SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): JULY 27, 2005
THE X-CHANGE CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 002-41703 90-0156146
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
100 Allentown Parkway, Suite 110, Allen, Texas 75002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 747-1206
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
The information set forth in Item 2.01 below is hereby incorporated by
reference into this Item 1.01.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
On July 20, 2005, The X-Change Corporation (the "Company") acquired
allof the outstanding shares (the "Acquisition") of AirGate Technologies, Inc.
("AirGate"), pursuant to a Stock Purchase Agreement (the "Stock Purchase
Agreement") between Michael L. Sheriff and the Company as announced in the
attached press release dated July 28, 2005. A copy of the Stock Purchase
Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K. AirGATE
provides leading-edge wireless technologies. In December 2004, AirGATE
Technologies, Inc. received a purchase order from a Fortune 1000 technology
company with interests in the oil and gas industry for a development project
utilizing radio frequency technology. Phase I is complete and the customer and
AirGATE are evaluating the results, and expect to launch Phase II in the near
future. AirGATE and its customer have filed two patent applications based on the
system and its technology.
As consideration for the Acquisition, the Company issued 10,000,000
shares of its common stock, par value $.001 per share, to Michael L. Sheriff.
Following the Acquisition, the Company will have 24,922,000 shares of its common
stock issued and outstanding.
The information set forth above does not purport to be complete and is
qualified in its entirety by reference to the full text of the Stock Purchase
Agreement, a copy of which is filed herewith as Exhibit 2.1, and is incorporated
herein by reference. A copy of the press release is attached to this Current
Report as Exhibit 99.1 and is incorporated herein by reference.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS.
Upon the closing of the transactions contemplated by the Stock Purchase
Agreement, Charles Stidham resigned each of his positions as Chief Executive
Officer and director of the Company and Dean Elliot resigned his position as
President of the Company. A copy of Mr. Stidham's resignation letter is attached
to this Current Report as Exhibit 99.2 and is hereby incorporated by reference
to this Item 5.02. Immediately thereafter the Acquisition, Michael L. Sheriff
was appointed as Chairman and Chief Executive Officer of the Company.
ITEM 7.01 REGULATION FD DISCLOSURE.
A copy of the press release announcing the Acquisition is attached as
Exhibit 99.1 and is hereby incorporated by reference to this Item 7.01.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
AIRGATE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
-:-
INDEPENDENT AUDITOR'S REPORT
DECEMBER 31, 2004
CONTENTS
Page
Independent Auditor's Report..............................................F - 1
Balance Sheet
December 31, 2004.......................................................F - 3
Statement of Operations
For the Period from February 4, 2004 through December 31, 2004..........F - 4
Statement of Stockholders' Equity
Period March 26, 2001 (inception) to December 31, 2004..................F - 5
Statement of Cash Flows
For the Period from February 4, 2004 through December 31, 2004..........F - 6
Notes to Financial Statements.............................................F - 8
INDEPENDENT AUDITOR'S REPORT
AirGATE Technologies, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of AirGATE Technologies,
Inc. (a development stage company) as of December 31, 2004, and the related
statement of operations and cash flows for the years then ended and the
cumulative since February 4, 2004 (inception of development stage) to December
31, 2004, and the statement of stockholders' equity since March 26, 2001
(inception) to December 31, 2004. 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 audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). 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 AirGATE
Technologies, Inc. (a development stage company) as of December 31, 2004 and the
results of its operations and its cash flows for the period ended December 31,
2004 and the cumulative since February 4, 2004 (inception of development stage)
to December 31, 2004 in conformity with accounting principles generally accepted
in the United States of America.
F-1
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
October 7, 2005
F-2
AIRGATE TECHNOLOGIES, INC.
