SECURITIES AND EXCHANGE COMMISSION

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 June 30, 2008



[
 ]        TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition
period from __________________ to __________________



Commission File Number 1-14219



TELAVA NETWORKS, INC.

(Exact Name
of small business issuer as specified in its charter)



California                                                            
65-0067192

(State or other Jurisdiction
of                                                                     
I.R.S. Employer Identification No.)

Incorporation or Organization



353 California Street, Suite 1500, San Francisco, California
94111

(Address of Principal
Executive
Offices)                                                                                                                            
(Zip Code)

(415)
321-3490

(Issuer's Telephone Number, including Area Code)



Indicate by check mark whether the Registrant (i) 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 (of for such shorter period that the Registrant
was required to file such reports) and (ii) has been subject to such filing
requirements for the past 90 days.



Yes X    No



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



Large accelerated filero

Accelerated filero

Non-accelerated filero

Smaller reporting companyþ(Do not check if a
smaller reporting company)


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

Yes[    ]No [ X ]



Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.



Common
Stock, no par value                                                                               
148,481,461

Title of
Class                                                                                                                              
Number of Shares outstanding

at June
5, 2008








TELAVA NETWORKS, INC. AND
SUBSIDIARIES

CONSOLIDATED BALANCE
SHEETS

(U.S.
Dollars)                                                                                                                           
June
30,               
December 31,

ASSETS                                                                                                                           
2008   
2007

Current
assets                                                                                                                 
       
(Unaudited)      
         (Audited)

Cash and cash
equivalents                                                                                   
$                
381,645   
$                
648,054

Accounts
receivable,
net                                                                                                       
1,409,721                   
1,330,370

Notes
receivable                                                                                                                          
38,900                        
16,290

Notes
receivable – related
party                                                                                                        
--                          
7,513

Employee
receivable                                                                                                                            
--                          
1,491

Prepaid
expenses                                                                                                    
26,469   
30,777

Total current
assets                                                                                                                        
1,856,735                   
2,034,495



Property, plant, and equipment,
net                                                                                             
2,022,353                   
2,073,886

Intangible asset,
net                                                                                                                            
38,795                        
51,727

Other assets,
net                                                                                                             
1,880,336   
128,262

Total assets$             
5,798,219   
$             
4,288,370



LIABILITIES AND STOCKHOLDERS’ EQUITY



Current liabilities

Accounts
payable                                                                                                  
$                
183,782   
$                
163,433

Accrued
expenses                                                                                                                     
223,959                      
102,682

Accrued
interest                                                                                                                        
138,689                        
46,683

Advances from
customers                                                                                                           
3,850                             
124

Other taxes
payable                                                                                                                       
5,363                        
18,568

Payroll &
payroll tax
liabilities                                                                                                   
75,266                          
9,379

Notes payable
– other,
net                                                                                                    
2,258,847                      
390,000

Notes payable
–
convertible                                                                                 
1,650,000   
1,650,000

Total current
liabilities                                                                                                                   
4,539,756                   
2,380,869



Long term liabilities

Deferred tax
liability                                                                                                
--   
--

Total
liabilities                                                                                                                                 
4,539,756                   
2,380,869



Minority interest – Telava
Wireless                                                                                               
292,671                      
344,930



Stockholders’ equity

Preferred stock, no par value, 2,000,000 shares
authorized

Series A
preferred stock, no shares issued and outstanding

at June 30,
2008 and December 31, 2007,
respectively                                                                    
--                                
--

Common stock, no par value 200,000,000 shares
authorized

148,481,461
and 148,481,461 shares issued and outstanding

at June 30,
2008 and December 31, 2007,
respectively                                                      
1,090,000                   
1,090,000

Additional paid-in
capital                                                                                                                   
70,216                        
70,216

Treasury stock, at
cost                                                                                                                     
(37,198)                     
(37,198)

Stock
payable                                                                                                                                       
96,988                        
96,988

Other comprehensive
income(loss)                                                                                                
(36,006)                       
(3,571)

Retained
earnings                                                                                                           
218,208   
346,136

Total stockholders’
equity                                                                                            
965,792   
1,562,571



Total liabilities and stockholders’
equity$             
5,798,219   
$             
4,288,370

2






TELAVA NETWORKS, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS

(U.S. Dollars)



For
the Three Months Ended

For
the Six Months EndedJune 30,

June 30,2008

2007

2008

2007Net sales

$      
1,408,493

$   1,560,508

$   2,847,344

$   2,838,027Cost of sales

458,266

471,811

887,051

1,161,030Gross profit

950,227

1,088,697

1,960,293

1,676,997Operating
expensesSalaries and payroll
taxes

642,554

411,516

1,129,236

741,365Depreciation and
amortization

40,844

24,547

81,633

60,476Commissions and
consulting

37,750

41,170

70,083

80,379Professional fees

97,061

16,200

152,863

17,186Bad debt

18,024

91,254

67,324

202,624Other general and
administrative expenses

434,461

299,455

877,961

481,055Total operating
expenses

1,270,694

884,142

2,379,100

1,583,085Loss from
operations

(320,467)

204,555

(418,807)

93,912Other Income
(Expense)Interest income

508

793

2,056

2,593Other income

665

87

1,270

330Interest expense

(99,717)

9,276

(201,129)

-Total other
income/(expense)

