      (AUDITED)PAGE
                2
                CONDENSED
      STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND
      2008PAGE
                3
                CONDENSED
      STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIENCY FOR THE THREE MONTHS
      ENDED MARCH 31, 2009PAGE
                4
                CONDENSED
      STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND
      2008PAGES
                5 -
      13
                NOTES
      TO CONDENSED FINANCIAL STATEMENTS
   
  SONASOFT, CORP.CONDENSED
      BALANCE SHEETSASSETSAs
      of
                              March
      31,
                            
                            
                            As
      of
                              December,
      312009
                            
                            
                            2008(UNAUDITED)Current
      AssetsCash
                            
                            $
                            599,669
                            
                            
                            $
                            890,806Accounts
      receivable, net
                            
                            
                            70,034
                            
                            
                            
                            95,602Prepaid
      expenses
                            
                            
                            37,500
                            
                            
                            
                            -Other
      current assets
                            
                            
                            1,819
                            
                            
                            
                            1,064Total
      Current Assets
                            
                            
                            709,022
                            
                            
                            
                            987,472Fixed
      assets, net
                            
                            
                            42,518
                            
                            
                            
                            35,233Deposit
                            
                            
                            -
                            
                            
                            
                            -Intangible
      assets, net
                            
                            
                            2,638
                            
                            
                            
                            2,638Total
      Other Assets
                            
                            
                            2,638
                            
                            
                            
                            2,638Total
      Assets
                            
                            $
                            754,178
                            
                            
                            $
                            1,025,343LIABILITIES AND STOCKHOLDERS'
      DEFICIENCYCurrent
      LiabilitiesAccounts
      payable
                            
                            $
                            126,335
                            
                            
                            $
                            115,326Accrued
      expenses - related party
                            
                            
                            912,872
                            
                            
                            
                            904,105Accrued
      expenses -non related party
                            
                            
                            521,290
                            
                            
                            
                            503,856Royalty
      payable
                            
                            
                            160,007
                            
                            
                            
                            150,498Notes
      payable - related party, net
                            
                            
                            122,130
                            
                            
                            
                            122,130Total
      Current Liabilities
                            
                            
                            1,842,634
                            
                            
                            
                            1,795,915Long
      Term LiabilitiesNotes
      payable - related party, net
                            
                            
                            66,867
                            
                            
                            
                            21,882Total
      Long Term Liabilities
                            
                            
                            66,867
                            
                            
                            
                            21,882Commitments
      and Contingencies
                            
                            
                            -
                            
                            
                            
                            -Stockholders'
      DeficiencyCommon
      stock, no par value; 100,000,000 shares authorized,36,387,877 and 36,219,877 shares issued and outstanding,
      respectively
                            
                            
                            8,407,200
                            
                            
                            
                            8,370,808Stock Subscription Receivable
                            
                            
                            (111
                            )
                            
                            
                            (111
                            )Accumulated deficit
                            
                            
                            (9,562,412
                            )
                            
                            
                            (9,163,151
                            )Total
      Stockholders' Deficiency
                            
                            
                            (1,155,323
                            )
                            
                            
                            (792,454
                            )-
                            
                            
                            
                            -Total
      Liabilities and Stockholders' Deficiency
                            
                            $
                            754,178
                            
                            
                            $
                            1,025,343
   See
accompanying notes to condensed unaudited financial statements
 -1-
  SONASOFT, CORP.CONDENSED
      STATEMENT OF OPERATIONS(UNAUDITED)For
      the Three Months EndedMarch
      31,
                        
                        
                        March
      31,2009
                        
                        
                        2008Revenue
                        
                        $
                        190,176
                        
                        
                        $
                        194,648Operating
      ExpensesOfficer's
      compensation
                        
                        
                        27,000
                        
                        
                        
                        30,000Salaries
                        
                        
                        233,937
                        
                        
                        
                        214,353Consulting
      fees
                        
                        
                        10,830
                        
                        
                        
                        95,364Marketing
      and advertising
                        
                        
                        33,970
                        
                        
                        
                        16,119Rent
                        
                        
                        15,000
                        
                        
                        
                        38,063Payroll
      taxes
                        
                        
                        28,868
                        
                        
                        
                        27,991General
      and administrative
                        
                        
                        83,777
                        
                        
                        
                        192,159Research
      and development
                        
                        
                        89,327
                        
                        
                        
                        96,952Total
      Operating Expenses
                        
                        
                        522,709
                        
                        
                        
                        711,001Net
      loss from Operations
                        
                        
                        (332,533
                        )
                        
                        
                        (516,353
                        )Other
      Income (Expense)Interest
      income
                        
                        
                        861
                        
                        
                        
                        8,411Interest
      expense
                        
                        
                        (58,080
                        )
                        
                        
                        -Royalty
      expense
                        
                        
                        (9,509
                        )
                        
                        
                        (9,732
                        )Total
      Other Income (Expense)
                        
                        
                        (66,728
                        )
                        
                        
                        (1,321
                        )Loss
      from Operations before Provision for Income Taxes
                        
                        
                        (399,261
                        )
                        
                        
                        (517,674
                        )Provision
      for Income Taxes
                        
                        
                        -
                        
                        
                        
                        -Net
      Loss
                        
                        $
                        (399,261
                        )
                        
                        $
                        (517,674
                        )Loss
      per Common Share - Basic and Diluted
                        
                        $
                        (0.01
                        )
                        
                        $
                        (0.02
                        )Weighted
      average number of shares outstandingduring
      the period - Basic and Diluted
                        
                        
                        36,337,344
                        
                        
                        
                        31,722,853
   See
accompanying notes to condensed unaudited financial statements
 -2-
  SONASOFT, CORP.CONDENSED
      STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCYFOR THE THREE MONTH'S ENDED MARCH 31,
      2009StockCommon
      Stock
                            
                            
                            Paid
      In
                            
                            
                            Subscription
                            
                            
                            AccumulatedShares
                            
                            
                            Par
                            
                            
                            Capital
                            
                            
                            Receivable
                            
                            
                            Deficit
                            
                            
                            TotalBalance,
      December 31, 2008
                            
                            
                            36,219,877
                            
                            
                            $
                            -
                            
                            
                            $
                            8,370,808
                            
                            
                            $
                            (111
                            )
                            
