UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549



FORM 10-QSB



xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period endedSeptember 30, 2006



oTRANSITION REPORT PURSUANT TO SECTION 13 OR

15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Commission file number333-118632



XSINVENTORY

(Exact name of small business issuer as specified in its charter)



Nevada
        71-0934772(State or other jurisdiction of incorporation or organization)
        (Employer Identification Number)




2950 E. Flamingo Rd., Suite E-6DLas Vegas, Nevada
        89121(Address of principal executive offices)
        (Zip Code)




(702) 866-5840

(Registrants telephone number, including area code)



Copies of Communications to:

Stoecklein Law Group

402 West Broadway, Suite 400

San Diego, CA 92101

(619) 595-4882

Fax (619) 595-4883



Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the last 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. YesxNoo



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesxNoo



The number of shares of Common Stock, $0.001 par value, outstanding on October 31, 2006, was3,873,139shares.



Transitional Small Business Disclosure Format (check one):Yeso
        Nox






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PART I  FINANCIAL INFORMATION



Item 1. Financial Statements.



XSInventory

and Subsidiary

(a Development Stage Company)

Balance Sheet



(unaudited)September 30,2006AssetsCurrent assets:Cash and cash equivalents
        $
        94,910$
        94,910Liabilities and Stockholders' EquityCurrent liabilitiesAccounts payable
        $
        2,365Stockholders' Equity:Preferred stock, $0.001 par value, 10,000,000shares authorized, no shares issued andoutstanding
        
        -Common stock, $0.001 par value, 100,000,000shares authorized, 2,993,139 shares issued andoutstanding
        
        2,993Additional paid-in capital
        
        136,164Subscription payable
        
        93,000Deficit accumulated during development stage
        
        (139,612)92,545$
        94,910






The Accompanying Notes are an Integral Part of These Financial Statement



1



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XSInventory

and Subsidiary

(a Development Stage Company)

Statements of Operations



Three Months Ending
        
        Nine Months Ending
        September 27, 2002September 30,
        
        September 30,
        (inception) to2006
        
        2005
        
        2006
        
        2005
        September 30,Revenue
        $
        -
        $
        595
        $
        -
        $
        5,147
        $
        55,069Cost of goods sold
        
        -
        
        459
        
        -
        
        4,497
        
        51,201-
        
        136
        
        -
        
        650
        
        3,868Expenses:General and administrative expenses
        
        1,383
        
        1,480
        
        3,284
        
        4,260
        
        26,580Professional fees
        
        (1,000)
        
        1,000
        
        7,500
        
        7,000
        
        24,500Salaries and wages
        
        6,300
        
        6,300
        
        18,900
        
        18,900
        
        92,400Total expenses
        
        6,683
        
        8,780
        
        29,684
        
        30,160
        
        143,480Net (loss)
        $
        (6,683)
        $
        (8,644)
        $
        (29,684)
        $
        (29,510)
        $
        (139,612)Weighted average number ofcommon shares outstanding - basic and fully diluted
        
        2,934,443
        
        2,022,738
        
        2,720,267
        
        2,021,377Net (loss) per share - basic & fully diluted
        $
        (0.002)
        $
        (0.004)
        $
        (0.011)
        $
        (0.015)










The Accompanying Notes are an Integral Part of These Financial Statement



2



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XSInventory

and Subsidiary

(a Development Stage Company)

Statements of Cash Flows

(unaudited)



September 27, 2002For the nine months ended
        (Inception) toSeptember 30,
        September 30,2006
        2005
        2006Cash flows from operating activitiesNet (loss)
        $
        (29,684)
        $
        (29,510)
        $
        (139,612)Adjustments to reconcile changes in operatingassets and liabilities(Increase) decrease in inventory
        
        404
        
        1,414
        
        -(Increase) in prepaid expenses
        
        -
        
        (1,000)
        
        -(Decrease) Increase in liabilities
        
        (569)
        
        1,590
        
        2,365Net cash (used) by operating activities
        
        (29,849)
        
