Attached files
| file | filename |
|---|---|
| EX-32 - GREEN EQUITY HOLDINGS, INC. | v188648_ex32.htm |
| EX-31 - GREEN EQUITY HOLDINGS, INC. | v188648_ex31.htm |
| EX-10.23 - GREEN EQUITY HOLDINGS, INC. | v188648_ex10-23.htm |
| EX-10.20 - GREEN EQUITY HOLDINGS, INC. | v188648_ex10-20.htm |
| EX-10.21 - GREEN EQUITY HOLDINGS, INC. | v188648_ex10-21.htm |
| EX-10.22 - GREEN EQUITY HOLDINGS, INC. | v188648_ex10-22.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(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, 2009
¨ TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the
transition period from ______ to _______
Commission
file number 0-52396
CX2
TECHNOLOGIES, INC.
(Exact
name of registrant as specified in its charter)
|
Nevada
|
20-2889663
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification
No.)
|
3700 Airport Road, Suite
410B, Boca Raton, FL 33431
(Address
of principal executive offices)
(561)
347-9235
Registrant's
telephone number
(Former
name, former address and former fiscal year, if changed since last
report)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ¨ No x
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (of for such shorter period that the registrant was required to submit
and post such files). Yes x No ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer,"
"accelerated filer" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act. Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer
¨ Smaller reporting
company x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes ¨ No x.
As of
June 15, 2010 there were 27,472,960 shares of the registrant's common stock
outstanding.
CX2
TECHNOLOGIES, INC.
INDEX
|
PART
I FINANCIAL INFORMATION
|
|
|
Item
1. Financial Statements
|
|
|
Condensed
Balance Sheets at September 30, 2009 (unaudited) and March 31,
2009
|
3
|
|
Condensed
Statements of Operations for the three and six months ended September 30,
2009 and 2008 (unaudited)
|
4
|
|
Condensed
Statements of Changes in Cash Flows for the six months ended September 30,
2009 and 2008 (unaudited)
|
5
|
|
Notes
to Condensed Financial Statements (unaudited)
|
6
|
|
Item
2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
|
13
|
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
15
|
|
Item
4T. Controls and Procedures
|
15
|
|
PART
II OTHER INFORMATION
|
|
|
Item
1A. Risk Factors
|
17
|
|
Item
5. Other Information
|
17
|
|
Item
6. Exhibits
|
17
|
2
CX2
TECHNOLOGIES, INC.
CONDENSED
BALANCE SHEETS
As
of September 30, 2009 and March 31, 2009
|
September 30,
|
March 31,
|
|||||||
|
2009
|
2009
|
|||||||
|
(Unaudited)
|
(Audited)
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT
ASSETS
|
||||||||
|
Cash
|
$ | 1,478 | $ | 192 | ||||
|
Notes
receivable-related party
|
1,245 | 1,245 | ||||||
|
Other
current assets
|
5,000 | 2,500 | ||||||
|
TOTAL
CURRENT ASSETS
|
7,723 | 3,937 | ||||||
|
Property
& Equipment, net
|
115,103 | 141,249 | ||||||
|
TOTAL
ASSETS
|
$ | 122,826 | $ | 145,186 | ||||
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||
|
CURRENT
LIABILITIES
|
||||||||
|
Accounts
payable and accrued expenses
|
$ | 656,909 | $ | 646,297 | ||||
|
Notes
payable - related parties
|
391,106 | 391,106 | ||||||
|
Note
payable - others
|
198,425 | 135,073 | ||||||
|
TOTAL
LIABILITIES
|
1,246,440 | 1,172,476 | ||||||
|
Commitments
and Contingencies
|
||||||||
|
STOCKHOLDERS'
DEFICIT
|
||||||||
|
Preferred
stock, $0.001 par value; 5,000,000 shares authorized; none issued and
outstanding
|
- | - | ||||||
|
Common
stock, $0.001 par value, 200,000,000 shares authorized; 22,057,210
and shares issued and outstanding at September 30, 2009; and
March 31, 2009, respectively
|
22,557 | 22,557 | ||||||
|
Additional
paid in capital
|
8,290,332 | 8,290,332 | ||||||
|
Accumulated
deficit
|
(9,436,503 | ) | (9,340,179 | ) | ||||
|
TOTAL
STOCKHOLDERS' DEFICIT
|
(1,123,614 | ) | (1,027,290 | ) | ||||
|
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$ | 122,826 | $ | 145,186 | ||||
See
accompanying notes to the condensed financial statements.
3
CX2
TECHNOLOGIES, INC.