(A Development Stage Company)
BALANCE SHEET
December 31,
2004
---------------------
ASSETS:
Current Assets:
Cash $ -
---------------------
Total Current Assets -
---------------------
Fixed Assets:
Computer Equipment 13,053
Furniture & Fixtures 14,000
Less Accumulated Depreciation (4,577)
---------------------
Total Fixed Assets 22,476
---------------------
Other Non-Current Assets:
Deposits 2,500
---------------------
Total Assets $ 24,976
=====================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts Payable $ 19,757
Bank Overdraft 16,708
Shareholder Loan 153,098
---------------------
Total Current Liabilities 189,563
---------------------
Stockholders' Equity:
Preferred Stock, Par Value $0.001,
Authorized 5,000,000 Shares, Issued 0 at
December 31, 2004 -
Common Stock, Par value $0.0001, Authorized
25,000,000 Shares, Issued 11,500,000
at December 31, 2004 1,150
Paid-In Capital -
Retained Deficit -
Deficit Accumulated During Development Stage (165,737)
---------------------
Total Stockholders' Equity (164,587)
---------------------
Total Liabilities and Stockholders' Equity $ 24,976
=====================
The accompanying notes are an integral part of these financial statements.
F-3
AIRGATE TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative
For the Period Since
From February 4,
February 4, 2004 2004
to Inception of
December 31, Development
2004 Stage
----------------------- -----------------------
Revenues $ - $ -
Costs of Operations - -
----------------------- -----------------------
Net Operating Income - -
Expenses
Consulting 145,358 145,358
General & Administrative 74,596 74,596
----------------------- -----------------------
Net Loss from Continuing Operations (219,954) (219,954)
----------------------- -----------------------
Other Income (Expenses)
Interest Expense (4,098) (4,098)
Forgiveness of Debt 58,315 58,315
----------------------- -----------------------
Net Income (Loss) $ (165,737)$ (165,737)
======================= =======================
Earnings per Share, Basic & Diluted $ (0.06)
=======================
Weighted Average Shares Outstanding 2,683,341
=======================
The accompanying notes are an integral part of these financial statements.
F-4
AIRGATE TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 26, 2001 (INCEPTION) TO DECEMBER 31, 2004
Deficit
Accumulated
Since
February 4,
2004
Inception of
Preferred Stock Common Stock Paid-In Retained Development
Shares Par Value Shares Par Value Capital Deficit Stage
---------- ---------- ------------ ------------- ------------ ---------- -------------
Balance at March 26, 2001
(inception) - $ - - $ - $ - $ - $ -
Net Loss - - - - - - -
---------- ---------- ------------ ------------- ------------ ---------- -------------
Balance at December 31, 2001 - - - - - - -
Net Loss - - - - - - -
---------- ---------- ------------ ------------- ------------ ---------- -------------
Balance at December 31, 2002 - - - - - - -
Net Loss - - - - - - -
----------- ---------- ------------ ------------- ------------ ---------- -------------
Balance at December 31, 2003 - - - - - - -
Issuance of stock for services - - 11,500,000 1,150 - - -
Net Income (Loss) - - - - - - (165,737)
----------- ---------- ------------ ------------- ------------ ---------- -------------
Balance at December 31, 2004 - $ - 11,500,000 $ 1,150 $ - $ - $ (165,737)
=========== ========== ============ ============= ============ ========== =============
The accompanying notes are an integral part of these financial statements.
F-5
AIRGATE TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative
For the Period Since
From February 4,
February 4, 2004 2004
to Inception of
December 31, Development
2004 Stage
----------------------- ---------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (165,737)$ (165,737)
Adjustments to reconcile net loss to net cash
Provided by operating activities:
Depreciation 4,577 4,577
Stock Issued for Services 1,150 1,150
Increase (Decrease) in Accounts Payable 19,757 19,757
Increase (Decrease) in Bank Overdraft 16,708 16,708
----------------------- ---------------------
Net Cash Used in Operating Activities (123,545) (123,545)
----------------------- ---------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Furniture and Equipment (27,053) (27,053)
Deposit (2,500) (2,500)
----------------------- ---------------------
Net Cash Provided by Investing Activities (29,553) (29,553)
----------------------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Shareholder Loan 153,098 153,098
----------------------- ---------------------
Net Cash Provided by Financing Activities 153,098 153,098
----------------------- ---------------------
Net (Decrease) Increase in
Cash and Cash Equivalents - -
Cash and Cash Equivalents
at Beginning of Period - -
----------------------- ---------------------
Cash and Cash Equivalents
at End of Period $ - $ -
======================= =====================
F-6
AIRGATE TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative
For the Period Since
From February 4,
February 4, 2004 2004
to Inception of
December 31, Development
2004 Stage
----------------------- ---------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
- -------------------------------------------------
Cash paid during the year for:
Interest $ - $ -
Franchise and Income Taxes $ 75 $ 75
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: None
- ----------------------------------------------------------- -----------
The accompanying notes are an integral part of these financial statements.