        (27,506)
        
        (137,247)Cash flows from financing activitiessubscription payable
        
        93,000
        
        -
        
        93,000Sale of common stock
        
        30,697
        
        17,960
        
        139,157Net cash provided by financing activities
        
        123,697
        
        17,960
        
        232,157Net (decrease) increase in cash
        
        93,848
        
        (9,546)
        
        94,910Cash - beginning
        
        1,062
        
        17,499
        
        -Cash - ending
        $
        94,910
        $
        7,953
        $
        94,910
















The Accompanying Notes are an Integral Part of These Financial Statement



3



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XSINVENTORY

And Subsidiary

(a Development Stage Company)

Notes



Note 1 - Basis of Presentation



The consolidated interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein.  It is suggested that these consolidated interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2005 and notes thereto included in the Company's Form 10-KSB annual report.  The Company follows the same accounting policies in the preparation of interim reports.



Results of operations for the interim periods are not indicative of annual results



Note 2 - Revenue recognition



XSInventory sells merchandise via the Internet to the general public. The Company recognizes revenue as each item is sold. Costs are recognized upon completion of each sales transaction. For the nine months ended September 30, 2006 and 2005, the Company recognized $0 and $5,147 in revenue, respectively.



Note 3  Stockholders equity



The Company is authorized to issue 10,000,000 shares of it $0.001 par value preferred stock and 100,000,000 shares of its $0.001 par value common stock.



In February 2003, the Company sold to an officer of the Company 350,000 shares of its $0.001 par value common stock at a price of $0.02 per share for a total amount raised of $7,000.



From March 2003 through December 2003, the Company sold to an officer of the Company 460,000 shares of its $0.001 par value common stock at a price of $0.05 per share for a total amount raised of $23,000.



During fiscal 2004, the Company sold to an officer of the Company 1,210,000 shares of its $0.001 par value common stock at a price of $0.05 per share for a total amount raised of $60,500.



During fiscal 2005, the Company sold to an officer of the Company 359,192 shares of its $0.001 par value common stock at a price of $0.05 per share for a total amount raised of $17,959.



4



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XSINVENTORY

And Subsidiary

(a Development Stage Company)

Notes



During the nine months ended September 30, 2006, the Company sold to an officer of the Company 613,947 shares of its $0.001 par value common stock at a price of $0.05 per share for a total amount raised of $30,698.



During the period ended September 30, 2006, the Company issued subscriptions to purchase 930,000 shares of its $0.001 par value common stock for cash totaling $93,000. The shares were subsequently issued on October 25, 2006.



No other shares have been issued.



Note 4  Going concern



The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company is in the development stage and, accordingly, has not yet generated revenues from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its product line, setting up its e-commerce website, and incurring substantial costs and expenses. As a result, the Company incurred accumulated net losses from September 27, 2002, (inception) through the period ended September 30, 2006 and 2005 of $139,612 and $101,437 respectively. In addition, the Companys development activities since inception have been financially sustained through equity financing.



The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues.  The accompanying financial statements do not include any adjustments that might be required should the Company be unable to recover the value of its assets or satisfy its liabilities.



Note 5  Warrants and options



There are no warrants or options outstanding to acquire any additional shares of common stock.



Note 6  Subsequent Events



Subsequent to the period ended September 30, 2006, the Company issued subscriptions to purchase 50,000 shares of its $0.001 par value common stock for cash totaling $5,000. The shares were subsequently issued on October 25, 2006.





5



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FORWARD-LOOKING STATEMENTS



This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements other than statements of historical fact are forward-looking statements for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.



Forward-looking statements may include the words may, could, estimate, intend, continue, believe, expect or anticipate or other similar words.  These forward-looking statements present our estimates and assumptions only as of the date of this report.  Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.



Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any or our forward-looking statements.  Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.  The factors impacting these risks and uncertainties include, but are not limited to:



o
        increased competitive pressures from existing competitors and new entrants;


o
        our ability to acquire sufficient inventory;


o
        deterioration in general or regional economic conditions;


o
        adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;


o
        loss of customers or sales weakness;


o
        inability to achieve future sales levels or other operating results;


o
        the unavailability of funds for general working capital; and


o
        operational inefficiencies in distribution or other systems.




For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see Factors That May Affect Our Results of Operations in this document and in our Annual Report on Form 10-KSB for the year ended December 31, 2005.









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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.



The following discussion and analysis should be read in conjunction with our financial statements and the notes thereto contained elsewhere in this filing.



Background Overview



We are a development stage company incorporated in the State of Nevada in September of 2002. We were formed to engage in the business of marketing, selling and distributing products through the online trading website of companies such as eBay, (www.eBay.com.). In February 2003, we formed Creative Excess, Inc., as a wholly owned subsidiary, to become an online liquidator of products through eBay. Although the affiliation with eBay as an online trading platform allows us immediate online access to an online auction facility, we are highly dependent upon eBay to provide a platform for the sale of our products. As of the date of this filing, we have generated all of our revenue by selling goods using eBay. Our affiliation with eBay is a standard user agreement which eBay makes available to members of the general public.



Since our incorporation in September 2002 through September 30, 2006, we have generated $55,069 in revenues with a net loss of $139,612. Our recent activities include organization of the Company, our setting up of our account with eBay, and the commencement of buying inventory and re-selling the inventory through eBay. The XSInventory business plan is to establish a number of quality product outlets where we can purchase quality products and excess inventory and sell the same inventory at a marked up price through our online trading platform on eBay and/or other similar trading platforms.



Results of Operations for the Three Months Ended September 30, 2006 and 2005.



The following table summarizes selected items from the statement of operations at September 30, 2006 compared to September 30, 2005.



Revenue



2006
        2005
        Increase/ (decrease)$For the three months ended September 30,Revenue
        $              -
        $         595
        $   (595)




Revenue for the three months ended September 30, 2006 was $0, a decrease of $595, from $595 in the same period one year ago.



We believe the decrease is due to a decrease in our purchasing of products for resale. This decrease in purchases is the result of the unavailability of cash for such purchases.





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Cost of goods sold/Gross profit percentage of revenue



2006
        2005
        Increase/ (decrease)$For the three months ended September 30,Cost of goods sold
        $              -
        $          459
        $           (459)




Cost of goods sold for the three months ended September 30, 2006 was $0, a decrease of $459, from $459 for the three months ended September 30, 2005. The decrease is the direct result of lower gross revenue for the period due to a decrease in purchases of products for resale.



2006
        2005
        Increase/ (decrease)$For the three months ended September 30,Gross profit
        $              -
        $          136
        $           (136)




Gross profit for the three months ended September 30, 2006 was $0, for a decrease of $136 over the $136 gross profit for the three months ended September 30, 2005.



Expenses



2006
        2005
        Increase/(decrease)$
        %For the three months ended September 30,Expenses
        $    6,683
        $      8,780
        $     (2,097)
        (24%)




The total expenses were $6,683 for the three months ended September 30, 2006 versus $8,780 for the three months ended September 30, 2005 a $2,097 or 24% decrease. The decrease for the three months ended September 30, 2006 versus the same period in 2005 is primarily due to decrease related to professional fees and general and administrative expenses.



Net loss



2006
        2005
        Increase/(decrease)$
        %For the three months ended September 30,Net loss
        $    6,683
        $      8,644
        $     (1,961)
        (23%)




Our net loss for the three months ended September 30, 2006 was $6,683, versus a net loss of $8,644 for the three months ended September 30, 2005, an decrease of $1,961, or 23%. The decrease in net loss was primarily the result of the decreased professional fees and general and administrative expenses.



Risks that could cause actual sales to differ from expected sales are detailed in the remainder of this section, and under the section titled Factors That May Affect the Companys Future Operating Results.



