Private Placement

On January 28, 2009, the Company executed an engagement letter with Falcon International Consulting Limited ("Falcon") under which Falcon would, on a best efforts basis, raise $2 million through the sale of new shares of common stock of the Company at $.10 per share (the "2009 Private Placement"). As of March 31, 2009, the Company had received cash of approximately $851,443, net of cash fees to Falcon and others, for the purchase of 9,630,000 shares of common stock, as more fully described in Note 12 Common Stock.

Liquidity

The Company's cash position at March 31, 2009 was $257,871. As of March 31, 2009, the Company had no indebtedness, with the exception of two non-compete agreements including one entered into with a shareholder. The Company has not made payments since July 1, 2008 totaling $498,500 under a non-compete agreement and a share redemption agreement with the same shareholder, as described more fully in Note 9 Commitments and Contingencies.

The Company has arranged a line of credit of $1,200,000 with a factor with whom they have worked previously. Subject to satisfactorily completing due diligence, the Company can borrow up to eighty percent of the value of eligible receivables. This line may provide cash to the Company for a certain indeterminant period but it does not represent a long term solution. The Company is exploring other alternatives for financing and additional equity capital but there can be no assurances that these efforts will be successful.

Management Plans

Management is actively determining opportunities to lower operating and administrative costs and increase revenue in an effort to reduce the current negative cash flow, including the following:

† Reduction of administrative staff in Miami, FL

† Consolidation of service facilities in Miami, FL

† Outsourcing of IT development services

† Use of part-time management personnel in lieu of full time

† Re-negotiating of contracts with certain key suppliers for better pricing and/or payment terms

The acquisition of LEL, in part, will make it possible for the Company to consolidate its service facilities in Miami, further reduce staff in Miami and enable the Company to make greater use of Avianca Airlines to service its customer base in Latin America at lower linehaul costs. The acquisition also makes it possible for the Company to achieve certain competitive advantages with respect to delivery times to Latin America, which may make it easier for the Company to add new customers and consequently increase revenues.

The Company also intends to seek out future acquisitions in order to achieve operating income sufficient to cover other expenses and achieve a net income. To complete such acquisitions the Company may require additional financing for which the Company has no financing commitments and for which management believes no assurances can be given that such financing commitments will be obtained. The Company also plans to seek out new customers and to increase business with existing customers as additional means to increase tonnage and reach profitability.

Note 3 Significant Accounting Policies

Acquisition Accounting

The acquisition of 70 percent of the common stock of LEL in February 2009 was recorded using the acquisition method, which accordingly includes the recording of the fair value of a noncontrolling interest and identifiable intangible assets. The determination of the value of identifiable intangible assets is based on the fair value of those assets.

Loss Per Share

Basic loss per share is presented on the face of the unaudited consolidated statements of operations. As provided by the Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share," basic loss per share is calculated as the loss attributable to common stockholders divided by the weighted average number of shares outstanding during the periods. Diluted loss per share reflects the potential dilution that could occur from common shares issuable through stock options, stock grants and warrants. As of March 31, 2009, diluted loss per share was affected by certain stock grants as described in Note
9. Basic and diluted earnings per share are the same for the three months ended March 31, 2009 and 2008.

Use of Estimates

The preparation of unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following: the amount of uncollectible accounts receivable, the amount to be paid for the settlement of liabilities related to cost of sales, the estimated useful lives for property and equipment and the value assigned to the warrants granted in connection with the various financing arrangements. Actual results could differ from those estimates.

Fair Values

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements ("SFAS No. 157"), which defines fair value, establishes a framework for measuring value in GAAP and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.

In February 2008, the FASB issued Staff Position FAS 157-2, Effective Date of FASB Statement No. 157 ("FSP No. 157-2"), which defers the effective date of SFAS No. 157 for non-financial assets and liabilities, except for items that are recognized or disclosed at fair value on a recurring basis, to fiscal years beginning after November 15, 2008 and interim periods within those fiscal years.

The Company has determined the estimated fair value amounts presented in these unaudited consolidated financial statements using available market information and appropriate methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. The estimates presented in the unaudited consolidated financial statements are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The Company has based these fair value estimates on pertinent information available to the Company as of March 31, 2009.

Noncontrolling Interest

As a result of the acquisition of 70 percent of the common stock of LEL in February 2009, in accordance with SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51, the Company recognized the noncontrolling interest in the consolidated financial statements of the allocable portion of LEL which is not 100% owned by Sky Postal. The determination of the fair value of the noncontrolling interest that arises due to the acquisition of LEL is described in Note 7.

