ENXNET INC - FORM 10-Q - August 15, 2011

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - ENXNET INC	Financial_Report.xls
EX-32.2 - RULE 1350 CERTIFICATION OF CFO - ENXNET INC	exh322.htm
EX-31.1 - RULE 15D-14(A) CERTIFICATION OF CEO - ENXNET INC	exh311.htm
EX-31.2 - RULE 15D-14(A) CERTIFICATION OF CFO - ENXNET INC	exh312.htm
EX-32.1 - RULE 1350 CERTIFICATION OF CEO - ENXNET INC	exh321.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM 10-Q

[X]	QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2011

	OR

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

Commission File Number 000-30675

EnXnet, Inc.

(Name of issuer in its charter)

Oklahoma	73-1561191
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

	11333 E. Pine Street, Suite 92 - Tulsa, Ok 74116
	(Address of principal executive offices & zip code)

	(918) 592 - 0015
	Registrant's telephone number, including area code:

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

Indicate by check mark whether the registrant 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.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

As of August 1, 2011, there were outstanding 43,045,018 shares of the registrant’s common stock, $.0005 par value.

Table of Contents

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Balance Sheets June 30, 2011 and March 31, 201	3
	Statements of Loss For the three months ended June 30, 2011 and 2010	4
	Statements of Cash Flows For the three months ended June 30, 2011 and 2010	5
	Summary of Accounting Policies	6
	Notes to Financial Statements	8

Item 2.	Management’s Discussion and Analysis	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Submission of Matters to a Vote to Security Holders	22
Item 5.	Other Information	22
Item 6.	Exhibits and Reports on Form 8-K	22

	SIGNATURES	23

	Exhibit Index	24

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Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ENXNET, INC

BALANCE SHEET


	June 30, 2011			March 31, 2011
ASSETS	(Unaudited)			(Audited)
CURRENT ASSETS
Cash	$	10,801		$	8,443
Accounts receivable		-			-
Prepaid expenses		28,592			42,824
TOTAL CURRENT ASSETS		39,393			51,267
FIXED ASSETS
Furniture & fixtures		6,160			6,160
Machinery & equipment		74,516			74,516
Less accumulated depreciation		(78,317	)		(76,865	)
TOTAL FIXED ASSETS		2,359			3,811
OTHER ASSETS
Licenses, net		-			-
Investment, net		-			-
Deposits		1,137			1,137
TOTAL OTHER ASSETS		1,137			1,137
TOTAL ASSETS	$	42,889		$	56,215
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	480,022		$	500,014
Advances from officer - related party		65,543			13,043
Advances from stockholder		31,000			31,000
Notes payable - stockholder		181,413			181,413
Notes payable - related party		700,312			700,312
TOTAL CURRENT LIABILITIES		1,458,290			1,425,782
COMMITMENTS AND CONTINGENCIES		-			-
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.00005 par value; 200,000,000 shares authorized, 43,045,018 and 43,030,018 shares issued and outstanding		2,152			2,151
Additional paid-in capital		5,055,337			5,054,588
Accumulated deficit		(6,372,890	)		(6,326,306	)
Deferred consideration		-			-
Other comprehensive income		(100,000	)		(100,000	)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		(1,415,401	)		(1,369,567	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	42,889		$	56,215

See accompanying summary of accounting policies and notes to condensed financial statement

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ENXNET, INC

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended
	June 30,
		2011			2010
REVENUES	$	-		$	-
COST OF SALES		-			-
Gross Profit		-			-
EXPENSES
Consulting fees		15,181			36,950
Depreciation & amortization		1,452			1,474
Advertising		-			-
Payroll		14,508			7,679
Professional services		2,591			26,362
Occupancy		3,231			3,392
Office		2,569			1,535
Travel		300			433
Other		1,151			-
Total Expenses		40,983			77,825
LOSS FROM OPERATIONS		(40,983	)		(77,825	)
OTHER INCOME (EXPENSE)
Interest expense		(5,601	)		(7,764	)
Other income		-			-
Interest income		-			-
Total Other Income (Expense)		(5,601	)		(7,764	)
COMPREHENSIVE LOSS	$	(46,584	)	$	(85,589	)
BASIC AND DILUTED NET LOSS PER SHARE	$	(0.001	)	$	(0.002	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED		43,040,073			36,253,924

