BodyTel Scientific 10Q 2009 Q1 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedMay 31, 2008

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT

For the transition period from _________to ________

Commission File No.000-51633

BODYTEL SCIENTIFIC INC.
(Exact name of registrant as specified in its charter)

Nevada	98-0461698
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4720 Salisbury Road, Suite 72 Jacksonville, Florida 32256
(Address of principal executive offices) (zip code)

904-305-8634
(Registrant’s telephone number, including area code)

One Independent Drive, Suite 1701, Jacksonville, FL
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes[ x ] No[ ]

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

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ]	Smaller reporting company [ x ]
(Do not check if a smaller reporting company)

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after distribution of securities under a plan confirmed by a court. Yes[ ] No[ ]

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:As of July 1, 2008, there were 44,175,000 shares of common stock, par value $0.001, outstanding.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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BODYTEL SCIENTIFIC INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

	May 31,
	2008			February 29,
ASSETS	(Unaudited)			2008

Current Assets:
Cash and cash equivalents	384,336			466,430
Inventories	253,457			247,381
Prepaid expenses and other current assets	556,266			189,086
Total current assets	1,194,059			902,897

Equipment & Software, net	218,486			170,572

TOTAL ASSETS	1,412,545		$	1,073,469

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
Accounts payable	2,017,639			677,666
Accrued liabilities	67,040			57,027
Shareholder loans - current	2,527,004			1,913,743
Total current liabilities	4,611,683			2,648,436


TOTAL LIABILITIES	4,611,683			2,648,436


Shareholders' Equity:
Capital stock	44,175			44,175
Additional paid in capital	14,827,825			2,507,825
Accumulated deficit	(18,171,772	)		(4,141,087	)
Accumulated other comprehensive income	100,634			14,120
Total shareholders' equity	(3,199,138	)		(1,574,967	)
	-			-
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	1,412,545			1,073,469

See accompanying Notes to Consolidated Financial Statements

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BODYTEL SCIENTIFIC INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

								Cumulative
								Period From
								April 4, 2005
		Three			Three			(Inception)
		Months Ended			Months Ended			To
		May 31,			May 31,			May 31,
		2008			2007			2008

Revenues	$	0		$	0		$	0

Operating expenses:

Research and development		383,727			-			2,936,512
Acquired in-process research and development		13,126,664			-			13,126,664
General and administrative		1,342,790			10,745			3,238,546
Total operating expenses		14,853,181			10,745			19,301,722

(Loss) from operations		(14,853,181	)		(10,745	)		(19,301,722	)

Loss from Joint Venture		-			(225,189	)		(476,030	)

Interest income		15,832			-			25,347

Net (loss)		(14,837,349	)		(235,934	)		(18,171,772	)

(Loss) per Common Share (basic and diluted)		(0.34	)		(0.01	)		(0.59	)

Weighted Avg no. of Common Shares		44,175,000			44,175,000			30,634,164

See accompanying Notes to Consolidated Financial Statements

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BODYTEL SCIENTIFIC INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

(UNAUDITED)

									(Deficit)
									Accumulated			Accumulated		Total
							Additional		During the			Other		Shareholders'
	Common Stock						Paid-in		Development			Comprehensive		Equity (Deficit)
	Shares			Amount			Capital		Stage			Income
Balances at April 4, 2005	-		$	-		$	-	$	-				$	-
Common stock issued for cash	44,175,000		$	44,175		$	1,257,825						$	1,302,000
Net (loss) for the period								$	(238,949	)			$	(238,949	)
Balances at February 28, 2007	44,175,000		$	44,175		$	1,257,825	$	(238,949	)	$	-	$	1,063,051
Common stock issued for cash						$	1,250,000						$	1,250,000
Non-Controlling Interest in GlucoTel								$	(806,664	)			$	(806,664	)
Comprehensive Income (Loss):
Net (loss) for the period								$	(3,095,474	)			$	(3,095,474	)
Cumulative translation adjustment											$	14,120	$	14,120
Comprehensive Loss													$	(3,081,354	)
Balances at February 29, 2008	44,175,000		$	44,175		$	2,507,825	$	(4,141,087	)	$	14,120	$	(1,574,967	)
Common stock returned to Company	(4,000,000	)	$	(4,000	)								$	(4,000	)
Common stock issued for GlucoTel acquisition	4,000,000		$	4,000		$	12,320,000						$	12,324,000
Non-Controlling Interest in GlucoTel								$	806,664				$	806,664
Comprehensive Income (Loss):
Net (loss) for the period								$	(14,837,349	)			$	(14,837,349	)
Cumulative translation adjustment											$	86,514	$	86,514
Comprehensive Loss													$	(14,750,835	)
Balances at May 31, 2008	44,175,000		$	44,175		$	14,827,825	$	(18,171,772	)	$	100,634	$	(3,199,138	)

See accompanying Notes to Consolidated Financial Statements

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BODYTEL SCIENTIFIC INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOW

(UNAUDITED)

								Cumulative
								Period From
								April 4, 2005
		Three			Three			(Inception)
		Months Ended			Months Ended			To
		May 31,			May 31,			May 31,
		2008			2007			2008

Operating Activities:
Net (loss)		($14,837,349	)		($235,934	)		($18,171,772	)
Add back non-cash expenses;
Depreciation and amortization expense		16,081			-		$	74,470
Acquired in-process research and development		13,126,664					$	13,126,664
Adjustments to reconcile net (loss) to net cash
(Used in) operating activities:
(loss) on equity investment in Joint Venture		-			225,189		$	476,030
Changes in assets and liabilities:
Inventories		-			-			($247,381	)
Prepaid expenses		(376,735	)		-			($565,821	)
Accounts payable - trade		1,307,410			6,245		$	1,985,076
Accrued liabilities		11,319			4,500		$	68,346
Net Cash Used in Operating Activities		(752,611	)		0			(3,254,389	)

Investing Activities:
Investment in Joint Venture		-			-			($1,250,000	)
Investment in Equipment & Software		(26,793	)					($255,754	)
Net Cash Used in Investing Activities		(26,793	)		0			(1,505,754	)

Financing Activities:
Net proceeds from issuance of debt		561,318			-		$	2,475,061
Issuance of common stock for cash		-			-		$	2,552,000
Net Cash Provided by Financing Activities		561,318			0			5,027,061

Effect of exchange rate changes on cash		135,991			-		$	117,417
Net Increase (Decrease) in Cash		(82,094	)		-			384,336

Cash and Cash Equivalents - Beginning of Period		466,430			-			-

Cashand Cash Equivalents - End of Period	$	384,336		$	0		$	384,336

See accompanying Notes to Consolidated Financial Statements

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BODYTEL SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1) Summary of Significant Accounting Policies

Basis of Presentation and Organization

BodyTel Scientific, Inc. (“BodyTel” or the “Company”) is a Nevada corporation in the development stage and has not commenced revenue-generating operations. The Company was incorporated under the laws of the State of Nevada on April 4, 2005. Through October 2006, the proposed business plan of the Company was to create a comprehensive, trusted, state-of-the-art online marketplace for buyers and sellers of new and used cellular (“cell”) telephones. Since its inception, the Company has strived to gain a large number of postings of cell telephones from a variety of sources, including individuals, businesses, and not-for-profit enterprises that would appeal to a broad market of interested buyers. However, commencing in November 2006, the Company embarked on a transition in its Business Plan from developing a state-of-the-art online marketplace for new and used cellular telephones to a Company seeking to market state-of-the-art monitoring products and services to patients.

