file10q.htm
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 June 30, 2008
 
       
  OR    
                 
  (    ) 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 : 0 - 26559
                 
GLOBAL PEOPLELINE TELECOM, INC. 
(Exact name of registrant as specified in its charter )
 
                 
   
Florida
       
330-751560
 
------------------------------------------------
   
-----------------------------------------------
 
( State or other jurisdiction of incorporation or organization )
                  (I. R. S. Empl. Ident. No. )
 
 
         
                 
407 - 1270 Robson Street, Vancouver, B.C. V6E 3Z6 Canada 
(Address of principal executive offices ) ( Zip Code )
 
 
1 - 604 - 632 - 9638

( Registrant's telephone number, including area code )
                 
Indicate by check whether the rgistrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of
the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant
was required to file such reports ) and (2) has been subject to such filing requirements for the past 90
days.  YES (   )    NO ( X )
           
                 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-
accelerated filer, or a small reporting company. See definitions of "large accelerated filer," "accelerated filer,"
and "small reporting company" in Rule 12B-2 of the Exchange Act.   (Check one) :
 
                 
 
Large accelerated filer (    )
 
Accelerated filer  ( X  )
   
                 
 
Non-accelerated filer (    )
   
Smaller reporting company   (    )
 
                 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 13b-2 of
the Securities Exchange Act )     Yes   ( X )         No  (    )
     
                 
As of November 30, 2008, 3,145,343 shares of the registrant's common stock were outstanding.




 
GLOBAL PEOPLELINE TELECOM, INC.
 
 
( FORMERLY : CHINA MOBILITY SOLUTIONS, INC. )
 
 
FORM 10-Q
 
     
 
TABLE OF CONTENTS
 
     
PART 1 - FINANCIAL INFORMATION
 
     
Item 1.
Unaudited Financial Statements
 
     
 
Balance Sheets as at June 30, 2008 and December 31, 2007
1
     
 
Statements of Operations for 6 months ended June 30, 2008 and 2007
2
     
 
Statements of Stockholder's Equity
3
     
 
Statements of Cash Flows for 6 months ended June 30, 2008 and 2007
4
     
 
Notes to the Financial Statements
          5 - 8
     
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operation
8 - 11
     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
11
     
Item 4.
Controls and Procedures
11
     
PART 2 - OTHER INFORMATION
 
     
Item 1.
Legal Proceedings
11 - 12
     
Item 1A.
Risk Factors
12
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
12
     
Item 3.
Defaults Upon Senior Securites
13
     
Item 4.
Submission of Matters to a Vote of Security Holders
13
     
Item 5.
Other Information
13
     
Item 6.
Exhibits, Signatures and Certification
14
     
CERTIFICATION
15 - 18
 
 

 
GLOBAL PEOPLELINE TELECOM, INC. AND SUBSIDIARIES
       
(FORMERLY : CHINA MOBILITY SOLUTIONS, INC. AND SUBSIDIARIES)
       
CONSOLIDATED BALANCE SHEETS
       
As At 30 June, 2008 and December 31, 2007
       
         
(Stated in U.S. dollars)
       
(unaudited)
       
   
2008
 
2007
         
ASSETS
       
         
Current Assets
       
  Cash and cash equivalents
$
               2,738
 $
               2,840
  Amount due from related parties
 
             24,543
 
             25,300
  Net assets of subsidiaries in liquidation
 
                      1
 
                      1
         
Total Current Assets
 
             27,282
 
             28,141
         
Property and Equipment, net of accumulated depreciation
 
               8,115
 
               9,632
of $62,070 and $62,421, respectively  (Note 3)
       
         
Other Assets
       
  Investment
 
                      1
 
                      1
  Goodwill
 
           127,124
 
           127,124
  Other assets
 
                  844
 
                  886
         
Total Assets
$
           163,366
 $
           165,784
         
LIABILITIES AND STOCKHOLDERS' EQUITY
       
         
Current Liabilities
       
  Accounts payable and other accrued liabilities
$
           593,169
 $
           474,561
  Amount due to related parties
 
           293,199
 
           292,668
  Convertible debentures
 
        1,650,000
 
        1,650,000
         
Total Current Liabilities
 
        2,536,368
 
        2,417,229
         
Stockholders' Equity (Deficiency)
       
  Common Stock : $0.001 par value
       
    authorized : 500,000,000 common shares
       
    issued and outstanding : 314,534,292 shares (2007: 314,534,292 shares)
 
           314,534
 
           314,534
  Additional paid in capital
 
      20,555,929
 
      20,555,929
  Accumulated deficit
 
    (23,243,465)
 
    (23,121,908)
         
Total stockholders' equity (deficiency)
 
      (2,373,002)
 
      (2,251,445)
         
Total Liabilities and Stockholders' Equity (Deficiency)
$
           163,366
 $
           165,784
         
         
(The accompanying notes are an integral part of these consolidated financial statements)
       
 
1 


GLOBAL PEOPLELINE TELECOM, INC. AND SUBSIDIARIES
       
(FORMERLY : CHINA MOBILITY SOLUTIONS, INC. AND SUBSIDIARIES)
       
