-----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, NxZJsakHBVKPKZRAmkagfXC/XXOuHdxwFh0ti/MDUx4jxvEhzUTdrGIWX/IiXEnl vLKtjwLNNcgsgHrmm3wPrw== 0000939802-03-000116.txt : 20030415 0000939802-03-000116.hdr.sgml : 20030415 20030414192137 ACCESSION NUMBER: 0000939802-03-000116 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030415 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: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 002-41703 FILM NUMBER: 03649388 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 10KSB 1 form10ksb123102.txt U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-KSB (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 2002 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. Commission file number 002-41703 THE X-CHANGE CORPORATION (Name of Small Business Issuer in Its Charter) Nevada 43-1594165 (State of Incorporation or Organization) (I.R.S. Employer Identification No.) 48 S.W. 16th Street, Dania Beach, FL 33004 (Address of principal executive offices) (Zip Code) (954) 927-0034 (Issuer's telephone number, including area code) Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: COMMON STOCK, $.001 PAR VALUE Title of Class Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] YES [ ] NO Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] State issuer's revenues for its most recent fiscal year: $390,357. As of April 10, 2003, there were 22,540,000 shares of Common Stock outstanding, none of which were held by non-affiliates. The aggregate market value of such Common Stock (based upon the average of the bid and asked prices on April 10, 2003) of the Registrant held by non-affiliates was approximately $0. As of April 10, 2003. Documents incorporated by reference: None. Transitional Small Business Disclosure Format (check one): [ ] YES [X] NO THE X-CHANGE CORPORATION FORM 10-KSB TABLE OF CONTENTS PAGE PART I ITEM 1. Description of Business..............................................3 ITEM 2. Description of Property..............................................4 ITEM 3. Legal Proceedings....................................................4 ITEM 4. Submission of Matters to a Vote of Security Holders..................4 PART II ITEM 5. Market for Common Equity and Related Stockholder Matters.............4 ITEM 6. Management's Discussion and Analysis or Plan of Operation............5 ITEM 7. Financial Statements.................................................6 ITEM 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure...................................6 PART III ITEM 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16 (a) of the Exchange Act..........6 ITEM 10. Executive Compensation...............................................8 ITEM 11. Security Ownership of Certain Beneficial Owners and Management...... 9 ITEM 12. Certain Relationships and Related Transactions.......................9 ITEM 13. Exhibits and Reports on Form 8-K.....................................9 ITEM 14. Controls and Procedures.............................................10 Signatures...................................................................11 2 RISK FACTORS AND CAUTIONARY STATEMENTS Forward-looking statements in this report are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1933, as amended. The Company wishes to inform readers that actual results may differ substantially from such forward-looking statements. Forward-looking statements include statements concerning underlying assumptions and other statements that are other than statements of historical fact. For example, words such as "may," "will," "should," "estimates," "predicts," "potential," "continue," "strategy," "believes," "anticipates," "plans," "expects," "intends" and similar expressions are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the statements, including, but not limited to, the following: the ability of the Company to provide for its obligations, to provide for its working capital needs from operating revenues, to obtain additional financing, to meet competitive challenges and technological changes and other risks as may be detailed in the Company's periodic report filings with the Securities and Exchange Commission. ITEM 1 DESCRIPTION OF BUSINESS On January 15, 2002, the Company closed under an Agreement and Plan of Merger with WEBiX, a privately-held Delaware corporation (the "Plan of Merger"), which resulted in WEBiX becoming a wholly-owned subsidiary of the Company. The Plan of 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. After closing, the shareholders of the Company elected a new board of directors