UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-Q

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(Mark One)

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

For The Quarterly Period Ended September 30, 2009

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Transition Period from __________ To _________

Commission file number: 000-52394

LIFE EXCHANGE, INC.

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

Nevada 20-2602277

(State or other jurisdiction (IRS Employer Identification No.)

of incorporation or organization)

2001 Biscayne Blvd., Suite 2102, Miami, FL 33137

(Address of principal executive offices) (zip code)

(866) 907-9766

(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 [ ]

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 preceeding 12 months (or for such short period that the registrant was required to submit and post such files). Yes [ ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ]

Non-accelerated filer [ ] Smaller reporting company [X]

(Do not check if a smaller reporting company)

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

Yes [ ] No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

As of November 13,2009, there were 178,465,000 shares of the Registrant's Common Stock, $0.001 par value per share, outstanding.

LIFE EXCHANGE INC

For The Quarterly Period Ending September 30, 2009

TABLE OF CONTENTS

PART 1 – FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements ………………….	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations ………………………………………….	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk ….	15
Item 4.	Controls and Procedures …………………………………………..	15
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings …………………………………………………..	16
Item 1A.	Risk Factors ………………………………………………………...	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds …...	16
Item 3.	Defaults upon Senior Securities …………………………………...	16
Item 4.T	Submission of Matters to a Vote of Security Holders ……………	16
Item 5.	Other Information ………………………………………………….	16
Item 6.	Exhibits ……………………………………………………………...	17

LIFE EXCHANGE, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
			September 30,	June 30,
			2009	2009
			Unaudited

ASSETS
CURRENT ASSETS
	Cash		$ 50,398	$ 34,193
	Accounts receivable, net		2,757	70,043
TOTAL CURRENT ASSETS			53,155	104,236

PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET			8,497	9,861
OTHER ASSETS, NET			7,167	7,333

TOTAL ASSETS			$ 68,819	$ 121,430

LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
	Trade accounts payable		$ 135,920	$ 155,433
	Accrued expenses, payroll and related taxes		20,102	8,477
	Notes payable - related party		559,839	550,076
TOTAL CURRENT LIABILITIES			715,861	713,986

TOTAL LIABILITES			715,861	713,986

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT
	Preferred stock $0.001 par value
		Authorized 20,000,000 shares. No shares issued and outstanding
	Common Stock $ 0.001 par value
		Authorized 250,000,000 shares
		178,465,000 and 178,315,000 shares issued and outstanding
		as of September 30, 2009 and June 30, 2009 respectively	178,465	178,315
	Additional paid in capital		589,732	570,382
	Accumulated deficit		(1,415,239)	(1,341,253)
TOTAL SHAREHOLDERS' DEFICIT			(647,042)	(592,556)

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT			$ 68,819	$ 121,430
The accompanying notes are an integral part of these financial statements.

LIFE EXCHANGE, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
			For the three months ended
			September 30
			2009	2008
NET REVENUES			$ 175,993	$ 103,833
COST AND EXPENSES
	Cost of net revenues
		Internet	5,027	9,288
		Other costs of net revenues	2,092	2,919
			7,119	12,207

GROSS PROFIT			168,874	91,626
	Costs of sales and marketing
		Travel and entertainment	3,735	13,729
		Telephone and communication	1,842	2,160
		Dues, subscriptions and memberships	284	12,910
		Other costs of sales and marketing	121,453	34,886
			127,314	63,685
	Cost of administration
		Legal and professional fees	35,843	59,725
		Payroll expenses	51,042	127,982
		Office expenses	10,843	16,043
		insurance	547	1,145
		Other cost of administration	7,007	15,021
			105,282	219,916
TOTAL COSTS AND EXPENSES			232,596	283,601
OPERATING LOSS			(63,722)	(191,975)
OTHER INCOME(EXPENSE)
	Refunds received and other fees		-	1,000
	Interest income		-	168
	interest expense		(10,264)	(8,791)
TOTAL OTHER INCOME(EXPENSE)			(10,264)	(7,623)

