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 ended ~~September~~March 3031, ~~2010~~2011

o ~~TRANSITION~~TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission ~~File~~file ~~Number~~number 000-50983

SkyShop Logistics, Inc.

(~~Exact~~Name ~~name~~ of registrant as specified in its charter)

NEVADA		27-0005846
(State or other jurisdiction of incorporation or		(~~I.R.S.~~IRS Employer ~~Identification~~identification No.)
organization)

7805 NW 15th Street

Miami, Florida 33126

(Address of principal executive offices) ~~(Zip Code)~~

(305) 599-1812

(Registrant’s telephone number~~, including area code~~)

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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 o		Accelerated filer o

Non-accelerated filer o		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 o No x

~~Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practical date.~~ As of ~~November 8~~May 6, ~~2010~~2011 there were 94121,~~763~~916,~~179~~223 shares of the issuer’s ~~Common Stock,~~ $0.001 par value, Common Stock outstanding.

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION			3
	ITEM 1.	FINANCIAL STATEMENTS	3
		Condensed Consolidated Balance Sheets as of September 30, 2010 (Unaudited) and December 31, 2009	3
		Condensed Consolidated Balance Sheets as of March 31, 2011 (Unaudited) and December 31, 2010 (Audited)	3
		Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2010 and 2009 (Unaudited)	4
		Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2011 and 2010 (Unaudited)	4
		Condensed Consolidated Statement of Changes in Stockholders’ Deficit and Comprehensive Loss for the Nine Months ended September 30, 2010 (Unaudited)	5
		Condensed Consolidated Statements of Changes in Stockholders’ Deficit and Comprehensive Loss for the Three Months ended March 31, 2011 (Unaudited)	5
		Condensed Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2010 and 2009 (Unaudited)	6
		Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2011 and 2010 (Unaudited)	6
		Notes to Condensed Consolidated Financial Statements (Unaudited)	7
	ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2117
	ITEM 3.	QUANTATATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	2720
	ITEM 4.	CONTROLS AND PROCEDURES	2721
PART II OTHER INFORMATION			2821
	ITEM 1.	LEGAL PROCEEDINGS	2821
	ITEM 1A.	RISK FACTORS	2822
	ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	2822
	ITEM 3.	DEFAULTS INUPON SENIOR SECURITIES	2922
	ITEM 4.	REMOVED AND RESERVED	2922
	ITEM 5.	OTHER INFORMATION	2922
	ITEM 6.	EXHIBITS	2922
Certification of Chief Executive Officer
Certification of Chief Financial Officer
Certification Section 906 of the Sarbanes-Oxley Act of 2002

PART I

ITEM 1. FINANCIAL STATEMENTS

SKYSHOP LOGISTICS, INC. ~~(FORMERLY SKYPOSTAL NETWORKS, INC.)~~

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2010			December 31, 2009
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	694,439		$	36,513
Accounts receivable, net		615,352			1,140,021
Prepaid expenses and other		182,625			61,135
TOTAL CURRENT ASSETS		1,492,416			1,237,669
DUE FROM STOCKHOLDER		30,260			1,974
PROPERTY AND EQUIPMENT, net		85,235			97,770
INTANGIBLE ASSETS, net		662,202			776,253
OTHER ASSETS, net		313,386			79,269
TOTAL ASSETS	$	2,583,499		$	2,192,935
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
CURRENT LIABILITIES:
Accounts payable	$	901,368		$	1,648,305
Accrued liabilities		719,453			772,217
Current portion of amount due on non-compete agreements		393,988			333,137
Customer deposits		2,381			1,603
Current portion of put option payable		278,400			1,296,000
TOTAL CURRENT LIABILITIES		2,295,590			4,051,262
CONVERTIBLE DEBT, NET		315,284			-
NON-COMPETE AGREEMENTS, less current portion		73,500			173,500
EXCESS OF VALUE OF PUT OPTIONS OVER THE ESTIMATED
FAIR VALUE OF SHARES, less current portion		9,600			1,296,000
TOTAL LIABILITIES		2,693,974			5,520,762
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Convertible preferred stock, $.001 par value, 50,000,000 authorized,
1,360,000 issued and outstanding at September 30, 2010 and
none issued and outstanding at December 31, 2009		1,360			-
Common stock, $.001 par value, 350,000,000 authorized, 95,083,179 and 69,443,292
shares issued and 94,763,179 and 69,123,292 shares
outstanding at September 30, 2010 and December 31, 2009, respectively		95,084			69,444
Additional paid-in capital		27,210,397			21,308,161
Accumulated deficit		(27,125,164	)		(24,299,296	)
Treasury stock, at cost (320,000 shares at September 30, 2010 and December 31, 2009)		(320,000	)		(320,000	)
Accumulated comprehensive income (loss)		15,472			(4,644	)
Non-controlling interest		12,376			(81,492	)
TOTAL STOCKHOLDERS' DEFICIT		(110,475	)		(3,327,827	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	2,583,499		$	2,192,935

AS OF MARCH 31, 2011 AND DECEMBER 31, 2010


	March 31, 2011			December 31, 2010
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	537,575		$	917,570
Accounts receivable, net		587,082			826,670
Prepaid expenses and other		142,260			144,208
TOTAL CURRENT ASSETS		1,266,917			1,888,448

DUE FROM STOCKHOLDER		5,508			2,708
PROPERTY AND EQUIPMENT, net		137,388			119,697
INTANGIBLE ASSETS, net		457,169			489,392
OTHER ASSETS, net		279,805			290,492
TOTAL ASSETS	$	2,146,787		$	2,790,737

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	1,225,931		$	1,139,523
Accrued liabilities		727,653			735,558
Current portion of amount due on non-compete agreements		373,114			370,740
Customer deposits		1,469			1,469
Current portion of put option payable		278,400			278,400
TOTAL CURRENT LIABILITIES		2,606,567			2,525,690

CONVERTIBLE DEBT, NET		746,690			532,915
NON-COMPETE AGREEMENTS, less current portion		35,000			52,500
EXCESS OF VALUE OF PUT OPTIONS OVER THE ESTIMATED
FAIR VALUE OF SHARES, less current portion		28,800			22,400
TOTAL LIABILITIES		3,417,057			3,133,505

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT:
Convertible preferred stock, $.001 par value, 50,000,000 authorized,
1,360,000 issued and outstanding at March 31, 2011 and December 31, 2010		1,360			1,360
Common stock, $.001 par value, 350,000,000 authorized, 117,503,179 and 95,083,179
shares issued and 117,183,179 and 94,763,179 shares outstanding
at March 31, 2011 and December 31, 2010, respectively		117,504			95,084
Subscribed stock		87,400			791,586
Subscriptions receivable		(6,400	)		(85,000	)
Additional paid-in capital		28,286,527			27,503,528
Accumulated deficit		(29,446,642	)		(28,355,320	)
Treasury stock, at cost (320,000 shares at March 31, 2011 and December 31, 2010)		(320,000	)		(320,000	)
Accumulated comprehensive income		13,942			14,001
Non-controlling interest		(3,961	)		11,993
TOTAL STOCKHOLDERS' DEFICIT		(1,270,270	)		(342,768	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	2,146,787		$	2,790,737

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

SKYSHOP LOGISTICS, INC. ~~(FORMERLY SKYPOSTAL NETWORKS, INC.)~~

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010
	2010			2009			2010			2009
NET REVENUES	$	1,640,325		$	1,502,993
NET REVENUES	$	1,709,139		$	1,669,675		$	5,528,542		$	6,415,106
OPERATING EXPENSES:
OPERATING EXPENSES:
Cost of delivery		1,406,130			1,347,196
Cost of delivery		1,362,690			1,442,272			4,569,101			5,464,488
General and administrative		1,030,105			852,479
General and administrative		977,854			1,018,953			2,747,545			3,279,006
Stock based compensation		30,833			39,448
Stock based compensation		123,984			(14,206	)		214,181			241,651
TOTAL OPERATING EXPENSES		2,467,068			2,239,123
TOTAL OPERATING EXPENSES		2,464,528			2,447,019			7,530,827			8,985,145
OPERATING LOSS		(826,743	)		(736,130	)
OPERATING LOSS		(755,389	)		(777,344	)		(2,002,285	)		(2,570,039	)
OTHER EXPENSES (INCOME):
OTHER EXPENSES (INCOME):
Interest		19,243			-
Interest		19,481			-			33,450			-
Amortization of discounts		213,775			3,000
Amortization of discounts		216,463			-			596,949			-
Changes in excess value of put option
Changes in excess value of put option
over the estimated fair value of shares		6,400			86,400
over the estimated fair value of shares		9,600			(144,000	)		51,200			230,400
Other expense (income)		41,090			(25,008	)
Other		71,602			121,681			68,946			375,703
TOTAL OTHER EXPENSES		280,508			64,392
TOTAL OTHER EXPENSES (INCOME)		317,146			(22,319	)		750,545			606,103
NET LOSS		(1,107,251	)		(800,522	)
NET LOSS		(1,072,535	)		(755,025	)		(2,752,830	)		(3,176,142	)
Net loss attributable to the non-controlling
Net income (loss) attributable to the non-controlling
interest		(15,929	)		(79,064	)
interest		875			(10,694	)		(100,815	)		9,315
Net loss attributable to the controlling interest and common
Loss attributable to the controlling interest		(1,073,410	)		(744,331	)		(2,652,015	)		(3,185,457	)
stockholders	$	(1,091,322	)	$	(721,458	)
Deemed dividend on convertible preferred stock		-			-			(798,333	)		-
WEIGHTED AVERAGE SHARES OUTSTANDING:
Net loss attributable to common shareholders	$	(1,073,410	)	$	(744,331	)	$	(3,450,348	)	$	(3,185,457	)
Basic and diluted		108,464,290			65,412,473
WEIGHTED AVERAGE SHARES OUTSTANDING:
NET LOSS PER SHARE ATTRIBUTABLE TO
Basic		88,707,127			67,773,528			77,362,405			64,029,794
COMMON STOCKHOLDERS
Effect of dilutive shares		-			-			-			-
Basic and Diluted	$	(0.01	)	$	(0.01	)
Diluted		88,707,127			67,773,528			77,362,405			64,029,794
NET INCOME/(LOSS) PER SHARE to common
shareholders:
Basic and Diluted	$	(0.01	)	$	(0.01	)	$	(0.04	)	$	(0.05	)

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

SKYSHOP LOGISTICS, INC. ~~(FORMERLY SKYPOSTAL NETWORKS, INC.)~~

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CHANGES IN STOCKHOLDERS’ ~~EQUITY AND COMPREHENSIVE LOSS~~DEFICIT

~~FOR~~AND ~~THE~~COMPREHENSIVE ~~NINE MONTHS ENDED SEPTEMBER 30, 2010~~LOSS

FOR THE THREE MONTHS ENDED MARCH 31, 2011

(UNAUDITED)

																	~~Additional~~		Additional										~~Non-~~			~~Accumulated~~			~~Total~~
	~~Preferred Stock~~		Preferred Stock						~~Common Stock~~		Common Stock						~~Paid-In~~		Paid-In		~~Accumulated~~		Subscribed		~~Treasury~~		Subscriptions		~~Controlling~~			~~Comprehensive~~			~~Stockholder's~~
	~~Shares~~		Shares		~~Amount~~		Amount		~~Shares~~		Shares		~~Amount~~		Amount		~~Capital~~		Capital		~~Deficit~~		Stock		~~Stock~~		Receivable		~~Interest~~			~~Income~~			~~Deficit~~
BALANCES AT
BALANCES AT DECEMBER
DECEMBER 31, 2009		-			$	-				69,123,292			$	69,444			$	21,308,161			$	(24,299,296	)		$	(320,000	)		$	(81,492	)	$	(4,644	)	$	(3,327,827	)
31, 2010				1,360,000			$	1,360				94,763,179			$	95,084			$	27,503,528			$	791,586			$	(85,000	)
Components of comprehensive loss:
Net loss		-		-		-		-		-		-		-		-		-		-		~~(2,652,015~~	)	-		-		-		~~(100,815~~	)		-			~~(2,752,830~~	)
Foreign currency translation
adjustment		-		-		-		-		-		-		-		-		-		-		-		-		-		-		~~8,621~~			~~20,116~~			~~28,737~~
Total comprehensive loss		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-			-			~~(2,724,093~~	)
Stock compensation - employees
Issuance of subscribed stock				-				-				22,420,000				22,420				752,166				(791,586	)			-
and director shares		-				-				3,050,900				3,051				211,130				-				-				-			-			214,181
Receipt of proceeds from subscriptions receivable				-				-				-				-								-				85,000
Common stock issued for
Stock compensation expense				-				-				-				-				30,833				-				-
accrued payroll		-				-				856,300				856				84,774				-				-				-			-			85,630
Exercies of common stock warrants				-				-				-				-				-				87,400				(6,400	)
Common stock issued for
BALANCES AT
trade payable		-				-				1,000,000				1,000				99,000				-				-				-			-			100,000
MARCH 31, 2011				1,360,000			$	1,360				117,183,179			$	117,504			$	28,286,527			$	87,400			$	(6,400	)
PuntoMio Exchange		11,425,160				11,425				-				-				786,908				-				-				-			-			798,333
																											(Continued)
Disposition of non-controlling
interest in PuntoMio		-				-				-				-				(12,209	)			(173,853	)			-				186,062			-			-
Deemed dividend from
PuntoMio Exchange		-				-				-				-				(798,333	)			-				-				-			-			(798,333	)
Redemption of warrants included in
PuntoMio preferred stock exchange		-				-				-				-				(109,000	)			-				-				-			-			(109,000	)
Conversion of preferred stock		(10,065,160	)			(10,065	)			10,065,160				10,065				-				-				-				-			-			-
Effect of adjustment of put option
payable		-				-				-				-				2,355,200				-				-				-			-			2,355,200
Broker fee for 3% $2.26m
Convertible Note		-				-				-				-				(52,522	)			-				-				-			-			(52,522	)
Warrants issued with 3% $2.26m
Convertible Note		-				-				-				-				375,268				-				-				-			-			375,268
Beneficial conversion feature attributed
to 3% $2.26m Convertible Note		-				-				-				-				1,884,732				-				-				-			-			1,884,732
Warrants issued with 3% $316k
Convertible Note		-				-				-				-				52,538				-				-				-			-			52,538
Beneficial conversion feature attributed
to 3% $316k Convertible Note		-				-				-				-				263,862				-				-				-			-			263,862
Conversion of 2% $402k & $95k
Convertible Notes into common stock		-				-				9,969,660				9,970				488,513				-				-				-			-			498,483
Private placement equity fee for conversion
of 2% $402k & $95k convertible notes		-				-				697,867				698				(698	)			-				-				-			-			-
Private placement fees for 2% $402k
Convertible Notes		-				-				-				-				(5,592	)			-				-				-			-			(5,592	)
Warrants issued with
Convertible Notes		-				-				-				-				79,865				-				-				-			-			79,865
Beneficial conversion features attributed
to Convertible Notes		-				-				-				-				198,800				-				-				-			-			198,800
BALANCES AT
SEPTEMBER 30, 2010		1,360,000			$	1,360				94,763,179			$	95,084			$	27,210,397			$	(27,125,164	)		$	(320,000	)		$	12,376		$	15,472		$	(110,475	)

	Accumulated			Treasury			Non- Controlling			Accumulated Comprehensive			Total Stockholders'
	Deficit			Stock			Interest			Income			Deficit

BALANCES AT DECEMBER
31, 2010	$	(28,355,320	)	$	(320,000	)	$	11,993		$	14,001		$	(342,768	)
Components of comprehensive loss:
Net loss		(1,091,322	)		-			(15,929	)		-			(1,107,251	)
Foreign currency translation
adjustment		-			-			(25	)		(59	)		(84	)
Total comprehensive loss		-			-			-			-			(1,107,335	)

Issuance of subscribed stock		-			-			-			-			(17,000	)
Receipt of proceeds from subscriptions receivable		-			-			-			-			85,000
Stock compensation expense				`										30,833
Exercies of common stock warrants		-			-			-			-			81,000

BALANCES AT
MARCH 31, 2011	$	(29,446,642	)	$	(320,000	)	$	(3,961	)	$	13,942		$	(1,270,270	)

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

SKYSHOP LOGISTICS, INC ~~(FORMERLY SKYPOSTAL NETWORKS, INC~~.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2010~~2011 AND ~~2009~~2010 (UNAUDITED)

(UNAUDITED)

