-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KuNvrCGtVBjycROnPOZKsOhAkjJ9XvZOLBGUeXsbHX43SlBfBA2wSouQse0bHOjx YZ+BgpybUPhGvYPfYsfdbw== 0000939802-02-000300.txt : 20020814 0000939802-02-000300.hdr.sgml : 20020814 20020814182805 ACCESSION NUMBER: 0000939802-02-000300 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: X-CHANGE CORP CENTRAL INDEX KEY: 0000054424 STANDARD INDUSTRIAL CLASSIFICATION: MACHINE TOOLS, METAL CUTTING TYPES [3541] IRS NUMBER: 431594165 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 002-41703 FILM NUMBER: 02738509 BUSINESS ADDRESS: STREET 1: 36 W. 44TH STREET, SUITE 1209 CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 646-728-7023 MAIL ADDRESS: STREET 1: 36 W. 44TH STREET, SUITE 1209 STREET 2: , CITY: NEW YORK STATE: NY ZIP: 10036 FORMER COMPANY: FORMER CONFORMED NAME: GRANDEE CORP DATE OF NAME CHANGE: 19940627 FORMER COMPANY: FORMER CONFORMED NAME: CASSCO CAPITAL CORP DATE OF NAME CHANGE: 19940804 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL K C JAKES BBQ & GRILL INC DATE OF NAME CHANGE: 19940627 FORMER COMPANY: FORMER CONFORMED NAME: DIVERSIFIED TECHNOLOGIES GROUP INC DATE OF NAME CHANGE: 20010330 10QSB 1 form10qsb063002.txt U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ------------ TO ------------. COMMISSION FILE NUMBER 002-41703 THE X-CHANGE CORPORATION (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER) NEVADA 43-1594165 - -------------------------------------------------------------------------------- (STATE OR OTHER JURISDICTION (IRS EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 36 W 44TH STREET - SUITE 1201, NEW YORK, NY 10036 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (646) 728-7023 ISSUER'S TELEPHONE NUMBER APPLICABLE ONLY TO CORPORATE ISSUERS STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON EQUITY, AS OF THE LATEST PRACTICAL DATE: JUNE 30, 2002 37,002,000 ---------------------------- TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE). YES ; NO X PART I ITEM 1. FINANCIAL STATEMENTS INDEPENDENT ACCOUNTANT'S REPORT The X-Change Corporation We have reviewed the accompanying balance sheets of The X-Change Corporation as of June 30, 2002 and December 31, 2001, and the related statements of operations for the three and six months ended June 30, 2002 and 2001 and statement of cash flows for the six month periods ended June 30, 2002 and 2001. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statement taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. Respectfully submitted \s\ Robison, Hill & Co. ----------------------------- Certified Public Accountants Salt Lake City, Utah August 6, 2002 F-2 THE X-CHANGE CORPORATION BALANCE SHEETS (Unaudited)
June 30, December 31, 2002 2001 --------------- --------------- ASSETS: Current Assets: Cash $ - $ 4,055 Accounts Receivable 27,837 - Salary Advances 3,000 - Deposits 26,351 Prepaid Expenses 32,045 - --------------- --------------- Total Current Assets 89,233 4,055 --------------- --------------- Fixed Assets: Hardware 100,602 - Office Equipment 16,982 11,349 Accumulated Depreciation (7,358) (1,527) --------------- --------------- Net Fixed Assets 110,226 9,822 --------------- --------------- Intangibles and Other Assets: Licensing and Distribution Rights - WebIAm 522,710 483,758 Accumulated Amortization (150,340) (67,189) --------------- --------------- Net Intangible and Other Assets 372,370 416,569 --------------- --------------- Total Assets $ 571,829 $ 430,446 =============== ===============
F-3 THE X-CHANGE CORPORATION BALANCE SHEETS (Unaudited)
June 30, December 31, 2002 2001 --------------- --------------- LIABILITIES AND STOCKHOLDERS' EQUITY: - ------------------------------------- Current Liabilities: Accounts payable $ 215,604 $ 78,010 Bank Overdraft 5,352 - Deferred Revenue 55,401 - Loans payable - shareholders 230,936 44,418 --------------- --------------- Total Current Liabilities 507,293 122,428 --------------- --------------- Stockholders' Equity: Preferred Stock, Par Value $.001, Series A Convertible - 5,000,000 Shares Authorized, Issued 5,000,000 and 914,500 at June 30, 2002 and December 31, 2001 5,000 915 Common Stock, Par value $.001, Authorized 100,000,000 Shares, Issued 37,002,000 and 1,100,000 at June 30, 2002 and December 31, 2001 37,002 11,000 Paid-In Capital 2,106,492 1,137,585 Retained Deficit (2,083,958) (841,482) --------------- --------------- Total Stockholders' Equity 64,536 308,018 --------------- --------------- Total Liabilities and Stockholders' Equity $ 571,829 $ 430,446 =============== ===============
See accompanying notes and accountants' report F-4 THE X-CHANGE CORPORATION STATEMENT OF OPERATIONS (Unaudited)
