Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
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(Mark one)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 2010
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ______________ to _____________
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Commission File Number: 002-41703
The X-Change Corporation
(Exact Name of Registrant as Specified in Its Charter)
Nevada 90-0156146
(State of Incorporation) (I.R.S. Employer ID Number)
12655 North Central Expressway, Suite 1000, Dallas, Texas 75243
(Address of Principal Executive Offices)
(972) 386-7350
(Registrant's Telephone Number)
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 [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 (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). YES [ ] NO [X]
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 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act): YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: November 22, 2010: 5,513,000
Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]
THE X-CHANGE CORPORATION
Form 10-Q for the Quarter ended September 30, 2010
Table of Contents
Page
----
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements 3
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 14
Item 3 - Quantitative and Qualitative Disclosures About Market Risk 17
Item 4 - Controls and Procedures 17
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 17
Item 2 - Sales of Equity Securities and Use of Proceeds 17
Item 3 - Defaults Upon Senior Securities 18
Item 4 - (Removed and Reserved) 18
Item 5 - Other Information 18
Item 6 - Exhibits 18
SIGNATURES 18
2
PART I
ITEM 1 - FINANCIAL STATEMENTS
THE X-CHANGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 2010 and December 31, 2009
(Unaudited) (Audited)
September 30, December 31,
2010 2009
------------ ------------
ASSETS
CURRENT ASSETS
Cash on hand and in bank $ 39 $ 1,080
------------ ------------
TOTAL CURRENT ASSETS 39 1,080
------------ ------------
OTHER ASSETS
Prepaid debt financing fees, net of accumulated
amortization of approximately $29,333 and $21,332 -- 8,001
------------ ------------
TOTAL OTHER ASSETS -- 8,001
------------ ------------
TOTAL ASSETS $ 39 $ 9,081
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Convertible debenture payable, net of unamortized discount $ 286,225 $ 249,532
Notes payable to shareholder 784,791 723,926
Accounts payable - trade 32,641 1,245
Accrued interest payable 164,872 97,134
------------ ------------
TOTAL CURRENT LIABILITIES 1,268,529 1,071,837
------------ ------------
TOTAL LIABILITIES 1,268,529 1,071,837
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock - $0.001 par value
3,750,000 shares authorized
none issued and outstanding -- --
Common stock - $0.001 par value
37,500,000 shares authorized
5,513,000 and 5,317,878 shares issued and outstanding 5,513 5,318
Additional paid-in capital 17,920,140 17,830,579
Accumulated deficit (19,194,143) (18,898,653)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (1,268,490) (1,062,756)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 39 $ 9,081
============ ============
The financial information presented herein has been prepared by
management without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
3
THE X-CHANGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Nine and Three months ended September 30, 2010 and 2009
(UNAUDITED)
Nine months Nine months Three months Three months
ended ended ended ended
September 30, September 30, September 30, September 30,
2010 2009 2010 2009
---------- ---------- ---------- ----------
REVENUES - net of returns and allowances $ -- $ -- $ -- $ --
COST OF SALES -- -- -- --
---------- ---------- ---------- ----------
GROSS PROFIT -- -- -- --
---------- ---------- ---------- ----------
OPERATING EXPENSES
General and administrative expenses 93,302 14,988 28,762 13,712
---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES 93,302 14,988 28,762 13,712
---------- ---------- ---------- ----------
LOSS FROM OPERATIONS (93,302) (14,988) (28,762) (13,712)
OTHER INCOME (EXPENSE)
Interest expense, including
amortization of financing
fees and note discounts (202,188) (695,098) (38,621) (58,331)
Gain on extinguishment of debt -- 464,975 -- --
---------- ---------- ---------- ----------
TOTAL OTHER INCOME (EXPENSE) (202,188) (230,123) (38,621) (58,331)
---------- ---------- ---------- ----------
LOSS FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES (295,490) (245,111) (67,383) (72,043)
PROVISION FOR INCOME TAXES -- -- -- --
---------- ---------- ---------- ----------
LOSS FROM CONTINUING OPERATIONS (295,490) (245,111) (67,383) (72,043)
DISCONTINUED OPERATIONS, NET OF INCOME TAXES
Loss on disposition of discontinued operations,
net of provision for income taxes of
$-0- and $-0-, respectively -- (33,500) -- --
---------- ---------- ---------- ----------
LOSS FROM DISCONTINUED OPERATIONS -- (33,500) -- --
---------- ---------- ---------- ----------
OTHER COMPREHENSIVE INCOME -- -- -- --
---------- ---------- ---------- ----------
COMPREHENSIVE LOSS $ (295,490) $ (278,611) $ (67,383) $ (72,043)
========== ========== ========== ==========
Net loss per weighted-average share
of common stock outstanding, calculated
on Net Loss - basic and fully diluted
From continuing operations $ (0.05) $ (0.04) $ (0.01) $ (0.01)
From discontinued operations (0.00) (0.01) (0.00) (0.00)
---------- ---------- ---------- ----------
Total $ (0.05) $ (0.05) $ (0.01) $ (0.01)
========== ========== ========== ==========
Weighted-average number of shares
of common stock outstanding 5,452,963 5,312,644 5,513,000 5,317,878
========== ========== ========== ==========
The financial information presented herein has been prepared by
management without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
4
THE X-CHANGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 2010 and 2009
(UNAUDITED)
Nine months Nine months
ended ended
September 30, September 30,
2010 2009
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $(295,490) $(278,611)
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation and amortization 76,694 501,444
Gain on extinguishment of debt -- (464,975)
Interest expense capitalized as principal -- 118,400
Interest expense paid with common stock 57,756 568
Increase (Decrease) in
Accounts payable and other 31,396 1,245
Accrued interest payable 67,738 74,683
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (61,906) (47,246)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES -- --
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received on related party notes payable 60,865 28,743
Cash received on notes payable, net of fees paid -- --
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES 60,865 28,743
--------- ---------
DECREASE IN CASH (1,041) (18,503)
Cash at beginning of period 1,080 18,503
--------- ---------
CASH AT END OF PERIOD $ 39 $ --
========= =========
SUPPLEMENTAL DISCLOSURE OF INTEREST AND INCOME TAXES PAID
Interest paid for the period $ -- $ --
========= =========
Income taxes paid for the period $ -- $ --
========= =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Conversion of Debenture Payable into Common Stock $ 32,000 $ 1,550
========= =========
The financial information presented herein has been prepared by
management without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
5
THE X-CHANGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010 and December 31, 2009
NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS
The X-Change Corporation (Company) was incorporated under the laws of the State
of Delaware on February 5, 1969 and changed its corporate domicile to the State
of Nevada on October 4, 2000. The Company was originally organized to seek
merger and/or acquisition candidates and engaged in various transactions since
our inception. As of December 31, 2008, the Company had disposed of all of the
assets and operating activities.