(98,544)

10,156

(197,803)

2,923Net loss before
taxes

(419,011)

214,711

(616,610)

96,835Benefit from income
taxes

-

(95,630)

-

-Net income before minority
interest

(419,011)

119,081

(616,610)

96,835Minority interest in
income

30,514

24,858

52,259

55,504Net income
(loss)

$       
(388,497)

$  
  143,939

$   
(564,351)

$    
152,339Net loss per common share
and equivalents - basic and diluted

$             
(0.00)

$          
0.02

$         
(0.00)

$          
0.02Weighted average oustanding
common shares - basic and diluted

148,481,461

9,581,340

148,481,461

9,581,340Comprehensive
Income/(Loss)Net
loss

$       
(388,497)

$    
143,939

$   
(564,351)

$    
152,339Foreign
currency exchange gain

(18,964)

872

(32,435)

(325)Comprehensive
Income/(Loss)

$       
(407,461)

$    
144,811

$   
(596,786)

$    
152,014


3



---



TELAVA NETWORKS, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

(U.S. Dollars)



For the Six Months Ended June
30,

2008     
2007

Cash Flows from Operating Activities:

Net income
(loss)$                     
(564,351)   
$                    
152,339

Adjustments
to reconcile net income (loss) to net cash used in

operating activities:

Depreciation and
amortization                                                                                       
81,633                            
60,476

Debt
discount                                                                                                                   
13,000                                    
--

Minority interest net
loss                                                                                            
(52,259)                         
(55,504)

Changes in
operating assets and liabilities:

(Increase) decrease in:

Accounts
receivable                                                                                             
(79,351)                         
(63,275)

Employee
receivable                                                                                                  
9,004                                   
21

Prepaid
Expenses                                                                                                  
(21,692)                            
61,986

Other
assets                                                                                                             
(2,074)                         
(10,562)

Increase (decrease) in:

Accounts
payable                                                                                                     
2,009                            
37,136

Accrued
expenses                                                                                                 
121,277                            
24,035

Accrued interest
payable                                                                                       
92,006                                    
--

Advances from
customers                                                                                       
3,726                                    
--

Other taxes
payable                                                                                              
(13,205)                           
(1,572)

Income taxes
payable                                                                                                      
--                            
12,023

Accrued salaries and payroll
taxes                                                                       
65,887                         
(28,785)

Deferred tax
liability                                                                    
--   
--

Net cash used in operating
activities                                              
(344,390)   
188,318



Cash Flows from Investing activities:

Purchase of
property and
equipment                                                                                 
(17,168)                         
(46,387)

Deposit for
investment in
IBFA                                                                                     
(1,750,000)                                    
--

Proceeds for
notes
receivable                                                                                             
(17,213)                         
(20,211)

Payments for
notes
receivable                                                                  
--   
--

Net cash used in investing
activities                                               
(1,784,381)   
(65,598)



Cash Flows from Financing Activities:

Donated
capital                                                                                                                                
--                                    
--

Proceeds from
notes
payable                                                                                            
1,929,950                          
101,459

Payments for
notes
payable                                                                      
(35,153)   
(12,735)

Net cash provided by financing
activities                                      
1,894,797   
88,724



Net increase (decrease) in cash during
year(233,974)                          
210,444

Effect of
foreign currency translation
adjustment                                 
(32,435)   
(325)

Cash and cash equivalents at beginning of
period648,054   
328,936

Cash and cash equivalents at end of
period                                                   
$                      
381,645   
$                  
539,055



Supplemental disclosure for non-cash
items:

Acquisition
of Telava Wireless, majority owned
subsidiary               
$                                  
--   
$                              
--

Purchase of
intangible assets with common
stock                                
$                                  
--   
$                              
--

Debt
converted to common
stock                                                            
$                                  
--   
$                              
--

Debt
converted to preferred
stock                                                           
$                                  
--   
$                              
--

Services
rendered for common
stock                                                       
$                                  
--   
$                              
--



4



TELAVA
NETWORKS, INC. AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE SIX MONTHS ENDED JUNE 30, 2008 and 2007




1.BASIS OF PRESENTATION





The accompanying unaudited consolidated financial statements have been prepared in accordance with Securities and Exchange Commission requirements for interim financial statements.  Therefore, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.  These consolidated financial statements should be read in conjunction with the Form 10-KSB for the year ended December 31, 2007 of Telava Networks, Inc. and Subsidiaries (the "Company").





The interim consolidated financial statements present the balance sheet, consolidated statements of operations and cash flows of the Company.  The financial statements have been prepared in accordance with accounting principles generally accepted in the United States.





The interim consolidated financial information is unaudited.  In the opinion of management, all adjustments necessary to present fairly the financial position as of June 30, 2008 and the results of operations, stockholders' equity and cash flows presented herein have been included in the financial statements.  Interim results are not necessarily indicative of results of operations for the full year.





The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.




Going Concern

The Company has incurred a net loss of $(564,351) for
the six months ended June 30, 2008 and has a working capital deficit of
$2,683,021 at June 30, 2008, all of which raises substantial doubt about its
ability to continue as a going concern. The Company has funded its operations
and marketing efforts through the issuance of debt and equity securities. In
order to continue execution of the business plan, increase marketing efforts and
achieve profitable operations, management anticipates a need for additional
financing. Management’s plans for funding future operations primarily include
the sale of debt and equity securities. The Company’s failure to raise
additional funds under its plan would unfavorably impact its ability to continue
as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty, including the Company’s
inability to realize the carrying value of assets.