See accompanying summary of accounting policies and notes to condensed financial statement

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ENXNET, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Three Months Ended
	June 30,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(46,584	)	$	(85,589	)
Depreciation and amortization		1,452			1,474
Common stock issued for services		750			-
Stock options issued		-			32,700
Adjustments to reconcile net loss to net cash used by operations:
Decrease (increase) in accounts receivable		-			-
Decrease (increase) in prepaid expenses		14,232			4,088
Increase (decrease) in accounts payable & accrued expenses		(19,992	)		(680	)
Net cash provided (used) by operating activities		(50,142	)		(48,007	)
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash provided (used) in investing activities		-			-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock sales		-			31,000
Proceeds from note payable		-			-
Proceeds from advances from officer and stockholder		52,500			5,000
Repayment of advances		-			(4,000	)
Net cash provided (used) by financing activities		52,500			32,000
NET INCREASE (DECREASE) IN CASH		2,358			(16,007	)
CASH - Beginning of period		24,289			24,289
CASH - End of period	$	10,801		$	8,282
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest expense	$	-		$	-
Income taxes	$	-		$	-
NON-CASH FINANCING AND INVESTING TRANSACTIONS:
Common stock issued for services	$	750		$	-
Common stock issued for payment of debt	$	-		$	35,000
Common stock issued for payment of accrued expenses	$	-		$	4,209

See accompanying summary of accounting policies and notes to condensed financial statement

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ENXNET, INC

NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

Cash Equivalents

For financial reporting purposes, the Company considers all highly liquid investments with an original maturity of three months or less when purchased to be a cash equivalent. Financial instruments, which potentially subject the Company to a concentration of credit risk, consist of cash and cash equivalents. Cash and cash equivalents consist of funds deposited with various high credit quality financial institutions.

Equipment

Equipment is recorded at cost. Depreciation and amortization are provided using the straight-line method over the useful lives of the respective assets, typically 3-10 years. Major additions and betterments are capitalized. Upon retirement or disposal, the cost and related accumulated depreciation or amortization is removed from the accounts and any gain or loss is reflected in operations.

Advertising

Advertising costs are expensed as incurred.

Licenses

The costs associated with acquiring exclusive licensing rights to patented technology have been capitalized and have been expensed using the straight line method of amortization over ten years, the estimated remaining useful lives of the patents.

Revenue Recognition

Revenue is generally recognized and earned when all of the following criteria are satisfied: a) persuasive evidence of sales arrangements exists; b) delivery has occurred; c) the sales price is fixed or determinable, and d) collectability is reasonably assured.

Persuasive evidence of an arrangement is demonstrated via a purchase order from our customers. Delivery occurs when title and all risks of ownership are transferred to the purchaser which generally occurs when the products are shipped to the customer. No right of return exists on sales of products except for defective or damaged products. The sales price to the customer is fixed upon acceptance of purchase order. To assure that collectability is reasonably assured we perform ongoing credit evaluations of all of our customers.

Income Taxes

Income taxes are provided based on the liability method of accounting. Under this approach, deferred income taxes are recorded to reflect the tax consequences on future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year end. A valuation allowance is recorded against deferred tax assets as management does not believe the Company has met the "more likely than not" standard to allow recognition of such an asset.

Accounts Receivable

Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within thirty days from the invoice date or as specified by the invoice and are stated at the amount billed to the customer. Customer account balances with invoices dated over thirty days or thirty days past the due date are considered delinquent.

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ENXNET, INC

NOTES TO FINANCIAL STATEMENTS

The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management's best estimate of the amount that will not be collected. Management individually reviews all accounts receivable balances that are considered delinquent and based on an assessment of current credit worthiness, estimates the portion, if any, of the balance that will not be collected. In addition, management periodically evaluates the adequacy of the allowance based on the Company's past experience.