The consolidated financial statements include the accounts and operations of BodyTel Scientific, Inc. and its wholly owned subsidiaries, BodyTel North America LLC, BodyTel Europe GmbH, and recently acquired GlucoTel Scientific Inc. All intercompany accounts and transactions have been eliminated on consolidation.

Prior to the Company acquiring the remaining 50% interest in Glucotel on March 5, 2008, for accounting purposes, the Company was treating its capital investment in GlucoTel as a vehicle for research and development. Because the Company was solely providing financial support to further the research and development of GlucoTel, such amounts were being charged to expense as incurred by GlucoTel. GlucoTel has no ability to fund these activities and is dependent on the Company to fund its operations. In these circumstances, GlucoTel was considered a variable interest entity and was consolidated. As of March 5, 2008, Glucotel became a wholly owned subsidiary of BodyTel. The creditors of GlucoTel do not have recourse to the general credit of the Company.

The accompanying financial statements were prepared under the accrual basis of accounting.

Cash and Cash Equivalents

For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents. Some risk of loss is incurred when cash balances exceed federally reserved limits.

Inventories

Inventories are stated at lower of cost or market value. Initial inventories of $253,457 were acquired in February 2008 and remain on hand as of May 31, 2008. The Company outsources its manufacturing and therefore no overhead costs are allocated to the purchased inventory. Inventories as of May 31, 2008 consist of the following:

Work in process	$	253,457
Finished Goods		none

- F-6 -

Property and Equipment

Office furniture, equipment, and software are carried at historical cost less accumulated depreciation, not in excess of their estimated net realizable value. Normal maintenance and repairs are charged to earnings, while expenditures for major maintenance and betterments are capitalized. Gains or losses on disposition are recognized in operations. Depreciation is calculated over the estimated useful lives of the assets as follows:

Computer Equipment: 2-3 years, declining balance method.
Office & Factory Equipment: 3-10 years, straight line and declining balance methods.

Depreciation and amortization expense was $16,081 for the quarter ended May 31, 2008. No depreciation or amortization expense was recorded for the quarter ended May 31, 2007.

Revenue Recognition

The Company is in the development stage and has yet to realize revenues from operations. Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

Advertising and Promotional Expenditures

Advertising and promotional costs are expensed as incurred. Advertising and promotional costs were $52,266 for the quarter ended May 31, 2008 and $198,509 for the period from inception to May 31, 2008. No advertising or promotional expenses were incurred in the quarter ended May 31, 2007.

Acquired In-process Research and Development (“IPR&D”)

When we acquire another company or group of assets, the purchase price is allocated, as applicable, between IPR&D, net tangible assets, goodwill and other intangible assets. We define IPR&D as the value assigned to those projects for which the related products have not received regulatory approval and have no alternative future use. Determining the portion of the purchase price allocated to IPR&D requires us to make significant estimates. The amount of the purchase price allocated to IPR&D is determined by estimating the future cash flows of each project or technology and discounting the net cash flows back to their present value. The discount rate used is determined at the time of the acquisition and includes consideration of the assessed risk of the project not being developed to a stage of commercial feasibility. Amounts allocated to IPR&D are expensed at the time of acquisition.

Research and Development Expenditures

Research and development costs are expensed as incurred and include the costs to design, develop, test, deploy and enhance our products. It also includes costs related to the execution of clinical trials and costs incurred to obtain regulatory approval for our products.

Loss per Common Share

Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for the quarters ended May 31, 2008 and 2007 and for the period from inception to May 31, 2008.

- F-7 -

Income Taxes

We account for income taxes pursuant to SFAS No. 109,Accounting for Income Taxes(“SFAS 109”). Under SFAS 109, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

We maintain a valuation allowance with respect to deferred tax assets. Our company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration our company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry forward period under the Federal tax laws.

Changes in circumstances, such as our generating taxable income, could cause a change in judgment about the ability to realize the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

Estimates

The financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the Consolidated Financial Statements and accompanying Notes. Actual results could differ from those estimates made by management.

Foreign Currency Translation

Assets and liabilities of the foreign subsidiary are translated into U.S. dollars at period end exchange rates. Capital accounts are translated into U.S. dollars at the acquisition date rates. Income and expense items are translated at the weighted average exchange rates for the period. Net exchange gains or losses resulting from such translations are excluded from net income (loss) but are included in comprehensive income (loss) and accumulated in a separate component of stockholders' equity.

Comprehensive Loss

Comprehensive loss consists of net loss and the effects of foreign currency translation.

2) New Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (Revised 2007) “Business Combinations” (SFAS No. 141(R)) and SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements,” which are effective for fiscal years beginning after December 15, 2008. These new standards represent the completion of the FASB’s first major joint project with the International Accounting Standards Board (IASB) and are intended to improve, simplify, and converge internationally the accounting for business combinations and the reporting of noncontrolling interests (formerly minority interests) in consolidated financial statements. We will adopt these standards at the beginning of our 2010 fiscal year. The effect of adoption will generally be prospectively applied to transactions completed after the end of the our 2009 fiscal year, although the new presentation and disclosure requirements for pre-existing non-controlling interests will be retrospectively applied to all prior-period financial information presented.

SFAS No. 141(R) retains the underlying fair value concepts of its predecessor (SFAS No. 141), but changes the method for applying the acquisition method in a number of significant respects including the requirement to expense transaction fees and expected restructuring costs as incurred, rather than including these amounts in the allocated

- F-8 -

purchase price; the requirement to recognize the fair value of contingent consideration at the acquisition date, rather than the expected amount when the contingency is resolved; the requirement to recognize the fair value of acquired in-process research and development assets at the acquisition date, rather than immediately expensing; and the requirement to recognize a gain in relation to a bargain purchase price, rather than reducing the allocated basis of long-lived assets. Because this standard is generally applied prospectively, the effect of adoption on our financial statements will depend primarily on specific transactions, if any, completed after 2009.

In May 2008, the Financial Accounting Standards Board (FASB) issued Statements of Financial Standards No. 162 (SFAS 162), "The Hierarchy of Generally Accepted Accounting Principles." SFAS 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for nongovernmental entities.

Prior to the issuance of SFAS 162, GAAP hierarchy was defined in the American Institute of Certified Public Accountants (AICPA) Statement on Auditing Standards No. 69 (SAS 69), "The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles." SAS 69 has been criticized because it is directed to the auditor rather than the entity. SFAS 162 addresses these issues by establishing that the GAAP hierarchy should be directed to entities because it is the entity (not its auditor) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP.

SFAS 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles." It is only effective for nongovernmental entities; therefore, the GAAP hierarchy will remain in SAS 69 for state and local governmental entities and federal governmental entities. The Company does not expect SFAS 162 to have a material effect on its consolidated financial statements.

3) Letter of Credit and Certificate of Deposit

The subsidiary, GlucoTel Scientific, Inc., maintains a $399,892 (257,000 Euros) certificate of deposit with CommerzBank (Korbach, Germany) to secure a letter of credit for a key supplier of product, LRE Medical GmbH.

4) Shareholder Loan

The company has received a series of cash advances from Ferro Group Ventures, Inc. on a Line of Credit Promissory Note accumulating to $2,527,004 through May 31, 2008. The amount of principal that has been advanced and is outstanding from time to time, shall be non-interest bearing up until October 31, 2008. Commencing November 1, 2008 (“Interest Bearing Date”), the amount of principal outstanding shall bear interest at ten percent (10%) per annum calculated and compounding annually from the Interest Bearing Date. As of June 10, 2008, this note is no longer outstanding as it has been converted to restricted common stock. See Note 9.