F-7
AIRGATE TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for AirGATE Technologies, Inc. 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 $165,737 for the period from February 4, 2004 (inception of
development stage) to December 31, 2004, 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, its development, acquisition, and
marketing of radio frequency identification (RFID), wireless and intelligent,
sensor technology.
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
AIRGATE TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
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 Texas on
March 26, 2001. The Company ceased all operating activities during the period
from March 26, 2001 to February 4, 2004 and was considered dormant. Since
February 4, 2004, the Company is in the development stage, and has not commenced
planned principle operations.
On February 9, 2004, the Company became a wholly owned subsidiary of
The X-Change Corporation. Subsequently on September 30, 2004, the Company
entered into a recision agreement with The X-Change Corporation whereby 100% of
AirGATE's stock owned by X-Change Corporation would be sold to Michael Sheriff
in exchange for the return of 3,500,000 common shares of X-Change Corporation's
stock.
Nature of Business
AirGATE Technologies, Inc. is an early stage company specializing in
radio frequency technology, including RFID, and intelligent, sensor networks.
Cash and Cash Equivalents
For the purpose of reporting cash flows, the Company considers all
highly liquid debt instruments purchased with maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
Concentrations of Credit Risk
The Company has no significant off-balance-sheet concentrations of
credit risk such as foreign exchange contracts, options contracts or other
foreign hedging arrangements.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-9
AIRGATE TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
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.
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. The effects of common stock
equivalents are anti-dilutive and thus are not considered.
NOTE 2 - INCOME TAXES
As of December 31, 2004, the Company had a net operating loss
carryforward for income tax reporting purposes of approximately $165,737 that
may be offset against future taxable income through 2024. 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 - DEVELOPMENT STAGE COMPANY
As is common with an early stage company, AirGATE had no revenues in
2004. The Company has had recurring losses during its development stage. The
Company's financial statements are prepared using generally accepted accounting
principles applicable to a going concern which contemplates the realization of
assets and liquidation of liabilities in the normal course of business. However,
the Company does not have significant cash or other material assets, nor does it
have an established source of revenues sufficient to cover its operating costs
and to allow it to continue as a going concern. In the interim, shareholders of
the Company have committed to meeting its minimal operating expenses.
F-10
AIRGATE TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - LEASE COMMITMENT
The Company currently leases office space at 100 Allentown Parkway,
Suite 110, Allen, Texas from R&J Diamond Limited Partnership. The lease payments
are approximately $2,500 per month which commenced March 1, 2004 and expired
August 31, 2004, continuing month to month thereafter.
NOTE 5 - PREFERRED STOCK
The Company has authorized a total of 5,000,000 shares of Preferred
Stock with a par value of $0.001
As of December 31, 2004, there are no preferred shares issued.
NOTE 6 - COMMON STOCK TRANSACTIONS
On October 15, 2004, the Company issued 11,500,000 shares of common
stock for services rendered. The shares were valued at $0.0001 per share.
NOTE 7 - CONTINGENCIES
On September 30, 2004, the Company entered into a recision agreement
with The X- Change Corporation whereby 100% of AirGATE's stock owned by X-Change
Corporation would be sold to Michael Sheriff in exchange for the return of
3,500,000 common shares of X- Change Corporation's stock. As part of the
purchase price, X-Change Corporation is entitled to 15 percent of the net
proceeds resulting from contracts with Standard Motor Products, Medtronics -
Cranial and Spinal Division, Borden Chemical and proceeds from the sale or
license of the Child Safety Seat technology.
NOTE 8 - SUBSEQUENT EVENTS
On July 20, 2005, the Company was reacquired by The X-Change
Corporation. In exchange for the Company, The X-Change Corporation issued
10,000,000 restricted shares of common stock to the shareholders of the Company.
On July 25, 2005, AirGATE Technologies, Inc. entered into an agreement
with Deutsche Guaranty, Ltd., a Bahamian Company, whereas AirGATE, intends to
license its child safety seat technology to Deutsche Guaranty, Ltd. Deutsche
Guaranty has paid the Company $50,000 on execution of a technology license
agreement. Deutsche Guaranty also agrees to pay AirGATE royalties of 5 percent
of the net proceeds or profits from the sale of any products incorporating the
licensed technology.
