CN Dragon (DRGN) 10-Q 2010 Q1 Quarterly report

U.S. Securities and Exchange Commission

Washington, D.C. 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 July 31, 2009
o	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: 333-90618

WAVELIT, INC.

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

NEVADA	98-0358149
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
7216 West Enterprise Drive, Las Vegas, Nevada	89147
(Address of principal executive offices)	(Zip Code)

Issuers Telephone Number (702) 951-5682

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

YES x NO o

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

YES o NO x

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 180,469,940 of September 17, 2009.

WAVELIT, INC.

Form 10-Q for the nine months ended July 31, 2009

TABLE OF CONTENTS AND INFORMATION REQUIRED IN REPORT

		Page
PART I	Financial Information
Item 1.	Financial Statements (unaudited):
	Consolidated:
	Balance Sheets as of July 31, 2009 and April 30, 2009	3
	Statements of Operations for the three month periods ended July 31, 2009 and July 31, 2008	4
	Statements of Cash Flows for the three month periods ended July 31, 2009 and July 31, 2008 and from inception (December 13, 2002) through July 31, 2009	5
	Notes to Financial Statements	7
Item 2.	Management’s Discussion and Analysis or Plan of Operation	12
Item 3.	Controls and Procedures	17
PART II	Other Information
Item 1.	Legal Proceedings	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	Submission of Matters to a Vote of Security Holders	18
Item 5.	Other Information	18
Item 6.	Exhibits	19
SIGNATURES		20

2

Wavelit, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Balance Sheets

(Unaudited)

	July 31,			April 30,
	2009			2009
Assets
Current Assets:
Cash	$	-		$	-
Accounts receivable		21,122			20,142
Inventory		144,007			144,007
Prepaid expenses and deposits (Note 4)		129,271			129,271
Total Current Assets		294,404			293,420
Property and Equipment, net of accumulated depreciation		217,109			218,752
Other assets, net of accumulated amortization		7,930			7,785
Goodwill (Note 5)		417,574			417,574
Total Assets	$	937,017		$	937,532
Liabilities and Stockholders’ Equity (Deficit)
Current Liabilities:
Bank Overdraft	$	299		$	344
Accounts payable		281,136			270,000
Accounts payable - related parties		477,810			1,472,427
Loans payable to stockholders		116,849			109,555
Compensation payable (Note 7)		65,950			-
Total Current Liabilities		876,095			1,852,326
Long Term Liabilities:
Due to Shareholders (Note 6)		590,776			1,372,734
Total Long Term Liabilities		590,776			1,372,734
Stockholders’ Equity (Deficit)
Preferred stock, voting; $0.001 par value; 375,000,000 shares authorized;
no shares issued and outstanding at July 31, 2009 and  April 30, 2009,
respectively		-			-
Common stock, voting; $0.001 par value; 250,000,000 shares authorized;
180,469,940 and 80,469,940 shares issued and outstanding at
July 31, 2009 and April 30, 2009, respectively (Note 8)		180,470			80,470
Additional paid in capital		5,835,280			4,143,452
Accumulated other comprehensive income		(31,745	)		(68,591	)
Deficit accumulated during the development stage		(6,513,859	)		(6,442,860	)
Total Stockholders’ Equity (Deficit)		(529,854	)		(2,287,528	)
Total Liabilities and Stockholders’ Equity (Deficit)	$	937,017		$	937,532

 The accompanying notes are an integral part of these financial statements

3

Wavelit, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Operations

(Unaudited)

							Cumulative
							amounts
							from inception
							(December 13,
	For the three months ended						2002)
	July 31,						through
	2009			2008			July 31, 2009
Revenue	$	123		$	16,052		$	1,122,208
Revenue from related parties		-			-			1,676
		123			16,052			1,123,884
Cost of goods sold		-			(26,667	)		(942,214	)
Gross Profit(Loss)		123			(10,615	)		181,670
Expenses
Selling, General and Adminstrative		9,168			310,677			5,743,044
Total Expenses		9,168			310,677			5,743,044
Operating Loss		(9,045	)		(321,292	)		(5,561,374	)
Other Income and Expenses
Loss/Gain on Foreign Exchange		-			4,222			83,072
Debt Forgiveness		-			42,000			387,882
Discontinued Operations		-			-			(738,692	)
Impairment of goodwill		-			-			(165,000	)
Net loss before taxes		(9,045	)		(275,070	)		(5,994,112	)
Provision for income taxes		-			-			-
Net Loss	$	(9,045	)	$	(275,070	)	$	(5,994,112	)
Net Loss Per Share (Basic and Diluted)	$	(0.00	)	$	(0.00	)
Weighted Average Shares Outstanding (Basic and Diluted)Diluted)		147,317,771			47,059,076

The accompanying notes are an integral part of these financial statements

4

Wavelit, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Cash Flows

(Unaudited)

