UNITED STATES
 SECURITIES AND EXCHANGE
COMMISSION
 WASHINGTON,D.C.20549
 
 FORM 10-Q
 
 xQUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the quarterly period endedMarch 31,
2009
 
 oTRANSITION REPORT PURSUANT TO SECTION
13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the transition period from ________
to ________
 
 Commission File Number:000-52074
  4C Controls
Inc.
 (Exact Name of Registrant as Specified
in its Charter)
 
 Nevada
                      
                      98-0446287(State or other jurisdiction
      of
                        incorporation or
      organization)
                      
                      (IRS Employer
                        Identification
      No.)
 
 100 Wall Street, 21stFloor
 New
York,NY10005
 (Address of principal executive
offices)
 
 866-515-7069
 (Registrant’s Telephone Number,
Including Area Code)
 
 N/A
 (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.
 YesxNoo
 
 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. (Check one):
 
 Large Accelerated
      Filer
                o
                Accelerated
      Filer
                oNon-Accelerated
      Filer
                o
                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).
 YesxNoo
 
 As ofMay 18, 2009, the Issuer had 44,179,540 shares of
its Common Stock outstanding.
 
   
 TABLE OF CONTENTS
  PART I: FINANCIAL
      INFORMATION
                F-1Item 1: Financial
      Statements
                F-1Item 2: Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
                4Item 3: Quantitative and
      Qualitative Disclosures about Market Risk
                10Item 4T: Controls and
      Procedures
                10PART II: OTHER
      INFORMATION
                11Item 1: Legal
      Proceedings
                11Item 2: Unregistered Sales of
      Equity Securities and Use of Proceeds
                11Item 3: Defaults Upon Senior
      Securities
                11Item 4: Submission of Matters to a
      Vote of Security Holders
                11Item 5: Other
      Information
                11Item 6:
      Exhibits
                12SIGNATURES
                13
 
 
 2
  
 SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
  This Report on Form 10-Q (this “Report”)
includes forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking statements
include statements concerning our plans, objectives, goals, strategies, future
events, future revenues or performance, capital expenditures, financing needs
and other information that is not historical information and, in particular,
appear in the section entitled “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and elsewhere in this Report.
When used in this Report, the words “estimates,” “expects,” “anticipates,”
“forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should”
and variations of these words or similar expressions (or the negative versions
of any these words) are intended to identify forward-looking statements. All
forward-looking statements, including, without limitation, management’s
examination of historical operating trends, are based upon our current
expectations and various assumptions. Our expectations, beliefs and projections
are expressed in good faith and we believe there is a reasonable basis for them.
However, we can give no assurance that management’s expectations, beliefs and
projections will be achieved.
 
 There are a number of risks and
uncertainties that could cause our actual results to differ materially from the
results referred to in the forward-looking statements contained in this Report.
Important factors outside the scope of our control could cause our actual
results to differ materially from the results referred to in the forward-looking
statements we make in this Report. Without limiting the foregoing, if we are
unable to acquire approvals or consents from third parties or governmental
authorities with respect to our new business model, our plans to commence our
new business may become irrevocably impaired.
 
 All forward-looking statements included
herein are expressly qualified in their entirety by the cautionary statements
contained or referred to in this Report. Except to the extent required by
applicable laws and regulations, the Company undertakes no obligation to update
these forward-looking statements to reflect events or circumstances after the
date of this Report or to reflect the occurrence of unanticipated
events.
  Unless otherwise provided in this
Report, references to the “Company,” the “Registrant,” the “Issuer,” “we,” “us,”
and “our” refer to 4C Controls Inc.
 
  
   PART IFINANCIAL
INFORMATION
  4C
      Controls Inc.(A
      Development Stage Company)Balance
      SheetsMarch
      31
                                                  
                                                  
                                                  December
      312009
                                                  
                                                  
                                                  2008(Unaudited)ASSETSCurrent
      AssetsCash
                                                  
                                                  $
                                                  2,016,619
                                                  
                                                  
                                                  $
                                                  104,708Prepaid
      expenses and other current assets
                                                  
                                                  
                                                  38,527
                                                  
                                                  
                                                  
                                                  43,097Total
      Current Assets
                                                  
                                                  
                                                  2,055,146
                                                  
                                                  
                                                  
                                                  147,805Property
      & Equipment, net of accumulated depreciation of $1185 and
      $957
                                                  
                                                  
                                                  14,115
                                                  
                                                  
                                                  
                                                  14,343Investment
      in and Advances to 4C Security Solutions,
    Ltd.
                                                  
                                                  
                                                  3,730,663
                                                  
                                                  
                                                  
                                                  3,806,601Total
      Assets
                                                  
                                                  $
                                                  5,799,924
                                                  
                                                  
                                                  $
                                                  3,968,749LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIENCY)Current
      LiabilitiesAccrued
      liabilities
                                                  
                                                  $
                                                  2,627,933
                                                  
                                                  
                                                  $
                                                  1,579,845Interest
      payable - related party
                                                  
                                                  
                                                  52,708
                                                  
                                                  
                                                  
                                                  23,305Loan
      payable - related party
                                                  
                                                  
                                                  1,525,592
                                                  
                                                  
                                                  
                                                  1,539,175Total
      Current Liabilities and Total Liabilities
                                                  
                                                  
                                                  4,206,233
                                                  
                                                  
                                                  
                                                  3,142,325Stockholders'
      Equity (Deficiency):Common
      Stock, par value $.00001 per share100,000,000
      shares authorized,44,649,990
      issued and 44,179,540 outstanding at March 31,
      2009and
      December 31, 2008
                                                  
                                                  
                                                  441
                                                  
                                                  
                                                  
                                                  441Additional
      paid in capital
                                                  
                                                  
                                                  13,488,198
                                                  
                                                  
                                                  
                                                  13,428,602Donated
      Capital
                                                  
                                                  
                                                  24,000
                                                  
                                                  
                                                  
                                                  24,000Treasury
      Stock, 470,450 shares at cost
                                                  
                                                  
                                                  (940,895
                                                  )
                                                  
                                                  
                                                  (940,895
                                                  )Deficit
      accumulated during development stage
                                                  
                                                  
                                                  (7,716,245
                                                  )
                                                  
                                                  
                                                  (5,867,715
                                                  )Deferred
      Compensation
                                                  
                                                  
                                                  (5,243,008
                                                  )
                                                  
                                                  
                                                  (5,818,009
                                                  )Total
      4C Controls Stockholders' Equity
(Deficiency)
                                                  
                                                  
                                                  (387,509
                                                  )
                                                  
                                                  
                                                  826,424Non
      Controlling Interest in Subsidiaries
                                                  
                                                  
                                                  1,981,200
                                                  
                                                  
                                                  
                                                  -Total
      Equity
                                                  
                                                  
                                                  1,593,691
                                                  
                                                  
                                                  
                                                  826,424Total
      Liabilities and Stockholders' Equity
      (Deficiency)
                                                  
                                                  $
                                                  5,799,924
                                                  
                                                  
                                                  $
                                                  3,968,749
  See
Notes to Financial Statements
   F-1
  4C
      Controls Inc.(A
      Development Stage Company)(Unaudited)
      Statements of OperationsAccumulated
      fromDecember
      28, 2004For
      the Three Months EndedMarch
    31
                                                                                        
                                                                                        
                                                                                        (Date
      of Inception)2009
                                                                                        
                                                                                        
                                                                                        2008
                                                                                        
                                                                                        
                                                                                        to
      March 31, 2009RevenueInterest
      Income
                                                                                        
                                                                                        $
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        $
                                                                                        3,219ExpensesDirector
      fees and expenses
                                                                                        
                                                                                        
                                                                                        112,439
                                                                                        
                                                                                        
                                                                                        
                                                                                        6,000
                                                                                        
                                                                                        
                                                                                        
                                                                                        433,322Donated
      Services
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        24,000General
      & Administrative
                                                                                        
                                                                                        
                                                                                        981,739
                                                                                        
                                                                                        
                                                                                        
                                                                                        50,396
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,463,535Interest
      - related party
                                                                                        
                                                                                        
                                                                                        29,403
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        82,024Marketing
      and public relations
                                                                                        