8



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Results of Operations for the Nine Months Ended September 30, 2006 and 2005.



The following table summarizes selected items from the statement of operations at September 30, 2006 compared to September 30, 2005.



Revenue



2006
        2005
        Increase/ (decrease)$For the Nine months ended September 30,Revenue
        $               -
        $    5,147
        $   (5,147)




Revenue for the Nine months ended September 30, 2006 was $0, a decrease of $5,147, from $5,147 in the same period one year ago.



We believe the decrease is due to a decrease in our purchasing of products for resale. This decrease in purchases is the result of the unavailability of cash for such purchases.



Cost of goods sold/Gross profit percentage of revenue



2006
        2005
        Increase/ (decrease)$For the Nine months ended September 30,Cost of goods sold
        $              -
        $       4,497
        $   (4,497)




Cost of goods sold for the nine months ended September 30, 2006 was $0, a decrease of $4,497, from $4,497 for the nine months ended September 30, 2005. The decrease is the direct result of lower gross revenue for the period due to a decrease in purchases of products for resale.



2006
        2005
        Increase/(decrease)$For the nine months ended September 30,Gross profit
        $              -
        $          650
        $      (650)




Gross profit for the nine months ended September 30, 2006 was $0, for a decrease of $650 over the $650 gross profit for the nine months ended September 30, 2005.



Expenses



2006
        2005
        Increase/(decrease)$
        %For the nine months ended September 30,Expenses
        $29,684
        $30,160
        $(476)
        (2%)






9



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The total expenses were $29,684 for the nine months ended September 30, 2006 versus $30,160 for the nine months ended September 30, 2005 a $476 or 2% decrease. The decrease for the nine months ended September 30, 2006 versus the same period in 2005 is primarily due to decrease related to general and administrative expenses.



Net loss



2006
        2005
        Increase/(decrease)$
        %For the nine months ended September 30,Net loss
        $29,684
        $29,510
        $174
        1%




Our net loss for the nine months ended September 30, 2006 was $29,684, versus a net loss of $29,510 for the nine months ended September 30, 2005, an increase of $174, or 1%. The increase in net loss was primarily the result of the lack of revenues in the nine months ended September 30, 2006.



Risks that could cause actual sales to differ from expected sales are detailed in the remainder of this section, and under the section titled Factors That May Affect the Companys Future Operating Results.



Liquidity and Capital Reserves



Cash will be increasing primarily due to the receipt of funds from our initial direct public offering to offset our near term cash requirements. Since inception, we have financed our cash flow requirements through the issuance of common stock and sales activities, which has resulted in our receipt of $232,157. We have used $137,247 as of September 30, 2006, leaving cash in the amount of $94,910. As we expand our activities, we may continue to experience net negative cash flows from operations, pending receipt of sales revenues. In addition to the SB-2 registration, we anticipate obtaining additional financing to fund operations through private placements of common stock offerings in the future, and subsequent to the funding of the pending registration.



We anticipate we will incur operating losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks, we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, provide order fulfillment through the Internet, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do
so can have a material adverse effect on our business prospects, financial condition and results of operations.





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Plan of Operation



Satisfaction of our cash obligations for the next 12 months.Our plan of operation has provided for us to establish an outlet for the sale of product which we have begun purchasing.  We are continuing to analyze new opportunities to acquire products for resale, which opportunities would provide better profit margins for us. Having established our relationship with eBay, as the initial online trading platform, we have commenced selling our inventory. We capitalized our company with $139,157 from our sole officer, director and stockholder, Mr. Evangelista and the selling of our common stock registered under an SB-2 registration in the amount of $98,000. We have utilized $137,247 to setup our corporate organization, payment of audit fees for our registration, inventory purchases, general and administrative, and payment of salaries, leaving us with a balance
of approximately $94,910 in cash and inventory as of September 30, 2006. Our plan of operation indicates expenditures in the following year of at least $31,700, to be used for: (i) salaries - $15,200, (ii) corporate filing fees - $325, (iii) accounting fees - $4,500, and (iv) inventory purchases - $11,675. Since we have raised funds from our registration beyond the minimum we are in a position to commence the acquisition of additional inventory. We have based our assumptions on the fact that we will not incur additional obligations for personnel, office, etc. until such time as we either raise additional equity or debt, or generate revenues to support such expenditures. Our sole officer and director, Mr. Evangelista has agreed to continue his part time work without pay if required, until such salary can be paid from revenues. If we were to not receive any additional funds, we could not continue our business operations.