							Cumulative
							amounts from
							inception
							(December 13,
	For the three month period ended						2002)
	July 31,						through
	2009			2008			July 31, 2009
Cash Flows From Operating Activities
Net Loss	$	(9,045	)	$	(275,070	)	$	(5,955,317	)
Adjustments to reconcile net loss to cash
Depreciation		9,093			8,824			144,290
Acquisition fees		-			-			90,000
Impairment of goodwill		-			-			165,000
Written off goodwill		-			-			738,692
Changes in working capital items
Increase (decrease) in bank overdraft		(45	)		(34	)		(389)
Increase (decrease) in accounts payable		11,136			(5,565	)		281,136
Increase in accounts payable - related parties		(994,617	)		441,033			477,810
Decrease (Increase) in accounts receivable		980			(1,988	)		(19,162	)
Decrease (increase) in other assets		523			-			523
Decrease (Increase) in prepaid expenses		4			26,667			(129,267	)
Net Cash Provided by (Used In) Operating Activities		(981,971	)		137,915			(4,206,684	)
Cash Flows to Investing Activities
Acquisition of property and equipment		-			-			(380,959	)
Acquisition of other assets		-			-			(9,881	)
Net Cash Used in Investing Activities		-			-			(390,840	)
Cash Flows from Financing Activities
Increase (decrease) in loans payable to stockholders		(781,958	)		(129,256	)		588,776
Increase (decrease) in Note Payable		-			-			-
Increase (decrease) in Loans Payable		7,294			-			7,294
Cash received in recapitalization		-			-			1,353
Proceeds from issuance of common stock		1,776,575			-			4,064,103
Net Cash Provided by Financing Activities		1,001,911			(129,256	)		4,661,526
Increase (Decrease) in Cash in the Period		19,940			8,659			64,002
Comprehensive gain (loss) on translation		(19,895	)		(8,693	)		(64,002	)
Cash - Beginning of Period		0			1,135			0
Cash - End of Period	$	0		$	1,101		$	0

(continued...)

					Cumulative
					amounts from
					inception
					(December 13,
	For the three month period ended				2002)
	July 31,				through
	2009		2008		July 31, 2009
Non-Cash Financing Activities
Common stock issued for equipment	$		$	703,135	$	93,193
Supplementary Disclosure of Non-Cash Items
Net liabilities assumed in recapitalization	$	-	$	-	$	(234,467	)
Issuance of common stock for purchase goodwill	$	-	$	-	$	838,358
Issuance of common stock for services	$	-	$	-	$	1,340,599
Issuance of common stock for consulting	$	-	$	-	$	223,937

The accompanying notes are an integral part of these financial statements

6

Wavelit, Inc. and Subsidiaries

(A Development Stage Company)

Notes to the Consolidated Financial Statements

Unaudited

1.  Interim Financial Information

The consolidated financial statements of Wavelit, Inc. (formerly Infotec Business Systems, Inc.) (the Company) and its wholly owned subsidiaries, Precision Aviation, Inc., Galaxy Networks Inc., Stream Horizon Studios Ltd. (formerly Infotec Business Strategies, Inc.), and Galaxy US Networks Inc. (formerly Eventec, Inc.) for the three month periods ended July 31, 2009 and 2008 and related footnote information are unaudited. All adjustments (consisting only of normal recurring adjustments) have been made which, in the opinion of management, are necessary for a fair presentation. Results of operations for the three month periods ended July 31, 2009 and 2008 are not necessarily indicative of the results that may be expected for any future period.

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 omitted. These financial statements should be read in conjunction with the audited financial statements and notes on Form 10-K for the year ended April 30, 2009 and filed on August 13, 2009.

2. Going Concern

The accompanying consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America, contemplates the continuation of the Company as a going concern. However, the Company has been in the development stage since its inception (December 13, 2002), sustained losses and has used capital raised through the issuance of stock and loans to fund activities. Continuation of the Company as a going concern is contingent upon establishing and achieving profitable operations. Such operations will require management to secure additional financing for the Company in the form of debt or equity.

Management believes that actions currently being taken to revise the Company’s funding requirements will allow the Company to continue its operations. However, there is no assurance that the necessary funds will be realized by securing debt or through stock offerings. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty

3. Summary of Significant Accounting Policies

The following summarizes the significant accounting policies and practices reflected in the accompanying financial statements;

(a) Development Stage Company

The Company is a development stage company as defined in the Statements of Financial Accounting Standards No. 7. The Company is devoting substantially all of its present efforts to establish a new business and only recently commenced its planned principal operations. All losses accumulated since inception have been considered as part of the Company’s development stage activities.

(b) Property and Equipment

Property and equipment are stated at cost and depreciated over the estimated useful lives of the related assets using the straight-line method. The estimated useful lives for the components of property and equipment are as follows:

3.  Summary of Significant Accounting Policies (continued)

(b) Property and Equipment (continued)

Office equipment - computers	3 years
Office equipment - other	5 years
Demonstration equipment	3 years
Server systems	5 years
Software	2 years
Studio equipment	5 years
Leasehold Improvements	Over the term of the lease

(c) Goodwill and Other Intangible Assets

Goodwill and other Intangible Assets are accounted for in accordance with the Statements of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”. Intangible assets are recorded at cost and where appropriate, amortized over the estimated lives of the related intangible assets using the straight line method. The estimated life of IP addresses has been determined to be three years from the date of the Company’s acquisition. Goodwill is recorded at cost. Management reviews the carrying cost of goodwill during the Company’s fiscal year, at such times as changes in the underlying assumptions as to the future value of goodwill arise.