                                                                                        
                                                                                        137,596
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        653,025Professional
      fees
                                                                                        
                                                                                        
                                                                                        511,416
                                                                                        
                                                                                        
                                                                                        
                                                                                        119,723
                                                                                        
                                                                                        
                                                                                        
                                                                                        2,951,447Equity
      in loss of unconsolidated subsidiary
                                                                                        
                                                                                        
                                                                                        75,937
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        112,111Total
      expenses
                                                                                        
                                                                                        
                                                                                        1,848,530
                                                                                        
                                                                                        
                                                                                        
                                                                                        176,119
                                                                                        
                                                                                        
                                                                                        
                                                                                        7,719,464Net
      Loss
                                                                                        
                                                                                        $
                                                                                        (1,848,530
                                                                                        )
                                                                                        
                                                                                        $
                                                                                        (176,119
                                                                                        )
                                                                                        
                                                                                        $
                                                                                        7,716,245Net
      Loss Per Share
                                                                                        
                                                                                        $
                                                                                        (0.04
                                                                                        )
                                                                                        
                                                                                        $
                                                                                        (0.00
                                                                                        )Weighted
      Average Shares Outstanding
                                                                                        
                                                                                        
                                                                                        44,179,540
                                                                                        
                                                                                        
                                                                                        
                                                                                        42,173,766
  See
Notes to Financial Statements
  F-2
  4C
      Controls Inc.(A
      Development Stage Company)(Unaudited)
      Statement of Stockholders' EquityFor
      the Period from December 28, 2004 (Date of Inception) to March 31,
      2009
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          DeficitAccumulatedDuring
      theCommon
      Stock
                                                          
                                                          Additional
                                                          
                                                          Treasury
      Stock
                                                          Donated
                                                          
                                                          Deferred
                                                          
                                                          DevelopmentShares
                                                          
                                                          Par
                                                          
                                                          Paid-in
      Capital
                                                          
                                                          Shares
                                                          
                                                          Value
                                                          
                                                          Capital
                                                          
                                                          Compensation
                                                          
                                                          Stage
                                                          
                                                          TotalValueCommon
      stock issued for cash at$0.00001 per
      share
                                                          
                                                          35,000,000
                                                          
                                                          $     350
                                                          
                                                          $               (300)
                                                          
                                                          
                                                          
                                                          $                 -
                                                          
                                                          $            -
                                                          
                                                          $                     -
                                                          
                                                          $                     -
                                                          
                                                          $                    50Net
      loss for the period
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          (6,520)
                                                          
                                                          (6,520)Balance
      - December 31, 2004
                                                          
                                                          35,000,000
                                                          
                                                          $     350
                                                          
                                                          $               (300)
                                                          
                                                          
                                                          
                                                          $                 -
                                                          
                                                          $            -
                                                          
                                                          $                     -
                                                          
                                                          $           (6,520)
                                                          
                                                          $           (6,470)Common
      stock issued for cash at $0.10 per
      share
                                                          
                                                          7,053,550
                                                          
                                                          70
                                                          
                                                          100,695
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          100,765Shares
      issuance costs
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          (1,548)
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          (1,548)Donated
      services
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          12,000
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          12,000Net
      loss for the year
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          (48,442)
                                                          
                                                          (48,442)Balance
      - December 31, 2005
                                                          
                                                          42,053,550
                                                          
                                                          $     420
                                                          
                                                          $           98,847
                                                          
                                                          
                                                          
                                                          $                 -
                                                          
                                                          $
      12,000
                                                          
                                                          $                     -
                                                          
                                                          $         (54,962)
                                                          
                                                          $           56,305Donated
      services
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          12,000
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          12,000Net
      loss for the year
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          (42,707)
                                                          
                                                          (42,707)Balance
      - December 31, 2006
                                                          
                                                          42,053,550
                                                          
                                                          $     420
                                                          
                                                          $           98,847
                                                          
                                                          
                                                          
                                                          $                 -
                                                          
                                                          $
      24,000
                                                          
                                                          $                     -
                                                          
                                                          $         (97,669)
                                                          
                                                          $           25,598Net
      loss for the year
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          (93,677)
                                                          
                                                          (93,677)Balance
      - December 31, 2007
                                                          
                                                          42,053,550
                                                          
                                                          $     420
                                                          
                                                          $           98,847
                                                          
                                                          
                                                          
                                                          $                 -
                                                          
                                                          $
      24,000
                                                          
                                                          $                     -
                                                          
                                                          $      (191,346)
                                                          
                                                          $         (68,079)Issuance
      of Common Stock
                                                          
                                                          1,596,440
                                                          
                                                          16
                                                          
                                                          4,806,810
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          4,806,826Non
      cash compensation
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          100,791
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          100,791Shareholder
      profits from sale of securities
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          1,522,164
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          1,522,164Stock
      grant
                                                          
                                                          1,000,000
                                                          
                                                          10
                                                          
                                                          6,899,990
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          (6,900,000)
                                                          
                                                          
                                                          
                                                          -Amortization
      of deferred compensation
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          1,081,991
                                                          
                                                          
                                                          
                                                          1,081,991Treasury
      stock acquired
                                                          
                                                          (470,450)
                                                          
                                                          (5)
                                                          
                                                          
                                                          
                                                          470,450
                                                          
                                                          (940,895)
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          (940,900)Net
      loss for the year
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          (5,676,369)
                                                          
                                                          (5,676,369)Balance
      - December 31, 2008
                                                          
                                                          44,179,540
                                                          
                                                          $     441
                                                          
                                                          $  13,428,602
                                                          
                                                          $   470,450
                                                          
                                                          $  (940,895)
                                                          
                                                          $
      24,000
                                                          
                                                          $   (5,818,009)
                                                          
                                                          $   (5,867,715)
                                                          
                                                          $        826,424Non
      cash compensation
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          59,596
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          59,596Amortization
      of deferred compensation
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          575,001
                                                          
                                                          
                                                          
                                                          575,001Net
      loss for the period
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          (1,848,530)
                                                          
                                                          (1,848,530)Balance
      - March 31, 2009
                                                          
                                                          44,179,540
                                                          
                                                          441
                                                          
                                                          13,488,198
                                                          
                                                          470,450
                                                          
                                                          (940,895)
                                                          
                                                          24,000
                                                          
                                                          (5,243,008)
                                                          
                                                          (7,716,245)
                                                          
                                                          (387,509)
  See
Notes to Financial Statements
   F-3
  4C
      Controls Inc.(A
      Development Stage Company)(Unaudited)
      Statement of Cash FlowsAccumulated
      fromFor
      the Three
                                                  
                                                  
                                                  December
      28, 2004Months
      Ended
                                                    March
      31
                                                  
                                                  
                                                  (Date
      of Inception)2009
                                                  
                                                  
                                                  2008
                                                  
                                                  
                                                  to
      March 31, 2009Operating
      ActivitiesNet
      loss
                                                  
                                                  $
                                                  (1,848,530
                                                  )
                                                  
                                                  $
                                                  (176,119
                                                  )
                                                  
                                                  $
                                                  (7,716,245
                                                  )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Amoritzation
      of deferred compensation
                                                  
                                                  
                                                  575,001
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (5,243,008
                                                  )Depreciation
                                                  
                                                  
                                                  229
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,185Issuance
      of stock options
                                                  
                                                  
                                                  59,596
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  160,387Donated
      Services
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  24,000Impairment
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  5,000Equity
      in loss of unconsolidated subsidiary
                                                  
                                                  
                                                  75,938
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  112,111Change
      in operating assets and liabilities
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -Interest
      payable
                                                  
                                                  
                                                  29,403
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  52,708Accrued
      expenses
                                                  
                                                  
                                                  1,034,503
                                                  
                                                  
                                                  
                                                  (612
                                                  )
                                                  
                                                  
                                                  2,621,547Prepaid
      expenses and other current assets
                                                  
                                                  
                                                  4,571
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (38,526
                                                  )Net
      Cash Used in Operating Activities
                                                  
                                                  
                                                  (69,289
                                                  )
                                                  
                                                  
                                                  (176,731
                                                  )
                                                  