LOSS BEFORE PROVISION FOR INCOME TAXES			(73,986)	(199,598)
	Provision for income taxes		-	-
NET LOSS			$ (73,986)	$ (199,598)

Weighted Average Shares Outstanding – Basic and Diluted			178,420,495	176,715,000
Basic and Fully Diluted Net Loss Per Share			$ (0.00)	$ (0.00)
The accompanying notes are an integral part of these financial statements

LIFE EXCHANGE, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
			For the three months ended
			September 30,
			2009	2008
Cash Flows From Operating Activities
NET INCOME(LOSS)			$ (73,986)	$ (199,598)
	Adjustments to reconcile to net loss to net
	cash used in operating activities
		Depreciation	1,364	1,541
		Stock compensation	19,500	-
		Accrued interest expense	9,763	-
		Amortization of intangible assets	166	167
		Allowance for bad debts	-	1,807
Net Cash used by operations before changes in working capital			(43,193)	(196,083)
	Changes in operating assets and liabilities
		Trade accounts receivable	67,286	77,422
		Prepaid expenses	-	(25,000)
		Trade accounts payable	(19,513)	22,093
		Accrued expenses, payroll and related taxes	11,625	28,350
	Net cash provided by (used) in operating activities		16,205	(93,218)
Cash Flow From Investing Activities
		Purchases of property equipment and improvements	-	-
	Net cash used in investing activities		-	-
Cash Flow From Financing Activities
		Note proceeds- related party	-	-
	Net cash used in financing activities		-	-

NET INCREASE (DECREASE) IN CASH			16,205	(93,218)
CASH AT BEGINNING OF THE PERIOD			34,193	263,263
CASH AT THE END OF THE PERIOD			$ 50,398	$ 170,045

SUPPLEMENTARY INFORMATION
	Cash paid for interest		$ -	$ -
	Cash paid for income taxes		$ -	$ -
NON CASH INVESTING AND FINANCING ACTIVITIES

		Forgiven accrued salaries	$	$ 144,218
The accompanying notes are an integral part of these financial statements

LIFE EXCHANGE, INC. and SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Company Background

On January 19, 2005 (“date of inception”), Life-Exchange, Inc. (“the Company”) was organized under the laws of the State of Delaware as a corporation. Life-Exchange, Inc. was established for the purposes of servicing the life settlement industry by creating an on-line business-to-business exchange platform, which will facilitate the brokering of secondary life insurance.

On January 29, 2006, the Company began to trade publicly under the name Life Exchange, Inc. (OTC pink sheets: LFXG.PK).

On September 27, 2007, the Company formed LFX Insurance Services, LLC (“LFXIS”) a Nevada limited liability corporation as a wholly-owned subsidiary. LFXIS was formed to process “structured finance” transactions related to the Company’s core life settlement business. Structured finance transactions involve an extension of the services provided to customer base for customer driven transactions executed through the Company’s exchange platform. Structured finance transactions involve utilizing the skill sets of the Company’s personnel to both advise and structure an appropriate transaction that accommodates the goals of the parties involved. The Company incurred minimal expenses in establishing the subsidiary.

In July 2008, the Company formed four additional subsidiaries to facilitate its plans to further expand its service offerings. Filings with the State of Nevada began on June 3, 2008, however the organization activities were not completed until July 2008. The newly formed subsidiaries are as follows:

LFX Brokerage LLC was formed to facilitate deeper market penetration into life settlement sell-side participants. This entity was formed to hold life settlement brokerage licenses and life insurance general agency licenses allowing us to offer expanded services as they relate to our core business of operating a life settlement exchange. These licenses also give us the flexibility to interact directly with policy owners and more efficiently address their market needs.

LFX Acquisitions LLC was formed to facilitate deeper market penetration into life settlement buy-side participants. This entity was formed to hold life settlement provider licenses and provide better market access to financial institutions like banks and pension funds to our life settlement exchange. This entity will also allow us the ability to provide ongoing asset servicing to clients that require these services.

LFX Capital Markets LLC was formed in anticipation of further regulatory developments that could bring greater oversight by FINRA to the life settlement market place. This entity will be licensed as a broker/dealer and will also be designed for providing trades in more advanced structured life settlement products that will be classified as securities. Having a broker/dealer license will also allow us to accept variable life insurance contracts, a sector of the market that we have not yet tapped.