Estimates

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

Fair Value of Financial Assets and Liabilities

Under FASB ASC 825 the Company is required to disclose the fair value of financial instruments for which it is practicable to estimate value.

The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities and debt. The Company believes that the carrying amounts approximate fair value for all such instruments.

FASB ASC 820 defines fair value, establishes a framework for measurement, and expands disclosure about fair value measurements. Topic No. 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Topic No. 820 classifies the inputs used to measure fair value into the following hierarchy:

	Level 1:	Quoted prices for identical assets or liabilities in active markets.
	Level 2:	Quoted market prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
	Level 3:	Pricing inputs are unobservable for the assets and liabilities, including situations in which there is little to no market activity.

Fair values assigned to the Company’s acquired fixed assets were determined using Level 2, and the fair value associated with the Company’s intangible asset was based on Level 3 inputs. The inputs used to determine fair value require significant management judgment and estimation.

Compensated Absences

Employees of the Company do not earn annual leave or sick leave. There is no compensated absences accrued liability on June 30, 2011and March 31, 2011.

Research and Development Costs

Research and development costs are charged to expense as incurred.

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ENXNET, INC

NOTES TO FINANCIAL STATEMENTS

Stock-Based Compensation

FASB ASC 718 requires that measurement of the cost of employee services received in exchange for an award of equity instruments be based on the grant-date fair value of the award. Such costs are recorded over the periods employees are required to render services in exchange for the awards.

Income Tax/Deferred Tax Policy

FASB ASC 740 requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differing treatment of certain items between the Company’s financial records and tax returns. Deferred tax assets are also established for tax benefits associated with tax loss and tax credit carryforwards. Such deferred balances reflect tax rates by tax jurisdiction that are scheduled to be in effect, based on currently enacted tax laws, in the years the book/tax differences reverse and tax loss and tax credit carryforwards are expected to be realized. An allowance is established for any deferred tax asset that is not expected to be realized.

FASB ASC 740 also prescribes a comprehensive model for how a company should measure, recognize, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. The Company recognizes the tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Interest and penalties, if incurred, are included in interest and financing expense. The Company’s income tax filings are subject to audit by various taxing authorities. The Company’s open audit periods are 2008 – 2010. The Company does not believe it has any material uncertain tax positions.

Net Loss Per Share

Basic EPS is computed as net income divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants and other convertible securities.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from management’s estimates.

Unaudited Financial Statements

The accompanying unaudited financial statements for the three months ended June 30, 2011 have been prepared in accordance with generally accepted accounting principles for interim financia1 information. In the opinion of management all adjustments considered necessary for a fair presentation, which consist of normal recurring adjustments, have been included. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's March 31, 2011 Annual Report on Form 10-K.

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ENXNET, INC

NOTES TO FINANCIAL STATEMENTS

NOTE 2 – GOING CONCERN

The Company has a working capital deficit and has incurred losses since inception. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

Management of the Company has undertaken certain actions to address these conditions. Management is currently in negotiations with potential customers and with marketing representatives to establish a more developed product channel. Funds required to carry out management's plans are expected to be derived from future stock sales and borrowings from outside parties. There can be no assurances that the Company will be successful in executing its plans.

NOTE 3 – INCOME TAXES

At June 30, 2011 and March 31, 2011, the Company had net deferred tax assets of approximately $2,167,000 and $2,150,000 principally arising from net operating loss carryforward for income tax purposes. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset has been established at June 30, 2011 and March 31, 2011. At June 30, 2011, the Company has net operating loss carryforwards totaling approximately $6,372,000 which will begin to expire in the year 2015.