For the Three Months For the Six Months Ended Ended June 30, June 30, ------------------------------- ------------------------------ 2002 2001 2002 2001 -------------- --------------- -------------- -------------- Revenues $ 162,636 $ - $ 293,741 $ - -------------- --------------- -------------- -------------- Expenses: Selling & Marketing 375 - 1,415 - General & Administrative 890,185 298,936 1,532,729 404,082 -------------- --------------- -------------- -------------- Operating Loss (727,924) (298,936) (1,240,403) (404,082) Other Income (Expense): Interest (939) (837) (2,073) (1,374) -------------- --------------- -------------- -------------- Loss Before Income Taxes (728,863) (299,773) (1,242,476) (405,456) Income Taxes - - - - -------------- --------------- -------------- -------------- Net Loss $ (728,863) $ (299,773)$ (1,242,476) $ (405,456) ============== =============== ============== ============== Basic & Diluted loss per share $ (0.01) $ (0.31) $ (0.01) $ (0.48) ============== =============== ============== ==============
See accompanying notes and accountants' report F-5 THE X-CHANGE CORPORATION STATEMENT OF CASH FLOWS (Unaudited)
For the Six Months Ended June 30, ------------------------------- 2002 2001 -------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (1,242,476) $ (405,456) Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: Depreciation and Amortization 88,982 330 Issuance of Preferred Stock for Expenses - 6,800 Issuance of Common Stock for Licensing Rights - 150,000 Change in operating assets and liabilities: (Increase) Decrease in Accounts Receivable (27,836) - (Increase) Decrease in Salary Advances (3,000) - (Increase) Decrease in Deposits (26,350) - (Increase) Decrease in Prepaid Expenses (32,044) - Increase (Decrease) in Accounts Payable 137,594 68,111 Increase (Decrease) in Bank Overdraft 5,352 Increase (Decrease) in Deferred Revenues 55,401 - -------------- --------------- Net Cash Used in Operating Activities (1,044,377) (180,215) -------------- --------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Hardware (100,601) - Purchase and Development of Licensing Rights (38,952) (381,398) Purchase of Office Equipment (5,632) (4,300) -------------- --------------- Net Cash Provided by Investing Activities (145,185) (385,698) -------------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES: Loans from Shareholders 226,518 30,833 Payment of Shareholder Loans (40,000) - Issuance of Common Stock for Cash - 75,000 Issuance of Preferred Stock for Cash 998,989 590,000 -------------- --------------- Net Cash Provided by Financing Activities 1,185,507 695,833 -------------- ---------------
F-6 THE X-CHANGE CORPORATION STATEMENT OF CASH FLOWS (Unaudited)
For the Six Months Ended June 30, ------------------------------- 2002 2001 -------------- --------------- Net (Decrease) Increase in Cash and Cash Equivalents $ (4,055) $ 129,920 Cash and Cash Equivalents at Beginning of Period 4,055 - -------------- --------------- Cash and Cash Equivalents at End of Period $ - $ 129,920 ============== =============== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for: Interest $ - $ - -------------- --------------- Franchise and income taxes $ 680 $ - -------------- ---------------
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: On June 30, 2001, the Company issued 150,000 common shares valued at $1 per share for partial payment of licensing rights for WebIAm Software. See accompanying notes and accountants' report F-7 THE X-CHANGE CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (Unaudited) NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of accounting policies for The X-Change Corporation is presented to assist in understanding the Company's financial statements. The accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements. Interim Reporting The unaudited financial statements as of June 30, 2002 and for the three and six month periods then ended, reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to fairly state the financial position and results of operations for the three and six months. Operating results for interim periods are not necessarily indicative of the results which can be expected for full years. Organization and Basis of Presentation The Company was incorporated under the laws of the State of Delaware on February 5, 1969 as Diversified Technologies Group, Inc., the Company reincorporated and changed its domicile to the State of Nevada on October 4, 2000. The Company on December 1, 1999, entered into an agreement (Reorganization Agreement) to acquire all of the outstanding capital stock of S&J (Chatteris) Holdings Limited, a United Kingdom corporation (S&J Holdings). Pursuant to the Reorganization Agreement, the Company agreed to acquire all of the outstanding capital stock of S&J in exchange for shares of Common Stock. The Reorganization Agreement required S&J Holdings to perform certain conditions, including the delivery of audited financial statements. These conditions had not been fulfilled by February 14, 2000; therefore, the agreement was rescinded and deemed to have been void and of no effect from the beginning as if the acquisition had not occurred. All shares issued in the acquisition were returned to treasury. The Company also attempted two acquisitions in 2000, neither of which were able to deliver the required financial statements. The first was rescinded and the second was not consummated. In June 2001, the Company entered into a reorganization agreement that was later rescinded for failure to provide adequate