UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: December 31, 2008
For the quarterly period ended: March 31, 2009
¨	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: 000-18296

Xstream Mobile Solutions Corp.

(Exact name of registrant as specified in its charter)

Delaware	62-1265486
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

14422 Edison Drive, Unit D, New Lenox, Illinois 60451

(Address of principal executive offices)

(708) 205-2222

(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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.¨ x Yes ý o 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,” “non-accelerated filer,” and “a 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 ý

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class		Outstanding at April 30, 2009
Common Stock, $0.001 par value		15,030,917

Table of Contents

	FORM 10-Q XSTREAM MOBILE SOLUTIONS CORP. December 31, 2008 TABLE OF CONTENTS	Page
	FORM 10-Q XSTREAM MOBILE SOLUTIONS CORP. March 31, 2008 TABLE OF CONTENTS	Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	4
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	7
Item 4T.	Controls and Procedures.	7
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	9
Item 1A.	Risk Factors.	9
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	9
Item 3.	Defaults Upon Senior Securities.	9
Item 4.	Submission of Matters to a Vote of Security Holders.	9
Item 5.	Other Information.	9
Item 6.	Exhibits.	9
Signatures
Exhibits
Certifications

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Our unaudited condensed consolidated financial statements included in this Form 10-Q are as follows:
F-1	Condensed Consolidated Balance Sheets as of ~~December~~March 31, ~~2008~~2009 (unaudited) and September 30, 2008 (audited).
F-2	Condensed Consolidated Statements of Operations for the Six and Three Months ended ~~December~~March 31, ~~2008~~2009 and ~~2007~~2008 (unaudited).
F-3	Condensed Consolidated Statements of Cash Flows for the ~~Three~~Six Months ended ~~December~~March 31, ~~2008~~2009 and ~~2007~~2008 (unaudited).
F-4	Notes to Condensed Consolidated Financial Statements (unaudited).

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended ~~December~~March 31, ~~2008~~2009 are not necessarily indicative of the results that can be expected for the full year.

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XSTREAM MOBILE SOLUTIONS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

ASSETS
	December 31,			September 30,
	March 31,			September 30,
	2008			2008
	2009			2008
CURRENT ASSETS
Cash and cash equivalents	$	~~8,801~~520		$	24,097
Total current assets		8,801			24,097
Total Current Assets	$	520		$	24,097
FIXED ASSETS
Equipment, net		54,~~141~~728			5,554
OTHER ASSETS
Investment in Triex		107,~~000~~500			10,000
TOTAL ASSETS	$	2312,~~942~~748		$	39,651
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
LIABILITIES
Accounts payable and accrued expenses	$	3481,~~374~~175		$	34,214
Convertible debenture		187,500			177,500
Convertible debentures		187,500			177,500
Short term loan payable		4,~~200~~400			-
Stock to be issued		15,000			15,000
Total Current Liabilities		~~241~~288,~~074~~075			226,714
STOCKHOLDERS' (DEFICIT)
Preferred Stock Series A, $.001 Par Value; 990,000 shares
authorized and none issued and outstanding		-			-
Preferred Stock Series B, $.001 Par Value; 9,000,000 shares
authorized and none issued and outstanding		-			-
Preferred Stock Series C, $.001 Par Value; 10,000 shares
authorized and none issued and outstanding		-			-
Common Stock $.001 Par Value; 90,000,000 shares
authorized and 5,580,917 and 5,580,917 shares, respectively, issued
and 5,186,065 and 5,186,065 shares, respectively outstanding		5,582			5,582
Additional Paid-in Capital		6,161,562			6,161,562
Other accumulated comprehensive income		-			8,574
Accumulated Deficit		(6,~~086~~145,~~971~~166	)		(6,065,476	)
		80,173			110,242
					-
		21,978			110,242
Less: Cost of treasury stock, 394,852 shares		(297,305	)		(297,305	)
Total Stockholders' (Deficit)		(~~217~~275,~~132~~327	)		(187,063	)
TOTAL LIABILITIES AND
STOCKHOLDERS' (DEFICIT)	$	2312,~~942~~748		$	39,651

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

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XSTREAM MOBILE SOLUTIONS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2007

(UNAUDITED)

