CANNABIS GLOBAL, INC. - FORM 10-Q

Attached files

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EX-32.1 - SECTION 1350 CERTIFICATION - CANNABIS GLOBAL, INC.	v228290_ex32-1.htm
EX-31.1 - SECTION 302 CERTIFICATION - CANNABIS GLOBAL, INC.	v228290_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

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

For quarterly period ended May 31, 2011

¨	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: 333-146404

MICROCHANNEL TECHNOLOGIES CORPORATION

(Exact name of registrant as specified in its charter)

Nevada		98-0539775
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

9192 Red Branch Road, Suite 110
Columbia, Maryland		21045
(Address of principal executive offices)		(Zip Code)

(888) 522-6422

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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 ¨

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

Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer (Do not check if a smaller reporting company)	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Exchange Act.) Yes x No ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 53,864,600 shares of common stock, par value $0.0001, were outstanding on July 11, 2011.

MICROCHANNEL TECHNOLOGIES CORPORATION

FORM 10-Q

For the Quarterly Period Ended May 31, 2011

Table of Contents

PART I FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Balance Sheets	3

Statements of Operations	4

Statements of Stockholders’ Equity (Deficit)	5

Statements of Cash Flows	6

Notes to Financial Statements	7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	10

Item 4. Controls and Procedures	14

PART II OTHER INFORMATION

Item 1. Legal Proceedings	15

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	15

Item 3. Defaults Upon Senior Securities	15

Item 5. Other Information	15

Item 6. Exhibits	15

Signatures	16

Certifications

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

MICROCHANNEL TECHNOLOGIES CORPORATION

(A Development Stage Company)

BALANCE SHEETS

MAY 31, 2011 AND AUGUST 31, 2010

(Expressed in U.S. Dollars)

(Unaudited)

	May 31,			August 31,
	2011			2010

ASSETS
Current assets
Cash and cash equivalents	$	122,502		$	168,464
Prepaid expenses		4,326			-
Total current assets		126,828			168,464

Total assets	$	126,828		$	168,464

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable	$	1,089		$	1,766
Total current liabilities		1,089			1,766

Stockholders' equity
Common stock: $0.0001 par value; 300,000,000 shares authorized, 53,864,600 issued and outstanding at May 31, 2011 and August 31, 2010		5,386			5,386
Additional paid-in capital		556,711			556,711
Deficit accumulated during the development stage		(436,358	)		(395,399	)
Total stockholders' equity		125,739			166,698

Total liabilities and stockholders' equity	$	126,828		$	168,464

(The accompanying notes are an integral part of these financial statements)

MICROCHANNEL TECHNOLOGIES CORPORATION

(A Development Stage Company)

STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2011 AND 2010

AND FOR THE PERIOD FROM INCEPTION (FEBRUARY 28, 2005) TO MAY 31, 2011

(Expressed in U.S. Dollars)

(Unaudited)

													Cumulative
	Three Months Ended						Nine Months Ended						February 28, 2005
	May 31,						May 31,						(inception) to
	2011			2010			2011			2010			May 31, 2011

Revenue	$	-		$	-		$	-		$	-		$	-

Operating expenses
Option fee		-			-			-			-			2,000
Research and development		-			-			-			-			175,839
Director and officer fees		2,250			6,750			6,750			20,250			77,950
Professional fees		5,515			6,694			32,702			34,369			162,891
Other operating expenses		95			95			1,507			595			26,618
Total operating expenses		7,860			13,539			40,959			55,214			445,298

Loss from operations		(7,860	)		(13,539	)		(40,959	)		(55,214	)		(445,298	)

Other income
Interest income		-			-			-			-			8,940
Total other income		-			-			-			-			8,940

Net loss	$	(7,860	)	$	(13,539	)	$	(40,959	)	$	(55,214	)	$	(436,358	)

Net loss per common share: basic	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Weighted average number of common shares outstanding: basic		53,864,600			53,864,600			53,864,600			53,864,600

(The accompanying notes are an integral part of these financial statements)

MICROCHANNEL TECHNOLOGIES CORPORATION

(A Development Stage Company)

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FROM INCEPTION (FEBRUARY 28, 2005) TO MAY 31, 2011

(Expressed in U.S. Dollars)

(Unaudited)

								Deficit accumulated
	Common Stock				Additional			during the			Total stockholders'
	Shares		Amount		paid-in capital			development stage			equity (deficit)

Common stock issued at $0.0001 per share		53,864,600	$	5,386	$	(5,286	)	$	-		$	100