CONSOLIDATED STATEMENTS OF OPERATIONS
       
For the six months ended June 30, 2008 and 2007
       
         
(Stated in U.S. dollars)
       
(unaudited)
 
            Six months ended
   
   
June 30,
 
June 30,
   
2008
 
2007
Revenue
       
   Tuition fee
 
                                            -
 
           66,077
   
                                            -
 
           66,077
 Cost of revenue
       
   Tuition fee
 
                                            -
 
                695
   
                                            -
 
                695
         
 Gross profit
 
                                            -
    -
           65,382
         
 Expenses
       
   Advertising and promotion
 
                                            -
 
                536
   Consulting and professional
 
                                            -
 
           38,120
   Depreciation
 
                                       1,236
 
             1,640
   Foreign exchange loss (gain)
 
                                       1,532
 
            (1,952)
   General and administrative
 
                                            93
 
           43,259
   Interest expense and penalty
 
                                   118,699
 
         118,335
   Investment w/o
 
                                            -
 
           50,000
   Liquidated damages
 
                                            -
 
         100,157
   Rent
 
                                            -
 
           22,179
   Salaries, wages and sub-contract
 
                                            -
 
           71,918
   
                                   121,560
 
         444,192
         
 Operating Income (Loss)
 
                                 (121,560)
 
        (378,810)
         
 Other Income (Expenses)
       
    Other income
 
                                            -
 
             4,354
    Interest income
 
                                              3
 
                516
 Other income (expense)- net
 
                                              3
 
             4,870
         
 Net Loss
 
                                 (121,557)
 
        (373,940)
         
 Income (loss) from continuing operations
 
                                 (121,557)
 
        (373,940)
         
 Earnings (loss) per share attributable to common
       
 stockholders:
 
(0.00)
 
(0.01)
         
 Weighted average number of common shares used to compute net income (loss) per share
       
   Basic and diluted
 
                            314,534,292
 
    50,363,325
         
 (The accompanying notes are an integral part of these consolidated financial statements)
       
         

2


GLOBAL PEOPLELINE TELECOM, INC. AND SUBSIDIARIES
           
( FORMERLY : CHINA MOBILITY SOLUTIONS, INC. AND SUBSIDIARIES )
           
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
           
for the period ended June 30, 2008
           
             
             
             
   
Stock
Additional
     
 
Common
Amount At
Paid In
Accumulated
   
Stated in U.S. dollars
Shares
Par Value
Capital
Deficit
Total
 
             
Balance, December 31, 2005
     20,011,792
 $     20,012
 $  18,442,826
 $  (14,005,770)
 $   4,457,068
 
             
Fair value of 200,000 warrants issued for services
           
  rendered
   
           50,000
 
 $        50,000
 
             
Net loss for the year ended
           
  December 31, 2006
     
       (7,870,967)
 $  (7,870,967)
 
             
Balance, December 31, 2006
     20,011,792
 $     20,012
 $  18,492,826
 $  (21,876,737)
 $  (3,363,899)
 
             
Conversion of convertible debentures to
           
  common shares @$0.05 per share
     33,500,000
        33,500
       1,641,500
 
 $   1,675,000
 
             
Conversion of penalty & liquidated damage in relation
           
  to convertible debentures to shares @$0.05 per share
       6,022,500
         6,023
         295,102
 
 $      301,125
 
             
Shares issued for directors' services
   253,000,000
 $   253,000
 $       126,500
 
 $      379,500
 
             
Shares issued for sevices
       2,000,000
 $       2,000
   
 $         2,000
 
             
Net loss for the year ended
           
December 31, 2007
     
 $    (1,245,171)
 $  (1,245,171)
 
             
Balance, December 31, 2007
   314,534,292
      314,535
     20,555,928
     (23,121,908)
     (2,251,445)
 
             
Net loss for the period
     
         (121,557)
 $     (121,557)
 
             
Balance, June 30, 2008
   314,534,292
      314,535
     20,555,928
     (23,243,465)
     (2,373,002)
 
             
             
             
(The accompanying notes are an integral part of these consolidated financial statements)
           

3


GLOBAL PEOPLELINE TELECOM, INC. AND SUBSIDIARIES
   
(FORMERLY : CHINA MOBILITY SOLUTIONS, INC. AND SUBSIDIARIES)
   
CONSOLIDATED STATEMENTS OF CASH FLOWS
   
For the six months ended June 30, 2008 and 2007
   
(Stated in U.S. dollars)
   
(unaudited)
   
     
 
2008
2007
     
Cash flows from operating activities
   
  Net loss
 $   (121,557)
 $   (373,940)
  Adjustments to reconcile net loss to net cash
   
    Provided by (Used in) operating activities
   
    Depreciation and amortization
           1,236
           1,640
    Translation adjustments
                   -
           9,354
    Changes in assets and liabilities
   