LFX Trading, LLC - was formed to hold all the technology related to our life settlement auction platform as well as the intellectual property we will be developing related to our electronic trading platform. This new entity will ultimately be responsible for receiving all transaction fees as they relate to auctions or trades through our systems.

Going Concern

It is uncertain whether the Company can consistently generate sufficient revenues to fund its operational costs. As shown in the accompanying financial statements, the Company realized a net loss from operations of $73,986 for the three months ended September 30, 2009 and a shareholders’ deficit of $647,042 which is an increase from $592,556 as of June 30, 2009. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to this matter are to continue to pursue structured finance transactions and if necessary to raise equity capital, seek debt financing and to form strategic relationships and alliances in order to continue the commercialization of its online exchange platform in an effort to generate sustainable positive cash flow. Until its online exchange platform becomes commercially viable or the newly formed structured finance transactions prove sustainable and continue to generate sufficient revenues, the Company must continue to rely upon debt and/or equity infusions in order to provide adequate liquidity to sustain its operations. However, there can be no assurance that management’s plans will be successful.

The financial statements have been prepared on a “going concern” basis and accordingly do not include any adjustments that might result from the outcome of this uncertainty.

Principles of Consolidation and Basis of Accounting

The consolidated financial statements include the accounts of Life-Exchange, Inc. and its wholly owned subsidiary LFX Insurance Services, LLC, LFX Brokerage, LLC, LFX Trading, LLC, LFX Capital Markets, LLC and LFX Acquisitions, LLC. The consolidated financial statements are prepared using the accrual basis of accounting where revenues and expenses are recognized in the period in which they were incurred. The basis of accounting conforms to accounting principles generally accepted in the United States of America. All significant intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made in the 2008 results to conform to the presentation used in the current financial statements.

Management’s Use of Estimates

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

Interim Presentation

The interim financial statements presented herein have been prepared pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The interim financial statements should be read in conjunction with the Company’s annual financial statements, notes and accounting policies included in the Company’s Annual Report. In the opinion of management, all adjustments which are necessary to provide a fair presentation of financial position as of September 30, 2009 and the related operating results and cash flows for the interim period presented have been made. All adjustments are of a normal recurring nature. The results of operations, for the period presented are not necessarily indicative of the results to be expected for the three months ended September 30, 2009.

Revenue Recognition

The Company recognizes revenue in accordance with the provisions of SAB 104, “Revenue Recognition”, which states that revenue is realized and earned when all of the following criteria are met:

(a) persuasive evidence of the arrangement exists,

(b) delivery has occurred or services have been rendered,

(d) collectability is reasonably assured.

The Company’s accounting policy for revenue recognition will have a substantial impact on its reported results and relies on certain estimates that require difficult, subjective and complex judgments on the part of management. The Company will recognize revenue when substantially all the risks and rewards of life settlement transactions have transferred (will transfer) from the seller to the buyer. A life settlement transaction is defined by the Company as “the sale of an in-force life insurance policy that is issued on the life of a person that is not considered terminally ill, for a lump sum amount; the amount is more than the cash surrender value of the policy but less than the face value of the policy”. Revenue associated with life settlement transactions will be recognized when title (ownership) passes to the customer (purchaser), either immediately or within a fixed time schedule that is reasonable and customary in the industry.

In addition to settlement transactions, the Company also recognizes revenue from distributing industry related news and information; annual license fees and setup fees. All these fees are non-refundable and earned upon delivery of the related service.

Accounts Receivable

The Company carries its accounts receivable at net realizable value. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on its history of past write-offs, collections and current credit conditions.

Intangible Assets

Intangible assets consist of patent costs covering the exchange platform concept and associated technology. The patent has a carrying value of $10,000 and is being amortized on the straight-line basis over 15 years. Accumulated amortization as of September 30, 2009 and June 30, 2009 was $2,833 and $2,667, respectively. Amortization expense for the three month ended September 30, 2009 and 2008 were $166 and $167 respectively. Amortization expense is estimated to be $668 per year in each of the years ended June 30 2010 through 2013.