                            $
                            (9,163,151
                            )
                            
                            $
                            (792,454
                            )Stock
      issued for services
                            
                            
                            135,000
                            
                            
                            
                            
                            
                            
                            
                            29,242
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            29,242Stock
      issued for cash
                            
                            
                            33,000
                            
                            
                            
                            
                            
                            
                            
                            7,150
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            7,150Net
      loss
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            (399,261
                            )
                            
                            
                            (399,261
                            )Balance,
      March 31, 2009 (UNAUDITED)
                            
                            
                            36,387,877
                            
                            
                            
                            -
                            
                            
                            
                            8,407,200
                            
                            
                            
                            (111
                            )
                            
                            
                            (9,562,412
                            )
                            
                            
                            (1,155,323
                            )
   See
accompanying notes to condensed unaudited financial statements
 -3-
  SONASOFT,
      CORP.CONDENSED
      STATEMENT OF CASH FLOWS(UNAUDITED)For
      the Three Months
                                  Ended
      March 31,2009
                                
                                
                                2008Cash
      Flows From Operating Activities:Net
      Loss
                                
                                $
                                (399,261
                                )
                                
                                $
                                (517,674
                                )Adjustments
      to reconcile net loss to net cash used in operationsIssuances
      of shares for services rendered
                                
                                
                                29,242
                                
                                
                                
                                98,733Amortization
      of debt discount
                                
                                
                                44,985
                                
                                
                                
                                -Options
      issued to employee
                                
                                
                                -
                                
                                
                                
                                49,936Depreciation
                                
                                
                                1,624
                                
                                
                                
                                6,060Changes
      in operating assets and liabilities:Accounts
      receivable
                                
                                
                                25,568
                                
                                
                                
                                (42,795
                                )Prepaid
      expenses
                                
                                
                                (37,500
                                )
                                
                                
                                -Other
      current assets
                                
                                
                                (755
                                )
                                
                                
                                -Accrued
      expenses - non related party
                                
                                
                                17,434
                                
                                
                                
                                (8,906
                                )Accrued
      expenses - related party
                                
                                
                                8,767
                                
                                
                                
                                -Royalty
      payable
                                
                                
                                9,509
                                
                                
                                
                                9,733Accounts
      payable
                                
                                
                                11,009
                                
                                
                                
                                9,033Net
      Cash Used In Operating Activities
                                
                                
                                (289,378
                                )
                                
                                
                                (395,880
                                )Cash
      Flows From Investing Activities:Purchase
      of Assets
                                
                                
                                (8,909
                                )
                                
                                
                                -Net
      Cash Used In Investing Activities
                                
                                
                                (8,909
                                )
                                
                                
                                -Cash
      Flows From Financing Activities:Proceeds
      from loans payable, net
                                
                                
                                -
                                
                                
                                
                                14,063Common
      Stock issued for cash
                                
                                
                                7,150
                                
                                
                                
                                435,657Net
      Cash Provided by Financing Activities
                                
                                
                                7,150
                                
                                
                                
                                449,720Net
      Decrease in Cash
                                
                                
                                (291,137
                                )
                                
                                
                                53,840Cash
      at Beginning of Period
                                
                                
                                890,806
                                
                                
                                
                                938,934Cash
      at End of Period
                                
                                $
                                599,669
                                
                                
                                $
                                992,774Supplemental disclosure of cash flow
      information:Cash
      paid for interest
                                
                                $
                                50,596
                                
                                
                                $
                                -Cash
      paid for taxes
                                
                                $
                                -
                                
                                
                                $
                                -
   See
accompanying notes to condensed unaudited financial statements
 -4-
   SONASOFT
CORP.
 MARCH
31, 2009
 NOTES TO CONDENSED FINANCIAL
STATEMENTS
 (UNAUDITED)
 
 NOTE
1     SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES AND ORGANIZATION
 
 (A)
Organization
  Sonasoft
Corp. (the "Company") was incorporated under the laws of the State of
California on December 18, 2002. The Company develops software that automates
the disk-to-disk backup and recovery process for Microsoft Exchange, SQL and
Windows Servers with integrated data protection, high availability and disaster
recovery solutions.
  (B) Basis of
Presentation
 
 The
unaudited condensed financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in the United States of
America and the rules and regulations of the Securities and Exchange Commission
for interim information. Accordingly, they do not include all the information
necessary for a comprehensive presentation of financial position and results of
operation.
 
 However,
the information included in these interim financial statements reflects all
adjustments (consisting solely of normal recurring adjustments) which are, in
the opinion of management, necessary for the fair presentation of the financial
position and the results of operations. Results shown for interim periods
are not necessarily indicative of the results to be obtained for a full
year.
  (C) Use of
Estimates
  In
preparing financial statements in conformity with generally accepted accounting
principles, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reported period. Actual results could differ from those
estimates.
  (D) Cash and Cash
Equivalents
  For
purposes of the cash flow statements, the Company considers all highly liquid
investments with original maturities of three months or less at the time of
purchase to be cash equivalents. The Company at times has cash in banks in
excess of FDIC insurance limits and places its temporary cash investments with
high credit quality financial institutions. At March 31, 2009, the Company had
approximately $284,050 in cash balances at financial institutions which were in
excess of the FDIC insured limits.
  (E) Loss Per
Share
 
 Basic and
diluted net loss per common share is computed based upon the weighted average
common shares outstanding as defined by Financial Accounting Standards No. 128,
“Earnings per Share.”  As of March 31, 2009 and 2008 there were
8,667,727 and 6,590,000 common share equivalents outstanding
respectively.  Common stocks equivalents have been excluded from the
diluted net loss per share as the amounts are anti-diluted.
  (F) Research and Development
Costs
  The
Company expenses all research and development costs as incurred for which there
is no alternative future use. These costs also include expensing of employee
compensation and employee stock based compensation.
   -5-
  SONASOFT
CORP.
 MARCH
31, 2009
 NOTES TO CONDENSED FINANCIAL
STATEMENTS
 (UNAUDITED)
 