       (Increase)Decrease in accounts receivable
                   -
             (372)
       (Increase)Decrease in prepaid expenses and other current assets
                   -
           4,615
       Increase (Decrease) in amount due from (to) related parties
           1,288
        (60,490)
       Increase (Decrease) in accounts payable
       118,608
      (172,903)
       Increase (Decrease) in deferred revenue
                   -
        (12,849)
  Net cash provided by (used in) operating activities
             (425)
      (604,945)
     
Cash flows from investing activities
   
   Investments written off
                   -
         50,000
   Purchases of property and equipment
              323
          (1,142)
 
              323
         48,858
     
     
Cash flows from financing activities
                   -
       301,125
     
Increase (decrease) in cash and cash equivalents
             (102)
      (254,962)
     
Cash and cash equivalents - beginning of period
           2,840
       288,149
     
Cash and cash equivalents - end of period
 $        2,738
 $      33,187
     
(The accompanying notes are an integral part of these consolidated financial statements)
   

4


 
GLOBAL PEOPLELINE TELECOM, INC. AND SUBSIDIARIES
       
 
(FORMERLY : CHINA MOBILITY SOLUTIONS, INC. AND SUBSIDIARIES)
       
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       
 
June 30, 2008
       
 
(Stated in U.S. dollars)
       
 
(unaudited)
       
           
           
1
BASIS OF PRESENTATION
       
           
 
The accompanying unaudited financial statements have been prepared in conformity with accounting
       
 
principles generally accepted in the United States of America. However, certain information and footnote
       
 
disclosures normally included in financial statements prepared in accordance with generally accepted
       
 
accounting principles have been omitted or condensed pursuant to the rules and regulations of the
       
 
Securities and Exchange Commission ("SEC"). In the opinion of management, all adjustments of a
       
 
normal recurring nature necessary for a fair presentation have been included. The results for interim
       
 
periods are not necessarily indicative of results for the entire year. These condensed consolidated
       
 
financial statements and accompanying notes should be read in conjunction with the Company's annual
       
 
consolidated financial statements and the notes thereto for the fiscal year ended December 31, 2007
       
 
included in its Annual Report on Form 10-K.
       
           
 
In August 2008, the Company changed its name to Global Peopleline Telecom, Inc.
       
           
 
The unaudited condensed consolidated financial statements include Global Peopleline Telecom, Inc. and
       
 
its subsidiaries. All inter-company transactions and accounts have been eliminated.
       
           
 
Certain items have been reclassified to conform to the current period presentation. There is no effect on
       
 
total results of operations or stockholder's equity.
       
           
2
DISCONTINUED OPERATTIONS
       
           
 
On August 15, 2006, a total of $3,350,000 of convertible debentures become due and payable. In October
       
 
2006, the Company was notified by the PRC State Administration of Foreign Exchange ("SAFE") that
       
 
its application to convert certain cash held by the Company's two subsidiaries organized under the laws
       
 
of the People's Republic of China (the "PRC Subsidiaries") into U.S. dollars and repay the debentures was
       
 
denied. Later, in the three months ended December 31, 2006, based upon advice of PRC counsel that
       
 
the Beijing Rule of Liquidation was the sole means to repay the outstanding debentures, the PRC
       
 
subsidiaries submitted applications to a PRC regulatory authority to liquidate pursuant to the Beijing Rule
       
 
of Liquidation. In connection therewith, the accounting responsibilities for the operations of the PRC
       
 
subsidiaries were transferred from the Company to a PRC accounting firm approved by the PRC regulatory
       
 
authority. The Company has been unable to obtain reports from this accounting firm and has not received
       
 
a definitive opinion regarding the ultimate outcome of these liquidations; accordingly, the Company reduced
       
 
the carrying value of the net assets of the PRC Subsidiaries to $1 at December 31, 2006 and reflected
       
 
operations of the PRC Subsidiaries to September 30, 2006 as discontinued operations. In the event that
       
 
the Company receives more than $1 from the liquidations, it will recognize a gain in such future periods
       
 
that the proceeds are realized.
       

5


3
PROPERTY AND EQUIPMENT
     
         
 
Property and equipment, net consists of :
     
     
June 30
December 31
     
2008
2007
 
Equipment
$
                 40,878
               41,913
 
Library
 
                 14,661
               15,114
 
Furniture
 
                 14,646
               15,026
 
Total
 
                 70,185
               72,053
 
Less : Accumulated depreciation
 
                (62,070)
              (62,421)
 
Net book value
 
                  8,115
                 9,632
         

4
CONVERTIBLE DEBENTURES
   
 
On August 15, 2005, the Company completed an offering of 134 units ("Units") for $3,350,000. Each Unit
 
was sold for $25,000, consisting of $25,000 principal amount of senior convertible debentures (the
 
"Debentures"), and one new Series "A" Warrant and one new Seris "B" Warrant. The Debentures were
 
initially convertible at $0.35 per share for 71,429 shares of common stock of the Company; maturing on
 
August 15, 2006 and accruing interest at a rate of not less than 6% per annum equal to the sum of 2%
 
per annum plus the one -month London Inter-Bank Offer Rate ("LIBOR"). The Debentures are subject to
 
redemption at 125% of the principal amount plus accrued interest commencing six months after
 
August 7, 2006.
   