which, in turn, appointed new executive officers for the Company. The Company acquired the business and operations of WEBiX by issuing (a) 24,000,000 shares of its Common Stock to the common shareholders of WEBiX on a pro rata basis, (b) 4,000,000 shares of its Series A Convertible Preferred Stock and (c) 40,000,000 warrants to the shareholders of WEBiX' on a pro rata basis. Immediately prior to closing certain existing shareholders of the Company surrendered approximately 9,500,000 shares of Common Stock of the Company to treasury, which reduced the number of outstanding shares of Common Stock of the Company immediately prior to closing to 13,002,000. Following closing the Company had outstanding 37,002,000 shares of Common Stock, 4,000,000 shares of Series A Convertible Preferred Stock (which are convertible into 40,000,000 shares of Common Stock) and 40,000,000 Warrants. On Dec 23, 2002, the company mailed all shareholders a Consent Solicitation for the purpose of entering into and closing under a Securities Repurchase Agreement which, effectively, proposed an unwinding of the Plan of Merger. The solicitation received the requisite number of consents and all conditions precedent to closing were subsequently fulfilled. The parties closed under the Securities Repurchase Agreement on March 13, 2003. The former board of directors resigned effective the closing date. 3 The Repurchase, essentially, resulted in the sale of all Registrant's assets in exchange for the surrender of all securities held by the former WEBiX shareholders in Registrant and the assumption by WEBiX of all the Company's debt immediately prior to closing. The repurchase effected a change in control over the business, policies and affairs of the Company from the WEBiX shareholders to those shareholders holding securities in the Company prior to January 15, 2002. The Company now has outstanding approximately 22,540,000 shares of common stock, which was the amount outstanding immediately prior to closing of the Plan of Merger on January 15, 2002. All lock-up agreements pertaining to these shares were released at closing. The common shares are the only securities of the Company now outstanding. The Company remains actively engaged in the process of locating a merger and/or acquisition candidate. ITEM 2 DESCRIPTION OF PROPERTY The executive offices of the Company, as of the date of this report, are located at 48 S.W. 16th Street, Dania Beach, FL 33004. The Company is receiving the use of these premises free of charge from its former President. The telephone number at this address is 954.927.0034. ITEM 3 LEGAL PROCEEDINGS There are no pending legal proceedings to which the Company is a party or of which any of its properties are subject, nor are there any proceedings known to the Company to be contemplated by any governmental authority. Additionally, the Company is unaware of any legal proceedings, pending or contemplated, in which any director, officer, affiliate or any principal security holder of the Company is a party or has an interest adverse to the Company. ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Stockholder's Consent for the Securities Repurchase, unwinding the merger with WebIX, was summitted to Sharehoders on Dec 28, 2002. The solicitation period closed on March 13, 2003. PART II ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS PRINCIPAL MARKET AND SALES PRICES FOR COMPANY'S COMMON STOCK As of April 10, 2003, there were 22,540,000 shares of Common Stock of the Company issued and outstanding which were held of record by 305 4 shareholders. Because brokerage firms hold a substantial number of shares in "street name" on behalf of their customers, the Company is unable to estimate the total number of stockholders represented by these record holders. As of April 10, 2003, there were no shares of Preferred Stock of the Company issued or outstanding. The Company's Common Stock is currently quoted on the OTCBB, under the trading symbol "XCHC." The following table sets forth the range of the high and low bid prices per share of the Common Stock as reported by the NASD during the last two calendar years for the period indicated. Prices reported are based on quotations between dealers, and do not reflect retail mark-up, mark-down or commissions, and may not necessarily represent actual transactions. The reported prices have been adjusted to retroactively reflect a reverse one-for-fifty (1:50) share split which took place in the quarter ended June 30, 2000, and a forward four-for-one (4:1) share split which took place in the fourth quarter of 2000.