CONDENSED
STATEMENTS OF OPERATIONS
(UNAUDITED)
For
the Three and Six Months Ended September 30, 2009 and 2008
|
For the Three Months Ended
|
For the Six Months Ended
|
|||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
REVENUES
|
$ | - | $ | 31,151 | $ | 2,500 | $ | 36,401 | ||||||||
|
Cost
of sales
|
- | - | ||||||||||||||
|
GROSS
MARGIN
|
- | 31,151 | 2,500 | 36,401 | ||||||||||||
|
OPERATING
EXPENSES:
|
||||||||||||||||
|
Selling,
general and administrative
|
36,622 | 134,239 | 72,678 | 252,724 | ||||||||||||
|
Depreciation
and amortization
|
13,073 | 13,073 | 26,146 | 26,146 | ||||||||||||
|
TOTAL
OPERATING EXPENSES
|
49,695 | 147,312 | 98,824 | 278,870 | ||||||||||||
|
NET
LOSS FROM OPERATIONS
|
(49,695 | ) | (116,161 | ) | (96,324 | ) | (242,469 | ) | ||||||||
|
OTHER
EXPENSE
|
||||||||||||||||
|
Interest
expense
|
- | (4,729 | ) | - | (4,737 | ) | ||||||||||
|
TOTAL
OTHER EXPENSES
|
(49,695 | ) | (120,890 | ) | (96,324 | ) | (247,206 | ) | ||||||||
|
NET
LOSS
|
$ | (49,695 | ) | $ | (120,890 | ) | $ | (96,324 | ) | $ | (247,206 | ) | ||||
|
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANIDING-BASIC AND DILUTED
|
23,553,100 | 23,057,210 | 23,057,210 | 23,057,210 | ||||||||||||
|
LOSS
PER COMMON SHARES-BASIC AND DILUTED
|
$ | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) |
$
|
$ | (0.01 | ) | |||
See
accompanying notes to the condensed financial statements.
4
CX2
TECHNOLOGIES, INC.
CONDENSED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
For
the Six Months Ended September 30, 2009 and 2008
|
For the Six Months Ended
|
||||||||
|
September 30,
|
||||||||
|
2009
|
2008
|
|||||||
|
CASH
FLOW FROM OPERATING ACTIVITIES:
|
||||||||
|
Net
loss
|
$ | (96,324 | ) | $ | (247,206 | ) | ||
|
Adjustment
to reconcile net income (loss) to net cash used in operating
activities:
|
||||||||
|
Depreciation
and amortization
|
26,146 | 26,146 | ||||||
|
Changes
in assets and liabilities:
|
||||||||
|
Notes
receivable-related party
|
- | (1,245 | ) | |||||
|
Prepaid
expenses
|
(2,500 | ) | ||||||
|
Deposits
|
- | 5,448 | ||||||
|
Accounts
payable and accrued liabilities
|
10,612 | 130,822 | ||||||
|
Net
Cash Used in Operating Activities
|
(62,066 | ) | (86,035 | ) | ||||
|
CASH
FLOW FROM FINANCING ACTIVITIES:
|
||||||||
|
Proceeds
from notes payable
|
63,352 | 100,619 | ||||||
|
Repayment
of notes payable
|
- | (12,000 | ) | |||||
|
Net
cash provided by financing activities
|
63,352 | 88,619 | ||||||
|
Net
decrease in cash
|
1,286 | 2,584 | ||||||
|
Cash
and cash equivalents at beginning of period
|
192 | 2,917 | ||||||
|
Cash
and cash equivalents at end of period
|
$ | 1,478 | $ | 5,501 | ||||
|
Supplemental
Disclosure of Cash Flow Information:
|
||||||||
|
Cash
paid for:
|
||||||||
|
Interest
|
$ | - | $ | - | ||||
|
Taxes
|
$ | - | $ | - | ||||
|
Supplemental
Disclosure of Non-Cash Investing and Financing Activities:
|
||||||||
|
Conversion
of note payable - related party to equity
|
$ | - | $ | 467,710 | ||||
See
accompanying notes to the condensed financial statements.
5
CX2
TECHNOLOGIES, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
As
of September 30, 2009
NOTE
1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
CX2
Technologies, Inc. (hereinafter the "Company" or "CX2") was incorporated on May
21, 2002 as Brookview Institute, Inc., under the laws of the State of
Nevada. On November 16, 2005, the Company changed its name to CX2
Technology, Inc. On December 6, 2005, the Company filed articles of
correction to change the name to CX2 Technologies, Inc. On May 10,
2006, the Company domesticated to the State of Florida. Its fiscal
year end is March 31.