(d) Impairment of Long Lived Assets

Long-lived assets, such as property and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events or circumstances include, but are not limited to, a significant decrease in the fair value of the underlying business, a significant decrease in the benefits realized from an acquired business, difficulties or delays in integrating the business or a significant change in the operations of an acquired business. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to result from its use and eventual disposition. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying value of the assets exceeds its fair value. If a readily determinable market price does not exist, fair value is estimated using discounted expected cash flows attributable to the assets. Assets to be disposed of are separately presented on the balance sheet and reported at the lower of their carrying amount or fair value less costs to sell, and are no longer depreciated.

(e) Basic and Diluted Net Income (Loss) per Share

The Company computes net income (loss) per share in accordance with SFAS No. 128, “Earnings per Share” (SFAS 128). SFAS 128 requires presentation of both basic and diluted earnings per shares (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is antidilutive. The Company has no stock equivalents which would dilute earnings per share for the period ending July 31, 2008 and 2009.

(f) Foreign Currency Transactions/Balances

The operations of the Company are located principally in British Columbia, Canada and its functional currency is the Canadian dollar. These financial statements, where applicable, have been translated using the current method whereby monetary assets and liabilities are translated at the period end exchange rate of 1.0775, capital accounts are at historic exchange rates and revenues and expenses at the average exchange rate for the period of 1.1107.

(g) Financial Instruments

The Company's financial instruments consist of cash, accounts receivable, pre-paid expenses and accounts and other amounts payable. The estimated fair value of these financial instruments approximate their carrying values, unless otherwise noted.

(h) Use of Estimates

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

(i) Revenue Recognition

The Company recognizes revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101 (“SAB 101”), “Revenue Recognition in Financial Statements.” Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collectibility is reasonably assured.

(j) Software Development Costs

Software development costs are charged to expense as incurred unless the development project meets the criteria under United States generally accepted accounting principles for capitalization. Capitalization of software development costs begins upon the establishment of technological feasibility and ceases when the product is available for general release. The Company has no capitalized software development costs at July 31, 2008 and July 31, 2009 respectively.

(k) Income Taxes

Deferred income taxes are reported using the liability method. Deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company incurred additional losses during the nine month period ended July 31, 2009 which generated a fully reserved tax asset.

4. PrePaid Expenses

On January 29, 2007, the company entered into into a World Wide International Development Agreement with MMAWL.com, Wallid Ismail and Wallid Ismail Promocoes E Eventos Ltda-Epp (“Wallid”), wherein Wallid will provide us with martial arts athletic entertainment for streaming on the internet for a period of three years expiring on January 29, 2010. The company agreed to issue 10,000,000 shares to Wallid Ismail as a signing bonus in connection with the World Wide International Development Agreement dated January 29, 2007. Shares were issued February 28, 2007 at a price of $0.032 per share. Total value of $320,000 is being treated as a PrePaid Expense and will be expensed over the term of the contract.

5.  Goodwill

The changes in the carrying amount of goodwill for the three months ended July 31, 2009 are as follows:

Balance as at April 30, 2009	$	417,574
Balance as at July 31, 2009	$	417,574

6.  Loans Payable to Stockholders

The total amount owing at July 31, 2009 and April 30, 2009 was $590,776 and $1,372,734 respectively. Convertible Debentures were issued to the following Shareholders: TOV Trust $500,000 ($250,000 Converted to shares July 7 2009); Arthur Griffiths $250,000 (Converted to shares June 29 2009); Edward Clunn $175,000 (Converted to shares March 4 2009); Bram Solloway $125,000 (Converted to shares March 4 2009); Carol Shaw $75,000 (Converted to shares March 4 2009); Robert Danvers $50,000 (Converted to shares March 4 2009); and Lorne Milne $27,730. All Convertible Debentures are 36-month term, bearing interest at 10%per annum payable upon conversion or end of term. Total Face Value of all Convertible Debentures = $1,202,730 and convert to a total of 24,054,600 common shares. Convertible Debentures were issued in order to consolidate debts owed and debt forgiveness of $264,856 was realized in the fiscal year ended April 30,2008.

9

7. Compensation Payable

The total amount of compensations payable at July 31, 2009 and April 30, 2009 was $65,950 and $65,950 respectively.  July 31, 2009 Compensation Payable balance payable to past CEO and Director, Kent Vaesen, whose duties ceased December 12, 2008 (view 8-K filed January 21, 2009).