2.   ORGANIZATION



Transnational Financial Network, Inc. (the "TelavaCA")
was formed in 1985 and is incorporated in the state of California. TelavaCA
conducted real estate mortgage banking activities through wholesale branches and
retail branches located in California and Arizona. TelavaCA's revenues are
derived primarily from the origination and sale of conforming and nonconforming
residential real estate loans for placement in the secondary market.  On
November 7, 2007, TransNational Financial Network, Inc. amended its articles of
incorporation and changed its name to Telava Networks, Inc. (“TelavaCA”) and
increased its authorized capital to 200,000,000.

5



TELAVA
NETWORKS, INC. AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE SIX MONTHS ENDED JUNE 30, 2008 and 2007




2.   ORGANIZATION (CONTINUED)



Telava Networks, Inc. (“TelavaNV”) was incorporated in
Nevada on July 23, 2003 as Local Area Yellow Pagesto provide advertising and directory listings for small
and medium sized businesses on its Internet website in a
“Yellow Pages” format.  The Company provides those services
to its subscribers for a monthly fee.  These services are provided
primarily to small and medium sized businesses throughout the United
States.  On July 10, 2007, Local Area Yellow Pages amended its Articles of
Incorporation to change the name of the corporation to Telava Networks, Inc.
(“TelavaNV”) for the purpose of launching itsnetworkto provide
the next generation fixed and mobile WiMax broadband solutions to small and
medium businesses, public safety organizations, and others in various markets
through its network.  TelavaNV continues its Yellow Pages operations while,
at the same time, expanding its WiMAX network.  Through June 30, 2007,
nearly all of the Company’s revenues have been generated by its Yellow Pages
business.



On January 19, 2006,the Telava Networks Inc. (NV) formed Local Info Pages,
Inc. (“LIP”), headquartered in Seoul, South Korea, as a wholly owned subsidiary
of Telava Networks, Inc. LIP is one of the leading direct marketing and business
service companies in Korea. LIP connects advertisers to targeted audiences
through its network advertising products and services. On January 3, 2007, the
Company acquired a website valued at $77,590.  The website brings value to
the Company because of its large customer base and they can target market those
customers.  This enables advertisers to directly reach consumers with
branded media products, coupons and other advertisements. Consumers trust the
Company to deliver the best values in town via direct and online coupons. For
advertisers, LIP offers business advertising solutions by enabling them to sell
their products and services in person, online or through the mail.



On May 17, 2006, the Telava Networks Inc. (NV) 
formed Telava Wireless, Inc. (“Telava Wireless”) as a subsidiary for the purpose
of entering the mobile WiMAX broadband solutions market.  On November 6,
2006, the Company acquired 40 microwave towers in exchange for 25% of Telava
Wireless.



On September 11, 2007, Telava Networks Inc. (NV) formed
Telava Acquisitions, Inc. as a wholly owned subsidiary for the purpose of
acquiring other related businesses.



On October 1, 2007, TelavaNV acquired TransNational
Financial Networks, Inc., a California corporation, (“TelavaCA”), via reverse
merger.  The acquisition was effected by the issuance of 958,134 shares of
Series A Convertible Preferred Stock to the six shareholders of TelavaNV in
exchange for all of the 20,000,000 shares of TelavaNV.  An additional
400,000 shares of Series A Convertible Preferred Stock was subsequently issued
to certain holders of TelavaNV convertible notes. Each share of Series A
Convertible Preferred Stock was convertible into 100 shares of common stock;
which were all converted to a total of 135,813,400 shares of common stock prior
to December 31, 2007.




TELAVA
NETWORKS, INC. AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE SIX MONTHS ENDED JUNE 30, 2008 and 2007




2.   ORGANIZATION (CONTINUED)



The acquisition of TelavaNV represented a change in
control of our Company. For accounting purposes, this change in control
constitutes a re-capitalization of TelavaNV, and is accounted for as a reverse
merger whereby the legal acquiror, TelavaNV, is treated as the acquired entity,
and the legal subsidiary, TelavaCA, is treated as the acquiring company with the
continuing operations. Accordingly, the historical financial information of
TelavaNV, Telava Wireless, and LIP constitutes the Company's historical
financial information prior to October 1, 2007 and the combined operations of
TelavaNV, TelavaCA, Telava Wireless and LIP (the “Company”) are reported from
October 1, 2007 forward.

As part of the reverse merger, the Company acquired
convertible debentures totaling $2,100,000.  During the year ended December
31, 2007, six holders of $450,000 in convertible debentures converted their debt
into 450,000 shares of common stock.  Such convertible debt converts into
one share of common stock for each dollar in principal amount of debt
outstanding.  Additionally, the Company issued 200,000 shares to an entity
which is considered a finder’s fee.  The Company acquired 37,116 shares of
treasury stock valued at $37,198.

On January 22, 2008, the Board of Directors approved a
change in the Company’s fiscal year end from April 30 to December 31, effective
as of December 31, 2007.