The significant accounting policies of the Company are described in detail in the audited financial statements of SkyPostal as of and for the year ended December 31, 2008.

Note 4 New Pronouncements

In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations" which replaces SFAS 141, "Business Combinations" and supersedes other authoritative guidance. SFAS 141(R) broadens the scope of SFAS 141 and requires the acquisition method (SFAS 141 referred to as the purchase method) to be used on all events where a business obtains control over another business. As a result, SFAS 141(R) works to improve the comparability of information about business combinations presented. SFAS 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interests in the acquiree, and goodwill acquired in a business combination or a gain from a bargain purchase. SFAS 141(R) also requires the acquirer to disclose information that enables the users to evaluate the nature and financial effects of the business combination. SFAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, with early adoption prohibited. The Company adopted the provisions of SFAS 141(R) as of the beginning of 2009. The acquisition of LEL was accounted for under SFAS 141(R).

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements - an amendment of Accounting Research Bulletin No. 51", which establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income

attributable to the parent and to the noncontrolling interest, changes in a parent's ownership interest and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS 160 also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS 160 is effective as of the beginning of fiscal years beginning after December 15, 2008. The Company adopted the provisions of SFAS 160 as of the beginning of 2009. SFAS 160 is to be applied prospectively as of the beginning of 2009 except for the presentation and disclosure requirements which are to be applied retrospectively. There is no retrospective effect for the Company due to the acquisition of LEL (which resulted in the recording of noncontrolling interest) occurring in the first quarter of 2009. The consolidated financial statements now conform to the presentation required under SFAS 160. Other than the change in presentation of noncontrolling interests, the adoption of SFAS 160 had no impact on the Company's consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles." The new standard 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.

In April 2009, the FASB issued FASB Staff Position No. FAS 107-1 ("FSP 107-1") "Interim Disclosures about Fair Value of Financial Instruments," which requires publicly traded companies to disclose the fair value of financial instruments within the scope of SFAS 107 "Disclosures about Fair Value of Financial Instruments" for interim and annual periods. FSP 107-1 also requires fair value disclosures for interim reporting periods with summarized financial information. FSP 107-1 is effective for interim periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009. Early adoption is only permitted for entities which also elect to early adopt FSP 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly," and FSP 115-2 and FSP 124-2, "Recognition and Presentation of Other-Than-Temporary Impairments." The Company does not expect any effect on the financial statements upon implementation of FSP 107-1.

In April 2009, the FASB issued FASB Staff Position No. FAS 157-4 ("FSP 157-4"), "Determining the Fair Value When the Volume and Level of Activity For the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly," which provides guidelines for making fair values measurements more consistent with the principles presented in SFAS No. 157. The guidance in FSP 157-4 is effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. Early adoption is only permitted for entities which also elect to early adopt FSP 115-2 and FSP 124-2. The Company is currently evaluating the impact of adopting FSP 157-4 on its results of operations and financial position.

In April 2009, the FASB issued FASB Staff Position No. FAS 115-2 and FAS 124-2 ("FSP 115-2 and FSP 124-2") "Recognition and Presentation of Other-Than-Temporary Impairments," which amends the current guidance on other-than-temporary impairment of debt securities and also improves the presentation and disclosure of other-than-temporary impairments of both debt and equity securities. The guidance in FSP 115-2 and FSP 124-2 is effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. Early adoption is only permitted for entities which also elect to early adopt FSP 157-4. The Company is currently evaluating the impact of adopting FSP 115-2 and FSP 124-2 on its results of operations and financial position.

Note 5 Concentration of Credit Risk

In the normal course of business, the Company incurs credit risk from accounts receivable and transactions with financial institutions. The Company has a credit policy which is used to manage the risk. As part of this policy, limits on exposure with counterparties have been set and are monitored on a regular basis. Anticipated bad debt losses have been provided for in the allowance for doubtful accounts. During the three months ended March 31, 2009, approximately 39% of the Company's revenues were generated from three customers and approximately 20% of the Company's cost of sales was purchased from one vendor.

Note 6 Foreign Sales and Assets

With the acquisition of LEL in February 2009, the revenues of LEL will be included in the presentation of U.S. and foreign revenues under foreign. With this 10-Q filing the Company will begin to report U.S. and foreign assets. At this time the only foreign assets of the Company are those of LEL, which are insignificant.