	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,107,251	)	$	(800,522	)
Adjustments to reconcile net loss including noncontrolling interest
to net cash used in operating activities:
Amortization of debt discounts		213,775			3,000
Amortization of financing fees		21,687			-
Depreciation and amortization		50,583			47,726
Bad debt expense		-			7,761
Stock compensation expense		30,833			39,448
Revaluation of put option liability		6,400			86,400
Changes in assets and liabilities
Decrease in accounts receivable		239,588			269,337
Increase in prepaid expense and other assets		(9,052	)		(68,215	)
Decrease in intangible assets		-			13,558
Increase in accounts payable and accrued liabilities		78,503			20,777
Increase in customer deposits		-			471
Net cash used in operating activities		(474,934	)		(380,259	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Advances to stockholders		(2,800	)		(15,608	)
Payment of trademark costs		(935	)		-
Capital expenditures		(35,116	)		(2,925	)
Net cash used in investing activities		(38,851	)		(18,533	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of subscribed stock, net of offering costs		68,000			-
Proceeds from exercise of warrants		81,000			-
Payments of amounts due for non-compete agreements		(15,126	)		(8,005	)
Proceeds from issuance of convertible notes payable, net of offering costs		-			499,000
Net cash provided by financing activities		133,874			490,995

Effect of exchange rate changes		(84	)		26,167

Net (decrease) increase in cash		(379,995	)		118,370
Cash, beginning of period		917,570			36,513
Cash, end of period	$	537,575		$	154,883

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	-		$	-

Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Reduction of noncompete payable in exchange for payment of administrative costs	$	-		$	2,759
Discount recorded for 2% convertible notes	$	-		$	225,398

	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,752,830	)	$	(3,176,142	)
Adjustments to reconcile net loss including noncontrolling interest
to net cash used in operating activities:
Amortization of debt discounts		596,949			-
Amortization of financing fees		61,489			-
Depreciation and amortization		144,497			155,029
Bad debt expense		7,761			27,404
Stock compensation expense		214,181			241,651
Conversion of interest on convertible debt		1,483			-
Revaluation of put option liability		51,200			230,400
Changes in assets and liabilities
Decrease in accounts receivable		516,908			515,215
(Increase) decrease in prepaid expense and other assets		(124,019	)		38,269
Decrease in intangible assets		-			366,205
Decrease in accounts payable and accrued liabilities		(614,072	)		(123,086	)
Increase in customer deposits		778			2,573
Net cash used in operating activities		(1,895,675	)		(1,722,482	)
CASH FLOWS FROM INVESTING ACTIVITIES:
(Advances to) repayments from stockholders		(28,286	)		60,942
Cash acquired in acquisition of LEL		-			11,753
Capital expenditures		(17,911	)		(20,200	)
Net cash (used in) provided by investing activities		(46,197	)		52,495
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of capital stock, net of offering costs		-			836,443
Issuance of warrants in connection with sale of subsidiary preferred stock, net		-			174,400
Issuance of subsidiary preferred stock					791,621
Warrants (redeemed) exercised		(109,000	)		15,000
Payments of amounts due for non-compete agreements		(39,149	)		(24,000	)
Proceeds from issuance of convertible notes payable, net of offering costs		2,969,210			-
Payment of principal on convertible notes payable		(250,000	)		-
Net cash provided by financing activities		2,571,061			1,793,464
Effect of exchange rate changes		28,737			(3,407	)
Net increase in cash		657,926			120,070
Cash, beginning of period		36,513			309,455
Cash, end of period	$	694,439		$	429,525
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	3,592		$	-
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Non-compete agreement-LEL acquisition	$	-		$	100,000
Reduction of noncompete payable in exchange for payment of administrative costs	$	-		$	157,036
Common stock issued for trade payable	$	100,000		$	55,722
Subsidiary stock issued for director fee payable	$	-		$	45,192
Discounts recorded on convertible debt	$	2,855,065		$	-
Conversion of $497,000 note payable into common stock	$	497,000		$	-
Adjustment to put option liability	$	2,355,200		$	-
Issuance of common stock for accrued payroll	$	85,630		$	-

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

SKYSHOP LOGISTICS, INC. ~~(FORMERLY SKYPOSTAL NETWORKS, INC.)~~

AS OF AND FOR THE ~~PERIOD~~THREE MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2010~~2011

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. ~~Organization~~ ~~and Basis of Presentation~~Organization

On ~~July~~April 1615, ~~2010~~2008, ~~SkyPostal~~Omega ~~Networks~~United, Inc., ~~a Nevada corporation, changed its name to SkyShop Logistics, Inc.~~ (“~~the Company~~Omega”) to ~~better~~entered ~~describe~~into ~~the~~and ~~repositioning~~closed ofan ~~its~~agreement ~~primary~~concerning ~~operations~~the toexchange ~~that~~ of ansecurities ~~international~~between ~~e-commerce~~Omega ~~service~~and ~~company. Through its trademarked name “PuntoMio”~~SkyPostal, ~~the Company is engaged in cross border shopping facilitation by providing services to non-U~~Inc.S. ~~based~~and ~~shoppers~~its ~~accessing~~security ~~U.S.~~holders ~~online~~of ~~merchant sites. The service provides a U.S. address and calculates~~ (the “~~landed~~Securities ~~cost~~Exchange”). ~~including~~Pursuant ~~the cost of shipping, customs and delivery for the buyer prior~~ to the ~~purchase. Online~~Securities ~~merchants~~Exchange, ~~wishing~~Omega toissued ~~sell~~29,000,000 toshares ~~international~~of ~~buyers~~common ~~can~~stock ~~eliminate~~for ~~the~~all ~~risks~~of ~~associated with foreign sales by utilizing~~ the ~~Company’s~~issued ~~Global e-Cart solutions~~ and ~~delivering~~outstanding ~~the~~common ~~purchase~~stock toof ~~a U.S. address. The Company’s subsidiary,~~ SkyPostal, Inc., ~~provides~~On ~~international,~~July ~~bar-coded~~25, ~~low cost distribution of catalogs~~2008, ~~books~~Omega ~~and~~changed ~~publications~~its ~~below~~name ~~United~~to ~~States~~SkyPostal ~~Postal~~Networks, ~~Service~~Inc. (~~“USPS”)~~together ~~costs~~ with ~~track and trace visibility. The Company relies on~~ its ~~own proprietary integrated delivery network consisting of commercial and cargo airlines~~subsidiaries, ~~customs~~the ~~brokers, local private postal services and delivery companies linked by its PosTrac mail and parcel tracking system~~“Company”).

OnIn ~~July~~June 162008, ~~2010,~~the Company established a ~~majority~~subsidiary, ofSkyShop ~~the~~Logistics ~~voting~~of ~~shareholders~~Florida, ~~approved~~Inc. ~~the~~doing ~~Company~~business ~~name~~as ~~change~~“PuntoMio”, to ~~SkyShop~~offer ~~Logistics,~~a ~~Inc~~new service. PuntoMio ~~and~~co-markets anwith ~~increase~~banks inand ~~the~~others ~~authorized~~to ~~shares~~facilitate ofcross ~~common~~border ~~stock~~online ~~available~~shopping, ~~for~~customs ~~issuance~~clearance atand $0delivery.~~001~~ ~~par~~The ~~value,~~PuntoMio.com ~~from~~website ~~150,000,000~~was tosuccessfully ~~350,000,000~~launched ~~shares~~in October 2008.

~~The~~On ~~condensed~~February ~~consolidated financial statements for the three and nine months ended September 30~~27, ~~2010 and~~ 2009, ~~included herein are not audited and have been prepared in accordance with~~ the ~~instructions~~Company ~~for~~acquired ~~Form~~seventy ~~10-Q~~percent ~~under~~of the ~~Securities~~common ~~Exchange~~stock ~~Act~~ of ~~1934,~~Logistics ~~as amended~~Enterprises, ~~(the~~Ltda (“~~Exchange Act~~LEL”), ~~and~~a ~~Article~~Colombian 8company ofalso ~~Regulation~~engaged ~~S-X~~in ~~under~~wholesale ~~the~~mail ~~Securities~~distribution ~~Act~~and ofrelated ~~1933, as amended (the “Securities Act”)~~activities. The ~~condensed~~acquisition ~~consolidated~~provided ~~balance~~the ~~sheet~~Company atwith ~~December~~a ~~31,~~hub ~~2009~~in ~~has~~the ~~been~~customs ~~derived~~Free ~~from~~Zone ~~audited~~in ~~consolidated~~Bogota, ~~financial statements; however~~Colombia, ~~these~~which ~~Notes~~allows ~~to Condensed Consolidated Financial Statements do not include all of~~ the ~~information~~Company ~~and~~to ~~notes~~consolidate ~~required~~greater bytonnage USat ~~generally~~better ~~accepted~~line ~~accounting~~haul ~~principles (“GAAP”) for complete consolidated financial statements~~rates. The ~~accompanying~~hub ~~unaudited~~also ~~interim~~allows ~~condensed~~the ~~consolidated~~Company ~~financial~~to ~~statements~~provide ~~should~~shorter bedelivery ~~read~~times in ~~conjunction~~Latin ~~with~~America ~~the consolidated financial statements~~ and ~~notes~~to ~~thereto~~reduce ~~included~~certain inmail ~~our~~sorting ~~Annual~~expenses ~~Report~~related onto ~~Form~~handling ~~10-K~~in ~~for~~Miami, ~~the~~Florida. ~~year~~The ~~ended~~acquisition ~~December~~was ~~31,~~accounted ~~2009~~for asusing ~~filed with~~ the USacquisition ~~Securities~~method and ~~Exchange~~the ~~Commission~~operating ~~(“SEC”).~~results Inof ~~the~~LEL ~~opinion~~are ofincluded ~~Management,~~in the ~~accompanying~~ consolidated financial statements ~~reflect~~beginning ~~all~~March ~~adjustments~~1, ~~consisting of only normal recurring adjustments, necessary for the fair presentation of results for these interim periods and in order to make the condensed financial statements not misleading~~2009.

~~Operating~~On ~~results~~July ~~for~~16, 2010, the ~~three~~Company ~~and~~changed ~~nine~~its ~~months~~name ~~ended~~to ~~September~~SkyShop 30Logistics, ~~2010~~Inc. to ~~are~~better ~~not~~describe ~~necessarily~~the ~~indicative~~repositioning of ~~the~~its ~~results~~primary operations to that ~~may~~of bean ~~expected~~international e-commerce service company. SkyShop Logistics of Florida, Inc., the Company’s subsidiary, through its trademarked name “PuntoMio”, is engaged in cross border shopping facilitation by providing services to non-U.S. based shoppers accessing U.S. online merchant sites. The service provides a U.S. address and calculates the “landed cost” including the cost of shipping, customs and delivery for the ~~fiscal~~buyer ~~year~~prior ~~ending~~to ~~December~~the 31purchase. Online merchants wishing to sell to international buyers can eliminate the risks associated with foreign sales by utilizing the Company’s Global e-Cart solutions and delivering the purchase to a U.S. address. The Company’s subsidiary, ~~2010~~SkyPostal, Inc., provides international, bar-coded, low cost distribution of catalogs, books and publications below United States Postal Service (“USPS”) costs with track and trace visibility. The Company relies on its own proprietary integrated delivery network consisting of commercial and cargo airlines, customs brokers, local private postal services and delivery companies linked by its PosTrac mail and parcel tracking system.

The unaudited condensed consolidated financial statements for the three months ended March 31, 2011 and 2010 included herein have been prepared in accordance with the instructions for Form 10-Q under the Securities Exchange Act of 1934, as amended, and Article 8 of Regulation S-X under the Securities Act of 1933, as amended. Certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain only normal recurring adjustments necessary to present fairly the Company’s financial position as of March 31, 2011, and the results of its operations and cash flows for the three months ended March 31, 2011 and 2010. Operating results for the three months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2011.

Note 2. Liquidity, Financial Condition and Management Plans

Liquidity and Financial Condition

As shown in the accompanying condensed consolidated financial statements, the Company incurred ~~net~~an ~~losses~~ operating loss of $1826,~~072,535~~743 ~~and~~in $2the three months ended March 31,~~752~~ 2011,~~830~~ ~~for~~has ~~the~~total ~~three~~stockholders’ ~~and~~deficit ~~nine~~of ~~months~~$1,270,270 ~~ended~~as ~~September~~of 30March 31, ~~2010~~2011, ~~respectively.~~and ~~Cash~~cash flow from operations has been negative for each of the last ~~eleven~~21 quarters through ~~September~~March 3031, ~~2010~~2011. These factors ~~indicate~~raise ~~that~~substantial doubt about the Company’s ability to continue as a going concern, iswhich ~~dependent~~was onthe ~~its~~opinion ~~ability~~included toin ~~continue to raise capital to support its ongoing restructuring and repositioning efforts. There can be no assurance that~~ the ~~Company will have access to additional equity capital. The~~ report ~~from~~of the Company’s independent registered public accounting firm ~~included~~in ~~with~~ the ~~audited~~ consolidated financial statements ~~as of and~~ for the year ended December 31, ~~2009 expressed doubts about our ability to continue as a going concern~~2010. ~~These~~ ~~consolidated~~The consolidated financial statements do not include any adjustments that might result if the Company is unable to continue as a going concern.

During the first half of 2010 the Company entered into various transactions and agreements impacting its current and future liquidity. In May 2010, the Company entered into a Note Purchase Agreement whereby the Company agreed to sell a 3% senior secured convertible note and warrants in exchange for proceeds of $2,260,000. On May 19, 2010, the Company issued a $2.26 million note maturing on May 19, 2013 that bears interest at an annual rate of 3% and payable monthly beginning on June 1, 2010. These loan proceeds were used to pay-off certain loan obligations, trade payables and expenses. The balance of the proceeds will be used to support the development of PuntoMio. The principal and accrued interest for this note are convertible at any time at the option of the note holder into shares of the Company’s common stock at a conversion price of $0.05 per share. The warrants expire on May 19, 2013 and are exercisable into 9,040,000 shares of the Company’s common stock at an exercise price of $0.15 per share. The note and related warrants are more fully described in Note 8 – Convertible Debt and Note 12 – Warrants. As of November 8, 2010, none of the note holders of the $2.26 million convertible note have exercised their option to convert any part of the note into stock or exercised warrants to purchase common shares.

As discussed in Note 7 – Commitments and Contingencies, in April 2010, a shareholder agreed to modify the terms of the Shareholder Put Option and Non-Compete Agreements. As a result of the change in terms of the Put Option, the Company determined that the put rights requiring the Company’s purchase and redemption of 2,560,000 shares were no longer required to be carried at fair value on the Company’s consolidated balance sheet. On April 21, 2010, the Company adjusted the liability related to the 2,560,000 shares valued at $2,355,200 based on the closing trading price of the Company’s common shares, with offset to additional paid in capital. The Company continues to be contingently liable for the remaining 2,560,000 shares under the Put Option. This adjustment resulted in a significant change to the financial position of the Company. The adjustment reduced the Company’s total current liabilities, working capital deficit, and stockholders’ deficit.

OnAs ~~May~~of 7March 31, ~~2010~~2011, the Company ~~issued~~had aconvertible ~~senior~~debt ~~secured~~outstanding ~~convertible~~with ~~note~~an ~~payable~~aggregate ~~for~~principal ~~net~~balance ~~proceeds~~ of $~~150~~2,~~000~~601,400, amounts due related to ~~serve~~non-compete asagreements of $408,114 and a ~~bridge~~potential ~~loan~~put liability of $307,200. The convertible notes are more fully described in ~~anticipation~~Note of9 - Convertible Debt, the ~~Note~~non-compete ~~Purchase~~is ~~Agreement. This~~described ~~note~~more ~~was~~fully ~~convertible~~in ~~into~~Note ~~common~~8 ~~stock~~- ofNon-Compete Agreements and the ~~Company~~put atoption aagreement ~~conversion~~is ~~price~~described ofmore ~~$0.05~~fully ~~per~~in ~~share~~Note 7- Put Option Payable. On ~~May~~The ~~20,~~Company ~~2010,~~believes that because the shareholders have a financial ownership interest in the Company ~~paid~~and because the ~~convertible~~Company ~~note~~has inan ~~full~~economically ~~with~~important ~~proceeds~~arms ~~from~~length working relationship, the ~~$2.26~~shareholders ~~million~~would ~~financing. There~~not ~~were~~enforce notheir ~~fees~~rights orto ~~interest~~demand ~~incurred~~collection onof their notes nor pursue litigation under the non-compete agreement and put option agreement at this ~~convertible~~time ~~loan~~because their interests are aligned with the success of the Company.