  (G) Income
Taxes
  The
Company accounts for income taxes under the Statement of Financial Accounting
Standards Board Statement of Financial Accounting Standard NO. 109, “Accounting
for Income Taxes” (“Statement 109”).  Under Statement 109, deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.  Under
Statement 109, the effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date.
  (H) Revenue
Recognition
  Revenue
is recognized when earned in accordance with applicable accounting standard,
including SOP 97-2, as amended. Revenue from software arrangements with end
users is recognized upon final delivery of the software, provided that
collection is probable and no significant obligations remain. Maintenance
arrangement revenue is deferred and recognized over the service
period.
  (I) Property &
Equipment
  We record
our property and equipment at cost and depreciate these assets on a
straight-line basis to their estimated residual values over their estimated
useful lives of 3 to 7 years.
  (J) Stock-Based
Compensation
  The
Company accounts for its stock-based compensation under the provisions of SFAS
No.123(R)“Accounting for
Stock Based Compensation.”  Under SFAS No. 123(R), the
Company is permitted to record expenses for stock options and other employee
compensation plans based on their fair value at the date of grant. Any such
compensation cost is charged to expense on a straight-line basis over the
periods the options vest. If the options had cashless exercise provisions, the
Company utilized variable accounting.
  Common
stock, stock options and common stock warrants issued to other than employees or
directors are recorded on the basis of their fair value, as required by SFAS
No. 123(R), which is measured as of the date required by EITF
Issue 96-18,“Accounting
for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or
in Conjunction with Selling, Goods or Services.” In accordance with
EITF 96-18, the stock options or common stock warrants are valued using the
Black-Scholes model on the basis of the market price of the underlying common
stock on the “valuation date,” which for options and warrants related to
contracts that have substantial disincentives to non-performance is the date of
the contract, and for all other contracts is the vesting date. Expense related
to the options and warrants is recognized on a straight-line basis over the
shorter of the period over which services are to be received or the vesting
period. Where expense must be recognized prior to a valuation date, the expense
is computed under the Black-Scholes model on the basis of the market price of
the underlying common stock at the end of the period, and any subsequent changes
in the market price of the underlying common stock up through the valuation date
is reflected in the expense recorded in the subsequent period in which that
change occurs.
  (K) Fair Value of Financial
Instruments
  The
carrying amounts of the Company’s financial instruments including accounts
receivable, accounts payable and accrued expenses approximate their fair value
due to the relatively short period to maturity for these
instruments.
  (L) Business
Segments
  The
Company operates in one segment and therefore segment information is not
presented.
   -6-
 SONASOFT
CORP.
 MARCH
31, 2009
 NOTES TO CONDENSED FINANCIAL
STATEMENTS
 (UNAUDITED)
   (M) Advertising
Costs
  Advertising
costs are expensed as incurred and include the costs of public relations
activities. These costs are included in selling, general and administrative
expenses and totaled $33,970 and $16,119 in the year ended March 31, 2009 and
2008 respectively.
 
 (N) Identifiable Intangible
Assets
  As of
March 31, 2009, $2,638 of costs related to filing patent applications has been
capitalized. When patents are approved, the costs are amortized over the life of
the patent.  All costs for patents not approved will be expensed at
that time of denial.
  (O) Long-Lived
Assets
  Long-lived
assets and certain identifiable intangible assets related to those assets are
periodically reviewed for impairment whenever circumstances and situations
change such that there is an indication that the carrying amounts may not be
recoverable. If the non-discounted future cash flows of the enterprise are less
than their carrying amount, their carrying amounts are reduced to fair value and
an impairment loss is recognized. There was no impairment recorded in 2009 and
2008.
  (P) Recent Accounting
Pronouncements
  In
December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No.
160, “Noncontrolling Interests
in Consolidated Financial Statements – an amendment of ARB No.
51”.  This statement improves the relevance, comparability, and
transparency of the financial information that a reporting entity provides in
its consolidated financial statements by establishing accounting and reporting
standards that require; the ownership interests in subsidiaries held by parties
other than the parent and the amount of consolidated net income attributable to
the parent and to the noncontrolling interest be clearly identified and
presented on the face of the consolidated statement of income, changes in a
parent’s ownership interest while the parent retains its controlling financial
interest in its subsidiary be accounted for consistently, when a subsidiary is
deconsolidated, any retained noncontrolling equity investment in the former
subsidiary be initially measured at fair value, entities provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners.  SFAS No. 160
affects those entities that have an outstanding noncontrolling interest in one
or more subsidiaries or that deconsolidate a subsidiary.  SFAS No. 160
is effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. Early adoption is prohibited. The
adoption of this statement did not have a material effect on the Company's
financial statements.
  In June
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133”
(SFAS 161). This statement is intended to improve transparency in financial
reporting by requiring enhanced disclosures of an entity’s derivative
instruments and hedging activities and their effects on the entity’s financial
position, financial performance, and cash flows. SFAS 161 applies to all
derivative instruments within the scope of SFAS 133, “Accounting for Derivative
Instruments and Hedging Activities” (SFAS 133) as well as related hedged items,
bifurcated derivatives, and nonderivative instruments that are designated and
qualify as hedging instruments. Entities with instruments subject to SFAS 161
must provide more robust qualitative disclosures and expanded quantitative
disclosures. SFAS 161 is effective prospectively for financial statements issued
for fiscal years and interim periods beginning after November 15, 2008,
with early application permitted.  The adoption of this statement did
not have a material effect on the Company's financial statements.
 