U.S. and Foreign revenues for the quarters ending March 31, 2009 and 2008 are shown below:

            Three Months Ended March 31            Change
               2009              2008         Amount     Percent
Revenue
U.S.      $     1,638,786    $  1,899,250   $ (260,464 )   -13.7 %
Foreign           936,563         541,551      395,012      72.9
Total     $     2,575,349    $  2,440,801   $  134,548       5.5 %

Note 7 Business Combinations

On February 27, 2009 the Company acquired 70 percent of the common stock of LEL. The purchase consideration of $100,000 was comprised of 400,000 shares of common stock in the Company with a fair value of $100,000 ($.25 per share). The purchase price was allocated to the tangible assets acquired and the liabilities assumed based on their respective fair values and any excess was allocated to the fair values of identifiable intangible assets, which is LEL's customer list. The allocation of the purchase price as of March 1, 2009 is shown below.

Cash                      $  11,753
Accounts receivable         112,455
Other assets                 13,791
Customer List-LEL            81,020
Accounts payable             31,994
Other liabilities            78,956
Noncontrolling interest       8,069
Net assets acquired       $ 100,000

The fair value determination of noncontrolling interest is shown below.

LEL net asset value          26,897
Noncontrolling percentage        30 %
Noncontrolling interest     $ 8,069

The Company also entered into a non-compete agreement with the controlling shareholder of LEL which includes payments totaling $100,000, comprised of 25 payments of $4,000. The non-compete agreement was recorded as an asset under Intangibles and Other Assets and will be amortized on a straight line basis over three years, with the value of the third year of the agreement remaining as an asset until one year after the controlling shareholder separates from LEL.

Note 8  Intangibles and Other Assets



Intangibles and other assets as of March 31, 2009 and 2008 include the assets
shown below.



Intangibles and Other Assets        2009          2008
Customer List-LEL                $    81,020   $         -
Non-Compete-LEL                      100,000             -
Escrow Deposit                       149,975       376,975
Security Deposit                      80,643        78,093
Trade Mark                            79,493        79,248
Non-Compete Agreement                735,000       735,000
License Agreement                    142,800       142,800
                                 $ 1,368,931     1,412,116

Less: Accumulated Amortization      (150,220 )    (116,830 )

                                 $ 1,218,711   $ 1,295,286

The escrow deposit is the subject of an arbitration, as more fully described in Part II ITEM 1 Legal Proceedings. A portion of the deposit was returned to the Company in the first quarter 2009 when the company terminated its previous investor relations program.

Additional information about the Non-Compete Agreement is contained in Note 9. The Customer List-LEL and LEL-Noncompete are described more fully in the previous note, Note 7.

Note 9 Commitments and Contingencies

Redemption Agreement

On April 1, 2007, SkyPostal agreed to a mandatory redemption with a shareholder of 3,200,000 shares of common stock at a price per share of $1.00, wherein the shareholder has the right to put to SkyPostal up to 160,000 shares each quarter beginning April 1, 2008 (the "Redemption Agreement"). Payments under this agreement since October 1, 2008 have not been made, as described below. Management believes that the shareholder will continue to exercise their put options until such time as the Company's stock is trading above $1 per share and there is sufficient trading and liquidity in the Company's stock to offer an alternative to the put.

If the Company's stock price is valued at less than $1 per share prior to the expiration of the put options on January 2, 2013, the Company will record a liability for the put based on the number of shares not yet redeemed multiplied by the difference between the Company's stock price and the exercise price of the put option, using Level I information to determine the stock price. Consequently, changes in the stock price at prices less than $1.00 per share will result in an expense being charged to the statement

of operations or a gain being recognized, depending upon whether the stock price declined or increased since the last reporting period. Should the share price equal or exceed $1.00 the liability is temporarily extinguished and the previous amount of the liability is recorded as a gain on the consolidated statement of operations. Should the share price subsequently drop below $1.00 the liability would again be recorded with an equal amount charged to the statement of operations.

In the quarter ending March 31, 2009 the Company recorded a gain of $316,800 with respect to the Redemption Agreement liability, as shown below.