The
Company had engaged in the development, operation and management of 220 MHz
digital wireless data communications services. As disclosed in the
Company's Form 10-K for the fiscal year ended March 31, 2009, "The Company
utilized intellectual property licensed from Bizcom pursuant to an agreement
with Bizcom, which subsequently forfeited their IP to Stillwater Asset Backed
Funds. Thus, CX2 no longer believes it has any right to use this IP, and
management is seeking to negotiate a license with Stillwater Asset Backed Funds
to enable the Company to continue to have access to this IP. There can be no
assurance that the Company will be successful in obtaining such a
license." CX2 management and consultants attempted and were not
successful in negotiating with representatives of Stillwater Asset Backed Funds
for the right to use the intellectual property underlying the technology which
was forfeited by Bizcom.
NOTE
2 – INTERIM FINANCIAL STATEMENTS
The
accompanying interim unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 8 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In our opinion, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three and six month periods ended September
30, 2009 are not necessarily indicative of the results that may be expected for
the year ending March 31, 2010. For further information, refer to the financial
statements and footnotes thereto included in our Annual Report on Form 10-K for
the fiscal year ended March 31, 2009.
NOTE
3 – GOING CONCERN
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. The Company had a net loss of
$96,324 and a negative cash flow from operations of $62,066 during the six
months ended September 30, 2009, along with a working capital deficiency of
$1,232,930 and a stockholder's deficiency of $1,117,827. These
factors raise substantial doubt about the Company's ability to continue as a
going concern. The Company was in the development stage from May 2002
until January 2007, at which time operations began. The Company has
incurred a loss from operations, and its present level of revenues is not
sufficient to cover all the Company's incurred expenses. Management
recognizes that the Company must generate additional resources to enable it to
pay its obligations as they come due, and that the Company must ultimately
achieve profitable operations. Management's plan in this regard is to
find an existing revenue producing company, or a company with assets to take
over or use to expand operations. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
6
CX2
TECHNOLOGIES, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
As
of September 30, 2009
NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of
Accounting
The
financial statements are prepared using the accrual basis of accounting where
revenues and expenses are recognized in the period in which they were
incurred. The basis of accounting conforms to accounting principles
generally accepted in the United States of America.
Revenue
Recognition
Revenue
from users for network services is recognized at the time that the services are
provided. Revenue from sales of radios and other related equipment is
recognized at date of delivery to the customer and when collection is reasonably
assured. Revenue from consulting services is recognized at the time
that the services are provided.
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Fair Value of Financial
Instruments
Statement
of Financial Accounting Standards (SFAS) No. 107, Disclosures About Fair Value
of Financial Instruments, defines the fair value of a financial instrument as
the amount at which the instrument could be exchanged in a current transaction
between willing parties. The carrying values of the Company's
financial instruments, which consist of current liabilities, approximate fair
values due to the short-term maturities of such instruments.
Net Loss Per
Share
The
Company follows the provisions of SFAS No. 128, "Earnings per Share," which
requires companies with complex capital structures or common stock equivalents
to present both basic and diluted earnings per share ("EPS") on the face of the
income statement. Basic EPS is calculated as income available to
common stockholders divided by the weighted average number of common shares
outstanding during the period. Diluted EPS is calculated using the
"if converted" method for common stock equivalents. As of September
30, 2009 there were no common stock equivalents outstanding.
7
CX2
TECHNOLOGIES, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
As
of September 30, 2009
Recent Accounting
Pronouncements
Recent
accounting pronouncements that the Company has adopted or that will be required
to adopt in the future are summarized below.
In August
2009, the FASB issued ASU 2009-05 which includes amendments to Subtopic 820-10,
"Fair Value Measurements and
Disclosures—Overall". The update provides clarification that in
circumstances, in which a quoted price in an active market for the identical
liability is not available, a reporting entity is required to measure fair value
using one or more of the techniques provided for in this update. The amendments
in this ASU clarify that a reporting entity is not required to include a
separate input or adjustment to other inputs relating to the existence of a
restriction that prevents the transfer of the liability and also
clarifies that both a quoted price in an active market for the
identical liability at the measurement date and the quoted price for the
identical liability when traded as an asset in an active market when no
adjustments to the quoted price of the asset are required are Level 1 fair value
measurements. The guidance provided in this ASU is effective for the first
reporting period, including interim periods, beginning after
issuance. The adoption of this standard did not have a material
impact on the Company's financial position and results of
operations.