 In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS No. 162 identifies the sources of accounting
principles and provides entities with a framework for selecting the principles
used in preparation of financial statements that are presented in conformity
with GAAP. The current GAAP hierarchy has been criticized because it is directed
to the auditor rather than the entity, it is complex, and it ranks FASB
Statements of Financial Accounting Concepts, which are subject to the same level
of due process as FASB Statements of Financial Accounting Standards, below
industry practices that are widely recognized as generally accepted but that are
not subject to due process. The Board believes the GAAP hierarchy should be
directed to entities because it is the entity (not its auditors) that is
responsible for selecting accounting principles for financial statements that
are presented in conformity with GAAP. SFAS 162 is effective 60 days following
the SEC’s approval of PCAOB Auditing Standard No. 6, Evaluating Consistency
of Financial Statements (AS/6). The adoption of FASB 162 is not expected to have
a material impact on the Company’s financial position.
   -7-
 SONASOFT
CORP.
 MARCH
31, 2009
 NOTES TO CONDENSED FINANCIAL
STATEMENTS
 (UNAUDITED)
 
 In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts-an interpretation of FASB Statement No. 60.” Diversity
exists in practice in accounting for financial guarantee insurance contracts by
insurance enterprises under FASB Statement No. 60, Accounting and Reporting by
Insurance Enterprises. This results in inconsistencies in the recognition and
measurement of claim liabilities. This Statement requires that an insurance
enterprise recognize a claim liability prior to an event of default (insured
event) when there is evidence that credit deterioration has occurred in an
insured financial obligation. This Statement requires expanded disclosures about
financial guarantee insurance contracts. The accounting and disclosure
requirements of the Statement will improve the quality of information provided
to users of financial statements.  SFAS 163 is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. The adoption of FASB 163 did not have
a material impact on the Company’s financial position.
 
 NOTE
2     GOING
CONCERN
  As
reflected in the accompanying financial statements, the Company has a net loss
of $399,261, a working capital deficiency of $1,133,612 and a stockholders’
deficiency of $1,155,323 at March 31, 2009.  For the quarter ended
March 31, 2009, the Company used cash of $289,378 in operations. This raises
substantial doubt about its ability to continue as a going
concern.  The ability of the Company to continue as a going concern is
dependent on the Company’s ability to raise additional capital and implement its
business plan.  The financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.
  Management
believes that actions presently being taken to obtain additional funding and to
implement its strategic sales plan provide the opportunity for the Company to
continue as a going concern.
  NOTE
3      ACCOUNTS
RECEIVABLE
  Accounts
receivable at March 31, 2009 and December 31, 2008 consisted of the
following:
  2009
                              
                              
                              
                              2008Trade
      and other receivables
                              
                              $
                              70,034
                              
                              
                              $
                              95,602Less:
      Allowance for doubtful accounts
                              
                              
                              -
                              
                              
                              
                              -$
                              70,034
                              
                              
                              $
                              95,602
 
 The bad
debt expense for the period ended March 31, 2009 and the year ended December 31,
2008 was $0 and $0, respectively.
 
 
 
 -8-
 SONASOFT
CORP.
 MARCH
31, 2009
 NOTES TO CONDENSED FINANCIAL
STATEMENTS
 (UNAUDITED)
 
 
 NOTE
4     PROPERTY AND
EQUIPMENT
  Property
and equipment at March 31, 2009 and December 31, 2008 consisted of the
following:
  2009
                              
                              
                              
                              2008Office
      equipment
                              
                              $
                              22,724
                              
                              
                              $
                              13,815Office
      furniture
                              
                              
                              -
                              
                              
                              
                              -Leasehold
      improvements
                              
                              
                              -
                              
                              
                              
                              -Computer
      equipment
                              
                              
                              101,875
                              
                              
                              
                              101,875Less:
      Accumulated depreciation
                              
                              
                              82,081
                              
                              
                              
                              80,457$
                              42,518
                              
                              
                              $
                              35,233
  Depreciation
expense for the Period ended March 31, 2009 and year ended December
31, 2008 was $1,624 and $23,977 respectively.
 
 NOTE
5     STOCKHOLDERS’
EQUITY
  (A) Common Stock Issued for
Cash
  During
the quarter ended March 31, 2009, the Company issued 33,000 shares of common
stock for cash for $7,150.
 
 (B) Common Stock Issued for
Services
 
 During
the quarter ended March 31, 2009, the Company issued 135,000 of common stock for
services provided by consultants; these shares were valued at a recent cash
offer price of $29,242.
 
 NOTE
6     STOCK OPTION
PLAN
  Effective
January 1, 2006, transactions under the Company’s 2003 Plan (as defined below)
were accounted for in accordance with the recognition and measurement provisions
of SFAS no. 123 (revised), “Share-Based Payment”, which replaces SFAS No. 123,
“Accounting for Stock-Based Compensation”, and supersedes APB Opinion No. 25,
“Accounting for Stock Issued to Employees”, and related
interpretations.  SFAS No. 123(R) requires compensation costs related
to share-based payment transactions, including employee stock options, to be
recognized in the financial statements.  In addition, the Company
adheres to the guidance set forth within SEC Staff Accounting Bulletin No. 107,
which provides the views of the staff of the SEC regarding the interaction
between SFAS No. 123(R) and certain SEC rules and regulations and provides
interpretations with respect to the valuation of share-based payments for public
companies.
  In
adopting SFAS No. 123(R), the Company applied the modified prospective approach
to transition.  Under the modified prospective approach, the
provisions of SFAS No. 123(R) are applied to new awards and to awards modified,
repurchased, or cancelled after the effective date.  Additionally,
compensation costs for the portion of awards for which the requisite service has
not been rendered that are outstanding as of the effective date are recognized
as the requisite services are rendered on or after such date.  The
compensation costs for that portion of awards are based on the grant-date fair
value of those awards as calculated for either recognition of pro-forma
disclosures under SFAS No. 123.
  As a
result of the adoption of SFAS No. 123(R), the Company’s results for the quarter
ended March 31, 2009 and 2008 includes share-based compensation expense totaling
$0 and $49,936 respectively, which has been included in salaries
expense.  No income tax benefit has been recognized in the income
statements for share-based compensation arrangements as the Company has provided
a 100% valuation allowance on its net deferred tax asset.
   -9-
  SONASOFT
CORP.
 MARCH
31, 2009
 NOTES TO CONDENSED FINANCIAL
STATEMENTS
 (UNAUDITED)
   Stock
option compensation expense for the period ended March 31, 2009 and
2008, is the estimated fair value of options granted, amortized on a
straight line basis over the requisite service period for the entire portion of
the award.
 