On July 20, 2005, the Company exchanged 10,000,000 shares of common stock for
100% of the issued and outstanding stock of AirGATE Technologies, Inc.
(AirGATE). This transaction made AirGATE a wholly-owned subsidiary of the
Company.
In December 2008, the lender of a note payable by AirGATE began foreclosure
proceedings against its collateral, which included 100% of the Company's
holdings in AirGATE and the right to convert the note into restricted,
unregistered shares of the Company's common stock. The foreclosure proceeding
was consummated on January 16, 2009 and Company's holdings in AirGATE were
forfeited. Due to the timing of this transaction, the foreclosure and related
disposition of AirGATE was reflected in the Company's financial statements as of
December 31, 2008.
On March 11, 2010, the Company announced a change in our strategic direction and
business plan to focus on offering multimedia and e-commerce to the diverse and
growing Hispanic markets within the United States and in other countries. The
Company anticipates having two distinct divisions and operating each within a
wholly-owned operating subsidiary corporation consisting of a Latino-targeted
media delivery service and a bilingual home shopping network. On March 25, 2010,
the Company formed the wholly-owned subsidiaries - Caballo Blanco
Communications, Ltd. and Commerce Services, Inc. - as Colorado corporations to
conduct these operations. As of September 30, 2010, no activities have taken
place in either subsidiary. On September 8, 2010, the Company abandoned this
business plan.
On August 16, 2010, the Company announced the pending acquisition of IPTV World,
a company based in Los Angeles with hosting facilities in the One Wilshire
carrier hotel. This acquisition was subject to the execution of a definitive
agreement and the completion of appropriate due diligence by all parties
On September 8, 2010, the Company announced the pending acquisition of Genesis
Key, Inc., based in Washington, DC. This acquisition was subject to the
execution of a definitive agreement and the completion of appropriate due
diligence by all parties.
On September 20, 2010, the Company announced that the Company has signed an
agreement to acquire Cybertel USA, Inc., based in Los Angeles, California, for
$800,000 cash payable to the shareholders of Cybertel USA in exchange for 100%
of the issued and outstanding stock of Cybertel USA, Inc. The closing of this
transaction remains subject to the completion of appropriate due diligence by
all parties.
On October 7, 2010, the Company announced that it was unable to conclude
definitive agreements in all previously announced acquisitions of IPTV World,
Genesis Key, Inc. and Cybertel USA and will not be acquiring these companies.
On October 7, 2010, the Company announced that it has signed an agreement in
principle to acquire 21-Century Silicon, Inc., based in Richardson, Texas
(21-Century Silicon). The terms of the acquisition is anticipated to involve a
change in control of the Company and the appointment of new directors. As of the
date of this report, this transaction remains subject to the completion of all
appropriate due diligence and has not closed. On November 8, 2010, 21-Century
executed a note payable to the Company in the amount of approximately $28,500,
bearing interest at 10.0% for working capital advances made by the Company on
21-Century's behalf.
(Remainder of this page left blank intentionally)
6
THE X-CHANGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010 and December 31, 2009
NOTE B - PREPARATION OF FINANCIAL STATEMENTS
The Company follows the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America and has
adopted a year-end of December 31.
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 and disclosure 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.
Management further acknowledges that it is solely responsible for adopting sound
accounting practices, establishing and maintaining a system of internal
accounting control and preventing and detecting fraud. The Company's system of
internal accounting control is designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are recorded; and 3)
transactions are recorded in the proper period in a timely manner to produce
financial statements which present fairly the financial condition, results of
operations and cash flows of the Company for the respective periods being
presented.