3.   SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES



Principles of Consolidation:The consolidated financial statements include the
accounts of TransNational Financial
Networks, Inc. A.K.A: Telava Networks, Inc., Telava Networks, Inc. Nevada
and its wholly-owned and majority-owned subsidiaries Telava Wireless and
LIP.  All significant inter-company balances and transactions have been
eliminated.  Telava Networks, Inc. Nevada and its subsidiaries Telava
Wireless and LIP and TransNational Financial Networks, Inc. A.K.A: Telava
Networks, Inc. will be collectively referred herein to as the “Company”. 
Minority interests in the net assets and earnings or losses of a consolidated
subsidiary are reflected in the caption “Minority Interest” in the Company’s
consolidated financial statements.  Minority interest adjusts the Company’s
consolidated results of operations to reflect only the Company’s share of the
earnings or losses of the subsidiary.



Foreign Currency Adjustments:The financial position and results of operations
of the Company’s foreign subsidiary, LIP, is measured using the foreign
subsidiary’s local currency as the functional currency.  Revenues and
expenses of the subsidiary have been translated into U.S. dollars at average
exchange rates prevailing during the period.  Assets and liabilities have
been translated at the rates of exchange on the balance sheet date.  The
resulting translation gain and loss adjustments are recorded as a separate
component of stockholders’ equity, unless there is a sale or complete
liquidation of the underlying foreign investments.  Foreign currency
translation adjustments for the six months ended June 30, 2008 and 2007 resulted
in losses of $32,435 and $325, respectively.



Cash and Cash Equivalents:This includes all short-term highly liquid
investments that are readily convertible to known amounts of cash and have
original maturities of three months or less.  At times cash deposits may
have exceeded government insured limits.  At June 30, 2008 and December 31,
2007, cash deposits exceeded those insured limits by $78,862 and $470,775,
respectively.

7



TELAVA
NETWORKS, INC. AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE SIX MONTHS ENDED JUNE 30, 2008 and 2007




3.   SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)



Advertising Costs:The Company incurs advertising costs that are not
considered direct response advertising and are expensed when incurred. 
Advertising expenses were $8,539 and $3,683 for the six months ended June 30,
2008 and 2007, respectively.



Recently Issued Accounting
Pronouncements:



SFAS 161:In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities", an amendment of SFAS No. 133. SFAS 161 applies to all derivative instruments and non-derivative instruments that are designated and qualify as hedging instruments pursuant to paragraphs 37 and 42 of SFAS 133 and related hedged items accounted for under SFAS 133. SFAS 161 requires entities to provide greater transparency through additional disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and how derivative instruments and related hedged items affect an entity's financial position, results of operations, and cash flows. SFAS 161 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2008. The Company does not expect the adoption of SFAS 161 will have a material impact on its financial condition or results of operation.





SFAS 162:In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.”  SFAS 162 will provide framework for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for nongovernmental entities.  SFAS 162 will be effective 60 days following the Securities and Exchange Commission’s approval of the Public Company Accounting Oversight Board (PCAOB) amendments to AU Section 411.  The Company does not expect the adoption of SFAS 162 will have a material impact on its financial condition or results of operation.





SFAS 163:In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts – an interpretation of FASB Statement No. 60.”  SFAS 163 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 also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. 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 will be effective for financial statements issued for fiscal years beginning after December 15, 2008.  The Company does not expect the adoption of SFAS 163 will have a material impact on its financial condition or results of operation.





Reclassification


The financial statements for 2007 reflect certain reclassifications, which have nominal effect on net income, to conform to classifications in the current year.





TELAVA
NETWORKS, INC. AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE SIX MONTHS ENDED JUNE 30, 2008 and 2007




4.   ACCOUNTS RECEIVABLE



The Company provides billing information to a third
party billing company for the majority of its monthly billings. Billings
submitted are “filtered” by this billing company and the LEC’s. Net accepted
billings are recognized as revenue and accounts receivable.  The billing
company remits payments to the Company on the basis of cash ultimately received
from the LEC’s by the billing company.  The billing company and LEC’s
charge fees for services, which are netted against the gross accounts receivable
balance. The billing companies also apply holdbacks to the remittance for
potentially uncollectible accounts.  These dilution amounts will vary due
to numerous factors and the Company may not be certain as to the actual amounts
of dilution on any specific billing submittal until several months after that
submittal.  The Company estimates the amount of these charges and holdbacks
based on historical experience and subsequent information received from the
billing companies. The Company also estimates uncollectible account balances and
provides an allowance for such estimates.  As of June 30, 2008 and December
31, 2007, the amount reserved for uncollectible account balances is $255,584
and  $235,202, respectively.



The billing companies retain certain holdbacks that may
not be collected by the Company for a period extending beyond one year.
  The balances are charged to bad debt expense.  However, when
true-up balances occur with the LEC after six to eighteen months, the money
received will be classified as revenue to offset current bad debt
expenses.



The Company experiences significant dilution of its
gross billings by the billing company.  The Company negotiates collections
with the billing companies on the basis of the contracted terms and historical
experience.  The Company’s cash flow may be affected by holdbacks, fees,
and other matters, which are determined by the LEC’s and the billing
company.  The Company processes its billings through the primary billing
company.