InDuring ~~April 2010,~~ the ~~Company~~three ~~issued~~months 2%ended ~~convertible~~March ~~notes~~31, ~~totaling $95~~2011,~~000~~ ~~with~~holders aof ~~conversion~~warrants ~~feature~~ to ~~convert~~purchase ~~the~~1,748,000 ~~principal and accrued interest from the notes into~~ shares of ~~the Company’s~~ common stock atfor aan ~~conversion~~exercise price of $0.05 per share~~. In~~ ~~March~~exercised ~~2010,~~ the ~~Company~~warrants ~~issued~~for 2%proceeds ~~convertible~~of ~~notes totaling~~ $~~402~~87,~~000~~400. During ~~with a conversion feature to convert~~ the ~~principal~~three ~~and~~months ~~accrued~~ended ~~interest~~March ~~from~~31, 2011, the ~~notes~~Company ~~into~~received ~~shares~~$81,000 of the ~~Company’s~~proceeds. The ~~common~~remaining ~~stock~~$6,400 ~~at a conversion price~~ of ~~$0.05~~the ~~per~~proceeds ~~share. These convertible notes~~ were ~~issued~~received ~~with~~during ~~warrants~~April to2011 ~~purchase~~and upare topresented ~~1,988,000~~as ~~shares~~subscriptions ofreceivable on the ~~Company‘s~~accompanying ~~common~~condensed ~~stock~~consolidated atbalance ansheets ~~exercise~~as ~~price~~ of ~~$0.05 per share expiring on~~ March 1531, 2011. InSince ~~May 2010,~~ the ~~holders~~common ofstock ~~these~~underlying ~~notes exercised~~ the ~~right~~warrants towas ~~convert~~not ~~these~~issued ~~notes~~until ~~into~~April ~~common~~2011, ~~stock. They converted~~ the ~~notes~~total ~~into~~proceeds ~~10,667,527~~from ~~shares of~~ the ~~Company’s~~exercise ~~common stock. As~~ of ~~November 8, 2010,~~ the ~~convertible note holders have not exercised their~~ warrants~~. The~~ ~~terms~~ of ~~the~~$87,400 ~~convertible notes and related conversion features~~ are ~~more~~presented ~~fully~~as ~~described~~subscribed instock ~~Note~~on ~~8 – Convertible Debt. The terms of~~ the ~~associated~~accompanying ~~warrants~~condensed ~~are~~consolidated ~~more~~balance ~~fully~~sheets ~~described~~as inof ~~Note~~March 1231, ~~– Warrants~~2011.

~~During~~The ~~March~~Company ~~2010,~~is ~~the~~exploring ~~Company~~other ~~issued~~alternatives afor ~~convertible~~financing ~~note~~and ~~payable~~raising ~~for~~additional ~~$100,000~~equity atin ~~18%~~the ~~annual~~capital ~~interest~~markets, ~~and~~ which is ~~convertible~~essential ~~into~~for ~~shares of~~ the Company’s ~~common~~to ~~stock~~continue atto ameet ~~conversion~~its ~~price~~ongoing ofworking ~~$0.10~~capital ~~per share~~needs. While ~~The~~there ~~note~~can ~~was~~be ~~paid~~no inassurances ~~full~~that onthese ~~May~~efforts ~~20,~~will ~~2010. During~~be ~~the life of the loan~~successful, the Company ~~incurred~~feels ~~and~~it ~~paid~~will abe ~~total~~able ofto ~~$3,592~~meet inits ~~interest~~working ~~based~~capital onrequirements ~~1.5%~~with ~~monthly~~funds ~~rate~~raised offrom ~~outstanding~~its ~~principal~~existing investors.

The Company is exploring other alternatives for financing and raising additional equity in the capital markets but there can be no assurances that these efforts will be successful.

Management Plans

Management is constantly seeking opportunities to lower operating and administrative costs, ~~and~~ increase revenue, inand anachieve ~~effort~~positive tocash ~~reduce~~flows ~~the~~from ~~current~~operations ~~negative~~and ~~cash flow~~profitability, including the following initiatives achieved in the twelve months ended December 31, ~~2009 and continued during the nine months ended September 30,~~ 2010:

● Repositioning of the Company’s core focus from low margin mail distribution to the provision of higher margin shopping facilitation services to foreign consumers and U.S. merchants.

● Increased investment in its PuntoMio’s e-commerce technology, foreign co-marketing banking relationships, internet marketing and international parcel ~~post~~ service to foreign shoppers and U.S. online merchants.

●

Repositioning its sales strategy by focusing efforts on generating higher margin international retail sales from and to Latin American countries.

● Re-negotiating of contracts with certain key suppliers for better pricing and payment terms.

Note 3. Summary of Significant Accounting Policies

Recent Accounting Pronouncements

Effective July 1, 2009, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted Accounting Principles — Overall (“ASC 105-10”). ASC 105-10 establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”). Rules and interpretive releases of the United States Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants.

Management does not believe that any recently issued, but yet effective, accounting standards if currently adopted would have a material effect on accompanying condensed consolidated financial statements.

Management Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the 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, the value assigned to the warrants granted in connection with the various financing arrangements, valuation of the deferred tax asset, put option liability, and calculation for stock compensation expense. Actual results could differ from those estimates.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of SkyShop Logistics, Inc. formerly SkyPostal Networks, Inc., as parent, and all entities in which the Company has a controlling voting interest. The Company has a controlling interest in SkyShop Logistics of Florida, Inc. doing business as “PuntoMio” and “Global E-Cart”, SkyPostal, Inc. and Logistics Enterprises “LEL”. All significant intercompany accounts and transactions between have been eliminated in consolidation.

Reclassification

Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period’s presentation.

Cash

Cash primarily consists of demand deposits in interest and non-interest bearing accounts. The carrying ~~amounts~~amount of these deposits ~~approximate~~approximates their fair value. The Company’s balances maintained may, at times, exceed available depository insurance limits. AtAs ~~September~~of 30March 31, ~~2010~~2011, the Company had deposits of $~~370~~24,~~848~~114 in excess of ~~the~~available ~~federally~~depository ~~insured~~insurance limits~~, but held by reputable financial institutions~~.

Accounts Receivable

Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Accounts receivable are recorded at the stated amount of the transactions with the Company’s customers. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on the customer’s creditworthiness, their payment history and the amount currently past due. All balances are reviewed individually for collectability. Accounts receivable are charged off against the allowance after all means of collection have been exhausted. Accounts receivable are recorded at the invoice amount net of allowance.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of office and computer equipment, furniture and fixtures, computer software and warehouse equipment is calculated using the straight-line method over the estimated useful life of the asset generally ranging from three to seven years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease term, commencing the month after the asset is placed in service. The costs of repair and maintenance are expensed when incurred, while expenditures for improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized.

Impairment of Long-Lived Assets

In accordance with ASC No. 360-10, Property, Plant and Equipment long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposal group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheets.

9Based on management’s analysis no long-lived assets were impaired during the three months ended March 31, 2011.

Based on Management’s analysis, no long-lived assets were deemed impaired during the nine months ended September 30, 2010.

Contingencies

The Company accrues for contingent obligations, including legal costs, when the obligation is probable and the amount can be reasonably estimated. As facts concerning contingencies become known, the Company reassesses its position and makes appropriate adjustments to the consolidated financial statements. Estimates that are particularly sensitive to future changes include those related to tax, legal, and other regulatory matters that are subject to change as events evolve and additional information becomes available.

Fair Value Measurements

The Company has determined the estimated fair value amounts presented in these 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 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. See Note ~~10-~~11. Fair Value Measurements.

Revenue Recognition and Cost of Delivery

Revenue is recognized upon delivery of a letter or a package in accordance with ASC 605-20, Revenue and Expense Recognition for Freight Service in Process. This method generally results in recognition of revenues and purchased transportation costs earlier than methods that do not recognize revenues until a proof of delivery is received or that recognize revenues as progress on the transit is made. The company's method of revenue and cost recognition does not result in a material difference from amounts that would be reported under such other methods. Cost of Delivery is comprised of postage, export line haul costs, clearance costs, and hand delivery costs.

Foreign Currency and Translation Policy

The financial statements of our foreign operation, LEL, are stated in a foreign currency, referred to as the functional currency. Under generally accepted accounting principles in the United States of America, functional currency assets and liabilities are translated into the reporting currency, U.S. Dollars, using period end rates of exchange while revenues and expenses are translated at average rates in effect during the period. Equity is translated at historical rates and the resulting cumulative translation adjustments are included as a component of accumulated other comprehensive income or loss. The Company recognized a net foreign currency loss of $578 and net foreign currency gain of $48,580 during the three months ended March 31, 2011 and 2010, respectively. Such amounts are included in Other on the accompanying condensed consolidated statements of operations.

Stock Based Compensation Plan

The Company accounts for stock based compensation according to ASC No. 505-50, Equity-Based Payments to Non-Employees, and ASC No. 718, Compensation-Stock Compensation. Stock-based compensation for awards granted prior to, but not yet vested, as of January 1, 2006 ~~are~~is recorded as if the fair value method required for pro forma disclosure under previous accounting standards were in effect for expense recognition purposes, adjusted for estimated forfeitures. For stock-based awards granted after January 1, 2006, we have recognized compensation expense based on the estimated grant date fair value method using the Lattice option pricing model prior to April 2008 and the Black-Scholes option pricing model thereafter. For these awards, we have recognized compensation expense using a straight-line amortization method (prorated). ASC No. 718 requires that stock-based compensation expense be based on awards that are ultimately expected to vest, after considering estimated forfeitures.

The Company has a stockholder approved plan for stock based compensation. At March 31, 2011, 554,754 shares of common stock are available for employee and director compensation. There were no grants of stock issued during the three months ended March 31, 2011.

Loss Per Share

Basic loss per share is presented on the face of the ~~condensed~~ consolidated statements of operations. Basic earnings or loss per share “EPS” is calculated as the loss attributable to common stockholders divided by the weighted average number of shares outstanding during each period. Basic net ~~income (~~loss) per share is computed using the weighted average number of shares outstanding during the period. Due to the Company’s losses from continuing operations, dilutive potential common shares in the form of convertible notes, warrants and any shares issuable under ~~2008~~the ~~Omnibus~~five ~~Equity~~million ~~Compensation~~stock ~~Plan~~compensation plan were excluded from the computation of diluted loss per share, as inclusion would be anti-dilutive for the periods presented. Potentially dilutive common shares as of March 31,2011 were as follows:

Warrants			14,889,600
Convertible Debt			52,028,000
Total			66,917,600

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

When required, the Company records a liability for unrecognized tax positions, defined as the aggregate tax effect of differences between positions taken on tax returns and the benefits recognized in the financial statements. Tax positions are measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. No tax benefits are recognized for positions that do not meet this threshold. The Company has no uncertain tax positions that require the Company to record a liability. The Company’s tax years ended after December 31, 2006 remain subject to examination by Federal and state jurisdictions.

10The Company recognizes penalties and interest associated with tax matters as part of the income tax provision and includes accrued interest and penalties with the related tax liability in the consolidated balance sheets.

~~The~~New ~~Company~~Accounting ~~recognizes penalties and interest associated with tax matters as part of the income tax provision and includes accrued interest and penalties with the related tax liability in the balance sheet.~~Pronouncements

~~Business~~In ~~Combinations~~January 2010, the FASB issued an accounting standard update on fair value measurements and ~~Non-controlling~~disclosures. ~~Interest~~The update requires more robust disclosures about (1) the different classes of assets and liabilities measured at fair value, (2) the valuation techniques and inputs used, (3) the activity in Level 3 fair value measurements, and (4) the transfers between Levels 1, 2, and 3. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. This update did not have an effect on the Company’s condensed consolidated financial statements.

~~Effective~~In ~~March~~January 12010, ~~2009,~~the FASB issued an accounting standard update that clarifies that the ~~Company~~decrease-in-ownership ~~acquired~~provisions ~~70%~~of the consolidation guidance of the ~~outstanding~~Codification ~~common~~apply ~~stock~~to: (1) a subsidiary or group of ~~LEL~~assets that is a business or nonprofit activity, (2) a ~~Colombian~~subsidiary ~~logistics~~that ~~company~~is a business or nonprofit activity that is transfered to an equity method investee or joint venture, and (3) an exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity (including an equity method investee or joint venture). The ~~Company~~update ~~used~~also clarifies that the ~~acquisition~~decrease ~~method~~in ofownership guidance on accounting tofor ~~account~~decreases in ownership of a subsidiary does not apply if the transaction is a sale of in-substance real estate or conveyance of oil and ~~report~~properties. This update is effective for interim and annual periods ending on or after December 15, 2009 with retrospective application required for the ~~LEL~~first ~~acquisition~~period of adoption of the consolidation guidance in the Codification. The Company adopted the amendment upon issuance with no material impact to its financial position or results of operations.

On September 30, 2009, the Company sold a 24.1% preferred equity interest in its wholly owned subsidiary PuntoMio and Company warrants for cash proceeds of $966,021 for cash. Effective April 30, 2010, the Company entered into an equity exchange (“PuntoMio Exchange”) with the preferred interest holders of PuntoMio. The Company exchanged eight preferred convertible shares of the Company for every one PuntoMio preferred share. Simultaneous with the PuntoMio Exchange, the Company bought back or redeemed 1,090,000 warrants for $109,000. There is no longer a non-controlling interest in PuntoMio as of June 30, 2010. The ownership percentage of the non-controlling interest in LEL has not changed.

The following table presents the (increase) decrease in the deficit attributable to the Company as of September 30, 2010 as a result of the Punto Mio Exchange.

Net loss attributable to the Company	$	2,652,015
Increase in the Company’s additional paid-in capital from the Exchange		(798,333	)
Change from net loss attributable to the Company and transfers from non-controlling interest	$	1,853,682

Note 4. Accounts Receivable and Concentration of Credit Risk

In the normal course of business, the Company incurs credit risk from accounts receivable by extending credit on a non-collateralized basis primarily to U.S. and non-U.S. based customers. The Company performs periodic credit evaluations of its customers’ financial condition as part of its decision to extend credit. The Company maintains an allowance for potential credit losses based on historical experience and other information available to Management. Accounts receivable, net, consisted of the following at ~~September~~March 3031, ~~2010~~2011 and December 31, ~~2009:~~2010,

	2010			2009
Accounts Receivable	$	665,037		$	1,183,573
Less: Allowance for doubtful accounts		(49,685	)		(43,552	)
Accounts Receivable, net	$	615,352		$	1,140,021

During the three months ended September 30, 2010 and 2009, approximately 38% and 28% of the Company’s revenues were generated from two customers. During the three months ended September 30, 2010, approximately, 28% of the Company’s cost of sales was purchased from two vendors.

	March 31, 2011			December 31, 2010

Accounts Receivable	$	636,767		$ 876,355
Less: Allowance for doubtful accounts		(49,685	)	(49,685	)
Accounts Receivable, net	$	587,082		$ 826,670

During the ~~nine~~three months ended ~~September~~March 3031, 2010 ~~and 2009~~, approximately 5728.5% ~~and 31%~~ of the Company’s revenues were generated from two ~~and three~~ customers~~, respectively~~. During the ~~same~~three ~~period~~months ended March 31, 2011 and 2010, approximately, 3220.9% and 1323.5%, respectively, of the Company’s cost of sales was purchased from ~~two~~one ~~vendors~~ and ~~one~~two ~~vendor~~vendors, respectively.

Note 5. Property and Equipment, net

Property and equipment, net, consisted of the following at ~~September~~March 3031, ~~2010~~2011 and December 31, ~~2009~~2010:

	2010			2009
	March 31, 2011			December 31, 2010
Office and computer equipment	$	~~171~~177,~~780~~158		$	~~167~~171,~~698~~805
Computer software		~~206~~276,~~289~~124			~~204~~246,~~153~~361
Furniture and fixtures		4547,~~595~~598			4547,~~595~~598
Warehouse equipment		73,378			7173,~~645~~378
Leasehold improvements		1,755			1,755
		498,797			490,846
		576,013			540,897
Less: accumulated depreciation		(413,562	)		(393,076	)
Less: Accumulated Depreciation		(438,625	)		(421,200	)
Property and equipment, net	$	85137,~~235~~388		$	97119,~~770~~697

11Depreciation expense for the three months ended March 31, 2011 and 2010 was $17,425 and $6,389, respectively.

Depreciation expense for the three months ended September 30, 2010 and 2009 was $7,550 and $7,161, respectively. Depreciation expense for the nine months ended September 30, 2010 and 2009 was $20,486 and $24,887, respectively.