During interim periods, the Company follows the accounting policies set forth in
its annual audited financial statements filed with the U. S. Securities and
Exchange Commission on its Annual Report on Form 10-K containing the Company's
financial statements for the year ended December 31, 2009. The information
presented within these interim financial statements may not include all
disclosures required by generally accepted accounting principles and the users
of financial information provided for interim periods should refer to the annual
financial information and footnotes when reviewing the interim financial results
presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the U. S. Securities and Exchange Commission's
instructions for Form 10-Q are unaudited and contain all material adjustments,
consisting only of normal recurring adjustments necessary to present fairly the
financial condition, results of operations and cash flows of the Company for the
respective interim periods presented. The current period results of operations
are not necessarily indicative of results which ultimately will be reported for
the full fiscal year ending December 31, 2010.
NOTE C - GOING CONCERN UNCERTAINTY
As of September 30, 2010, the Company has no operations, limited cash on hand,
no operating assets and has significant debt related to the financing of the
operations of its former subsidiary, AirGATE. Because of these factors, the
Company's auditors have issued an audit opinion on the Company's financial
statements which includes a statement describing our going concern status. This
means, in the auditor's opinion, substantial doubt about our ability to continue
as a going concern exists at the date of their opinion.
The Company's current business plan intends to locate and combine with an
existing, privately-held company which is profitable or, in management's view,
has growth potential, irrespective of the industry in which it is engaged. Such
combination may be structured as a merger, consolidation, exchange of the
Company's common stock for stock or assets or any other form which will result
in the combined enterprise's becoming a publicly-held corporation.
The Company's continued existence is dependent upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis. Further, the Company faces considerable risk in its business plan
and a potential shortfall of funding due to any inability to raise capital in
the equity securities market. If no additional operating capital is received
during the next twelve months, the Company will be forced to rely on existing
cash in the bank and additional funds loaned by management and/or significant
stockholders.
The Company may become dependent upon additional external sources of financing;
including being dependent upon its management and/or significant stockholders to
provide sufficient working capital in excess of the Company's initial
capitalization to preserve the integrity of the corporate entity.
7
THE X-CHANGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010 and December 31, 2009
NOTE C - GOING CONCERN UNCERTAINTY - CONTINUED
The Company anticipates offering future sales of equity securities. However,
there is no assurance that the Company will be able to obtain additional funding
through the sales of additional equity securities or, that such funding, if
available, will be obtained on terms favorable to or affordable by the Company.
The Company's certificate of incorporation authorizes the issuance of up to
3,750,000 shares of preferred stock and 37,500,000 shares of common stock. The
Company's ability to issue preferred stock may limit the Company's ability to
obtain debt or equity financing, The Company's ability to issue these authorized
but unissued securities may also negatively impact our ability to raise
additional capital through the sale of our debt or equity securities.
The Company's current controlling stockholder has maintained the corporate
status of the Company and has provided all nominal working capital support on
the Company's behalf since the December 2008 foreclosure action. Because of the
Company's lack of operating assets, its continuance is fully dependent upon the
majority stockholder's continuing support. It is the intent of this controlling
stockholder to continue the funding the nominal necessary expenses to sustain
the corporate entity. However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist. There is
no legal obligation for either management or significant stockholders to provide
additional future funding. Further, the Company is at the mercy of future
economic trends and business operations for this controlling stockholder to have
the resources available to support the Company. Should this pledge fail to
provide financing, the Company has not identified any alternative sources of
working capital to support the Company.
In such a restricted cash flow scenario, the Company would be unable to complete
its business plan steps, and would, instead, delay all cash intensive
activities. Without necessary cash flow, the Company may become dormant during
the next twelve months, or until such time as necessary funds could be raised in
the equity securities market.
While the Company is of the opinion that good faith estimates of the Company's
ability to secure additional capital in the future to reach its goals have been
made, there is no guarantee that the Company will receive sufficient funding to
sustain operations or implement any future business plan steps.
NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Cash and cash equivalents
For Statement of Cash Flows purposes, the Company considers all cash on
hand and in banks, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be
cash and cash equivalents.
Cash overdraft positions may occur from time to time due to the timing of
making bank deposits and releasing checks, in accordance with the Company's
cash management policies.
2. Financing Fees
Financing fees recorded in connection with debt issuances are amortized on
a straight-line basis over the maturity term of the related debt.
3. Convertible Debt Instruments
The Company records debt net of debt discount for beneficial conversion
features and warrants, on a relative fair value basis. Beneficial
conversion features are recorded pursuant to the Beneficial Conversion
Feature and Debt Topics of the FASB Accounting Standards Codification. The
amounts allocated to warrants and beneficial conversion rights are recorded
as debt discount and as additional paid-in-capital. Debt discount is
amortized to interest expense over the life of the debt.
8
THE X-CHANGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010 and December 31, 2009
NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
5. Accounting for Stock Options
The Company has adopted the provisions of the Compensation Topic of the
FASB Accounting Standards Codification which requires the measurement and
recognition of compensation expense for all share-based payment awards made
to its employees and directors based on estimated fair values at the time
of grant. In addition, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 107 "Share-Based Payment" (SAB 107) in March 2005,
which provides supplemental accounting guidance.
The valuation techniques used in applying these provisions are sensitive to
certain assumptions and parameters used including the volatility and
liquidity of the Company's stock. The Black Scholes option valuation model
used in this process was developed for use in estimating the fair value of
trading options that have no vesting restrictions and are fully
transferable. Because the Company's stock options have characteristics
significantly different from those of traded options, and because changes
in the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its stock options.
The Company has recorded in the past, and may record in the future,
substantial non-cash compensation expense which is not expected to have a
significant effect on our financial condition or cash flows but are
expected to have a significant, adverse effect on our reported results of
operations.