------------------------------------------------------------------------------------------ FISCAL YEAR FISCAL YEAR FISCAL YEAR 2002 2001 2000 ------------------------------------------------------------------------------------------ High Low High Low High Low ------------------------------------------------------------------------------------------ First Quarter .70 .10 $0.68 $0.22 $2.40 $0.30 ------------------------------------------------------------------------------------------ Second Quarter .35 .07 $0.45 $0.22 $0.30 $.00 ------------------------------------------------------------------------------------------ Third Quarter .07 .05 $1.30 $0.21 $10.00 $1.20 ------------------------------------------------------------------------------------------ Fourth Quarter .07 .03 $0.75 $0.18 $3.50 $0.10 ------------------------------------------------------------------------------------------
DIVIDENDS The Company has never paid any cash dividends on its Common Stock. The Company intends to retain and use any future earnings for the development and expansion of its business and does not anticipate paying any cash dividends in the foreseeable future. ITEM 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The following discussion should be read in conjunction with the Company's audited financial statements and notes thereto which appear elsewhere in this report. The Company ceased all operations in WEBiX during the fourth quarter of 2002 and the acquisition of WEBiX was unwound on March 13, 2003. As is common with development stage companies, the Company has had recurring losses from operations since inception and had a deficit at year end. The company was able to obtain only enough working capital, as loans, to close its operations in an orderly fashion RESULTS OF OPERATIONS. The Company conducted only start up operations in the implementation of the WEBiX business plan during 2002, which was unsuccessful and caused the cessation of operations in WEBiX during the fourth quarter of the year. WEBiX had no revenue producing operations during 2001. 5 LIQUIDITY AND CAPITAL RESOURCES. WEBiX concluded a private placement of shares of preferred stock on January 15, 2002 which raised approximately $1,000,000. These funds were utilized to implement the business plan of WEBiX and fund the operations of the Company. These proceeds, followed by loans from shareholders of the Company sustained operations throughout 2002. The Company is now providing for its operations from existing management. ITEM 7 FINANCIAL STATEMENTS The financial statements of the Company as of and for the years ended December 31, 2002 and December 31, 2001 are included immediately following the signature page to this Report beginning at page F-1. ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT The following table sets forth all of the current directors and executive officers of the Company, including their ages, as of the date of this report. All of the other persons listed below were elected or appointed during 2002.
- ---------------------------------------------- ------------------------- --------------------------------------------- NAME AGE POSITIONS HELD - ---------------------------------------------- ------------------------- --------------------------------------------- Robert Merritt Barbee 33 Chairman of the Board of Directors Director - ---------------------------------------------- ------------------------- --------------------------------------------- Jeff Troncone 50 Chief Executive Officer, President, Chief Financial Officer, Treasurer - ---------------------------------------------- ------------------------- ---------------------------------------------
None of the executive officers, directors and/or control persons of the Company have filed any bankruptcy petition, have been convicted in or been the subject of any pending criminal proceedings, or the subject of any order, judgment or decree involving the violation of any state or federal securities laws. No current director has any arrangement or understanding whereby he is or will be selected as a director or as an executive officer. All directors will hold office until the next annual meeting of shareholders and until their 6 respective successors have been duly elected and qualified, unless and until they earlier resign or are removed from office. The executive officers of the Company are elected by the Board of Directors at its annual meeting immediately following the annual meeting of shareholders. The Company does not currently have any standing audit, nominating or compensation committees, or any committee performing similar functions. ROBERT MERRITT BARBEE, Chairman of the Board. Mr. Barbee, 33, has been actively involved in the oil and gas business in East Texas since 1989. He has been Vice-President of Oil Patch Pipe & Supply since 2000. This entity is an independent oil field supply store which has garnered the distributorship for micro chemical applications to down hole well bore repair. Mr. Barbee acted as President of S&B Resources from 1991 until 2002, when he directed the sale of all its assets. S&B was a small, privately-held oil and gas company which owned and operated its own production. From 1992 through 1994 he directed LAZ Financial, a Russian company involved in oil and gas natural resource. From 1995 through 1998 Mr. Barbee was Operations Management for 4-S Operating, one of the top ten operators in East Texas, where he oversaw the production of approximately 15,000 barrels of oil monthly. Mr. Barbee also worked with Gregg Industrial Insulators, Inc., where he increased sales by approximately $5,000,000 annually. Mr. Barbee also serves on the Board of Directors for Merritt Tool in