In
September 2009, the FASB issued ASU 2009-06, Income Taxes (Topic 740), "Implementation Guidance on
Accounting for Uncertainty in Income Taxes and Disclosure Amendments for
Nonpublic Entities", which provides implementation guidance on accounting
for uncertainty in income taxes, as well as eliminates certain disclosure
requirements for nonpublic entities. For entities that are currently
applying the standards for accounting for uncertainty in income taxes, this
update shall be effective for interim and annual periods ending after September
15, 2009. For those entities that have deferred the application of accounting
for uncertainty in income taxes in accordance with paragraph 740-10-65-1(e),
this update shall be effective upon adoption of those standards. The adoption of
this standard is not expected to have an impact on the Company's financial
position and results of operations since this accounting standard update
provides only implementation and disclosure amendments.
In
September 2009, the FASB has published ASU No. 2009-12, "Fair Value Measurements and
Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net
Asset Value per Share (or Its Equivalent)". This ASU amends Subtopic
820-10, "Fair Value
Measurements and Disclosures – Overall", to permit a reporting entity to
measure the fair value of certain investments on the basis of the net asset
value per share of the investment (or its equivalent). This ASU also requires
new disclosures by major category of investments including the attributes of
investments within the scope of this amendment to the Codification. The guidance
in this Update is effective for interim and annual periods ending after December
15, 2009. Early application is permitted. The adoption of this
standard is not expected to have an impact on the Company's financial position
and results of operations.
8
CX2
TECHNOLOGIES, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
As
of September 30, 2009
In
October 2009, the FASB has published ASU 2009-13, "Revenue Recognition (Topic
605)-Multiple Deliverable Revenue Arrangements", which addresses the
accounting for multiple-deliverable arrangements to enable vendors to account
for products or services (deliverables) separately rather than as a combined
unit. Specifically, this guidance amends the criteria in Subtopic 605-25, "Revenue
Recognition-Multiple-Element Arrangements", for separating consideration
in multiple-deliverable arrangements. This guidance establishes a selling price
hierarchy for determining the selling price of a deliverable, which is based on:
(a) vendor-specific objective evidence; (b) third-party evidence; or (c)
estimates. This guidance also eliminates the residual method of allocation and
requires that arrangement consideration be allocated at the inception of the
arrangement to all deliverables using the relative selling price method and also
requires expanded disclosures. The guidance in this update is effective
prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
The adoption of this standard is not expected to have any impact on the
Company's financial position and results of operations.
In
October 2009, the FASB has published ASU 2009-14, "Software (Topic 985)-Certain
Revenue Arrangements that Include Software Elements" and changes the
accounting model for revenue arrangements that include both tangible products
and software elements. Under this guidance, tangible products containing
software components and nonsoftware components that function together to deliver
the tangible product's essential functionality are excluded from the software
revenue guidance in Subtopic 985-605, "Software-Revenue
Recognition". In addition, hardware components of a tangible product
containing software components are always excluded from the software revenue
guidance. The guidance in this ASU is effective prospectively for
revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010. Early adoption is permitted. The
adoption of this standard is not expected to have any impact on the Company's
financial position and results of operations.
In
December 2009, the FASB has published ASU 2009-16 "Transfers and Servicing (Topic
860): Accounting for Transfers of Financial Assets." ASU No. 2009-16
is a revision to ASC 860, "Transfers and Servicing,"
and amends the guidance on accounting for transfers of financial assets,
including securitization transactions, where entities have continued exposure to
risks related to transferred financial assets. ASU No. 2009-16 also expands
the disclosure requirements for such transactions. This ASU will become
effective for us on April 1, 2010. The adoption of this standard
is not expected to have any impact on the Company's financial position and
results of operations.
In
December 2009, the FASB has published ASU 2009-17 "Consolidations (Topic 810):
Improvements to Financial Reporting by Enterprises Involved with Variable
Interest Entities." ASU No. 2009-17 amends the guidance for
consolidation of VIEs primarily related to the determination of the primary
beneficiary of the VIE. The adoption of this standard is not expected to have
any impact on the Company's financial position and results of
operations.
In
January 2010, the FASB has published ASU 2010-01 "Equity (Topic 505) - Accounting for
Distributions to Shareholders with Components of Stock and Cash—a consensus of
the FASB Emerging Issues Task Force," as codified in ASC 505. ASU
No. 2010-01 clarifies the treatment of certain distributions to
shareholders that have both stock and cash components. The stock portion of such
distributions is considered a share issuance that is reflected in earnings per
share prospectively and is not a stock dividend. The amendments in this Update
are effective for interim and annual periods ending on or after December 15,
2009 and should be applied on a retrospective basis. Early adoption
is permitted. The adoption of this standard is not expected to have
an impact on the Company's financial position and results of
operations.