 
Each Unit also included: (i) new Series "A" Warrants exercisable at $0.44 per share to purchase 71,429
 
shares of Common Stock of the Company until February 15, 2009. The new Series "A" and new Series
 
"B" Warrants are subject to redemption by the Company at $0.001 per Warrant at any time commencing
 
six months and twelve months, respectively, from August 7, 2006, provided the average closing bid price
 
of the common stock of the Company equals or exceeds 175% of the respective exercise prices for 20
 
consecutive trading days.
   
 
On January 18, 2006, the Company received a letter (the "Default Notice") from the attorney for
 
Southridge Partners, LP, (the "Lender"), the holder of $500,000 principal amount of the Company's
 
Senior Convertible Debentures (the "Debenture") stating that the Company was in default of certain
 
transaction agreements (the "Transaction Agreements") issued in connection with the Debenture by
 
virtue of the Company's issuance of registered shares of stock to employees and consultants under a
 
Form S-8 registration statement and the filing of the Form S-8 prior to the date of effectiveness, August
 
7, 2006, of the Company's SB-2 Registration Statement required under the Registration Rights
 
Agreement (one of the Transaction Agreements).

6


   
 
The Company denied that it was in default of the Transaction Agreements. However, in order to avoid
 
costly litigation, the parties entered into a waiver/settlement agreement on May 4, 2006 (the "Waiver/
 
Settlement Agreement").
   
 
In accordance with the terms of the Waiver/Settlement Agreement, the initial conversion price of the
 
Debenture was reduced from $0.35 per share to $0.30 per share, the new Series "A" Warrant exercise
 
price was reduced from $0.44 to $0.38 per share and the new Series "B" Warrant exercise price was
 
reduced from $0.52 to $0.45 per share. In addition, the number of shares of the Company's common
 
stock exercisable upon conversion of each $25,000 principal amount of Debenture and upon exercise
 
of the new Series "A" and new Series "B" Warrants included in each Unit was increased from 71,429
 
shares to 83,333 shares for each of the Debenture, Class A Warrants and Class B Warrants, or an
 
aggregate of 250,000 shares per unit.
   
 
The Lender waived the S-8 Default set forth in the Default Notice and the Company agreed not to file
 
any additional S-8 Registration Statements prior to 45 days after August 7, 2006.
   
 
On August 15, 2006, the Company did not repay the $3,350,000 of Debentures then due. The Company
 
has paid all interest on the Debenture accrued through November 15, 2006. As discussed in Note 2,
 
the Company had applied to the regulatory authority in China to approve converting its subsidiaries'
 
fund into U.S. dollars and repay the Debentures and was denied. The Company was advised that the
 
Rule of Liquidation is the sole means of assuring repayment of the Debentures and subsequently
 
submitted applications for such liquidations to a PRC regulatory authority. At May 18, 2007, these
 
liquidations have not been completed.
   
 
The holder of an aggregate of $300,000 of the Debentures has agreed to extend the due date to
 
December 31, 2007 with an interest rate of 10% per annum starting from August 15, 2006 and the
 
exercise price of the new Series "A" Warrants and new Series "B" Warrants being reduced to $0.15
 
and $0.20 per share respectively. Other terms remain the same.
   
 
The Company received letters (the "Default Letters") from the attorneys for two holders of an aggregate
 
$875,000 principal amount of Debentures stating that the Company was in default under the Debentures
 
as a result of its failure to pay principal plus interest thereon. On September 18, 2006, one of the
 
debenture holders commenced a lawsuit against the Company in the Supreme Court of the State of
 
New York, New York County (No. 603266). The action is a motion for summary judgement in lieu of
 
complaint based on the Company's Debentures in the amount of $500,000 in favor of Plaintiff which was
 
due on August 15, 2006, with interest at 12% per annum. On January 19, 2007, this motion was granted
 
and a judgement in the amount of $545,440 was awarded the Plaintiff.

7


 
The Company entered into conversion/settlement agreements (the "Conversion Agreements") dated
 
February 2, 2007, which provided that the conversion price (the "Conversion Price") of the Debentures,
 
as set forth in paragraph 7(d) of the Debentures shall be reduced to $0.05 per share of Common Stock
 
("Underlying Common Stock") issuable upon conversion (the "Conversion"), provided that at least fifty
 
(50%) percent in principal amount (or $1,675,000) of the initial $3,350,000 of Debentures (the "Minimum
 
Conversion") agree to the Conversion. The closing of the Conversion (the "Closing") occurred on
 
February 12, 2007. Those Debenture holders who agree to the Conversion shall also agree to convert
 
all accrued but unpaid penalties and interest owed by the Company into Common Stock at $0.05 per
 
share. Pursuant to the terms of the May 4, 2006 Waiver/Settlement Agreement entered into between
 
the Company and Debenture holders the Conversion Price of the Debentures was reduced to its
 
current price of $0.30 per share. A total of 39,522,500 shares of common stock were issued to 29
 
Debenture holders under Conversion Agreements in satisfaction of $1,675,000 total principal amount
 
of Debentures and $301,125 unpaid accrued interest and late registration penalty fees.
   