	2008			2007
	Six Months			Six Months			Three Months			Three Months
OPERATING REVENUES
	Ended			Ended			Ended			Ended
Revenue	$	-		$	-
	March 31, 2009			March 31, 2008			March 31, 2009			March 31, 2008
OPERATING EXPENSES
OPERATING REVENUES
Depreciation		413			276
Revenue	$	11,200		$	42,450		$	11,200		$	42,450
General and administrative expenses		25,467			84,872
OPERATING EXPENSES
Total operating expenses		25,880			85,148
Depreciation		826			552			413			276
LOSS BEFORE OTHER INCOME (EXPENSES)		(25,880	)		(85,148	)
General and Administrative expenses		90,511			134,320			65,043			49,448
OTHER INCOME (EXPENSES)
Total operating expenses		91,337			134,872			65,456			49,724
Gain on short-term securities -net		8,290			-
LOSS BEFORE OTHER INCOME (EXPENSES)		(80,137	)		(92,422	)		(54,256	)		(7,274	)
Interest income		5			102
OTHER INCOME (EXPENSES)
Interest expense		(3,910	)		-
Gain on short-term securities -net		8,289						(2	)
Total other income (expense)		4,385			102
Interest income		5			102			-			-
LOSS BEFORE PROVISION FOR INCOME TAXES		(21,495	)		(85,046	)
Interest expense		(7,847	)		-			(3,937	)		-
Provision for Income Taxes		-			-
Total other income (Expense)		447			102			(3,939	)		-
NET LOSS APPLICABLE TO COMMON SHARES	$	(21,495	)	$	(85,046	)
LOSS BEFORE PROVISION FOR INCOME TAXES		(79,690	)		(92,320	)		(58,195	)		(7,274	)
NET LOSS PER BASIC AND DILUTED SHARES	$	(0.00	)	$	(0.02	)
Provision for Income Taxes		-			-			-			-
WEIGHTED AVERAGE NUMBER OF COMMON
NET LOSS APPLICABLE TO COMMON SHARES	$	(79,690	)	$	(92,320	)	$	(58,195	)	$	(7,274	)
SHARES OUTSTANDING		5,580,917			4,774,140
NET LOSS PER BASIC AND DILUTED SHARES	$	(0.01	)	$	(0.02	)	$	(0.01	)	$	(0.00	)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING		5,580,917			4,781,098			5,580,917			4,788,133

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

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XSTREAM MOBILE SOLUTIONS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2008 AND 2007

(UNAUDITED)

	2008			2007
	Six Months			Six Months
	Ended			Ended
	March 31, 2009			March 31, 2008
CASH FLOW FROM OPERATING ACTIVITIES
Net loss	$	(2179,~~495~~690	)	$	(8592,~~046~~320	)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation		~~413~~826			~~276~~552
Gain on short term investment - net		(8,574	)		-
Changes in assets and liabilities
Increase in accounts payable and
accrued expenses		~~160~~46,961			2,999
Total adjustments		(839,~~001~~213	)		3,~~275~~551
Net cash (used in) operating activities		(2940,~~496~~477	)		(8188,~~771~~769	)
CASH FLOW FROM INVESTING ACTIVITIES
Investment in Triex		2,500			-
Net cash provided by investing activities		2,500			-
CASH FLOW FROM FINANCING ACTIVITIES
Sale of common stock		-			37,850
Issuance of stock for cash		-			22,850
Proceeds from short term loan		4,200			-
Proceeds from liability for stock to be issued		-			15,000
Proceeds from convertible debentures		10,000			-
Proceeds of short term loan payable		4,400			10,000
Repurchase of stock		-			(1,250	)
Net cash provided by financing activities		14,200			36,600
Proceeds from convertible debentures		10,000			-
Net cash provided by financing activities		14,400			46,600
NET (DECREASE) IN
CASH AND CASH EQUIVALENTS		(1523,~~296~~577	)		(4542,~~171~~169	)
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD		24,097			51,724
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	~~8,801~~520		$	69,~~553~~555
SUPPLEMENTAL DISCLOURE OF CASH FLOW INFORMATION
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Cash paid during the period for:
Income taxes	$	-		$	-
Interest paid	$	-		$	-
Interest	$	-		$	-
Income taxes paid	$	-		$	-

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

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XSTREAM MOBILE SOLUTIONS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~DECEMBER~~ March 31, ~~2008~~ 2009 AND ~~2007~~2008

(UNAUDITED)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

The condensed consolidated unaudited interim financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The condensed consolidated financial statements and notes are presented as permitted on Form 10-Q and do not contain information included in the Company’s annual statements and notes. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the September 30, 2008 audited financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these condensed financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.