5.   PROPERTY, PLANT AND
EQUIPMENT



Property, plant and equipment consisted of the following
at:

June 30, 2008

December 31,
2007MicrowaveTowers

$       
1,998,765

$       
1,998,765Computer Equipment

194,790

180,427Furniture and Equipment

76,571

77,197Software

36,486

34,796Subtotal

2,306,612

2,291,185Less: Accumulated Depreciation

(284,259)

(217,299)Total

$       
2,022,353

$       
2,073,886




Depreciation expense was $68,701 and $60,475 for the six
months ended June 30, 2008 and 2007, respectively.

9

---






TELAVA
NETWORKS, INC. AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE SIX MONTHS ENDED JUNE 30, 2008 and 2007




6.   INTANGIBLE ASSETS



Intangible assets consisted of the following
at:

June 30, 2008

December 31,
2007Website

$       
77,590

$       
77,590Less: Accumulated Amortization

(38,795)

(25,863)Total

$       
38,795

$   
    51,727




Amortization expense was $12,932 and $0 for the six
months ended June 30, 2008 and 2007, respectively.



7.   OTHER ASSETS



Other assets consisted of security deposits for the
leases of office spaces and $1,750,000 as a deposit for the acquisition of
IBFA.  (See Note 15).



8.   NOTES PAYABLE



Short-term debt consists of the following at:

June 30, 2008

December 31,
2007Demand note payable to various entities,
unsecured, interest at 8%

$          
570,000

$          
390,000Convertible note payable to various individuals,
unsecured, interest at 10%, maturity date 1/12/15, conversion rate of $1,
there is no beneficial conversion feature – default

1,650,000

1,650,000Line of credit, secured by assets, interest at
approximately 12%, maturity date 1/16/09

1,701,847

-Subtotal

$       
3,921,847

$       
2,040,000Less: Discount on debt

(13,000)

-Total

$       
3,908,847

$       
2,040,000




The convertible note payable of $1,650,000, has
defaulted due to failure to make interest payments, the terms of the note
payable state that upon default the holder may declare the entire unpaid
principal balance immediately due and payable without any further notice, demand
or presentment and may exercise, without any further notice, demand or
presentment



Interest expense was $201,129 and $0 for the six months
ended June 30, 2008 and 2007, respectively.

10

---



TELAVA NETWORKS, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE SIX MONTHS ENDED JUNE 30, 2008 and 2007




9.  LINE OF CREDIT




The Company had a line of credit totaling $1,600,000 under which the Company may borrow on a secured basis at the prime rate plus 7%.  There were no amounts outstanding under this line of credit at December 31, 2007 and 2006.  The credit agreement requires compliance with certain financial covenants and expires on September 12, 2008.  The use of proceeds is limited to the acquisition of Kite Broadband, LLC.  During the year ended December 31, 2007, the Company received a total of $1,574,000; however, the acquisition of Kite Broadband, LLC did not occur therefore the Company was required to return all of the funds.  The lender retained a total of $26,000 as a non refundable origination and commitment fee.





On January 17, 2008, the Company renegotiated the line of credit and increased the amount to $1,800,000 and paid the lender $2,000 for the increased commitment fee.  The use of proceeds has been amended and the funds must be used for the acquisition of IBFA Acquisition Company, LLC.  (See Note 15).





During the six months ended June 30, 2008, the Company borrowed $1,750,000 of the $1,800,000 line of credit and has repaid $48,153 to the lender.  As of June 30, 2008, the Company has an available credit line of $98,153 to be used for any additional costs related to the IBFA acquisition.





The direct costs associated with the loan are considered a discount on the debt and amortized over the life of the loan.  The Company amortized loan fees totaling $13,000 and $0, during the six months ended June 30, 2008 and 2007, respectively.  (See Note 8).





10.   LEASES



The Company leases its office space under long-term
operating leases expiring through fiscal year 2008. Rent expense under these
leases was $196,604 and $119,696 for the six months ended June 30, 2008 and
2007, respectively.  The lease expired on April 30, 2008.  On February
22, 2008, the Company executed a lease with the landlord for additional office
space for corporate use commencing May 1, 2008 and expires on April 30,
2013.  Lease obligations are disclosed as follows:



YearFuture Minimum Lease Payments

2008                                        
$149,045

2009                                        
$489,173

2010                                        
$500,638

2011                                        
$512,103

Thereafter                               
$699,365

11

---






TELAVA
NETWORKS, INC. AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE SIX MONTHS ENDED JUNE 30, 2008 and 2007




10.   LEASES (CONTINUED)



The Company has entered into a corporate leasing
agreement for the property located in San Francisco on October 1, 2006 for
monthly rental of $5,000. The lease has an option to renew for another year on
month to month basis. The Company leases office space in Seoul, Korea for the
LIP operations.  The Company has the option to continue with the lease on a
month-to-month basis .The lease has an option to renew for another year on month
to month basis.  The monthly rent is approximately $5,000 and will expire
on December 31, 2008.Lease
obligations are disclosed as follows:



YearFuture Minimum Lease Payments

2008                                        
$  30,000



11.   EMPLOYMENT AGREEMENTS



On December 15, 2006, TelavaNV executed an employment
agreement with an executive for a period of four years.  The employment
agreement is effective as of January 1, 2007.  The executive has an annual
base salary of approximately $60,000 plus bonuses to be determined by the board
of directors.  In addition, the executive will receive a total of 500,000
shares of the Company’s common stock and will be earned in 125,000 share
increments at the end of the year for each of the four years.  During the
year ended December 31, 2007, the executive earned 125,000 shares of the
Company’s common stock valued at $19,398 which is based on the fair value of the
common stock as on the date of the agreement as the Company was private at the
time of the agreement.