                                                  
                                                  (10,020,841
                                                  )Investing
      ActivitiesInvestments
      in 4C Security Solutions, Ltd.
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (940,900
                                                  )
                                                  
                                                  
                                                  (3,690,808
                                                  )Advances
      to 4C Security Solutions, Ltd.
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (151,966
                                                  )Acquisition
      of Property and Equipment
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (15,300
                                                  )Website
      development costs
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (5,000
                                                  )Net
      Cash Used in Investing Activities
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (940,900
                                                  )
                                                  
                                                  
                                                  (3,863,074
                                                  )Financing
      ActivitiesProceeds
      of Loan from related party
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  196,256
                                                  
                                                  
                                                  
                                                  1,531,977Repayments
      to a related party
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -Net
      proceeds from issuance of common shares
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  940,900
                                                  
                                                  
                                                  
                                                  12,387,357Proceeds
      from Minority Interest
                                                  
                                                  
                                                  1,981,200
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,981,200Net
      Cash Provided by (used in) Financing
    Activities
                                                  
                                                  
                                                  1,981,200
                                                  
                                                  
                                                  
                                                  1,137,156
                                                  
                                                  
                                                  
                                                  15,900,534Increase
      (Decrease) in Cash
                                                  
                                                  
                                                  1,911,911
                                                  
                                                  
                                                  
                                                  19,525
                                                  
                                                  
                                                  
                                                  2,016,619Cash-
      Beginning of Period
                                                  
                                                  
                                                  104,708
                                                  
                                                  
                                                  
                                                  6,313
                                                  
                                                  
                                                  
                                                  -Cash
      - End of Period
                                                  
                                                  $
                                                  2,016,619
                                                  
                                                  
                                                  $
                                                  25,838
                                                  
                                                  
                                                  $
                                                  2,016,619See
      Notes to Financial StatementsSupplemental
      disclosure of cash flow informationCommon
      Stock issued for deferred compensation
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  6,900,000Profits
      from shareholder sales of stock capitalized to loan
    recievable
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,522,164Treasury
      stock acquired through offset of loan to related party
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  940,895




F-4


4C
CONTROLS INC.




(A
Development Stage Company)




NOTES TO
FINANCIAL STATEMENTS




March
31, 2009




(Unaudited)




NOTE 1
- BASIS OF PRESENTATION




The
accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted for interim financial information
and with the instructions to Form 10-Q and Article 8 of Regulation S-X relating
to smaller reporting companies.  Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles (“GAAP”) for complete financial statements.  In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included.  Operating results for the three month period ended March
31, 2009 are not necessarily indicative of the results that may be expected for
the year ended December 31, 2009.




The balance sheet at December 31, 2008
has been derived from the audited financial statements at that date but does not
include all of the information and footnotes required by GAAP for complete
financial statements.




For further information, refer to the
consolidated financial statements and footnotes thereto included in our Annual
Report on Form 10-K for the year ended December 31, 2008.




NOTE
2 – ORGANIZATION AND BUSINESS DESCRIPTION




4C
Controls Inc. (the “Company”) was incorporated in the State of Nevada on
December 28, 2004 and is a development stage company as defined by Statement of
Financial Accounting Standard No. 7, “Development Stage
Companies”.  On January 10, 2008, a change of control of the Company
occurred and Rudana Investment Group AG (“Rudana”) a corporation formed under
the laws of Switzerland, became the new majority shareholder of the Company,
controlling approximately 66% of the issued and outstanding shares of the
Company’s common stock.  On February 12, 2008, the Company changed its
name from Amecs Inc. to 4C Controls Inc.  The Company’s business plan
focuses on offering cutting edge earth observation solutions, including
Synthetic Aperture Radar (SAR) and high resolution optical satellite images, and
integrated high technology security, surveillance and access control
solutions.  During the quarter-ended March 31, 2009, the Company has
been refining its business plan, recruiting its management team, and
establishing strategic alliances.




NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Use
of Estimates




The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles 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.  The actual results experienced by the Company may differ
materially and adversely from the Company’s estimates.  To the extent
there are material differences between the estimates and the actual results,
future results of operations will be affected.




F-5


Cash
and cash equivalents




The
Company considers all highly liquid debt investments with original maturities of
three months or less when purchased to be cash equivalents.  The
carrying amounts approximate fair market value because of the short
maturity.




The
Company maintains cash balances at various financial
institutions.  Accounts at each institution are insured by the Federal
Deposit Insurance Corporation up to $250,000.  The Company's accounts
at these institutions may, at times, exceed the Federally insured
limits.  The Company has not experienced any losses in such
accounts.




Property
and Equipment




Property
and equipment consisting of office furniture and equipment, is stated at cost
and are depreciated over their estimated useful life (seven years), using the
straight line method. Maintenance and repairs are expensed as
incurred.




Income
taxes




The
Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 (“SFAS 109”) which requires that deferred tax
assets and liabilities be recognized for future tax consequences attributable to
differences between financial statement carrying amounts of existing assets and
liabilities and their respective tax bases.  In addition, SFAS 109
requires recognition of future tax benefits, such as carry forwards, to the
extent that realization of such benefits is more likely than not and that a
valuation allowance be provided when it is more likely than not that some
portion of the deferred tax asset will not be realized.




Long-lived
assets




In
accordance with the Financial Accounting Standards Board (“FASB”) SFAS No. 144,
“Accounting for the Impairment of Disposal of Long-Lived Assets”, the carrying
value of intangible assets and other long-lived assets is reviewed on a regular
basis for the existence of facts or circumstances that may suggest
impairment.  The Company recognizes impairment when the sum of the
expected undiscounted future cash flows is less than the carrying amount of the
asset.  Impairment losses, if any, are measured as the excess of the
carrying amount of the asset over its estimated fair value.




Financial
instruments




The fair
values of cash, prepaid expense, accrued liabilities and amounts due to a
related party was estimated to approximate their carrying values due to the
immediate or short-term maturity of these financial instruments.




Basic
and diluted net income (loss) per share




The
Company computes net income (loss) per share in accordance with SFAS No. 128,
“Earnings Per Share” (“SFAS 128”).  SFAS 128 requires presentation of
both basic and diluted earnings per share (“EPS”) on the face of the income
statement.  Basic EPS is computed by dividing net income (loss)
available to common shareholders (numerator) by the weighted average number of
shares outstanding (denominator) during the period.  Diluted EPS gives
effect to all dilutive potential common shares outstanding during the period
including stock options, using the treasury stock method, and convertible
preferred stock, using the if-converted method.  In computed Diluted
EPS, the average stock price for the period is used in determining the number of
shares assumed to be purchased from the exercise of stock options or
warrants.  Diluted EPS excludes all dilutive potential shares if their
effect is anti-dilutive.




F-6


Stock
based compensation




Common
stock, stock options and warrants issued to other than employees or directors in
exchange for services are recorded on the basis of their fair value, as required
by SFAS No. 123R, which is measured as of the date required by EITF Issue 96-18,
“Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services ”.  In
accordance with EITF 96-18, the non-employee stock options or warrants are
measured at their fair value by using the Black-Scholes option pricing model as
of the earlier of the date at which a commitment for performance to earn the
equity instruments is reached (“performance commitment date”) or the date at
which performance is complete (“performance completion date”).  The
stock-based compensation expenses are recognized on a straight-line basis over
the shorter of the period over which services are to be received or the vesting
period.  Accounting for non-employee stock options or warrants which
involve only performance conditions when no performance commitment date or
performance completion date has occurred as of reporting date requires
measurement at the equity instruments then-current fair value.  Any
subsequent changes in the market value of the underlying common stock are
reflected in the expense recorded in the subsequent period in which that change
occurs.




Other
comprehensive income




SFAS
No. 130, “Reporting Comprehensive Income/(Loss)”, establishes standards for the
reporting and display of comprehensive income or loss and its components in the
financial statements.  As of March 31, 2009 and December 31, 2008, the
Company has no items that represent comprehensive income.