5) Commitments Operating lease

The Company’s wholly owned subsidiary, Bodytel North America LLC, has entered into a 36 month lease agreement with an unrelated third party in regards to its premises. The agreement began on December 1, 2007 and the monthly payments for the first 12 months are $6,080 per month with an increase to $6,215 for months 13 – 24 and an increase to $6,350 for months 25 – 36. Subsequently the Company cancelled the lease at a cost of $22,898.16 payable on September 30, 2008.

The Company’s wholly owned subsidiary, BodyTel Europe GmbH, entered into a lease agreement for the lease of BodyTel Europe GmbH offices in Europe. Pursuant to the terms of the lease agreement the Company agreed to lease 187 square meters (2012 square feet) of office space located in Schlachthofstr. 1, Bad Wildungen, 34537

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Germany for a term of two years beginning August 1, 2007 and € 1,309 per month, plus 19% VAT, which is equivalent to $2,425 per month at the USD exchange rate on May 31, 2008.

The Company’s wholly owned subsidiary, BodyTel Europe GmbH, entered into a lease agreement for the lease of six vehicles. Pursuant to the terms of the lease agreement the Company agreed to lease the vehicles for a term of three years beginning approximately December 18, 2007 for a total of € 4,259 per month, which is equivalent to $6,628 per month at the USD exchange rate on May 31, 2008.

Total future minimum payments under operating leases extending beyond one year is as follows:

Fiscal year ending February 28, 2009	$	182,001
Fiscal year ending February 28, 2010	$	166,646
Fiscal year ending February 28, 2011	$	116,802
Total commitment	$	465,449

6) Net Loss Carryforwards (Deferred Taxes)

The company has generated a tax-basis Net Operating Loss of approximately $5,264,000 from its inception through May 31, 2008, thereby creating tax loss carryforwards that can be applied in future periods to reduce taxable income, within certain limitations..

The provision (benefit) for income taxes for the quarters ended May 31, 2008, and May 31, 2007, were as follows (assuming a 40% effective U.S. and Foreign blended tax rate):

		2008			2007
Current Tax Provision:
U.S and Foreign
Taxable Income	$	-		$	-
Total current tax provision	$	-		$	-

Deferred Tax Provision:
U.S and Foreign
Loss Carryforwards	$	772,000		$	94,000
Change in valuation allowance		(772,000	)		(94,000	)
Total deferred tax provision	$	-		$	-

The Company has deferred income tax assets as of May 31, 2008 and May 31, 2007, as follows:

		2008			2007
Loss carryforwards	$	2,106,000		$	190,000
Less - Valuation allowance		(2,106,000	)		(190,000	)
Total net deferred tax assets	$	-		$	-

The Company provided a valuation allowance equal to the deferred income tax assets for the quarters ended May 31, 2008, and May 31, 2007, because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.

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7) Investment in and Acquisition of GlucoTel Scientific Inc.

In December 2006, the Company entered into an incorporated joint venture, GlucoTel Scientific Inc (the “Joint Venture”) with Safe-com GmbH & Co., KG (“Safe-com”), a German corporation, to pursue the development, production, and marketing of a blood glucose meter for diabetic patients that operates over a cellular telephone system. Under the Joint Venture arrangement, the Company obtained fifty (50) percent ownership of the Joint Venture in return for an investment of $1,250,000. Safe-com transferred to the Joint Venture all received trade marks or trade marks which are currently in approval; all patent applications; the intellectual property rights and source code for the software running on the cellular telephones; the intellectual property rights and source code for the web server and portal; the design prototype; the rights for the design of the blood glucose test meter; the negotiated contracts with the manufacturers of the blood glucose test meter and the strip manufacturer; the working prototypes of the blood glucose meter; all marketing and promotional equipment; and, all blueprints and architectural studies of the blood glucose test meter, in exchange for a fifty (50) percent ownership interest.

From December 2006 to June 30, 2007, the Company recorded its investment in GlucoTel under the equity method. For the Period March 1, 2007 to June 30, 2007 the Company recorded $318,571 of losses and for the period December 1, 2006 through February 28, 2007, the Company recorded $157,458 of losses. On June 30, 2007, the Company invested another $1,250,000 in the joint venture.

Commencing July 1, 2007, the Company treated its capital investment in GlucoTel as a vehicle for research and development. Because the Company is solely providing financial support to further the research and development of GlucoTel, such amounts are being charged to expense as incurred by GlucoTel. GlucoTel has no ability to fund these activities and is dependent on the Company to fund its operations. In these circumstances, GlucoTel was considered a variable interest entity and was consolidated.

On March 5, 2008, the Company entered into a letter agreement with Marlon Vermögensverwaltungsgesellschaft mbH (“Marlon”). Pursuant to the terms of the Letter Agreement the Company acquired 100 shares (the “GlucoTel Shares”) of the common stock of GlucoTel Scientific Inc., a private Nevada corporation (“GlucoTel”) held by Marlon, representing the remaining 50% of the issued and outstanding shares of GlucoTel, in consideration of which the Company issued 4,000,000 restricted shares of its common stock (the “BodyTel Shares”) to Marlon. Fair value of the common stock was measured by the most recent traded price preceding March 5, 2008.

The investment was accounted for using the step acquisition method prescribed by ARB 51, Consolidated Financial Statements. Step acquisition accounting requires the allocation of the excess purchase price to the fair value of net assets acquired.

The following table presents the purchase price for the acquisition on March 5, 2008:

Shares issued by the company			4,000,000
FMV per share (most recent trade price 3/5/08)	X	$	3.08
Fair value of shares issued		$	12,320,000
Interest acquired in historical book value of GlucoTel			806,664
Excess purchase price over historical book value		$	13,126,664

The entire excess purchase price over historical book value of $13,126,664 was charged to in-process research and development and expensed in the current quarter ended May 31, 2008. As of the acquisition date, the in-process projects had not yet reached technological feasibility and had no alternative use. The primary basis for determining technological feasibility of these projects is obtaining regulatory approval to market the products. Accordingly, the value attributable to these projects, which had yet to obtain regulatory approval, was expensed in conjunction with the acquisition.

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The agreement supersedes and replaces all prior agreements relating to the acquisition by the Company of the remaining 50% shareholding interest in GlucoTel, including the Shareholders Agreement between the Company and Safe-com GmbH & Co. KG (“Safecom”) dated December 6, 2006, a copy of which was filed with the Company’s current report on Form 8-K filed with the SEC on December 14, 2006. Safecom’s interest in GlucoTel and the Shareholders Agreement was subsequently assigned to Marlon by Safecom.

Closing of the acquisition by the Company of GlucoTel Shares by the Company occurred on March 5, 2008. Following completion of the transaction the Company now holds 100% of the issued and outstanding shares of GlucoTel and Marlon holds 23,500,000 shares of the Company’s issued and outstanding common stock. GlucoTel is the Company’s wholly owned subsidiary which has the proprietary rights to the Company’s blood glucose monitoring and diabetes management system, GlucoTel™, as well as the PressureTel™ blood pressure device and the WeightTel™ weight scale systems.

