UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q







(Mark
One)


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




For
the quarterly period ended March 31, 2009




 ̈
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
the transition period from 
to




Commission file number: 333-141521




City Language Exchange Incorporated





(Exact
Name of Registrant as Specified in Its Charter)





Delaware
              
              20-5433090(State
      or Other Jurisdiction of
              
              (I.R.S.
      EmployerIncorporation
      or Organization)
              
              Identification
      No.)





6021 Roxton Road, Halifax, Nova Scotia, Canada B3H
1H4





(Address
of Principal Executive Offices)     (Zip Code)





(902) 478-5065





(Registrant’s
Telephone Number, Including Area Code)




(Former
Name, Former Address and Former Fiscal Year, 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 Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes 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 (not
required)




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




Large
      accelerated filer
                     ̈
                    
                    Accelerated
      filer
                     ̈Non-accelerated
      filer
                     ̈
                    
                    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 x No ̈




As of May
13, 2009, there were 35,945,000 shares of the registrant’s common stock
outstanding.








City
Language Exchange Incorporated





TABLE OF
CONTENTS





PART I - FINANCIAL
      INFORMATIONItem 1.  Financial
      Statements
                                                3Item 2.Management’s Discussion and Analysis of Financial
      Condition and Results ofOperations
                                                7Item 3.  Quantitative and Qualitative
      Analysis About Market Risk
                                                8Item 4T.  Controls and
      Procedures
                                                8PART II - OTHER
      INFORMATIONItem 1.  Legal
      Proceedings
                                                10Item 1A.  Risk
      Factors
                                                10Item 2.  Unregistered Sales of Equity
      Securities and Use of Proceeds
                                                10Item 3.  Defaults Upon Senior
      Securities.
                                                10Item 4.  Submission of Matters to a Vote
      of Security Holders.
                                                10Item 5.  Other
      Information.
                                                10Item 6.  Exhibits
                                                10SIGNATURES
                                                12










CITY
LANGUAGE EXCHANGE, INC.


BALANCE
SHEETS


MARCH
31, 2009 AND DECEMBER 31, 2008


(UNAUDITED)





MARCH
      31,
                                      
                                      
                                      DECEMBER
      31,2009
                                      
                                      
                                      2008ASSETSCURRENT
      ASSETSCash
                                      
                                      $
                                      173
                                      
                                      
                                      $
                                      173FIXED
      ASSETSEquipment,
      net of accumulated depreciation of  $1,156 and $968,
      respectively
                                      
                                      
                                      314
                                      
                                      
                                      
                                      502TOTAL
      ASSETS
                                      
                                      $
                                      487
                                      
                                      
                                      $
                                      675LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIESAccrued
      liabilities
                                      
                                      $
                                      5,957
                                      
                                      
                                      $
                                      1,681TOTAL
      LIABILITIES
                                      
                                      
                                      5,957
                                      
                                      
                                      
                                      1,681STOCKHOLDERS'
      DEFICITPreferred
      stock, $0.0001 par value, 20,000,000 shares  authorized, none
      issued and outstandingCommon
      stock, $0.0001 par value, 100,000,000 shares authorized, 35,945,000 shares
      issued and outstanding at March 31, 2009 and December 31,
    2008
                                      
                                      
                                      3,595
                                      
                                      
                                      
                                      3,595Additional
      paid in capital
                                      
                                      
                                      110,022
                                      
                                      
                                      
                                      109,922Deficit
      accumulated during the development stage
                                      
                                      
                                      (119,087
                                      )
                                      
                                      
                                      (114,523
                                      )TOTAL
      STOCKHOLDERS' DEFICIT
                                      
                                      
                                      (5,470
                                      )
                                      
                                      
                                      (1,006
                                      )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
                                      
                                      $
                                      487
                                      
                                      
                                      $
                                      675





The
accompanying notes are an integral part of these financial
statements.


3





CITY
LANGUAGE EXCHANGE, INC.


STATEMENTS
OF OPERATIONS


THREE
MONTHS ENDED MARCH 31, 2009 AND MARCH 31, 2008





(UNAUDITED)





MARCH
      31,
                
                
                MARCH
      31,2009
                
                
                2008REVENUETranslation
      services
                
                $
                -
                
                
                $
                97OPERATING
      EXPENSESGeneral
      & administrative
                
                
                4,376
                
                
                
                3,648Depreciation
      expense
                
                
                188
                
                
                
                83Total
      operating expenses
                
                
                4,564
                
                
                
                3,731NET
      LOSS
                
                $
                (4,564
                )
                
                $
                (3,634
                )NET
      LOSS PER SHARE - BASIC & DILUTED
                
                $
                (0.00
                )
                
                $
                (0.00
                )WEIGHTED
      AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC & DILUTED
                
                
                35,945,000
                
                
                
                7,189,000





The
accompanying notes are an integral part of these financial
statements.


4




CITY
LANGUAGE EXCHANGE, INC.