Recent
accounting pronouncements




In
December 2007, the FASB issued SFAS No. 141(R), Business Combinations, a
replacement of FASB Statement No. 141 (SFAS No. 141(R)), which significantly
changes the principles and requirements for how the acquirer of a business
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed and any noncontrolling interest in the
acquiree.  The statement also provides guidance for recognizing and
measuring the goodwill acquired in the business combination and determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination.  This
statement became effective prospectively, except for certain retrospective
adjustments to deferred tax balances, January 1, 2009.  The Company
will assess the impact of this statement upon any future business
combinations.




In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51 (SFAS No.
160).  This statement establishes accounting and reporting standards
for the noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary.  The accounting and reporting for minority interests will
be recharacterized as noncontrolling interests and classified as a component of
equity separate from the parent’s equity.  In addition, SFAS No. 160
establishes reporting requirements that provide sufficient disclosures that
clearly identify and distinguish between the interests of the parent and the
interests of the noncontrolling owners.  This statement became
effective prospectively, except for certain retrospective disclosure
requirements, January 1, 2009.




In March
2008, the FASB issued Statement of Financial Accounting Standards No. 161,
Disclosures about Derivative Instruments and Hedging Activities, an amendment of
FASB Statement No. 133 (“SFAS 161”).  SFAS 161 is intended to improve
transparency in financial reporting by requiring enhanced disclosures of an
entity’s derivative instruments and hedging activities.  This
statement requires additional disclosures about the objectives of derivative
instruments and hedging activities, the method of accounting for such
instruments under SFAS No. 133 and its related interpretations, and a tabular
disclosure of the effects of such instruments and related hedged items on the
Company’s financial position, financial performance, and cash
flows.  SFAS 161 was adopted by the Company January 1,
2009.  The adoption of SFAS 161 did not have a material effect on the
Company’s consolidated financial statements.




F-7


NOTE
4 - GOING CONCERN




The
Company is in the development stage during which management has devoted most of
its activities to the development of a business plan for the
Company.  As of March 31, 2009, the Company has an accumulated deficit
of $7,716,245, has a working capital deficiency of $1,747,281 and has not
generated any revenue since its inception.  The ability of the Company
to continue as a going concern and to emerge from the development stage is
dependent upon its successful execution of its plan of operations and ability to
raise additional financing.  There is no guarantee that the Company
will be able to raise additional capital or sell any of its products and
services at a profit.  These factors, among others, raise substantial
doubt regarding the Company’s ability to continue as a going
concern.  The accompanying financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.




NOTE
5 - STOCKHOLDERS’ EQUITY




On
December 18, 2007, the Board of Directors declared the payment of a stock
dividend to the stockholders of record of the Company as of January 2,
2008.  The stock dividend was paid on January 4, 2008.  Each
stockholder received six additional shares of the Company’s common stock for
each one share of the Company’s common stock which they held on the record
date.  Following the payment of the stock dividend, the issued and
outstanding share ownership of the Company increased from 6,007,650 shares of
Company common stock to 42,053,550 shares of common stock.  The
Company retained the current par value of $0.00001 per share for all common
shares. The statement of Stockholders’ Equity and per share amounts have been
retroactively adjusted to reflect the historical impact of the stock
dividend.  We have entered into financing arrangements which may
result in the issuance of warrants to the financing company.  See Note
10.




NOTE
6 - INVESTMENT IN 4C SECURITY SOLUTIONS LTD.




As of
December 31, 2008, the Company had made a cumulative investment of $3,690,808
(AUD $4,000,000) into 4C Security Solutions Limited (“FCS”), an Australian
company, formerly known as BQT Solutions Limited, in consideration for
12,800,000 ordinary shares of FCS representing approximately 19.8% of the issued
and outstanding shares of FCS.  The Company was also granted 9,500,000
options with a strike price of AUD $0.10 and an expiration date of December 31,
2013.  FCS is an Australian public company specializing in access
control systems, biometric and smart card readers, CCTV, cameras and customized
developments for selected clients. FCS’s strategy is to diversify and expand its
activities in the security and surveillance technology sector. FCS intends to
focus on commercializing its SMAX access control system and support sales of
existing company technologies of biometrics, smart card readers, CCTV cameras
and customized solutions for selected key clients. The SMAX Access Control
Management System is a sophisticated, intelligent and cost effective security
application that provides movement and access controls within a facility. In
addition, the Company advanced $151,966 to a subsidiary 4C Security Solutions,
which amount is included in investments and advances to 4C Security Solutions on
the accompanying Balance Sheets.







F-8




NOTE
7 - RELATED PARTY TRANSACTIONS




As of
March 31, 2009, Rudana the Company’s majority shareholder and companies
controlled by Rudana has advanced several loans to the Company with a cumulative
balance at the end of the reporting period of [$1,525,592]. The funds were used
by the Company for general corporate purposes and for financing its strategic
alliance investment obligations in FCS.  These loans bear interest at
7.5% per annum and are due thirty (30) days after demand. Interest expense
related to these loans aggregated $29,403 and nil for the three months ended
March 31, 2009 and 2008, respectively.




The
Company has a management service agreement with Prime Asset Finance Ltd., a UK
company which is a wholly owned subsidiary of Rudana, to assist the Company in
advising and developing  its strategic plans. The agreement provides
for an initial service fee of $250,000, which is being amortized over the three
year life of the agreement, and (a) a monthly management fee of $25,000, (b) a
fee equal to 5% of the total value of each transaction involving mergers,
acquisitions, and divestitures by the Company or any of its subsidiaries, and
(c) a fee equal to 8% of the total value of each customer sales contracts,
contractor and sub-contractor agreements with the Company.  The
Company has recorded an expense of $171,455 relating to this agreement during
the three months ended March 31, 2009, which is included in professional fees on
the Statement of Operations for the three months ended March 31, 2009, and is
included in Accrued Liabilities on the accompanying Balance Sheet at March 31,
2009.  The Company has recorded total expenses of $299,233 from
inception through March 31, 2009 relating to this Agreement.  As of
the date of his Report the Company has not yet paid any amounts due in respect
of the management service agreement and all such amounts have only been
accrued.




NOTE
8 – COUNTERPARTY RISKS




The
Company is exposed to counterparty risks in respect of financing the Company’s
business plan, and risks related to prospective service partners and clients of
the Company and its operating subsidiaries. The Company has entered into
agreement with e-GEOS, a joint venture between Italian Space Agency (ASI) and
Telespazio, to sell satellite images from the COSMO-SkyMed satellite
constellation in exclusive Company markets.  The Company is exposed to
risks that it may not be able to pay the minimum payments due as required under
the e-GEOS agreement as well as risks that e-GEOS may not be able to perform in
regard to delivery of the satellite images for Company customers in accordance
with the agreement.  The Company previously commissioned a business
plan and business case study by an outside consultant with respect to satellite
construction and sales (the “Consultant Plan”).  The Company is
preparing to execute and implement the Consultant
Plan.  The Company equity capitalization amounts to be raised by
Synergy are tied to the Consultant Plan.  The Company has commenced
marketing efforts to sell and/or lease capacity on its proprietary Synthetic
Aperture Radar (“SAR”) satellites.  The Company has been in
negotiations with Thales Alenia Space (Italy) with respect to negotiating the
prime contractor agreement for construction of the satellites.  The
Company believes that the negotiations with Thales Alenia Space are nearing
completion.  Synergy must introduce the Company to sufficient capital
resources in order for the Company to implement the Consultant Plan and to
engage Thales Alenia Space as prime contractor.  Prior to closing any
investments resulting from introductions, the Company will be exposed to
counterparty risk with respect to investment commitments introduced to the
Company through Synergy.  The Company will also be exposed to
counterparty risk with respect to any agreement with Thales Alenia Space (and
indirectly, to the subcontractors of Thales Alenia Space).




F-9


Additional
risks are detailed in the Company’s Form 10-K for the fiscal year ended December
31, 2008.




NOTE
9 – INCOME TAXES




The
Company has available $7,200,000 of net operating loss carryforwards available
to offset future taxable income, if any.  These carryforwards expire
in the year 2024.




The
Company has a deferred tax asset of approximately $2,800,000 relating to
available net operating loss carryforwards for which a full valuation allowance
has been provided.  Utilization of the net operating loss carry
forwards will be limited due to the change in control referred to in Note
2.