 
The Conversion Agreements provided for the Debenture holders who signed such agreements to:
 
(i) terminate any and all pending litigation with the Company to which they are a party, without prejudice
 
to reinstatement if and only if the Minimum Conversion is not completed, and/or the Company defaults
 
in its obligations under the Conversion Agreements; (ii) in any vote of shareholders not vote against any
 
nominee to the Board of Directors of the Company and any proposal designated by current management
 
of the Company and its officers, directors, employees, representatives and affiliates following the Closing.
   
 
The Company agreed to make whatever filings are necessary with the SEC, whether by way of
 
supplement or post-effective amendment to this registration statement concerning the Underlying Common
 
Stock, to permit issuance of common stock at the reduced Conversion Price of $0.05 per share.
 
Notwithstanding the foregoing, only the original 214,287 shares of Common Stock issuable underlying
 
each $25,000 Unit, including 71,429 Shares of Common Stock underlying each Debenture, are registered
 
on this Registration Statement. Accordingly, at the reduced Conversion Price of $0.05 per share an
 
aggregate of 500,000 shares of Common Stock would be issuable upon conversion of the Debentures and
 
an additional 166,666 shares of Common Stock issuable upon exercise of warrants included in the Units.
 
All additional shares of Common Stock not included in this Registration Statement, as well as those
 
issuable in exchange for any interest and penalties due under the Debentures at the time of the Closing,
 
have been included in a second registration statement filed by the Company on February 12, 2007.
   
 
The Company shall also provide the Debenture holders with "most favored nation" status and reduce the
 
Conversion Price to the per share price of any equity offering made by the Company within 18 months of
 
the Closing Date. The Company shall issue such number of additional shares to the Debenture holders
 
to reduce their Conversion Price to that of such subsequent offering.
   
 
At June 30, 2008, accounts payable and accrued liabilities include interest payable of $463,892 and
 
unpaid late registration penalty fees payable of $129,277.
   
8


5
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
   
 
Basic earnings (loss) per share are computed by dividing net earnings (loss) available to common
 
stockholders by the weighted-average number of common shares outstanding during the period.
 
Diluted earnings per share is computed by dividing net earnings available to common stockholders
 
by the weighted-average number of common shares outstanding during the period increased to
 
include the number of additional common shares that would have been outstanding if potentially
 
dilutive common shares had been issued.
   
 
The following table sets forth the computations of shares and net loss used in the calculation of basic
 
and diluted loss per share for the six months ended June 30, 2008 and 2007.

       
   
2008
2007
       
Net loss for the period
 
       (121,557)
          (373,940)
       
Weighted-average number of shares outstanding
 
 314,534,292
       50,363,325
       
Effective of dilutive securities :
     
Dilutive options - $0.30
 
                -
                    -
Dilutive warrants new Series "A" - $0.15
 
                -
                    -
Dilutive warrants new Series "A" - $0.38
 
                -
                    -
Dilutive warrants new Series "B" - $0.20
 
                -
                    -
Dilutive warrants new Series "B" - $0.45
 
                -
                    -
Dilutive warrants Series "C" - $0.45
 
                -
                    -
Dilutive potential common shares
 
                -
                    -
       
Adjusted weighted-average shares and assumed conversions
 
 314,534,292
       50,363,325
       
Basic income (loss) per share attributable to common shareholders
$
(0.00)
(0.01)
       
Diluted income (loss) per share attributable to common shareholders
$
(0.00)
(0.01)
       
The effect of outstanding options and warrants was not included as the effect would be anti-dilutive.


6
SHARE PURCHASE WARRANTS
     
         
 
During the six months ended June 30, 2008, no share purchase warrants were issued, exercised or
 
cancelled.
     
         
 
As of June 30, 2007, 122 new Series "A" warrants were outstanding which entitle the holders to purchase
 
83,333 common shares of the Company at $0.38 unitl February 15, 2008. 122 new Series "B" warrants
 
were outstanding which entitle the holders to purchase 83,333 common shares of the Company at $0.45
 
until February 15, 2009. 12 amended new Series "A" warrants were outstanding which entitle the holders
 
to purchase 83,333 common shares of the Company at $0.15 each until February 15, 2008. 12 amended
 
new Series "B" warrants were outstanding which entitle the holders to purchase 83,333 common shares
 
of the Company at $0.20 until February 15, 2009. 200,000 Series "C" warrants were outstanding which
 
entitle the holders to purchase 200,000 common shares of the Company at $0.45 each expiring on
 
May 5, 2010.
     

9


 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
   
 
Discontinued Quicknet Operations
   
 
The liquidation of Quicknet (the "Liquidation") began in January 2007, at which time the Beijing
 
Bureau of Commerce approved the Liquidation of the Company's operating subsidiaries in China,
 
and its operations are reflected as discontinued operations. Management does not believe that the
 
operations of Quicknet will be transferred to a new entity controlled by the Company following the
 
completion of the Liquidation. Quicknet was engaged in the development of software for mobile/
 
wireless communication and for Short Message Services ("SMS").
   