Kilgore, Texas. This company is a privately owned machine tool shop which focuses principally on the aviation and oil and gas industries. Mr. Barbee graduated from Kilgore Junior College with an associates degree in general business in 1992. JEFFREY TRONCONE, President and CEO. Mr. Troncone, 50, has 25 years of marketing, sales, and promotions experience working with Fortune 500 companies as well as major broadcast networks, advertising, media, and public relations companies. Jeff founded International Talent Negotiators, a company that provided Fortune 500 companies and their agencies with celebrities for television, broadcast, and print advertising campaigns. This included such renown celebrities and talent as Britney Spears, Michael Jackson, Elizabeth Taylor, Rod Stewart, Orson Welles, Joe Montana, Linda Evans, and Christie Brinkley. Subsequently, he founded Starkives, which was a developmental company whose primary product was the first interactive database with a full range of pictures, sound, and motion. He has packaged and developed deals for and with Omnicom, InterpublicGroup, PepsiCo, Avon Products, Blockbuster, Southland Corporation (7-Eleven), General Mills, and Sears. Jeff next developed the award-winning syndicated radio talk show "The Working Mom on the Run" which aired on over 175 stations. In addition, the radio talk show spawned an award-winning TV short-form feature that he executive produced and syndicated to over 75 broadcast stations. Mr. Troncone's background also includes: consultation to the Home Shopping Network for new product development and on-air-talent; program development with station General Managers and program directors at Clear Channel Communications; creation of a national 26-city promotional tour for 7-Eleven Stores; and the development of promotional broadcast initiatives with Simon Mall Entertainment for many of their malls. 7 COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company during its past fiscal year, and Form 5 and amendments thereto furnished to the Company with respect to its most recent fiscal year, there were no directors, officers or shareholders that failed to file, on a timely basis, reports required to be filed under Section 16(a) of the Exchange Act. ITEM 10. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE. The following table presents the total compensation that the Company paid during fiscal year 2002 to its Former Chief Executive Officer from Jan 1 to July 1. In 2002, no other executive officer of the Company earned any salary whatsoever.
Annual Compensation Long Term Compensation - ---------------------- -------- ---------------- ------------- ------------------- ---------------- ------------------ Name and Position Year Salary Bonus Annual Number of All other ($) ($) Compensation ($) Securities Compensation (1) Underlying ($) Options - ---------------------- -------- ---------------- ------------- ------------------- ---------------- ------------------ K. Richard B. 2002 $80,208.37 -0- $124,375 ---- ---- Niehoff, President and Chief Executive Officer - ---------------------- -------- ---------------- ------------- ------------------- ---------------- ------------------
(1) Information on "perks" and other personal benefits has been omitted because the aggregate value of these items does not meet the minimum amount required for disclosure under the Securities and Exchange Commission's regulations. COMPENSATION OF DIRECTORS. During the most recent fiscal year, the Company did not compensate its directors for service on the Board of Directors nor did it reimburse its directors for expenses incurred for attendance at meetings of the Board of Directors. EMPLOYMENT AGREEMENTS. The Company does not currently have any employment agreements with any of its executive officers. 8 ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding the beneficial ownership as of April 10, 2003, of the Common Stock by (1) each person known to the Company to be the beneficial owner of more than five percent of the Common Stock, (2) each director and executive officer of the Company, and (3) all directors and officers of the Company as a group. Information relating to beneficial ownership of the Company is based upon "beneficial ownership" concepts set forth in the rules promulgated under the Exchange Act. Under these rules a person is deemed to be a "beneficial owner" of a security if that person has or shares "voting power," which includes the power to vote or to direct the voting of a security, or "investing power," which includes the power to dispose or to direct the disposition of a security. Under the rules, more than one person may be deemed to be a beneficial owner of the same securities. A person is also deemed to be a beneficial owner of any security as to which that person has the right to acquire beneficial ownership within sixty (60) days from the current date.
Name and address of Beneficial Owner Number of Shares (1) (2) (3) Percent of Class Bruce Pierce ............... 2,250,000 9.98% Connie Howard .............. 2,250,000 9.98% Teresa McKee ............... 2,250,000 9.98% Lynn Elliott ............... 2,250,000 9.98% Cynthia Jared .............. 2,250,000 9.98% Rachell York ............... 2,250,000 9.98% All directors and executive officers None 0% as a group (2 persons)
______________________ (1)Based upon 22,540,000 shares of Common Stock outstanding on April 10, 2003. ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS None ITEM 13 EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS
Exhibit No. Exhibit Name 2.1 Plan of Merger, incorporated by reference to Exhibit 10.1 to Form 8-K dated January 30, 2002 - Previously Filed. 3.1 Articles of Incorporation - Previously Filed.