NOTE
10 – FINANCING ACTIVITIES




We have
entered into an agreement with Synergy Investments & Finance Holding Limited
(“Synergy”) formerly known as Arimathea Limited, to assist us to raise
capital.  In consideration for assisting us to raise equity and debt
capital, we issued a warrant to Synergy. On May 29, 2008, the Company amended
the warrant (the “First Amended Warrant”).  The Company and Synergy
subsequently agreed to amend the Warrant again (the “Second Amended
Warrant”).  The Second Amended Warrant has an exercise term of 3 years
and will become exercisable only for the purchase of a number of shares equal to
the following: (i) 5% of the amount of capital raised by the Company from
introductions made by Synergy, divided by (ii) the original exercise price of
$3.45 per share, which was the closing publicly traded market price of the
Company’s common stock on March 25, 2008, the date immediately preceding the
date of grant of the original warrant.  Under the formulation, the
maximum number of shares that may be purchased under the Second Amended Warrant
is approximately one million shares of Company restricted common stock at a
purchase price of $3.45 per share (the exercise price of the original warrant),
assuming the Company raises $70 million attributable to introductions made by
Synergy. Under the terms of its warrant, Synergy will not be permitted to
exercise and own more than 4.9% of the Company’s Common Stock at any given time.
The Synergy Warrant does not contain any call provisions and there is no
obligation on the part of Synergy to exercise its warrant at any time. As a
result of the contingent nature of the vesting of the Synergy warrant, no
expense has been recognized.  Synergy has not yet raised any funds for
the Company and we cannot guarantee that Synergy will be successful in assisting
us to raise capital for our operations.  As of the date of this
Report, no warrants have been issued to Synergy. No firm commitments regarding
performance have been made by Synergy.  All other terms and conditions
of the original warrant remain the same.  The Company’s Agreement with
Synergy is nominally for a period of three years, however, the Agreement may be
terminated prior to that period so long as the Company compensates Synergy for
any introductions of capital which are attributable to Synergy.  The
parties have agreed that neither the original Warrant nor the First Amended
Warrant vested and no portion of the Second Amended Warrant has yet
vested.  Performance in respect of the terms of the Second Amended
Warrant have not been met, so there has not been an accounting event that would
require valuation.







F-10




NOTE
11 – EMPLOYEES




On March
12, 2009, effective as of February 5, 2009 the Company entered into a three year
employment agreement (the “Employment Agreement”) with Mr. Anastasios Angeloglou
regarding his service as the Company’s Chief Executive
Officer.  Pursuant to the Employment Agreement, Mr. Angeloglou will
receive (i) a base salary of 400,000 Euros (approximately U.S. $520,000) per
year; (ii) contributions to a pension fund in the amount of 108,000 Euros
(approximately U.S. $140,000) for the first year of service and 35,000 Euros
(approximately U.S. $46,000) for each of the second and third years of service;
(iii) an annual bonus to be granted on the basis of obtaining certain
performance benchmarks; (iv) reasonable education of costs for Mr. Angeloglou’s
children and other benefits.  The Company has also entered into two
related agreements with 4C Security Solutions Limited (“4C Security Solutions”).
The Company entered into a Provision of Services Agreement with 4C Security
Solutions dated as of February 5, 2009, pursuant to which the Company agreed to
pay a monthly fee to 4C Security Solutions for the use of certain 4C Security
Solutions’ staff.  This agreement terminates on June 30,
2011.  The Company entered into a second Provision of Services
Agreement with 4C Security Solutions dated as of February 5, 2009, pursuant to
which 4C Security Solutions agreed to pay a monthly fee to the Company for the
shared, part-time allocation of services by the Company’s Chief Executive
Officer, Anastasios Angeloglou.  Pursuant to this agreement, Mr.
Angeloglou serves as the Chief Executive Officer of 4C Security Solutions as
well as the Company.  Mr. Angeloglou allocates approximately twenty
eight hours per month to the business of 4C Security Solutions.  This
agreement terminates on June 30, 2011.




On
February 24, 2009, the Company entered into a new Executive Services Agreement
with General Khalid Abdulla Mabarak Al Buainain regarding his service as the
Company’s Vice President for Middle East Military and Defense
Projects.  The new agreement completely supersedes and replaces all
terms and conditions of the August 2008 agreement.  The 2009 Executive
Services Agreement has a term of two years.  Pursuant to the Executive
Services Agreement, General Khalid will receive (i) a salary of 220,000 Euros
per year; (ii) a stock grant equal of 750,000 shares of the Company’s common
stock (the “4C Controls Shares”); (iii) ten percent (10%) of the equity shares
of the Company’s partially-owned subsidiary 4C Gulf Earth Observation Center
(the “4C GEOC Shares”); and (iv) ten percent (10%) of the equity shares of the
4C GulfSatellites program (the “GulfSatellites Shares”).   The 4C
Controls Shares, the 4C GEOC Shares and the GulfSatellites Shares shall be
issued in the name of General Khalid and placed into Company escrow for release
to General Khalid after two years from the date of the Executive Services
Agreement.  In the case of the 4C GEOC Shares, release from escrow
shall also require the condition precedent that there be revenues received by
the Company from sales of ten (10) satellite images per day by 4C GEOC
attributable to introductions to customers made by General Khalid.  In
the case of the GulfSatellites Shares, release from escrow shall also require
the provision of a financial asset and/or technological participation (direct or
indirectly through a third party), or investment or viable economic off-take
agreement equivalent to the value of ten percent equity interest in
GulfSatellites.  If General Khalid achieves his performance
commitments before the two year escrow period has lapsed, all of the shares
shall be released immediately to General Khalid.




NOTE
12 – SUBSEQUENT EVENTS




Subsequent
to the period covered by this Report, ITIGROUP Corporation, an international
logistics and software security group, became a 5% shareholder and strategic
alliance partner of 4C SatImage Ltd., a subsidiary 4C Controls Inc.




Subsequent
to the period covered by this Report, the Company has decided to scale down some
activities and concentrate the Company’s efforts on certain projects which are
expected to have accelerated rates of return on investment – sales of Satellite
Images through strategic alliances, business development of integrated security
systems and solutions for residential projects (through our 4C Systems
Engineering Limited majority owned subsidiary) and ID systems and solutions
(through our 4C ID Systems Limited majority owned subsidiary).  The
Company has also decided to take a hiatus from the development of the
Specialized & Proprietary Security Products until the achievement of key
milestones in the Satellite Imagery and Integrated Security Systems &
Solutions.




*           *




*




F-11




ITEM
      2.
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF
      OPERATIONS





Introduction





The following discussion of the
financial condition and results of operations of the Company should be read in
conjunction with the financial statements and the related notes thereto included
elsewhere in this Report. This Report contains certain forward-looking
statements and the Company's future operating results could differ materially
from those discussed herein. Certain statements contained in this Report,
including, without limitation, statements containing the words “believes”,
“anticipates,” “expects” and the like, constitute “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). However, as the Company intends to issue “penny stock,” as such term is
defined in Rule 3a51-1 promulgated under the Exchange Act, the Company is
ineligible to rely on these safe harbor provisions. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Given these
uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. The Company disclaims any obligation to update any
such factors or to announce publicly the results of any revisions of the
forward-looking statements contained or incorporated by reference herein to
reflect future events or developments, except as required by the Exchange
Act.





Our trading symbol on the
over-the-counter bulletin board is FOUR.





Plan of Operations





The Company intends to position itself
as a leading strategic high technology systems integrator through affiliations
with international security and surveillance enterprises as well as offering
proprietary services and products developed by the Company. The Company intends
to design, manage and integrate state-of-the-art high technology solutions with
comprehensive and fully integrated service offerings.





The Company has developed a strategic
vision to enter into the niche markets described below. During the quarter endedMarch 31, 2009and through the date of this Report, we
have been refining our business plan, restructuring our businesses operations,
recruiting our management team, establishing strategic alliances and joint
ventures, and achieving a number of important milestones.