Note 6. Intangible Assets, net

Intangible assets as of ~~September~~March 3031, ~~2010~~2011 and December 31, ~~2009~~2010 are shown below:

	2010			2009			Life (yrs)
	March 31, 2011			December 31, 2010			Life (yrs)
Trademarks	$	99107,~~204~~707		$	89106,~~244~~772		Indefinite
Customer List-LEL		81,020			81,020		Three
Non-Compete-LEL		100,000			100,000		Three
Non-Compete-Shareholder		~~735~~595,~~000~~959			~~735~~595,~~000~~959		Seven
Subtotal		1884,~~015,224~~686			1883,~~005,264~~751
Less: Accumulated Amortization		(~~353~~427,~~022~~517	)		(~~229~~394,~~011~~359	)
Intangible Assets, net	$	~~662~~457,~~202~~169		$	~~776~~489,~~253~~392

Amortization expense ~~was approximately $41,000 and $48,000~~ for ~~each of~~ the three months ended ~~September~~March 3031, ~~2010~~2011 and ~~2009, respectively. Amortization expense for the nine months ended September 30,~~ 2010 ~~and 2009~~ was ~~approximately~~ $~~124~~33,~~000~~158 and $~~130~~41,~~000~~337, respectively.

The Company has various registered trademarks in North America, Europe, Middle East and Latin America under which the Company trades depending on the market and co-marketing partner. The carrying value of the trademarks represents legal and other costs related to development and registration of the Company’s trademarks. Additional ~~legal~~ expenditures of $9935,~~960,~~ related to trademarks, were incurred and capitalized during the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011. This investment is considered to have an indefinite life and as such is not amortized.

On February 27, 2009, the Company acquired 70 percent of the outstanding common stock of LEL. The purchase price was allocated to the tangible assets acquired and the liabilities assumed based on their respective fair values and $81,020 was allocated to the fair value of identifiable intangible assets, identified as LEL’s customer list. The Company also entered into a non-compete agreement with a shareholder of LEL, which includes payments totaling $100,000, comprised of 25 payments of $4,000 payable on a monthly basis. The customer list and non-compete agreement were recorded as intangible assets and are being amortized on a straight line basis over three years. The unamortized portion of the Customer List-LEL and the Non-Compete-LEL totaled $40,502, and $49,996, respectively, as of September 30, 2010.11

~~Simultaneous~~On ~~with~~February ~~the~~27, ~~Put~~2009, ~~Option~~the ~~Agreement,~~Company ~~see~~acquired ~~Note~~70 7percent —of ~~Commitments~~the ~~and~~outstanding ~~Contingencies,~~common ~~entered~~stock ~~into~~of onLEL. ~~April~~The 1,purchase ~~2007,~~price ~~the~~was ~~Company~~allocated ~~also~~to ~~entered~~the ~~into~~tangible aassets ~~non-compete~~acquired ~~agreement~~and ~~with~~the ~~one~~liabilities ofassumed ~~its~~based ~~shareholders.~~on ~~Under~~their ~~the~~respective ~~Shareholder~~fair ~~Non-Compete~~values ~~Agreement,~~and ~~the~~any ~~shareholder~~excess was allocated to ~~receive~~the ~~quarterly~~fair ~~payments beginning~~value onof ~~April~~identifiable 1intangible assets, ~~2008~~identified ~~and~~as ~~ending~~LEL’s oncustomer ~~January 1~~list, ~~2013~~amounting to $81,020. The ~~non-compete~~Company ~~agreement~~also ~~was~~entered ~~recorded~~into asa annon-compete ~~intangible~~agreement, ~~asset~~with ona ~~the~~shareholder ~~balance~~of ~~sheet~~LEL, inwhich ~~the~~includes ~~amount~~payments oftotaling $~~735~~100,000 ~~with~~, ancomprised ~~offsetting~~of ~~liability~~25 ~~to recognize the cumulative future~~ payments inof ~~2008.~~$4,000 ~~The~~payable ~~non-compete is amortized~~ on a ~~straight~~monthly ~~line~~ basis. ~~over~~The ~~the~~customer ~~term~~list ~~of the agreement~~ and ~~for~~non-compete aagreement ~~period~~were ofrecorded ~~two~~as ~~years~~intangible ~~thereafter~~assets asand ~~stated~~are inbeing ~~the~~amortized ~~agreement~~on ~~for~~ a ~~total~~straight ofline ~~seven~~basis over three years. AtThe ~~September~~Customer 30List-LEL, ~~2010,~~net and the ~~unamortized~~Non-Compete-LEL, ~~portion~~net ofamounted ~~the~~to ~~non-compete~~$26,996, ~~agreement~~and ~~recorded~~$33,328, respectively as anof ~~intangible~~March ~~asset amounted to $472~~31,~~500~~ 2011.

12Simultaneously with the Put Option Agreement, see Note 7 — Put Option Payable, entered into on April 1, 2007, the Company also entered into a non-compete agreement with a shareholder. Under the shareholder non-compete agreement the shareholder was to receive quarterly payments totaling $735,000 starting April 1, 2008 ending January 1, 2013. The non-compete agreement was recorded as an intangible asset on the balance sheet with an offsetting liability to recognize the cumulative future payments. The non-compete is amortized on a straight line basis over the term of the agreement and for a period of two years thereafter as stated in the agreement for a total of seven years. . During the year ended December 31, 2010, the Company determined that the carrying value of the non-compete exceeded its fair value and recorded an impairment charge of $139,041. At March 31, 2011, the net balance of the non-compete agreement amounted to $289,138.

Note 7. ~~Commitments~~ ~~and~~Put ~~Contingencies~~Option Payable

Put Option

On April 1, 2007, the Company and a shareholder entered into a Sale Option Agreement, (the “Shareholder Put Option Agreement”), whereby 3,200,000 options (the “Put Option”) were issued to the shareholder which, when exercised, obligated the Company to purchase and redeem up to 3,200,000 shares of the Company’s common stock at a cash exercise price of $1.00 per share. The shareholder had the right to exercise at any time up to 3,200,000 shares in quarterly increments of up to 160,000 common shares beginning with the quarter ended April 1, 2008. The Put Option expires on January 2, 2013.

The Company accounted for the Put Option as a liability at inception since the Put Option (a) embodied an obligation to repurchase the equity shares, and (b) required the Company to settle the obligation by transferring assets. The Put Option was measured initially at the fair value of the shares at inception. The fair value was determined by the amount of cash that would be paid under the conditions specified in the agreement if the shares were repurchased immediately. The Company has made subsequent fair value adjustments to the liability at each reporting period to reflect the fair value of the Company’s common shares to be received if the Company were to sell the redeemed shares in the market. Therefore, the fair value of the Put Option liability consisted of the shares available under the Put Option at a cash exercise price of $1.00 per share, less the market value of the Company’s common stock for such shares on the reporting date.

On April 21, 2010, as a condition for entering into the 3% $2.26m Convertible Note (see Note 89. – Convertible Debt), the shareholder agreed to a change of terms within the Shareholder Put Option Agreement. The shareholder agreed to not exercise the Put Option until the closing price for the Company’s common stock on the principal market on which such common stock trades is greater than $1.00 (subject to adjustment for stock splits, stock dividends and similar events) for 60 consecutive days. Except for this change, the Shareholder Put Option Agreement will remain in full force and effect in accordance with its respective terms. From April 2007 to April 2010, the shareholder has put 640,000 shares to the Company at an exercise price of $1.00 per share and the Company has made payments totaling $320,000 to the shareholder. As of April 21, 2010 immediately before the change in terms, there were 320,000 shares to be redeemed, and 2,560,000 shares remaining that may be put to the Company for purchase and redemption under the Put Option. As a result of the change in terms, which restrict the shareholder’s right to exercise the Put Option, the Company determined that the put rights requiring the Company’s purchase and redemption of 2,560,000 shares were no longer required to be reflected at fair value on the Company’s consolidated balance sheets. On April 21, 2010, the Company ~~reclassed~~reclassified the liability related to the 2,560,000 shares valued at $2,355,200 based on the closing trading price of the Company’s common shares, to additional paid in capital. The Company continues to be contingently liable for the remaining 2,560,000 shares under the Put Option. Should the Company’s trading price remain above $1.00 per common share for 60 consecutive days reinstituting the Put Option rights, then fall below $1.00 per share, a liability would be recognized and charged to earnings in the period. A summary of the Put Option atfor ~~December 31, 2009,~~ the ~~effect~~years ofended ~~elimination~~March ~~of a portion of the liability at April 21~~31, ~~2010~~2011 and ~~the~~December ~~Put Option at September 30~~31, 2010 is as follows:

					Effect of
	December 31, 2010				March 31, 2011					Change in
					April 21, 2010									Nine Month
	Shares		Value		Shares		Value			Fair Value
	December 31, 2009				Adjustment					September 30, 2010				Change in
Put Option exercised and unpaid		320,000	$	300,800		320,000	$	307,200		$	6,400
	Shares		Value		Shares		Value			Shares		Value		Fair Value
Put Option exercised and unpaid		320,000	$	288,000							320,000	$	288,000	$	-
Remaining Put Option liability		2,560,000		2,304,000		-	$	(2,355,200	)		2,560,000		-		51,200
Total Put Option		2,880,000	$	2,592,000							2,880,000	$	288,000	$	51,200

For the three ~~and nine~~ months ended ~~September~~March 3031, 2011 and 2010, the Company recognized losses in its operating results from adjustments to the fair value of the Put Option in the amount of ~~a loss of~~ $96,~~600~~400 and $5186,~~200~~400, respectively. The fair value adjustment for the three months ended ~~September~~March 3031, ~~2010~~2011 was the result of a decrease in the trading price of our common stock from $0.1306 per share on ~~June~~December 3031, 2010 to $0.1004 per share on ~~September~~March 3031, ~~2010~~2011. The fair value adjustment for the ~~nine~~three months ended ~~September~~March 3031, 2010 was the result of a decrease in the trading price of our common stock from $0.10 per share on December 31, 2009 to $0.0807 per share on ~~April~~March 2131, 2010.

~~Non-Compete Agreements~~12

~~Simultaneous~~Note with the Shareholder Put Option Agreement, the Company also entered into a non-compete agreement (the “Shareholder Non-Compete Agreement”) whereby the shareholder was to receive quarterly payments totaling $735,000 beginning April 1, 2008 and ending on January 1, 2013 pursuant to a schedule in the agreement8. ~~The Shareholder~~ Non-Compete Agreement was recorded as an intangible asset on the consolidated balance sheets with an offsetting liability to recognize the cumulative future payments. The agreed-upon value of the non-compete is being amortized on a straight line basis over the term of the agreement and for a period of two years thereafter as stated in the agreement for a total of seven years. See Note 6 - Intangible Assets.Agreements

13Simultaneously with the Shareholder Put Option Agreement, the Company also entered into a non-compete agreement (the “Shareholder Non-Compete Agreement”) whereby the shareholder was to receive quarterly payments totaling $735,000 beginning April 1, 2008 and ending on January 1, 2013 pursuant to a schedule in the agreement. The Shareholder Non-Compete Agreement was recorded as an intangible asset on the consolidated balance sheets with an offsetting liability to recognize the cumulative future payments. The agreed-upon value of the non-compete is being amortized on a straight line basis over the term of the agreement and for a period of two years thereafter as stated in the agreement for a total of seven years. See Note 6 - Intangible Assets.

On April 21, 2010, as a condition ~~for~~of entering into the 3% $2.26m Convertible Note (see Note 89. – Convertible Debt), the shareholder agreed to a change of terms within the Shareholder Non-Compete Agreement. The shareholder agreed to waive any payments under the Non-Compete Agreement until the Company achieves positive annualized net positive cash flow from operations (determined in accordance with U.S. GAAP after deducting capital expenditures) of at least $750,000 for three consecutive fiscal quarters. Except for this change, the Shareholder Non-Compete Agreement will remain in full force and effect in accordance with its ~~respective~~ terms. The Company remains liable for the obligation.

At the request of the shareholder, the Company made payments on behalf of the shareholder of $29,~~208~~483 ~~and $7,175~~ during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2010~~2011, ~~respectively,~~ reducing amounts owed under the Shareholder Non-Compete Agreement.

At ~~September~~March 3031, ~~2010~~2011, amounts due on the liability related to the Shareholder Non-Compete Agreement are as follows:

Payment Schedule for September 30,	Amount
Payment Schedule for Twelve Months Ending March 31,	Amount
2011	$	353,957
2012	$	342,457
2012		63,000
2013		35,000
2013		10,500
Total	$	377,457
Total	$	427,457

In addition, at ~~September~~March 3031, ~~2010~~2011, the Company’s current liability related to non-compete agreements included $4030,~~031~~657 payable to a minority shareholder of LEL. ~~Through~~ ~~September~~During ~~30,~~the ~~2010~~three months ended March 31, ~~$59~~2011,~~969~~ ~~has~~the ~~been~~Company ~~paid~~made onpayments of $5,643 to the ~~LEL~~minority ~~non-compete~~shareholder ~~agreement~~of LEL.

~~Litigation~~Note 9. Convertible Debt

~~The~~As ~~Company~~of ~~may~~March ~~become a party to various claims~~31, ~~legal actions and complaints arising in the ordinary course of business. In the opinion of Management~~2011, ~~there were no matters that would have a material adverse effect on~~ the Company’s ~~consolidated~~has ~~financial~~the ~~statements~~following ~~taken~~convertible asnotes ~~whole as of September 30, 2010 and December 31, 2009~~outstanding.

Note 8. Convertible Debt

During the nine months ended September 30, 2010, the Company entered into several convertible note agreements. In March 2010, the Company entered into two convertible debt agreements to raise working capital and continue the development of PuntoMio.

3% Convertible Note - $2,260,000 (“3% $2.26m Convertible Note”)

On May ~~18th~~18, 2010, the Company entered into a Note Purchase Agreement and other agreements with LBI Investments, LLC whereby the Company agreed to issue a 3% ~~Senior~~senior ~~Secured~~secured ~~Convertible~~convertible ~~Note~~note and ~~Warrant~~warrants for cash proceeds of $2,260,000. The investment banker was entitled to a transaction fee equal to 7% of gross cash proceeds ~~in cash~~ and 7% of the cash proceeds in ~~SKPN~~the Company’s common stock at $.05 per share. The Company settled the transaction fee with the issuance of a 3% convertible note at $.05 per share with a face value of $316,400 due May 19, 2013.

The terms of the 3% $2.26m Convertible Note agreements are:

●

The note becomes due on May 19, 2013 and bears interest at 3% annually, payable monthly beginning on June 1, 2010.

● The principal of the note and any accrued and unpaid interest are convertible into shares of ~~the~~ common stock of the Company at conversion price of $0.05 per share at any time at the option of the note holder. The conversion price is adjustable in the event of any stock split, stock dividend or other recapitalization of the Company.

● In conjunction with the convertible debt agreements, warrants to purchase the equivalent to 20% of the shares issuable upon conversion, or 9,040,000 shares were issued with a strike price of $0.15 per share expiring May 19, 2013. The warrant exercise price is adjustable in the event of any stock split, stock dividend or other recapitalization of the Company. These warrants contain a cashless exercise feature.

1413

●

The note agreements contain a registration rights agreement whereby the holders may at any time demand registration under the Securities Act.

●

The convertible note is secured by a first priority lien on substantially all of the Company’s and PuntoMio’s assets and a guarantee by PuntoMio.

●

The note agreements contain various provisions impacting the Company including: (i) a stock reservation provision whereby the Company shall reserve shares of common stock for issuance to the note and warrant holder equal to the number of shares required upon conversion of the note and exercise of the warrant; (ii) restrictions on the payment of dividends, distributions, redemption of stock and warrants, and the making of loans; (iii) participation rights in any subsequent securities offering; (iv) indemnification of certain investor parties; and (v) appointment of four members of our Board of Directors.

Proceeds of this convertible note were tested for a beneficial conversion feature by comparing the effective conversion price to the fair value of the Company’s stock on the commitment date. After determination of the fair value of the warrants, the Company recognized a beneficial conversion feature of $1,884,732 which was recorded as a discount to the convertible notes with an offset to additional paid-in capital. The fair value of the warrants was determined utilizing the Black-Scholes pricing model methodology using assumptions of three years for expected term, volatility of 334.888%, no dividends and a risk free interest rate of 1.59%. The discount related to the warrants for common stock was determined to be $375,268 and recorded as a further reduction to the carrying amount of the convertible debt offset against additional paid-in capital. Both the beneficial conversion feature and warrant discounts will be amortized over three years and charged to interest expense. However, the Company has elected to disclose the amortization of debt discount separately on the ~~condensed~~ consolidated statements of operations. For the ~~period~~three ~~from~~months ~~issuance~~ended toMarch ~~September 30~~31, ~~2010~~2011, amortization of the discount for the beneficial conversion feature and the discount on the warrants amounted to $~~230~~154,~~643~~910 and $4530,~~923~~844, respectively. Interest expense recorded during the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 amounted to $2416,~~891~~717. As of ~~September~~March 3031, ~~2010~~2011, the entire $2,260,000 convertible note is outstanding and is carried at $~~276~~652,~~566~~201 net of discounts in the accompanying consolidated balance sheets.