9
Exhibit No. Exhibit Name 3.2 Certificate of Amendment to Articles of Incorporation of Registrant filed with the Secretary of State of the State of Nevada on January 14, 2002 - Previously Filed. 3.3 By-Laws - Previously Filed. 4.1 Specimen of Common Stock Certificate - Previously Filed. 4.3 Form of Warrant Agreement, previously filed, incorporated by reference to Exhibit 10.2 to Form 8-K dated January 30, 2002 - Previously Filed. 10.1 License Agreement dated as of June 20, 2001 between WebIAm, Inc. as licensor, and WEBiX Inc. (the predecessor of the Company), as licensee- Previously Filed. 10.2 Amendment to License Agreement dated as of January 15, 2002 - Previously Filed. 10.3 Form of Lock-Up Agreement, incorporated by reference to Exhibit 4.1 to Form 8-K dated January 30, 2002 - Previously Filed. 10.4 Securities Repurchase Agreement - Previously Filed. 21 List of subsidiaries - None 99.1* Certification Pursuant to 18 U.S.C.ss.1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. * Filed herewith.
(B) REPORTS ON FORM 8-K FILED IN THE FOURTH QUARTER OF 2002 o The Company filed a Current Report on October 3, 2002 for Item 5 to provide information regarding the resignation and appointment of Chief Executive Officer. o The Company filed a Current Report on December 26, 2002 for Item 7 announcing execution of securities repurchase agreement. ITEM 14. 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 annual report on Form 10-KSB, that the Company's disclosure controls and procedures have functioned effectively so as to provide those officers the information necessary whether: (i) this annual report on Form 10-KSB 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 annual report on Form 10-KSB, and 10 (ii) the financial statements, and other financial information included in this annual report on Form 10-KSB, 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 annual report on Form 10-KSB. 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. SIGNATURES In accordance with 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. THE X-CHANGE CORPORATION (Registrant) Dated: April 14, 2003 By: /s/ Jeff Troncone Jeff Troncone, President and Chief Executive Officer (Principal Executive and Financial Officer) In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE /s/ Robert Merritt Barbee Chairman of the Board of April 14, 2003 Robert Merritt Barbee Directors /s/ Jeff Troncone President, Chief Executive and April 14, 2003 Jeff Troncone Accounting Officer, Treasurer 11 I, Jeff Troncone, certify that: 1. I have reviewed this annual report on form 10-KSB of The X-Change Corporation. 2. Based on my knowledge, this annual 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 annual report. 3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual 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 annual 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 annual report (the "evaluation date"); and C) presented in this annual 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 annual 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: April 14, 2003 By: /s/ Jeff Troncone Jeff Troncone President and Chief Executive Officer (Principal Executive and Financial Officer) 12 THE X-CHANGE CORPORATION -:- INDEPENDENT AUDITOR'S REPORT DECEMBER 31, 2002 AND 2001 CONTENTS
Page Independent Auditor's Report...............................................................................F - 1 Balance Sheets December 31, 2002 and 2001...............................................................................F - 2 Statements of Operations For the Years Ended December 31, 2002 and 2001...........................................................F - 3 Statement of Stockholders' Equity For the Years Ended December 31, 2002 and 2001............................................................F - 4 Statements of Cash Flows For the Years Ended December 31, 2002 and 2001...........................................................F - 6 Notes to Financial Statements..............................................................................F - 8
INDEPENDENT AUDITOR'S REPORT The X-Change Corporation We have audited the accompanying balance sheets of The X-Change Corporation December 31, 2002 and 2001, and the related statements of operations, cash flows and stockholders' equity for the two years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The X-Change Corporation as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the two years ended December 31, 2002 and 2001 in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Respectfully submitted /s/ ROBISON, HILL & CO. Certified Public Accountants Salt Lake City, Utah April 11, 2003 F - 1 THE X-CHANGE CORPORATION BALANCE SHEETS