As a result of recent restructuring of
our business operations by the Company’s new Chief Executive Officer and
management team subsequent to the period covered by this Report, the Company has
decided to focus on the following three areas of operation and market
sectors:







1.
            Satellite Imagery Infrastructure,
      Sales & Support;




2.
            Integrated Systems Security and
      Surveillance Solutions; and




3.
            ID Systems and
      Solutions.





1. Satellite Imagery Infrastructure,
Sales & Support





The Company is positioning itself to
commence generating revenues during the second half of 2009 through the sale of
SAR satellite images under our Strategic Alliance and Distribution Agreement
with e-GEOS, S.p.A .(a joint-venture between the Italian Space Agency (ASI) and
Telespazio S.p.A, a Finmeccanica/Thales company), and though the sale of
integrated security & surveillance solutions.  Under the terms of
our agreement with e-GEOS, we may commence sales and distribution of SAR
satellite images through the existing e-GEOS delivery infrastructure. 
During the first quarter of 2009, we have initiated establishing a strategic
alliance network of sales offices throughout the Middle East andAfrica, starting with the Gulf Cooperation
Council (GCC) and North African regions, to commence our marketing and sales
program to governments and commercial end-users of the SAR images.  We
believe that our strategic alliance approach to marketing our products and
services will facilitate access to key regional decision makers and advisers of
prospective customers to create a strong foundation for generating revenues
commencing in the second half of 2009.





4


StrategicAllianceand Distribution Agreement with
e-GEOS





OnJanuary 27, 2009, we signed our Strategic Alliance and
Distribution Agreement with e-GEOS.  The Italian Space Agency has
developed in cooperation with the Italian Ministry of Defense a constellation
of four satellites that will serve both civil and military purposes
(“Cosmo-SkyMed”).  The Strategic Alliance and Distribution Agreement grants
exclusive rights to us for distribution of Cosmo Sky-Med satellite constellation
images in certain countries of the Middle East and North Africa (MENA) andSouth East Asia.  The e-GEOS agreement also
provides the Company with the right to distribute Cosmo-SkyMed products on a
non-exclusive basis in substantially all other African countries.  The
exclusive distribution rights include worldwide sales of substantially all
satellite images taken over the exclusive territory countries as well as
substantially all worldwide e-GEOS satellite images and products which are sold
within the exclusive territory countries.  We expect to commence
construction of our satellite-data direct receiving station in Abu Dhabi (UAE)
during the fourth quarter of 2009 and we will endeavor to have the satellite
direct receiving station fully operational in the first quarter of
2010.





Prior to the operation of our direct
receiving station, we will use the existing infrastructure of e-GEOS for
worldwide sales and distribution of SAR satellite images.  Our rights
under the e-GEOS Agreement for sales and distribution of satellite images
require substantial minimum annual payments to e-GEOS.  In addition,
we must pay for the significant costs of building and maintaining the satellite
direct receiving ground station.  We believe that our strategic
alliance sales and marketing program, coupled with new investors, will
facilitate sufficient sales of satellite images for coverage of the minimum
annual payments required to e-GEOS and cover the costs of building and
maintaining the direct receiving station.  We expect to commence
generating revenues under our Strategic Alliance and Distribution Agreement with
e-GEOS during the second half of 2009.  We will deploy our operations
under the e-GEOS Agreement through 4C Satimage Ltd., a 51% majority-owned
operating subsidiary.  The minority partners in 4C Satimage Ltd. are
strategic alliance partners and strategic investors.




4CGulfEarthObservationCenter(4C GEOC) – Creation of the first
Direct Receiving Station (DRS) inUnited Arab Emirates





OnFebruary 24, 2009, we announced our plans to build a
10,000 square meter high resolution satellite space center inAbu Dhabito be known as the 4CGulfEarthObservationCenter(4C GEOC).  We are planning
for the facility to host an earth observation satellite data direct receiving
station (DRS) and offer university level courses in space engineering held in
cooperation with Politecnico di Torino, one of the leading scientific research
institutions inEurope.  We expect to finance the 4C
GEOC together with equity investments of Hydra Trading LLC (Abu Dhabi) and other strategic investors from theUnited Arab
Emirates. Our
strategic alliance partner Hydra Trading is a subsidiary of the PAL Group and a
part of the Royal Group of Companies, one of the largest investment companies in
the Middle East andAfrica.  Hydra Trading is primarily
focused on supplying security and armaments equipment to both civilian and
military sectors.  We expect to own approximately 50% of the equity
interests in the 4C GEOC.  While we have agreed in principal to
proceed with Hydra Trading on the development of 4C GEOC, we are finalizing the
terms and conditions under which the Company and its partners will be committing
to this project.  We have begun our efforts to raise significant
capital to proceed with the development of the 4C GEOC.  We expect the
strategic alliance shared costs and partnering structure to facilitate
commencement of the realization of the 4C GEOC towards the end of 2009 and into
2010. We expect the 4C GEOC to serve as a significant marketing and distribution
platform for sales of our satellite images in theMiddle Eastand North Africa (MENA)
region.  Our strategic alliance interests in 4C GEOC will be held
through our majority-owned subsidiary 4C Satimage Ltd.





During the period covered by this
Report, the Company finalized the selection of the 4C GEOC location and obtained
clearance with respect to technical requirements for installing the DRS antennas
and related systems.  The Company has commenced the procedures to
obtain the final license with local authorities inAbu Dhabi.  The 4C GEOC is expected to
be operative in June 2009.





4C High Resolution "GulfSatellites"
Satellite Program





We plan to offer an innovative solution
to improve the Earth observation applications with our "GulfSatellites"
program.  GulfSatellites is an Earth Observation System (EOS) expected
to consist of four high resolution SAR satellites ("GulfSAR 1, 2, 3 & 4")
which will be devoted to security applications, maritime management, risk
management, environmental protection, geology, cartography and
planning.  The Area of Interest (AOI) has been defined as the region
with latitude ranging from 43° S to 43° N. The program is expected to include
two high resolution optical satellites as well as the four SAR
satellites.  For purposes of capitalizing the GulfSatellites program,
we expect several institutions and organizations from the Gulf Cooperation
Council region (GCC) to participate as equity investors in the GulfSatellites
program.  OnFebruary 24, 2009, we have entered into a services
agreement with the General Khalid Abdulla Mabarak Al Buainain who is the
Company’s Vice President for Middle East Military and Defense Projects, which
includes his assistance in respect to commercialization of the GulfSatellites
program. This service agreement is being presented in details in the caption
Employees below. This program is still under development and we do not have
significant advancement that should be reported at the date of this
report.





5


StrategicAlliancewith 4C Security Solutions Limited and
4C Satellites Limited




Through ourstrategic alliance with 4C Security
Solutions Limited and its subsidiary 4C Satellites Limited, we are planning to
create a platform for developing our satellites program.  4C Security
Solutions Limited has undertaken a major restructuring last year and expects to
be on track with its plans for improvement of bottom line performance, new
customers acquisition inAustralia, Gulf Cooperation Council (GCC) and theUnited States, and completion of its access control
product portfolio with its SmaX product.  We currently own 19.8% of 4C
Security Solutions Limited.  Under our agreement with4C
Security Solutions, we have also
been issued options under which we may purchase of 9.5 million shares of4C Security Solutionsat a
purchase price of AUD$0.10 per share, which may be exercised in whole or in part
at any time prior to December 31, 2013.




In connection with our strategic
alliance4C Security Solutions, we have also agreed to acquire 40% of
4C Satellites Ltd.We expect 4C Satellites to serve as the
satellite production and sales business unit of the Company.  The 4C Satellites program is part of our
strategic plan to cover the entire value chain of high resolution Earth
observation satellite-based businesses, from satellite manufacturing and
operation to images processing and sales to end users.  In
consideration for the issuance of our 40% interest in 4C Satellites, we agreed
to capitalize 4C Satellites with AUD$14 million.Due to the
effects of the international financial crisis, we have not yet been able to
commence payment of our AUD $14 million equity infusion into 4C Satellites and
we may not be able to close this transaction during the foreseeable
future.  However, we still plan to move forward with the 4C Satellites
project as soon as reasonably feasible.