NOTE 4 – NOTES PAYABLE

Notes payable-related party consists of the following:	June 30,			March 31,
	2011				2011
3% convertible note payable to Ryan Corley, President of the Company, due on demand, convertible into a maximum of 271,311 common shares			21,705				21,705
2% convertible note payables to Ryan Corley, President of the Company, due on demand, convertible into a maximum of 11,146,310 common shares			518,357				518,357
2% convertible note payable to an entity controlled by Ryan Corley the President of the Company, due on demand, convertible into a maximum of 978,000 common shares			48,900				48,900
3% convertible note payables to an entity controlled by Ryan Corley the President of the Company, due on demand, convertible into a maximum of 1,619,500 common shares			111,350				111,350
Total notes payable-related party		$	700,312			$	700,312

Notes payable consist of the following:	June 30,			March 31,
	2011				2011
4% convertible notes payable to a stockholder, due on demand, convertible into a maximum of 350,000 common shares			175,000				175,000
2% convertible notes payable to 3 stockholders, due on demand, convertible into a maximum of 128,267 common shares			6,413				6,413
Total notes payable		$	181,413			$	181,413

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ENXNET, INC

NOTES TO FINANCIAL STATEMENTS

NOTE 5 – ADVANCES FROM OFFICER AND STOCKHOLDER

Advances from a stockholder at June 30, 2011 and March 31, 2011 were $31,000 and $31,000, respectively.

Our CEO, Ryan Corley, has made advances to the Company in prior years. During the three months ended June 30, 2011, the CEO made additional unsecured advances totaling $52,500. During the three months ended June 30, 2011 the Company made payments on these advances of $-0-. At June 30, 2011 and March 31, 2011, advances from the CEO were $55,043 and $2,543, respectively.

The Company has notes payable to the CEO in the aggregate amount of $540,062 and $540,062 as of June 30, 2011 and March 31, 2011. Accrued interest owed on these notes at June 30, 2011 and March 31, 2011 is $113,436 and $110,689. These notes and accrued interest are convertible into 11,869,981 and 11,812,372 shares of Rule 144 restricted common stock of the company as of June 30, 2011 and March 31, 2011.

An entity controlled by the CEO has made unsecured advances and notes payables to the Company. At June 30, 2011 and March 31, 2011, advances from the entity controlled by the CEO were $10,500 and $10,500 with notes payable totaled $160,250 and $160,250. Accrued interest owed on these notes as of June 30, 2011 and March 31, 2011 is $8,761 and $7,684. These notes and accrued interest are convertible into 2,727,003 and 2,710,013 shares of Rule 144 restricted common stock of the company as of June 30, 2011 and March 31, 2011.

NOTE 6 - COMMON STOCK TRANSACTIONS

The Company issued 15,000 shares of restricted common stock in exchange for services in the amount of $750 for the three months ended June 30, 2011.

NOTE 7 – STOCK OPTIONS

On July 24, 2001, the Company filed with the SEC Form S-8, for its 2002 Stock Option Plan, (the Plan). An aggregate amount of common stock that may be awarded and purchased under the Plan is 3,000,000 shares of the Company's common stock. Under the Plan during the three months ended June 30, 2011, the Company did not grant any options under the plan. At June 30, 2011 there were 985,000 options issued under the Plan and 1,760,800 options available to issue under the Plan. On July 2, 2011 another 530,000 options expired and were available to be issued under the Plan.

The Company also issues stock options to purchase Rule 144 restricted common stock which is not issued under the Plan. During the three months ended June 30, 2011 the Company did not issue any options. At June 30, 2011, there were 300,000 options issued not under the Plan

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ENXNET, INC

NOTES TO FINANCIAL STATEMENTS

The Company estimated the fair value of each stock option for employees and consultants at the grant date by using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants as follows:

Dividends yield		0	%
Expected volatility	2.04		%
Risk-free interest rate		.43 to .33	%
Expected life	2 years

For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period.