3% Convertible Note - $316,400 (“3% $316k Convertible Note”)

With respect to the May 18, 2010 Note Purchase Agreement with LBI Investments, LLC, the broker fee was 14% of the note principal. The Company entered into a $316,400 convertible note agreement with the broker. The Company recorded the broker fee payable by allocating the fair value of the fee related to the warrant discount of $52,522 to additional paid-in capital and capitalizing the remainder to Other Asset – Debt Issuance Cost for $263,878. The debt issuance cost will be amortized to financing fees over the life of the convertible note.

The terms of the 3% $316k ~~convertible~~Convertible ~~note~~Note agreement are:

●

The note becomes due on May 19, 2013 and bears interest of 3% annually, payable monthly beginning on June 1, 2010.

●

The principal of the note and accrued and unpaid interest are convertible into shares of the Company’s common stock at a conversion price of $0.05 per share.

● The notes provide for 20% warrant coverage with a strike price of $0.15 per share and expire on May 19, 2013. Warrants to purchase 1,265,600 shares of common stock at $0.15 per share have been issued and are outstanding at ~~September~~December 3031, 2010.

The Company tested the $316,400 convertible note for a beneficial conversion feature by comparing the effective conversion price to the fair value of the Company’s stock on the commitment date. The Company recognized a beneficial conversion feature of $263,862 which was recorded as a discount to the convertible notes with an offset to additional paid-in capital. The fair value of the warrants was determined utilizing the Black-Scholes pricing model methodology using assumptions of three years for expected term, volatility of 334.888%, no dividends and a risk free interest rate of 1.59%. The discount related to the warrants for common stock was determined to be $52,538 and recorded as a further reduction to the carrying amount of the convertible debt offset against additional paid-in capital. Both the beneficial conversion feature and warrant discounts will be amortized over three years and charged to interest expense. However, the Company has elected to disclose the amortization of debt discount separately on the ~~condensed~~ consolidated statements of operations. For the ~~period~~three ~~from~~months ~~issuance~~ended toMarch ~~September 30~~31, ~~2010~~2011, amortization of the discount for the beneficial conversion feature and the discount on the warrants amounted to $3221,~~290~~687 and $64,~~428~~317, respectively. Interest expense recorded during the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 amounted to $32,~~485~~340. As As of ~~September~~March 3031, ~~2010~~2011, the entire $316,400 convertible note is outstanding and is carried at $3891,~~718~~304 net of discounts in the accompanying consolidated balance sheets.

~~2% Convertible Notes - $402,000 and $95,000~~14

3% Convertible Note - $25,000 (“3% $25k Convertible Note”)

In November 2010, the Company issued a $25,000 Convertible Note. The terms of the 3% $25k Convertible Note agreements are:

●

The note becomes due on November 9, 2013 and bears interest at 3% annually, payable monthly beginning on December 1, 2010.

●

The principal of the note and any accrued and unpaid interest are convertible into shares of the common stock of the Company at conversion price of $0.05 per share at any time at the option of the note holder. The conversion price is adjustable in the event of any stock split, stock dividend or other recapitalization of the Company.

●

In conjunction with the convertible debt agreements, warrants to purchase an equivalent of 20% of the shares issuable upon conversion, or 100,000 shares were issued with a strike price of $0.15 per share expiring November 9, 2013. The warrant exercise price is adjustable in the event of any stock split, stock dividend or other recapitalization of the Company. These warrants contain a cashless exercise feature.

●

The note agreement contains a registration rights agreement whereby the holders may at any time demand registration of the underlying common stock under the Securities Act.

●

The convertible note is secured by a lien on substantially all of the Company’s and PuntoMio’s assets and a guarantee by PuntoMio.

●

Proceeds of this convertible note were tested for a beneficial conversion feature by comparing the effective conversion price to the fair value of the Company’s stock on the commitment date. After determination of the fair value of the warrants, the Company recognized a beneficial conversion feature of $20,896 which was recorded as a discount to the convertible notes with an offset to additional paid-in capital. The fair value of the warrants was determined utilizing the Black-Scholes pricing model methodology using assumptions of three years for expected term, volatility of 281.09%, no dividends and a risk free interest rate of 0.66%. The discount related to the warrants for common stock was determined to be $4,104 and recorded as a further reduction to the carrying amount of the convertible debt offset against additional paid-in capital. Both the beneficial conversion feature and warrant discounts will be amortized over three years and charged to interest expense. However, the Company has elected to disclose the amortization of debt discount separately on the consolidated statements of operations. For the three months ended March 31, 2011, amortization of the discount for the beneficial conversion feature and the discount on the warrants amounted to $1,686 and $331, respectively. Interest expense recorded during the three months ended March 31, 2011 amounted to $186. As of March 31, 2011, the entire $25,000 convertible note is outstanding and is carried at $3,185 net of discounts in the accompanying consolidated balance sheets.

Below is a summary of convertible debt outstanding as of March 31, 2011:

	Amount Due and Discounts at Issuance								Amount Due and Discounts at March 31, 2011
Convertible Security Description	Amount Due		Beneficial Conversion Feature		Warrants		Net Amount		Amount Due		Unamortized Discounts		Net Amount

3% $2.26m Convertible Note	$	2,260,000	$	1,884,732	$	375,268	$	-	$	2,260,000	$	1,607,799	$	652,201
3% $316k Convertible Note		316,400		263,862		52,538		-		316,400		225,096		91,304
3% $25k Convertible Note		25,000		20,896		4,104		-		25,000		21,815		3,185
	$	2,601,400	$	2,169,490	$	431,910	$	-	$	2,601,400	$	1,854,710	$	746,690

OnNote ~~March 15th 2010, the Company entered into an agreement with Falcon Consulting to raise up to $500,000 through the sale of convertible notes~~10. InStock-Based ~~March and April 2010, the Company entered into convertible note agreements with several investors of the Company totaling $497,000. The terms of the convertible note agreements are:~~Compensation

● The notes become due upon the earlier of July 15, 2010 or completion of a financing event in the amount of $4,000,000 or greater.

● Annual interest rate of 2%, payable annually and to accrue beginning on April 1, 2010.

● The convertible note holders have the option to convert the notes into shares of the Company’s stock at a conversion ratio of $.05 per $1.00 of principal outstanding, at any time.

● The notes provide for 20% warrant coverage with a strike price of $0.05 per share expiring March 15, 2011. As of September 30, 2010, 1,988,000 warrants have been issued.

Proceeds of $497,000 from these convertible notes were tested for a beneficial conversion feature by comparing the effective conversion price to the fair value of the Company’s stock on the commitment date. The Company recognized a beneficial conversion feature of $198,800 which was recorded as a discount to the convertible notes with an offset to additional paid-in capital. The fair value of the warrants was determined utilizing the Black-Scholes pricing model methodology using assumptions of one year for expected term, volatility of 390.53%, no dividends and a risk free interest rate of .41%. The discount related to the warrants for common stock was determined to be $79,865 and recorded as a further reduction to the carrying amount of the convertible debt offset against additional paid-in capital.

In May 2010, the $497,000 convertible note holders converted the principal plus accrued interest of $1,483 owed to them into 9,969,660 shares of common stock at the $0.05 conversion price.

The private placement agent, Falcon Consulting, earned a cash fee comprised of 7% of the total monies raised or $34,790. The amount was allocated to additional paid-in-capital and debt issuance costs based on the relative fair values of the conversion feature and the warrants resulting in a $5,592 charged to additional paid-in capital and the remaining $29,199 to debt issuance cost. These amounts were being amortized through July 15, 2010; however, the remaining amount of $21,595 was expensed upon conversion on May 19, 2010.

In addition, Falcon Consulting was entitled to receive 7% of any common shares issued upon conversion of the notes through July 15, 2010.

On May 20, 2010, Falcon was issued 697,876 shares of common stock upon conversion of these notes valued at $55,830 based on the closing trading price of the Company’s common stock on that date. These shares were deemed to be placement fees related to the sale of issuance of common stock and thus were charged to additional paid-in capital. In total, 10,667,527 shares of common stock were issued for the $497,000 convertible debt. None of this debt is outstanding at September 30, 2010. The unamortized discounts of $147,027 and $73,626 related to the remaining beneficial conversion features and the warrants, respectively, were charged to expense during quarter ended June 30, 2010.

18% Convertible Note Payable - $100,000

On March 8th 2010, the Company entered into a note agreement for $100,000. Terms of the note payable were:

● Discount granted at issuance of 3% charged to expense.

● Interest on the unpaid principal at 1.5% per month, which was payable monthly.

● Maturity date was May 7, 2010, subsequently extended to June 7, 2010.

● Note was secured by the Company’s accounts receivable to the extent of the amount owed.

● Lender had option to convert 100% of the note payable to Company’s common shares at a conversion price of $0.10 per share.

The proceeds of $97,000 were received March 8th 2010 and the convertible note was tested for a beneficial conversion feature at the time of issuance by comparing the effective conversion price to the fair value of the Company’s stock. The $3,000 discount was amortized into expense and included in amortization of discounts on the consolidated statements of operations. The Company determined that the 18%, $100,000 convertible note payable did not have an embedded beneficial conversion feature and thus did not recognize any reduction to the carrying amount of the convertible debt. In May 2010, the Company repaid the note payable with $100,000 cash proceeds from the 3% $2.26m Convertible Note. The Company incurred and paid $3,592 of interest expense related to this note.

3% Convertible Note Payable - $150,000

On May 7th 2010, the Company entered into a convertible note agreement for $150,000. Terms of this note payable were:

● Interest on the unpaid principal accrued at 3% annually.

● The loan was due on demand.

● Note was secured by the Company’s assets including accounts receivable to the extent of the amount owed.

● Lender had option to convert 100% of the note payable to Company’s common shares at a conversion price of $0.05 per share.

The proceeds of $150,000 were received on May 8, 2010 and the convertible note was tested for a beneficial conversion feature at the time of issuance by comparing the effective conversion price to the fair value of the Company’s stock. The Company determined that the 3%, $150,000 convertible note payable did have an embedded beneficial conversion feature. However, the 3% $2.26m Convertible Note was used to pay this 3% $150,000 note payable in full and since the 3% $150,000 loan was repaid within twelve days as expected, the Company reversed the discount and no interest was incurred or expensed.

Below is a summary of convertible debt outstanding as of September 30, 2010:

	Amount Due and Discounts at Issuance								Amount Due and Discounts at September 30, 2010
Convertible Security Description	Amount Due		Beneficial Conversion Feature		Warrants		Net Amount		Amount Due		Unamortized Discounts		Net Amount
3% $2.26m Convertible Note		2,260,000		1,884,732		375,268		-		2,260,000		1,983,434		276,566
3% $316k Convertible Note		316,400		263,862		52,538		-		316,400		277,682		38,718
	$	2,576,400	$	2,148,594	$	427,806	$	-	$	2,576,400	$	2,261,116	$	315,284

Note 9. Stock-Based Compensation

Common Stock Awards

The Company recognized $123,984 and $(14,206), net of forfeitures of $77,764, of share-based compensation expense during the three months ended September 30, 2010 and 2009, respectively, related to the vesting of previously awarded stock. As of ~~September~~March 3031, ~~2010~~2011, the future compensation expense related to awarded, non-vested stock that will be recognized is $~~162~~100,~~610,~~258 and ~~this amount~~ is expected to be recognized over a weighted average period of 1.6414 years. ~~A summary of the Company’s non-vested stock as of September 30, 2010 is presented below:~~

						Weighted
						Average Grant-
				Grant Date		Date Fair Value		Unamortized
	Shares			Fair Value		(per share)		Value
Nonvested at December 31, 2009		688,046		$	-	$	0.55	$	380,023
Awarded		3,957,200			221,100		0.11		162,610
Vested		(2,795,246	)		-		0.49		(367,352	)
Forfeited		(200,000)			-		0.15		(12,671)
Nonvested at September 30, 2010		1,650,000		$	221,100	$	0.12	$	162,610

The Company recognized $30,833 and $39,448 of share-based compensation expense during the three months ended March 31, 2011 and 2010, respectively. As of March 31, 2011, there were 1,650,000 shares of non-vested common stock outstanding. There were no stock awards issued, forfeited or vested during the three months ended March 31, 2011.

OnNote June 18, 2010, 1,200,000 restricted shares with a three year vesting period were awarded to members of the Board of Directors valued at $156,000 based on the closing price of the Company’s common stock on that date11. ~~These~~Fair ~~shares~~Value were issued on August 16, 2010. During the three months ended June 30, 2010 our Board of Directors granted 495,000 shares of common stock to prior members of the Board of Directors for services, of which 345,000 were for prior services and vested immediately and 150,000 shares will vest and be issued after one-year of continued service. The fully vested shares were valued at $24,600 based on the closing trading price of the Company’s common stock on the date of grant and charged to compensation expense. The 150,000 shares that vest over one-year were valued at $10,500 and will be charged to expense over the one-year vesting period. In August 2010, the Company granted and issued employees 2,262,200 shares of common stock valued at $226,220 based on their grant-date fair value, 300,000 of which are restricted shares subject to a three-year vesting period and 856,300 of which were issued to settled previously accrued payroll. In August 2010 the Company also issued 100,000 shares of common stock that were granted to an employee in February 2009 and became fully vested in February 2010. The Company recognized $214,181 and $241,651 of share-based compensation expense during the nine months ended September 30, 2010 and 2009, respectively, related to the award, vesting and forfeiture of shares.Measurements

The July 2008 stock compensation plan authorized 5,000,000 shares for issuance and since then, a total of 4,445,246 shares have been granted. Therefore, 554,754 shares of common stock are available for issuance from the current stock compensation plan.

Note 10. Fair Value Measurements

The Company carries various assets and liabilities at fair value in the accompanying consolidated balance sheets. Fair value is defined as the amount that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Three levels of inputs that may be used to measure fair value are as follows:

Level I: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level II: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

Level III: Unobservable inputs when there is little or no market data available, thereby requiring an entity to develop its own assumptions. The fair value hierarchy gives the lowest priority to Level 3 inputs.

The following table presents the Company’s financial liabilities that are measured at fair value on a recurring basis as of ~~September~~March 3031, ~~2010~~2011 and December 31, ~~2009~~2010, for each fair value hierarchy level.

	Put Option Liability	~~Put Option Liability~~
		September 30, 2010			December 31, 2009
	March 31, 2011			December 31, 2010
Level I		$	~~288~~307,~~000~~200		$	2300,~~592,000~~800
Level II			-			-
Level III			-			-
Total		$	~~288~~307,~~000~~200		$	2300,~~592,000~~800

Note 11. Common and Preferred Stock

Effective July 16, 2010, the Company is authorized to issue 350,000,000 common shares (an increase of 200,000,000 from 150,000,000 authorized shares at June 30, 2010) with a par value of $0.001 and 50,000,000 preferred shares with par value $0.001.

During the nine months ended September 30, 2010, the Company had several equity transactions. The Company issued 1,000,000 shares of common stock valued at $100,000 by the parties as partial settlement of a trade payable. The Company converted 2% $497,000 convertible notes, including related interest and fees into 10,667,527 shares of common stock, more fully described in Note 8 - Convertible Debt. Also, during the nine months ended September 30, 2010, the Board of Directors approved grants of 345,000 shares to Directors for their past service valued at $24,600 more fully described in Note 9 – Stock-Based Compensation.

During third quarter 2009, the Company sold units comprised of one preferred share of PuntoMio, its subsidiary, plus one warrant to purchase one common share of the Company, at an exercise price of $.10 expiring July 1, 2012, for $1.00 per unit in a private placement. The Company sold 1,090,000 units of PuntoMio preferred stock and warrants for the Company’s common stock and received proceeds of $966,021 net of placement fees. In addition to the cash fee paid to the Falcon Consulting, the private placement agent, the Company issued Falcon Consulting 284,345 PuntoMio preferred shares for their efforts in connection with the private placement. The sale of PuntoMio preferred shares resulted in a non-controlling interest of 24.1%.