F-11
AIRGATE TECHNOLOGIES, INC
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
June 30, December 31,
2005 2004
------------------- --------------------
ASSETS
Current Assets:
Cash $ 12,416 $ -
Accounts Receivable 69 -
Salary Advance 6,500 -
------------------- --------------------
Total Current Assets 18,985 -
------------------- --------------------
Fixed Assets:
Computer Equipment 13,453 13,053
Furniture & Fixtures 14,000 14,000
Less Accumulated Depreciation (7,945) (4,577)
------------------- --------------------
Net Fixed Assets 19,508 22,476
------------------- --------------------
Other Non-Current Assets:
Deposits 2,500 2,500
------------------- --------------------
TOTAL ASSETS $ 40,993 $ 24,976
=================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 34,847 $ 19,757
Bank Overdraft - 16,708
Due to Shareholder 161,293 153,098
------------------- --------------------
Total Current Liabilities 196,140 189,563
------------------- --------------------
TOTAL LIABILITIES 196,140 189,563
------------------- --------------------
Stockholders' Equity:
Preferred Stock, Par Value $.001,
Authorized5,000,000 Shares, Issues 0 at June 30, 2005
and December 31, 2004 - -
Common Stock, Par value $.0001, Authorized 25,000,000
Shares, Issued 11,500,000 at June 30,2005 and December
31, 2004 1,150 1,150
Paid-In Capital - -
Retained Deficit - -
Deficit Accumulated During Development Stage (156,297) (165,737)
------------------- --------------------
Total Stockholders' Equity (Deficit) (155,147) (164,587)
------------------- --------------------
Total Liabilities and Stockholders' Equity (Deficit) $ 40,993 $ 24,976
=================== ====================
See accompanying notes
AIRGATE TECHNOLOGIES, INC
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
Cumulative
For the Since
For the Six Period From February 4,
Months February 4, 2004
For the Three Months Ended Ended 2004 to Inception of
June 30, June 30, June 30, Development
2005 2004 2005 2004 Stage
----------------- ---------------- ---------------- ---------------- ----------------
Revenues $ 90,862 $ - $ 300,983 $ - $ 300,983
Costs of Operations - - - - -
----------------- ---------------- ---------------- ---------------- ----------------
Net Operating Income 90,862 - 300,983 - 300,983
Expenses
General & Administrative 13,854 8,362 17,337 17,475 39,426
Consulting 24,110 96,000 44,090 106,000 189,448
Payroll 45,833 - 123,708 - 123,708
Professional Fees - - - 4,645 2,790
Outside Contractors 6,000 - 10,500 - 12,502
Rent 3,750 7,625 8,750 10,125 34,375
Travel 2,832 7,476 5,330 9,646 16,063
Development 11,756 - 73,670 - 85,027
----------------- ---------------- ---------------- ---------------- ----------------
Net Income (Loss) from
Continuing Operations (17,273) (119,463) 17,598 (147,891) (202,356)
----------------- ---------------- ---------------- ---------------- ----------------
Other Income (Expense)
Interest Expense (4,098) (1,508) (8,195) (1,885) (12,293)
Interest Income 24 - 37 - 37
Forgiveness of Debt - - - - 58,315
----------------- ---------------- ---------------- ---------------- ----------------
Net Income (Loss) $ (21,347) $ (120,971) $ 9,440 $ (149,776)$ (156,297)
================= ================ ================ ================ ================
Earnings per Share, Basic & Diluted $ - $ - $ - $ -
================= ================ ================ ================
Weighted Average
Shares Outstanding 11,500,000 - 11,500,000 -
================= ================ ================ ================
See accompanying notes
AIRGATE TECHNOLOGIES, INC
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
Cumulative
For the Since
Period From February 4,
For the Six February 4, 2004
Months Ended 2004 to Inception of
June 30 June 30 Development
--------------------------------------
2005 2004 Stage
------------------ ------------------ -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 9,440 $ (149,776) $ (156,297)
Adjustments to reconcile net loss to net cash
Provided by operating activities:
Depreciation 3,368 1,785 7,945
Stock Issued for Services - - 1,150
Change in Operating Assets and Liabilities:
(Increase) Decrease in Employee Advances (6,500) (432) (6,500)
(Increase) Decrease in Accounts Receivable (69) - (69)
Increase (Decrease) in Accounts Payable 15,090 120 34,847
Increase (Decrease) in Bank Overdraft (16,708) - -
------------------ ------------------ -----------------
Net Cash Used in Operating Activities 4,621 (148,303) (118,924)
------------------ ------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposit - (2,500) (2,500)
Purchase of Furniture and Equipment (400) (23,029) (27,453)
------------------ ------------------ -----------------
Net Cash Provided by Investing Activities (400) (25,529) (29,953)
------------------ ------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Intercompany Loan - 72,840 -
Proceeds from Shareholder Loan 8,195 101,010 161,293
------------------ ------------------ -----------------
Net Cash Provided by Financing Activities 8,195 173,850 161,293
------------------ ------------------ -----------------
Net (Decrease) Increase in Cash 12,416 18 12,416
Cash at Beginning of Period - - -
------------------ ------------------ -----------------
Cash at End of Period $ 12,416 $ 18 $ 12,416
================== ================== =================
AIRGATE TECHNOLOGIES, INC
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
Cumulative
For the Since
Period From February 4,
For the Six February 4, 2004
Months Ended 2004 to Inception of
June 30 June 30 Development
--------------------------------------
2005 2004 Stage
------------------ ------------------ -----------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ - $ -
Franchise and Income Taxes $ - $ - $ 75
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: None
- -----------------------------------------------------------------------
See accompanying notes
(b) Pro Forma Financial Information
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On July 20, 2005, The X-Change Corporation, a publicly-held Nevada
Corporation, acquired the business and operations of AirGATE Technologies, Inc.
a Texas corporation. See "The Acquisition". The following unaudited pro forma
condensed combined financial statements are based on the December 31, 2004 and
June 30, 2005 historical financial statements of The X-Change Corporation and
AirGATE contained elsewhere herein, giving effect to the transaction under the
purchase method of accounting, with The X-Change Corporation treated as the
acquiring entity for financial reporting purposes.
The unaudited pro forma condensed combined balance sheet at December
31, 2004 presenting the financial position of the Surviving Corporation assumes
the purchase occurred as of December 31, 2004. The unaudited pro forma condensed
combined statement of operations for the year ended December 31, 2004 presents
the results of operations of the Surviving Corporation, assuming the acquisition
was completed on January 1, 2004. The unaudited pro forma condensed combined
balance sheet at June 30, 2005 presenting the financial position of the
Surviving Corporation assumes the purchase occurred as of June 30, 2005. The
unaudited pro forma condensed combined statement of operations for the six
months ended June 30, 2005 presents the results of operations of the Surviving
Corporation, assuming the acquisition was completed on January 1, 2005.
The unaudited pro forma condensed combined financial statements have
been prepared by management of The X-Change Corporation and AirGATE
Technologies, Inc based on the financial statements included elsewhere herein.
The pro forma adjustments include certain assumptions and preliminary estimates
as discussed in the accompanying notes and are subject to change. These pro
forma statements may not be indicative of the results that actually would have
occurred if the combination had been in effect on the dates indicated or which
may be obtained in the future. These pro forma financial statements should be
read in conjunction with the accompanying notes and the historical financial
information of The X-Change Corporation and AirGATE Technologies, Inc.
(including the notes thereto) included in this Form. See "FINANCIAL STATEMENTS."