compliance with the representations, warranties and covenants of the agreement. In July 2001, the Company changed its name to The X-Change Corporation. On January 15, 2002, the Company merged with WEBiX, Inc. This merger resulted in the Company acquiring the business and operations of WEBiX, in exchange for the issuance by the Company of a controlling interest in its shares to the former shareholders of WEBiX. F-8 THE X-CHANGE CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (Unaudited) NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Nature of Business The Company has completed the software and regulatory undertakings necessary to allow for the introduction of the first phase of the Internet-accessible Alternative Trading System(ATS) WEBIXTRADER. The System will be utilized by brokerages to transact business in Microcap Securities that are currently quoted on the Nasdaq OTC Bulletin Board. The Company will offer access to its web-based System on a subscription basis which will be available to registered brokerages only. The Company will charge transaction fees for all transactions that are processed through the System by each subscriber. In addition to the WEBiX exchange software license, the Company has an exclusive royalty free license to the ABS exchange; the eBond exchange; the High Grade software; the New Issue software; the Parts exchange; and the jsBuilder software. The Company may re-sell these system licenses to clients and thereby earn additional revenue. Additionally, the Company anticipates earning additional revenue from customization of these Systems to meet client specifications. The Company also acts as a Service Bureau providing facilities management, managed services, and web hosting to client licensees and non-licensee customers. Cash and Cash Equivalents For the purpose of reporting cash flows, the Company considers all highly liquid debt instruments purchased with maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. Concentrations of Credit Risk The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. Pervasiveness of Estimates The preparation of financial statements in conformity with generally accepted accounting principles required 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. F-9 THE X-CHANGE CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (Unaudited) NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Stock Compensation for Non-Employees The Company accounts for the fair value of its stock compensation grants for non-employees in accordance with FASB Statement 123. The fair value of each grant is equal to the market price of the Company's stock on the date of grant if an active market exists or at a value determined in an arms length negotiation between the Company and the non-employee. Advertising Costs Advertising costs are expensed as incurred. Advertising expense for the three months ended June 30, 2002 was $375. Property and Equipment Property and equipment are stated at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives, principally on a straight-line basis from 3 to 5 years. Upon sale or other disposition of property and equipment, the cost and related accumulated depreciation or amortization are removed from the accounts and any gain or loss is included in the determination of income or loss. Expenditures for maintenance and repairs are charged to expense as incurred. Major overhauls and betterments are capitalized and depreciated over their useful lives. The Company identifies and records impairment losses on long-lived assets such as property and equipment when events and circumstances indicate that such assets might be impaired. The Company considers factors such as significant changes in the regulatory or business climate and projected future cash flows from the respective asset. Impairment losses are measured as the amount by which the carrying amount of intangible asset exceeds its fair value. F-10 THE X-CHANGE CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (Unaudited) NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The reconciliations of the numerators and denominators of the basic income (loss) per share computations are as follows:
Per-Share Income Shares Amount (Numerator) (Denominator) For the Three Months Ended June 30, 2002 BASIC LOSS PER SHARE Loss to common shareholders $ (728,863) 85,822,000 $ (0.01) =============== =============== ============== For the Three Months Ended June 30, 2001 BASIC LOSS PER SHARE Loss to common shareholders $ (299,773) 957,468 $ (0.31) =============== =============== ============== For the Six Months Ended June 30, 2002 BASIC LOSS PER SHARE Loss to common shareholders $ (1,242,476) 83,997,000 $ (0.01) =============== =============== ============== For the Six Months Ended June 30, 2001 BASIC LOSS PER SHARE Loss to common shareholders $ (405,456) 841,968 $ (0.48) =============== =============== ==============