 
In connection with the Liquidation, the accounting responsibilities for the operations of the PRC
 
subsidiaries were transferred from the Company to a PRC accounting firm approved by the PRC
 
regulatory authority. For the quarter ended June 30, 2007, the Company has been unable to
 
obtain reports from this accounting firm and has not received a definitive opinion regarding the
 
ultimate outcome of these liquidations; accordingly, the Company has reduced the carrying value
 
of the net assets of the PRC subsidiaries to $1 at December 31, 2006 and continues to maintain
 
that carrying value at June 30, 2008. Likewise, the Company has reflected operations ot the PRC
 
subsidiaries for the quarter ended June 30, 2008 as discontinued operations.
   
 
Critical Accounting Policies
   
 
Our discussion and analysis is based upon our consolidated financial statements, which have been
 
prepared in accordance with accounting principles generally accepted in the United States. The
 
preparation of these financial statements requires us to make estimates and judgements that
 
affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of
 
contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those
 
related to revenue recognition, accounts receivable and allowance for doubtful accounts, intangible
 
and long-lived assets, and income taxes. We base our estimates on historical experience and on
 
various other assumptions that are believed to be reaseonable under the circumstances, the results
 
of which form the basis for making judgements about the carrying values of assets and liabilities
 
that are readily apparent from other sources. Actual results may differ from these estimates under
 
different assumptions or conditions.
   
 
An accounting policy is deemed to be critical if it requires an accounting estimate to be made based
 
on assumptions about matters that are highly uncertain at the time the estimate is made, and if
 
different estimates that reasonably could have been used or changes in the accounting estimate
 
that are reasonably likely to occur could materially change the financial statements. We believe
 
the following critical accounting policies reflect our more significant estimates and assumptions in
 
the preparation of our consolidated financial statements:
   
 
Contingencies - We may be subject to certain asserted and unasserted claims encountered in the
 
normal course of business. It is our belief that the resolution of these matters will not have a
 
material adverse effect on our financial position or results of operations, however, we cannot provide
 
assurance that damages that result in a material adverse effect on our financial position or results of
 
operations will not be imposed in these matters. We account for contingent liabilities when it is
 
probable that future expenditures will be made and such expenditures can be reasonably estimated.

10


 
Critical Accounting Policies (continued)
   
 
Income Taxes - We record a valuation allowance to reduce our deferred tax assets to the amount that
 
is more likely than not to be realized. We have considered future market growth, forecasted earnings,
 
future taxabel income, and prudent and feasible tax planning strategies in determining the need for a
 
valuation allowance. We currently have recorded a full valuation allowance against net deferred tax
 
assets as we currently believe it is more likely than not that the deferred tax assets will not be realized.
   
 
Valuation Of Long-Lived Assets - We review property, plant and equipment and other assets for
 
impairment whenever events or changes in circumstances indicate the carrying value of an asset may
 
not be recoverable. Our asset impairment review assess the fair value of the assets based on the future
 
cash flows the assets are expected to generate. An impairment loss is recognized when estimate
 
undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected
 
from disposition of the asset (if any) are less than the carrying value of the asset. When an impairment
 
is identified, the carrying amount of the asset is reduced to its estimated fair value. Deterioration of our
 
business in a geographic region could lead to impairment adjustments when identified. The accounting
 
effect of an impairment loss would be a charge to income, thereby reducing our net profit.
   
 
Forward-looking Statements
   
 
Statements contained in this report include "forward-looking statements" within the meaning of such
 
term in Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E
 
of the Exchange Act. Forward-looking statements involve known and unknown risks, uncertainties and
 
other factors which could cause actual financial or operating results, performances or achievements
 
expressed or implied by the forward-looking statements not to occur or be realized. Forward-looking
 
statements generally are based on our best estimates of future results, performances or achievements,
 
based upon current conditions and the most recent results of the companies involved and their
 
respective industries. Forward-looking statements may be identified by the use of forward-looking
 
terminology such as "may," "will," "could," "project," "expect," "believe," "estimate," "anticipate,"
 
"intend," "continue," "potential," "opportunity" or similar terms, variations of those terms or the negative
 
of those terms or other variations of those terms or comparable words or expressions.
   
 
Potential risks and uncertainties include, among other things, such factors as :
   
 
*  the Liquidation of our PRC Subsidiaries as set forth below under the "Liquidation of Quicknet
 
   Subsidiaries to Repay Debentures in Default,"
   
 
*  our business strategies and future plans of operations,
   
 
*  general economic conditions in the United States and elsewhere, as well as the economic conditions
 
   affecting the industries in which we operate,
   
 
*  the market acceptance and amount of sales of our products and services,
   
 
*  our historical losses,
   
 
*  the competitive enviroment within the industries in which we compete,
   
 
*  our ability to raise additional capital, currently needed for expansion, the other factors and information
 
   discussed in other sections of this report and in the documents incorporated by reference in this report.

11


 
Forward-looking Statements (continued)
   
 
Persons reading this report should carefully consider such risks, uncertainties and other information,
 
disclosures and discussions which contain cautionary statements identifying important factors that
 
could cause actual results to differ materially from those provided in the forward-looking statements.
 