The Company follows the provisions of the Compensation topic of the FASB
Accounting Standards Codification for equity instruments granted to
non-employees.
6. Income taxes
The Company files income tax returns in the United States of America and
various states, as appropriate and applicable. As a result of the Company's
bankruptcy action, the Company is no longer subject to U.S. federal, state
and local, as applicable, income tax examinations by regulatory taxing
authorities for any period prior to December 31, 2006. The Company does not
anticipate any examinations of returns filed for periods ending after
December 31, 2006.
The Company uses the asset and liability method of accounting for income
taxes. At September 30, 2010 and December 31, 2009, the deferred tax asset
and deferred tax liability accounts, as recorded when material to the
financial statements, are entirely the result of temporary differences.
Temporary differences generally represent differences in the recognition of
assets and liabilities for tax and financial reporting purposes, primarily
accumulated depreciation and amortization, allowance for doubtful accounts
and vacation accruals.
The Company has adopted the provisions required by the Income Taxes topic
of the FASB Accounting Standards Codification. The Codification Topic
requires the recognition of potential liabilities as a result of
management's acceptance of potentially uncertain positions for income tax
treatment on a "more-likely-than-not" probability of an assessment upon
examination by a respective taxing authority. As a result of the
implementation of Codification's Income Tax Topic, the Company did not
incur any liability for unrecognized tax benefits.
7. Income (Loss) per share
Basic earnings (loss) per share is computed by dividing the net income
(loss) available to common stockholders by the weighted-average number of
common shares outstanding during the respective period presented in our
accompanying financial statements.
Fully diluted earnings (loss) per share is computed similar to basic income
(loss) per share except that the denominator is increased to include the
number of common stock equivalents (primarily outstanding options and
warrants).
9
THE X-CHANGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010 and December 31, 2009
7. Income (Loss) per share - continued
Common stock equivalents represent the dilutive effect of the assumed
exercise of the outstanding stock options and warrants, using the treasury
stock method, at either the beginning of the respective period presented or
the date of issuance, whichever is later, and only if the common stock
equivalents are considered dilutive based upon the Company's net income
(loss) position at the calculation date.
As of September 30, 2010 and 2009, the Company's outstanding stock options,
warrants, and convertible debentures are considered to be anti-dilutive due
to the Company's net operating loss.
8. New and Pending Accounting Pronouncements
The Company is of the opinion that any and all pending accounting
pronouncements, either in the adoption phase or not yet required to be
adopted, will not have a significant impact on the Company's financial
position or results of operations.
NOTE E - NOTE PAYABLE TO STOCKHOLDER
During Calendar 2009, the Company executed a $100,000 Line of Credit Note
Payable with South Beach Live, Ltd. (South Beach), a significant Company
stockholder, to provide funds necessary to support the corporate entity and
comply with the periodic reporting requirements of the Securities Exchange Act
of 1934, as amended. This note bears interest at 10.0% and matures in Calendar
2011. Through September 30, 2010, South Beach or its affiliates have advanced an
aggregate of approximately $116,600 against this note.
NOTE F - INCOME TAXES
The components of income tax (benefit) expense for each of nine months ended
September 30, 2010 and 2009, respectively, are as follows:
Nine months Nine months
ended ended
September 30, September 30,
2010 2009
------- -------
Federal:
Current $ -- $ --
Deferred -- --
------- -------
-- --
------- -------
State:
Current -- --
Deferred -- --
------- -------
-- --
------- -------
Total $ -- $ --
======= =======
As of September 30, 2010, the Company has a net operating loss carryforward(s)
of approximately $4,000,000 to offset future taxable income. The amount and
availability of any net operating loss carryforwards will be subject to the
limitations set forth in the Internal Revenue Code. Such factors as the number
of shares ultimately issued within a three year look-back period; whether there
is a deemed more than 50 percent change in control; the applicable long-term tax
exempt bond rate; continuity of historical business; and subsequent income of
the Company all enter into the annual computation of allowable annual
utilization of any net operating loss carryforward(s).
10
THE X-CHANGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 2010 and December 31, 2009
NOTE F - INCOME TAXES - CONTINUED
The Company's income tax expense for each of the nine month periods ended
September 30, 2010 and 2009, respectively, are as follows:
Nine months Nine months
ended ended
September 30, September 30,
2010 2009
----------- -----------
Statutory rate applied to income before income taxes $ (100,000) $ (95,000)
Increase (decrease) in income taxes resulting from:
State income taxes -- --
Non-deductible conversion discounts 23,000 171,000
Gain on extinguishment of debt -- 1,019,000
Other, including reserve for
deferred tax asset and application
of net operating loss carryforward 77,000 (1,095,000)
----------- -----------
Income tax expense $ -- $ --
=========== ===========
The Company's only temporary difference as of September 30, 2010 and December
31, 2009, respectively, relates to the Company's net operating loss pursuant to
the applicable Federal Tax Law. As of September 30, 2010 and December 31, 2009,
respectively, the deferred tax asset is as follows:
September 30, December 31,
2010 2009
----------- -----------
Deferred tax assets
Net operating loss carryforwards $ 1,349,000 $ 1,272,000
Less valuation allowance (1,349,000) (1,272,000)
----------- -----------
Net Deferred Tax Asset $ -- $ --
=========== ===========
During the nine months ended September 30, 2010 and the year ended December 31,
2009, respectively, the valuation allowance against the deferred tax asset
increased (decreased) by approximately $77,000 and $(1,025,000).