 Black-Scholes
Valuation
  The fair
value of options at the date of grant is estimated using the Black Scholes
option pricing model.  The assumptions made in calculating the fair
values of options are as follows:
  For
      the period ended
                        March
      31,
                        2009
                      For
      the period ended
                        March
      31,
                        2008Expected
      term (in years)
                      N/A
                      3Expected
      volatility
                      N/A
                      25%
      to 78%Rick-free
      interest rate
                      N/A
                      1.79%
      to 3.05%
  There
were Nil and 785,000 stock option awards granted during the quarters ended March
31, 2009 and 2008 respectively.
  Plan
Information
  In
February 2003, the 2003 Incentive and Non-Statutory Stock Option Plan was
approved and adopted by the Board of Directors.  The 2003 Plan became
effective upon the approval of the holders of the Company’s stock at the
Company’s annual stockholders meeting held on September 4,
2003.  Under the 2003 Plan, the Company may grant stock options to its
employees, officers, and other key persons employed or retained by the Company
and any non-employee director, consultant, vendor or other individual having a
business relationship with the Company.  Options are granted at
various times and usually vest over a thirty-six (36) month period and also in
the event of filing with SEC all the unvested options will become fully
vested. As of March 31, 2009 and 2008 the Company had total options
pursuant to the 2003 Plan of 6,395,000 and 6,590,000 outstanding,
respectively.
  A summary
of the status of Company’s fixed stock option plan as of March 31, 2009
(unaudited), and the changes during the years then ended is presented
below:
  Fixed
Options
 
 Qty
                            
                            
                            Weighted
                              Average
                              Exercise
      PriceOutstanding
      at December 31, 2008
                            
                            
                            6,395,000
                            
                            
                            $
                            0.17Issued
                            
                            
                            -
                            
                            
                            $
                            0.00Exercised
                            
                            
                            -
                            
                            
                            $
                            (0.00
                            )Cancelled
                            
                            
                            -
                            
                            
                            $
                            (0.00
                            )Outstanding
      at March 31, 2009
                            
                            
                            6,395,000
                            
                            
                            $
                            0.17Exercisable
      at March 31, 2009
                            
                            
                            6,395,000
   -10-
  SONASOFT
CORP.
 MARCH
31, 2009
 NOTES TO CONDENSED FINANCIAL
STATEMENTS
 (UNAUDITED)
  Exercise
      Price
                        Number
                          Outstanding
                          March
      31, 2008
                        Weighted
                          Average
                          remaining
                          Contractual
      Life
                        Weighted
                          Average
                          Exercise Price
                        Number
                          Exercisable
      at
                          March
      31, 2008
                        Weighted
                          Average
                          Exercise
      Price.01-.10
                        3,115,000
                        -
                        0.07
                        3,115,000
                        0.07.11-.20
                        845,000
                        .81
                        0.20
                        739,025
                        0.20.21-.30
                        2,630,000
                        1.74
                        0.30
                        876,381
                        0.306,590,000
                        
                        
                        4,730,407
   Exercise
      Price
                        Number
                          Outstanding
                          March
      31, 2009
                        Weighted
                          Average
                          remaining
                          Contractual
      Life
                        Weighted
                          Average
                          exercise Price
                        Number
                          Exercisable
      at
                          March
      31, 2009
                        Weighted
                          Average
                          Exercise
      Price.01-.10
                        3,115,000
                        -
                        0.07
                        3,115,000
                        0.07.11-.20
                        845,000
                        .81
                        0.20
                        845,000
                        0.20.21-.30
                        2,435,000
                        1.74
                        0.30
                        2,435,000
                        0.306,395,000
                        
                        
                        6,395,000
 
 NOTE
7     COMMITMENTS AND
CONTINGENCIES
  (A) Employment
Agreement
  The
company has entered into an employment agreement with its Chief Executive
Officer through the year 2013 at an annual minimum salary of $150,000 per year,
with additional fringe benefits as determined by the Board of
Directors.  In the event of termination of the agreement by the
company, the company is required to pay a severance payment equivalent to 60
months of salary at the rate, and with the benefits, in effect at the date of
termination.
  The
company has also entered into similar agreements each extending through the year
2011 with four other employees/managers at an average annual salary of
$113,000.  In the event of termination of the agreement by the
company, the company is required to pay a severance payment equivalent to 12
months of salary at the rate, and with the benefits, in effect at the date of
termination.  The total commitment as of March 31, 2009 under the
employment agreements are summarized below:
  2009
                        
                        $
                        450,0002010
                        
                        
                        600,0002011
                        
                        
                        600,0002012
                        
                        
                        150,0002013
                        
                        
                        150,000Total
                        
                        $
                        1,950,000
  (B) Product
Development/Royalty Agreement
  In
November 2007, the Company entered into a product development agreement with a
software development company (developer).  Under the terms of the
agreement, the developer will be entitled to a royalty based on 10% of net sales
of the product developed until such time as two hundred percent (200%) of the
actual project cost has been cumulatively received by the
developer.  After such time, the developer would receive 5% of net
sales of the product developed until such time as an additional three hundred
percent (300%) of the actual project cost has been cumulatively received by the
developer, resulting in a total payment to the developer of five hundred percent
(500%) of the actual project cost.  At a point in time in the future
that five hundred percent (500%) of the actual project cost has been received by
the developer, no further royalties shall be owed.  As of March 31,
2009, the total estimated royalty liability only upon sales of the new product
is up to $1,525,015.
   -11-
 SONASOFT
CORP.
 MARCH
31, 2009 AND 2008
 NOTES TO CONDENSED FINANCIAL
STATEMENTS
 (UNAUDITED)
 (C) Royalty
Agreement
  During
the year 2003, the Company entered into royalty agreements with
investors.  The maximum liability under the agreement will be
$1,500,000.  The maximum amount due to investors in each year will be
5% of revenue up to a total of $1,500,000.  Such premium is payable
only if management of the Company reasonably determines that the company has the
cash available to pay.  In accordance with the signed royalty
agreements, the Company is accruing the royalty premium at 5% of
revenue.  As of March 31, 2009 and 2008, $160,007 and $121,721 has
been accrued.
 