These condensed consolidated unaudited financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary to present fairly the operations and cash flows for the periods presented.

The Company was incorporated on May 10, 1998, under the laws of the State of Delaware. The business purpose of the Company was originally to engage in environmental monitoring and testing. However, on December 31, 2001, the Company liquidated those operating assets. The Company has adopted a fiscal year ending September 30.

On February 3, 2005 the Company changed its name to Netchoice, Inc. On December 19, 2005 the Company changed its name to Xstream Mobile Solutions Corp. On January 1, 2006 the Company began operations in software acquisition, development and marketing. The Company acquired a related company in October 2006 (see Note 9).

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XSTREAM MOBILE SOLUTIONS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~DECEMBER~~March 31, ~~2008~~2009 AND ~~2007~~2008

(UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates

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

Cash and Cash Equivalents/Investments

The Company considers all highly liquid debt instruments and other short-term investments with an initial maturity of three months or less to be cash equivalents. There were $~~8,801~~520 and $24,097 cash equivalents as of ~~December~~March 31, ~~2008~~ 2009 and September 30, 2008.

The Company maintains cash and cash equivalent balances at one financial institution that is insured by the Federal Deposit Insurance Corporation up to $250,000. At ~~December~~ March 31, ~~2008~~ 2009, the Company had no funds in excess of the insured limit.

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XSTREAM MOBILE SOLUTIONS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~DECEMBER~~March 31, ~~2008~~2009 AND ~~2007~~2008

(UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue and Cost Recognition

Revenue is recognized under the accrual method of accounting when the services are rendered and the customer has been billed, rather than when cash is collected for the services provided. Specifically, the terms of the contracts call for a fixed set fees based on an hourly rate per individual.

Cost is recorded on the accrual basis as well, when the services are incurred rather than paid for.

Start-up Costs

In accordance with the American Institute of Certified Public Accountants Statement of Position 98-5, “Reporting on the Costs of Start-up Activities,” the Company expenses all costs incurred in connection with the start-up and organization of the Company.

Common Stock Issued for Other Than Cash

Services purchased and other transactions settled in the Company’s common stock are recorded at the estimated fair value of the stock issued if that value is more readily determinable than the fair value of the consideration received.

Equipment

The cost of office and computer equipment is capitalized and depreciated over its useful life using the straight-line method of depreciation. For all equipment presently owned the estimated useful life is 60 months. Repairs that substantially extend the useful life of the assets are capitalized and those that do not are charged to operations. Depreciation expense for the ~~three~~six months ended ~~December~~ March 31, 2009 ~~2008~~ and ~~2007~~2008 was $~~413~~826 and $~~276~~552, respectively.

Income Taxes

The income tax benefit is computed on the pretax loss based on the current tax law. Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates. The Company has not established a provision due to the losses sustained.

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XSTREAM MOBILE SOLUTIONS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~DECEMBER~~ March 31, ~~2008~~ 2009 AND ~~2007~~2008

(UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Earnings (Loss) Per Share of Common Stock

Historical net (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents were not included in the computation of diluted earnings per share when the Company reported a loss because to do so would be antidilutive for periods presented.

The following is a reconciliation of the computation for basic and diluted EPS:

	Decemeber 31,			Decemeber 31,
	March 31,			March 31,
	2008			2007
	2009			2008
Net Loss	$	(2179,~~495~~690	)	$	(8592,~~046~~320	)
Weighted-average common shares outstanding (Basic)		5,580,917			4,~~774~~781,~~140~~098
Weighted-average common stock equivalents:
Stock options		-			-
Warrants		-			-
Weighted-average common shares outstanding (Diluted)		5,580,917			4,~~774~~781,~~140~~098

Options and warrants outstanding to purchase stock were not included in the computation of diluted EPS because inclusion would have been antidilutive.

