-----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, QRSFSixhURQttQdaVMtSKSGPfyXe/iGF660Yqtr+oVAn7Dd0PN9Vqp3u8fkW9TBe wCQMtETsU59zjwu1xHHrtw== 0000939802-02-000425.txt : 20021114 0000939802-02-000425.hdr.sgml : 20021114 20021114140141 ACCESSION NUMBER: 0000939802-02-000425 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 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: 02824010 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 form10qsb093002.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 September 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: September 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 September 30, 2002 and December 31, 2001, and the related statements of operations for the three and nine months ended September 30, 2002 and 2001 and statement of cash flows for the nine month periods ended September 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 November 12, 2002 F-2 THE X-CHANGE CORPORATION BALANCE SHEETS (Unaudited)
September 30, December 31, 2002 2001 ----------------- ------------------ ASSETS: Current Assets: Cash $ 567 $ 4,055 Accounts Receivable 1,400 - Deposits 9,417 - Prepaid Expenses 32,044 - ----------------- ------------------ Total Current Assets 43,428 4,055 ----------------- ------------------ Fixed Assets: Hardware 100,606 - Office Equipment 16,980 11,349 Accumulated Depreciation (12,377) (1,527) ----------------- ------------------ Net Fixed Assets 105,209 9,822 ----------------- ------------------ Intangibles and Other Assets: Licensing and Distribution Rights - WebIAm 522,710 483,758 Accumulated Amortization (193,177) (67,189) ----------------- ------------------ Net Intangible and Other Assets 329,533 416,569 ----------------- ------------------ Total Assets $ 478,170 $ 430,446 ================= ==================
F-3 THE X-CHANGE CORPORATION BALANCE SHEETS (Unaudited)
September 30, December 31, 2002 2001 ----------------- ------------------ LIABILITIES AND STOCKHOLDERS' EQUITY: Current Liabilities: Accounts payable $ 196,446 $ 78,010 Deferred Revenue 25,050 - Loans payable - shareholders 409,159 44,418 ----------------- ------------------ Total Current Liabilities 630,655 122,428 ----------------- ------------------ Stockholders' Equity: Preferred Stock, Par Value $.001, Series A Convertible - 5,000,000 Shares Authorized, Issued 5,000,000 and 914,500 at September 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 September 30, 2002 and December 31, 2001 37,002 11,000 Paid-In Capital 2,106,491 1,137,585 Retained Deficit (2,300,978) (841,482) ----------------- ------------------ Total Stockholders' Equity (152,485) 308,018 ----------------- ------------------ Total Liabilities and Stockholders' Equity $ 478,170 $ 430,446 ================= ==================
See accompanying notes and accountants' report F-4 THE X-CHANGE CORPORATION STATEMENT OF OPERATIONS (Unaudited)
For the Three Months For the Nine Months Ended Ended September 30, September 30, ------------------------------------- -------------------------------------- 2002 2001 2002 2001 ----------------- ----------------- ------------------ ------------------ Revenues $ 63,512 $ - $ 357,253 $ - ----------------- ----------------- ------------------ ------------------ Expenses: Selling & Marketing 125 - 1,540 - General & Administrative 275,059 182,706 1,807,788 586,788 ----------------- ----------------- ------------------ ------------------ Operating Loss (211,672) (182,706) (1,452,075) (586,788) Other Income (Expense): Interest (5,348) (1,922) (7,421) (3,296) ----------------- ----------------- ------------------ ------------------ Loss Before Income Taxes (217,020) (184,628) (1,459,496) (590,084) Income Taxes - - - - ----------------- ----------------- ------------------ ------------------ Net Loss $ (217,020) $ (184,628)$ (1,459,496) $ (590,084) ================= ================= ================== ================== Basic & Diluted loss per share $ - $ (0.10) $ (0.02) $ (0.51) ================= ================= ================== ==================
See accompanying notes and accountants' report F-5 THE X-CHANGE CORPORATION STATEMENT OF CASH FLOWS (Unaudited)
For the Nine Months Ended September 30, ------------------------------------- 2002 2001 ----------------- ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (1,459,496) $ (590,084) Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: Depreciation and Amortization 136,838 26,875 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 (1,400) - (Increase) Decrease in Deposits (9,417) - (Increase) Decrease in Prepaid Expenses (32,044) - Increase (Decrease) in Accounts Payable 118,456 4,140 Increase ( Decrease) in Accrued Salaries (30,833) Increase (Decrease) Overdraft - (3,218) Increase (Decrease) in Accrued Expenses 6,471 3,296 Increase (Decrease) in Deferred Revenues 25,050 - ----------------- ------------------ Net Cash Used in Operating Activities (1,215,542) (433,024) ----------------- ------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Hardware (100,606) - Purchase and Development of Licensing Rights (38,952) (483,758) Purchase of Office Equipment (5,631) (9,051) ----------------- ------------------ Net Cash Used in Investing Activities (145,189) (492,809) ----------------- ------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Loans from Shareholders 397,243 30,833 Payment of Shareholder Loans (40,000) - Issuance of Common Stock for Cash - 75,000 Issuance of Preferred Stock for Cash 1,000,000 820,000 ----------------- ------------------ Net Cash Provided by Financing Activities 1,357,243 925,833 ----------------- ------------------
F-6 THE X-CHANGE CORPORATION STATEMENT OF CASH FLOWS (Unaudited)
For the Nine Months Ended September 30, ------------------------------------- 2002 2001 ----------------- ------------------ Net (Decrease) Increase in Cash and Cash Equivalents $ (3,488) $ - Cash and Cash Equivalents at Beginning of Period 4,055 - ----------------- ------------------ Cash and Cash Equivalents at End of Period $ 567 $ - ================= ================== 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 NINE MONTHS ENDED SEPTEMBER 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 September 30, 2002 and for the three and nine 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 nine 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 NINE MONTHS ENDED SEPTEMBER 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 NINE MONTHS ENDED SEPTEMBER 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 September 30, 2002 was $1,540. 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 NINE MONTHS ENDED SEPTEMBER 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 September 30, 2002 Basic Loss per Share Loss to common shareholders $ (217,020) 87,002,000 $ - ================== =================== ================== For the Three Months Ended September 30, 2001 Basic Loss per Share Loss to common shareholders $ (184,628) 1,815,200 $ (0.10) ================== =================== ================== For the Nine Months Ended September 30, 2002 Basic Loss per Share Loss to common shareholders $ (1,459,496) 84,997,000 $ (0.02) ================== =================== ================== For the Nine Months Ended September 30, 2001 Basic Loss per Share Loss to common shareholders $ (590,084) 1,167,212 $ (0.51) ================== =================== ==================