9
CX2
TECHNOLOGIES, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
As
of September 30, 2009
In
January 2010, the FASB has published ASU 2010-02 "Consolidation (Topic 810) -
Accounting and Reporting for Decreases in Ownership of a Subsidiary—a Scope
Clarification," as codified in ASC 810, "Consolidation." ASU
No. 2010-02 applies retrospectively to April 1, 2009, our adoption
date for ASC 810-10-65-1 as previously discussed in this financial note. This
ASU clarifies the applicable scope of ASC 810 for a decrease in ownership in a
subsidiary or an exchange of a group of assets that is a business or nonprofit
activity. The ASU also requires expanded disclosures. The amendments in this
Update are effective for interim and annual periods ending on or after December
15, 2009, and should be applied on a retrospective basis. The
adoption of this standard is not expected to have any impact on the Company's
financial position and results of operations.
In
January 2010, the FASB has published ASU 2010-06 "Fair Value Measurements and
Disclosures (Topic 820): - Improving Disclosures about Fair Value
Measurements". ASU No. 2010-06 clarifies improve disclosure
requirement related to fair value measurements and disclosures – Overall
Subtopic (Subtopic 820-10) of the FASB Accounting Standards Codification. The
new disclosures and clarifications of existing disclosures are effective for
interim and annual reporting periods beginning after December 15, 2009, except
for the disclosure about purchase, sales, issuances, and settlement in the roll
forward of activity in Level 3 fair value measurements. Those
disclosures are effective for fiscal years beginning after December 15, 2010,
and for interim periods within those fiscal years. The amendments in this Update
are effective for interim and annual periods ending on or after December 15,
2009, and should be applied on a retrospective basis. The adoption of
this standard is not expected to have a material impact on the Company's
financial position and results of operations.
Other
ASUs not effective until after September 30, 2009 are not expected to have a
significant effect on the Company's financial position or results of
operations.
NOTE
5 – NOTES PAYABLE
Debt due
as of September 30, 2009 consists of the following:
|
2009
|
||||
|
Promissory
note to a related party, payable in monthly installments of
$25,000. Interest calculated at 5% per
annum. Includes accrued interest of $13,031
|
$
|
391,106
|
||
|
Unsecured
note payable to GEOCommand, Inc., this note is payable on demand with no
interest.
|
96,325
|
|||
| Note payable - officer |
92,100
|
|||
| Note payable - other |
10,000
|
|||
|
589,531
|
||||
|
Less
current portion of long term notes payable
|
589,531
|
|||
|
Total
notes payable
|
$
|
-
|
||
10
CX2
TECHNOLOGIES, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
As
of September 30, 2009
During
the three months ended September 30, 2009, GEOCommand, Inc., loaned the Company
an additional $49,465 for working capital purposes. These loans are
unsecured, due on demand and bear no interest.
During
the six months ended September 30, 2009, GEOCommand, Inc., and
officers have loaned the Company a total of $63,252 for working
capital purposes. These loans, which total $188,425, are unsecured,
due on demand and bear no interest.
The
Company also owes Geocommand, Inc., in connection with a management consulting
contract, a total of $200,000 as of September 30, 2009. This total is
included in accounts payable and accrued expenses in the accompanying financial
statements.
NOTE
6 – STOCKHOLDERS' EQUITY
Common
Stock
All
shares of common stock are identical with each other in every respect, and the
holders thereof are entitled to one vote for each share of common stock upon all
matters upon which the shareholders have the right to vote.
Preferred
Stock
The
Company has 5,000,000 shares of $0.001 par value preferred stock authorized with
such preferences as the Board of Directors may designate.
Private Placements of Common
Stock
The
Company previously offered, through its private placement memorandum dated March
6, 2006 and as amended on September 27, 2006 (the "PPM"), up to a maximum of
5,000,000 shares of its common stock par value $.001 per share, at a price of
$1.00 per share for total gross offering proceeds of up to
$5,000,000. The PPM was terminated in June of 2008.
NOTE
7 – COMMITMENTS AND CONTINGENCIES
Operating Lease
Obligations
In April,
2006, the Company entered into a 60-month operating lease for office space in
Boynton Beach, Florida beginning June 1, 2006 for $4,459 per month, exclusive of
recurring utility expenses. The Company vacated this office space in
February 2008 and the landlord obtained a $226,562 default judgment which has
been accrued in these financial statements.