During the next twelve months, the Company intends to focus on finishing the development and commercialization of the GlucoTel blood glucose monitoring system. During this period, the Company expects to have completed and received all relevant patents, trademarks and regulatory approvals such as Federal Drug Administration for the United States and CE approvals from the European Union (received subsequently on May 28, 2008) to begin distributing its product. Additionally, the Company expects to have finalized the development and commercialization of its products WeighTel and PressureTel. Also, the Company expects to conduct further research and development on home monitoring devices in different areas for chronic diseases such as Diabetes.

The Company issued the BodyTel Shares to Marlon pursuant to Regulation S of the Securities Act of 1933 on the basis that: (i) Marlon represented that it was outside of the United States at the time the Letter Agreement was entered into; and (ii) Marlon represented that it was not a US person as such term is defined under Regulation S.

8) Going Concern

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of May 31, 2008, the Company had negative working capital of $3,417,624, and the Company had no cash resources to meet its current Business Plan. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

9) Common Stock

On June 11, 2008 we entered into a secured convertible discount note purchase agreement with Pageant Holdings Ltd. (the “Lender”) pursuant to which we sold to the lender as secured convertible note in the principal amount of $1,220,190 (the “Note”). The purchase price of the Note was $1,000,000 constituting an original issue discount of $180.46 for each $1,000 principal amount thereof. The maturity date of the Note is June 11, 2013 and the yield to maturity based on quarterly compounding is 4.00% per annum. The principal outstanding under the Note is convertible into shares of common stock of BodyTel at any time prior to the maturity date by dividing either the accreted amount of principal (as defined in the agreement) or the principal amount by the initial conversion price of $1.39 (as may be adjusted from time to time as set out in the agreement). The Company sold the Note to the Lender pursuant to Regulation D of the Securities Act of 1933 on the basis that Lender represented that they were either an “accredited investor” as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended (the “Act”) or a “qualified institutional buyer” within the meaning of Rule 144A. The Company intends to use the proceeds of the Note for working capital purposes and repayment of debt.

- F-12 -

On June 10, 2008 we entered into a debt settlement agreement with Ferro Group Ventures, Inc. pursuant to which we issued to Ferro Group 1,562,500 restricted shares of our common stock in full and final settlement of the total $2,500,000 outstanding principal on our Line of Credit Promissory Note with Ferro Group dated March 6, 2008. Pursuant to the terms of the agreement we received a release from all further obligations under line of credit promissory note in consideration of the issuance of the 1,562,500 shares. The Company issued the shares to Ferro Group pursuant to Regulation S of the Securities Act of 1933 on the basis that Ferro Group represented that they were not a “U.S. Person” as defined in Regulation S under the Securities Act of 1933.

On March 5, 2008, the Company entered into a letter agreement with Marlon Vermögensverwaltungsgesellschaft mbH (“Marlon”). Pursuant to the terms of the Letter Agreement the Company acquired 100 shares (the “GlucoTel Shares”) of the common stock of GlucoTel Scientific Inc., a private Nevada corporation (“GlucoTel”) held by Marlon, representing 50% of the issued and outstanding shares of GlucoTel, in consideration of which the Company issued 4,000,000 restricted shares of its common stock (the “BodyTel Shares”) to Marlon.

On August 13, 2007, the Company issued 28,307,500 shares of its common stock in anticipation of acquiring the remaining 50% ownership of GlucoTel Scientific, Inc. The shares were being held by the Company until the transaction was completed. The transaction was completed on March 5, 2008 and the shares were subsequently cancelled.

On June 30, 2007, a shareholder contributed $1,250,000 cash to the Company, which was recorded as additional paid-in-capital, and related to the issuance of 625,000 shares on January 12, 2007 listed below.

On January 12, 2007, the Company issued 625,000 shares of common stock (post forward split) at a price of $2.00 per share for cash proceeds of $1,250,000.

On January 2, 2007, the Company completed a 13 for 1 split of its common stock to outstanding stockholders as of January 2, 2007. Accordingly, all issued amounts of common stock have been restated to reflect the forward stock split.

On September 12, 2005, the Company issued 3,900,000 shares of common stock (post forward split) at a price of $0.000769 per share for cash proceeds of $3,000.

In August 2005, the Company issued 20,150,000 shares of common stock (post forward split) pursuant to a Private Placement Offering at a price of $0.00169 per share for cash proceeds of $34,000.

On May 27, 2005, the Company issued 19,500,000 shares of common stock (post forward split) pursuant to a Private Placement Offering at a price of $0.000769 per shares for cash proceeds of $15,000.

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS.

Forward Looking Statements

This quarterly report contains forward-looking statements within the meaning of Section 27A of the

Securities Act of 1933, as amended, and Section 21E of theSecurities Exchange Act of 1934, as amended. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” and the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation:

the completion of the development, production and marketing of our GlucoTel products;
the potential for delays in the development, production and research of our GlucoTel products;
risks related to maintaining the required regulatory approvals;
risks related to the commercial acceptance of our GlucoTel products;
risks related to intellectual property litigation;
the potential exposure to product liability claims;
the uncertainty of profitability based upon our history of losses;
risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned development, research, marketing and distribution of our GlucoTel products;
other risks and uncertainties related to our prospects, properties and business strategy.

This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.

Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to the common shares in our capital stock.

As used in this quarterly report, the terms “we”, “us”, “our”, the “Company” and “BodyTel” mean BodyTel Scientific, Inc., unless the context clearly requires otherwise.

Background

We are a development stage company specializing in telemedical monitoring and management systems (the “BodyTel System”) for chronic diseases, particularly diabetes. We combine our know-how in

telecommunications, internet and medical technology/diagnostics to create new products and services for the changing needs of global health. Our Bluetooth® enabled products are designed to simplify home monitoring by patients and to ease the communication of measured body values (for example, blood glucose level, blood pressure and body weight) to healthcare professionals or other caregivers by providing real-time communications between patients and caregivers.

Our BodyTel System is a new approach to effective patient treatment that consists of several components used together in an integrated process. These components are:

Bluetooth enabled measuring devices (GlucoTel for blood glucose monitoring, PressureTel for blood pressure monitoring and WeightTel for body weight monitoring)
BodyTel Mobile (Java application for Bluetooth and Mobile Internet enabled cell phones)
BodyTel Center (secure online database accessible via www.BodyTel.com)

Our current monitoring systems include GlucoTel™, PressureTel™ and WeightTel™. We have recently obtained CE approval are in the process of obtaining FDA approvals for GlucoTel. While we are devoting significant resources to obtaining FDA approvals for the GlucoTel system, we are also developing the PressureTel™ and WeightTel™ systems.

We operate using an outsourced business model. We have established relationships with proven industry leaders, including suppliers, manufacturers, product designers, regulatory consultants and logistics experts, to ensure supply chain efficiency as BodyTel commences production of its key products. The field of telemedicine has been identified as a key component in the efforts to reduce the healthcare cost burden to governments and insurers around the world. There are currently no significant competitors who offer comparable product features in our three initial product areas.

Corporate History

Our company was incorporated in the State of Nevada on April 4, 2005 under the name “SellCell.Net”. Effective December 13, 2006, we changed our name from “SellCell.Net” to “BodyTel Scientific, Inc.” The address of our principal executive office is 4720 Salisbury Road, Suite 72 Jacksonville, Florida 32256. Our common stock is quoted on the OTC Bulletin Board under the symbol "BDYT". Shares of BodyTel are traded on the Frankfurt Stock Exchange under the symbol “ZYE”, on the Berlin Stock Exchange under the symbol “ZYE” and on the XETRA Stock Exchange under the symbol “ZYE”.