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XSTREAM MOBILE SOLUTIONS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~DECEMBER~~ March 31, ~~2008~~ 2009 AND ~~2007~~2008

(UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (Continued)

In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements,” which provides a definition of fair value, establishes a framework for measuring fair value and requires expanded disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The provisions of SFAS No. 157 should be applied prospectively.

In February 2008, FASB Staff Position ("FSP") FAS No. 157-2, "Effective Date of FASB Statement No. 157" ("FSP No. 157-2") was issued. FSP No. 157-2 defers the effective date of SFAS No. 157 to fiscal years beginning after December 15, 2008, and interim periods within those fiscal years, for all nonfinancial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Examples of items within the scope of FSP No. 157-2 are nonfinancial assets and nonfinancial liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods), and long-lived assets, such as property, plant and equipment and intangible assets measured at fair value for an impairment assessment under SFAS No. 144.

The partial adoption of SFAS No. 157 on October 1, 2008 with respect to financial assets and financial liabilities recognized or disclosed at fair value in the financial statements on a recurring basis did not have a material impact on the Company's financial statements. See Note 11 for the fair value measurement disclosures for these assets and liabilities. The Company is in the process of analyzing the potential impact of SFAS No. 157 relating to its planned October 1, 2009 adoption of the remainder of the standard.

In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans -- An Amendment of FASB Statements No. 87, 88, 106, and 132R." This standard requires an employer to: (a) recognize in its statement of financial position an asset for a plan's overfunded status or a liability for a plan's underfunded status; (b) measure a plan's assets and its obligations that determine its funded status as of the end of the employer's fiscal year (with limited exceptions); and (c) recognize changes in the funded status of a defined benefit postretirement plan in the year in which the changes occur. Those changes will be reported in comprehensive income. The requirement to recognize the funded status of a benefit plan and the disclosure requirements are effective as of the end of the fiscal year ending after December 15, 2006. The requirement to measure plan assets and benefit obligations as of the date of the employer's fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008.

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XSTREAM MOBILE SOLUTIONS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~DECEMBER~~ March 31, ~~2008~~ 2009 AND ~~2007~~2008

(UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (Continued)

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of SFAS No. 115 (“SFAS No. 159”), which provides all entities, including not-for-profit organizations, with an option to report selected financial assets and liabilities at fair value. The objective of SFAS No. 159 is to improve financial reporting by providing entities with the opportunity to mitigate volatility in earnings caused by measuring related assets and liabilities differently without having to apply the complex provisions of hedge accounting. Certain specified items are eligible for the irrevocable fair value measurement option as established by SFAS No. 159. SFAS No. 159 is effective as of the beginning of the Company’s year beginning after October 1, 2008. The Company does not believe this statement will have a material impact on its financial position and results of operations upon adoption.

In December 2007, the FASB issued FAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements-an amendment of ARB No. 51” (“FAS No. 160”). FAS No. 160 establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. FAS No. 160 is effective for the Company in its fiscal year beginning October 1, 2010. The Company does not believe this statement will have a material impact on its financial position and results of operations upon adoption.

In December 2007, the FASB issued FAS No. 141 R “Business Combinations” (“FAS No. 141R”). FAS No. 141R establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquire. FAS No. 141R also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. FAS No. 141R is effective for the Company’s fiscal year beginning October 1, 2010.

NOTE 3 - INVESTMENT IN TRIEX

The Company purchased 10,000 shares and sold back 2,500 shares of Triex Financial Services, Inc. at a price of $1 per share. The Company has obtained a valuation response from an independent appraiser, who noted that as of ~~December~~March 31, ~~2008~~2009 the fair market value of Triex Financial Services, Inc. stock was at $1 per share.

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XSTREAM MOBILE SOLUTIONS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~DECEMBER~~March 31, ~~2008~~2009 AND ~~2007~~2008

(UNAUDITED)

NOTE 4 – SHORT TERM ~~LOAN~~LOANS-RELATED PARTY

The short term ~~loan~~loans payable ~~bears~~have noterms ~~interest~~of 90 days and ~~has~~bear nointerest ~~specified~~at ~~terms~~3% ofper ~~repayment~~annum.