Stock Based Compensation

The company accounts for all compensation related to stock, options or warrants using a fair value method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.

Recent Accounting Pronouncements

Recent accounting pronouncements that the Company has adopted or that will be required to adopt in the future are summarized below.

In September 2009, the FASB issued ASU No. 2009-12 – Fair Value Measurements and Disclosures (Topic 820) – Investments in Certain Entities That Calculate Net Asset Value per Share (or its equivalent). This ASU permits use of a practical expedient, with appropriate disclosures, when measuring the fair value of an alternative investment that does not have a readily determinable fair value. ASU No. 2009-12 is effective for interim and annual periods ending after December 15, 2009, with early application permitted. Since the Company does not currently have any such investments, it does not anticipate any impact on its financial statements upon adoption.

In August 2009, the FASB issued ASU No. 2009-05 – Fair Value Measurements and Disclosures (Topic 820) – Measuring Liabilities at Fair Value. This ASU clarifies the fair market value measurement of liabilities. In circumstances where a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: a technique that uses quoted price of the identical or a similar liability or liabilities when traded as an asset or assets, or another valuation technique that is consistent with the principles of Topic 820 such as an income or market approach. ASU No. 2009-05 was effective upon issuance and it did not result in any significant financial impact on the Company upon adoption.

On July 1, 2009, the FASB officially launched the FASB ASC 105 -- Generally Accepted Accounting Principles, which established the FASB Accounting Standards Codification (“the Codification”), as the single official source of authoritative, nongovernmental, U.S. GAAP, in addition to guidance issued by the Securities and Exchange Com mission. The Codification is designed to simplify U.S. GAAP into a single, topically ordered structure. All guidance contained in the Codification carries an equal level of authority. The Codification is effective for interim and annual periods ending after September 15, 2009. Accordingly, the Company refers to the Codification in respect of the appropriate accounting standards throughout this document as “FASB ASC”. Implementation of the Codification did not have any impact on the Company’s consolidated financial statements.

On June 30, 2009, the FASB issued Accounting Standard Update (ASU) No. 2009-01 (Topic 105) – Generally Accepted Accounting Principles – amendments based on – Statement of Financial Accounting Standards No. 168 – The FASB Accounting and Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. Beginning with this Statement the FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standard Updates. This ASU includes FASB Statement No. 168 in its entirety. While ASU’s will not be considered authoritative in their own right, they will serve to update the Codification, provide the bases for conclusions and changes in the Codification, and provide background information about the guidance. The Codification modifies the GAAP hierarchy to include only two levels of GAAP: authoritative and nonauthoritative. ASU No. 2009-01 is effective for financial statements issued for the interim and annual periods ending after September 15, 2009, and the Company does not expect any significant financial impact upon adoption.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)”. SFAS No. 167 addresses the effect on FASB Interpretation 46(R), “Consolidation of Variable Interest Entities” of the elimination of the qualifying special-purpose entity concept of SFAS No. 166, “Accounting for Transfers of Financial Assets”. SFAS No. 167 also amends the accounting and disclosure requirements of FASB Interpretation 46(R) to enhance the timeliness and usefulness of information about an enterprise’s involvement in a variable interest entity. This Statement shall be effective as of the Company’s first interim reporting period that begins after November 15, 2009. Earlier application is prohibited. The Company does not anticipate any significant financial impact from adoption of SFAS No. 167. As of September 30, 2009, SFAS No. 167 has not been added to the Codification.

NOTE 2 – PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET

			September 30,		June 30,
Description	Life		2009		2008
Office Equipment	4 yrs	$	20,731	$	20,731
Furniture and Fixtures	7 yrs		2,085		2,085
Leasehold Improvements	1 yr		5,775		5,775
Vehicle	3 yrs		2,123		2,123

Total Property, Equipment and Improvements			30,741		30,741
Less Accumulated Depreciation			(22,244)		(20,880)

Total Property, Equipment and Improvements, Net		$	8,497	$	9,861

Depreciation expenses for the three months ended September 30, 2009 and 2008 was $1,364 and $1,541 respectively.