NOTE
8 – RELATED PARTY TRANSACTIONS
Bizcom
USA, Inc. ("Bizcom") is a major shareholder of the Company. The
Company had non-exclusive access to 500 million minutes of airtime in the 220
MHz frequency band as a result of its Airtime Agreement with Bizcom which was
entered into in March 2006. In addition, the Company had another
non-exclusive license agreement with Bizcom which provided for rights to use
certain wireless digital data intellectual property, including rights to further
develop the existing technology or new technology, which new development would
be owned by the Company. The Company owes Bizcom approximately
$391,106 as of September 30, 2009. In late 2008 the Company learned
that Bizcom had lost ownership of its FCC licenses and thus the Company does not
believe it continues to have any rights to use minutes or other rights granted
to it under its agreements with Bizcom.
11
CX2
TECHNOLOGIES, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
As
of September 30, 2009
NOTE
9 – CONCENTRATION OF CREDIT RISKS
Customers
For the
six months ended September 30, 2009, one customer accounted for all of the
Company's sales. The Company purchases its radios primarily from one
vendor, which accounted for all of the Company's product purchases during that
period. As such, the Company believes that it has a concentration of credit risk
within its receivables because of the limited customer base.
NOTE
10 – SUBSEQUENT EVENT
The
Company received $11,164 in loans from a GEOCommand, Inc., and officers
subsequent to September 30, 2009. These loans are unsecured, due on
demand and bear no interest. The Company had no material subsequent
events to disclose from the balance sheet date to the filing date. The Company
evaluated subsequent events through June 1, 2010.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following is a discussion and analysis of our financial condition and results of
operations for the three and six months ended September 30, 2009 and significant
factors that could affect our prospective financial condition and results of
operations. You should read this discussion in conjunction with our financial
statements and notes contained in our Form 10-K for the fiscal year ended March
31, 2009. Historical results may not be indicative of future
performance.
Caution Regarding
Forward-Looking Information
All
statements contained in this Form 10-Q, other than statements of historical
facts, that address future activities, events or developments are
forward-looking statements, including, but not limited to, statements containing
the words "believe," "expect," "anticipate," "intends," "estimate," "forecast,"
"project," and similar expressions. All statements other than
statements of historical fact are statements that could be deemed
forward-looking statements, including any statements of the plans,
strategies and objectives of management for future operations; any statements
concerning proposed new developments; any statements regarding future economic
conditions or performance; any statements of belief; and any statements of
assumptions underlying any of the foregoing. These statements are
based on certain assumptions and analyses made by us in light of our experience
and our assessment of historical trends, current conditions and expected future
developments as well as other factors we believe are appropriate under the
circumstances. However, whether actual results will conform to the
expectations and predictions of management is subject to a number of risks and
uncertainties described under "Risk Factors" in Item 1A of Part II below and in
the "Risk Factors" section of our Form 10-K for the fiscal year ended March 31,
2009 that may cause actual results to differ materially.
Consequently,
all of the forward-looking statements made in this Form 10-Q are qualified by
these cautionary statements and there can be no assurance that the
actual results anticipated by management will be realized or, even if
substantially realized, that they will have the expected consequences to or
effects on our business operations. Readers are cautioned not to
place undue reliance on such forward-looking statements as they speak only of
the Company's views as of the date the statement was made. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Overview
Until
December 31, 2008, CX2 Technologies, Inc. was engaged in the development and
sale of its 220 MHz digital wireless data communications technologies and
related services.
The
Company previously marketed CX2 branded data technology and services for use by
various commercial/industrial applications and the Homeland Security/Public
Safety sector. Due to advances in 220 MHz technology and equipment
and the lower costs generally associated with lower frequency band usage in
comparison to cellular telephone and other wireless communications services,
management believed a broad spectrum of potential commercial and public
safety/emergency disaster relief end-users may find the Company's services
advantageous and desirable, which could result in fee-based subscribership
and/or high margin technology sales.
As the
intellectual property underlying the CX2 branded technology was licensed from a
major shareholder, and this intellectual property was forfeited by this licensor
shareholder to one of its creditors, the Company lost its ability to continue
developing and marketing its products and services. Subsequently, the
Company sold its hard assets to a consultant in exchange for cancellation of
past due consulting fees. The Company now has no operations and is
seeking to acquire or merge with a revenue producing company as a possible way
to preserve some shareholder value. However, there can be no
assurance that this will occur.