NOTE G - COMMON STOCK TRANSACTIONS
Stock split
Effective August 9, 2010, Company's Board of Directors declared a 1-for-20
reverse split of the issued and outstanding shares of common stock. The reverse
stock split was implemented by adjusting the stockholders' book entry accounts
to reflect the number of shares held by each stockholder following the split. No
fractional shares were issued in connection with the reverse stock split and any
fractional shares resulting from the reverse split were rounded up to the
nearest whole share. The reverse stock split reduced the number of the Company's
issued and outstanding shares of common stock from 136,089,746 to approximately
5,513,000.
The effect of this action is reflected in the accompanying financial statements
as of the first day of the first period presented.
Stock issuances
In January 2009, the Company issued an aggregate 2,118,506 shares of restricted,
unregistered common stock (approximately 105,925 post-reverse split shares) in
connection with the redemption of $1,550 in convertible debenture debt. As the
conversion price was below the "fair value" of the securities issued, the
Company experienced a non-cash charge to operations of approximately $568 which
was classified as "interest expense" in the accompanying financial statements.
11
THE X-CHANGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 2010 and December 31, 2009
NOTE G - COMMON STOCK TRANSACTIONS
Stock issuances - continued
On March 26, 2010, LJII issued a Debenture Conversion Notice to the Company for
the conversion of $32,000 of the outstanding debenture balance into 3,902,439
shares (approximately 195,122 post-reverse split shares) of the Company's common
stock. This conversion was completed on April 12, 2010 with the delivery of the
shares to LJII. As the conversion price was below the "fair value" of the
securities issued, the Company experienced a non-cash charge to operations of
approximately $57,760 which will be classified as "interest expense" in the
financial statements for the quarter ended September 30, 2010.
In conjunction with conversions from 2008 through 2010, a continued disagreement
exists between LCII and the Company's management over the requirements of the
contractual mandatory exercise of approximately 475,500 warrants related to the
conversion of an aggregate $45,500 of the debenture balance. The disputed
balance on this transaction is approximately $475,500 due to the Company on
contractually exercisable warrants by LCII. There is a remote possibility that
this delinquency could be deemed a default by LCII by the Company's management.
The Company's management is investigating potential remedies to this situation.
NOTE H - CONTINGENCIES
On December 15, 2008, the Company defaulted on its promissory note obligation to
Melissa CR 364, LTD. for failing to remit the outstanding balance and unpaid,
but accrued, interest payable on the contractual maturity date. Melissa CR 364,
LTD. served the Company with a demand for payment in full of the promissory
note. As of the demand date, the Company did not have the funds available to pay
Melissa CR 364, LTD. Melissa CR 364, LTD. has a security interest in the shares
of stock of our wholly owned subsidiary, AirGATE. Additionally, a default under
the Melissa CR 364, LTD. note triggered a default under our loan agreement with
La Jolla Cove Investors, Inc. Upon an event of default under the La Jolla Cove
Investors, Inc. debenture, the Company may be (I) required to pay a default rate
equal to 3.75% percent and (ii) accelerate the payment of the entire outstanding
amounts owed at 120% of the outstanding principal amount.
On January 21, 2009, Melissa CR 364, LTD. informed the Company it had completed
a foreclosure on its security interest in the 100% of the issued and outstanding
shares of the stock of our wholly-owned subsidiary, AirGATE Technologies, Inc.
and held a sale of the AirGATE stock on January 16, 2009. As disclosed in the
Company's Form 8-K, filed on January 26, 2009, Melissa CR 364, LTD.'s
foreclosures and auction of their holdings reduced the Company's debt to Melissa
CR 364, LTD. by $10,000, the amount realized from the auction. After this
foreclosure action and auction sale, The X-Change Corporation (Company) had no
operations or operating assets.
On January 26, 2009, we received notice of a default on our Amended and Restated
Senior Secured Convertible Term Notes - Tranche A and our Senior Secured
convertible Term Note - Tranche B from Samson Investment Company, Ironman PI
Fund (QP), L.P. and John Thomas Bridge and Opportunity Fund, L.P., with a
collective principal amount of $3,600,000, plus unpaid, but accrued, interest
payable, related to Melissa CR 364, LTD.'s notice of foreclosure on the AirGATE
stock. Samson Investment Company, Ironman PI fund (QP), L.P. and John Thomas
Bridge and Opportunity Fund, L.P. collectively demanded redemption of the notes
within seven days of the notice of default date for $1,975,162.87, $1,975,162.87
and $637,149.31, respectively. At the time notice of default was received, the
Company did not have the funds available to satisfy the collective obligations.
Samson Investment Company, Ironman PI Fund (QP), L.P. and John Thomas Bridge and
Opportunity Fund, L.P., has a security interest in all of the assets of AirGATE.
On May 4, 2009, the Company entered into a Settlement Agreement and Release with
AirGATE Technologies Inc. (AirGATE), HM Energy Technologies Inc. (HM), WM Chris
Mathers (Mathers), Kathleen Hanafan (Hanafan), Duke Loi (Loi), Samson Investment
Company (Samson), Ironman PI Fund (QP), L.P. (Ironman), John Thomas Bridge and
Opportunity Fund, LP (John Thomas and, collectively with Samson and Ironman,
SIJ) and Melissa CR 364, LTD (Melissa).