STATEMENTS
OF CASH FLOWS


THREE
MONTHS ENDED MARCH 31, 2009 AND MARCH 31, 2008





(UNAUDITED)





MARCH
      31,
                              
                              
                              MARCH
      31,2009
                              
                              
                              2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                              
                              $
                              (4,564
                              )
                              
                              $
                              (3,634
                              )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
                              
                              
                              188
                              
                              
                              
                              84Increase
      (Decrease) of accrued liabilities
                              
                              
                              4,276
                              
                              
                              
                              (3,200
                              )Net
      cash (used in) operating activities
                              
                              
                              (100
                              )
                              
                              
                              (6,750
                              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Contribution
      of capital
                              
                              
                              100
                              
                              
                              
                              6,500Net
      cash provided by financing activities
                              
                              
                              100
                              
                              
                              
                              6,500NET
      INCREASE (DECREASE) IN CASH
                              
                              $
                              -
                              
                              
                              $
                              (250
                              )CASH,
      BEGINNING OF PERIOD
                              
                              
                              173
                              
                              
                              
                              1,254CASH,
      END OF PERIOD
                              
                              $
                              173
                              
                              
                              $
                              1,004SUPPLEMENTAL
      INFORMATIONInterest
      paid
                              
                              $
                              -
                              
                              
                              $
                              -Income
      taxes paid
                              
                              $
                              -
                              
                              
                              $
                              -





The
accompanying notes are an integral part of these financial
statements.


5




CITY
LANGUAGE EXCHANGE INCORPORATED


NOTES TO
FINANCIAL STATEMENTS





NOTE 1 –
BASIS OF PRESENTATION





The
accompanying unaudited interim financial statements of City Language Exchange
Incorporated (“CLE”) have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the
Securities and Exchange Commission, and should be read in conjunction with the
audited financial statements and notes thereto contained in CLE’s Annual Report
filed with the SEC on Form 10-KSB. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the interim
periods presented have been reflected herein. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the full year. Notes to the financial statements which would substantially
duplicate the disclosure contained in the audited financial statements for
fiscal year 2008 as reported in the Form 10-KSB have been omitted.





NOTE 2 -
GOING CONCERN





Since its
inception, CLE has incurred losses and has been dependent on its majority owner
to provide cash resources to fund its operations. As of March 31, 2009, CLE’s
accumulated deficit was $119,087. Management has plans to seek additional
capital through private placements and public offerings of its common stock.
There is no guarantee that CLE will be able to complete any of the above
objectives. These factors raise substantial doubt regarding CLE's ability to
continue as a going concern.







NOTE 3 –
RELATED PARTY TRANSACTIONS





Since
April 14, 2008, when Vision Opportunity China LP purchased the President’s
7,000,000 shares of common stock, Vision Opportunity China LP paid our operating
expenses.  Since December 10, 2008, when Vision Opportunity Master
Fund, Ltd. purchased all of Vision Opportunity China LP’s shares in CLE, Vision
Opportunity Master Fund, Ltd. has paid our operating expenses. In 2009, expenses
have been accrued (but not paid) in the amount of $5,957.


6




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




The
following discussion of our financial condition and results of operations should
be read in conjunction with our financial statements and related notes included
under Item 1 of this report.





Results
of Operations - Quarter ended March 31, 2009 compared to Quarter ended March 31,
2008




We had no
revenue for the quarter ended March 31, 2009, and $97 for the quarter ended
March 31, 2008.  There has been a downward turn of registrations by
100% comparing the quarter ended March 31, 2009, to the quarter ended March 31,
2008, due to a lack of consumer interest.




There
were $4,376 of general and administrative expenses for the quarter ended March
31, 2009, as compared to $3,648 of general and administrative expenses for the
quarter ended March 31, 2008.  The major components of these expenses
were the professional expenses consisting of legal and accounting
fees.  For the quarter ended March 31, 2009, professional fees were
$3,814, which were 87.2% of the general and administrative fees for the same
period.  This is an increase of 53% from the professional fees of
$2,500 incurred for the quarter ended March 31, 2008. The professional fees paid
during the 2008 quarter were 68.5% of the general and administrative expenses
for the quarter ended March 31, 2008. There were no contract labor and
commission expenses during the first quarter of 2009.




Depreciation
expense was $188 for the quarter ended March 31, 2009, as compared to $83 for
the quarter ended March 31, 2008.




Total
expenses were $4,564 for the quarter ended March 31, 2009, and $3,731 for the
quarter ended March 31, 2008.




Total net
loss was $4,564 for the quarter ended March 31, 2009, and $3,634 for the quarter
ended March 31, 2008.




We
anticipate our primary expense, professional expense, to remain steady as we
continue our quarterly and annual SEC filings.




Liquidity
and Capital Resources




Since we
are a development stage company, we have been dependent on our majority owner to
provide cash resources to fund operations. As of March 31, 2009, our accumulated
deficit was $119,087.




During
2008, Jonathan White contributed $6,500 for operating expenses and the assistant
secretary contributed $2,500 for operating expenses.  Also, during
2008 and 2009, Vision Opportunity China LP and Vision Opportunity Master Fund,
Ltd. contributed $47,091 in the aggregate for operating
expenses.  That amount is reflected as contributed
capital.