We have a
working capital shortage and must continue to seek and secure significant
capital from outside funding sources as our cash flow from operations is
insufficient to sustain operations. No assurances can be given that
we will be successful in obtaining such needed capital. Our inability
to promptly secure needed capital will materially adversely affect the Company
and its operations, as we believe our current cash position and anticipated
receipt of revenues will enable us to sustain current operations for up to
approximately one month from the date of this filing.
13
We have
no financing sources in place and no assurances can be given as to the
availability of any financing, or if available, the terms thereof. We
will require additional capital within the next month to continue our
operations, the failure of which to obtain could materially adversely affect the
Company and its business.
The
Company has limited assets and capital. For our fiscal year ended
March 31, 2009, we had a net loss of $565,001, and for the six months ended
September 30, 2009, we had a net loss of $96,324.
Results
of Operations
Three
months ended September 30, 2009 compared to the three months ended September 30,
2008
Revenues. Revenues
from operations for the three months ended September 30, 2009 reflected a
decrease of $31,151 from the three months ended September 30, 2008, due to a
decrease in sales of equipment, primarily base stations. We had no
revenues in the three months ended September 30, 2009 as we had ceased marketing
our products and services. Revenues in the quarter ended September
30, 2008 were minimal as the Company had not yet fully commenced its operations
and no longer plans to do so unless and until a new source of operations is
acquired by the Company.
Cost of
Sales. There were no costs of sales for the three months ended
September 30, 2009 and the three months ended September 30, 2008 due to having
no sales in the three months ended September 30, 2009, and, for the three months
ended September 30, 2009, due to the Company's decision to adjust its radio
inventory that was considered obsolete at March 31, 2008.
Operating
Expenses. Operating expenses decreased by $97,617 to $49,695
for the three months ended September 30, 2009, as compared to $147,312 for the
three months ended September 30, 2008, as a result of a decrease in marketing
and investor relations costs.
Net
Loss. The Company's net loss was $49,695 for the three months
ended September 30, 2009, as compared to a net loss of $120,890 for the three
months ended September 30, 2008.
Six
months ended September 30, 2009 compared to the six months ended September 30,
2008
Revenues. Revenues
from operations for the six months ended September 30, 2009 reflected a decrease
of $33,901 from the six months ended September 30, 2008, due to a decrease in
sales of equipment, primarily base stations. Revenues in both periods
were minimal as the Company had not yet fully commenced its operations and no
longer plans to do so unless and until a new source of operations is acquired by
the Company.
Cost of
Sales. There were no costs of sales for the six months ended
September 30, 2009 and the six months ended September 30, 2008, due to the
Company's decision to adjust its radio inventory that was considered obsolete at
March 31, 2008.
Operating
Expenses. Operating expenses decreased by $180,046 to $98,824
for the six months ended September 30, 2009, as compared to $278,870 for the six
months ended September 30, 2008, as a result of a decrease in marketing and
investor relations costs.
Net
Loss. The Company's net loss was $96,324 for the six months
ended September 30, 2009, as compared to a net loss of $247,206 for the six
months ended September 30, 2008.
Liquidity
and Capital Resources
Our
financial statements appearing elsewhere in this report have been prepared on a
going concern basis that contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of business.
Management realizes that we must generate capital and revenue resources to
enable us to achieve profitable operations. To the extent that we are unable to
obtain additional working capital from operations and/or other sources as
required or otherwise desired, our financial statements will be materially
affected and we may be forced to curtail our operations.
We were
in a working capital shortage at the fiscal year end of March 31, 2009 and at
September 30, 2009, and cash flow from operations is insufficient to sustain our
operations as of the date of this filing. As of the date of this
filing, the Company still requires additional financing to sustain operations
until a new source of potential revenue can be located. No assurances are given
that we will be successful in obtaining additional needed
capital. Our inability to secure such additional capital will
materially adversely affect the Company and its operations. We believe our
current cash position after funding and anticipated receipt of revenues will
enable us to sustain current operations for up to approximately one
month.
14
At
September 30, 2009, we had stockholders' deficiency of $1,117,827, total assets
of $122,826 and total current liabilities of $1,246,440. For the six months
ended September 30, 2009, we have incurred losses of $96,324 and for the six
months ended September 30, 2009, we used cash in operations of $62,066. Our
operations and acquisitions have been funded by the sale of equity in private
equity financing from accredited investors and by loans from our management.
These funds have been used for working capital and general corporate purposes
and acquisition and licensing costs in furtherance of our business plan. There
are no current arrangements with purchasers for any of our
securities.