4C Polito Space Technologies
S.p.A





We expect to work closely with the
Politechnico di Torino on all of our projects through Dr. Riccardo Maggiora, who
is our Chief Technology Officer and an Associate Professor at the Politechnico
di Torino.  Our satellite plan focuses on the design, construction and
operation of small synthetic aperture radar satellites dedicated for Earth
observation and surveillance in cooperation with the Politechnico di Torino and
other scientific research institutes. The Politechnico di Torino has established
4C Polito Space S.p.A., an Italian private stock company (“4C Polito Space”) in
a joint venture with 4C Satellites.  We are working in cooperation
with Politechnico di Torino and 4C Polito Space through Dr. Riccardo Maggiora,
our Chief Technology Officer and a director on our Board, who also serves as an
officer and director of 4C Polito Space and as an Associate Professor at
Politechnico di Torino.





We anticipate setting up high resolution
synthetic aperture radar satellite production facilities within the Politechnico
di Torino Campus inVerres,Italy.  Areas of operation are
expected to include avionics (digital hardware design, radio frequency and
antenna design), telecommunications systems, firmware/ software design,
aerospace (mechanical and thermal design, propulsion and mission specialists)
assembly, integration and acceptance tests.





Initially, anticipated sales of
synthetic aperture radar satellites are expected to be a key source of our
revenue.  We expect it will take a 24 to 30 month production cycle to
develop, manufacture and launch each synthetic aperture radar satellite. We plan
to sell each satellite at commercially competitive prices.  Out prices
will take into account cost associated with mission control and variations due
to custom attributes. We anticipate that the purchase price to be paid by each
customer will be paid in incrementally in advance
installments.





We have selected Thales Alenia Space
Italia S.p.A. (TASI) as the prime contractor for the in-orbit delivery of the
first two satellites with related ground segment of our planned satellites
constellation. We expect to equip the two satellites with very high-resolution
(1 meter) synthetic aperture radar. We plan to arrange to have the first
satellite in orbit by end of 2011.  We expect to execute prime
contractor agreements with TASI during the foreseeable
future.








2. Integrated Systems Security and
Surveillance Solutions





•
            4C Hydra Systems Engineering &
      Technologies





During the first quarter 2009, we
announced, together with Hydra Trading LLC (Abu Dhabi), the formation of a strategic alliance
to be known as 4C Hydra Systems Engineering & Technologies, whose mission
will be to provide infrastructure projects with a comprehensive systems approach
for integrated solutions delivery.  This approach will range from
traditional projects (commercial buildings) to large infrastructure projects
(new cities, ports, airports, highways, and similar broad scale
projects).  We are finalizing the formation of this alliance, where we
expect to own approximately 50% of the equity interests in the 4C Hydra Systems
Engineering & Technologies strategic alliance.  We have commenced
working on 4C Hydra Systems Engineering & Technologies projects during the
course of first quarter of 2009 with a view to generate revenues in this
operating unit during 2009.





•
            4C Global Security Consulting Ltd.
      - 4C Systems Engineering Ltd. – 4C Homeland Security and Defence Systems
      Ltd.





During the first quarter 2009, we also
created three strategic operating units which will further support the Company’s
growth strategy and expansion plans to become a full spectrum provider of
turnkey integrated scalable solutions for sophisticated high-technology systems,
including but not limited to, civil and homeland security and
defense.  Each of the new operating units are majority owned
subsidiaries of the Company.  The operating units are: (i)4C Global Security
Consulting Ltd., a joint
venture with ISDS Hellas S.A., which will engage in threat analysis, assessment
and design of security solutions; (ii)4C Systems Engineering Ltd., a joint venture with Hellenic
Technologies One-Partner EPE, which will engage in the design, integration,
planning, procurement, implementation, operation, management & maintenance
of systems; and (iii)4C
Homeland Security and Defence Systems Ltd., a joint venture with Theron S.A. to
provide turnkey scalable solutions for high technology projects in homeland
security, defense, and offset benefits programs.





6


During this first quarter of the fiscal
year 2009, we have shifted the focus of our security activities fromDubaitoAbu Dhabidue to the cancellation and slow-down
of a number  of construction projects involving Dubai-based Sire
Contracting Company with whom the Company was previously planning to undertake
strategic alliance activities.





The Company is presently engaged in
negotiations with a major real estate developer inAbu Dhabito provide complete design,
engineering, procurement, installation, commissioning, delivery, operation and
maintenance of certain integrated control and security systems for residential
units now under development.The range of servicesmayinclude the followingelements:Community services command and control,
security systems integration, network infrastructure for village systems
(including Wi-Fi coverage), perimeter and gates surveillance, public areas
surveillance and security, public transportation management, including smart
bus-stops and kiosks, utility mobile resources location and communications,
adaptive irrigation control, air and meteorological monitoring and complete
“smart house” suite, including access control and security for every villa. The
operation and maintenance contract term is planned to exceed five years, and
thus is expected to provide the Company with a stable revenue flow in addition
to revenues expected to be generated by project engineering and delivery.
Additional projects, with a similar scope of activities inSaudi ArabiaandAbu Dhabiare in the early stages of
negotiations.





3. ID Systems and
Solutions





4C ID Systems Ltd.





During the first quarter 2009, we
created 4C ID Systems Limited, a joint venture with Denmead International – a
company which specializes in providing identification systems and has an
established track record inAfrica.  4C ID Systems Limited plans
to provide turnkey ID systems and solutions such as passports, national ID
cards, driving license. 4C ID Systems Limited has commenced its commercial
activities inAfricaand Commonwealth of Independent States
(CIS) regions.TheCompany’s team possessessubstantial expertise in providing theIDsystems to governmentson a global basis. TheCompany is currently in advanced negotiations withseveralgovernments in Africa andAsiato providenational ID and driverlicensesas well as passport systems.The4C ID Systems Limitedbusiness model is to build, operate and
managethevarioussystemstoprovide theCompanywithstablerecurringrevenue flows.







Specialized & Proprietary Security
Products Segment





Our strategy includes developing and
offering specialized and proprietary security technologies in the following
fields:





·Ground High Performance Radars for
Intrusion Detection


·Electromagnetic Security
Systems;


·Real Time Positioning
System;


·Radio Frequency Identification;
and


·Real Time Locating
Systems.





We have previously entered into a License
Agreement with Dr. Maggiora, our Chief Technology Officer and member of our
Board of Directors, under which we have acquired exclusive rights to proprietary
high technology intellectual properties invented and/or developed by Dr.
Maggiora, that we expect to further develop and offer to our
customers.  These proprietary solutions include Electromagnetic
Security (EMSEC) systems, Real Time Positioning System (RTPS), RADAR and GUIDAR
Systems and Real Time Locating Systems (RTLS).Asof the date of this Report,we have not made anyimprovementsor developmentsin respect ofthese technologies thathave resulted in patentsor commercial applications.







7




RESULTS OF
OPERATIONS





Revenues





During the quarter endedMarch 31, 2009, the Company had no revenues from
operations.  We expect to commence generating revenues during the
second half of 2009.





Expenses





Our total expenses for the quarter endedMarch 31, 2009were $1,848,530, which consisted
primarily of general and administrative expenses of $981,739 and professional
fees of $511,416. The general and administrative expenses included $575,001 of
non cash amortization of deferred compensation to our Chief Technology Officer
for expertise in our technology development, $259,456 for officers and personnel
salaries and expenses.





Liquidity and Capital
Resources





During the three months endedMarch 31, 2009and through the date of this Report,
our primary source of capital has been short term cash advances from Rudana
Investment Group AG, the majority shareholder of our Company.  Our
operations to date have consumed substantial amounts of cash.  Our
negative cash flow from operations is expected to continue and increase
significantly in the foreseeable future as we will have new costs associated
with the developments of our joint ventures, strategic alliances and production
facilities.





Since inception of the Company, we
have incurred aggregate total expenses of $7,719,464, including total
expenses of $1,848,530 during the three months endedMarch 31, 2009.  Our consolidated cash
balance atMarch 31,
2009was
$2,016,619.  As ofMarch 31, 2009, our total assets (consisting of cash,
investment in 4C Security Solutions) were $5,779,924 and our total liabilities
were $4,206,233.