The effect of outstanding common stock equivalents are anti-dilutive for June 30, 2002 and 2001 and are thus not considered. NOTE 2 - INCOME TAXES As of June 30, 2002, the Company had a net operating loss carryforward for income tax reporting purposes of approximately $2,085,000 that may be offset against future taxable income through 2021. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carryforwards will expire unused. Accordingly, the potential tax benefits of the loss carryforwards are offset by a valuation allowance of the same amount. F-11 THE X-CHANGE CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (Unaudited) NOTE 3 - COMMITMENTS On June 25, 2001, the Company entered into a three year lease agreement for its office facilities. The rental charges are approximately $54,000 to $57,000 per year. On April 10, 2002, the Company entered into another lease agreement for five years to rent additional office facilities. The rental charges for these lease are approximately $8,500 to $9,700 per month starting June 1, 2002. The minimum future lease payments under these leases for the next five years is: 3 Year 5 Year -------------- -------------- 2003 55,620 101,400 2004 57,289 104,949 2005 - 108,622 2006 - 112,424 2007 - 116,359 -------------- -------------- Total Minimum Future Lease Payments 112,909 543,754 -------------- -------------- In conjunction with the acquisition of WebIAm, the Company assumed a data center lease of $5,700 per month through September of 2002. NOTE 4 - LOANS FROM SHAREHOLDERS AND OTHER RELATED PARTY TRANSACTIONS As of June 30, 2002 and December 31, 2001, shareholder payables include approximately $230,936 and $44,418 owing to shareholders of the Company at an interest rate between 4.75% to10%. NOTE 5 - PREFERRED STOCK The Company has authorized a total of 10,000,000 shares of Preferred Stock. Series A Convertible Preferred Stock is the initial series of Preferred Stock. This series shall consist of 5,000,000 shares with a par value of $.001. The Corporation is under no obligation to pay dividends or to redeem the Series A Convertible Preferred Stock. This series of stock is convertible into 10 shares of Common Stock at the option of the shareholder or upon automatic conversion. F-12 THE X-CHANGE CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (Unaudited) NOTE 5 - PREFERRED STOCK (Continued) In the event of any liquidation, dissolution or winding-up of the Corporation, the holders of outstanding shares of Series A Preferred shall be entitled to be paid out of the assets of the Corporation available for distribution to shareholders, before any payment shall be made to or set aside for holders of the Common Stock, at an amount of $1 per share. NOTE 6 - STOCK SPLIT On July 16, 2001, WEBiX, Inc.'s Board of Directors authorized a 60,000 to 1 stock split. As a result of the split, 599,990 shares were issued. Also on July 16, 2001, the number of authorized shares was increased from 100 to 7,500,000 Common and 1,500,000 shares of Preferred along with the par value was changed from $1 to $.01. All references in the accompanying financial statements to the number of common shares and per-share amounts for 2001 have been restated to reflect the stock split. NOTE 7 - STOCK TRANSACTIONS On June 30, 2001, the Company issued 150,000 common shares valued at $1 per share for partial payment of licensing rights for WebIAm Software. Throughout 2001, 350,000 shares of common stock were purchased at $.21 per share and 895,000 shares of preferred stock were purchased at $1 per share. Also 19,500 preferred shares were issued in exchange for services. During the first quarter of 2002, 800,000 shares of Series A Convertible Preferred Stock were issued for cash at $1 per share. During the second quarter of 2002, 200,000 shares of Series A Convertible Preferred Stock were issued for cash at a $1 per share. NOTE 8 - MERGER/ACQUISITION On January 15, 2002, the Company and its newly created wholly owned subsidiary X-Change Technologies Corp, merged with WEBiX, Inc. (a Florida Corporation). As a result, the Company acquired the business and operations of WEBiX, in exchange for the issuance of a controlling interest in The X-Change Corporations' shares to the former shareholders of WEBiX. Under the Plan of Merger, 24,000,000 shares of Common Stock, 4,000,000 shares of Series A Convertible Preferred Stock (convertible into 40,000,000 shares of Common Stock) and 40,000,000 warrants were issued. In addition, certain existing shareholders of the Company surrendered approximately F-13 THE X-CHANGE CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (Unaudited) NOTE 8 - MERGER/ACQUISITION (Continued) - --------------------------- 9,500,000 shares of Common Stock to treasury. In connection with this merger, the par value of the Series A Convertible Preferred Stock changed from $.01 to $.001. All references in the accompanying financial statements to the number of Series A Convertible Preferred shares and per-share amounts for 2001 have been restated to reflect the change in par value. F-14 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION This discussion should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's annual report on Form 10-KSB for the year ended December 31, 2001. Plan of Operation On January 15, 2002, the Company obtained