NOTE 5 - FIXED ASSETS

Fixed assets consisted of the following:

	December 31,			September 30,
	March 31,			September 30,
	2008			2008
	2009			2008
Equipment	$	8,262		$	8,262
Less: Accumulated Depreciation		(3,~~121~~534	)		(2,708	)
Fixed Assets - Net	$	54,~~141~~728		$	5,554

NOTE 6 - CONVERTIBLE DEBENTURES

The Company issued convertible debentures to investors. The debentures will pay interest at a rate of 6% to 12% per annum, have a term of 12 months and are convertible into the Company’s common stock at any time at the option of the investor. As of ~~December~~March 31, ~~2008~~2009, the Company has received investments in aggregate of $187,500. The Company will determine the best use of the proceeds based on the corporate strategy and immediate needs.

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XSTREAM MOBILE SOLUTIONS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~DECEMBER~~March 31, ~~2008~~2009 AND ~~2007~~2008

(UNAUDITED)

NOTE 7 - STOCKHOLDERS’ (DEFICIT)

Preferred Stock

On December 3, 2004 the Company changed the number of Preferred Stock from one class of stock consisting of 10,000,000 shares with a par value of $0.01 to three separate series of preferred stock and changed the par value to $0.001. They are as follows:

Preferred Stock Series A

990,000 shares with a par value of $0.001 per share, participating, voting and convertible with a liquidation value of $1,000.

Preferred Stock Series B

9,000,000 shares with a par value of $0.001 per share, participating; voting and convertible with a liquidation value of $3 each.

Preferred Stock Series C

10,000 shares with a par value of $0.001 per share, with a liquidation value of $10 each.

All preferred stock series A, B and C are convertible to 4,000 common shares as well as 4,000 votes for each share held. In addition, in all cases, the holders of the Preferred Stock C will vote cumulatively at least fifty-one percent (51%) of all votes cast regardless of the amount of series C shares issued, at any meeting of shareholders or any major issue put before the Company for voting of shareholders.

Common Stock

~~The~~As of ~~following~~March is31, a2009, ~~list~~there were 90,000,000 shares authorized and 5,580,917 shares issued and 5,186,065 shares outstanding of the Company’s common stock ~~transactions~~with ~~during~~a ~~the three~~par ~~months ended~~value ~~December~~of ~~31, 2007:~~$0.001.

OnThere was ~~December~~no ~~19, 2007~~ the ~~company~~common ~~repurchased~~stock ~~1,250~~transactions ~~shares~~during ~~and~~the ~~refunded~~period ~~cash~~ended ~~of $1~~March 31,~~250~~ 2009.

As of December 31, 2007, there were 90,000,000 shares authorized and 4,773,067 shares issued and 4,378,215 shares outstanding of the Company’s common stock with a par value of $0.001.

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XSTREAM MOBILE SOLUTIONS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~DECEMBER~~March 31, ~~2008~~2009 AND ~~2007~~2008

(UNAUDITED)

NOTE 7 8- ~~STOCKHOLDERS’ EQUITY~~ INCOME ~~(DEFICIT) (CONTINUED)~~TAXES

~~Common~~There ~~Stock~~was ~~(Continued)~~no income tax benefit recognized at March 31, 2009 and 2008.

~~There~~The net ~~were no common~~deferred ~~stock~~tax ~~transactions~~assets ~~during~~in the ~~period~~accompanying ~~ended~~balance ~~December~~sheet include benefit of utilizing net operating losses of approximately $6,145,166 (at March 31, 2009) and $6,065,476 (at September 30, 2008). However due to the uncertainty of utilizing the net operating losses, an offsetting valuation allowance has been established.

~~As of~~ NOTE ~~December~~9- RELATED ~~31, 2008, there were 90,000,000 shares authorized and 5,580,917 shares~~PARTY ~~issued and 5,186,065 shares outstanding of the Company’s common stock with a par value of $0.001.~~TRANSACTIONS

NOTE 8 - INCOME TAXES

There was no income tax benefit recognized at December 31, 2008 and 2007.

The net deferred tax assets in the accompanying balance sheet include benefit of utilizing net operating losses of approximately $6,086,971 (at December 31, 2008) and $6,065,476 (at September 30, 2008). However due to the uncertainty of utilizing the net operating losses, an offsetting valuation allowance has been established.