The effect of outstanding common stock equivalents are anti-dilutive for September 30, 2002 and 2001 and are thus not considered. NOTE 2 - INCOME TAXES As of September 30, 2002, the Company had a net operating loss carryforward for income tax reporting purposes of approximately $2,300,000 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 NINE MONTHS ENDED SEPTEMBER 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. As of the date of this report, the Company has defaulted on these leases. Subsequent to the quarter end, an officer of the Company has taken out a lease on the office space and has agreed to let the Company continue operating from this space without any obligation to pay rent. NOTE 4 - LOANS FROM SHAREHOLDERS AND OTHER RELATED PARTY TRANSACTIONS As of September 30, 2002 and December 31, 2001, shareholder payables include approximately $409,159 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. 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. F-12 THE X-CHANGE CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (Unaudited) 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 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-13 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. On September 20, 2002 a new management team was selected. This team plans, during the fourth quarter, to reorganize the company's operations, products and services, raise loans to continue operations, raise permanent funding, and effect a restructuring that is consistent with these new plans. Should these plans be successful, the team expects them to be complete by the end of the fourth quarter or early in the first quarter of 2003. Results of Operations The Company had $275,184 and $1,809,328 in expenses for the three and nine month periods ended September 30, 2002 and $182,706 and $586,788 for the three and nine months ended September 30, 2001. For the quarter ended September 30, 2002, the Company earned revenues of $63,512 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 September 30, 2002, the Company had total current assets of $43,428 and total assets of $478,170 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 ($587,227) and ($118,373) at September 30, 2002 and December 31, 2001. F-14 Net stockholders' equity (deficit) in the Company was and (152,485) as of September 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 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. Item 3. Controls and Procedures The Company's Chief Executive Officer and Chief Financial Officer have concluded, based on an evaluation conducted within 90 days prior to the filing date of this Quarterly Report on Form 10-Q, that the Company's disclosure controls and procedures have functioned effectively so as to provide those officers the information necessary whether: (i) this Quarterly Report on Form 10-Q contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report on Form 10-Q, and (ii) the financial statements, and other financial information included in this Quarterly Report on Form 10-Q, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Quarterly Report on Form 10-Q. There have been no significant changes in the Company's internal controls or in other factors since the date of the Chief Executive Officer's and Chief Financial Officer's evaluation that could significantly affect these internal controls, including any corrective actions with regards to significant deficiencies and material weaknesses. PART II - OTHER INFORMATION Item 1. Legal Proceedings None F-15 Item 2. Changes in Securities None 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. 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 August 9, 2002 for Item 5 to provide information regarding the termination of its private offering of subordinated notes and other matters. F-16 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 November 14, 2002 THE X-CHANGE CORPORATION ------------------------ (Registrant) DATE: November 14, 2002 By: /s/ William F. Frank -------------------------------- ------------------------------------- William F. Frank President and Chief Executive Officer (Principal Executive Officer) DATE: November 14, 2002 By: /s/ Susan Landin -------------------------------- ------------------------------------- Susan Landin Chief Operating Officer (Principal Financial and Accounting Officer) I, William F. Frank, certify that: 1. I have reviewed this quarterly report on form 10-QSB of The X-Change Corporation 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report. 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report. 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in exchange act rules 13a-14 and 15d-14) for the registrant and have: A) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to F-17 us by others within those entities, particularly during the period in which this quarterly report is being prepared; B) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "evaluation date"); and C) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the evaluation date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): A) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and B) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 14, 2002 /s/ William F. Frank President and Chief Executive Officer (Principal Executive Officer) F-18 I, Susan Landin, certify that: 1. I have reviewed this quarterly report on form 10-QSB of The X-Change Corporation 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report. 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report. 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in exchange act rules 13a-14 and 15d- 14) for the registrant and have: A) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; B) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "evaluation date"); and C) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the evaluation date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): A) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and B) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. F-19 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 14, 2002 /s/ Susan Landin Chief Operating Officer (Principal Financial and Accounting Officer) F-20 EX-99 3 form10qsb093002ex_99-1.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 September 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William F. Frank, 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/ William F. Frank President and Chief Executive Officer (Principal Executive Officer) November 14, 2002 EX-99 4 form10qsb093002ex_99-2.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 September 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Susan Landin, Chief Operating 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/ Susan Landin Chief Operating Officer (Principal Financial and Accounting Officer) November 14, 2002 -----END PRIVACY-ENHANCED MESSAGE-----