12
THE X-CHANGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 2010 and December 31, 2009
NOTE H - CONTINGENCIES - CONTINUED
Under the terms of the Agreement, (I) SIJ foreclosed on the assets of AirGATE,
which had been security for the SIJ Notes; (ii) SIJ transferred and assigned
7,196,429 pre-split shares of the Company's common stock held by Samson,
7,196,429 pre-split shares of the Company's common stock held by Ironman and
2,321,428 pre-split shares of the Company's common stock held by John Thomas,
comprising all of the shares of Company common stock owned by them, to Melissa
and others; (iii) SIJ cancelled the SIJ Notes, SIJ Guaranty, the Tranche A
Warrants and the Tranche B Warrants issued in connection with the SIJ Notes, and
any other security convertible or exchangeable into the common stock of
X-Change; (iv) SIJ and Hanafan paid $75,000.00 to Melissa and (v) all the
parties agree to mutual releases and confidentiality, except that Melissa did
not release the Company from the balance of the Melissa Note.
In summary, as a result of the various transactions effected under the
Agreement, SIJ surrendered all of their shares in the Company; cancelled
financial obligations of the Company that exceeded $3.6 million, with interest;
and terminated their rights under warrant and guaranty agreements. The Company
provided all parties with a full release of claims, known and unknown, in
exchange for these various surrenders, cancellations and terminations. To the
extent that the cancellation of debt constitutes a taxable event, management is
of the opinion that the Company's cumulative net operating loss carryforward
will more than offset any taxes due as a result of this event.
On May 26, 2009, effective as of December 15, 2008, the Company issued
51,000,000 shares (approximately 2,550,000 post-reverse split shares) of its
common stock to K & D Equity Investments, Inc. (K&D) , a Texas corporation,
pursuant a Debt Assignment and the conversion features of the Convertible
Promissory Note between the Company, AirGATE and Melissa CR 364, LTD. The
issuance was originally approved by the Board in December 2008, but was not
accepted by Melissa CR 364, LTD. and assigned to K & D until May 26, 2009. This
issuance is reflected in the accompanying financial statements as of the
effective date of the Board Action.
NOTE I - SUBSEQUENT EVENTS
On October 7, 2010, the Company announced that it has signed an agreement in
principle to acquire 21-Century Silicon, Inc., based in Richardson, Texas
(21-Century Silicon). As of the date of this report, this transaction remains
subject to the completion of all appropriate due diligence items and has not
closed. On November 8, 2010, 21-Century executed a note payable to the Company
in the amount of approximately $28,500, bearing interest at 10.0% for working
capital advances made by the Company on 21-Century's behalf.
Management has evaluated all other activity of the Company through November 22,
2010 (the issue date of the financial statements) and concluded that no
subsequent events, other than as disclosed above, have occurred that would
require recognition in the financial statements or disclosure in the notes to
financial statements.
13
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(1) CAUTION REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained in this quarterly filing, including, without
limitation, statements containing the words "believes", "anticipates",
"expects", "aims" and words of similar import, constitute forward-looking
statements. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements.
Such factors include, among others, the following: international, national and
local general economic and market conditions: demographic changes; the ability
of the Company to sustain, manage or forecast its growth; the ability of the
Company to successfully make and integrate acquisitions; raw material costs and
availability; new product development and introduction; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; the loss of significant customers
or suppliers; fluctuations and difficulty in forecasting operating results;
changes in business strategy or development plans; business disruptions; the
ability to attract and retain qualified personnel; the ability to protect
technology; and other factors referenced in this and previous filings.
Given these uncertainties, readers of this Form 10-Q and investors are cautioned
not to place undue reliance on such forward-looking statements. The Company
disclaims any obligation to update any such factors or to publicly announce the
result of any revisions to any of the forward-looking statements contained
herein to reflect future events or developments.
(2) GENERAL
The X-Change Corporation (Company) was incorporated under the laws of the State
of Delaware on February 5, 1969 and changed its corporate domicile to the State
of Nevada on October 4, 2000. We were originally organized to seek merger and/or
acquisition candidates and engaged in various transactions since our inception.
As of December 31, 2008, we have disposed of all of the assets and operations.
On July 20, 2005, the Company exchanged 10,000,000 shares of common stock for
100% of the issued and outstanding stock of AirGATE Technologies, Inc.
(AirGATE). This transaction made AirGATE a wholly-owned subsidiary of the
Company.
In December 2008, the lender of a note payable by AirGATE began foreclosure
proceedings against its collateral, which included 100% of the Company's
holdings in AirGATE and the right to convert the note into restricted,
unregistered shares of the Company's common stock. A portion of the note balance
and accrued, and unpaid, interest was converted to 51,000,000 pre-split shares
(approximately 2,550,000 post-split shares) of the Company's common stock and
the foreclosure proceeding was consummated on January 16, 2009. Due to the
timing of this transaction, the foreclosure and related disposition of AirGATE
is reflected in the accompanying financial statements as of December 31, 2008.
On May 4, 2009, the Company entered into a Settlement Agreement and Release with
AirGATE, HM Energy Technologies, Inc. (HM), Wm. Chris Mathers, the Company's
former CFO, (Mathers), Kathleen Hanafan, the Company's former CEO, (Hanafan),
Duke Loi, an employee of AirGATE, (Loi), Samson Investment Company (Samson),
Ironman PI Fund (QP), L.P. (Ironman), John Thomas Bridge and Opportunity Fund,
LP ("John Thomas" collectively with Samson and Ironman, SIJ) and Melissa CR 364,
LTD (Melissa).