Recent Corporate Developments

Since the completion of our fiscal year ended February 29, 2008 we experienced the following significant corporate developments:

	1.	In July, 2008, we finalized the mass production of all GlucoTel Starter Kit components including GlucoTel Blood Glucose Test Strips and are now preparing the kitting of our first market ready product. After having obtained CE approval in May, 2008, BodyTel has commenced supplies of its blood glucose monitoring and management system GlucoTel to selected partners in CE sensitive countries. GlucoTel is expected to be commercially available in Germany, the Netherlands and the United Arab Emirates (U.A.E.) by August 18th.

	2.	On June 26, 2008 BodyTel Scientific Inc. we entered, through our wholly owned subsidiary, into an exclusive distribution agreement with Sanisa of Valencia, Spain. Beginning in the third quarter of 2008, BodyTel's new partner, Sanisa, is expected to commence offering BodyTel's blood glucose monitoring and diabetes management system, GlucoTel, in Spain and Portugal. Pursuant to the terms of the distribution agreement, BodyTel granted Sanisa the right to exclusively market GlucoTel in those countries for a term of one year.

	3.	On June 24, 2008, we entered, through our wholly owned subsidiary, into an exclusive distribution agreement with Diabetes Supplies Ltd. (DSL), a distributor of medical supplies in New Zealand. Beginning in the third quarter of 2008, BodyTel's new partner, Diabetes Supplies, intends to begin offering BodyTel's blood glucose monitoring and diabetes management system, GlucoTel, in New Zealand. Pursuant to the terms of the distribution agreement, BodyTel granted DSL the right to exclusively market the GlucoTel in the Territory for a term of one year. Diabetes Supplies Ltd. is also responsible for all distribution, compliance and marketing costs relating to the sale of the products in New Zealand.

	4.	The Company’s wholly owned subsidiary, Bodytel North America LLC, previously entered into a 36 month lease agreement with One Independent Square LLC an unrelated third party in regards to its head office. The lease agreement commenced on December 1, 2007 and the monthly payments for the first 12 months were $6,080 per month. Subsequently, on June 12, 2008 the Company cancelled the lease at a cost of $22,898.16 payable on September 30, 2008. The Company has also changed its North American head office to 4720 Salisbury Road, Suite 72 Jacksonville, Florida 32256.

	5.	On June 11, 2008 we entered into a secured convertible discount note purchase agreement with Pageant Holdings Ltd. (the “Lender”) pursuant to which we sold to the lender as secured convertible note in the principal amount of $1,220,190 (the “Note”). The purchase price of the Note was $1,000,000 constituting an original issue discount of $180.46 for each $1,000 principal amount thereof. The maturity date of the Note is June 11, 2013 and the yield to maturity based on quarterly compounding is 4.00% per annum. The principal outstanding under the Note is convertible into shares of common stock of BodyTel at any time prior to the maturity date by dividing either the accreted amount of principal (as defined in the agreement) or the principal amount by the initial conversion price of $1.39 (as may be adjusted from time to time as set out in the agreement). The Company sold the Note to the Lender pursuant to Regulation D of the Securities Act of 1933 on the basis that Lender represented that they were either an “accredited investor” as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended (the “Act”) or a “qualified institutional buyer” within the meaning of Rule 144A. In connection with the issuance and sale of the Note, the Company entered into a Guaranty and Intellectual Property Security Agreement with the Lender dated June 11, 2008 pursuant to which BodyTel provided the Lender a guarantee of repayment of the amounts owing under the Note and granted a security interest in all of their intellectual property to the Lender to secure repayment. The Company intends to use the proceeds of the Note for working capital purposes and repayment of debt.

	6.	On June 10, 2008 we entered into a debt settlement agreement with Ferro Group Ventures, Inc. pursuant to which we issued to Ferro Group 1,562,500 restricted shares of our common stock in full and final settlement of the total $2,500,000 outstanding principal on our Line of Credit Promissory Note with Ferro Group dated March 6, 2008. Pursuant to the terms of the agreement we received a release from all further obligations under line of credit promissory note in consideration of the issuance of the 1,562,500 shares. The Company issued the shares to Ferro Group pursuant to Regulation S of the Securities Act of 1933 on the basis that Ferro Group represented that they were not a “U.S. Person” as defined in Regulation S under the Securities Act of 1933.

	7.	In June, 2008, BodyTel through its wholly owned subsidiary, BodyTel Europe GmbH, received CE certification for the GlucoTel blood glucose monitoring and diabetes management system. The company's notified body, National Standards Authority of Ireland (NSAI), successfully reviewed BodyTel's technical file and confirmed that BodyTel and its key vendors meet ISO quality standards and regulatory directives, and further confirmed that the GlucoTel blood glucose monitoring and diabetes management system meets defined performance standards. CE Certification is required for all medical devices to be sold in the European Union. On the basis of the successful review the CE Certificate was granted to BodyTel. BodyTel not only obtained CE certification for the 'GlucoTel' blood glucose meter, but also for the 'BodyTel Center', the international online patient database at http://www.bodytel.com and 'BodyTel Mobile', a java software application that interfaces the patient's cell phone with the online database. The data the Company provided NSAI is expected to form the foundation of the information needed to obtain FDA clearance in the U.S. market. BodyTel's next regulatory steps are to apply for a Canadian license, complete international clinical studies with the GlucoTel and move forward to obtain U.S. FDA clearance as well as other required local registrations in other target markets around the world.

	8.	On April 2, 2008, we appointed Paul Barry and Lawrence Rosenfeld to our board of directors. Lawrence Rosenfeld is the CEO of VitalStream Health, a spin-out company of The Cleveland Clinic. Mr. Rosenfeld was the founder, Chairman and CEO of Concentra Corporation (formerly Nasdaq: CTRA). For the last ten years, he has served on the boards of a number of International and US corporations including Ansaldo Signal (formerly Nasdaq: ASIGF), a $400 million railroad signal company. Mr. Rosenfeld earned a BS in mathematics in 1976 from Hampshire College, Amherst, MA. Paul Barry is an experienced corporate finance executive with substantial experience in private equity financings. Previously he was an executive in the Leveraged Finance Division of HSBC with responsibility for structuring and syndicating private equity transactions in the United Kingdom and continental Europe. Prior to that, he was at Morgan Stanley in London advising on M&A transactions, corporate restructurings and IPOs, principally for private equity clients. He holds a degree in electrical engineering from University College Cork, Ireland.

	9.	On April 2, 2008, the Board of Directors of the Company amended and restated the Company’s bylaws. The amendment and restatement of the bylaws was for the purpose of, among other things, removing certain outdated and redundant provisions that existed in the Company’s prior bylaws with respect to corporate governance, shareholder and director meeting procedures, and indemnification procedures. The changes to the Company’s prior bylaws include: (i) expanding certain provisions with respect to shareholders’ meetings including change of quorum requirements; (ii) amending certain provisions respecting appointment of directors, corporate governance and committees, and directors’ meetings; (iii) expanding certain provisions with respect to officers and their duties; (iv) changing certain provisions with respect to share certificates; and (vi) adding certain indemnification provisions.

	10.	On March 7, 2008, our German subsidiary, BodyTel Europe GmbH showcased at The TeleHealth International Conference and Exhibition for ICT Solutions in the Health Sector held in Germany.