8.  Capital Stock

(a)	On September 16, 2005, the Company completed a private placement of 2,000,000 (5,000,000 post-split) shares of common stock at a price of $0.125 per share for cash proceeds of $250,000.
(b)	On September 30, 2005, the Company issued 5,000,000 (12,500,000 post-split) common shares in exchange for the business and assets of Stream Horizon Media (see Note 10 “Business Combination”).
(c)	On September 30, 2005 the Company issued 1,100,000 (2,750,000 post-split) common shares in exchange for the prior development and assets of ebahn Television Network Corp., for an aggregated consideration of $165,000 (see Note 11 - “Acquisition”).
(d)	On October 18, 2005 the Company effected a forward split of its capital stock on a 2.5:1 basis so that the 450,000,000 shares authorized (300,000,000 common shares and 150,000,000 preferred shares) and 48,600,000 shares of common stock issued, were increased to 1,125,000,000 shares authorized (750,000,000 common shares and 375,000,000 preferred shares) and 121,500,000 shares of common stock issued. Par value of the preferred and common stock remained unchanged at $0.001. All figures in these financial statements, including comparative information have been updated to give effect to the forward 2.5:1 split.
(e)	On November 6, 2006, we issued 3,100,000 shares of our company to two consultants, Paul Marek and Peter Lindhout, pursuant to consulting agreements dated November 6, 2006 for $93,000 value of consulting services.
(f)	On February 6,2007, we filed form S-8 in relation to our 2007 Stock Plan and authorized 35,000,000 pre-split (1,166,667 post 30:1 split) common shares. We issued 6,893,719 pre-split (229,791 post 30:1 split) common shares to employees and contractors for past and future services to the company. Total value of services $220,599. On February 28, 2007, we have issued common stock to the following service providers/contractors/employees: OC3 Networks (Ilan Mishan), 2,037,063 shares for $65,186; M. Barhonovich, 2,562,500 shares for $82,000; D. McIlroy, 669,156 shares for $21,413; S. McKiernan Law, 625,000 shares for $20,000; A.Bacon, 500,000 shares for $16,000; P. Harris, 500,000 shares for $16,000.
(g)	On January 29, 2007, the company entered into into a World Wide International Development Agreement with MMAWL.com, Wallid Ismail and Wallid Ismail Promocoes E Eventos Ltda-Epp (“Wallid”), wherein Wallid will provide us with martial arts athletic entertainment for streaming on the internet for a period of three years expiring on January 29, 2010. The company agreed to issue 10,000,000 shares to Wallid Ismail as a signing bonus in connection with the World Wide International Development Agreement dated January 29, 2007. Shares were issued February 28, 2007 at a price of $0.032 per share. Total value of $320,000 is being treated as a PrePaid Expense and will be expensed over the term of the contract.

	(h)	On April 1, 2006 and amended January 29, 2007, the company entered into an Executive Employment Agreement with Arthur Griffiths for the position of President and Chief Executive Officer. As a signing bonus, the contract grants 20,000,000 pre-split common shares (666,667 post 30:1 reverse split). Shares were issued February 28, 2007.
	(i)	On June 8, 2007, the Company effected a name change to Wavelit, Inc. and a reverse split of its common stock on a 30:1 basis so that the 1,250,000,000 shares authorized (750,000,000 common shares and 375,000,000 preferred shares) and 161,493,721 shares of common stock issued, were decreased to 400,000 shares authorized (25,000,000 common shares and 375,000,000 preferred shares) and 5,383,069 shares of common stock issued and outstanding. The company then increased its authorized common stock to 250,000,000 effective June 8, 2007. Par value of the preferred and common stock remained unchanged at $0.001. All figures in these financial statements, including comparative information have been updated to give effect to the reverse 30:1 split.
	(j)	On November 1, 2007, the company entered into a Consultant Advisor Agreement with Peter Lindhout wherein Mr Lindhout is to research and develop acquisition targets and make introductions to privately held corporations to facilitate acquisitions. The company issued 936,876 shares to Mr. Lindhout (valued at $18,738 according to the November 1st closing price of $0.02). As of the filing of this quarterly report, these consulting services have not been provided by Mr. Lindhout.
	(k)	On November 22, 2007, the company completed a Stock Purchase Agreement with ATB Company wherein the company acquired 100% of Precision Aviation, Inc. The company issued 40,000,000 restricted WAVL shares to ATB Company placing ATB as majority shareholder of the company. The company also entered into a Memorandum of Understanding with ATB Company wherein ATB Company will invest additional funds to be directed towards the company’s accrued debts.
	(l)	On July 24, 2008, Precision Aviation, Inc., wholly owned subsidiary of Wavelit, Inc., acquired manufacturing equipment, materials and inventory, as well as a facility located in Lewisville, Texas, from Electro Aero Modelling, Inc., (EAM) a Texas corporation, in an all WAVL stock transaction. The company issued 8,500,000 restricted WAVL shares to EAM for $703,135 value of assets purchased.
	(m)	On October 31, 2008, Wavelit, Inc. entered into multiple consulting services contracts payable in restricted WAVL shares.  Total shares issued 5,100,000 for services to be performed between November 1, 2008 and April 30, 2009.  Total value of services is $51,000.00 held as PrePaid Expenses and shall be expenses over the six month period.
	(n)	On November 3, 2008, 10,000,000 restricted WAVL shares issued to Director and CEO, Kent Vaesen, as per Employment Agreement. Danby Financial Management Corp. issued 1,000,000 restricted WAVL shares for consulting services provided to date.
(o)	On February 19, 2009, Wavelit, Inc. issued restricted WAVL shares on behalf of its wholly-owned subsidiary Precision Aviation Inc. for the Resignations of its two directors.  Total shares issued 1,050,000.  Total value of services is $52,500.00 expensed within Precision Aviation’s books and records.
(p)	Between February 23, 2009 and March 4, 2009, Wavelit, Inc. converted Debentures held by Ed Clunn, Carol Shaw, Robert Danvers and Bram Solloway.  Total shares issued 17,000,000.  Total value of Debentures converted is $425,000.00.
(q)	On March 18, 2009, Wavelit, Inc. cancelled shares issued to Electro Aero Modelling (EAM) and David Roberts as Wavelit’s wholly-owned subsidiary Precision Aviation Inc. cancelled the July 24, 2008 Asset Purchase Agreement.  Total shares cancelled and returned to treasury 8,500,000.
(r)	On June 25, 2009, Wavelit, Inc. converted all debt owed to ATB Company and consultant T. Porrata into restricted common shares.  Total restricted common shares issued 80,000,000 for total debt owing of $1,279,708.
(s)	On June 29, 2009, Wavelit, Inc. converted Debentures held by Arthur Griffiths.  Total shares issued 10,000,000.  Total value of Debentures converted is $250,000.00.
(t)	On July 7, 2009, Wavelit, Inc. converted Debentures held by TOV Trust.  Total shares issued 10,000,000.  Total value of Debentures converted is $250,000.00.