A summary of the status of the Company's stock options as of June 30, 2011 and March 31, 2011 is presented below:

	June 30,		March 31,
	2011		2011
Options outstanding at beginning of year		1,285,000		3,880,800
Options granted		-		300,000
Options exercised		-		-
Options canceled		-		(2,895,800	)
Options outstanding at end of year		1,285,000		1,285,000

The following table summarizes the information about the stock options as of June 30, 2011:

Range of Exercise Price		Number Outstanding at June 30		Weighted Average Remaining Contractual Life Years		Weighted Average Exercise Price (Total shares)		Number Exercisable at June 30		Weighted Average Exercise Price (Exercisable shares)
$	.40 - .66		330,000		.01	$	.56		330,000	$	.56
	.43		200,000		.01		.43		200,000		.43
	.38		135,000		.06		.38		135,000		.38
	.06 - 51		320,000		.06		.38		320,000		.38
	.05		300,000		0.94		.05		300,000		.05
$	.05 – .66		1,285,000		.24	$	.36		1,285,000	$	.36

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ENXNET, INC

NOTES TO FINANCIAL STATEMENTS

The following table summarizes the information about the stock options as of March 31, 2011:

Range of Exercise Price		Number Outstanding at March 31		Weighted Average Remaining Contractual Life Years		Weighted Average Exercise Price (Total shares)		Number Exercisable at March 31		Weighted Average Exercise Price (Exercisable shares)
$	.40 - .66		330,000		.26	$	.56		330,000	$	.56
	.43		200,000		.26		.43		200,000		.43
	.38		135,000		.31		.38		135,000		.38
	.06 - 51		320,000		.31		.38		320,000		.38
	.05		300,000		1.21		.05		300,000		.05
$	.05 – .66		1,285,000		.49	$	.36		1,285,000	$	.36

NOTE 8 – COMMITMENTS AND CONTINGENCIES

The Company is not involved in litigation at this time. We may from time to time be a party to various legal actions in the ordinary course of business. There can be no assurance that the Company will not be a party to litigation in the future that could have an adverse effect on the Company.

NOTE 9 – SUBSEQUENT EVENTS

Company Acquires Title, and Patent to Thermal Air Control System

The Company announced on July 11, 2011 an agreement to acquire the rights, title and patents to the Thermal Air Control Systems (TAC Unit) from Tac Unit LLC. The agreement calls for Tac Unit LLC to be paid a royalty of eight percent (8%) on the net sales of the products based on the Technology. In addition, Tac Unit LLC will be paid 300,000 shares of EnXnet Common Stock, with an additional stock option to purchase 300,000 shares of EnXnet Stock at a price of $0.15 per share. EnXnet has agreed to provide funding to introduce the Technology to the market.

The TAC Unit provides air conditioning and heating for semi-truck cabs that are now required to meet State and Federal engine idling rules. The Tac Unit uses a 12 Volt Technology and is operated solely from the truck’s auxiliary batteries. The batteries are recharged by the truck’s alternator while running. With the TAC Unit, a truck can remain parked with the motor off and maintain a comfortable environment for the driver while burning no diesel fuel for up to 10 hours on the auxiliary battery system. The TAC Unit’s technology has the ability to serve numerous other vehicle applications as well.

In acquiring the rights, title and patent to the TAC Unit, the CEO of the Company advanced on behalf of the Company $10,450 and another individual advanced $5,000 on behalf of the Company. Subsequent to June 30, 2011, the Company issued notes payable for $10,450 and $5,000 to the CEO and individual bearing interest at 2% and convertible into common stock of the Company at $0.03 per share.

In acquiring the TAC Unit, the Company also issued 150,000 shares of the Company’s common stock to an individual for his assistance and work on the TAC Unit. These shares were valued at $0.03 per share for total compensation of $4,500.

Options Issued

On July 19, 2011 the Company issued 2,040,000 stock options under the Company’s 2002 Stock Option Plan. These options were exercisable for a period of six years at $0.12 exercise price per option.

Notes Issued – Related party

On July 1, 2011, the Company issued to the CEO a note payable in the amount of $55,043 at 2% interest and convertible into common stock of the Company at a rate of $0.03 per share. Advances and accounts payable to the CEO were converted into the note.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.

This Quarterly Report includes "forward-looking statements" within the meaning of Section 27A of the Exchange Act which represent the expectations or beliefs concerning future events that involve risks and uncertainties, including but not limited to the demand for Company products and services and the costs associated with such goods and services. All other statements other than statements of historical fact included in this Quarterly Report including, without limitation, the statements under "Management’s Discussion and Analysis or Plan of Operations" and elsewhere in the Quarterly Report, are forward-looking statements. While the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.