In the
event we are unable to raise additional capital within the next one month, such
event will significantly restrict and possibly cause us to cease our operations
which would have a substantial adverse effect on the Company and
shareholders.
We do not
currently anticipate any material capital expenditures for our existing
operations. We do not currently anticipate purchasing, leasing or
selling any plant or significant equipment during approximately the next twelve
(12) months. To the extent that we engage in any acquisitions, we plan to
utilize shares of the Company's common stock for such purposes, and may assume
certain obligations and debt in such transactions. Such common stock
issuance, as well as any common stock issuance for cash to the extent affected,
will have the effect of creating further shareholder dilution.
We do not
believe that inflation has had a material effect on our results of operations.
However, there can be no assurances that our business will not be affected by
inflation in the future.
We have
no off balance sheet arrangements.
Critical
Accounting Policies and Estimates
Note 4 of
the Notes to the Financial Statements, includes a summary of the significant
accounting policies and methods used in the preparation of our Financial
Statements. We consider the following accounting policies and methods
to be the most important to our financial position and results of operations,
either because of the significance of the financial statement item or because
they require the exercise of significant judgment or the use of
estimates. In addition, Financial Reporting Release No. 61 requires
all companies to include a discussion to address, among other things, liquidity,
off-balance sheet arrangements, contractual obligations and commercial
commitments.
Revenue
Recognition
Revenue
from users for network services is recognized at the time that the services are
provided. Revenue from sales of radios and other related equipment is
recognized at date of delivery to the customer and collection is reasonably
assured. Revenue from consulting services is recognized at the time
that the services are provided.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
As a
smaller reporting company, the Company is not required to provide Part I, Item 3
disclosure in this Quarterly Report.
ITEM
4T. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of the design and operation of our disclosure controls and
procedures, as such term is defined under Rules 13a-14(c) and 15d-14(c)
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as of September 30, 2009. Based on that evaluation, our
principal executive officer and our principal financial officer concluded that
the design and operation of our disclosure controls and procedures were
effective. The design of any system of controls is based in part upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote. However,
management believes that our system of disclosure controls and procedures is
designed to provide a reasonable level of assurance that the objectives of the
system will be met.
15
Changes
in Internal Control over Financial Reporting
There
have not been any changes in our internal control over financial reporting (as
such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)
during the most recent fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
16
PART
II
OTHER
INFORMATION
ITEM
1A. Risk Factors.
There
have been no material changes to the risk factors discussed in Item 1A of
our Annual Report on Form 10-K for the fiscal year ended March 31,
2009.
ITEM
5. Other Information.
During
the quarter ended September 30, 2009, the Company entered into four promissory
notes in favor of GEOCommand, Inc., a consultant to the Company – one dated July
31, 2009 in the principal amount of $37,200, one dated August 6, 2009 in the
principal amount of $8,500, one dated August 27, 2009 in the principal amount of
$2,400 and one dated September 30, 2009 in the principal amount of
$1,365.92. The proceeds of the notes were used by the Company for
working capital. The notes are due on demand and do not bear
interest.
ITEM
6. Exhibits and Reports on Form 8-K.
|
(a)
|
Exhibits:
|
|
|
10.20
|
Promissory
Note dated July 31, 2009 issued by CX2 Technologies, Inc. in favor of
GEOCommand, Inc. in the principal amount of
$37,200
|
|
|
10.21
|
Promissory
Note dated August 6, 2009 issued by CX2 Technologies, Inc. in favor of
GEOCommand, Inc. in the principal amount of
$8,500
|
|
|
10.22
|
Promissory
Note dated August 27, 2009 issued by CX2 Technologies, Inc. in favor of
GEOCommand, Inc. in the principal amount of
$2,400
|
|
|
10.23
|
Promissory
Note dated September 30, 2009 issued by CX2 Technologies, Inc. in favor of
GEOCommand, Inc. in the principal amount of
$1,365.92
|
|
|
31
|
Rule
13a-14(a)/15d-14(a) Certification of Principal Executive and Principal
Financial Officer
|
|
|
32
|
Section
1350 Certification
|
|
(b)
|
Reports
on Form 8-K:
|
None.
17
SIGNATURES
Pursuant
to the requirements 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.
|
Date:
June 21, 2010
|
CX2
Technologies, Inc.
|
|
(Registrant)
|
|
|
By: /s/ Lester
Hahn
|
|
|
Lester
Hahn, Chief Executive Officer, Principal Executive,
|
|
|
Financial
and Accounting Officer
|
18