NOTE 9 - RELATED PARTY TRANSACTIONS

On October 9, 2006 the Company approved 1,517,992 shares of its common stock to acquire Xstream Mobile Solutions, Inc., an Illinois company. The Company acquired Xstream Mobile Solutions Inc. from a related party. Under FASB 141 Business Combinations, when accounting for a transfer of assets or exchange of shares between entities under common control, the entity that receives the net assets or the equity interests shall initially recognize the assets and liabilities transferred at their carrying amounts in the accounts of the transferring entity at the date of transfer.

An affiliated company of which a stockholder is a principal has contracted with the Company to provide programming services and technical communications support for its operations. The total charged to the Company for these services for the ~~three~~six months ended ~~December~~March 31, ~~2008~~2009 and ~~2007~~2008 is $ 1418,~~451~~051 and $ 5083,~~754~~159, respectively.

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XSTREAM MOBILE SOLUTIONS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~DECEMBER~~March 31, ~~2008~~2009 AND ~~2007~~2008

(UNAUDITED)

NOTE 10- GOING CONCERN

As shown in the accompanying condensed consolidated financial statements, the Company incurred substantial net losses for the period ended ~~December~~March 31, ~~2008~~2009 and ~~2007 and~~ for the years ended September 30, 2008 and 2007, respectively. There is no ~~guarantee~~ guarantee whether the Company will be able to generate enough revenue and/or raise capital to support those operations. This raises substantial doubt about the Company’s ability to continue as a going concern. Management believes the Company’s capital requirement will depend on many factors, including the success of the Company to raise money. The Company continues to search for acquisition candidates to fund operations. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

NOTE 11- FAIR VALUE MEASUREMENTS

On October 1, 2008, the Company adopted SFAS No. 157 “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, provides a consistent framework for measuring fair value under Generally Accepted Accounting Principles and expands fair value financial statement disclosure requirements. SFAS 157’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. SFAS 157 classifies these inputs into the following hierarchy:

Level 1 Inputs– Quoted prices for identical instruments in active markets.

Level 2 Inputs– Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs– Instruments with primarily unobservable value drivers.

The following table represents the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of ~~December~~March 31, ~~2008~~2009.

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XSTREAM MOBILE SOLUTIONS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~DECEMBER~~March 31, ~~2008~~2009 AND ~~2007~~2008

(UNAUDITED)

NOTE 11- FAIR VALUE MEASUREMENTS (CONTINUED)

Fair Value Measurements on a Recurring Basis as of ~~December~~March 31, ~~2008~~2009:

Assets	Level I		Level II		Level III		Total


Cash equivalents	$	-	$	-	$	-	$	-

Total Assets	$	-	$	-	$	-	$	-

Liabilities	$	-	$	187,500	$	-	$	187,500

Total Liabilities	$	-	$	187,500	$	-	$	187,500

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

This Quarterly Report on Form 10-Q contains forward-looking statements regarding our capital needs, business plans and expectations. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this Quarterly Report on Form 10-Q. Additionally, statements concerning future matters are forward-looking statements.

Although forward-looking statements in this Quarterly Report on Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. We caution the reader that numerous important factors, including those factors discussed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2008, which are incorporated herein by reference, could affect our actual results and could cause our actual consolidated results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, Xstream Mobile Solutions Corp. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We file reports with the Securities and Exchange Commission (the “SEC” or “Commission”). You can also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.

We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report on Form 10-Q. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

As used in this Quarterly Report, the terms “we,” “us,” “our,” and “Xstream Mobile Solutions Corp.” mean Xstream Mobile Solutions Corp., unless otherwise indicated.

Overview

We were incorporated as a Delaware corporation on May 10, 1998 under the name Environmental Monitoring and Testing Corporation. Since our incorporation, we provided electronic filing services to companies that are required to electronically file disclosure information with the Securities and Exchange Commission "SEC."

The Company filed a Form 8-K with the Securities and Exchange Commission and changed its name to Netchoice, Inc., effective February 3, 2005.

Subsequent to the reporting period, the Company filed a Form 8-K with the Securities and Exchange Commission and changed its name to Xstream Mobile Solutions Corp. effective December 19, 2005.