The following discussion of the results of operations and financial conditions should be read in conjunction with the financial statements and related notes appearing in this report.

EnXnet, Inc. was formed under the laws of the State of Oklahoma on March 30, 1999 as Southern Wireless, Inc. It is a business and technology development enterprise engaged in the development, marketing, and licensing of emerging technologies and innovative business strategies and practices, focusing primarily on products, solutions, and services which support and enhance multimedia management.

The Company currently can satisfy its current cash requirements for approximately 30 days and has a plan to raise additional working capital by the sale of shares of the Company common stock to select perspective individuals and from additional borrowings. Additionally, holders of outstanding stock options have been exercising those options which have provided additional working capital for the Company. This plan should provide the additional necessary funds required to enable the Company to continue marketing and developing its products until the Company can generate enough cash flow from sales to sustain its operations.

The Company does not anticipate any significant cash requirements for the purchase of any facilities.

The Company currently has one full-time employee on the payroll. It is anticipated that the Company will need to hire additional employees in order to expand the marketing and developing of its products. The Company currently has arrangements with marketing affiliate Duplium for our DVDplus product and with iACTIVECARD LLC, One28 Marketing Group and Interactive Affinities for our ThinDisc product. Currently our employee and other outside consultants are used for the further development of our products.

Results of Operations – Three months ended June 30, 2011 and 2010.

Revenues have not been substantial as we refocused our efforts on developing technologies and developing marketing affiliates.

The Company incurred operating expenses of $40,983 and $77,825 for the three months ended June 30, 2011 and 2010, a decrease of $36,842 or 47.34%. The decrease in operating expenses of $36,842 for the three months ended June 30, 2011 when compared to the three month period ended June 30, 2010 is attributed to:

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Increases in:

·	Payroll expenses of $6,829
·	All other increasing expense categories $2,185

Decreases in:

·	Consulting expenses of $21,769
·	Professional fees of $23,771
·	All other decreasing expense categories $316

The increase in payroll expenses of $6,829 for the three months ended June 30, 2011 compared to the three month period ended June 30, 2010 is attributed to an increase in pay and health insurance expenses.

The decrease in consulting expenses of $21,769 for the three months ended June 30, 2011 compared to the three month period ended June 30, 2010 is related to valuation of common stock options and common stock issued to compensate our consultants.

The decrease in professional fees of $23,771 for the three months ended June 30, 2011 compared to the three month period ended June 30, 2010 is attributed to a decrease in fees attributed to patent fillings and in auditor related fees.

Other classifications of expenses did not fluctuate substantially for the three month period ended June 30, 2011 to June 30, 2010.

Interest expense decreased for the three months ended June 30, 2011 compared to the three month period ended June 30, 2010 by $2,163. This decrease is attributed to a reduced amount of Notes payables and reduced interest rates on all notes.

During the three months ended June 30, 2011 and 2009 we incurred net losses of $46,584 and $85,589 or $(0.001) and $(0.002) per share.

Liquidity and Capital Resources.

From inception through June 30, 2011, the Company has issued 43,045,018 shares of its Common Stock to officers, directors and outside shareholders. The Company has little operating history and no material assets other than the license agreement for ClearVideo and DVDplus, the patents for TAC Unit, ThinDisc, Passive Resonant Reflector, and an Antenna for an optical storage disk, EnXcase, and Disc Security Tag. The Company has $10,801 in cash as of June 30, 2011.

The Company has incurred operating losses each year since its inception and has had a working capital deficit at June 30, 2011. At June 30, 2011 and March 31, 2011 the working capital deficit was $1,418,897 and $1,374,515, respectively. The working capital deficit and cash balance raise substantial doubt about the Company's ability to continue as a going concern. As a result of these factors, the Company's independent certified public accountants have included an explanatory paragraph in their reports on the Company's March 31, 2011 financial statements which expressed substantial doubt about the Company's ability to continue as a going concern.

Contractual Obligations.