 (D) Lease
Agreement
  The
company had entered into a lease agreement for two office suites within an
office building with a related party for a term of 3 years ending on April 30,
2010.  On November 1, 2008, the Company vacated one of the office
suites. The new rent of $5,000 per month with an increase of 3% to $5,150 per
month beginning May 1, 2009 was confirmed by landlord via letter dated April 24,
2009. The following summarizes obligations under the existing lease as of March
31, 2009:
 
 2009
                            
                            $
                            46,2002010
                            
                            
                            20,600Total
                            
                            $
                            66,800
 
 The
company has entered into three lease agreements for computer equipment with an
unrelated third party for a term of 3 years ending in April, May, and September
of 2011. The company has entered into one lease agreement for office equipment
with an unrelated third party for a term of 5 years ending December 2013.
The annual lease amounts payable under the leases are $346, $1,091, $3,475
and $2,440 respectively.  The following summarizes obligations under the
existing leases as of December 31, 2008:
  2009
                            
                            $
                            5,5152010
                            
                            
                            7,3522011
                            
                            
                            5,2982012
                            
                            
                            2,4402013
                            
                            
                            2,440Total
                            
                            $
                            23,045
  (E) Employment Related
Lawsuit
  In 2006,
an ex-employee filed a lawsuit against the Company for wrongful
termination.  The Company has accrued a tentative settlement with the
ex-employee for the payment of $152,500 as of March 31, 2009.  As of
May 06, 2009, the tentative settlement with ex-employee was not finalized or
agreed upon by both parties.
  NOTE
8     RELATED PARTY
TRANSACTIONS
  On
January 4, 2007, the company entered into an addendum to the lease agreement for
their office space with the owner who is a Director of the
Company.  In consideration for the unpaid amounts of rent and
leasehold improvements, the Company issued a convertible note
payable.  On April 3, 2008, the Company entered into an addendum to
the lease agreement for their office with the owner who is a Director which
stated that all amounts of unpaid rent and leasehold improvements could only be
made in cash. (See Note 9).
 
  -12-
 
 SONASOFT
CORP.
 MARCH
31, 2009
 NOTES TO CONDENSED FINANCIAL
STATEMENTS
 (UNAUDITED)
   NOTE
9    NOTE
PAYABLE – RELATED PARTY
  In 2007,
the Company entered into a convertible note agreement with its landlord who is
also a director.  The note is convertible into common stock at $0.30
per share at the election of the note holder.  The value of the
conversion option is equal to recent cash offering prices and no beneficial
conversion was recognized in accordance with EITF 98-5 and EITF
00-19.  On April 3, 2008, the Company entered into an addendum to the
lease agreement for their office with the owner who is a Director which stated
that all amounts of unpaid rent and leasehold improvements could only made in
cash. (See Note 8).
  On
December 19, 2008, the company has issued a note to one of their directors for
cash received of $500,000 on terms of 10% per interest per year and payable 36
months after issuance. The first interest payment of $50,000 was due sixty (60)
days after the issuance of the note and made in January of 2009. In
conjunction with the issuance of the note payable, the Company also granted
warrants for 2,272,727 shares of common stock at an exercise price of $0.22
each.  These warrants were valued at $478,118 using the Black-Scholes
valuation method subject to the same assumptions made in calculating a fair
value of the Company's stock options. The fair value of the warrants was treated
as a discount on the note payable and will be amortized over the life of the
note. (See Note 6)  The note is secured by all of the assets of the
company.
 
 Notes
      Payable, Related Party – Face Value
                        
                        $
                        622,130Notes
      Payable, Related Party - Discount
                        
                        
                        433,313188,817Notes
      Payable, Related Party - Current
                        
                        
                        122,130Notes
      Payable, Related Party – Long Term
                        
                        $
                        66,867
  NOTE
10   SUBSEQUENT
EVENTS
 
 Effective
May 1, 2009, Mr. Vass Srinivasan resigned as an officer of the
company.  In a separate agreement effective June 1, 2009, Mr.
Srinivasan was hired as a full time consultant.


-13-




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





Forward-Looking
Statements





The
following discussion may contain certain forward-looking statements. Such
statements are not covered by the safe harbor provisions. These statements
include the plans and objectives of management for future growth of the Company,
including plans and objectives related to the consummation of acquisitions and
future private and public issuances of the Company's equity and debt securities.
The forward-looking statements included herein are based on current expectations
that involve numerous risks and uncertainties. Assumptions relating to the
foregoing involve judgments with respect to, among other things, future
economic, competitive and market conditions and future business decisions, all
of which are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. Although the Company believes that the
assumptions underlying the forward-looking statements are reasonable, any of the
assumptions could be inaccurate and, therefore, there can be no assurance that
the forward-looking statements included in this report will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.





The words
“we,” “us” and “our” refer to the Company. The words or phrases “would be,”
“will allow,” “intends to,” “will likely result,” “are expected to,” “will
continue,” “is anticipated,” “estimate,” “project,” or similar expressions are
intended to identify “forward-looking statements.” Actual results could differ
materially from those projected in the forward looking statements as a result of
a number of risks and uncertainties, including but not limited to: (a) limited
amount of resources devoted to achieving our business plan; (b) our failure to
implement our business plan within the time period we originally planned to
accomplish; (c) our strategies for dealing with negative cash flow; and (d)
other risks that are discussed in this report or included in our previous
filings with the Securities and Exchange Commission.





Results of
Operations





Three Months ended
March 31,2009 (unaudited) Compared to Three Months ended March 31,2008
(Unaudited)





The
following tables set forth key components of our results of operations for the
periods indicated for Sonasoft Corp.





March
      31
                                    
                                    
                                    March
      312009
                                    
                                    
                                    2008(unaudited)
                                    
                                    
                                    (unaudited)Revenue
                                    
                                    $
                                    190,176
                                    
                                    
                                    $
                                    194,648Selling
      Expenses
                                    
                                    
                                    (158,520
                                    )
                                    
                                    
                                    (142,908
                                    )General
      and administrative
                                    
                                    
                                    (274,862
                                    )
                                    
                                    
                                    (471,141
                                    )Research
      and development
                                    
                                    
                                    (89,327
                                    )
                                    
                                    
                                    (96,952
                                    )Total
      operating expenses
                                    
                                    
                                    (522,709
                                    )
                                    
                                    
                                    (711,001
                                    )Net Loss
      from Operations
                                    
                                    
                                    (332,533
                                    )
                                    
                                    
                                    (516,353
                                    )Interest
      expenses
                                    
                                    
                                    (58,080
                                    )
                                    
