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 June 30, 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  ̈
  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   ̈ No  ̈ (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 xNo o




As of
August 6, 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 of Operations
                                                                        
                                                                        
                                                                        9Item 3.  Quantitative and Qualitative
      Analysis About Market Risk
                                                                        
                                                                        
                                                                        10Item 4T.  Controls and
      Procedures
                                                                        
                                                                        
                                                                        10PART II - OTHER
      INFORMATIONItem 1.  Legal
      Proceedings
                                                                        
                                                                        
                                                                        12Item 1A.  Risk
      Factors
                                                                        
                                                                        
                                                                        12Item 2.  Unregistered Sales of Equity
      Securities and Use of Proceeds
                                                                        
                                                                        
                                                                        12Item 3.  Defaults Upon Senior
      Securities.
                                                                        
                                                                        
                                                                        12Item 4.  Submission of Matters to a Vote
      of Security Holders.
                                                                        
                                                                        
                                                                        12Item 5.  Other
      Information.
                                                                        
                                                                        
                                                                        12Item 6.  Exhibits
                                                                        
                                                                        
                                                                        12SIGNATURES
                                                                        
                                                                        
                                                                        13







CITY
LANGUAGE EXCHANGE, INC.


(A Development Stage
Company)


BALANCE
SHEETS


JUNE
30, 2009 AND DECEMBER 31, 2008


(UNAUDITED)





JUNE
      30,
                          
                          
                          DECEMBER
                            31,2009
                          
                          
                          2008ASSETSCURRENT
      ASSETSCash
                          
                          $
                          15,038
                          
                          
                          $
                          173FIXED
      ASSETSEquipment,
      net of accumulated depreciation of $1,206 and $968
      respectively
                          
                          
                          264
                          
                          
                          
                          502TOTAL
      ASSETS
                          
                          $
                          15,302
                          
                          
                          $
                          675LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT
      LIABILITIESAccrued
      liabilities - related party
                          
                          $
                          12,913
                          
                          
                          $
                          1,681TOTAL
      LIABILITIES
                          
                          
                          12,913
                          
                          
                          
                          1,681STOCKHOLDERS'
      EQUITY (DEFICIT)Preferred
      stock, $0.0001 par value, 20,000,000 shares authorized, none issued and
      outstanding
                          
                          
                          -
                          
                          
                          
                          -Common
      stock, $0.0001 par value, 100,000,000 shares authorized, 35,945,000 shares
      issued and outstanding at June 30, 2009 and December 31,
    2008
                          
                          
                          3,595
                          
                          
                          
                          3,595Additional
      paid in capital
                          
                          
                          131,063
                          
                          
                          
                          109,922Deficit
      accumulated during the development stage
                          
                          
                          (132,269
                          )
                          
                          
                          (114,523
                          )TOTAL
      STOCKHOLDERS' EQUITY (DEFICIT)
                          
                          
                          2,389
                          
                          
                          
                          (1,006
                          )TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                          
                          $
                          15,302
                          
                          
                          $
                          675





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


3


CITY
LANGUAGE EXCHANGE, INC.


(A Development Stage
Company)


STATEMENTS
OF OPERATIONS


FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 and 2008, AND THE
PERIOD


FROM
AUGUST 28, 2006 (INCEPTION) THROUGH JUNE 30, 2009


(UNAUDITED)





THREE MONTHS
                              ENDED JUNE 30,
                            
                            
                            SIX MONTHS ENDED
                              JUNE 30,
                            
                            
                            AUGUST 28, 2006
                              (INCEPTION)2009
                            
                            
                            2008
                            
                            
                            2009
                            
                            
                            2008
                            
                            
                            THROUGH JUNE 30,
                              2009REVENUETranslation
      services
                            
                            $
                            -
                            
                            
                            $
                            60
                            
                            
                            $
                            -
                            
                            
                            $
                            156
                            
                            
                            $
                            5,096OPERATING
      EXPENSESGeneral
      & administrative
                            
                            
                            13,132
                            
                            
                            
                            891
                            
                            
                            
                            17,508
                            
                            
                            
                            4,538
                            
                            
                            
                            134,469Commissions
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            1,690Depreciation
      expense
                            
                            
                            50
                            
                            
                            
                            84
                            
                            
                            
                            238
                            
                            
                            
                            168
                            
                            
                            
                            1,206Total
      Operating Expenses
                            
                            
                            13,182
                            
                            
                            
                            975
                            
                            
                            
                            17,746
                            
                            
                            
                            4,706
                            
                            
                            
                            137,365NET
      LOSS
                            
                            $
                            (13,182
                            )
                            
                            $
                            (915
                            )
                            
                            $
                            (17,746
                            )
                            
                            $
                            (4,550
                            )
                            
                            $
                            (132,269
                            )NET
      LOSS PER SHARE - BASIC & DILUTED
                            
                            $
                            (0.00
                            )
                            
                            $
                            (0.00
                            )
                            
                            $
                            (0.00
                            )
                            
                            $
                            (0.00
                            )WEIGHTED
      AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC & DILUTED
                            
                            
                            35,945,000
                            
                            
                            
                            35,945,000
                            
                            
                            
                            35,945,000
                            
                            
                            
                            35,945,000


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




4


CITY
LANGUAGE EXCHANGE, INC.