                                                       Shares
                                        Liability    Subject to
                        Share Price     per Share       Put        Put Liability
         31-Dec-08     $        0.23   $      0.77    2,880,000   $     2,217,600
         31-Mar-09              0.34          0.66    2,880,000         1,900,800
         Gain/(Loss)   $        0.11   $     (0.11 )  2,880,000   $       316,800

Non-Compete Agreement

Coincident with the redemption agreement, the shareholder also entered into a Non-Compete Agreement with SkyPostal. Under this agreement the shareholder receives payments totaling $ 735,000 beginning April 1, 2008. The Non-Compete Agreement was recorded as an intangible asset on the balance sheet and amortized on a straight line basis over the term of the agreement with an offsetting liability to recognize the cumulative future payments.

The unpaid balance of the liability according to the year of scheduled payment is shown below:

Annual Payment Schedule

         Year               Amount
         2009             $  217,973
         2010                161,000
         2011                105,000
         2012                 49,000
         2013                  3,500
         Total            $  536,473

Non-Payment



As of April 1, 2009, the most recent contractual payment date, the Company has
failed to make scheduled payments totaling $498,500, under both the Redemption
Agreement and Non-Compete Agreement, as shown below.



                           Agreement
                   Redemption     Non-compete
 Payment Date      Agreement       Agreement

October 1, 2008   $    160,000   $      63,000

January 1, 2009        160,000          59,500

  April 1, 2009              -          56,000

                  $    320,000   $     178,500

The shareholder did not request a redemption under the Redemption Agreement at April 1, 2009.

The Company does not expect to make any other payments under either agreement for the foreseeable future. The agreements do not provide for any remedies or penalties in the event of non-payment and the shareholder may elect to pursue legal action to recover the monies owed. Management does not believe a lawsuit is likely or imminent.

The Company has agreed with the shareholder to make payments in the amount of approximately $62,000 for certain of their legal bills in return for a reduction in the amount owing under the Non-Compete Agreement, when funds are available.

Note 10 Share-based Compensation

The Company has agreed to compensate certain employees and directors through the grant of restricted shares of common stock, as more fully described in the Company's 10-K filing dated March 31, 2009.

In February 2009 the Company agreed to compensate a new executive with the grant of 300,000 shares of restricted common stock with vesting over a three year period. The shares were valued at $.15 using Level I information.

Valuation of Grants. A summary of the status of the Company's non-vested shares (restricted stock), as of December 31, 2008 and March 31, 2009, and changes during the three months ended March 31, 2009, is presented below:

                                                 Weighted
                                              Average Grant-
                                             Date Fair Value
                                  Shares       (per share)      Fair Value
Nonvested at December 31, 2008   1,384,136   $           0.76   $ 1,047,568
Awarded                            300,000               0.15        45,000
Vested                                   -                  -             -
Forfeited                                -                  -             -
Nonvested at March 31, 2009      1,684,136   $           0.65     1,092,568

For the quarter ended March 31, 2009 $106,126 in expense was recorded relating to the stock grants and is reflected in Stock Based Compensation on the consolidated statements of operations. As of March 31, 2009, there was $388,901 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans. That cost is expected to be recognized over a weighted-average period of 2 years.

Note 11  Fair Value



The fair value hierarchy ranks the quality and reliability of the information
used to determine fair values. Financial assets and liabilities carried at fair
value will be classified and disclosed in one of the following three categories:



Level 1:     Quoted prices (unadjusted) in active markets for identical assets or
             liabilities.

Level 2:     Directly or indirectly observable market based inputs used in models
             or other valuation methodologies.

Level 3:     Unobservable inputs that are not corroborated by market data which
             require significant management judgement or estimation.

The following table presents the Company's financial assets that are measured at fair value on a recurring basis as of March 31, 2009 and December 31, 2008, for each fair value hierarchy level.

                                 Redemption Agreement Liability
                              March 31, 2009      December 31, 2008
                 Level I     $      1,900,800    $         2,217,600
                 Level II                   0                      0
                 Level III                  0                      0
                 Total       $      1,900,800    $         2,217,600

Note 12 Common Stock

On January 28, 2009, the Company executed an engagement letter with Falcon under which Falcon would, on a best efforts basis, raise $2 million through the sale of new shares of common stock of the Company at $.10 per share (the "2009 Private Placement"). As of March 31, 2009, the Company had received $963,000 for the purchase of 9,630,000 shares of common stock. Falcon's fees include a cash payment equal to ten percent of the proceeds to the Company and one share of common stock for each ten shares of common stock sold. As of March 31 2009 Falcon had earned fees of approximately $96,300 payable in cash and shares of common stock totaling approximately 963,000. The Company also reimbursed certain expenses totaling approximately $5,800, as provided for in the engagement letter.

. . .