December 31, 2002 2001 ---------------- ------------------ ASSETS: Current Assets: $ - $ - Net Assets of Discontinued Operations - 308,018 ---------------- ------------------ Total Assets $ - $ 308,018 ================ ================== LIABILITIES AND STOCKHOLDERS' EQUITY: Current Liabilities: $ 625 $ - Net Liabilities of Discontinued Operations 244,249 - ---------------- ------------------ Total Current Liabilities 244,874 - ---------------- ------------------ Stockholders' Equity: Preferred Stock, Par Value $.001, Series A Convertible - 5,000,000 Shares Authorized, Issued 5,000,000 and 4,000,000 at December 31, 2002 and December 31, 2001 5,000 4,000 Common Stock, Par value $.001, Authorized 100,000,000 Shares, Issued 37,602,000 and 24,000,000 at December 31, 2002 and December 31, 2001 37,602 24,000 Paid-In Capital 2,153,891 1,121,500 Retained Deficit (2,441,367) (841,482) ---------------- ------------------ Total Stockholders' Equity (244,874) 308,018 ---------------- ------------------ Total Liabilities and Stockholders' Equity $ - $ 308,018 ================ ==================
See accompanying notes and accountants' report F - 2 THE X-CHANGE CORPORATION STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2002 2001 ------------------ ------------------ Revenues: $ - $ - ------------------ ------------------ Expenses: General & Administrative 46,679 4,300 ------------------ ------------------ Operating Loss (46,679) (4,300) Other Income (Expense): Interest - - ------------------ ------------------ Net Loss from Continuing Operations (46,679) (4,300) ------------------ ------------------ Discontinued Operations Loss from Operations of X-Change Technologies Corp. to be disposed Net of Tax, Effects of $0 (1,553,206) (796,668) ------------------ ------------------ Net Loss $ (1,599,885) $ (800,968) ================== ================== Earnings per Share, Basic & Diluted Income from continuing operations $ - $ - Income (Loss) from discontinued operations (0.03) (0.04) Loss Per Share $ (0.03) $ (0.04) ================== ================== Weighted Average Shares Outstanding 47,218,000 21,141,580 ================== ==================
See accompanying notes and accountants' report F - 3 THE X-CHANGE CORPORATION STATEMENT OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
Preferred Stock Common Stock Paid-In Retained Shares Par Value Shares Par Value Capital Deficit --------------- ------------ --------------- ------------- --------------------------- Balance December 31, 2000 - $ - 600,000 $ 6,000 $ 4,000 $ (40,514) January 15, 2002, Exchange WEBiX shares for X-Change Corporation - - 12,490,000 7,090 (7,090) - --------------- ------------ --------------- ------------- ------------ -------------- Restated Balance December 31, 2000 - - 13,090,000 13,090 (3,090) (40,514) February 28, 2001, Shares Issued For Cash - - 7,637,000 7,637 67,363 - June 30, 2001 Shares Issued For Acquisition of Licensing - - 3,273,000 3,273 146,727 - Cash 2,580,660 2,581 - - 587,419 - Expenses 29,743 30 - - 6,770 - July 30, 2001, Shares Issued For Cash 546,750 547 - - 124,453 - August 31, 2001, Shares Issued For Cash 459,270 459 - - 104,541 - November 2, 2001, Shares Issued For Cash 109,350 109 - - 24,891 - December 7, 2001, Shares Issued For Cash 218,700 219 - - 49,781 - For Expenses 55,527 55 - - 12,645 - Net Loss - - - - - (800,968) --------------- ------------ --------------- ------------- ------------ -------------- Balance at December 31, 2001 4,000,000 4,000 24,000,000 24,000 1,121,500 (841,482) January 15, 2002, to record merger with X-Change Corporation - - 13,002,000 13,002 (14,009) January 8, 2002, Preferred Stock Issued for Cash 150,000 150 - - 149,850 -
F - 4 THE X-CHANGE CORPORATION STATEMENT OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 (Continued)
Preferred Stock Common Stock Paid-In Retained Shares Par Value Shares Par Value Capital Deficit --------------- ------------ --------------- ------------- ------------ -------------- January 17, 2002, Preferred Stock Issued for Cash 250,000 $ 250 - $ - $ 249,750 $ - February 14, 2002, Preferred Stock Issued for Cash 200,000 200 - - 199,800 - February 25, 2002, Preferred Stock Issued for Cash 200,000 200 - - 199,800 - May 24, 2002, Preferred Stock Issued for Cash 200,000 200 - - 199,800 - August 20, 2002, Common Stock issued for Services - - 600,000 600 47,400 - Net Loss - - - - - (1,599,885) --------------- ------------ --------------- ------------- ------------ -------------- Balance at December 31, 2002 5,000,000 $ 5,000 37,602,000 $ 37,602 $ 2,153,891 $ (2,441,367) =============== ============ =============== ============= ============ ==============