(A Development Stage
Company)


STATEMENTS
OF CASH FLOWS


FOR
THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008, AND THE PERIOD FROM AUGUST 28,
2006


(INCEPTION)
THROUGH JUNE 30, 2009


(UNAUDITED)





SIX MONTHS ENDING
                                
                                
                                INCEPTIONJUNE 30,
                                
                                
                                JUNE 30,
                                
                                
                                THROUGH2009
                                
                                
                                2008
                                
                                
                                JUNE 30, 2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                                
                                $
                                (17,746
                                )
                                
                                $
                                (4,550
                                )
                                
                                $
                                (132,269
                                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
                                
                                
                                238
                                
                                
                                
                                168
                                
                                
                                
                                1,206Increase
      (Decrease) of accrued liabilities
                                
                                
                                11,232
                                
                                
                                
                                (5,700
                                )
                                
                                
                                12,913Net
      cash (used in) operating activities
                                
                                
                                (6,276
                                )
                                
                                
                                (10,082
                                )
                                
                                
                                (118,150
                                )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of equipment
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (1,470
                                )Net
      cash (used in) investing activities
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (1,470
                                )CASH
      FLOWS FROM FINANCING ACTIVITIES:Issuance
      of stock  for cash
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                18,900Contribution
      of capital
                                
                                
                                21,141
                                
                                
                                
                                9,000
                                
                                
                                
                                115,758Net
      cash provided by financing activities
                                
                                
                                21,141
                                
                                
                                
                                9,000
                                
                                
                                
                                134,658NET
      INCREASE (DECREASE) IN CASH
                                
                                $
                                14,865
                                
                                
                                $
                                (1,082
                                )
                                
                                $
                                15,038CASH,
      BEGINNING OF PERIOD
                                
                                
                                173
                                
                                
                                
                                1,254
                                
                                
                                
                                -CASH,
      END OF PERIOD
                                
                                $
                                15,038
                                
                                
                                $
                                172
                                
                                
                                $
                                15,038SUPPLEMENTAL
      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 U.S.
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-K. 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-K 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 June 30, 2009, CLE’s
accumulated deficit was $132,269. 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




6




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,
$21,141 of expenses have been paid by these entities on behalf of CLE and
$12,913 of expenses have been accrued.


7


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 quarterly report.





Results
of Operations - Three and Six Month Periods ended June 30, 2009 compared to
Three and Six Month Periods ended June 30, 2008




We had no
revenue for the three and six month periods ended June 30, 2009, compared to $60
for the three months and $156 for the six months ended June 30,
2008.  There has been a downward turn of registrations by 100%
comparing the three and six month periods ended June 30, 2009 to the three and
six month periods ended June 30, 2008, due to an apparent lack of consumer
interest.




There
were $13,132 of general and administrative expenses for the three months and
$17,508  for the six months ended June 30, 2009, compared to $891 of
general and administrative expenses for the three months and $4,538 for the six
months ended June 30, 2008.  The major component of these expenses was
professional expenses consisting of legal and accounting fees.  For
the three months ended June 30, 2009, professional fees were $12,732, which was
96.95% of the general and administrative fees for that period.  This
is an increase of 3,377.19% from the professional fees of $377 incurred for the
three months ended June 30, 2008. The professional fees paid during the 2008
three-month period were 42.3% of the general and administrative expenses for the
three months ended June 30, 2008. For the six months ended June 30, 2009,
professional fees were $16,546, which was 94.51% of the general and
administrative fees for that period.  This is an increase of 575.11%
from the professional fees of $2,877 incurred for the six months ended June 30,
2008. The professional fees paid during the 2008 six-month period were 63.4% of
the general and administrative expenses for the six months ended June 30,
2008.  There were no contract labor or commission expenses during the
three and six month periods ended June 30, 2009.




Depreciation
expense was $50 for the three months and $238 for the six months ended June 30,
2009, compared to $84 for the three months and $168 for the six months ended
June 30, 2008.




Total
operating expenses were $13,182 for the three months and $17,746 for the six
months ended June 30, 2009, compared to $975 for the three months and $4,706 for
the six months ended June 30, 2008.




Net loss
was $13,182 for the three months and $17,746 for the six months ended June 30,
2009, compared to $(915) for the three months and $(4,550) for the six months
ended June 30, 2008.




We
anticipate  professional fees, our primary expense, to remain steady
as we continue our current, 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 June 30, 2009, our deficit
accumulated during the development stage was $132,269.




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 $66,249 in the aggregate for operating
expenses.




8




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.




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




(a)
Evaluation 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 not 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.




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.


9





In order
to remedy our existing internal control deficiencies,  as soon as our
finances allow, we will hire sufficient accounting staff and implement
appropriate procedures for monitoring and review of our financial reporting
function.




(b)
Changes in Internal Control Over Financial Reporting




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


10


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
June 30, 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.







(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:  August
      7, 2009
                By:
                /s/   Jonathan
      WhiteJonathan
      WhitePresident,
      ChiefExecutive
      Officer and Chief Financial Officer(principal
      executive officer andprincipal
      financial and accounting
officer)




12