Effective April 30, 2010, the Company entered into an equity exchange agreement with the non-controlling shareholders of PuntoMio (the PuntoMio Exchange”). The PuntoMio Exchange provides for the exchange of the entire subsidiary preferred equity interest for Company preferred convertible stock at an exchange of 1:8. In addition to the PuntoMio Exchange, the Company agreed to redeem 1,090,000 warrants expiring July 1, 2012 for $0.10 per warrant or $109,000. More information regarding the warrants affected in the PuntoMio Exchange is more fully described in Note12 - Warrants.

On April 30, 2010, the Company exchanged 1,428,145 preferred shares of a Company’s subsidiary for 11,425,160 shares of the Company’s preferred convertible stock and fully eliminated the non-controlling interest in the subsidiary. The disposition of the non-controlling interest required the Company to reclassify the losses accumulated from the sale of the non-controlling interest through the PuntoMio Exchange date from Non-Controlling Interest to Accumulated Deficit. From September 30, 2009 through April 30, 2010, $173,853 losses were attributable to the non-controlling interest. Furthermore, the equity attributable to the non-controlling interest at inception of $57,401 was eliminated as part of the disposition of the non-controlling interest in PuntoMio. The Company valued the 11,425,160 preferred convertible shares issued in the exchange based on the closing trading price of the Company’s common stock on April 30, 2010. Despite certain preferences within the terms of the preferred convertible stock (see below), the Company believes that the closing price on the Company’s common stock on the date of the exchange provides a reasonable approximation of the value of the preferred convertible stock. The difference between the carrying value of the subsidiary stock and the value of the common stock on commitment date in the amount of $798,333 was reflected as a deemed dividend and was charged to additional paid-in capital.

Upon any liquidation, dissolution or winding up of the Company, the holders of the preferred convertible stock have preference to receive distribution before any payment is made to common stockholders. The holders also have preference to any dividends that may be declared and have equal equity interest as common stockholders but do not have voting rights. Convertible preferred stockholders have the right to convert to common stock on a 1:1 ratio at anytime with written notice. Finally, the Company may force the preferred convertible stockholder to convert their shares into common stock at the stated 1:1 ratio if the stock trades at an amount greater than $0.30 for 20 consecutive trading days. If the Company, at any time after the issue date, subdivides by stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise, the outstanding shares of common stock into a greater number of shares, then after the date of record for effecting such subdivision, the number of conversion shares issuable upon a conversion of a preferred convertible share in effect immediately prior to such subdivision will be proportionately increased. If the Company, at any time after the issue date, combines (by reverse stock split, recapitalization, reorganization, reclassification or otherwise) the outstanding shares of common stock into a smaller number of shares, then, after the date of record for effecting such combination, the number of conversion shares issuable upon a conversion of a preferred convertible share in effect immediately prior to such combination will be proportionately reduced.

In August 2010, holders of 10,065,160 shares of the Company’s preferred stock converted their preferred stock into an equivalent number of shares of the Company’s common stock. As of September 30, 2010, 1,360,000 shares of preferred stock remain outstanding.

Note 12. Warrants

InDuring ~~May 2010, warrants were issued as part of~~ the 3%three ~~$2.26m~~months ~~Convertible~~ended ~~Note~~March ~~agreements.~~31, ~~The~~2011, ~~note agreements provide for the issuance of detachable~~ warrants ~~equivalent~~ to ~~20%~~purchase of1,748,000 ~~the~~ shares ~~issuable upon conversion~~ of ~~the~~common ~~notes,~~stock orfor ~~9,040,000 warrants, with~~ an exercise price of $0.1505 per share ~~and~~were ~~expiring~~exercised onfor ~~May~~proceeds ~~19, 2013. In addition, a broker fee resulted from the issuance~~ of ~~the 3%~~ $~~2.26m convertible note amounting to 14% of the principal of the notes~~87, ~~or $316,~~400, ~~and the Company entered into convertible note and warrant agreements for this obligation. In May 2010~~$81,000 ~~1,265,600 warrants were issued as part~~ of ~~the~~which 3%was ~~$316k~~received ~~Convertible~~in ~~Note~~March ~~issuance~~2011 ~~with a strike price of $0.15 per share~~ and ~~expiring on May 19~~$6,400 ~~2013. These~~of ~~warrants~~which ~~contain~~was ~~anti-dilution~~received ~~provisions~~in ~~and~~April ~~a cashless exercise feature~~2011. AsWarrants ~~of September 30, 2010, 10,305,600 warrants~~ to purchase an240,000 ~~equivalent~~shares ~~number~~ of common ~~shares~~stock ~~related~~expired tounexercised ~~the 3% $2.26m Convertible Note and broker fee remain outstanding. These warrants were recorded and valued~~ in ~~conjunction~~March ~~with their respective issuance of convertible notes – See Note 8 – Convertible Debt~~2011.

During March and April 2010, warrants were issued as part of the 2% $402,000 and 2% $95,000 Convertible Note agreements. The note agreements provide for the issuance of detachable warrants equivalent to 20% of the principal of the notes with a strike price of $0.05 per share and expiring March 15, 2011. As of September 30, 2010, 1,988,000 warrants to purchase 1,988,000 common shares at $0.05 per share are outstanding. These warrants were recorded and valued in conjunction with the issuance of the convertible notes – See Note 8 – Convertible Debt.

	Warrants			Exercise Price		Proceeds Upon Exercise
Outstanding at December 31, 2010		19,074,766		$	0.37	$	3,431,423
Awarded		-			-		-
Exercised		(1,748,000	)		0.05		87,400
Expired		(2,437,166	)		0.46		(1,110,583	)
Outstanding at March 31, 2011		14,889,600		$	0.15	$	2,233,440

InNote ~~2009, 1,090,000 warrants were issued as part of the third quarter 2009 private placement with an exercise price of $0~~13.10 ~~per~~Commitments ~~share~~ and ~~an expiration date of July 1, 2012. These warrants were valued by an independent service at $174,400. These warrants were redeemed on April 30, 2010 for $109,000.~~Contingencies

19In July 2009, the Company consolidated and renegotiated the two Miami leases for SkyPostal Networks, Inc. and PuntoMio into one Miami facility. The new lease is a non-cancellable operating lease that expires on June 2016. Rent expense under the new lease was $32,602 and $27,118, for the three months ended ended March 31, 2011 and 2010, respectively.

Falcon Consulting and others earned 2,653,195 warrants with an exercise price of $0.50 as fees for 2008 private placement and bridge loans. These warrants were valued at $188,144 and have an expiration date of March 11, 2011. During 2009, 456,029 of these warrants were cancelled and in exchange for the issuance of 100,000 common shares. At September 30, 2010 and December 31, 2009, 2,197,166 warrants payable to Falcon Consulting remain outstanding. A summary of all warrants outstanding at September 30, 2010 and changes to warrants issued during the nine months then ended, is as follows:16

	Warrants			Exercise Price			Proceeds Upon Exercise or Redemption			Expiration Dates
Outstanding at December 31, 2009		3,287,166		$	0.37		$	1,207,583		March 11, 2011 and July 1, 2012
Awarded		1,608,000			0.05			80,400		March 15, 2011
Awarded		380,000			0.05			19,000		March 15, 2011
Awarded		9,040,000			0.15			1,356,000		May 19, 2013
Awarded		1,265,600			0.15			189,840		May 19, 2013
Exercised		-			-			-
Redeemed		(1,090,000	)		(0.10	)		(109,000	)	July 1, 2012
Forfeited		-			-			-
Outstanding at September 30, 2010		14,490,766					$	2,743,823

The future minimum rental payments under these leases for the five years subsequent to March 31, 2011 are as follows:


2012	$	54,912
2013		63,244
2014		71,576
2015		79,909
2016		20,498
Total	$	290,138

Litigation

The Company may become a party to various claims, legal actions and complaints arising in the ordinary course of business. In the opinion of management, there were no matters that would have a material adverse effect on the Company’s consolidated financial statements taken as whole as of March 31, 2011.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Note About Forward Looking Statements

This report contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), which are based on management’s exercise of business judgment, as well as assumptions made by and information currently available to management. When used in this document, the words “may,” “will,” “anticipate,” “believe,” “estimate,” “expect,” “intend” and words of similar import, are intended to identify any forward-looking statements. You should not place undue reliance on these forward-looking statements. These statements reflect our current view of future events and are subject to certain risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company’s actual results could differ materially from those anticipated in these forward-looking statements. The Company undertakes no obligation, and does not intend, to update, revise or otherwise publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of any unanticipated events. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that its expectations will materialize.

Company Overview

The Company ~~has~~provides ~~repositioned~~international, ~~its~~wholesale ~~core~~mail ~~business~~delivery services to ~~focus~~20 onmajor ~~the~~countries ~~growing~~in ~~cross-border~~Latin ~~business~~America toand ~~consumer~~the ~~B2C~~Caribbean, ~~e-commerce~~of ~~market. The~~which ~~Company~~all ~~provides~~of athe ~~shopping~~countries ~~facilitator~~would ~~service~~be toclassified ~~foreign~~as ~~consumers~~emerging markets. It ~~also~~The ~~offers~~Company ~~U.S.~~also ~~online~~provides ~~merchants~~parcel ~~the~~delivery ~~ability~~service to ~~handle~~consumers ~~cross~~living ~~border~~in ~~orders. The Company’s SkyPostal~~Europe, ~~Inc.~~Middle ~~subsidiary provides international distribution of catalogs~~East, ~~books~~Eastern Europe and ~~publications~~Africa. The Company ~~operates~~provides ~~facilities~~a indoor-to-door ~~Miami,~~service ~~Florida~~largely ~~and~~using ~~Bogota,~~outsourced ~~Colombia~~transportation ~~for~~via ~~the~~international ~~sorting~~commercial airlines and ~~consolidating~~local ofin-country ~~mail~~delivery ~~and~~companies, ~~parcels~~private ~~for~~postal ~~shipment~~services toand ~~specific~~national ~~countries~~postal services in ~~Latin~~some ~~America~~countries.

OnThe ~~July~~Company 16operates facilities in Miami, ~~2010~~Florida and Bogota, aColombia ~~majority~~for the sorting and consolidating of ~~the~~mail ~~voting~~for ~~shareholders~~shipment ~~approved~~to specific countries in Latin America. The facilities in Bogota, in particular, provide the Company ~~name~~with ~~change~~certain competitive advantages with respect to ~~SkyShop~~faster ~~Logistics,~~delivery ~~Inc.~~times to Latin America and analso ~~increase~~lower sorting and handling costs than in the ~~authorized~~U.S. Management ~~shares~~believes ofthat ~~common~~faster ~~stock~~delivery ~~available~~times ~~for~~provide ~~issuance~~a atmeaningful $0differential advantage with respect to the decision making of customers.~~001~~ ~~par~~The ~~value,~~Company ~~from~~outsources ~~150,000,000~~its tomail ~~350~~sorting facilities in Philadelphia and in London,~~000,000~~ ~~shares~~which processes mail originating in Europe and bound for Latin America.

~~LEL~~In ~~was~~October 2008, ~~acquired~~the ~~effective~~Company ~~March~~established 1PuntoMio, ~~2009~~a subsidiary, to begin offering a service that enables non-U. ~~The~~S. ~~results~~resident ofinternet ~~operations~~shoppers to use PuntoMio as their mailing address for ~~the~~U.S. ~~nine~~e-commerce ~~months~~websites. ~~ended~~PuntoMio ~~September~~is 30a shopping facilitator for foreign online buyers which provides a U.S. address to use when making online purchases. This facilitates shopping on U.S. online merchant sites, ~~2010~~wherein ~~include~~many e-tailers do not accept orders from foreign buyers. The PuntoMio service assists the ~~results~~buyers ofin ~~LEL~~finding ~~for~~products, ~~nine~~price ~~months~~comparison, ~~whereas~~use of the ~~results~~U.S. ofaddress, ~~operations~~transportation ~~for~~and customs clearance and delivery to the ~~period~~buyer’s ~~ended~~home. ~~September~~It 30is a less costly alternative to the express carriers and more efficient than the international parcel post service offered by the world’s national postal services, ~~2009~~since ~~include~~it ~~only~~provides ~~seven~~a ~~months~~secured, online visibility of ~~operations~~the inparcel ~~these~~until ~~consolidated~~delivery ~~financial~~has ~~statements~~taken place.

~~Results~~The ofCompany ~~Operations~~will ~~for~~require additional capital to continue operations during the ~~Three~~second ~~Months~~quarter. There ~~Ended~~can ~~September 30,~~be ~~2010~~no asassurance ~~Compared~~of the Company’s ability to raise additional capital through the ~~Three~~issuance ~~Months~~of ~~Ended~~debt ~~September 30,~~or ~~2009~~equity securities.

~~The~~Results ~~following~~of ~~table~~Operations ~~sets forth,~~ for the ~~periods~~Three ~~indicated,~~Months ~~statements~~Ended ofMarch 31, ~~operations~~2011 ~~information~~as ~~from~~Compared ~~our~~to ~~unaudited condensed consolidated statements of operations with changes from~~ the ~~same~~Three ~~three~~Months ~~month~~Ended ~~period~~March 31, ~~in 2009~~2010.

21The following table sets forth, for the periods indicated, statements of operations information from our unaudited condensed consolidated statements of operations with changes from the same three month period in 2010.

	Three Months Ended September 30,
	2010			2009
NET REVENUES	$	1,709,139		$	1,669,675
OPERATING EXPENSES:
Cost of delivery		1,362,690			1,442,272
General and administrative		977,854			1,018,953
Stock based compensation		123,984			(14,206	)
TOTAL OPERATING EXPENSES		2,464,528			2,447,019
OPERATING LOSS		(755,389	)		(777,344	)
OTHER EXPENSES (INCOME):
Interest		19,481			-
Amortization of discounts		216,463			-
Changes in excess value of put option
over the estimated fair value of shares		9,600			(144,000	)
Other		71,602			121,681
TOTAL OTHER EXPENSES (INCOME)		317,146			(22,319	)
NET LOSS		(1,072,535	)		(755,025	)
Net income (loss) attributable to the non-controlling
interest		875			(10,694	)
Loss attributable to the controlling interest		(1,073,410	)		(744,331	)
Deemed dividend on convertible preferred stock		-			-
Net loss attributable to common shareholders	$	(1,073,410	)	$	(744,331	)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		88,707,127			67,773,528
Effect of dilutive shares		-			-
Diluted		88,707,127			67,773,528
NET INCOME/(LOSS) PER SHARE to common
shareholders:
Basic and Diluted	$	(0.01	)	$	(0.01	)


							Increase (Decrease)
	2011			2010			Amount			Percent

NET REVENUES	$	1,640,325		$	1,502,993		$	137,332			9.1	%

OPERATING EXPENSES:
Cost of delivery		1,406,130			1,347,196			58,934			4.4	%
General and administrative		1,030,105			852,479			177,626			20.8	%
Stock based compensation		30,833			39,448			(8,615	)		(21.8	%)
TOTAL OPERATING EXPENSES		2,467,068			2,239,123			227,945			10.2	%

OPERATING LOSS		(826,743	)		(736,130	)		(90,613	)		12.3	%

OTHER EXPENSES (INCOME):
Interest		19,243			-			19,243
Amortization of discounts		213,775			3,000			210,775			7,025.8	%
Changes in excess value of put option
over the estimated fair value of shares		6,400			86,400			(80,000	)		(92.6	%)
Other (income) expense		41,090			(25,008	)		66,098			(264.3	%)
TOTAL OTHER EXPENSES		280,508			64,392			216,116			335.6	%

NET LOSS		(1,107,251	)		(800,522	)		(306,729	)		38.3	%

Net loss attributable to the non-controlling
interest		(15,929	)		(79,064	)		63,135			(79.9	%)
								-
Net loss attributable to the controlling interest and common
stockholders	$	(1,091,322	)	$	(721,458	)	$	(369,864	)		51.3	%


WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and diluted		108,464,290			65,412,473			43,051,817			65.8	%

NET LOSS PER SHARE ATTRIBUTABLE TO
COMMON STOCKHOLDERS
Basic and Diluted	$	(0.01	)	$	(0.01	)	$	0.00

Revenue

The Company’s ~~generates~~revenues ~~revenue~~increased onby ~~the~~approximately ~~tonnage~~$137,000 ofor ~~mail~~9.1%, ~~and~~from ~~parcels delivered~~$1,503,000 ~~measured~~for inthe ~~kilograms~~three ~~plus~~months ~~service~~ended ~~fees~~March ~~charged~~31, 2010 to ~~non-U.S.~~$1,640,000 ~~based consumers~~ for ~~processing~~the ~~customs~~three ~~and~~months ~~duties~~ended ~~and~~March ~~sales~~31, ~~commissions earned from merchants~~2011. ~~Revenue~~Tonnage ~~during~~in the three months ended ~~September~~March 3031, ~~2010~~2011 decreased by 18.1% compared to the three months ended ~~September~~March 3031, ~~2009~~2010; however, our e-commerce business has continued to grow, resulting in the overall increase in revenue. The decrease in tonnage is primarily due to the ongoing migration of mail to electronic alternatives that continues to erode the mail business. Revenue per kilo for our mail business increased slightly by 20.4% to $4.65 per ton for the three months ended March 31, 2011.