Net loss for the period ended August 31, 2005		-		-		-			(52,898	)		(52,898	)

Balance, August 31, 2005		53,864,600		5,386		(5,286	)		(52,898	)		(52,798	)

Net loss for the year ended August 31, 2006		-		-		-			(82,739	)		(82,739	)

Balance, August 31, 2006		53,864,600		5,386		(5,286	)		(135,637	)		(135,537	)

Conversion of debt to equity on August 31, 2007		-		-		561,997			-			561,997

Net loss for the year ended August 31, 2007		-		-		-			(27,405	)		(27,405	)

Balance, August 31, 2007		53,864,600		5,386		556,711			(163,042	)		399,055

Net loss for the year ended August 31, 2008		-		-		-			(84,635	)		(84,635	)

Balance, August 31, 2008		53,864,600		5,386		556,711			(247,677	)		314,420

Net loss for the year ended August 31, 2009		-		-		-			(77,593	)		(77,593	)

Balance, August 31, 2009		53,864,600		5,386		556,711			(325,270	)		236,827

Net loss for the year ended August 31, 2010		-		-		-			(70,129	)		(70,129	)

Balance, August 31, 2010		53,864,600		5,386		556,711			(395,399	)		166,698

Net loss for the nine months ended May 31, 2011		-		-		-			(40,959	)		(40,959	)

Balance, May 31, 2011		53,864,600	$	5,386	$	556,711		$	(436,358	)	$	125,739

(The accompanying notes are an integral part of these financial statements)

MICROCHANNEL TECHNOLOGIES CORPORATION

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED MAY 31, 2011 AND 2010

AND FOR THE PERIOD FROM INCEPTION (FEBRUARY 28, 2005) TO MAY 31, 2011

(Expressed in U.S. Dollars)

(Unaudited)

							Cumulative
	Nine Months Ended						February 28, 2005
	May 31,						(inception) to
	2011			2010			May 31, 2011

Cash flows from operating activities
Net loss	$	(40,959	)	$	(55,214	)	$	(436,358	)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in operating assets and liabilities:
Increase in prepaid expenses		(4,326	)		-			(4,326	)
Increase (decrease) in accounts payable		(677	)		(43	)		1,089
Net cash used in operating activities		(45,962	)		(55,257	)		(439,595	)

Cash flows from financing activities
Increase in payable - related party		-			-			561,997
Proceeds from the issuance of common stock		-			-			100
Net cash provided by financing activities		-			-			562,097

Increase (decrease) in cash and cash equivalents		(45,962	)		(55,257	)		122,502

Cash and cash equivalents at beginning of period		168,464			241,845			-

Cash and cash equivalents at end of period	$	122,502		$	186,588		$	122,502

Supplemental disclosure of cash flow information:
Interest paid in cash	$	-		$	-		$	-
Income taxes paid in cash		-			-			-

Supplemental disclosure of non-cash transaction:
Conversion of debt to equity	$	-		$	-		$	561,997

(The accompanying notes are an integral part of these financial statements)

MICROCHANNEL TECHNOLOGIES CORPORATION

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

May 31, 2011

(Expressed in U.S. Dollars)

(Unaudited)

Note 1. Organization and Description of Business

MicroChannel Technologies Corporation (“the Company”) was formed as a wholly-owned subsidiary of New Energy Technologies, Inc. (formerly, Octillion Corp.). New Energy Technologies, Inc. (“New Energy”) spun off the Company’s issued and outstanding shares to New Energy’s shareholders on December 18, 2007, the date on which a registration statement was declared effective by the United States Securities and Exchange Commission (“SEC”). The Company was incorporated under the name MultiChannel Technologies Corporation on February 28, 2005 in the State of Nevada, and changed to its existing name on April 4, 2005.

The Company was previously engaged in an effort to develop technologies and products for peripheral and optic nerve damage and nerve regeneration. Until September 30, 2008, the Company was engaged in the development of the Iowa State University Research Foundation Inc. (“ISURF”) Nerve Regeneration Technology. On September 30, 2008, the Option Agreement and Sponsored Project Agreement between the Company and ISURF expired, thereby concluding the Company’s research and development of technologies and products for peripheral and optic nerve damage and nerve regeneration. Upon conclusion of these agreements with ISURF, researchers were unable to identify suitable, commercially-available cells for use in this technology. The Company did not renew these agreements with ISURF.

The Company does not currently engage in any business operations. It is, however, in the process of attempting to identify, locate, and if warranted, acquire new commercial opportunities.