As part of the employment agreement, the executive sold
its website www.ttore.com to TelavaNV for 500,000
shares of the Company’s common stock.  The shares are valued at $77,590
which is based on the fair value of the common stock as on the date of the
agreement as the Company was private at the time of the agreement.



As of June 30, 2008, the common shares owed to the
executive have not been issued and are recorded as stock payable.



12.   STOCKHOLDERS’ EQUITY



Preferred Stock:The
authorized Series A preferred stock is 2,000,000 shares with no par value. 
As of June 30, 2008 and at December 31, 2007, the Company had no shares of
Series A preferred stock issued and outstanding. Each share of the Series A
preferred stock is convertible at any time into 100 shares of common stock, and
has 100 votes per share. Holders of the Series A preferred stock are entitled to
dividends at the same rate as common stock as if converted immediately prior to
the date the dividend is declared.



Common Stock:The
authorized common stock is 200,000,000 shares at no par value.  As of June
30, 2008, and December 31, 2007 the Company had 148,481,461 shares of common
stock issued and outstanding.



12



TELAVA NETWORKS, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE SIX MONTHS ENDED JUNE 30, 2008 and 2007




13.   STOCK OPTIONS AND
WARRANTS



As of June 30, 2008, there are no stock options and
warrants outstanding.



14.   CONCENTRATION OF CREDIT
RISK



Financial instruments that potentially subject the
Company to concentrations of credit risk are primarily trade accounts
receivable.  The trade accounts receivable are due primarily from business
customers over widespread geographical locations within the LEC billing areas
across the United States.  The Company historically has experienced
significant dilution and customer credits due to billing difficulties and
uncollectible trade accounts receivable.  The Company estimates and
provides an allowance for uncollectible accounts receivable.  The handling
and processing of cash receipts pertaining to trade accounts receivable is
maintained primarily by two third party billing companies.  The Company is
dependent upon these billing companies for collection of its accounts
receivable.



15.   ACQUISITIONS



On January 16, 2008,Telava Acquisitions Corporation, a wholly owned
subsidiary,announced that it has signed an
agreement to acquire IBFA Acquisition Company, LLC (IBFA). The operations will
continue to be under the auspices of a Management Agreement between the two
entities until all regulatory transfer of licenses has been completed. IBFA
began operations in 1995, and is a licensed Competitive Local Exchange Carrier
(CLEC), long distance provider, and Internet Service Provider (ISP) based in the
Midwest.  The Company anticipates the deal to be closed by the third
quarter of 2008 pending the completion of the audit and regulatory transfer of
licenses.  During the six months ended June 30, 2008, the Company paid a
deposit of $1,750,000 to acquire IBFA and this amount is included in other
assets.








**ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF
OPERATIONS**



The following discussion and analysis should be read in
conjunction with the condensed financial statements and the notes thereto
included as Item 1 of this Report. The discussion of results and trends does not
necessarily imply that these results and trends will continue.



The Management's Discussion and Analysis of Financial
Condition and Results of Operations and other sections of the Form 10-Q contain
forward-looking information. The forward-looking information involves risks and
uncertainties that are based on current expectations, estimates, and projections
about the Company's business, management's beliefs and assumptions made by
management. Words such as "expects", "anticipates", "intends", "plans",
"believes", "seeks", "estimates", and variations of such words and similar
expressions are intended to identify such forward-looking information.
Therefore, actual outcomes and results may differ materially from what is
expressed or forecasted in such forward-looking information due to numerous
factors, including, but not limited to, availability of financing for
operations, successful performance of internal operations, impact of competition
and other risks detailed below, as well as those discussed elsewhere from time
to time in the Company's Securities and Exchange Commission filings and reports.
In addition, general economic and market conditions and growth rates could
affect such statements.



On October 1, 2007, Televa Networks, Inc., a Nevada
corporation, (“TelavaNV”) acquired TransNational Financial Networks, Inc., a
California corporation, (“TelavaCA”), via reverse merger.  The acquisition
was effected by the issuance of 958,134 shares of Series A Convertible Preferred
Stock to the six shareholders of TelavaNV in exchange for all of the 20,000,000
shares of TelavaNV.  An additional 400,000 shares of Series A Convertible
Preferred Stock was subsequently issued to certain holders of TelavaNV
convertible notes. Each share of Series A Convertible Preferred Stock was
convertible into 100 shares of common stock; the Series A Convertible Preferred
Stock was all converted to a total of 135,813,400 shares of common stock prior
to December 31, 2007.



The acquisition of TelavaNV represented a change in
control of our company. For accounting purposes, this change in control
constitutes a re-capitalization of TelavaNV, and is accounted for as a reverse
merger whereby the legal acquiror, TelavaCA, is treated as the acquired entity,
and the legal subsidiary, TelavaNV, is treated as the acquiring company with the
continuing operations. Accordingly, the historical financial information of
TelavaNV, Telava Wireless, and LIP constitutes the Company's historical
financial information prior to October 1, 2007 and the combined operations of
the TelavaNV, TelavaCA, Telava Wireless and LIP (the “Company”) are reported
from October 1, 2007 forward.