an exclusive, royalty free (subject to an early termination or royalty provisions), license for a period of two years ending on the date which is 3 months after the second anniversary of January 15, 2002. The rights to use for any and all purposes (including the right to sublicense software to others) were obtained in exchange for the assumption of certain obligations incurred by WebIAm and the issuance of one hundred thousand (100,000) shares of Common Stock of WEBiX ("the WEBiX shares") with a valuation of $20,000. The Company introduced the WEBIXTRADER ATS System on July, 02, 2002. The System is an Internet-based trading and order processing System for Microcap Securities, (also known as OTC Bulletin Board stocks). The launch of the System should contribute revenues to operations in the third quarter of 2002. Results of Operations The Company had $891,816 and $1,536,533 in expenses for the three and six month periods ended June 30, 2002 and $299,773 and $405,456 for the three and six months ended June 30, 2001. For the quarter ended June 30, 2002, the Company earned revenues of $162,636 from a software development project for a single client and from facilities management for several clients. The client is involved in business to consumer e-commerce. As this is the first year that the Company has revenue, no meaningful comparison can be made to prior periods. Losses on operations will continue until sufficient revenues can be achieved from the various business units of the Company. Liquidity and Capital Resources At June 30, 2002, the Company had total current assets of $83,877 and total assets of $566,477 as compared to $4,055 current assets and $430,446 total assets at December 31, 2001. The Company had a net working capital (deficit) of ($267,602) and ($118,373) at June 30, 2002 and December 31, 2001. Net stockholders' equity in the Company was and $64,220 as of June 30, 2002 and $308,018 as of December 31, 2001. The Company anticipated the need to raise additional capital before the end of the second quarter of 2002. Discussions with the investment banking firm of Harris, Hoover & Lewis, Inc. resulted in the issuance of an Investment Offering Summary for $500,000 8% Subordinated F-15 Convertible Notes of July '04 and Warrants. The offering was dated June 24, 2002. On July 18, 2002, the offering was terminated. The Company continues to seek strategic alternatives, including discussions with joint venture partners and investors. The accompanying quarterly financial statements have been prepared assuming the Company will continue as a going concern. The Company's ability to continue as a going concern, however, is dependent upon its ability to obtain additional funding which will enable the Company to implement its business objectives in order to generate cash flow. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES During the second quarter of 2002, 200,000 shares of Series A Convertible Preferred Stock were issued for cash at a $1 per share. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K EXHIBITS The following exhibits are included as part of this report: Exhibit Number Title of Document 99.1 Certification Pursuant to 18 U.S.C. SS 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. F-16 99.2 Certification Pursuant to 18 U.S.C. SS 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. REPORTS The Company filed a Current Report on June 27, 2002 for Item 7 and 9 to provide a revised and updated description of the business of the Company, its proposed annual meeting for 2002 and disclosure of the security ownership pf certain beneficial owners and management. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this August 14, 2002 THE X-CHANGE CORPORATION (Registrant) DATE: August 14, 2002 By: /s/ K. Richard B. Niehoff ------------------------------ -------------------------------- K. Richard B. Niehoff President and Chief Executive Officer (Principal Executive, Financial and Accounting Officer) F-17 EX-99 3 form10qsb063002_ex99-1.txt EXHIBIT 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SS 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of The X-Change Corporation on Form 10-QSB for the period ending June 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, K. Richard B. Niehoff, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. SS 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Richard B. Niehoff - ----------------------------------------------------------------------- K. Richard B. Niehoff Chief Executive Officer August 14, 2002 EX-99 4 form10qsb063002_ex99-2.txt EXHIBIT 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SS 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of The X-Change Corporation on Form 10-QSB for the period ending June 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Dean Efkarpidis, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. SS 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Dean Efkarpidis - -------------------------------------------------------------------- Dean Efkarpidis Chief Financial Officer August 14, 2002 -----END PRIVACY-ENHANCED MESSAGE-----