Note 2. Going Concern Uncertainties

The Company is a development stage company, has not generated any revenues, has an accumulated deficit of $436,358 as of May 31, 2011, and does not have positive cash flows from operating activities. The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern, which is dependent upon the Company’s ability to establish itself as a profitable business.

Due to the start-up nature of the Company’s business, the Company expects to incur additional losses as it continues to identify and develop new technologies. To date, the Company’s cash flow requirements have been met by $400,000 received from New Energy, its former parent company. Management recognizes that in order to meet the Company’s capital requirements, and continue to operate, additional financing will be necessary. The Company expects to raise additional funds through private or public equity investments in order to expand the range and scope of its business operations. The Company will seek access to private or public equity but there is no assurance that such additional funds will be available for the Company to finance its operations on acceptable terms, if at all. Furthermore, there is no assurance that the net proceeds received from any successful financing arrangement will be sufficient to cover cash requirements during the initial stages of the Company’s operations. If the Company is unable to raise additional capital or generate positive cash flow, it is unlikely that the Company will be able to continue as a going concern.

In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. These financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying financial statements.

Note 3. Presentation of Interim Information

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (of a normal recurring nature) considered necessary for a fair presentation of the financial statements have been included. Operating results for the three and nine months ended May 31, 2011 are not necessarily indicative of the results that may be expected for the year ended August 31, 2011 or any other interim period. For further information, refer to the financial statements and notes thereto included in the Company’s 2010 Annual Report on Form 10-K for the year ended August 31, 2010 filed with the Securities and Exchange Commission.

Note 4. Summary of Significant Accounting Policies

Estimates

The preparation of the Company’s financial statements requires management to make estimates and use assumptions that affect the reported amounts of assets, liabilities, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. On an on-going basis, the Company evaluates its estimates. Actual results and outcomes may differ materially from these estimates and assumptions.

Research and Development

Research and development costs represent costs incurred to develop the Company’s technology, including salaries and benefits for research and development personnel, allocated overhead and facility occupancy costs, supplies, equipment purchase and repair and other costs. Research and development costs are expensed when incurred, except for nonrefundable advance payments for future research and development activities which are capitalized and recognized as expense as the related services are performed.

The Company did not incur any research and development expense during any of the three and nine month periods ended May 31, 2011 and 2010. Research and development expense from the period of inception (February 28, 2005) to May 31, 2011 was $175,839, comprised entirely of payments made pursuant to the ISURF Research Agreement. See “Note 6. Option Interest in Nerve Regeneration Technologies.”

Fair Value of Financial Instruments

The carrying value of cash and cash equivalents and accounts payable approximate their fair value because of the short-term nature of these instruments and their liquidity. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

Recently Issued and Adopted Accounting Pronouncements

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, it has not identified any standards that it believes merit further discussion. The Company believes that none of the new standards will have a significant impact on its financial statements.

Note 5. Net Loss Per Share

Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The Company does not have any stock options or warrants outstanding that would be anti-dilutive.

For purposes of earnings per share computations, shares of common stock that are issuable at the end of a reporting period are included as outstanding.

Following is the computation of basic net loss per share for the three and nine months ended May 31, 2011 and 2010:

	Three Months Ended						Nine Months Ended
	May 31,						May 31,
	2011			2010			2011			2010

Numerator - net loss	$	(7,860	)	$	(13,539	)	$	(40,959	)	$	(55,214	)

Denominator - weighted average number of common shares outstanding - basic		53,864,600			53,864,600			53,864,600			53,864,600

Basic net loss per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Note 6. Option Interest in Nerve Regeneration Technologies

On April 29, 2005, an Option Agreement (the “ISURF Agreement”) was executed between Iowa State University Research Foundation Inc., (“ISURF”) and the Company, pursuant to which the Company acquired an option to obtain a license to certain nerve regeneration technologies being developed by ISURF. On September 30, 2008, the ISURF Agreement expired, thereby concluding the Company’s research and development of technologies and products for peripheral and optic nerve damage and nerve regeneration. Upon conclusion of the ISURF Agreement, researchers were unable to identify suitable, commercially-available cells for use in this technology. The Company did not renew the ISURF Agreement or the Sponsored Project Agreement related to the ISURF Nerve Regeneration Technology.

The Company did not incur any research and development expense during any of the three and nine month periods ended May 31, 2011 and 2010. During the period from inception (February 28, 2005) to May 31, 2011, the Company recorded research and development expense of $175,839 pursuant to the ISURF Agreement.