                                    
                                    -Other
      Expense
                                    
                                    
                                    (8,648
                                    )
                                    
                                    
                                    (1,321)Loss
      from Operations before Provision for income
taxes
                                    
                                    
                                    (399,261
                                    )
                                    
                                    
                                    (517,674
                                    )Provision
      for Income taxes
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Net
      Loss
                                    
                                    $
                                    (399,261
                                    )
                                    
                                    $
                                    (517,674
                                    )Earnings
      per share – Basic and Diluted
                                    
                                    $
                                    (0.01
                                    )
                                    
                                    $
                                    (0.02
                                    )Weighted
      average shares outstanding – Basic and Diluted
                                    
                                    
                                    36,337,334
                                    
                                    
                                    
                                    31,722,853





Net
Revenue:





Net
revenue decreased $4,472 or 2%, from $194,648, in the three months ended March
31, 2008 to $190,176 in the three months ended March31, 2009. The reduction in
sales was mainly due to slow down in economy in general.





Selling
Expenses:





Selling
expenses increased $15,612 or 11% from $142,908 in the three months ended March
31, 2008 to $158,520 in the three months ended March 31, 2009, primarily due to
incentive payments to sales staff for better performance in comparative tough
economic environment. For purposes of the comparisons of the three months ended
March 31, 2009 and 2008, certain expenses that were previously classified as
selling were reclassified to general and administrative in nature.







-14-




General
and Administrative Expenses:





General
and administrative expenses decreased $196,279 or 42% from $471,141 in the three
months ended March 31, 2008 to $274,862 in the three months ended March
31, 2009. The decrease of these expenses was primarily reduction in rent,
consulting fees and stock options related charges.





Research
and Development:





Research
and development decreased $7,625 or 8% from $96,952 in the three months ended
March 31, 2008 to $89,327 in the three months ended March 31, 2009, and consist
primarily of salaries and related expenses of personnel engaged in research and
development activities. The decrease was mainly due to shifting of product
development activity to India.





Income from
Operations:





Operating
loss decreased $183,820 or 36% from $516,353 in the three months ended March 31,
2008 to $332,533 in the three months ended March 31, 2009, primarily due to
decrease in rent, consulting fees and stock option charges.





Other Income
(Expenses):





Other
expenses increased by $65,704 from $1,321 in the three months ended March 31,
2008 to $66,728 in the three months ended March 31, 2009. This was mainly due to
a increase in interest expenses and the amortization of debt
discount.





Income
Taxes:





In lieu
of the losses in the past and current years, there is no tax
liability.





Net
Loss:





Net loss
was $399,261, in the three months ended March 31, 2009, compared to $517,674 in
the three months ended March 31, 2008, decrease of $118,413, or 23%, mainly due
to decrease in expenses during the three month period.





LIQUIDITY
AND CAPITAL RESOURCES





Net cash
used in operating activities was $289,378 for the three months ended March 31,
2009, compared to $395,880 for the three months ended March 31, 2008, decrease
of $106,502 or 27%. This was mainly due to the:





Decrease
of accounts receivable by $25,568 for the three months ended March 31, 2009 as
compared to a increase in accounts receivable by $42,795 for the three months
ended march 31, 2008.





An
increase of accounts payable and accruals by $46,719 for the three months ended
March 31, 2009 as compared to increase in accounts payables and accruals by
$9,860 for the three months ended March 31, 2008.





Net cash
used in investing activities was $8,909 for the three months ended March 31,
2009, compared to $Nil for the three months ended March 31, 2008. This was due
to the purchase of equipment in the period March 31, 2009.





Net cash
provided by financing activities was $7,150 in the three months ended March 31,
2009, compared to $449,720 in the three months ended March 31, 2008. $7,150 and
$435,657 were raised from issue of shares during the three months ended March
31, 2009 and 2008 respectively.





The
company has reorganized their cost structure and it expects to continue to
use cash in the year 2009 at the current level of $300,000 per
quarter. The company is in immediate need of cash to meet operating cost and
support growth. In view of this, the company is actively working on
raising capital. The company is hopeful to raise capital, but their
inability to raise capital will adversely affect the company’s ability to
continue to operate.





SUBSEQUENT
EVENT





Effective
May 1, 2009 Mr. Vass Srinivasan has resigned as an officer of the company. In a
separate agreement effective June 1, 2009, Mr. Srinivasan was hired as a full
time consultant





Critical Accounting
Policies




Our
significant accounting policies are summarized in Note 1 of our Consolidated
Financial Statements attached hereto as Exhibit F-1. Policies determined to be
significant are those policies that have greatest impact on our financials
statements and require management to use a greater degree of judgment and
estimates. Actual result may differ from those estimates. Our management
believes that given current facts and circumstances, it is unlikely that
applying any other reasonable judgments or estimate methodologies would cause
effect on our consolidated results of operations, financial position or
liquidity for the periods presented in the report.






-15-






Revenue
Recognition




Revenue
is recognized when earned in accordance with applicable accounting standard,
including SOP 97-2, as amended. Revenue from software arrangements with end
users is recognized upon final delivery of the software, provided that
collection is probable and no significant obligations remain. Maintenance
arrangement revenue is deferred and recognized over the service
period




Stock-Based
Compensation




The
Company accounts for its stock-based compensation under the provisions of SFAS
No.123(R)“Accounting for
Stock Based Compensation.”  Under SFAS No. 123(R), the
Company is permitted to record expenses for stock options and other employee
compensation plans based on their fair value at the date of grant. Any such
compensation cost is charged to expense on a straight-line basis over the
periods the options vest. If the options had cashless exercise provisions, the
Company utilized variable accounting.




Common
stock, stock options and common stock warrants issued to other than employees or
directors are recorded on the basis of their fair value, as required by SFAS
No. 123(R), which is measured as of the date required by EITF
Issue 96-18,“Accounting
for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or
in Conjunction with Selling, Goods or Services.” In accordance with
EITF 96-18, the stock options or common stock warrants are valued using the
Black-Scholes model on the basis of the market price of the underlying common
stock on the “valuation date,” which for options and warrants related to
contracts that have substantial disincentives to non-performance is the date of
the contract, and for all other contracts is the vesting date. Expense related
to the options and warrants is recognized on a straight-line basis over the
shorter of the period over which services are to be received or the vesting
period. Where expense must be recognized prior to a valuation date, the expense
is computed under the Black-Scholes model on the basis of the market price of
the underlying common stock at the end of the period, and any subsequent changes
in the market price of the underlying common stock up through the valuation date
is reflected in the expense recorded in the subsequent period in which that
change occurs.