Management believes that overall industry mail tonnage will continue to decrease while parcel volumes from the U.S. and Europe into Latin America will increase due to ~~an increase in~~ general demand increase for U.S. products. ~~Management believes this demand will drive the growth of fees earned from customs and duties processing, delivery and merchant fees.~~ In addition, ~~Management believes that~~ higher margin, ~~e-commerce consumer~~ business originating in Latin America, ~~Europe~~ and ~~Middle~~Caribbean ~~East,~~continues ~~will continue~~ to increase as the Company continues to ~~grow~~build ~~its~~on ~~consumer~~new ~~customer~~retail ~~base~~customers ~~through~~in ~~co-marketing~~the ~~agreements~~region. Foreign ~~with~~revenues ~~banks~~increased ~~and~~as ~~credit~~a ~~card~~percentage ~~issuers~~of insales ~~those~~to ~~regions~~66.1% ~~where~~during the ~~growth~~three inmonths ~~cross-border~~ended ~~shopping~~March is31, ~~greatest~~2011 compared to 32. ~~Revenue~~4% ~~growth~~for ~~will~~the ~~also~~three bemonths ~~generated~~ended ~~from~~March ~~U.S.~~31, ~~merchant~~2010, ~~agreements~~which ~~wherein~~has ~~the~~contributed ~~Company~~to ~~assumes~~an ~~the~~increase ~~management~~in ofgross ~~foreign~~margin ~~shopper~~to ~~transactions~~14.3% ~~that~~for the ~~merchants~~three ~~prefer~~months ended March 31, 2011 compared to ~~outsource~~10.4% for the three months ended March 31, 2010.

~~The following schedule highlights the Company’s U.S. and foreign sourced revenue, including the revenues of PuntoMio and LEL, for the three months ended September 30, 2010 and 2009:~~18

	Three Months Ended September 30,										Change
Region	2010		Percent of Total			2009		Percent of Total			Amount			Percent
U.S.	$	668,155		39.1	%	$	736,331		44.1	%		(68,176	)		-9.3	%
Foreign		1,040,984		60.9	%		933,344		55.9	%		107,640			11.5	%
Total	$	1,709,139				$	1,669,675					39,464			2.3	%

The following schedule highlights the Company’s U.S. and foreign sourced revenue for the three months ended March 31, 2011 and 2010:

	Three Months Ended March 31,								Change
Region	2011		Percent of Total		2010		Percent of Total		Amount		Percent

U.S.	$	556,530	33.9	%	$	1,016,151	67.6	%	(459,621	)	(45.2	)%
Foreign		1,083,795	66.1	%		486,842	32.4	%	596,953		122.6	%
Total	$	1,640,325			$	1,502,993			$ 137,332

Operating Expenses

Cost of Delivery. The total cost of delivery ~~per~~has ~~kilo~~decreased ~~increased~~as bya 5%percentage ~~compared to the same period in the prior year primarily due to increase fuel costs. In addition, the Company phased-out low margin business at the end~~ of ~~2009 therefore 2010~~ sales ~~are~~as ~~comprised~~a ofresult ~~better margin sales resulting in an increase~~ of ~~gross~~increasing ~~margin~~e-commerce ofbusiness ~~7%. The~~and ~~Company~~decrease ~~expects gross margin to continue to improve~~ in ~~the~~our ~~next twelve months as the PuntoMio volume grows and better margins are realized on~~ mail business ~~into Latin America, Europe, and the Middle East~~. ~~The~~On ~~cost~~a per kilogram ~~will~~basis ~~vary with~~ the ~~price~~cost of ~~oil and the margin between revenue and~~ delivery ~~costs~~decreased ~~would~~by be3.5% ~~adversely~~compared ~~affected~~with bythe ~~any~~same ~~significant~~period ~~increases~~ in ~~oil~~the ~~prices~~prior year.

~~Stock~~General ~~Based~~and ~~Compensation~~Administrative. This expense increased by $~~138~~178,~~190~~000 ~~to $123,984~~ during the three months ended ~~September~~March 3031, ~~2010~~2011 ~~compared~~primarily due to aincreases ~~net~~in ~~negative expense of $14~~sales,~~206~~ ~~resulting~~marketing ~~from~~and ~~forfeitures~~travel expenses of $7764,~~764~~000, ~~and~~increases ~~expense~~in offoreign ~~$63~~management,~~558~~ ~~for~~administrative ~~the~~and ~~three~~information ~~months~~technology ~~ended~~salaries ~~September~~of 30$112,000, ~~2009. The~~and ~~increase~~increases in ~~stock~~legal ~~compensation~~fees ~~expense~~and isIT ~~due~~expenses toof a$40,000, ~~stock~~offset ~~grant~~by ~~forfeiture~~decreases ~~that~~in ~~took~~bank ~~place~~charges inof ~~2009~~$14,000 and ~~the~~reporting ~~issuance~~costs and ~~continued~~board ~~vesting~~meetings of ~~stock~~$14,000 ~~options~~compared to ~~employees~~the ~~and~~same ~~directors~~period ~~during~~in 2010 ~~totaling $123,984~~.

Other Expenses

~~Interest~~Amortization of Debt Issuance Discount. During ~~The~~the three months ended March 31, 2011 the Company ~~accrued~~recognized $19214,~~481~~000 of ~~interest~~amortization expense related to ~~the various~~ convertible debt ~~agreements~~issued ~~entered~~in ~~into~~2010 ~~during~~compared ~~1st~~to ~~and~~$3,000 ~~2nd~~of ~~quarters~~debt ofissuance ~~2010~~discount ~~that~~amortization ~~did~~recognized ~~not~~during ~~exist~~the inthree months ~~2009~~ended March 31, 2010. See financial statement Note 89. – Convertible Debt for full discussion on all convertible debt.

~~Amortization~~Revaluation of ~~Debt~~Put ~~Issuance~~Option ~~Discount~~Liability. The Company ~~incurred~~records ~~$216,463~~a ofmark ~~amortization~~to ~~expense~~market ~~related~~adjustment every reporting period to ~~discounts~~adjust onthe ~~convertible~~fair ~~debt~~value ~~issued~~of ~~during~~the put option liability. During the ~~1st~~three ~~and~~months ~~2nd~~ended ~~quarters~~March 31, 2011, the Company recognized a loss of $6,400. During the three months ended March 31, 2010, ~~that~~the ~~did~~stock ~~not~~price ~~exist~~of inthe ~~2009~~Company was less than the $1. ~~See~~00 ~~financial~~exercise ~~statement~~price ~~Note~~of 8the put option resulting in a net charge to earnings of $86,400. See note 7. – ~~Convertible~~Put ~~Debt~~Option Payable for a full discussion onof ~~all~~the ~~convertible~~put ~~debt~~option liability.

~~Revaluation~~Other ofExpenses ~~Put~~increased ~~Option~~by ~~Liability.~~$66,000 ~~The Company records a mark~~ to ~~market~~net ~~adjustment~~other ~~every~~expense ~~reporting period to adjust the fair value~~ of ~~the~~$41,000 ~~put~~for ~~option liability (see Put Option and Non-Compete Agreements below). The Company’s expense resulting from~~ the ~~mark to market adjustment during the~~ three months ended ~~September 30~~March 31, ~~2010~~2011 ~~was~~compared ato ~~loss of~~ $925,~~600~~000 ~~compared~~of tonet aother ~~gain~~income ~~$144,000~~ for the three months ended ~~September~~March 3031, ~~2009~~2010. The ~~decrease~~change was primarily due to ~~the~~$49,000 ~~reclassification~~of ~~into~~income ~~equity~~recognized ~~and~~for ~~the~~foreign ~~discontinuance~~currency oftransaction ~~mark~~gains toduring ~~market~~the ~~accounting~~three ofmonths aended ~~significant~~March ~~portion~~31, of2010 ~~the~~compared ~~Put~~to ~~Option~~a ~~during~~net ~~2010. See~~loss ~~Note~~of 7$600 –for ~~Commitments~~the ~~and~~quarter ~~Contingencies~~ended March 31, 2011.

~~Other~~Liquidity ~~income~~ and ~~expenses~~Capital ~~consist of non-operating items such as depreciation, amortization and financing fees. Other expenses decreased by $50,079 during the three months ended September 30, 2010.~~ Resources

23The Company’s primary recurring source of liquidity is the cash provided through its on-going operations and the issuance of debt and equity securities. Proceeds from additional sales of debt and equity securities over the last two years have been used for the development of new products and services, operating losses and for corporate working capital needs. For the three month period ended March 31, 2011, cash decreased by $379,995 compared to an increase of $118,370 during the same period of 2010.

Results of Operations for the Nine Months Ended September 30, 2010 as Compared to the Nine Months Ended September 30, 2009.

The following table sets forth, for the periods indicated, statements of operations information from our unaudited condensed consolidated statements of operations with changes from the same nine month period in 2009.

	Nine Months Ended September 30,
	2010			2009
NET REVENUES	$	5,528,542		$	6,415,106
OPERATING EXPENSES:
Cost of delivery		4,569,101			5,464,488
General and administrative		2,747,545			3,279,006
Stock based compensation		214,181			241,651
TOTAL OPERATING EXPENSES		7,530,827			8,985,145
OPERATING LOSS		(2,002,285	)		(2,570,039	)
OTHER EXPENSES (INCOME):
Interest		33,450			-
Amortization of discounts		596,949			-
Changes in excess value of put option
over the estimated fair value of shares		51,200			230,400
Other		68,946			375,703
TOTAL OTHER EXPENSES (INCOME)		750,545			606,103
NET LOSS		(2,752,830	)		(3,176,142	)
Net income (loss) attributable to the non-controlling
interest		(100,815	)		9,315
Loss attributable to the controlling interest		(2,652,015	)		(3,185,457	)
Deemed dividend on convertible preferred stock		(798,333	)		-
Net loss attributable to common shareholders	$	(3,450,348	)	$	(3,185,457	)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		77,362,405			64,029,794
Effect of dilutive shares		-			-
Diluted		77,362,405			64,029,794
NET INCOME/(LOSS) PER SHARE to common
shareholders:
Basic and Diluted	$	(0.04	)	$	(0.05	)

Revenue

The Company generates revenue on the tonnage of mail and parcels delivered, measured in kilograms plus service fees charged to non-U.S. based consumers for processing customs and duties and sales commissions earned from merchants. Revenue during the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009 decreased by 14% as a result of a 19% decrease in tonnage primarily during the first quarter of 2010, and a 2.9% increase in rates charged to customers implemented during 2nd quarter 2010. The tonnage decrease and reduction in U.S. sourced revenue is primarily attributable to low margin, high volume business that was phased out at the end of 2009 and does not exist in 2010. Going forward, the Company is focused on maintaining and growing higher margin business specifically, mail and parcels origination and into Latin America. Management believes that overall industry mail tonnage will continue to decrease while parcel volumes from the U.S. and Europe into Latin America will increase due to general demand increase for U.S. products. Management believes this demand will drive the growth of fees earned from customs and duties processing, delivery and merchant fees. In addition, Management believes that higher margin, e-commerce consumer business originating in Latin America, Europe and Middle East, will continue to increase as the Company continues to grow its consumer customer base through co-marketing agreements with banks and credit card issuers in those regions where the growth in cross-border shopping is greatest. Revenue growth will also be generated from U.S. merchant agreements wherein the Company assumes the management of foreign shopper transactions that the merchants prefer to outsource.

The following schedule highlights the Company’s U.S. and foreign sourced revenue including the revenues of PuntoMio and LEL, for the nine months ended September 30, 2010 and 2009:

	Nine Months Ended September 30,										Change
Region	2010		Percent of Total			2009		Percent of Total			Amount			Percent
U.S.	$	2,516,936		45.5	%	$	3,585,104		55.9	%		(1,068,168	)		-29.8	%
Foreign		3,011,606		54.5	%		2,830,002		44.1	%		181,604			6.4	%
Total	$	5,528,542				$	6,415,106					(886,564	)		-23.4	%

Operating Expenses

Cost of Delivery. Total cost of delivery decreased by 16.4% and the gross margin increased by 2% as a result of better renegotiated rates with key vendors compared to the same period in the prior year. The Company expects gross margin to improve in the next twelve months as the parcel and mail business into Latin America, Europe, and Middle East continues to grow. The cost per kilogram will vary with the price of oil and the margin between revenue and delivery costs would be adversely affected by any significant increases in oil prices.

General and Administrative. This expense decreased by $531,461 during the nine months ended September 30, 2010 primarily due to reductions in salaries and benefits of $302,536, public company costs such as audit, reporting, and investor relations costs of $137,607 and rent, telephone, and utilities of 83,401.

Other Expenses

Interest. The Company incurred and paid $3,592 of interest expense from the 18%, $100,000 Note entered into in March 2010. In addition, the Company accrued $29,858 of interest expense related to the various convertible debt agreements entered into during 1st and 2nd quarters of 2010 that did not exist in 2009. See financial statement Note 8 – Convertible Debt for full discussion on all convertible debt.

Amortization of Debt Issuance Discount. The Company incurred $596,949 of amortization expense related to debt issuance discounts resulting from the various convertible debt agreements entered into during the 1st and 2nd quarters of 2010 that did not exist in 2009. See financial statement Note 8 – Convertible Debt for full discussion on all convertible debt.

Revaluation of Put Option Liability. The Company’s expense resulting from the mark to market adjustment during the nine months ended September 30, 2010 was a loss of $51,200 compared to a loss of $230,400 for the nine months ended September 30, 2009. The decrease was primarily due to the reclassification into equity and the discontinuance of mark to market accounting of a significant portion of the Put Option during 2010. See Note 7 – Commitments and Contingencies.

Other income and expenses, which consist of non-operating items such as depreciation, amortization and financing fees decreased by $306,757 during the nine months ended September 30, 2010 compared to the same period in 2009 primarily due to a charge of $149,000 to income in 2009 for a loss on a deposit. In addition, during the nine months ended September 30, 2009, the Company incurred $43,000 of acquisition related expense related to the acquisition of LEL that did not occur in 2010. In 2010, the Company was able to negotiate reduced payments to satisfy past due amounts and therefore recognized a $35,000 of gain from the write-off of trade payables. The balance of the reduction in other expenses is due to currency gains during the nine months ended September 30, 2010 compared to the same period in 2009.

Net Income (Loss) Attributable to the Non-Controlling Interest

Net income of $875 and loss of $100,815 for the three and nine months ended September 30, 2010, respectively, are the portion of earnings and losses attributable to the non-controlling shareholder in LEL, who holds a 30% common equity interest, and shareholders whom held a 24.1% preferred equity interest in PuntoMio for the period through April 30, 2010. The Company acquired a 70% interest in LEL effective March 1, 2009. The change of the Company’s equity interest in PuntoMio from 100% to 75.9% occurred effective September 30, 2009 as a result of the third quarter capital raise for PuntoMio. Effective April 30, 2010, the Company entered into an exchange agreement with the holders of the preferred equity interest in PuntoMio and at September 30, 2010, the Company possesses 100% equity interest in PuntoMio. The earnings (loss) attributable to the non-controlling interest of $(10,694) and $9,315 for the three and nine months ended September 30, 2009, respectively, contain losses attributable to the PuntoMio non-controlling interest for the entire periods.

Deemed Dividend

As further discussed in Note 11 – Common Stock and Preferred Stock, the Company recorded a non-cash deemed dividend of $798,333 in connection with the issuance of its convertible preferred stock in the exchange for preferred shares of its subsidiary, PuntoMio.

Liquidity

The Company’s primary recurring sources of liquidity is the cash provided through its on-going operations and issuance of debt and equity securities. Proceeds from issuances of debt and equity securities over the last two years have been used for the development of new products and services, fund operations and other corporate needs. For the nine month period ended September 30, 2010, cash increased by $657,926 compared to an increase of $120,070 during the same period in 2009. The primary sources of cash during the nine months ended September 30, 2010 were the issuances of convertible debt.