11

ITEM 2.  Management's Discussion and Analysis or Plan of Operation

Statements contained in this Plan of Operation of this quarterly report on Form 10-Q and elsewhere in this filing that are not statements of historical or current fact constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause the actual results of the Company, its performance (financial or operating) or its achievements expressed or implied by such forward-looking statements not to occur or be realized. Forward-looking statements may be identified by the use of forward-looking terminology such as "may," "will," "project," "expect," "believe," "estimate," "anticipate," "intends," "continue", "potential," "opportunity" or similar terms, variations of those terms or the negative of those terms or other variations of those terms or comparable words or expressions. You should read statements that contain these words carefully because they discuss our future expectations, make projections of our future results of operations or our financial condition or state other forward-looking statements. The factors listed under the caption "Additional Risk Factors" below, as well as any other cautionary language in this report, provide examples of risks, uncertainties and events which may cause our actual results to differ materially from the expectations we described in our forward-looking statements. We do not undertake any obligation to publicly update forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

The following information should be read in conjunction with the consolidated financial statements and the notes thereto appearing elsewhere in this filing as well our annual report on Form 10-K filed with the Securities and Exchange Commission on August 12, 2008. All figures representing shares of our capital stock have been adjusted to reflect the 30 to 1 reverse split of our capital stock on June 8, 2007.

General

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate these estimates, including those related to software development expenses, financing operations and contingencies and litigation. We base these 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.

Financial Reporting Release No. 60, which was recently released by the SEC, requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. Note 3 to our consolidated financial statements includes a summary of the significant accounting policies and methods used in the preparation of our financial statements. We believe that the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

We recognize revenues in accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue recognition in Financial Statements”. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collectibility is reasonably assured.

12

Overview

Precision Aviation, Inc. (newly acquired wholly-owned subsidiary of Wavelit, Inc. as of November 22, 2007)

Precision Aviation, Inc. (PAI) is in the business of developing, manufacturing and marketing Unmanned Aerial Vehicles (UAVs) for aerial surveillance and scanning missions. PAI markets these production and custom UAVs to civilian, industrial, governmental, policing and military clients.

PAI is a developer and marketer of short, medium and long-range aerial drones. Since the 1940's federal and locals governments have used varying forms of remotely piloted vehicles for many purposes primarily as target practice for manned aircraft. Our drones are intended for both private and governmental use in such a diverse array of applications such as oil and gas exploration, municipal operations, forestry, agriculture and coastal/border surveillance as well as various military applications.

PAI has taken a new approach to the development of UAV technology by making use of advanced composite construction techniques and materials. The company incorporates the latest in ultra light high speed computer processors to deliver a flexible, mission specific UAV to our customers that can perform various complex missions.

While military applications for PAI products are a natural in these current times of global instability, PAI is looking forward to a more peaceful future and is focusing not only on military, but also on civilian uses for UAVs. PAI products will provide platforms necessary for aerial imaging in industries and sectors as diverse as agricultural, forestry, livestock ranches, law enforcement, environmental protection agencies, coast guard, and even Hollywood. Currently, PAI is aggressively developing a class of micro-UAVs to support law enforcement with perimeter level reconnaissance to preserve the safety of officers in close contact and hostage type situations. These UAVs provide much more focused coverage than having only trained officers at street-level.

Wavelit, Inc.

We provide complete, end-to-end solutions for streaming media and broadcasting over the Internet, from filming services for live video and edited content, to advertising-based free access content broadcasting through our Internet TV channel at www.WAVELIT.com  or client’s websites, to Pay-per-View special events broadcasting on our MMA Sports channel at www.MMAWL.com  or client’s websites, to media hosting and transmission. We conduct our principal business operations through our wholly-owned subsidiary Galaxy Networks Inc. (“Galaxy”), a British Columbia, Canada company which designs, develops, manages and markets products and services that provide end-to-end solutions for streaming or broadcasting digital media over the Internet.