Recent Accounting
Pronouncements




In
December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No.
160, “Noncontrolling Interests
in Consolidated Financial Statements – an amendment of ARB No.
51”.  This statement improves the relevance, comparability, and
transparency of the financial information that a reporting entity provides in
its consolidated financial statements by establishing accounting and reporting
standards that require; the ownership interests in subsidiaries held by parties
other than the parent and the amount of consolidated net income attributable to
the parent and to the noncontrolling interest be clearly identified and
presented on the face of the consolidated statement of income, changes in a
parent’s ownership interest while the parent retains its controlling financial
interest in its subsidiary be accounted for consistently, when a subsidiary is
deconsolidated, any retained noncontrolling equity investment in the former
subsidiary be initially measured at fair value, entities provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners.  SFAS No. 160
affects those entities that have an outstanding noncontrolling interest in one
or more subsidiaries or that deconsolidate a subsidiary.  SFAS No. 160
is effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. Early adoption is prohibited. The
adoption of this statement did not have a material effect on the Company's
financial statements.




In June
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133”
(SFAS 161). This statement is intended to improve transparency in financial
reporting by requiring enhanced disclosures of an entity’s derivative
instruments and hedging activities and their effects on the entity’s financial
position, financial performance, and cash flows. SFAS 161 applies to all
derivative instruments within the scope of SFAS 133, “Accounting for Derivative
Instruments and Hedging Activities” (SFAS 133) as well as related hedged items,
bifurcated derivatives, and nonderivative instruments that are designated and
qualify as hedging instruments. Entities with instruments subject to SFAS 161
must provide more robust qualitative disclosures and expanded quantitative
disclosures. SFAS 161 is effective prospectively for financial statements issued
for fiscal years and interim periods beginning after November 15, 2008,
with early application permitted.  The adoption of this statement did
not have a material effect on the Company's financial statements.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS No. 162 identifies the sources of accounting
principles and provides entities with a framework for selecting the principles
used in preparation of financial statements that are presented in conformity
with GAAP. The current GAAP hierarchy has been criticized because it is directed
to the auditor rather than the entity, it is complex, and it ranks FASB
Statements of Financial Accounting Concepts, which are subject to the same level
of due process as FASB Statements of Financial Accounting Standards, below
industry practices that are widely recognized as generally accepted but that are
not subject to due process. The Board believes the GAAP hierarchy should be
directed to entities because it is the entity (not its auditors) that is
responsible for selecting accounting principles for financial statements that
are presented in conformity with GAAP. SFAS 162 is effective 60 days following
the SEC’s approval of PCAOB Auditing Standard No. 6, Evaluating Consistency
of Financial Statements (AS/6). The adoption of FASB 162 is not expected to have
a material impact on the Company’s financial position.






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In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts-an interpretation of FASB Statement No. 60.” Diversity
exists in practice in accounting for financial guarantee insurance contracts by
insurance enterprises under FASB Statement No. 60, Accounting and Reporting by
Insurance Enterprises. This results in inconsistencies in the recognition and
measurement of claim liabilities. This Statement requires that an insurance
enterprise recognize a claim liability prior to an event of default (insured
event) when there is evidence that credit deterioration has occurred in an
insured financial obligation. This Statement requires expanded disclosures about
financial guarantee insurance contracts. The accounting and disclosure
requirements of the Statement will improve the quality of information provided
to users of financial statements.  SFAS 163 is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. The adoption of FASB 163 did not have
a material impact on the Company’s financial position.





Off-Balance Sheet
Arrangements




We do not
have any off-balance sheet arrangements, financings, or other relationships with
unconsolidated entities or other persons, also known as “special purpose
entities” (SPEs).




Item
3. Quantitative and Qualitative Disclosures About Market Risk





Not
required for Smaller Reporting Companies.




Item
4T.  Controls and Procedures





a) Evaluation of Disclosure
Controls. Pursuant to Rule 13a-15(b) under the Securities Exchange Act of
1934 (“Exchange Act”), the Company carried out an evaluation, with the
participation of the Company’s management, including the Company’s Chief
Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s
principal financial and accounting officer), of the effectiveness of the
Company’s disclosure controls and procedures (as defined under Rule
13a-15(e) under the Exchange Act) as of the end of the period covered by
this report. Based upon that evaluation, the Company’s CEO and CFO concluded
that the Company’s disclosure controls and procedures are effective to ensure
that information required to be disclosed by the Company in the reports that the
Company files or submits under the Exchange Act, is recorded, processed,
summarized and reported, within the time periods specified in the SEC’s rules
and forms, and that such information is accumulated and communicated to the
Company’s management, including the Company’s CEO and CFO, as appropriate, to
allow timely decisions regarding required disclosure.





(b)
  Changes in
internal control over financial reporting. There have been no changes in
our internal control over financial reporting that occurred during the last
fiscal quarter 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.




We are
currently not involved in any litigation that we believe could have a material
adverse effect on our financial condition or results of operations. There is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the executive officers of our company or any of our
subsidiaries, threatened against or affecting our company, our common stock, any
of our subsidiaries or of our companies or our subsidiaries’ officers or
directors in their capacities as such, in which an adverse decision could have a
material adverse effect.




Item
1A. Risk Factors.




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 and Reports of Form 8-K.




(a)         Exhibits




31.1 Certifications pursuant to Section 302 of Sarbanes Oxley Act of
2002




32.1 Certifications pursuant to Section 906 of Sarbanes Oxley Act of
2002




(b)         Reports
of Form 8-K




None.




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SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.




SONASOFT
      CORP.Date:
      May 15, 2009
              By:
              /s/
      Nand (Andy) KhannaNand
      (Andy) Khanna
                President
      and Chief Executive OfficerBy:
              /s/Paresh
      MehtaParesh
      Mehta
                Chief
      Financial Officer
                and
      Principal Accounting Officer













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