See accompanying notes and accountants' report F - 5 THE X-CHANGE CORPORATION STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 2002 2001 ------------------- ------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (1,599,885)$ (800,968) Adjustments to reconcile net loss to net cash Provided by operating activities: Net (Income) Loss from Discontinued Operations 1,553,206 796,668 Increase (Decrease) in Accounts Payable 625 - ------------------- ------------------- Net Cash Used in Continuing Activities (46,054) (4,300) Net Cash Used in Discontinued Activities (1,306,269) (515,446) ------------------- ------------------- Net Cash Used in Operating Activities (1,352,323) (519,746) ------------------- ------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Net Cash from Discontinued Activities (145,189) (492,809) ------------------- ------------------- Net Cash Provided by Investing Activities (145,189) (492,809) ------------------- ------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net Cash from Discontinued Activities 1,497,512 1,012,555 ------------------- ------------------- Net Cash Provided by Financing Activities 1,497,512 1,012,555 ------------------- -------------------
F - 6 THE X-CHANGE CORPORATION STATEMENTS OF CASH FLOWS (Continued)
For the Year Ended December 31, 2002 2001 ------------------- ------------------- Net (Decrease) Increase in Cash and Cash Equivalents $ - $ - Cash and Cash Equivalents at Beginning of Period - - ------------------- ------------------- Cash and Cash Equivalents at End of Period $ - $ - =================== =================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for: Interest $ - $ 2,891 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 YEARS ENDED DECEMBER 31, 2002 AND 2001 (Continued) 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. Nature of Operations and Going Concern The accompanying financial statements have been prepared on the basis of accounting principles applicable to a "going concern", which assume that the Company will continue in operation for at least one year and will be able to realize its assets and discharge its liabilities in the normal course of operations. Several conditions and events cast doubt about the Company's ability to continue as a "going concern". The Company has incurred net losses of approximately $2,500,000 for the period from January 1, 2001 to December 31, 2002, has a liquidity problem, and requires additional financing in order to finance its business activities on an ongoing basis. The Company is actively pursuing alternative financing and has had discussions with various third parties, although no firm commitments have been obtained. In the interim, shareholders of the Company have committed to meeting its minimal operating expenses. The Company's future capital requirements will depend on numerous factors including, but not limited to, actively searching and locating a possible merger and/or acquisition candidate. These financial statements do not reflect adjustments that would be necessary if the Company were unable to continue as a "going concern". While management believes that the actions already taken or planned, will mitigate the adverse conditions and events which raise doubt about the validity of the "going concern" assumption used in preparing these financial statements, there can be no assurance that these actions will be successful. If the Company were unable to continue as a "going concern", then substantial adjustments would be necessary to the carrying values of assets, the reported amounts of its liabilities, the reported expenses, and the balance sheet classifications used. F - 8 THE X-CHANGE CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 (Continued) NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. Subsequent to year end, the Company repurchased its shares and disposed of WEBix. 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 YEARS ENDED DECEMBER 31, 2002 AND 2001 (Continued) 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. During the year, all activity ceased and all of activities related to the trading system were discontinued. 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. F - 10 THE X-CHANGE CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 (Continued) 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 year ended December 31, 2002 was $3,377. Property and Equipment Property and equipment are stated at cost. Depreciation is provided for 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 - 11 THE X-CHANGE CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 (Continued) NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Earnings (Loss) per Share Basic loss per share has been computed by dividing the loss for the year applicable to the common stockholders by the weighted average number of common shares outstanding during the years. There were no common equivalent shares outstanding at December 31, 2002 and 2001. NOTE 2 - INCOME TAXES As of December 31, 2002, the Company had a net operating loss carryforward for income tax reporting purposes of approximately $2,450,000 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. 