Until
financing described below has been received, all our costs, which we will incur
irrespective of our business development activities, including bank service fees
and those costs associated with SEC requirements associated with going and
staying public, estimated to be less than $25,000 annually, will be funded as a
loan from management, to the extent that funds are available to do so.
Management is not obligated to provide these or any other funds.




We will
need to secure a minimum of $10,000 in funds to finance our business in the next
12 months, in addition to the funds which will be used to stay public, these
funds will be used for business development and sales and marketing. However, in
order to become profitable, we may still need to secure additional debt or
equity funding. We hope to be able to raise additional funds from an offering of
our stock in the future. However, this offering may not occur, or if it occurs,
may not raise the required funding. We do not have any plans or specific
agreements for new sources of funding, except for the anticipated loans from
management as described above, or any planned material
acquisitions.


7


Because
of the need for additional funding, the lack of revenues in 2008, and the
downturn in new registrations, management is currently looking for merger
candidates.




Our
independent auditors have indicated in their audit report for the year ended
December 31, 2008, that, due to our working capital deficiency, there is
substantial doubt about our ability to continue as a going concern.




Off-Balance
Sheet Arrangements




There
were no off-balance sheet arrangements.




Item
3.   Quantitative and Qualitative Analysis About Market
Risk




Not
required




Item
4T. Controls and Procedures




Conclusion
Regarding the Effectiveness of Disclosure Controls and Procedures




Under the
supervision and with the participation of our management, including our
principal executive officer, we conducted an evaluation of our disclosure
controls and procedures, as such term is defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end
of the period covered by this report. Based on this evaluation, our principal
executive officer and our principal financial officer concluded that our
disclosure controls and procedures were effective to provide reasonable
assurance that information required to be disclosed by us in reports we file or
submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms, and is
accumulated and communicated to our management, including our principal
executive officer and principal financial officer, as appropriate to allow
timely decisions regarding required disclosures.





Management’s
Report on Internal Control Over Financial Reporting




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) of the Exchange Act. Our internal control system was designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes, in accordance
with generally accepted accounting principles. Because of inherent limitations,
a system of internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate due to
change in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.





Our
management conducted an evaluation of the effectiveness of our internal control
over financial reporting using the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control -
Integrated Framework. Based on its evaluation, our management concluded that
there is a material weakness in our internal control over financial reporting. A
material weakness is a deficiency, or a combination of control deficiencies, in
internal control over financial reporting such that there is a reasonable
possibility that a material misstatement of our annual or interim financial
statements will not be prevented or detected on a timely basis.


8





The
material weakness relates to the lack of sufficient accounting staff and the
performance of the principal accounting functions by one officer. Our chief
executive officer also serves as our chief financial officer. All of our
financial reporting is carried out by one individual, and we do not have an
audit committee. Our board of directors consists of one individual, who serves
as our chief executive officer and chief financial officer. This lack of
accounting staff results in a lack of segregation of duties and accounting
technical expertise necessary for an effective system of internal
control.





In order
to remedy our existing internal control deficiencies,  as soon as our
finances allow, we will hire a Chief Financial Officer who will be sufficiently
experienced in public company accounting to implement appropriate procedures for
timely and accurate disclosures. We will also establish an audit committee and
recruit members to serve on our board of directors.





Changes
in Internal Control Over Financial Reporting




There
were no charges in our internal control over financial reporting during the
first quarter of fiscal 2009 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.


9


PART
II - OTHER INFORMATION




Item
1.  Legal Proceedings




We are
not party to any legal proceedings, nor are we aware of any contemplated or
pending legal proceedings against us.




Item
1A.  Risk Factors




Not
required




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.




We did
not submit any matters to a vote of security holders during the quarter ended
March 31, 2009.




Item
5.  Other Information.




None




Item
6.  Exhibits




Exhibits
required by Item 601 of Regulation S-K:




Number
              
              Description3.1
              
              Certificate
      of Incorporation. (1)3.2
              
              Bylaws.
      (1)3.3
              
              Certificate
      of Amendment of the Certificate of Incorporation. (2)4.1
              
              Form
      of Common Stock Certificate of City Language Exchange Incorporated.
      (1)11.1
              
              Statement
      re computation of per share earnings (see Note 1 to Financial Statements
      on page 5).31.1
              
              Certification
      as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 by
      Chief Executive Officer and Chief Financial Officer.32.1
              
              Certification
      Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 by Chief Executive Officer and Chief
      Financial Officer.


________________




10




(1)
              Incorporated
      by reference to the exhibits included with Registration Statement on FormSB-2,
      File No. 333-141521, filed with the U.S. Securities and Exchange
      Commission on March 22,
2007.


(2)
            Incorporated
      by reference to the exhibits included with Current Report on Form 8-K,
      dated June 23, 2008, and filed with the U.S. Securities and Exchange
      Commission on June 27, 2008.


11





SIGNATURES





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





CITY
      LANGUAGE EXCHANGE INCORPORATEDDate:  May
      13, 2009
              By:
              /s/  Jonathan
    WhiteJonathan
      WhitePresident,
      ChiefExecutive
      Officer and Chief Financial Officer(principal
      executive officer andprincipal
      financial and accounting
officer)


12