Summary of any product research and development that we will perform for the term of the plan.We do not anticipate performing any significant product research and development under our plan of operation. In lieu of product research and development we anticipate spending efforts on our acquisition of inventory which will allow for the highest return on cost of goods.



Expected purchase or sale of plant and significant equipment.We do not anticipate the purchase or sale of any plant or significant equipment, as such items are not required by us at this time or in the next 12 months.



Significant changes in number of employees.The number of employees required to operate our business is currently one part time individual and one full time individual. After we complete the current offering and have commenced generating revenues based upon the expenditures of our inventory, our plan of operation anticipates our requiring additional capital to hire at least one additional full time person.



FACTORS THAT MAY AFFECT OUR FUTURE OPERATING RESULTS



Our auditors report reflects the fact that without realization of additional capital, it would be unlikely for us to continue as a going concern.



Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have suffered losses from operations during our operating history and our ability to



11



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continue as a going concern is dependent upon obtaining future profitable operations. Our business is capital intensive. Although management believes that the proceeds from the sale of its securities, together with funds from operations, will be sufficient to cover its anticipated cash requirements, the Company may be required to seek additional capital to fund future growth and expansion. No assurance can be given that such financing will be available or, if available, that it will be on commercially favorable terms. Moreover, favorable financing may be dilutive to investors.



There is no current public market for our common stock; therefore you may be unable to sell your securities at any time, for any reason, and at any price, resulting in a loss of your investment.



As of the date of this filing, there is no public market for our common stock. Although we plan, in the future, to contact an authorized OTC Bulletin Board market maker for sponsorship of our securities on the Over-the-Counter Bulletin Board, there can be no assurance that our attempts to do so will be successful. Furthermore, if our securities are not quoted on the OTC Bulletin Board, or elsewhere, there can be no assurance that a market will develop for the common stock or that a market in the common stock will be maintained. As a result of the foregoing, investors may be unable to liquidate their investment for any reason.



Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.



Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of XSInventory; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of XSInventory are being made only in accordance with authorizations of management and directors of XSInventory, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of XSInventorys assets that could have a material effect on the financial statements.



We have one individual performing the functions of all officers and directors. This individual is responsible for monitoring and ensuring compliance with our internal control procedures. As a result, our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision.



12



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We have minimal operating history, which raises substantial doubt as to our ability to successfully develop profitable business operations.



We have only a limited operating history and our business model has not yet been tested in the market place. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered in establishing a business in the eBay retail markets industry, which are characterized by a large number of market entrants, intense competition and a high failure rate. To date, we have been engaged primarily in start-up and business development activities and have generated little revenue from product sales. To achieve profitable operations, we must successfully establish methods of acquiring products for re-sale which can be purchased at significantly discounted prices, enabling us to introduce and market the products at competitive prices. No assurance can be given that we will be successful in the location of product, or if located, that we will be able to purchase the
products at competitive prices as the result of our inability to purchase large quantities of products, or if competitively purchased, that we will be successful in marketing the product through the Internet. Accordingly, we have generated only $55,069 in revenues from the sale of products from inception. Consequently, we have incurred a net loss from operating activities of approximately $139,612 for the same period. In view of our lack of revenue and losses we have analyzed various methods of Internet marketing. We have no intention of merging, acquiring, or forming a business combination with any other entity. Future operating results will depend on many factors, including our ability to raise capital to acquire inventory, the demand for our products, the level of competition and our ability to establish relationships wherein we are able to acquire inventory on a substantially discounted basis.