We undertake no obligation to publicly update or revise any forward-looking statements, whether as a
 
result of new information, future events or otherwise.
   
 
ITEM 3.  QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 
The Company does not hold any derivaties or investments that are subject to market risk. The carrying
 
values of any financial instruments, approximate fair value as of those dates because of the relatively
 
short-term maturity of these instruments which eliminates any potential market risk associated with
 
such instruments.
   
 
ITEM 4.  CONTROLS AND PROCEDURES
   
 
The Company maintains disclosure controls and procedures that are designed to ensure that information
 
required to be disclosed in the Company's Exchange Act reports is recorded, processed and
 
summarized and is reported within the time periods specified in the SEC's rules and forms, and that
 
such information is accumulated and communicated to the Company's management, including its Chief
 
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
 
disclosure. In designing and evaluating the disclosure control procedures, no matter how well designed
 
and operated, can provide onlyreasonable assurance of achieving the desired control objectives, and
 
management necessarily was required to apply its judgement in evaluating the cost-benefit relationship
 
relationship of possible controls and procedures.
   
 
As of the date of this report, the Company's management, including the President ( principal executive
 
officer ) and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and
 
operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a - 14.
 
Based upon the evaluation, the Company's President ( principal executive officer ) and Chief Financial
 
Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting
 
them to material information required to be included in the Company's periodic SEC filings. There have
 
been no significant changes in the Company's disclosure controls and procedures or in other factors,
 
which could significantly affect disclosure controls subsequent to the date the Companys management
 
carried out its evaluation. During the period covered by this quarterly report on Form 10Q, there was no
 
change in our internal control over financial reporting ( as defined in Rule 13a - 15(f) under the Exchange
 
Act ) that materially affected, or is reasonably likely materially affect, our internal control over financial
 
reporting.
   
 
PART 2.  OTHER INFORMATION
   
 
ITEM 1.  LEGAL PROCEEDINGS
   
 
In the ordinary course of business, the Company may be involved in legal proceedings from time to
 
time. During the period covered by this report, the legal proceedings that commenced or had
 
material developments are as follows :
   
 
On September 18, 2006, Southridge Partners, L.P. ("Plaintiff") commenced a lawsuit against the
 
Company in the Supreme Court of the State of New York, New York County (No. 603266) for an
 
alleged default on repayment of its Senior Convertible Debentures due August 15, 2006 (the
 
"Debentures"). The motion for summary judgement in lieu of complaint was granted based on the
 
Company's Debentures in the amonunt of $500,000 in favor of the Plaintiff which was due on August
 
15, 2006, with interest at 12% per annum. During the quarter of March 31, 2007, the Plaintiff took
 
steps to execute its default judgement.

12


 
ITEM 1.  LEGAL PROCEEDINGS (continued)
   
 
On February 22, 2007, Microsoft Corporation commenced a lawsuit against the Company and others
 
in the King County Superior Court of the State of Washington (No. 06-2-18596-0 SEA). Microsoft
 
alleges claims for trepass to chattels, conversion, and violations of the Washington Commercial
 
Electronic Mail Act, Washington Consumer Protection Act, the Controlling the Assault of Non-
 
Solicited Pornography and Marketing Act ('CAN-SPAM"), and the Lanham Act. The Company has
 
retained counsel to evaluate and defend the suit.
   
 
No director, officer or affiliate of Global Peopleline Telecom, Inc., and no owner of record or beneficial
 
owner of more than 5% of the securities of the Company, or any associate of any such director,
 
officer or security holder is a party adverse to the Company or has a material interest adverse to it
 
in reference to pending litigation.
   
 
ITEM 1A.  RISK FACTORS
   
 
The Company at present does not engage in any business activities thus will not be subjected to any
 
risk.
   
 
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   
 
The Company entered into the Conversion/Settlement Agreements dated February 2, 2007 and
 
February 12, 2007, respectively. The Company offered to lower the conversion price of the Debentures
 
to $.05 per share conditioned upon at least 50% in principal amount of Debentures agreeing to
 
convert all of their Debentures in accordance with the terms and conditions of a Conversion/Settlement
 
Agreement dated February 2, 2007. This transaction was completed in February 2007 and
 
approximately 58% of the Debentures have been converted at $.05 per share or an aggregate of
 
33,500,000 shares of Common Stock were issued upon conversion during the quarter plus an
 
additional 6,022,500 shares in satisfaction of unpaid accrued interest and late registration fees. The
 
Debentureholders who executed the Agreement released the Company from all claims.
   
 
The Conversion/Settlement Agreements provided for an increase in the number of shares of Common
 
Stock issuable upon conversion of the Debentures and exercise of the Warrants as a result of the
 
reduction in the initial conversion price. Thus, there are now more shares issuable than were
 
contemplated during the original offer. The Company believed that the offer (there was no issuance)
 
of such additional shares was exempt from registration under the Securities Act and under applicable
 
state securities laws pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation D
 
promulgated thereunder. The offer was made some 18 months after the original sale to the same
 
investors. The Company did not offer securities to any new investors, nor was it receiving proceeds
 
from the issuance of additional shares. The offer was not made voluntarily, but solely in reponse to
 
treatened litigation.
   