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

Forward-Looking Statements

This Report on Form 10-Q contains forward-looking statements which involve assumptions and describe our future plans, strategies, and expectations, and are generally identifiable by use of words such as “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project,” or the negative of these words or other variations on these words or comparable terminology. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished.

Such forward-looking statements include statements regarding, among other things, (a) the potential markets for our technologies, our potential profitability, and cash flows, (b) our growth strategies, (c) expectations from our ongoing research and development activities, (d) anticipated trends in the technology industry, (e) our future financing plans, and (f) our anticipated needs for working capital. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in this Form 10-Q generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the matters described in this Form 10-Q generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. In addition to the information expressly required to be included in this filing, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.

Although forward-looking statements in this report reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect our actual results may vary materially from those expected or projected.

Except where the context otherwise requires and for purposes of this Form 10-Q only, “we,” “us,” “our,” “Company,” “our Company,” and “MicroChannel” refer to MicroChannel Technologies Corporation..

Overview

The following discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with our financial statements and the accompanying notes to the financial statements included in this Form 10-Q.

The MD&A is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Background

We were formed as a wholly-owned subsidiary of New Energy Technologies, Inc. (formerly, Octillion Corp.). New Energy Technologies, Inc. (“New Energy”) spun off our issued and outstanding shares to New Energy’s shareholders on December 18, 2007. We were incorporated under the name MultiChannel Technologies Corporation on February 28, 2005 in the State of Nevada, and changed to our existing name, MicroChannel Technologies Corporation, on April 4, 2005.

We are a development stage company previously engaged in an effort to develop technologies and products for peripheral and optic nerve damage and nerve regeneration. Until September 30, 2008, we were engaged in the development of the Iowa State University Research Foundation Inc. (“ISURF”) Nerve Regeneration Technology. On September 30, 2008, the Option Agreement and Sponsored Project Agreement between us and ISURF expired, thereby concluding our research and development of technologies and products for peripheral and optic nerve damage and nerve regeneration. Upon conclusion of these agreements with ISURF, researchers were unable to identify suitable, commercially-available cells for use in this technology. We did not renew these agreements with ISURF.

We do not currently engage in any business operations. We are, however, in the process of attempting to identify, locate, and if warranted, acquire new commercial opportunities.

Results of Operation

Three and Nine Months Ended May 31, 2011 and 2010

Below is a summary of our operating expenses for the three and nine months ended May 31, 2011 and 2010:

	Three Months Ended
	May 31,				Increase /			Percentage
	2011		2010		(Decrease)			Change

Operating expenses
Director and officer fees	$	2,250	$	6,750	$	(4,500	)		(67	)%
Professional fees		5,515		6,694		(1,179	)		(18	)
Other operating expenses		95		95		-			-
Total operating expenses	$	7,860	$	13,539	$	(5,679	)		(42	)%

	Nine Months Ended
	May 31,				Increase /			Percentage
	2011		2010		(Decrease)			Change

Operating expenses
Director and officer fees	$	6,750	$	20,250	$	(13,500	)		(67	)%
Professional fees		32,702		34,369		(1,667	)		(5	)
Other operating expenses		1,507		595		912			153
Total operating expenses	$	40,959	$	55,214	$	(14,255	)		(26	)%

Director and Officer Fees

Through August 31, 2010, our Chief Executive Officer (the “CEO”) received $1,250 per month and our Chief Financial Officer (the “CFO”) received $750 per month for their services as executive officers. The Board approved a curtailment in the amount paid to our CFO from $750 per month to $500 per month, effective September 9, 2010.

Non-employee directors receive $250 per month for their services as directors.

Effective September 1, 2010, Mr. Meetesh Patel resigned as a member of our Board of Directors and from all executive officer positions held with us and Ms. Pattiann Hiranandani resigned as a member of our Board of Directors. In order to fill the vacancies created by these resignations, the Board appointed Mr. David Gamache to the positions of President and CEO and Mr. Jeet Sidhu to our Board of Directors.

During the three months ended May 31, 2011 and 2010, we incurred $1,500 and $6,000, respectively, as compensation for services provided to us by our executive officers. The decrease of $4,500 is due to the resignation of Mr. Patel, resulting in a decrease of $3,750 during the three months ended May 31, 2011 as compared to the same period of the prior year. Also contributing to the decrease is the curtailment of the amount paid to our CFO, resulting in a decrease of $750 during the three months ended May 31, 2011 as compared to the same period of the prior year.