The following table summarizes the Company’s Consolidated Statement of Cash Flows:

	Nine Months Ended September 30,
	Three Months Ended March 31
Net cashed provided by (used) in:	2010				2009
Net cashed provided by (used in):	2011				2010
Operating activities	$	~~(1,895,675)~~$	(474,934	)	$	~~(1,722,482~~$	)(380,259	)
Investing activities		~~(46,197)~~	(38,851	)		~~52,495~~	(18,533	)
Financing activities		~~2,571,061~~	133,874			~~1,793,464~~	490,995

The cash used by operating activities during the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 of $1474,~~895,675~~934 was primarily due to the net loss incurred of $21,~~752~~107,~~830,~~251 adjusted for ~~amortization~~a ofdecrease ~~convertible~~in ~~debt~~accounts ~~discounts~~receivable ~~and financing fees~~ of $~~658~~239,~~438~~588, ~~depreciation~~non-cash ~~and~~ amortization of ~~$144,497,~~debt ~~stock~~discounts ~~based compensation~~ of $~~214~~213,~~181 and a decrease in accounts receivable of $516~~775,~~908,~~ ~~offset~~an byincrease ~~a decrease~~ in accounts payable and accrued ~~expenses~~liabilities of $~~614~~78,~~072~~503, depreciation and anamortization ~~increase~~expense inof ~~prepaid~~$50,583 ~~expense~~ and ~~other~~stock ~~assets~~compensation expense of $~~124~~30,~~019~~833.

The cash used byin ~~investing~~operating activities ~~of $46,197~~ during the ~~nine~~three months ended ~~September~~March 3031, 2010 of $380,259 was primarily due to the ~~purchase~~net loss incurred of ~~computers~~$800,522 ~~and~~adjusted ~~other~~for ~~fixed~~a ~~assets~~decrease ~~the~~in ~~payment~~accounts receivable of ~~trademark~~$269,337, ~~related~~revaluation ~~costs~~of ~~and~~ the ~~advance~~put option liability of ~~approximately~~$86,400, depreciation expense of $2847,~~000~~726 toand astock ~~stockholder~~compensation expense of $39,448.

The cash provided by financing activities during the nine months ended September 30, 2010 of $2,571,061 is from convertible debt proceeds. See financial statements Note 8 – Convertible Debt for full discussion. The proceeds from issuance of convertible debt were used to pay trade payables, settle $250,000 of other convertible debt, redeem warrants in the amount of $109,000, and fund the day-to-day operations of the business and development of new services including the PuntoMio technology.19

~~Given~~The ~~the~~cash ~~conditions~~used in ~~international~~investing ~~financial~~activities ~~markets,~~of ~~which affect many companies~~$38,851 ~~there~~during ~~can~~the bethree nomonths ~~assurances~~ended ofMarch ~~the~~31, ~~Company’s~~2011 ~~continuing~~was ~~ability~~primarily due to ~~raise additional capital through~~ the ~~issuance~~purchase of ~~debt~~property orand ~~equity~~equipment ~~securities~~totaling in$35,116 ~~order~~and tonet ~~reduce~~advances orto ~~eliminate~~stockholders ~~the~~totaling ~~continuing negative cash flow~~$2,800.

The cash used in investing activities of $18,533 during the three months ended March 31, 2010 was due to the purchase of computers and other fixed assets totaling $2,925 and net advances to stockholders totaling $15,608.

The cash provided by financing activities during the three months ended March 31, 2011 was due to the collection of net proceeds of $68,000 related to a private placement that closed in December 2010, proceeds from the exercise of warrants totaling $81,000, less the payment of amounts due for non-compete agreements totaling $15,126.

The cash provided by financing activities during the three months ended March 31, 2010 due to proceeds from the issuance of convertible debt.

Given the conditions in international financial markets, which affect many companies, there can be no assurances of the Company’s ability to raise additional capital through the issuance of debt or equity securities in order to reduce or eliminate the continuing negative cash flow. In the absence of securing additional capital, the Company will be unable to meet its cash needs during the latter half of the second quarter 2011. While there can be no assurances that these efforts will be successful, the Company feels it will be able to meet its working capital requirements with funds raised from its existing investors.

Financial Condition

~~As discussed in Note 7 – Commitments and Contingencies, in April 2010, a shareholder agreed to modify the terms of the Shareholder Put Option and Non-Compete Agreements.~~ The ~~shareholder agreed not to exercise the Put Option until the closing price for the~~ Company’s ~~common~~current ~~stock~~liabilities onexceed ~~the~~current ~~principal~~assets ~~market~~by ~~on which such common stock trades is greater than~~ $1~~.00 (subject to adjustment for stock splits~~, ~~stock dividends and similar events) for 60 consecutive days. As a result of the change in terms of the Put Option~~339,650 ~~which restricts the stockholder’s right to exercise the Put Option, the Company determined that the put rights requiring the Company’s purchase~~ and ~~redemption~~through ofMarch 231,~~560,000~~ ~~shares~~2011 ~~were no longer required to be reflected at fair value on~~ the Company’s ~~consolidated~~has ~~balance~~an ~~sheets. On~~accumulated ~~April~~deficit ~~21, 2010, the Company adjusted the liability related to the 2,560,000 shares effectively eliminating for the remaining Put Option liability, valued at $2,355,200 based on the closing trading price~~ of the Company’s common shares, with offset to additional paid in capital. The Company continues to be contingently liable for the remaining 2,560,000 shares under the Put Option. Should the Company’s trading price remain above $~~1.00 per common share for 60 consecutive days re-instituting the Put Option rights~~29, ~~then fall below $1.00 per share~~446, ~~a liability would be recognized and charged to earnings in the period~~642. This adjustment resulted in a significant change to the financial position of the Company. The adjustment reduced the Company’s total current liabilities and working capital deficit, and increased the Company’s equity capital by $2,355,200.

26As of March 31, 2011, the Company owes $2,601,400 on three convertible notes. The convertible debt is fully described in financial statement Note 9. – Convertible Debt. The Company also owes $408,114 related to a non-compete agreement and has a potential liability of $307,200 related to a Put Option. The non-compete agreement is fully described in Note 8. – Non-Compete Agreements and the put option liability is fully described in Note 7. – Put Option Payable. The non-compete and put option agreements do not provide for any significant remedies for the counterparty in the event of non-payment. The Company has not made payments related to the non-compete agreement in accordance with the agreement. In Management’s opinion the failure of the Company to make payments on the Shareholder Non-Compete will not have an adverse effect on the Company’s business, financial condition or liquidity. Neither the Put Option, nor Shareholder Non-Compete nor LEL Non-Compete bear any interest penalty on the unpaid portion.

~~As of September 30, 2010, the Company had cash on hand of $694,439 and current assets of $1,492,416, compared to $36,513 of cash on hand and current assets of $1,237,669 at December 31, 2009~~ITEM 3. At ~~September~~QUANTITATIVE ~~30,~~AND ~~2010,~~QUALITATIVE ~~the~~DISCLOSURES ~~Company’s~~ABOUT ~~current~~MARKET liabilities exceeded current assets by $803,174 compared to a working capital deficit of $2,813,593 at December 31, 2009. The improvement is primarily attributable to the Put Option adjustment and proceeds from convertible debt. As listed on the Consolidated Statement of Changes in Stockholders Equity and Comprehensive Loss, the Company’s capital structure benefited from the adjustment to the Put Option liability, the valuation of the preferred shares included PuntoMio Exchange and various discounts associated with beneficial conversion features within preferred debt. The discounts associated with beneficial conversion features will be amortized to interest expense over the life of the debt. Through September 30, 2010, the Company has an accumulated deficit of $27,125,164.RISK

AsNot ofapplicable ~~September~~to ~~30,~~smaller ~~2010,~~reporting ~~the~~companies. ~~Company owes $2~~However,~~576,400~~ onrisk ~~two~~factors ~~convertible~~relating ~~notes~~to ~~reflected on~~ the ~~consolidated~~Company ~~balance~~and ~~sheets~~Company’s atsecurities ~~$315,284~~are ~~net of discounts. The convertible debt is fully~~ described inbelow ~~financial~~under ~~statement~~“Part ~~Note~~II 8Item –1A ~~Convertible~~Risk ~~Debt~~Factors.”

~~I TEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~20

~~This~~ITEM 4. ~~Item~~CONTROLS 3AND ~~is not applicable to us as, pursuant to Item 305(e) of Regulation S-K, a smaller reporting company is not required to provide the information required by Item 305 of Regulation S-K.~~PROCEDURES

I TEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Control and Procedures

We carried out an evaluation required by ~~Exchange Act~~ Rule 13a-15(b) ~~and~~of ~~Rule~~the ~~15d-15(b)~~Securities Exchange Act of 1934 or the Exchange Act under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of ~~our~~the ~~disclosure~~design ~~controls~~ and ~~procedures~~operation ~~(as~~of ~~defined~~our indisclosure ~~Exchange~~controls ~~Act Rules 13a-15(e)~~ and ~~15d-15(e)) as of September 30, 2010~~procedures.

Disclosure controls and procedures are designed with the objective of ensuring that (i) information required to be disclosed in an issuer’s reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) information is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

The evaluation of our disclosure controls and procedures included a review of our objectives and processes and effect on the information generated for use in this ~~quarterly report on Form 10-Q~~Report. This type of evaluation is done quarterly so that the conclusions concerning the effectiveness of these ~~disclosure~~ controls ~~and procedures~~ can be reported in our periodic reports filed with the SEC. We intend to maintain these controls as processes that may be appropriately modified as circumstances warrant.

Based on their evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures are effective in timely alerting them to material information which is required to be included in our periodic reports filed with the SEC as of the filing of this Report.

AChanges ~~new~~in ~~audit~~Internal ~~chairman~~Control ~~was~~Over ~~appointed~~Financial ~~effective July 16, 2010 and the new chairman has initiated a review of the Company internal controls, business policies, and operating procedures.~~Reporting

~~(b) Internal~~There ~~Control~~were ~~Over~~no ~~Financial~~changes ~~Reporting~~in our internal control over financial reporting that occurred during the three months ended March 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~There~~Neither ~~have~~this ~~been~~Quarterly noReport ~~changes~~nor in the ~~Company’s~~Annual Report Form 10-K filed on March 16, 2011 include an attestation report of our registered public accounting firm regarding internal ~~controls~~control over financial reporting. ~~that~~Management’s ~~occurred~~report ~~during~~was ~~the~~not ~~Company’s~~subject ~~second~~to ~~quarter~~attestation ofby ~~the~~our ~~fiscal~~registered ~~year~~public ~~2010~~accounting ~~that~~firm ~~materially~~pursuant ~~affected,~~to orrules of ~~are~~the ~~reasonably~~SEC ~~likely~~that topermit ~~materially~~us ~~affect,~~to ~~the~~provide ~~Company~~only Management’s ~~internal~~report ~~controls~~in ~~over~~this ~~financial~~Quarterly ~~reporting~~Report.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

An investment in the Company’s common stock is speculative and involves a high degree of risk. You should carefully consider the ~~risk~~risks ~~factors~~ described in the Company’s ~~Annual~~annual ~~Report~~report on Form 10-K filed on March 31, ~~2010~~2011 and other information in this report before purchasing any shares of the Company’s common stock. Such factors may have a significant impact ~~the~~on ~~Company’s~~its business, operating results, liquidity and financial condition. In the absence of securing additional capital, the Company will be unable to meet its cash needs during the latter half of the second quarter 2011. As a result of the identified risk factors, actual results could differ materially from those projected in any forward-looking statements. Additional risks and uncertainties not presently known to the ~~Company~~company, or that are currently considered to be immaterial, may also impact the Company’s business, operating results, liquidity and financial ~~condition~~conditions. If any such risks occur, the Company’s business, operating results, liquidity and financial condition could be materially affected in an adverse manner. In addition, the trading price of the Company’s stock, when and if a market develops for the Company’s stock, could decline.

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

During the three months ended ~~June~~March 3031, ~~2010~~2011, the Company ~~entered~~did ~~into~~not ~~several~~sell ~~convertible~~any ~~debt~~restricted ~~agreements~~securities ~~that mature more than one year from the date of issuance, which were~~ exempt from registration ~~pursuant~~under tothe ~~Rule~~Securities ~~506~~Act of ~~Regulation~~1933 ~~D of~~ (the “Securities Act”). ~~The~~ ~~exemption~~However, ~~is based on~~ the ~~fact~~holders ~~that there were less than 35 purchasers~~ of ~~convertible~~warrants ~~notes and all purchasers were either, or reasonably believed~~ to ~~be,~~acquire ~~accredited~~common ~~investors~~stock ~~or purchasers with such knowledge and experience in financial and business matters to be capable~~ of ~~evaluating~~ the ~~merits~~Company ~~and~~for ~~risks~~an ofexercise ~~the~~price ~~convertible debt agreements. These convertible debt agreements are more fully described in Part I, Note 8~~ of ~~the Company’s consolidated financial statements and are specifically incorporated herein by reference~~$0.05 Onper ~~April 30~~shares, ~~2010,~~exercised ~~the~~warrants ~~Company~~to ~~exchanged~~acquire 1,~~428~~748,~~145~~000 ~~preferred~~ shares of acommon ~~Company’s~~stock ~~subsidiary~~ for ~~11,425,160~~proceeds ~~shares~~ of ~~the~~$87,400. These ~~Company’s~~were ~~preferred~~shares ~~stock~~were ~~and~~issued ~~fully~~in ~~eliminated~~April ~~the~~2011 ~~non-controlling interest~~ in ~~the~~reliance ~~subsidiary.~~upon ~~In conjunction with this exchange,~~ the ~~Company~~exemptions ~~redeemed~~provided ~~1,090,000~~in ~~warrants~~Section ~~outstanding~~4(2) ~~for~~and ~~$109,000~~Rule 506.

Securities Authorized For Issuance Under Equity Compensation Plan

At ~~September~~March 3031, ~~2010~~2011, under plans approved by the Board of Directors, the Company had outstanding to management, employees and directors stock grants of common stock, as shown below.

Plan Category

Number of securities to be issued upon vesting

Weighted- average price of outstanding unvested securities granted

Number of securities remaining available for future issuance under equity compensation plans

Equity compensation plans approved by security holders

~~1,650,000~~-

~~0.12~~-

~~554,754~~-

Equity compensation plans not approved by security holders

-1,650,000

-554,754

~~The~~Of the 1,650,000 shares to vest in ~~2010 and~~ 2011, ~~were~~2012 ~~granted~~and ~~under~~2013, ~~the~~none ~~2008 stock compensation plan. None of these~~ are attributable to executive officers. All ~~Effective July~~ 1,650,000 ~~2008~~shares asof ~~voted~~common onstock insubject ~~the~~to ~~2008~~vesting ~~proxy,~~requirements ~~shareholders~~have ~~authorized~~been anissued, ~~equity~~are ~~compensation~~included ~~plan~~in ~~comprised~~the ~~of 5,000,000~~ shares. ~~Since~~outstanding ~~inception~~as of ~~the~~March ~~2008 plan~~31, ~~4,445,246~~2011 ~~shares~~and ~~have~~are ~~been~~subject ~~granted. Therefore,~~to ~~554,754~~forfeiture ~~shares~~in ~~are~~the ~~available~~event ~~for~~vesting ~~issuance~~requirements atare ~~September~~not ~~30, 2010~~met.

28ITEM 3. DEFAULTS UPON SENIOR SECURITIES

ITEM 3. DEFAULTS IN SENIOR SECURITIES

None.

ITEM 4. REMOVED AND RESERVED

ITEM 5. OTHER INFORMATION

On June 28, 2010, the Company filed a Schedule 14A Proxy Statement describing various matters for vote by securities holders. Information in that Proxy Statement is hereby incorporated by reference.None

On July 30, 2010, the Company filed a Current Report on Form 8-K with regard to the submission of matters to a vote of securities holders. Information in that Current Report is hereby incorporated by reference.

ITEM 6. EXHIBITS

EXHIBIT INDEX

Exhibit Number		Description of Document
3(i)		Amended Articles of Incorporation
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1		Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350)
32.2		Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350)

2922

SIGNATURES

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

	SkyShop Logistics, Inc. formerly SkyPostal Networks, Inc.
	SkyShop Logistics, Inc.
Date: November 8, 2010	/s/ Albert P. Hernandez
Date: May 13, 2011	/s/ Albert Hernandez
	Albert P. Hernandez
	Albert Hernandez
	Chief Executive Officer and President
Date: November 8, 2010	/s/ A.J. Hernandez
Date: May 13, 2011	/s/ A J Hernandez
	A.J. Hernandez
	A J Hernandez
	Chief Financial Officer

3323

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