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 December 31, 2002, the Company has defaulted on these leases. NOTE 4 - LOANS FROM SHAREHOLDERS AND OTHER RELATED PARTY TRANSACTIONS As of December 31, 2002 and 2001 shareholder payables include approximately $555,883 and $44,418 owing to shareholders of the Company at an interest rate between 4.25% to10%. F - 12 THE X-CHANGE CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 (Continued) 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 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. On August 20, 2002, the Company issued 600,000 shares for services. These shares were valued at $.08 per share F - 13 THE X-CHANGE CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 (Continued) NOTE 7 - 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. NOTE 8 - DISCONTINUED OPERATIONS On January 6, 2003, the Company decided to cease operations on the its WEBiX alternative trading system and transferred all of its assets, including the rights to use the technology to X- Change Technologies Corp., a subsidiary of the Company, which as of March 13, 2003 will no longer be a subsidiary per a Securities Repurchase Agreement. The assets and liabilities of X-Change Technologies Corp., consisted of the following:
December 31, December 31, 2002 2001 ----------------- ------------------ Cash $ 63,068 $ 4,055 Prepaid Expenses 20,000 - Office Equipment & Hardware, Net 100,191 9,822 Licensing and Distribution Right, Net 286,695 416,569 ----------------- ------------------ Total Assets 469,954 430,446 ----------------- ------------------ Accounts payable $ 158,322 $ 78,010 Loans payable - shareholders 555,881 44,418 ----------------- ------------------ Total Liabilities 714,203 122,428 ----------------- ------------------ Net Assets (Liabilities) to be Disposed of $ (244,249) $ 308,018 ================= ==================
F - 14 THE X-CHANGE CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 (Continued) NOTE 8 - DISCONTINUED OPERATIONS (Continued) Net Assets (Liabilities) to be disposed of have been separately classified in the accompanying balance sheet at December 31, 2002. The 2001 balance sheet has been restated to conform with the current year's presentation. Operating results of this discontinued operation for the year ended December 31, 2002 are shown separately in the accompanying statement of operations. The operating statement for 2001 has been restated to conform with the current year's presentation and are also shown separately. The operating results of this discontinued operation for the years ended December 31, 2002 and 2001 consist of: For the Year Ended December 31, -------------------------------------- 2002 2001 ------------------ ----------------- Revenues $ 390,357 $ - Expenses (1,943,563) (796,668) ------------------ ----------------- Net Income (Loss) $ (1,553,206) $ (796,668) ================== ================= NOTE 9 - SUBSEQUENT EVENTS On March 13, 2003, the Company closed on a Securities Repurchase Agreement. The Repurchase, essentially, resulted in the sale of all Registrant's assets in exchange for the surrender of all securities held by the former X-Change Technologies shareholders in the Company and the assumption by X-Change Technologies Corp. of all the Company's debt immediately prior to closing. The Repurchase effected a change in control over the business, policies and affairs of the Company from the X-Change shareholders to those shareholders holding securities in the Company prior to January 15, 2002. See Note 7. As a result of the Repurchase, 15,062,000 shares of common stock and 5,000,000 shares of preferred stock were returned to treasury. As of March 13, 2003, the Company now has 22,540,000 shares of common stock, which was the amount outstanding immediately prior to closing of the X-Change Technologies Corp. acquisition on January 15, 2002. All lock-up agreements pertaining to these shares were released effective with the closing. F - 15 EX-99 3 form10ksb123102ex_99-1.txt EXHIBIT 99.1 CEO CERTIFICATION CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of The X-Change Corporation on Form 10-KSB for the period ending December 31, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jeff Troncone, President of the Company, certify, pursuant to 18 U.S.C. Section 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. April 14, 2003 By: /s/ Jeff Troncone Jeff Troncone President and Chief Executive Officer (Principal Executive and Financial Officer) -----END PRIVACY-ENHANCED MESSAGE-----