NOTE 3 – OTHER ASSETS

		September 30, 2009		June 30, 2009
OTHER ASSETS
Patent costs	$	10,000	$	10,000
Less accumulated amortization		(2,833)		(2,667)
Total Other Assets	$	7,167	$	7,333

Patent costs consist of accumulated legal costs associated with a patent application covering the exchange platform concept and associated technology. On March 29, 2006 David Dorr (“Dorr”), the chief executive officer of Life Exchange and primary developer of the online exchange platform concept, entered into an Assignment by Inventor agreement whereby the ownership of the patent application and associated intellectual property rights were transferred to the Company. Prior to the transfer, the Company had operated under a license agreement with Dorr to pursue the development and utilization of the online exchange platform. Patent costs amortization expense is $667 annually, for each fiscal year ended June 30, through 2020.

NOTE 4 – NOTE PAYABLES – RELATED PARTY

On July 5, 2006, the Company entered into a note agreement with Vantage Group Ltd. to provide $300,000 of additional financing (“Note 1”). The terms of Note 1, as modified by subsequent amendments, provide for 7% compounding interest payable at maturity. Note 1 also provides Vantage with conversion rights based on the Company attaining certain performance criteria as follows. The Holder of this Note 1 is entitled, at its option, to convert the principal amount of Note 1 or any portion thereof, together with accrued but unpaid interest, into shares of Common Stock of the Company (“Conversion Shares”) based on the Company attaining certain performance criteria measured during December, 2006. The Company did not meet the performance criteria and accordingly, no shares were converted.

On April 2, 2007, the Company entered into a note agreement with Vantage Group Ltd. to provide $150,000 of additional financing (“Note 2”). The terms of Note 2, as modified by subsequent amendments, provide for 7% compounding interest payable at maturity. Note 2 is unsecured and matures on April 15, 201. Note 2 also provides Vantage with conversion rights based on the Company attaining certain performance criteria as follows. Note 2 may be converted into shares of the Company’s common stock at (i) $0.10 or (ii) fifty percent (50%) of the three lowest closing prices of the Company’s Common Stock on the Pink Sheets (or such other principal market or exchange where the Common Stock is listed or traded at the time of conversion) immediately preceding the date of conversion.

On August 2, 2007, the Company was advanced an additional $5,000 under the same terms as Note 2.

		September 30, 2009		June 30, 2009
Note Payable Related Party
Beginning Balance	$	550,076	$	510,121
Additions
Accured Interest Exp		9,763		39,955
Ending Balance	$	559,839	$	550,076

NOTE 5 – LEASES and COMMITMENTS

The Company currently leases its primary office facilities under a one-year, non-cancelable real estate operating lease with a minimum annual rental commitment of $33,000. The lease expired on June 1, 2009 and the company is currently on a month to month tenancy.

NOTE 6 – EARNINGS PER SHARE

Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share are not calculated as the calculation would have an anti-dilutive effect to the reported net loss/

NOTE 7 - EQUITY

The Company has authorized 250,000,000 shares of common stock with a par value of $0.001 per share. As of September 30, 2009, the Company has 178,465,000 shares of common stock issued and outstanding

The Company has authorized 20,000,000 shares of preferred stock with a par value of $0.001 per share. As of September 30, 2009, the Company has no shares of preferred stock issued and outstanding

On July 28, 2009 the Company issued 150,000 shares of common stock for amounts owed a consultant. The shares issued had a market value of $19,500.

NOTE 8 – EMPLOYEE STOCK OPTION PLAN

On January 9, 2009, the Company’s board of directors approved the Company’s 2009 Employee Stock Option Plan (the “2009 Stock Plan”). Under the 2009 Stock Plan, incentive stock options, nonstatutory stock options, stock appreciation rights (SARs), restricted stock, restricted stock units, performance units and performance shares as the Administrator may determine, may be granted to officers, employees and service providers of the Company including our subsidiaries.

No stock option awards have yet been made under the 2009 Stock Plan and accordingly no expenses or compensation has been charged to operations.