At the present time, the Company has no material commitments for capital expenditures. If capital expenditures are required after operations commence, the Company will pay for the same through the sale of common stock, or through loans from third parties. There is no assurance, however, that such financing will be available and in the event such financing is not available, the Company may have to cease operations.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES.

Management's discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements. These statements have been prepared in accordance with generally accepted accounting principles in the United States of America.

Use of estimates in preparation of financial statements

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates, judgments and assumptions 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, based on historical experience, and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The following critical accounting policies rely upon assumptions, judgments and estimates and were used in the preparation of our consolidated financial statements:

Cash Equivalents

Equipment

Advertising

Advertising costs are expensed as incurred.

Licenses

Revenue Recognition

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Income Taxes

Accounts Receivable

Estimates

Fair Value of Financial Assets and Liabilities

Under FASB ASC 825 the Company is required to disclose the fair value of financial instruments for which it is practicable to estimate value.

	Level 1:	Quoted prices for identical assets or liabilities in active markets.
	Level 2:	Quoted market prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
	Level 3:	Pricing inputs are unobservable for the assets and liabilities, including situations in which there is little to no market activity.

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Compensated Absences

Employees of the Company do not earn annual leave or sick leave. There is no compensated absences accrued liability on June 30, 2011 and March 31, 2011.

Research and Development Costs

Research and development costs are charged to expense as incurred.

Stock-Based Compensation

FASB ASC 718, requires that measurement of the cost of employee services received in exchange for an award of equity instruments be based on the grant-date fair value of the award. Such costs are recorded over the periods employees are required to render services in exchange for the awards.

Income Tax/Deferred Tax Policy

Net Loss Per Share

Use of Estimates

Unaudited Financial Statements

The accompanying unaudited financial statements for the nine months ended June 30, 2011 have been prepared in accordance with generally accepted accounting principles for interim financia1 information. In the opinion of management all adjustments considered necessary for a fair presentation, which consist of normal recurring adjustments, have been included. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's March 31, 2011 Annual Report on Form 10-K.

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Off Balance Sheet Arrangements

We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

CURRENT TRADING MARKET FOR THE COMPANY'S SECURITIES.

Currently the Company's stock is traded under the symbol "EXNT" on the NASD OTC Bulletin Board, and the symbol “AOHMDW” on the Frankfurt, Berlin and Stuttgart Stock Exchanges in Germany. There can be no assurance that an active or regular trading market for the common stock will develop or that, if developed, will be sustained. Various factors, such as operating results, changes in laws, rules or regulations, general market fluctuations, changes in financial estimates by securities analysts and other factors may have a significant impact on the market of the Company securities. The market price for the securities of public companies often experience wide fluctuations that are not necessarily related to the operating performance of such public companies such as high interest rates or impact of overseas markets.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable

ITEM 4. CONTROL AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures (as defined in Rules 13(a)-15(e) under the Securities Act of 1934, as amended) are effective to ensure that all information required to be disclosed by us in the reports filed or submitted by us under the Securities and Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to the management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate and allow timely decisions regarding required disclosure.

Changes in Internal Controls. In connection with the above-referenced evaluation, no change in our internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

There have been no material changes with regard to the risk factors previously disclosed in our most recent Annual Report on Form 10-K.

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

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE TO SECURITY HOLDERS

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

The following are included herein:

31.1	Rule 15d-14(a) Certification of CEO
31.2	Rule 15d-14(a) Certification of CFO
32.1	Rule 1350 Certification of CEO
32.2

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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.

	EnXnet

Dated: August 14, 2011	By:	RYAN CORLEY
		Ryan Corley, President. Chief Executive Officer
		(Principal Executive Officer)

Dated: August 14, 2011	By:	STEPHEN HOELSCHER
		Stephen Hoelscher, Chief Financial Officer
		(Principal Financial Officer)

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EXHIBIT INDEX

31.1	Rule 15d-14(a) Certification of CEO
31.2	Rule 15d-14(a) Certification of CFO
32.1	Rule 1350 Certification of CEO
32.2

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