Three Months Ended June 30, 2008



Our net sales for the three months ended June 30, 2008
was $1,408,493, a decrease of $152,015 when compared to the net sales of
$1,560,508 for the three months ended June 30, 2007.  The net sales
decreased by 10% due to poor conditions in the economy.



The cost of sales for the three months ended June 30,
2008 and 2007 totaled $458,266 and $471,811, respectively.  The decrease of
3% in 2008 was due to improved cost controls.



Our gross profit was $950,227 for the three months ended
June 30, 2008 and $1,088,697 for the three months ended June 30, 2007.  The
gross profit decreased by 13% from 2007 to 2008 due to the slight decrease in
net sales.



Our total operating expenses increased by 44% from the
three months ended June 30, 2007 to 2008 due to the addition of overall
employees and expenses associated with market expansion and sales growth in
TelavaNV and LIP.  The depreciation and amortization expense for the three
months ended June 30, 2008 was $40,844 which was a 66% increase when compared to
the prior period expense of $24,547 for the three months ended June 30,
2007.  We had professional fees of $97,061 and $16,200 for the six months
ended June 30, 2008 and 2007 which was an increase of 499%.  The increase
in professional fees was primarily caused by expenses related to being
public.  Bad debt expense was reduced by more than half due to improved
collection efforts.  Other general and administrative expenses increased
from $299,455 to $434,461, or 45%, and salaries also increased by 56% due to our
expansion efforts.

13





Six Months Ended June 30, 2008



Our net sales for the six months ended June 30, 2008 was
$2,847,344, an increase of $9,317 when compared to the net sales of $2,838,027
for the six months ended June 30, 2007.  A significant part of our net
sales in 2007 and most of 2008 were from the Local Area Yellow Pages business;
our wireless business had minimal sales in 2007.  The increase in sales was
primarily derived from purchase of the intangible asset from the Korean
business, Ttoore Company, which we acquired on January 3, 2007. At the time of
acquisition, TToore’s business was not significant in comparison with the
Company. We now have a strategic partnership with a major Korean
telecommunications company which is important to our growth in Korea.



The cost of sales for the six months ended June 30, 2008
and 2007 totaled $887,051 and $1,161,030, respectively.  The decrease of
24% in 2008 was due to improved cost controls.



Our gross profit was $1,960,293 for the six months ended
June 30, 2008 and $1,676,997 for the six months ended June 30, 2007.  The
gross profit increased by 17% from 2007 to 2008 due to better cost
controls.



Our total operating expenses increased by 50% from the
six months ended June 30, 2007 to 2008 due to the addition of overall employees
and expenses associated with market expansion and sales growth in TelavaNV and
LIP.  The depreciation and amortization expense for the six months ended
June 30, 2008 was $81,633 which was a 35% increase when compared to the prior
period expense of $60,476 for the six months ended June 30, 2007.  We had
professional fees of $152,863 and $17,186 for the six months ended June 30, 2008
and 2007 which was an increase of 789%.  The increase in professional fees
was primarily caused by expenses related to being public.  Bad debt expense
was reduced by more than half due to improved collection efforts.  Other
general and administrative expenses increased from $481,055 to $877,961, or 83%,
and salaries also increased significantly due to our expansion efforts.



Expansion of the wireless business will require a
significant amount of capital. We estimate the capital need to be approximately
$30 million, to be used primarily for building infrastructure and integrating
infrastructure with our existing wireless assets. Our market area is the smaller
metropolitan area (less than 100,000 population) which is currently underserved
by current broadband solutions.  We have engaged ThomasLloyd Capital LLC as
our financial adviser to assist us in acquiring businesses in the wireless
industry as well as to assist us in raising capital, but no agreements for
specific capital raises have been entered into.



In connection with the sale of the mortgage division,
the purchaser agreed to assume all the liabilities related to that business.
There are $1,650,000 in subordinated convertible debentures (convertible at
$1.00 per share) remaining outstanding from the mortgage division. As of the
date of this filing, the convertible debentures are in default.The convertible note payable of $1,650,000, has
defaulted due to failure to make interest payments, the terms of the note
payable state that upon default the holder may declare the entire unpaid
principal balance immediately due and payable without any further notice, demand
or presentment and may exercise, without any further notice, demand or
presentment.



Off-Balance Sheet Arrangements



We do not have any off-balance sheet arrangements that
have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
is material to investors.



Derivatives



None.

14



Critical Accounting Policies



Stock Based
Compensation:  The Company adopted Statement of Financial Accounting
Standards (SFAS) No. 123R (revised 2004), “Share-Based Payment,” requiring the
Company to recognize expense related to the fair value of its employee stock
option awards.  SFAS-123R eliminates accounting for share-based
compensation transactions using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25 (APB-25), “Accounting for Stock
Issued to Employees”, and requires instead that such transactions be accounted
for using a fair-value-based method. The Company recognizes the cost of all
share-based awards on a graded vesting basis over the vesting period of the
award.



Revenue Recognition:



TelavaNVand LIP:The Company’s revenue is generated by
customer subscriptions of directory and advertising services.  Revenue is
billed and recognized monthly for services subscribed in that specific
month.  The Company utilizes outside billing companies to transmit billing
data, much of which is forwarded to Local Exchange Carriers (“LEC’s”) that
provide local telephone service.