	11.	On March 6, 2008, we issued a line of credit promissory note (the “Note”) evidencing a loan to the Company of up to $2,500,000 (the “Loan”) from Ferro Group Ventures, Inc. The principal outstanding on the Note matures on February 28, 2009. The Note is non-interest bearing until October 31, 2008 and thereafter bears interest at a rate of 10% per annum. Advances on this Note were made to the Company during fiscal 2008.

	12.	On March 5, 2008, we entered into a letter agreement with Marlon Vermögensverwaltungsgesellschaft mbH (“Marlon”).Pursuant to the terms of the Letter Agreement we acquired 100 shares (the “GlucoTel Shares”) of the common stock of GlucoTel Scientific Inc., a private Nevada corporation (“GlucoTel”) held by Marlon, representing 50% of the issued and outstanding shares of GlucoTel, in consideration of which the Company issued 4,000,000 restricted shares of its common stock (the “BodyTel Shares”) to Marlon. Following completion of the transaction the Company now holds 100% of the issued and outstanding shares of GlucoTel and Marlon holds 23,500,000 shares of the Company’s issued and outstanding common stock. GlucoTel is the Company’s wholly owned subsidiary which has the proprietary rights to the Company’s blood glucose monitoring and diabetes management system, GlucoTel™, as well as the PressureTel™ blood pressure device and the WeightTel™ weight scale systems. The Company issued the BodyTel Shares to Marlon pursuant to Regulation S of the Securities Act of 1933 on the basis that: (i) Marlon represented that it was outside of the United States at the time the Letter Agreement was entered into; and (ii) Marlon represented that it was not a US person as such term is defined under Regulation S.

General

The following is a discussion and analysis of our results of operation for the three month period ended May 31, 2008, and the factors that could affect our future financial condition. This discussion and analysis should be read in conjunction with our consolidated unaudited financial statements and the notes thereto included elsewhere in this quarterly report. Our consolidated financial statements are prepared in accordance with United States generally accepted accounting principles. All references to dollar amounts in this section are in United States dollars unless expressly stated otherwise.

Results Of Operations

Three Months Summary

		Three Months Ended May 31,
		2008			2007
Research and development	$	383,727		$	-
Acquired in-process research		13,126,664			-
and development
General and Administrative		1,342,790			10,745
Total Operating Expenses	$	14,853,181		$	10,745
(Loss) from operations		(14,853,181	)		(10,745	)
Loss from Joint Venture		-			(225,189	)
Interest Income		15,832			-
Net Loss	$	(14,837,349	)	$	(235,934	)

Revenue

From our inception through May 31, 2008, we have not generated any revenue. We expect to distribute our products during our second fiscal quarter now that we have received CE approval. We plan to distribute our products to the United Arab Emirates, Germany and Netherlands initially. We still must receive regulatory approvals in other countries or regions that do not use CE (FDA for US for instance) in order to ship product and generate revenue in those countries or regions.

Expenses

Total operating expenses during the three months ended May 31, 2008 increased substantially as compared to the comparative period in 2007 because of the preparation of the market entry for the GlucoTel product. General and administrative cost increased as a result of regulatory and approval costs as well as the operational costs for preparing the market launch in Europe and the US.

The following table presents the purchase price for the acquisition on March 5, 2008:

Shares issued by the company			4,000,000
FMV per share (most recent trade price 3/5/08)	X	$	3.08
Fair value of shares issued		$	12,320,000
Interest acquired in historical book value of GlucoTel			806,664
Excess purchase price over historical book value		$	13,126,664

market the products. Accordingly, the value attributable to these projects, which had yet to obtain regulatory approval, was expensed in conjunction with the acquisition.

Liquidity and Financial Condition

Working Capital

		At May 31, 2008			At February 29, 2008
Current assets	$	1,194,059		$	902,897
Current liabilities		4,611,683			2,648,436
Working capital (deficiency)	$	(3,417,624	)	$	(1,745,539

Cash Flows

		Three Months Ended
		May 31, 2008			May 31, 2007
Cash flows used in operating activities	$	(752,611	)	$	0
Cash flows used in investing activities		( 26,793	)		0
Cash flows provided by financing activities &		697,309			0
exchange rate effect
Increase (decrease) in cash during period	$	(82,094	)	$	0

Future Financings

Our plan of operation calls for significant expenses in connection with the development, research, marketing and distribution of our GlucoTel products. We recorded a net operating loss of $14,837,349 for the three month period ended May 31, 2008 and have an accumulated deficit of $18,171,772 since inception. We estimate that we will require approximately $10,858,249 for anticipated expenses over the next twelve months. As of May 31, 2008, we had cash of $384,336. Accordingly, we expect that we will need to obtain additional financing over the next twelve months in order to meet our anticipated expenditures and if our revenues are insufficient to meet our estimated operating expenses over the next twelve months.

On June 10, 2008, we entered into a debt settlement agreement with Ferro Group Ventures, Inc. pursuant to which we issued to Ferro Group 1,562,500 restricted shares of our common stock in full and final settlement of the total $2,500,000 outstanding principal on our Line of Credit Promissory Note with Ferro Group dated March 6, 2008. Pursuant to the terms of the agreement we received a release from all further obligations under line of credit promissory note in consideration of the issuance of the 1,562,500 shares.

On June 11, 2008, we entered into a secured convertible discount note purchase agreement with Pageant Holdings Ltd. (the “Lender”) pursuant to which we sold to the lender a secured convertible note in the principal amount of $1,220,000 (the “Note”). The purchase price of the Note was $1,000,000 constituting an original issue discount of $180.46 for each $1,000 principal amount thereof. The maturity date of the Note is June 11, 2013 and the yield to maturity based on quarterly compounding is 4% per annum. The principal outstanding under the Note is convertible into shares of common stock of BodyTel at any time prior to the maturity date by dividing either the accreted amount of principal (as defined in the agreement) or the principal amount by the initial conversion price of $1.39 (as may be adjusted from time to time as set out in the agreement). The Company intends to use the proceeds of the Note for working capital purposes and repayment of debt.

Obtaining additional financing is subject to a number of factors. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us. Since our inception, we have used our common stock to raise money for our operations. We have not attained profitable operations and are

dependent upon obtaining financing to pursue our plan of operation. For these reasons, our independent auditors believe there exists a substantial doubt about our ability to continue as a going concern.

Going Concern

We have incurred operating losses, accumulated deficit and negative cash flows from operations since inception. As of May 31, 2008, we had an accumulated deficit of approximately $18.2 million. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our unaudited consolidated financial statements included in this Quarterly Report on Form 10Q do not include any adjustments related to recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we be unable to continue as a going concern.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Application of Critical Accounting Estimates

The financial statements of our company have been prepared in accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgement.

The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:

Cash and Cash Equivalents

For purposes of reporting within the statement of cash flows, we consider all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

Property and Equipment

Office furniture and equipment are carried at cost not in excess of their estimated net realizable value. Normal maintenance and repairs are charged to earnings, while expenditures for major maintenance and betterments are capitalized. Gains or losses on disposition are recognized in operations. Depreciation is computed using straight-line methods over the estimated economic lives of 3 to 5 years.