We will require approximately $31,700 to operate our business over the next 12-month period which funds we have generated through our public offering. This amount includes funds for salaries, accounting, corporate filing fees, office lease, postage and telephones, and $11,765 in inventory purchases.



Off-Balance Sheet Arrangements



We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.



Item 3. Controls and Procedures.



We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the specified time periods.  As of the end of the period covered by this report, Michael J. Evangelista, our Chief Executive Officer and Principal Accounting Officer evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based on the evaluation, which disclosed no significant deficiencies or material weaknesses, Mr. Evangelista, our Chief Executive Officer and Principal Accounting Officer concluded that our disclosure controls and procedures are



13



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effective in timely alerting him to material information required to be included in our periodic SEC filings. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



It should be noted, however, that no matter how well designed and operated, a control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems (including faulty judgments in decision making or breakdowns resulting from simple errors or mistakes), there can be no assurance that any design will succeed in achieving its stated goals under all potential conditions. Additionally, controls can be circumvented by individual acts, collusion or by management override of the controls in place.



PART II  OTHER INFORMATION



Item 1.
        Legal Proceedings.




None.




Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.



Use of Proceeds From Sales of Registered Securities



Our Registration Statement on Form SB- 2 (File No. 333-118632), related to our initial public offering, was declared effective by the SEC on February 13, 2006. A total of 1,000,000 shares maximum and 350,000 shares minimum of our Common Stock was registered with the SEC with an aggregate offering price of $100,000 maximum and $35,000 minimum.  The offering commenced on April 5, 2006 and 980,000 shares of common stock offered were sold to 58 stockholders resulting in $98,000 of proceeds to us with no commissions paid on funds raised. The offering terminated on October 2, 2006 wherein the remaining unsold 20,000 shares were deregistered in a post-effective amendment filed on October 31, 2006.



Item 3.
        Defaults Upon Senior Securities.




None.




Item 4.
        Submission of Matters to a Vote of Security Holders.




None.




Item 5.
        Other Information.




None.



14



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Item 6.
        Exhibits and Reports on Form 8-K.




Exhibits



Incorporated by referenceExhibit
number
        Exhibit description
        Filed
herewith
        Form
        Period
ending
        Exhibit
        Filing date3(i)(a)
        Articles of Incorporation of XSInventory
        
        SB-2
        
        3(i)(a)
        8/27/043(i)(b)
        Articles of Incorporation of Creative Excess
        
        SB-2
        
        3(i)(b)
        8/27/043(ii)(a)
        Bylaws of the XSInventory
        
        SB-2
        
        3(ii)(a)
        8/27/043(ii)(b)
        Bylaws of Creative Excess
        
        SB-2
        
        3(ii)(b)
        8/27/044
        Instrument defining the rights of security holders:
(a)   Articles of Incorporation
(b)  Bylaws
(c)   Stock Certificate Specimen
        
        SB-2
        
        
        8/27/0410.1
        Restated Lock Up Agreement
        
        SB-2
        
        10.1
        8/27/0410.2
        Office Lease
        
        SB-2
        
        10.2
        8/27/0410.3
        Renewal Addendum to Office Lease 2005
        
        SB-2
        
        10.3
        8/27/0410.4
        User Agreement
        
        SB-2
        
        10.4
        8/27/0410.5
        Agent for the Issuer Letter Agreement
        
        SB-2
        
        10.5
        8/27/0410.6
        Subscription Agreement
        
        SB-2
        
        10.6
        8/27/0431
        Certification pursuant to Section 302 of the Sarbanes-Oxley Act
        X32
        Certification pursuant to Section 906 of the Sarbanes-Oxley Act
        X






15



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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.



XSINVENTORY

(Registrant)





By:/s/
			Michael Evangelista


Michael J. Evangelista, President &


Chief Executive Officer (On behalf of


the registrant and as principal accounting


officer)




Date: November 14, 2006



16