NOTE 9 – SUBSEQUENT EVENTS

The Company adopted FASB ASC 855, Subsequent Events (“ASC855”) effective June 15, 2009. ASC 855 defines subsequent events as either recognized (events that existed at the balance sheet date and therefore should be reflected in the financial statements) or non-recognized (events that did not exist at the balance sheet date and are not reflected in the financial statements; material non-recognized subsequent events should be disclosed). ASC 855 requires the Company to disclose the date through which it has evaluated subsequent events and whether the date represents the date the financial statements were issued or were available to be issued. The Company has evaluated subsequent events through September 24, 2009, the date the financial statements were issued.

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

The following presentation of management's discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements, the accompanying notes thereto and other financial information appearing elsewhere in this report. This section and other parts of this report contain forward-looking statements that involve risks and uncertainties. Please refer to the discussion of Forward-looking statements included at the start of this annual report. Our actual results may differ significantly from the results discussed in the forward-looking statements.

OVERVIEW

On January 19, 2005, Life-Exchange, Inc. (the “Company” or “we” or “our” or “us”) was incorporated under the laws of the State of Delaware for the purposes of servicing the life settlement industry by creating an on-line business-to-business exchange platform. This platform was designed to facilitate the brokering of life insurance policies in the secondary market. On January 29, 2006, our common stock began trading publicly on the NASDAQ Pink Sheets under the symbol “LFXG.PK”. On November 26, 2007, our common stock began trading on the Over The Counter Bulletin Board (OTCBB) under the symbol “LFXG”

We are an Internet-based, business-to-business exchange for the life settlement industry. By providing a secure, efficient and neutral electronic auction and trading platform specifically designed for life settlements, we address many of the inefficiencies and difficulties currently facing the industry.

Both viatical and life settlement transactions involve the sale of an existing life insurance policy to a third party. By selling the policy, the policyholder receives an immediate cash payment to use as he or she wishes. The purchaser takes an ownership interest in the policy at a discount to its face value and receives the death benefit under the policy when the insured dies. The insurance industry generally uses the term “viatical settlement” to refer to a transaction involving the terminally or chronically ill insured and the term “life settlement” to refer to a transaction involving an insured who is not terminally or chronically ill, but generally over the age of sixty five (65).

After a policy has been registered and submitted to auction, the policy enters a preview period, which allows all potential buyers the opportunity to underwrite the policy. After this preview period expires, the policy enters a live online auction period whereby providers are able to bid against each other for the right to purchase the life insurance policy in a real-time.

Our operating revenues are derived from fees for facilitating viatical and life settlement transactions associated with successful policy auctions and trades. Transactions fees are based on a percentage of the face amount of the life insurance policy. This fee arrangement is non-commission based and therefore it allows us to remain neutral in a life settlement transaction, as we are not incentivized by either a high or a low sales price. Furthermore, because of our role in the life settlement transaction and as validated by the neutrality of our fee structure, we do not represent or negotiate on behalf of the policy owners and accordingly do not have a fiduciary responsibility to the policy owner as a life settlement broker would.

In addition to the transaction fees described above, we also generate news distribution fees. The secondary life insurance market is a niche marketplace with a unique blend of participants. And while this marketplace is experiencing tremendous growth, it is still difficult to target the most active firms and individuals. To address this need, we maintain a large database of influential readers focused on life settlements. For news distribution fees ranging from $500 to $2000 per press release, we will distribute press releases to our subscriber base.

Our automated exchange and auction system has modernized the life settlement industry by introducing buyers to sellers (and vice versa) in a virtual, online marketplace. Our features and functionality are specifically designed to improve regulatory compliance, increase customer value, reduce transaction costs, create new revenue models, and add efficiency to an inefficient market.

We operate two websites: www.life-exchange.com and www.life-exchange.net.