Revenue Recognition

We are in the development stage and have yet to realize revenues from operations. Once we have commenced operations, we will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by our customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

Acquired In-process Research and Development (“IPR&D”)

assigned to those projects for which the related products have not received regulatory approval and have no alternative future use. Determining the portion of the purchase price allocated to IPR&D requires us to make significant estimates. The amount of the purchase price allocated to IPR&D is determined by estimating the future cash flows of each project or technology and discounting the net cash flows back to their present value. The discount rate used is determined at the time of the acquisition and includes consideration of the assessed risk of the project not being developed to a stage of commercial feasibility. Amounts allocated to IPR&D are expensed at the time of acquisition.

Loss per Common Share

Income Taxes

We account for income taxes pursuant to SFAS No. 109,Accounting for Income Taxes (“SFAS 109”). Under SFAS 109, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

Fair Value of Financial Instruments

We estimate the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts our company could realize in a current market exchange. As of May 31, 2008, the carrying value of cash, prepaid expenses, accounts payable, and accrued liabilities approximated fair value due to the short-term nature and maturity of these instruments.

Estimates

The financial statements are prepared on the basis of accounting principles generally accepted in the United States. 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 as of May 31, 2008, and expenses for the periods ended May 31, 2008, and 2007, and cumulative from inception. Actual results could differ from those estimates made by management.

Risks And Uncertainties

We need to raise additional financing to support the development, production and research of our GlucoTel products in the future but we cannot be sure we will be able to obtain additional financing on terms favorable to us when needed. If we are unable to obtain additional financing to meet our needs, our operations may be adversely affected or terminated.

We raised gross proceeds of approximately $2,552,000, plus subsequently an additional $2,500,000 and $1,000,000 in a convertible loan through private placements since our inception. Our ability to continue to develop the GlucoTel products is dependent upon our ability to raise significant additional financing when needed. If we are unable to obtain such financing, we will not be able to fully develop our GlucoTel products. Our future capital requirements will depend upon many factors, including:

continued scientific progress in our research and development programs;
costs and timing of seeking regulatory approvals and patent prosecutions;
competing technological and market developments;
our ability to establish additional collaborative relationships; and
the effect of commercialisation activities and facility expansions if and as required.

We have limited financial resources and to date, no cash flow from operations and we are dependent for funds on our ability to sell our common stock, primarily on a private placement basis. There can be no assurance that we will be able to obtain financing on that basis in light of factors such as the market demand for our securities, the state of financial markets generally and other relevant factors. Any sale of our common stock in the future will result in dilution to existing stockholders. Furthermore, there is no assurance that we will not incur debt in the future, that we will have sufficient funds to repay our future indebtedness or that we will not default on our future debts, jeopardizing our business viability. Finally, we may not be able to borrow or raise additional capital in the future to meet our needs or to otherwise provide the capital necessary to conduct the development of GlucoTel products, which might result in the loss of some or all of your investment in our common stock.

Our common shares are considered speculative. Prospective investors should consider carefully the risk factors set out below.

We have not earned any revenues since our incorporation and only have a limited operating history in our current business of developing, marketing, researching and distributing the GlucoTel products, which raise doubt about our ability to continue as a going concern.

Our company has a limited operating history in our current business of developing, marketing, researching and distributing the GlucoTel products and must be considered in the development stage. We were incorporated on April 4, 2005 with a business plan to create a comprehensive, trusted, state-of-the-art online marketplace for buyers and sellers of new and used cellular telephones. We were not successful in implementing our original business plan and as a result we decided in November 2006 to market state-of-the-art monitoring products and services to diabetic patients. In December 2006, we entered into an incorporated joint venture with Safe-com GmbH & Co., KG, a German corporation, to pursue the development, production and marketing of blood glucose meter for diabetic patients that operates over a cellular telephone system.

We have not generated any revenues since our inception and we will, in all likelihood, continue to incur operating expenses without significant revenues until we successfully develop, produce and market our GlucoTel products. Our primary source of funds has been the sale of our common stock. We cannot assure that we will be able to generate any significant revenues or income. These circumstances make us dependent on additional financial support until profitability is achieved. There is no assurance that we will ever be profitable, and we have a going concern note as described in an explanatory paragraph to our consolidated financial statements for the year ended February 29, 2008.

Our likelihood of profit depends on our ability to develop, produce and market our GlucoTel products, which is currently in the development stage. If we are unable to complete the development, production and marketing of our GlucoTel products successfully, our likelihood of profit will be limited severely.

We are engaged in the business of developing, producing and marketing of our GlucoTel products. Our GlucoTel products are in the development stage and, while we have secured CE regulatory approval, there remain significant other regulatory approvals to attain, most notably the FDA approval. We have not realized a profit from our operations to date and there is a risk that we will not realize any profits in the short or medium term. Any profitability in the future from our business will be dependent upon successful commercialization of our GlucoTel products, which will require significant additional research and development.

If we encounter problems or delays in the development, production and research of our GlucoTel products, we may not be able to raise sufficient capital to finance our operation during the period required to resolve the problems or delays.

Our GlucoTel products are currently in the development stage and we anticipate that we will continue to incur operating expenses without significant revenues until we have successfully completed all necessary research and clinical trials. We, and any of our potential collaborators, may encounter problems and delays relating to research and development, regulatory approval and intellectual property rights of our technology. Our research and development programs may not be successful. If any of these events occur, we may not have adequate resources to continue operations for the period required to resolve the issue delaying commercialization and we may not be able to raise capital to finance our continued operation during the period required for resolution of that issue. Accordingly, we may be forced to discontinue or suspend our operations.

If we fail to obtain and maintain required regulatory approvals for GlucoTel products, our ability to commercialize our GlucoTel products will be limited severely.

Once GlucoTel products are fully developed, we intend to market our GlucoTel products primarily in the United States and Europe. We must obtain the approval of the Food and Drug Administration of our GlucoTel products before commercialization of our GlucoTel products may commence in the United States. Even though we have recently received CE approval, we may also be required to obtain additional approvals from foreign regulatory authorities to commence our marketing activities in those jurisdictions. If we cannot demonstrate the safety, reliability and efficacy of our GlucoTel products, the Food and Drug Administration or other regulatory authorities could delay or withhold regulatory approval of our potential products.

Furthermore, even if we obtain regulatory approval for our GlucoTel products, that approval may be subject to limitations on the indicated uses for which they may be marketed. Even after granting regulatory approval, the Food and Drug Administration, other regulatory agencies, and governments in other countries will continue to review and inspect marketed products, manufacturers and manufacturing facilities. Later discovery of previously unknown problems with a product, manufacturer or facility may result in restrictions on the product or manufacturer, including a withdrawal of the product from the market. Further, governmental regulatory agencies may establish additional regulations which could prevent or delay regulatory approval of our GlucoTel products.

Even if we obtain regulatory approvals to commercialize our GlucoTel products, we may encounter a lack of commercial acceptance of our GlucoTel products, which would impair the profitability of our business.

The largest industry competitors actively marketing blood glucose monitoring devices, such as Abbott Laboratories, Bayer, Johnson & Johnson and Roche Holding, occupy over 90% of sales of blood glucose monitors within the market. As a result, we cannot be certain that our GlucoTel products will achieve the market acceptance at a level that would allow us to operate profitably.

We depend to a significant extent on certain key personnel, the loss of any of whom may materially and adversely affect our company.

Our success depends solely upon the continued service of our officers and directors and a team of consultants. The loss of any combination of these individuals would have a material adverse effect on our growth, revenues, and prospective business. We do not maintain key-man insurance on the life of our executive officer. In addition, in order to successfully implement and manage our business plan, we will be dependent upon, among other things, successfully recruiting qualified managerial personnel and employees with experience in business and the telecommunications industry. Competition for qualified individuals is intense. There can be no assurance that we will be able to find, attract and retain existing employees or that we will be able to find, attract and retain qualified personnel on acceptable terms.