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
DECEMBER 31, 2004
Pro Forma
The X-change AirGATE Pro Forma Combined
Corporation Technologies Adjustments Balance
---------------- ---------------- --------------- -------------------
ASSETS
Cash $ 4,902 $ - $ - $ 4,902
---------------- ---------------- --------------- -------------------
Total Current Assets 4,902 - - 4,902
Property and Equipment, Net - 22,476 - 22,476
Other Non-Current Assets - 2,500 - 2,500
Oil & Gas Properties
Oil & Gas Properties, Net 36,878 - - 36,878
---------------- ---------------- --------------- -------------------
Total Assets $ 41,780 $ 24,976 $ - $ 66,756
================ ================ =============== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $ 42,292 $ 19,757 $ - $ 62,049
Bank Overdraft - 16,708 - 16,708
Shareholder Loan - 153,098 - 153,098
---------------- ---------------- --------------- -------------------
Total Current Liabilities 42,292 189,563 - 231,855
---------------- ---------------- --------------- -------------------
Total Liabilities 42,292 189,563 - 231,855
---------------- ---------------- --------------- -------------------
Stockholders' Equity:
Preferred Stock - - - -
Common Stock 14,752 1,150 10,000 A 24,752
(1,150) B
Additional Paid in Capital 653,283 - - 653,283
Retained Earnings (Deficit) (536,688) - - (536,688)
Deficit Accumulated During the Development Stage (131,859) (165,737) (8,850) A (306,446)
---------------- ---------------- --------------- -------------------
Total Stockholders' Equity (Deficit) (512) (164,587) - (165,099)
---------------- ---------------- --------------- -------------------
Total Liabilities and Stockholders' Equity $ 41,780 $ 24,976 $ - $ 66,756
================ ================ =============== ===================
See accompanying notes to unaudited pro forma condensed combined
financial statements.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2004
Pro Forma
The X-change AirGATE Pro Forma Combined
Corporation Technologies Adjustments Balance
------------------ ------------------ ----------------- -------------------
Revenues $ 37,439 $ - $ - $ 37,439
Cost of Operations 29,192 - - 29,192
------------------ ------------------ ----------------- -------------------
Gross Profit 8,247 - - 8,247
Expenses:
Consulting - 145,358 - 145,358
General & Administrative 23,755 74,596 - 98,351
------------------ ------------------ ----------------- -------------------
Total Operating Expenses 23,755 219,954 - 243,709
------------------ ------------------ ----------------- -------------------
Net Loss from Continuing Operations (15,508) (219,954) - (235,462)
------------------ ------------------ ----------------- -------------------
Other Income (Expense):
Interest Expense - (4,098) - (4,098)
Forgiveness of Debt - 58,315 (58,315) B -
Write off of Goodwill - - (8,850) A (8,850)
------------------ ------------------ ----------------- -------------------
Total Other Income (Expense) - 54,217 (67,165) (12,948)
------------------ ------------------ ----------------- -------------------
Discounted Operations
Loss on Sale of AirGATE (58,315) - 58,315 B -
------------------ ------------------ ----------------- -------------------
Net Income (Loss) $ (73,823) $ (165,737) $ (8,850) A $ (248,410)
================== ================== ================= ===================
Loss per share $ (0.01) $ (0.06) $ - $ (0.01)
================== ================== ================= ===================
Weighted average shares outstanding 16,295,835 2,683,341 7,316,659 A 26,295,835
================== ================== ================= ===================
See accompanying notes to unaudited pro forma condensed combined
financial statements.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
JUNE 30, 2005
Pro Forma
The X-change AirGATE Pro Forma Combined
Corporation Technologies Adjustments Balance
------------------ ------------------ -------------- ---------------
ASSETS
Cash $ 91,453 $ 12,416 $ - $ 103,869
Accounts Receivable 146,891 69 - 146,960
Salary Advance 2,030 6,500 - 8,530
------------------ ------------------ -------------- ---------------
Total Current Assets 240,374 18,985 - 259,359
Property and Equipment, Net 1,004 19,508 - 20,512
Other Non-Current Assets - 2,500 2,500
Oil & Gas Properties
Oil & Gas Properties, Net 248,087 - - 248,087
------------------ ------------------ -------------- ---------------
Total Assets $ 489,465 $ 40,993 $ - $ 530,458
================== ================== ============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $ 70,042 $ 34,847 $ - $ 104,889
Bank Overdraft - - - -
Notes Payable 203,231 - - 203,231
Shareholder Loan 25,702 161,293 - 186,995
------------------ ------------------ -------------- ---------------
Total Current Liabilities 298,975 196,140 - 495,115
------------------ ------------------ -------------- ---------------