Life settlements have become a more popular investment for many institutional lenders, including life insurance companies. Throughout the quarter, ending September 30, 2009 there has been a stabilization of the life settlement markets. The uncertainty that surrounded the government takeover of AIG on September 17, 2008 sent ripple effects throughout the life settlement industry because carrier solvency was and still is of tremendous concern to institutional buyers. Additionally on the same date, our industry saw a significant revision in the underwriting tables used by a major life expectancy provider that had an adverse impact on the pricing of life settlements. These two events together practically froze the entire life settlement market. Since the beginning of 2009, the market has adjusted to the new underwriting guidelines and carrier solvency risk has been priced into transactions. We anticipate the rest of 2009 will be much more stable and the life settlement market will return back to its previous volume and continuing to grow.

Results of Operations

Three Months Ended September 30, 2009 Compared to Three Months Ended September 30, 2008

Revenues for the three months ended September 30, 2009 was $175,993 compared to the three months ended September 30, 2008 of $103,833 an increase of $72,160 (69.4%) The increase is due to increase activity in the market since the downturn in the market after the uncertainty of AIG during 2008. The Company currently operates three service lines, its original exchange transaction platform service line, specialty auctions and a new service line of brokerage services, which commenced operations during the first quarter of fiscal 2009.

Costs of Revenue for the three months ended September 30, 2009 and 2008 was $7,119 and $12,207, respectively The decrease of $5,088 (41.6%) was attributed to decreased expenditures relating to the Internet Hosting Costs.

Sales and Marketing Costs for the three months ended September 30, 2009 and 2008 was $127,314 and $63,685, respectively for an increase in expenditures of $63,629 (99.9%) The increase is primarily related to increased sales and marketing costs consist of travel, communications, subscriptions and memberships, of which $85,567 was increased commissions and other marketing costs associated with increased revenues compared to the same period last year.

Administration Costs for the three months ended September 30, 2009 and 2008 was $105,282 and $219,916 respectively. The decrease of $114,634 (52.1%) was primarily attributed to a decrease in payroll expense of $76,940 and a decrease in legal and professional fees of $23,882. Administration costs also consist of office expenses and other general and administrative costs.

Other Income (Expense) for the three months ended September 30, 2009 and 2008 was an expense of $10,264 and $7,623 respectively, an increase of $2,641 (34.6%). The increased expense is primarily interest expense due to a higher carrying value of Note Payables compared to the same period last year.

Net Income (Loss) for the three months ended September 30, 2009 and 2008 was a loss of $73,986 and $199,598 respectively. The decrease of $125,612 (62.9%) was attributed to increase revenues over the same period last year and a decrease in expense.

Liquidity and Capital Resources and Plan of Operations

Overview The Company’s net working capital at September 30, 2009 was a deficit of $662,706 compared $609,750 at June 30, 2009. The Company reported $50,3983 in cash at September 30, 2009. A major contributing factor for the working capital deficit being significantly higher than prior year is a reduction in Accounts Receivable compared to the prior year end.

It is still uncertain whether the Company can consistently generate sufficient revenues to fund its operational costs. As shown in the accompanying financial statements, the Company realized net loss from operations of $73,986 for the three months ended September 30, 2009 and a shareholders’ deficit of $647,042 compared to a shareholders’ deficit of $592,565 as of June 30, 2009. These factors continue to raise substantial doubt about the Company’s ability to continue as a going concern. Our financial statements were prepared on the assumption that we will continue as a going concern and do not include any adjustments that might result should we be unable to continue as a going concern

Throughout the quarter ending September 30, 2009 there has seen a stabilization of the life settlement markets. The uncertainty that surrounded the government takeover of AIG on September 17, 2008 sent ripple effects throughout the life settlement industry because carrier solvency was and still is of tremendous concern to institutional buyers. Additionally on the same date, our industry saw a significant revision in the underwriting tables used by a major life expectancy provider that had an adverse impact on the pricing of life settlements. These two events together practically froze the entire life settlement market. Since the beginning of calendar year 2009, the market has adjusted to the new underwriting guidelines and carrier solvency risk has been priced into transactions. We anticipate the rest of the calendar year 2009 will be much more stable and the life settlement market will return back to its previous volume and continuing to grow.