During the nine months ended May 31, 2011 and 2010, we incurred $4,500 and $18,000, respectively, as compensation for services provided to us by our executive officers. The decrease of $13,500 is due to the resignation of Mr. Patel and the curtailment of the amount paid to our CFO.

During both of the three month periods ended May 31, 2011 and 2010, we incurred $750 as compensation for services provided to us by our non-employee directors.

During both of the nine month periods ended May 31, 2011 and 2010, we incurred $2,250 as compensation for services provided to us by our non-employee directors.

Professional Fees

Professional fees primarily consist of accounting, audit, tax, legal, and transfer agent fees and fees related to the filing of documents with the Securities and Exchange Commission.

Professional fees decreased $1,179 during the three months ended May 31, 2011 compared to the same period in 2010 substantially as a result of a decrease in accounting related fees directly attributable to the reduction in services provided while we identify new commercial opportunities.

Professional fees decreased $1,667 during the nine months ended May 31, 2011 compared to the same period in 2010 partially as a result of the decrease in accounting and audit related fees of approximately $5,000 offset by an increase in legal fees of approximately $3,100 due to additional services required of legal counsel upon the resignation of Mr. Patel and Ms. Hiranandani and the appointment of Mr. Sidhu to our Board of Directors (see “Director and Officer Fees” above).

Liquidity and Capital Resources

The accompanying financial statements have been prepared assuming we will continue as a going concern. We have incurred cumulative losses of $436,358 through May 31, 2011 and do not have positive cash flows from operating activities. Due to the "start up" nature of our business, we expect to incur losses as we continue to identify and develop new technologies. These conditions raise substantial doubt about our ability to continue as a going concern. Management recognizes that in order to meet our capital requirements, and continue to operate, additional financing will be necessary. We are evaluating alternative sources of financing to improve our cash position and are undertaking efforts to raise capital, but there is no assurance that such additional funds will be available for us to finance our operations on acceptable terms, if at all. If we are unable to raise additional capital or generate positive cash flow, it is unlikely that we will be able to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our principal source of liquidity is cash in the bank. At May 31, 2011, we had cash and cash equivalents of $122,502. We have financed our operations primarily from $400,000 received from New Energy, our former parent company. This amount was subsequently converted to equity as part of the spin-off in December 2007.

Net cash used in operating activities was $45,962 for the nine months ended May 31, 2011 compared to net cash used in operating activities of $55,257 for the nine months ended May 31, 2010. The decrease in cash used in operating activities of $9,295 substantially due to a decrease in the amount paid for director and officer fees (see “Director and Officer Fees” above).

Other Contractual Obligations

As of May 31, 2011, we do not have any contractual obligations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Recently Issued and Adopted Accounting Pronouncements

We review new accounting standards as issued. Although some of these accounting standards issued or effective after the end of our previous fiscal year may be applicable to us, we have not identified any standards that we believe merit further discussion. We believe that none of the new standards will have a significant impact on our financial statements.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this quarterly report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of May 31, 2011 that our disclosure controls and procedures were effective such that the information required to be disclosed in our United States Securities and Exchange Commission (the “SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.		Description of Exhibit

3.1		Articles of Incorporation, as amended. (3)

3.2		By Laws. (1)

10.1		Option Agreement, dated April 29, 2005, between MicroChannel Technologies Corporation and Iowa State Research Foundation, Inc. (1)

10.2		Amended Option Agreement No. 1 between MicroChannel Technologies Corporation and Iowa State Research Foundation, Inc. dated October 13, 2005. (1)

10.3		Amended Option Agreement No. 2 between MicroChannel Technologies Corporation and Iowa State Research Foundation, Inc. dated February 8, 2007. (1)

10.4		Amended Option Agreement No. 3 between MicroChannel Technologies Corporation and Iowa State Research Foundation, Inc. dated November 12, 2007. (2)

31.1		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13(a)-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

32.1		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 USC. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

*Filed herewith.

(1) Incorporated by reference to the exhibits filed as part of the report on Form SB-2 filed by MicroChannel Technologies Corporation on October 1, 2007.

(2) Incorporated by reference to the exhibits filed as part of the report on Form SB-2/A filed by MicroChannel Technologies Corporation on November 16, 2007.

(3) Incorporated by reference to the exhibits filed as part of the report on Form 10-Q filed by MicroChannel Technologies Corporation on April 8, 2010.

SIGNATURES

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

	MicroChannel Technologies Corporation
	(Registrant)

July 14, 2011	By:	/s/ David Gamache
	David Gamache
	President, Chief Executive Officer,
	Chief Financial Officer, and Director

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