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Business of the Issuer

Description of Business

We are creating and marketing Software for the emergency text message market. Xstream Safe© allows your organization to easily send messages to anyone or everyone in a database from any internet accessible computer. DBM-1©: Database Migration Software creates databases automatically for an organization. Import/Export: provides the ability to import and export existing contact databases, if needed. Archive of sent messages Two methods of Delivery: Send Text, E-mail or both simultaneously. Cell-Enabled Message Interface: Send messages from internet capable devices (cell phones, PDA’s, etc.) Message Storage: Store messages for easy retrieval when seconds count. Both Client-Side and Server-Side Capabilities: This means that sensitive personal data is stored on your server, not a server in another state or country. Certification Indicator: Lets you know that people in groups have tested and registered their phones. Contact Size: Scalable from small groups of 1-100 up to large groups encompassing tens of thousands.

Patents, Licenses, Trademarks, Intellectual Property, Franchises, Concessions, Royalty Agreements, or Labor Contracts

We do not own any interest in a patent, trademark, license, franchise, concession, or royalty agreement.

Employees

We currently have two full-time administrative employees. Our employees are not represented by labor unions or collective bargaining agreements. Our key employees are Mr. Michael See, founder, Chief Executive Officer, and Chairman of the Board of Directors, and Mr. Joseph F. Johns, III, Director, President and Chief Financial Officer

Government Regulation

We are not aware of any existing or probable governmental regulation that will have a material impact on our company.

We are not subject to any compliance with environmental laws.

Research and Development

We did not incur any research or development expenditures during the quarter ended ~~December~~March 31, ~~2008~~2009.

Compliance with Environmental Laws

We did not incur any costs in connection with the compliance with any federal, state, or local environmental laws.

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Plan of Operations

We are currently in the communications business specializing in entertainment, safety and security. Since this time, we have attempted to identify and evaluate other business and technology opportunities in order to proceed with an active business operation. At the present time, we have not identified any other business and/or technology opportunities that our management believes are consistent with the best interest of the company. Our plan of operations is to continue our attempts to identify and evaluate other business and technology opportunities in order to proceed with an active business operation.

We currently have forecasted the expenditure of approximately $20,000 during the next twelve months in order to remain in compliance with the Securities Exchange Act of 1934 and to identify additional business and/or technology for acquisition. We can provide no assurance that we will be successful in acquiring other businesses or technology due to our limited working capital. We anticipate that if we are successfully able to identify any technology or business for acquisition, we will require additional financing in order for us to complete the acquisition. We can provide no assurance that we will receive additional financing if sought.

We do not anticipate purchasing any real property or significant equipment in the next twelve months.

We have two (2) employees at this time. We do not anticipate hiring any additional employees until such time as we are able to acquire any additional businesses and/or technology.

Results of Operations for the ~~Three~~ Six Months Ended ~~December~~March 31, ~~2008~~2009 and ~~2007~~ 2008

We earned $011,200 ofin revenues for ~~three months~~the six months ended ~~December~~March 31, ~~2008~~2009 and no no revenues were earned during the same period in ~~2007~~2008. We hope that ~~our~~ our earnings will continue to increase as our name is established in the market for our products.

We incurred operating expenses in the amount of $2591,~~880~~337 for the ~~three~~ six months ended March ~~December~~ 31, ~~2008~~2009, compared to operating expenses of $85134,~~148~~872 for the ~~three months~~ six months ended ~~December~~March 31, ~~2007~~ 2008. Our operating expenses for the ~~three~~ six month period ended ~~December~~March 31, ~~2008~~2009 were primarily attributable to selling, general and administrative expenses of $2590,~~467~~511 and depreciation of $~~413~~826. Our operating expenses for the ~~three~~six month period ended ~~December~~March 31, ~~2007~~ 2008 were primarily attributable to selling, general and administrative expenses of $84134,~~872~~320.

We have incurred a net loss of ($2179,~~495~~690) for the ~~three~~ six months ended ~~December~~March 31, ~~2008~~2009, compared to ($8592,~~046~~320) for the ~~three~~ six months ended ~~December~~ March 31, ~~2007~~ 2008.

Results of Operations for the Three Months Ended March 31, 2009 and 2008

We earned $11,200 in revenues for the three months ended March 31, 2009 and no revenues were earned during the same period in 2008. We hope that our earnings will continue to increase as our name is established in the market for our products.