Wavelit's products and services incorporate 3rd Generation streaming video technology and proprietary software to provide video streaming capabilities that allow a TV quality signal to be sent over the Internet or stored locally. Using a mix of the latest leading vendor software and proprietary coding, the Wavelit Encoder allows for push streaming of real time broadcasts and does not require a stream be uploaded to a server and then pulled, or accessed, by viewers. The Wavelit Encoder provides the facilities our customers require for capture, edit and content delivery of digital media. The Wavelit Encoder has been developed as a series of products which are differentiated by encoding rates.

The Wavelit Media Services Platform is the foundation of the Wavelit Broadcast Network and represents the solution for the next generation of asset management operations. The Platform is principally composed of computer servers, storage devices and network routing and transmission equipment. The delivery of streaming video through Galaxy's network has been optimized to provide a smoother, clearer and more enjoyable viewing experience, even when viewed in full screen mode.

The Wavelit Media Server system allows both content distribution via the Internet and the application of digital rights management technologies for securing such content. The Wavelit Media Server incorporates a storage, management, and distribution system and proprietary software to control the hardware platform with Wavelit's encoder software. Together the system can manage large volumes of entertainment programming and has content archive, search, access, serve and track capability. Software selects and assembles various pieces of stored content as separate digital files into a single continuous seamless programming block for playback or broadcast. Wavelit's software and management systems have been designed with ease of use in mind, allowing anyone with a broadband connection to broadcast their message to thousands of viewers worldwide. The Encoder was designed and developed to replace an entire room of traditional equipment that would otherwise be needed to drive a broadcasting operation.

Wavelit has developed technology that makes streaming of digital video easy, fast and cost effective and includes tracking software that lets customers know who views their video communications, the length of time they view it and, in the case of archived video, how many times they view it. This information is available for utilization by specific billing and action tracking applications.

We are currently marketing and selling our software, systems and solutions as a network solution for media services which we refer to as the “Wavelit Broadcast Network”. We provide a hosted and managed streaming video delivery system to enable customers to stream content to their specific audiences. Wavelit provides full service capabilities enabling it to receive client produced video and to encode it for webcasting visual media including, events, situations of interest, meetings, news, entertainment, shows or video for any other purpose.

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Wavelit.com

We also offer a complete Internet television experience via Wavelit.com, our Internet video broadcast portal/web site at http://www.wavelit.com. Recently launched, Wavelit.com provides live video viewing experiences via the Internet. Wavelit.com is undergoing constant upgrade and development as we build on our product plan. We are currently offering viewers with a free Internet broadcast experience featuring a mix of live streamed content and ‘video on demand' content which demonstrate our encoding and broadcast capabilities. Wavelit can deliver content both for mass delivery at low bandwidth, and in high bandwidth for viewing in HDTV with surround sound. We plan to offer Wavelit in four formats:

- Advertising Supported Programming – we deliver free programming to viewers supported by advertising on Wavelit.com. We offer a completely live view of wild animals in their natural habitats. Streaming video completely live 24 hrs a day, viewers can watch wild animals in locations around the world without having to leave home.

 - Pay-per-View TV - we offer premium content by a Pay for View model where we pay a portion of our revenues to the content provider. We currently operate this system on our www.MMAWL.com website where we broadcast live Mixed Martial Arts events (Pay-per-View). This system broadcasts PPV events globally, unlike satellite or digital cable PPV which can only broadcast locally.

Markets and Competition

Markets for the Wavelit Broadcast Network and our related products and services are those business and other organizations in a variety of industries who have digital media which they desire other parties to view.

We have identified more specifically the following markets due to their growth characteristics and our experience with customers in these markets:

-   content providers;

-   Internet Broadcast Networks (Internet TV);

-   live media and archival feed services;

-   digital video production and editing;

-   advertising and marketing; and

-   resellers and agents.

We plan to market our streaming video and Internet TV services directly to selected resellers and distributors and to content creators or program development companies or organizations. We are developing programs and plans for revenue generation by ebahn which we expect to launch next quarter.

Our business opportunity is driven by the expected growth in the volume of media broadcasting over the Internet. Media broadcasting platforms and services have proven to be difficult to manage and deploy and the results for companies are often less than planned. Media streaming and other media broadcasting is seeing significant growth, driven by among other things, the growth of Internet Broadcasting or Internet TV and the use of streaming media in advertising.

We believe we are well positioned to support the growth in media broadcasting and viewing and provide a foundation for the growth of Streaming Internet Broadcasting. We believe we have a proven system and technology that provides an easy to use, next generation platform solution for worldwide, almost unlimited ability to deliver streaming media and other encoded broadcasts over the Internet or other wired or wireless networks.

The market for streaming media services and for related services is broad and encompasses many different types of companies, organizations and technologies. We will compete with numerous providers of streaming media technology and services, many of which have far greater financial and other resources than we do. Many of these companies have established histories and relationships in providing such systems and services that enable them to attract staff and customers. Many of the firms within this industry are large and have significantly more resources for sales, marketing and research and development than we do.