 
The Company has not received any proceeds as a result of the registration statement that went effective
 
on August 7, 2006, registering a protion of the additional shares issuable upon conversion of Debentures
 
and exercise of the Class A and Class B Warrants, under the Settlement Agreement, as the case may
 
be, as well as placement agent warrants and warrants received as compensation for services provided.
   
 
Since the Company entered into the May 2006 Settlement Agreement and the February 2007
 
Conversion/Settlement Agreement, it has not been threatened by any of its investors or shareholders
 
with respect to rescission rights. Furthermore, notwithstanding the fact that shares of common stock
 
have been removed from the initial Registration Statement which was declared effective by the SEC on
 
August 7, 2006, the SEC is not foreclosed from taking any enforcement action with respect to the
 
filing and the Company may not assert the declaration of effecativeness as a defense in any proceeding
 
initiated by the SEC.
   
 
No dividends on outstanding common stock have ever been paid. The Company does presently have
 
any plans regarding payment of dividends in the foreseeable future.

13


 
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
   
 
The Company disclosed in a Current Report on Form 8-K for August 31, 2006, that it had not repaid
 
$3,350,000 of Senior Convertible Debentures due August 15, 2006 (the "Debentures"). The Company
 
stated that it had sufficient cash on hand to repay the Debentures and any accrued interest. The
 
Company also disclosed in a Current Report on Form 8-K for August 31, 2006, that it had applied to the
 
banking authorities (State Administration of Foreign Exchange ("SAFE")) in China to convert its
 
subsidiaries' fund into U.S. dollars and repay the Debentures. The Company's operating subsidiary in
 
China has advised the Company that its application to SAFE to withdraw the funds from China had
 
been denied. On October 25, 2006, the Company retained the law firm of Wyatt & Wang in Beijing to
 
assist it comply with the Beijing Rule of Liquidation of companies with foreign investment (the "Rule of
 
Liquidation"). The Company has been advised by PRC Counsel that the Rule of Liquidation is the sole
 
means of assuring repayment of the Debentures. The Company began the process to submit an
 
application for such liquidation to the Bureau of Ministry of Commerce ("BOMOC"). On January 16, 2007,
 
the Beijing Bureau of Commerce approved the Liquidation.
   
 
The Company had paid all interest on the Debentures accrued through August 15, 2006. Interest accrued
 
on the Debentures through maturity, at the rate of not less than 6% per annum equal to the sum of 2%
 
per annum plus the one month LIBOR rate. From the maturity date of August 15, 2006, interest on
 
outstanding principal amount of Debentures and unpaid accrued interest accrues at the rate of 12% per
 
annum.
   
 
The Company received letters (the "Default Letters") from the attorneys for two holders of an aggregate
 
$875,000 principal amount of Debentures stating that the Company was in default under the Debentures
 
as a result of its failure to pay principal plus interest thereon. On September 18, 2006, one of the
 
debenture holders commenced a lawsuit against the Company in the Supreme Court of the State of
 
New York, New York County (No. 603266). The action is a motion for summary judgement in lieu of
 
camplaint based on the Company's Debentures in the amount of $500,000 in favor of Plaintiff which was
 
due on August 15, 2006, with interest at 12% per annum. On January 19, 2007, this motion was granted
 
and a judgement in the amount of $545,440 was awarded the Plaintiff. This debenture holder, Southridge
 
Partners, LP, took steps to execute on its judgement in excess of $545,440 plus interest during the
 
first quarter of 2007. The second debenture holder, Iroquois Management Fund Ltd., commenced a
 
lawsuit on November 25, 2006 against the Company in the Supreme Court of the State of New York,
 
New York, New York County (No. 6604397/06). The action is a motion for summary judgement in lieu of
 
complaint based on the Company's Debentures in the amount of $375,000 in favor of Plaintiff which was
 
due on August 15, 2006, with interest at 6% per annum from June 30, 2005 to August 15, 2006, and
 
with interest at 12% per annum from August 15, 2006 to the date of entry of judgement, plus costs and
 
disbursements.
   
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   
 
None
   
 
ITEM 5.  OTHER INFORMATION
   
 
None

14


 
ITEM 6.  EXHIBITS
   
       
 
Exhibit Number
Exhibit Description
 
       
 
31.01
       
 
31.02
       
 
32.01
       
 
32.02
       
 
*  These certificates accompany Global Peopleline Telecom, Inc Quarterly Report on Form 10-Q; they are not
 
   deemed "filed" with the Securities and Exchange Commission and are not to be incorporated by reference
 
   in any filing of Global Peopleline Telecom, Inc. under the Securities Act of 1933, or the Securities Exchange
 
   Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation
 
   langauge in any filings.
 


  Global Peopleline Telecom, Inc.  
       
January 22, 2009
By:
/s/ Angela Du  
    Angela Du  
    Director and Chief Executive Officer  
       
    /s/ Ernest Cheung  
    Ernest Cheung  
    Chief Financial Officer