We incurred operating expenses in the amount of $65,456 for the three months ended March 31, 2009, compared to operating expenses of $49,724 for the three months ended March 31, 2008. Our operating expenses for the three months period ended March 31, 2009 were primarily attributable to selling, general and administrative expenses of $65,043 and depreciation of $413. Our operating expenses for the three month period ended March 31, 2008 were primarily attributable to selling, general and administrative expenses of $49,448.

We have incurred a net loss of ($58,195) for the three months ended March 31, 2009, compared to ($7,274) for the three months ended March 31, 2008.

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Liquidity and Capital Resources

As of March ~~December~~ 31, ~~2008~~2009, we had total current assets of $~~8,801~~520 and total assets in the amount of $2312,~~942~~748. Our total current liabilities as of ~~December~~ March 31, ~~2008~~ 2009 were $~~241~~288,~~074~~075. As a result, on ~~December~~March 31, ~~2008~~2009, we had a working capital Deficit ~~deficit~~ of ($~~232~~287,~~273)~~555.

We are not certain as to whether our current cash balance will be sufficient to fund our operations for the next ~~nine~~six (96) months, as well as meet the requirements for promotion our products. In order to support our working capital needs and to provide for previously unanticipated legal expenses, we are considering ~~the~~ the possibility of raising additional capital as well as other strategic options.

Off Balance Sheet Arrangements

We do not have any off-balance sheet debt nor did we have any transactions, arrangements, obligations (including contingent obligations) or other relationships with any unconsolidated entities or other persons that may have material current or future effect on financial conditions, changes in the financial conditions, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenue or expenses.

Going Concern

We have incurred net losses for the period from inception on May 10, 1998 to ~~December~~ March 31, 2009 ~~2008~~ of ($6,~~086~~145,~~971)~~166 and we have generated a small ~~sources~~amount of revenue ~~thus far~~. The continuity of our future operations is dependent on our ability to obtain financing and upon future acquisition, exploration and development of profitable operations from our software development. These conditions raise substantial doubt about our ability to continue as a going concern.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We believe that the following accounting policies fit this definition.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain a set of disclosure controls and procedures designed to ensure that information we are required to disclose in reports filed under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this information 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.

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Based upon their evaluation as of the end of the period covered by this report, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are not effective to ensure that information required to be included in our periodic SEC filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms.

Our Board of Directors were advised by Bagell, Josephs, Levine & Company, LLC, the Company’s independent registered public accounting firm, that during their performance of audit procedures for 2008 Bagell, Josephs, Levine & Company, LLC identified a material weakness as defined in Public Company Accounting Oversight Board Standard No. 5 in the Company’s internal control over financial reporting.

This deficiency consisted primarily of inadequate staffing and supervision that could lead to the untimely identification and resolution of accounting and disclosure matters and failure to perform timely and effective reviews. However, the size of the Company prevents us from being able to employ sufficient resources to enable us to have adequate segregation of duties within our internal control system. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of five percent or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 1A. Risk Factors

Not Applicable.

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

The Company sold 22,850 shares of its common stock at $1.00 per share for a total of $22,850 as of December 31, 2007. In addition, existing shareholders exercised warrants for 15,000 shares @ $1.00 per share.

Item 3. Defaults upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

No matters have been submitted to our security holders for a vote, through the solicitation of proxies or otherwise, during the quarterly period ended ~~December~~March 31, ~~2008~~2009.

Item 5. Other Information

None.

Item 6. Exhibits

See the Exhibit Index following the signatures page of this report, which is incorporated herein by reference.

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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.

	Xstream Mobile Solutions Corp.
Date:	June 2224, 2009
	By: /s/ Michael See Michael See Title: Chief Executive Officer and Director
Date:	June 2224, 2009
	By: /s/ Joseph Johns, III Joseph Johns, III Title: Chief Financial Officer

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XSTREAM MOBILE SOLUTIONS CORP.

(the “Registrant”)

(Commission File No. 000-18296)

Exhibit Index

Quarterly Report on Form 10-Q

for the Quarter Ended ~~December~~March 31, ~~2008~~2009

Exhibit No.	Description	Incorporated Herein by Reference to	Filed Herewith
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		X
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		X
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		X

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Filing Compare · Xstream Mobile Solutions Corp