Under the terms of the Agreement, (I) SIJ foreclosed on the assets of AirGATE,
which had been security for the SIJ Notes; (ii) SIJ transferred and assigned
7,196,429 pre-split shares of the Company's common stock held by Samson,
7,196,429 pre-split shares of the Company's common stock held by Ironman and
pre-split 2,321,428 shares of the Company's common stock held by John Thomas,
comprising all of the shares of Company common stock owned by them, to Melissa
and its assigns; (iii) SIJ cancelled the SIJ Notes, SIJ Guaranty, the Tranche A
Warrants and the Tranche B Warrants issued in connection with the SIJ Notes, and
any other security convertible or exchangeable into the common stock of the
Company; (iv) SIJ and Hanafan paid $75,000.00 to Melissa; and (v) all the
parties agree to mutual releases and confidentiality, except that Melissa did
not release the Company from the Melissa Note.
As a result of the various transactions effected under the Agreement, SIJ
surrendered all of their shares in the Company; cancelled all financial
obligations of the Company, which approximated $3.96 million, including accrued
but unpaid interest); and terminated their rights under the various warrant and
guaranty agreements. The Company provided all parties with a full release of
claims, known and unknown, in exchange for these various surrenders,
cancellations and terminations. To the extent that the cancellation of these
debts constitutes a taxable event, the Company's net operating loss
carry-forward is anticipated to compensate for any taxes due from this event.
14
(3) PLAN OF BUSINESS
On August 16, 2010, the Company announced the pending acquisition of IPTV World,
a company based in Los Angeles with hosting facilities in the One Wilshire
carrier hotel. This acquisition was subject to the execution of a definitive
agreement and the completion of appropriate due diligence by all parties
On September 8, 2010, the Company announced the pending acquisition of Genesis
Key, Inc., based in Washington, DC. This acquisition was subject to the
execution of a definitive agreement and the completion of appropriate due
diligence by all parties.
On September 20, 2010, the Company announced that the Company has signed an
agreement to acquire Cybertel USA, Inc., based in Los Angeles, California, for
$800,000 cash payable to the shareholders of Cybertel USA in exchange for 100%
of the issued and outstanding stock of Cybertel USA, Inc. The closing of this
transaction remains subject to the completion of appropriate due diligence by
all parties.
On October 7, 2010, the Company announced that it was unable to conclude
definitive agreements in all previously announced acquisitions of IPTV World,
Genesis Key, Inc. and Cybertel USA and will not be acquiring these companies.
On October 7, 2010, the Company announced that it has signed an agreement in
principle to acquire 21-Century Silicon, Inc., based in Richardson, Texas
(21-Century Silicon). The terms of the acquisition is anticipated to involve a
change in control of the Company and the appointment of new directors. As of the
date of this report, this transaction remains subject to the completion of all
appropriate due diligence and has not closed. On November 8, 2010, 21-Century
executed a note payable to the Company in the amount of approximately $28,500,
bearing interest at 10.0% for working capital advances made by the Company on
21-Century's behalf.
(4) RESULTS OF OPERATIONS
The Company had no revenue for either of the nine or three month periods ended
September 30, 2010 or 2009, respectively.
General and administrative expenses for the nine months ended September 30, 2010
and 2009 were approximately $93,000 and 15,000, respectively. The increase in
the 2010 expenditures over the 2009 costs was due to the Company's effort to
become and remain current with its reporting requirements under the Securities
Exchange Act of 1934, as amended. Since the 1st quarter of Calendar 2009, the
Company has been virtually dormant due to the foreclosure of the Company's
former wholly-owned subsidiary, AirGATE Technologies, Inc. Subsequent to that
date, management has focused on having the Company remain current with its
reporting obligations under the Securities Exchange Act of 1934, as amended.
The Company recognized interest accruals, amortization of debt financing fees
and accretion of debt discounts of approximately $77,000 and $695,000 during the
nine months ended September 30, 2010 and 2009, respectively. The Company's
convertible debenture with La Jolla Cove Investors, Inc. matured in August 2010.
This debenture is discussed more fully in our Annual Report on Form 10-K for the
year ended December 31, 2009. We specifically note that all of the Company's
debt is in default due to the December 2008 foreclosure action and, accordingly,
has been classified as "current" on the Company's balance sheet regardless of
the stated maturity date(s).
Due to the minimal expenditures in 2009, management anticipates that future
expenditure levels will fluctuate, either up or down, as the Company complies
with its periodic reporting requirements and implements the business plan of
identifying a suitable situation for a business combination transaction.
Earnings per share for the respective nine month periods ended September 30,
2010 and 2009 were $(0.05) and $(0.05) based on the weighted-average shares
issued and outstanding at the end of each respective period as adjusted for the
August 2010 1-for-20 reverse stock split.
The Company does not expect to generate any meaningful revenue or incur
operating expenses for purposes other than fulfilling the obligations of a
reporting company under the Securities Exchange Act of 1934 unless and until
such time that the Company completes a business combination transaction.
(5) LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2010 and December 31, 2009, respectively, the Company had a
working capital of approximately $(1,268,000) and $(1,071,000).
The Company's continued existence is dependent upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
15
timely basis. Further, the Company faces considerable risk in its business plan
and a potential shortfall of funding due to any inability to raise capital in
the equity securities market. If no additional operating capital is received
during the next twelve months, the Company will be forced to rely on existing
cash in the bank and additional funds loaned by management and/or significant
stockholders.