LEC Billing: 
When a customer subscribes to the Company’s service an electronic customer file
is created, which is the basis for the billing.  The Company submits
gross billings electronically to third party billing aggregators. These billing
aggregators compile and format electronic customer files and forward the billing
records to the appropriate LECs.  The billing for our service flows
through to monthly bills of the individual LEC customers.  The LECs
collect the Company’s billing and remit amounts to the billing aggregators,
which in turn remit funds to the Company.  The following are
significant accounting estimates and assumptions used in the revenue recognition
process with respect to these
billings.



Customer
refunds:  The Company’s customer refund policy allows the customer to
request a refund if they are not satisfied with the service within the first 30
days of the subscription.  The Company accrues for refunds based on
historical experience of refunds as a percentage of new billings in that 30-day
period.  Customer refunds are reserved and charged against gross
revenue.



Non-paying
customers:  There are customers who may not pay the fee for our
services even though the Company believes they are valid subscribers. 
Included in cost of services is an accrual for estimated non-paying customers
that are recorded at the time of
billing.



Dilution:  The
Company recognizes revenue during the month for which the service is provided
based on net billings accepted by the billing aggregators and recognizes revenue
only for accepted records.  However, subsequent to this acceptance,
there are instances in the LEC billing process where a customer cannot be billed
due to changes in telephone numbers, telephone carriers, data synchronization
issues, etc.  These amounts that ultimately cannot be billed, as well
as certain minor billing adjustments by the LECs are commonly referred to as
“dilution.”  Such unbillable accounts and chargebacks are estimated at
the time of billing and charged against net
revenues.



Fees:  Both
the aggregator and the LEC charge processing fees.  Additionally, the
LEC charges fees for responding to billing inquiries by its customers,
processing refunds, and other customer-related services.  Such fees
are estimated at the time of billing and charged to cost of
services.



Revenue for billings to certain customers whom are
billed directly by the Company and not through the LEC’s, is recognized based on
estimated future collections.   The Company continuously reviews this
estimate for reasonableness based on its collection experience.



Telava Wireless:  Leasing revenue for towers are
recognized on a monthly basis based on the terms and conditions of the lease
agreements.



LIP:  Printing
revenue for coupon books are recognized as services are
performed.

15



Foreign Currency Adjustments:The financial position and results of operations of the Company’s foreign
subsidiary, LIP, is measured using the foreign subsidiary’s local currency as
the functional currency.  Revenues and expenses of the subsidiary have been
translated into U.S. dollars at average exchange rates prevailing during the
period.  Assets and liabilities have been translated at the rates of
exchange on the balance sheet date.  The resulting translation gain and
loss adjustments are recorded as a separate component of stockholders’ equity,
unless there is a sale or complete liquidation of the underlying foreign
investments.  Foreign currency translation adjustments for the six months
ended June 30, 2008 and 2007 resulted in losses of $32,435and $325,
respectively.



Item
3.Quantitative and Qualitative Disclosures About Market
Risk.



As a “smaller reporting company” as
defined by Item 10 of Regulation S-K, the Company is not required to provide
information required by this Item.



Item 4T. Controls and
Procedures.



Disclosure Controls and
Procedures





Evaluation of
disclosure controls and procedures. The Company’s principal executive officer
and its principal financial officer, based on their evaluation of the Company’s
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c)
and 15d -14 (c) as of March 31, 2008. ,Based
on this evaluation, our principal executive officer and principal financial
officer concluded as of the Evaluation Date that our disclosure controls and
procedures were not effective such that the information relating to the Company,
including our consolidated subsidiaries, required to be disclosed in our SEC
reports (i) is recorded, processed, summarized and reported within the time
periods specified in SEC rules and forms and (ii) is accumulated and
communicated to management, including our principal executive officer/principal
financial officer, as appropriate, to allow timely decisions regarding required
disclosure.



Our management, including our chief
executive officer and chief financial officer, does not expect that our
disclosure controls and procedures or our internal controls will prevent all
error and all fraud.  A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints and the
benefits of controls must be considered relative to their costs. Due to the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected.



Changes in internal controls.
There were no significant changes in the Company’s internal controls or in other
factors that could significantly affect the Company’s internal controls
subsequent to the date of their evaluation.



PART II. OTHER INFORMATION



Item 1.    LEGAL PROCEEDINGS -
None



Item 2.    UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS - NoneItem
3.    DEFAULTS UPON SENIOR SECURITIES - None



The Company has convertible notes payable of $1,650,000,
and have defaulted due to failure to make interest payments. The terms of the
note payable state that upon default the holder may declare the entire unpaid
principal balance immediately due and payable without any further notice, demand
or presentment and may exercise, without any further notice, demand or
presentment

16



Item 4.    SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS - None



Item 5.    OTHER INFORMATION -
None



Item 6.    EXHIBITS



31.1   Certifications, Baldwin Yung, CEO and
CFO.

32.1   Certification pursuant to 18 U.S.C.
Section 1350 of Baldwin Yung.



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.



TELAVA NETWORKS, INC.



Date:       August 19,
2008                                                                  
By:      /s/
BaldwinYung

BaldwinYung

Chief Executive and Financial Officer

(Chief financial officer and accounting officer

and duly authorized officer)

17