We may be unable to prevent certain employees or partners from competing with us if they leave our employment or terminate their relationship with us.

Our non-compete provisions may not be enforceable if we try to enforce such provisions. Even if our restrictive covenant is enforceable in Nevada, it does not mean that covenant will be enforceable in other jurisdictions or at all. A court in, for example, Germany may decide not to enforce the restrictive covenant for public policy reasons, notwithstanding that the agreement is slated to be governed by Nevada law and notwithstanding that the restrictive covenant is enforceable in Nevada.

We may be subject to intellectual property litigation such as patent infringement claims, which could adversely affect our business.

Our success will also depend in part on our ability to develop our technology and commercially viable products without infringing the proprietary rights of others. If we are forced to litigate an intellectual property dispute, we will have to divert management’s attention from developing our technology and marketing our GlucoTel products and will have to incur substantial costs regardless of whether or not we are successful. An adverse outcome could subject us to significant liabilities to third parties, and force us to curtail or cease the development and commercialization of our GlucoTel products.

Potential product liability claims could adversely affect our future earnings and financial condition.

We face an inherent business risk of exposure to product liability claims in the event that the use of our products results in adverse affects. As a result, we may incur significant product liability exposure. We may not be able to maintain adequate levels of insurance at reasonable cost and/or reasonable terms. Excessive insurance costs or uninsured claims would add to our future operating expenses and adversely affect our financial condition.

Because a majority of our officers and directors are located in non-U.S. jurisdictions, you may have no effective recourse against the management for misconduct and may not be able to enforce judgment and civil liabilities against our officers, directors, experts and agents.

A majority of our directors and officers are nationals and/or residents of a country other than the United States, and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any U.S. state.

It is likely that additional shares of our stock will be issued in the normal course of our business development, which will result in a dilutive effect on our existing shareholders.

We may issue additional stock as required to raise additional working capital in order to undertake company acquisitions, recruit and retain an effective management team, compensate our sole officer and director, engage industry consultants and for other business development activities.

A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations.

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because our operations have been primarily financed through the sale of equity securities, a decline in the price of our common stock could be especially detrimental to our liquidity and our continued operations. Any reduction in our ability to raise equity capital in the future would force us to reallocate funds from other planned uses and would have a significant negative effect on our business plans and operations. If our stock price declines, we may not be able to raise additional capital or generate funds from operations sufficient to meet our obligations.

Our stock is a penny stock. Trading of our stock may be restricted by the Securities and Exchange Commission’s penny stock regulations which may limit a stockholder’s ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.

These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under

interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4T. CONTROLS AND PROCEDURES.

As required by Rule 13a-15 under the Exchange Act, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures at May 31, 2008, which is the end of the period covered by this report. This evaluation was carried out by our Chief Executive Officer and our Chief Financial Officer. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that the design and operation of our disclosure controls and procedures are effective as at the end of the period covered by this report.

There were no changes in our internal control over financial reporting during the fiscal quarter ended May 31, 2008 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by our company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS.

Not Applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS

Exhibit Number	Description
3.1	Articles of Incorporation (incorporated by reference from our Form SB-2 Registration Statement, filed on October 25, 2005)
3.2	Bylaws (incorporated by reference from our Form SB-2 Registration Statement, filed on October 25, 2005)
10.1	Product Supply Agreement between Safe-com GmbH & Co. KG and Cambridge Sensors Limited dated January 23, 2006 (incorporated by reference from our Quarterly Report on Form 10-QSB, filed on January 22, 2008)
10.2	Shareholder Agreement among our company, Safe-com GmbH & Co. KG and Gluoctel Scientific Inc. dated December 6, 2006 (incorporated by reference from our Current Report on Form 8-K, filed on December 14, 2006)
10.3	Technology Transfer Agreement between Safe-com GmbH & Co. KG and GlucoTel Scientific Inc. dated December 8, 2006 (incorporated by reference from our Current Report on Form 8-K, filed on December 14, 2006)
10.4	Services Agreement dated November 1, 2007 between GlucoTel Scientific, Inc. and RR Donnelley Global Turnkey B.V. (incorporated by reference from our Quarterly Report on Form 10-QSB, filed on January 22, 2008)
10.5	Product Development and Supply Agreement dated May 30, 2007 between GlucoTel Scientific Inc. and LRE Medical GmbH (incorporated by reference from our Quarterly Report on Form 10- QSB, filed on January 22, 2008)
10.6	Subscription Agreement between our company and Galaxy Equity Holdings Inc. dated June 30, 2007 (incorporated by reference from our Quarterly Report on Form 10-QSB, filed on January 22, 2008)
10.7	Office Lease Agreement between Bodytel North America, LLC and One Independent Square LLC dated December 1, 2007 (incorporated by reference from our Quarterly Report on Form 10-QSB, filed on January 22, 2008)
10.8	Loan Agreement dated November 9, 2007 between BodyTel Scientific Inc. and GlucoTel Scientific Inc. (incorporated by reference from our Quarterly Report on Form 10-QSB, filed on January 22, 2008)
10.9	Investment Letter dated June 11, 2008 between BodyTel Scientific Inc. and Pageant Holdings Ltd. (incorporated by reference from our Annual Report on Form 10-KSB, filed on June 13, 2008)
10.10	Guaranty and Intellectual Property Security Agreement dated June 11, 2008 between GlucoTel Scientific, Inc. and Pageant Holdings Ltd. (incorporated by reference from our Annual Report on Form 10-KSB, filed on June 13, 2008)
10.11	Secured Convertible Discount Note dated June 11, 2008 between BodyTel Scientific Inc. and Pageant Holdings Ltd. (incorporated by reference from our Annual Report on Form 10-KSB, filed on June 13, 2008)
10.12	Note Purchase Agreement dated June 11, 2008 between BodyTel Scientific Inc. and Pageant Holdings Ltd. (incorporated by reference from our Annual Report on Form 10-KSB, filed on June 13, 2008)
10.13	Debt Settlement Agreement dated June 10, 2008 between Ferro Group Ventures, Inc. and BodyTel Scientific Inc. (incorporated by reference from our Annual Report on Form 10-KSB,
10.14*	Lease Termination Agreement between BodyTel North America LLC. and One Independent Square LLC dated June 12, 2008

Exhibit Number	Description
	filed on June 13, 2008)
14.1	Code of Ethics (incorporated by reference from our Annual Report on Form 10-KSB, filed on June 13, 2008)
21.1	List of Subsidiaries (incorporated by reference from our Annual Report on Form 10-KSB, filed on June 13, 2008)
31.1*	CEO and CFO Section 302 Certification under Sarbanes-Oxley Act of 2002
32.1*	CEO and CFO Section 906 Certifications under Sarbanes-Oxley Act of 2002

* Filed herewith.

SIGNATURES

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

BODYTEL SCIENTIFIC INC.

By:

	/s/ Stefan Schraps
	Stefan Schraps
	President, Chief Executive Officer,
	Chief Financial Officer and Director
	(Principal Executive Officer and Principal
	Financial and Accounting Officer)

	Dated: July 15, 2008

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BodyTel Scientific (BDYTE) Inactive 10-Q2009 Q1 Quarterly report

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