Total Liabilities 298,975 196,140 - 495,115
------------------ ------------------ -------------- ---------------
Stockholders' Equity:
Preferred Stock - - - -
Common Stock 14,922 1,150 10,000 A 24,922
(1,150) B
Additional Paid in Capital 714,525 - - 714,525
Retained Earnings (Deficit) (536,688) - - (536,688)
Deficit Accumulated During the Development Stage (2,269) (156,297) (8,850) A (167,416)
------------------ ------------------ -------------- ---------------
Total Stockholders' Equity (Deficit) 190,490 (155,147) - 35,343
------------------ ------------------ -------------- ---------------
Total Liabilities and Stockholders' Equity $ 489,465 $ 40,993 $ - $ 530,458
================== ================== ============== ===============
See accompanying notes to unaudited pro forma condensed combined
financial statements.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2005
Pro Forma
The X-change AirGATE Pro Forma Combined
Corporation Technologies Adjustments Balance
------------------ ------------------ ----------------- -------------------
Revenues $ 126,956 $ 300,983 $ - $ 427,939
Cost of Sales 38,476 - - 38,476
------------------ ------------------ ----------------- -------------------
Gross Profit 88,480 300,983 - 389,463
Expenses:
Consulting - 44,090 - 44,090
Salaries - 114,083 - 114,083
Development - 73,670 - 73,670
General & Administrative 55,019 51,542 - 106,561
------------------ ------------------ ----------------- -------------------
Total Operating Expenses 55,019 283,385 - 338,404
------------------ ------------------ ----------------- -------------------
Net Income (Loss) from Continuing Operations 33,461 17,598 - 51,059
------------------ ------------------ ----------------- -------------------
Other Income (Expense)
Interest Expense (3,933) (8,195) - (12,128)
Interest Income 62 37 - 99
Sale of Working Interest 100,000 - - 100,000
Write off of Goodwill - - (8,850) A (8,850)
------------------ ------------------ ----------------- -------------------
Total Other Income (Expense) 96,129 (8,158) (8,850) 79,121
------------------ ------------------ ----------------- -------------------
Net Income (Loss) $ 129,590 $ 9,440 $ (8,850) $ 130,180
================== ================== ================= ===================
Loss per share $ (0.01) $ - $ 0.01 $ 0.01
================== ================== ================= ===================
Weighted average shares outstanding 14,922,000 11,500,000 (1,500,000) A 24,922,000
================== ================== ================= ===================
See accompanying notes to unaudited pro forma condensed combined
financial statements.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS
(1) GENERAL
In the acquisition involving The X-Change Corporation and AirGATE
Technologies, Inc., The X-Change Corporation acquired the business and
operations of AirGATE Technologies, Inc. Under the Plan of Acquisition, AirGATE
Technologies, Inc.'s common stock shareholders received 10,000,000 shares of The
X-Change Corporation's common stock in exchange for all of the outstanding
common stock of AirGATE Technologies, Inc. As a result of the acquisition, The
X- Change Corporation now owns 100 percent of the outstanding stock of AirGATE
Technologies, Inc.
(2) FISCAL YEAR ENDS
The unaudited pro forma condensed combined statements of operations for
the year ended December 31, 2004 and for the six months ended June 30, 2005,
include The X-Change Corporation and AirGATE Technologies, Inc. operations on a
common fiscal year.
(3) PRO FORMA ADJUSTMENTS
The adjustments to the accompanying unaudited pro forma condensed
combined balance sheets are described below:
A) Record acquisition of AirGATE Technologies, Inc. by issuing
10,000,000 shares of The X-Change Corporation's common stock to the shareholders
of AirGATE Technologies, Inc. in exchange for 100 percent of AirGATE
Technologies, Inc's outstanding stock.
B) Elimination of intercompany accounts.
The adjustments to the accompanying unaudited pro forma condensed
combined statements of operations are described below:
A) Record acquisition of AirGATE Technologies, Inc. by issuing
10,000,000 shares of The X-Change Corporation's common stock to the shareholders
of AirGATE Technologies, Inc. in exchange for 100 percent of AirGATE
Technologies, Inc's outstanding stock.
B) Elimination of intercompany accounts.
(c) Exhibits
EXHIBIT
NUMBER DESCRIPTION
10.1 Stock Purchase Agreement, dated as of July 20, 2005, between the
Company and Michael L. Sheriff.*
99.1 Press Release issued by the Company on July 28, 2005 furnished pursuant
to Item 7.01 of this Form 8-K.*
99.2 Letter of Resignation from Charles Stidham to the Company dated as of
July 20, 2005.*
*Previously filed on July 28, 2005
SIGNATURE
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.
THE X-CHANGE CORPORATION
By: /s/ Scott Thompson
Scott Thompson
Principal Financial Officer
Date: October 13, 2005