We plan to compete within this industry by focusing on providing high value ser-vices within the framework of the Wavelit Broadcast Network, by continuing to develop our technology to maintain a technical advantage and by exploiting the market opportunities as outlined above. We believe it is an important competitive edge to have a fully enabled network in place and to market our system to early adopters, giving us an opportunity to gain an early lead and volume in the market and to further solidify our competitive positioning. We also plan to compete by providing our customers with fully capable, easy to use systems for delivery and to assisting our customers to grow their streaming needs.

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Operation Development and Plan

With our newly acquired building and manufacturing equipment for our subsidiary, Precision Aviation, Inc., we are entering into the production phase of our UAV prototypes. We will begin our marketing and sales efforts in the next quarter.

With our Los Angeles facility, our plan is to continue to market our website, www.Wavelit.com, and add new content to the website. We will also continue to service our hosting clients and market to new hosting clients

Our budget and plan is based on our current assessment of costs and application to our plan. The ultimate amounts expended under this plan will be determined based on customer acceptance and the rate of adoption of the Wavelit Broadcast Network platform. Management reserves the right to reallocate as necessary, any amounts in any budget set out above, as circumstances warrant without notice or correction.

Marketing

Subject to adequate financial support, we have budgeted $50,000 for the development of marketing materials, including: (i) the updating of our web sites at  www.WAVELIT.com  , (ii) the production of marketing and advertising materials, product support and training resources, and (iii) marketing of our products and services. We do not expect to engage sales personnel for our marketing efforts initially, but will rely on relationships and advertising through our customers under the slogan “Powered by Wavelit”. Given adequate funding, we expect to be able to engage marketing consultants and sales agents as required. We currently lack the financial resources to broaden our marketing efforts and fulfill this portion of our plan. A lack of financial resources will inhibit our plan and our marketing activities and may cause harm to our business and to the successful execution of our plan.

Development

Our development staff are responsible for our system operation and maintenance and for providing customer service to our existing customer base. Our development activities are currently focused on ongoing product improvement, system maintenance and upgrades, content encoding and development of the web portal. We have set out our assessment of the costs for development below under the subheadings “Property and Plant” and “Employment”. Our existing infrastructure is adequate to meet our customers current and short term needs, however, our growth is ultimately dependent on increasing our delivery capabilities and our ability to support and service our customer needs.

Property or Plant

We currently lease office space in Los Angeles, California for our Internet Operations, and have recently acquired a building in Lewisville, Texas to house Precision Aviation, Inc.’s manufacturing facility.

Employment

We currently employ our CEO/CFO, and have contracts in place with three Consultants.

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Results of Operations

Our July 31, 2009 consolidated interim financial statements have been prepared on the basis of the accounts and operations of Galaxy Networks Inc. from incorporation, December 13, 2002 to July 31, 2009 and incorporate the accounts and operations for Wavelit, Inc. (fornerly Infotec Business Systems, Inc.), Precision Aviation, Inc., Stream Horizon Studios Ltd. (formerly “Infotec Business Strategies, Inc.” and Galaxy US Networks Inc. (formerly Eventec Inc.) from October 1, 2005 to July 31, 2009.

For the period from incorporation, December 13, 2002 through July 31, 2009, we incurred a deficit of $6,442,860. Operating expenditures during the period totaled $5,743,044.

For the three month period ended July 31, 2009, we incurred a loss from operations of $9,045. Revenues were $123, and costs of goods sold were $0 in the period.

Liquidity and Capital Resources

As of July 31, 2009, we had an accumulated deficit of $6,442,860, stockholders deficit of $529,853 and cash on hand of $0. Our working capital at July 31, 2009 was $60,922.

Our working capital is currently insufficient to sustain our current operations. Our operations are currently dependent on our suppliers’ willingness and ability to continue to provide services without some assurance of payment. As set out under the heading “Operation Development and Plan” above, our plan is to seek additional funding to underwrite our operations and our development plan.

While management believes that sales can be grown and that ultimately profitable operations can be attained in the future, there is no assurance that sales will be maintained or grown or that they will ultimately be of a level required to generate profitable operations or provide positive cash flow. We are unable to predict at this time the exact amount of any additional working capital we may require to fund the implementation of our business plan and achieve cash flow sufficient to sustain operations and achieve profitability. To fund our operations and implementation of our business plan, we are seeking additional capital in the private and/or public equity markets or through the sale of debt securities, or through the issuance of debt instruments. If we receive additional funds through the issuance of equity securities, however, our existing stockholders may experience significant dilution. If we issue new securities, they may contain certain rights, preferences or privileges that are senior to those of our common stock. Moreover, we may not be successful in obtaining additional financing when needed or on terms favorable to our stockholders. As we have no commitments from any third parties to provide additional equity or debt funding, we cannot provide any assurance that we will be successful in attaining such additional funding.

We currently market a range of products and services, however, we have limited revenues and only a limited operating history from which to assess our operations. Due to our lack of revenue-production history and our lack of contractual commitments to generate profits, there is no basis at this time for investors to make an informed determination as to the prospects for our future success. For this reason and, as we have not achieved profitable operations and require additional capital to achieve our objectives, our auditors have included in their report covering our financial statements for the period from incorporation to July 31, 2009, that there is substantial doubt about our ability to continue as a going concern.