Management’s plans in regard to this matter are to continue to raise equity capital and seek strategic relationships and alliances in order to further enhance the commercialization of its exchange platform in an effort to generate positive cash flow. Until its technologies become fully commercially viable and marketing efforts generate sufficient transaction volume, the Company may need to seek additional equity infusions in order to provide adequate liquidity to sustain its operations.

Cash Flows

Cash Flows From Operating Activities Net cash used by operating activities was $16,205 for the three months ended September 30, 2009. Net cash used from net loss, adjusted for non-cash reconciling items, was $43,193, which was partially offset by net cash used for working capital requirements of $59,398.

Cash Flows From Investing Activities Net cash used by investing activities was $0 for three months ended September 30, 2009 compared to $0 for the three months ended September 30, 2008.

Cash Flows From Financing Activities Net cash provided by financing activities was $0 for the three months ended September 30, 2009 compared to $0 for the three months ended September 30, 2008.

Financing The Company has obtained its financing from Vantage Group Ltd., a significant shareholder, through two note agreements, one for $300,000 dated July 7, 2006 and one for $150,000 dated April 2, 2007 and a $5,000 advance made under the same terms as the second note. Vantage Group Ltd. has provided $455,000 of financing in aggregate. The terms of the notes provide for 7% interest payable at maturity. The notes are unsecured and mature on April 15, 2010.

The $300,000 note provides that the Holder, at its option, may convert the principal amount of this Note or any portion thereof, together with accrued but unpaid interest, into shares of Common Stock of the Company (“Conversion Shares”) based on the Company attaining certain performance criteria as follows measured during December 2006. Company did not meet the performance criteria and accordingly, no shares were converted.

The $150,000 note also provides the Holder with conversion rights based on the Company attaining certain performance criteria.

Off Balance Sheet Transactions

As of September 30, 2009, we did not have any relationships with unconsolidated entities or financial partners, such as entities often referred to as structured finance or special purpose entities, that had been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we were engaged in such relationships.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management, including our Chief Executive Officer (our Principal Executive Officer and Principal Financial Officer), has evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of the period ended September 30, 2009, the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective as of September 30, 2009 to ensure the timely collection, evaluation and disclosure of information relating to our company that would potentially be subject to disclosure under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Control Over Financial Reporting

During the most recent quarter ended September 30, 2009, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) ) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any pending legal proceedings nor is any of our property the subject of any pending legal proceedings.

Item 1A. Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.

Item 2. Unregistered Sales Of Equity Securities And Use Of Proceeds.

none

Item 3. Defaults Upon Senior Securities

none

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

none

Item 5. Other Information

On September 23, 2009, the Securities and Exchange Commission temporarily suspended the trading of the securities of Life Exchange, Inc., together with sixteen other unrelated entities, which trading suspension terminates on October 6, 2009. Life Exchange was unaware of any issues that would result in a trading suspension prior to September 23, 2009. The Commission suspended the trading as a result of alleged issues with the control authority of the predecessor management of the public company. That is, the Commission has made allegations against the management of the public entity prior to Life Exchange completing a reverse merger in December, 2005. Moreover, the Commission has not made any allegations of wrongdoing as to Life Exchange, its management or operations, following the completion of such reverse merger.

Life Exchange has begun an aggressive and thorough investigation into the matter. Life Exchange is unaware at this time of any impact that the trading suspension will have on its financial statements or future operations

EXHIBIT

NUMBER DESCRIPTION

--------------- ----------------------

31.1 Certification of Principal Executive Officer pursuant to Sarbanes-Oxley Section 302

31.2 Certification of Principal Financial Officer pursuant to Sarbanes-Oxley Section 302

32.1 Certification of Chief Executive Officer pursuant to Sarbanes-Oxley Section 906

32.2 Certification of Chief Financial Officer pursuant to Sarbanes-Oxley Section 906

SIGNATURES

-------------------------

By: David Dorr

Chief Executive Officer, President, Director

Date: __________

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

/s/ David Dorr

By: David Dorr

Chief Executive Officer, President, Director, Chief Financial Officer

Date: ____________

/s/ Brian Dorr

By: Brian Dorr

Secretary, Director, Treasurer

Date: ____________

Life Exchange Inc 10-Q