The Company may become dependent upon additional external sources of financing;
including being dependent upon its management and/or significant stockholders to
provide sufficient working capital in excess of the Company's initial
capitalization to preserve the integrity of the corporate entity.
The Company anticipates offering future sales of equity securities. However,
there is no assurance that the Company will be able to obtain additional funding
through the sales of additional equity securities or, that such funding, if
available, will be obtained on terms favorable to or affordable by the Company.
The Company's certificate of incorporation authorizes the issuance of up to
3,750,000 shares of preferred stock and 37,500,000 shares of common stock. The
Company's ability to issue preferred stock may limit the Company's ability to
obtain debt or equity financing, The Company's ability to issue these authorized
but unissued securities may also negatively impact our ability to raise
additional capital through the sale of our debt or equity securities.
The Company's current controlling stockholder has maintained the corporate
status of the Company and has provided all nominal working capital support on
the Company's behalf since the December 2008 foreclosure action. Because of the
Company's lack of operating assets, its continuance is fully dependent upon the
majority stockholder's continuing support. It is the intent of this controlling
stockholder to continue the funding the nominal necessary expenses to sustain
the corporate entity. However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist. There is
no legal obligation for either management or significant stockholders to provide
additional future funding. Further, the Company is at the mercy of future
economic trends and business operations for this controlling stockholder to have
the resources available to support the Company. Should this pledge fail to
provide financing, the Company has not identified any alternative sources of
working capital to support the Company.
In such a restricted cash flow scenario, the Company would be unable to complete
its business plan steps, and would, instead, delay all cash intensive
activities. Without necessary cash flow, the Company may become dormant during
the next twelve months, or until such time as necessary funds could be raised in
the equity securities market.
While the Company is of the opinion that good faith estimates of the Company's
ability to secure additional capital in the future to reach its goals have been
made, there is no guarantee that the Company will receive sufficient funding to
sustain operations or implement any future business plan steps.
Regardless of whether the Company's cash assets prove to be inadequate to meet
the Company's operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash.
(6) CRITICAL ACCOUNTING POLICIES
Our financial statements and related public financial information are based on
the application of accounting principles generally accepted in the United States
(GAAP). GAAP requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an impact on the
assets, liabilities, revenue and expense amounts reported. These estimates can
also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition. We
believe our use of estimates and underlying accounting assumptions adhere to
GAAP and are consistently and conservatively applied. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.
16
Our significant accounting policies are summarized in Note D of our financial
statements. While all these significant accounting policies impact our financial
condition and results of operations, we view certain of these policies as
critical. Policies determined to be critical are those policies that have the
most significant impact on our financial statements and require management to
use a greater degree of judgment and estimates. Actual results may differ from
those estimates. Our management believes that given current facts and
circumstances, it is unlikely that applying any other reasonable judgments or
estimate methodologies would cause effect on our consolidated results of
operations, financial position or liquidity for the periods presented in this
report.
(7) EFFECT OF CLIMATE CHANGE LEGISLATION
The Company currently has no known or identified exposure to any current or
proposed climate change legislation which could negatively impact the Company's
operations or require capital expenditures to become compliant. Additionally,
any currently proposed or to-be-proposed-in-the-future legislation concerning
climate change activities, business operations related thereto or a publicly
perceived risk associated with climate change could, potentially, negatively
impact the Company's efforts to identify an appropriate target company which may
wish to enter into a business combination transaction with the Company.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company may be subject to certain market risks, including changes in
interest rates and currency exchange rates. At the present time, the Company
does not undertake any specific actions to limit those exposures.
ITEM 4 - CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
As of September 30, 2010, our management, under the supervision and with the
participation of our Chief Executive Officer and Chief Financial Officer
(Certifying Officers), evaluated the effectiveness of our disclosure controls
and procedures as defined in Rules 13a-15 promulgated under the Exchange Act.
Disclosure controls and procedures are controls and procedures designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the Commission's rules and forms and
include controls and procedures designed to ensure that information we are
required to disclose in such reports is accumulated and communicated to
management, including our Certifying Officers, as appropriate, to allow timely
decisions regarding required disclosure. Based upon that evaluation, our
Certifying Officers concluded that as of September 30, 2010, our disclosure
controls and procedures were not effective to ensure that the information
required to be disclosed by us in our reports is recorded, processed, summarized
and reported within the time periods specified by the SEC due to a inherent
weakness in our internal controls over financial reporting due to our status as
a shell corporation and having a sole officer and director. However, our
Certifying Officers believe that the financial statements included in this
report fairly present, in all material respects, our financial condition,
results of operations and cash flows for the respective periods presented.
(b) Changes in Internal Controls
There were no significant changes (including corrective actions with regard to
significant deficiencies or material weaknesses) in our internal controls over
financial reporting that occurred during the quarter ended September 30, 2010
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
The Company may become involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters should not have an adverse material impact either
individually or in the aggregate on results of operations, financial position or
cash flows of the Company.
ITEM 1A - RISK FACTORS
Not applicable
17
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3 - DEFAULTS ON SENIOR SECURITIES
None.
ITEM 4 - (REMOVED AND RESERVED)
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS
31.1 Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002
32.1 Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: November 22, 2010 By: /s/ Haviland Wright
----------------------------------
Haviland Wright
Chairman, Chief Executive Officer,
Acting Chief Financial Officer and
Director
1