Additional Risk Factors

As noted throughout this quarterly report, Wavelit, Inc. (formerly Infotec Business Systems, Inc.), is an emerging development stage company and accordingly, there are many risks that affect our operations and our ultimate viability. It is not possible, however, to foresee all risks which may affect us. Moreover, we cannot predict the magnitude of each risk nor can we predict whether we will successfully effectuate our current business plan. Each prospective investor is encouraged to carefully analyze the risks and merits of an investment in our securities and to take into consideration when making such analysis, among others, the financial risks discussed under the subheading “Liquidity and Capital Resources” above and the additional risk factors we have set out below.

Operating History - We are presently in the process of marketing products and services which we have developed or acquired. We have only a limited operating history from which investors can evaluate our future business prospects or managements performance. As a result, you have no reliable means to determine whether you should make an investment in this company.

Marketable Products - In order to sell our products and services, we must demonstrate to potential customers that we have systems and services that are functional, supported, cost effective and address their needs. We have developed products and services which we have introduced and from which we are receiving sales revenues. At present however, we have only limited history in offering and supporting these product offerings. If products and services we offer do not meet customer needs and if customers are not convinced we can maintain, support and upgrade our offerings in future, or if our products contain product flaws or bugs, we will not be able to successfully market our products and services or earn revenues.

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Staff Availability - We currently have employment agreements with the directors, officers and employees we depend on for the successful implementation of our plan.

Competition - We face competition from a wide range of firms in the streaming media, filing and hosting services industry. These include large, well established and financially stronger companies. We do not currently have resources to compete and may never have sufficient funds to be able to refine, and successfully market our offerings so that we may become a factor in the industry. These competitive disadvantages represent another factor which may cause investors in our securities to lose the value of their investment.

ITEM 3.  Controls and Procedures

On July 31, 2009, our management concluded its evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. As of the Evaluation Date, our Chief Executive Officer (also President, Secretary, Treasurer), interim Chief Financial Officer concluded that we maintain disclosure controls and procedures that are effective in providing reasonable assurance that information required to be disclosed in our reports under the Securities Exchange Act of 1934 (Exchange Act) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (also President, Secretary, Treasurer), interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding managements control objectives.

There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls over financial reporting subsequent to its evaluation.

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PART II OTHER INFORMATION

ITEM 1.  Legal Proceedings.

We have settled litigation with AboveNet in the amount of $87,500 and have paid AboveNet in full. AboveNet was contracted to supply bandwidth to our POP facility in Los Angeles. AboveNet claimed payments due, and when left unpaid, filed suit in New York. Wavelit has settled out-of-court.

We have settled out of court a Wrongful Dismissal lawsuit filed by a previous consultant. Lawsuit filed in Vancouver, BC, Canada.

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

None.

ITEM 3.  Defaults Upon Senior Securities.

None

ITEM 4.  Submissions of Matters to a Vote of Security Holders.

On February 20, 2007, a vote was put to the shareholders in order to change the corporate name from Infotec Business Systems, Inc to Wavelit, Inc., to approve a 30:1 reverse split of the authorized, issued and outstanding common shares and to increase the authorized common shares from 50,000,000 (post-split) to 250,000,000 authorized common shares. (as referenced by the Definitive 14C filing with the Securities and Exchange Commission on May 5, 2007 and the Form 8-K filing with the Securities and Exchange Commisssion on June 13, 2007.) The company received not less than 51% approval from its shareholders of record as at February 20, 2007.

On November 22, 2007, a vote was put to the shareholders in order to approve the Stock Purchase Agreement between Wavelit, Inc. and ATB Company, a Colorado corporation, in which Wavelit, Inc. will purchase 100% of the issued and outstanding shares of Precision Aviation, Inc., a Nevada corporation, for Forty Million (40,000,000) Wavelit, Inc. common shares. The company received not less than 51% approval from its shareholders of record as at November 22, 2007.

On February 10, 2009, a vote was put to the shareholders in order to approve “the spin-off of Wavelit, Inc.'s wholly-owned subsidiaries: Galaxy Networks, Inc. (Canada), Galaxy Networks, Inc. (USA) and Stream Horizon Studios Ltd. (Canada), resulting in the Wavelit, Inc. shareholders, on the Record Date, owning a direct interest in each of the three subsidiaries that is proportionate to their ownership in Wavelit, Inc.” The company received not less than 51% approval from its shareholders of record as at February 10, 2009.

ITEM 5.  Other Information.

None

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ITEM 6.  Exhibits.

Index to Exhibits

Exhibits	Description of Documents
3.1a	Form of Certificate Change (Incorporated by reference to the Form Definitive 14C filed with the Securities and Exchange Commission on May 5, 2007 and the Form 8-K filed with the Securities and Exchange Commission on June 13, 2007.)
3.1b	Change of Directors and Officers (Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission on December 12, 2008.)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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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.

	WAVELIT, INC. (Registrant)
Date: September 17, 2009	By:	/s/ Henry Ligouri
		(Henry Ligouri, President, Director, CEO)
	By:	/s/  Henry Ligouri
		(Henry Ligouri, interim CFO)