We will need to raise additional capital
to implement our new business plan and continue operations. We are continuing to
seek sources of financing through private placements of securities and loans in
order for us to fully deploy our business plan.  We have also
commenced a capital sourcing plan to accept investments of strategic equity
partners directly into our operating subsidiaries.  We expect such
operating level investments to provide us with necessary means to commence our
business plans as well as beneficially leverage the regional marketing and sales
strengths of our strategic alliance partners.  We will endeavor to
maintain majority ownership of our operating subsidiaries, however, due to
certain legal regional requirements; we may in some circumstances be obliged to
be a minority partner in certain operating subsidiaries.  Our capital
resources as of the date of this Report are dependent on  shareholder
loans, third party investments by strategic alliance partners and other
strategic investors investing directly into our operating
subsidiaries.  Although we expect some of the operating subsidiaries
to generate sufficient cash for internal working capital purposes, we will be
dependent on shareholder loans and third party investment capital at the
subsidiary level in order to implement and sustain our overall Company business
plans during the foreseeable future.  We believe the overall benefits
expected to be derived from accepting investments directly into our operating
subsidiaries and benefitting from the strengths of our strategic equity partners
will overcome the effects of diluting our prospective revenues in our operating
subsidiaries.





Employees





Effective as ofJanuary 7, 2009, Mr. Mathias Kaiser replaced Mr. Gerald
Sullivan as our Chief Financial Officer.





Effective as ofFebruary 1, 2009, Mr. Anastasios Angeloglou has been
appointed as the Chief Executive Officer of the Company.





Mr. Angeloglou is serving as Group CEO
of 4C Controls and all of its operating units, subsidiaries and joint
ventures.  Mr. Angeloglou has served for the past 12 months as the
Chief Executive Officer of 4C Security Solutions Limited, an Australian company
which has a strategic alliance with 4C Controls.  Mr. Angeloglou has
more than 20 years of international business experience.  Prior to his
appointment as CEO of 4C Security Solutions, Mr. Angeloglou served as the CEO of
OTE International Solutions Ltd., a wholly-owned subsidiary of Hellenic
Telecommunications Organization S.A. (OTE) doing business as OTEGlobe, from 2000
to 2006 and as Chief Officer of Wholesale Services for Hellenic
Telecommunications Organization S.A., a New York Stock Exchange listed company
(OTE) from 2002 to 2005.  From 1996 to 2000, Mr. Angeloglou was the
CEO of Global One Communications Hellas S.A., a joint venture of France Telecom,
Deutsche Telekom & US Sprint. From 1991 to 1996, he held senior positions
with Infonet Services Corporation Ltd, responsible for that company’s sales in
European, Middle East & Africa, and global business
development.  From 1985 to 1991, he held telecommunications
engineering positions with Exxon Chemical International Ltd, S.I.T.A., and
Phillips International B.V.  Mr. Angeloglou was born in 1959 inGreeceand he is a graduate ofLondonUniversity, with postgraduate studies inWalesandBelgium, in the fields of Computer Science
& Mathematics, and Network Systems Engineering.





8


OnMarch 12, 2009, the Company entered into an Employment
Agreement with Mr. Angeloglou regarding his service as the Company’s Chief
Executive Officer.  The Employment Agreement is retroactively
effective as ofFebruary 5,
2009.  The
Employment Agreement has a term of three years.  Pursuant to the
Employment Agreement, Mr. Angeloglou will receive (i) a base salary of 400,000
Euros (approximately U.S. $520,000) per year; (ii) contributions to a pension
fund in the amount of 108,000 Euros (approximately U.S. $140,000) for the first
year of service and 35,000 Euros (approximately U.S. $46,000) for each of the
second and third years of service; (iii) an annual bonus to be granted on the
basis of obtaining certain performance benchmarks; (iv) reasonable education
costs for Mr. Angeloglou’s children; (v) health insurance premiums for Mr.
Angeloglou and his family; (vi) travel insurance, disability insurance, and life
insurance; (vii) reimbursement of reasonable relocation expenses; (viii) a
housing allowance; and (ix) expenses for an automobile.  Mr.
Angeloglou shall serve from offices inDubaiin theUnited Arab Emirates.





In addition to the Employment Agreement
with Mr. Angeloglou, the Company also entered into two related agreements with
its strategic alliance partner 4C Security Solutions. The Company entered into a
Provision of Services Agreement with 4C Security Solutions dated as ofFebruary 5,
2009, pursuant to which the
Company agreed to pay a monthly fee to 4C Security Solutions for the use of
certain 4C Security Solutions’ staff.  This agreement terminates onJune 30, 2011.  The Company also entered
into a second Provision of Services Agreement with 4C Security Solutions dated
as ofFebruary 5,
2009, pursuant to which 4C
Security Solutions agreed to pay a monthly fee to the Company for the shared,
part-time allocation of services by the Company’s Chief Executive Officer, Mr.
Angeloglou.  Pursuant to this agreement, Mr. Angeloglou serves as the
Chief Executive Officer of 4C Security Solutions as well as the
Company.  Mr. Angeloglou allocates approximately twenty eight hours
per month to the business of 4C Security Solutions.  This agreement
also terminates onJune 30,
2011.





Effective as ofFebruary 1, 2009, Mr. Olivier de Vergnies resigned as
the Company’s Chief Executive Officer.  Mr. de Vergnies will continue
to serve as a Director and on the Executive Committee of the Company’s
Board.





As of the date of this Report all of our
employees serve on a part time basis.  Our Chief Executive Officer
devotes approximately 80% of his time to our Company and 20% of his time to our
strategic alliance partner 4C Security Solutions Ltd.  Our Chief
Financial Officer devotes approximately 35% of his time to our Company, with the
balance of his time spent on matters pertaining to two other public companies
which are majority-owned portfolio companies of Rudana Investment Group
AG.  Our Chief Technology Officer, Dr. Riccardo Maggiora, devotes
approximately 70% of his time to our Company and allocates the balance of his
professional time as an Associate Professor at Politecnico di Torino and as CEO
of 4C Polito Space.  Our other officers and employees serve the
Company on a part time basis devoting between 25%-50% of their professional time
to our Company.  We have no collective bargaining agreements with our
employees.





OnFebruary 24, 2009, the Company entered into an Executive
Services Agreement with General Khalid Abdulla Mabarak Al Buainain regarding his
service as the Company’s Vice President for Middle East Military and Defense
Projects.  The Executive Services Agreement has a term of two
years.  Pursuant to the Executive Services Agreement, General Khalid
will receive (i) a salary of 220,000 Euros per year; (ii) a stock grant equal of
750,000 shares of the Company’s common stock (the “4C Controls Shares”); (iii)
ten percent (10%) of the equity shares of the Company’s partially-owned
subsidiary 4C Gulf Earth Observation Center (the “4C GEOC Shares”); and (iv) ten
percent (10%) of the equity shares of the 4C GulfSatellites program (the
“GulfSatellites Shares”). The GulfSatellites program is part of the Company’s
plans to offer innovative solutions to improve Earth observation
applications.  General Khalid’s interest in the 4C GEOC Shares and the
GulfSatellites Shares are non-dilutable.  The 4C Controls Shares, the
4C GEOC Shares and the GulfSatellites Shares shall be issued in the name of
General Khalid and placed into Company escrow for release to General Khalid
after two years from the date of the Executive Services Agreement.  In
the case of the 4C GEOC Shares, release from escrow shall also require the
condition precedent that there be revenues received by the Company from sales of
ten (10) satellite images per day by 4C GEOC attributable to introductions made
by General Khalid.  In the case of the GulfSatellites Shares, release
from escrow shall also require the provision of a financial asset and/or
technological participation (direct or indirectly through a third party), or
investment or viable economic off-take agreement equivalent to the value of ten
percent equity interest in GulfSatellites.  If General Khalid achieves
his performance commitments before the two year escrow period has lapsed, all of
the shares shall be released immediately to General Khalid.  The
Executive Services Agreement supersedes all prior agreements with General
Khalid.  The Executive Services Agreement also contains provisions
concerning the reimbursement of expenses, confidentiality of Company information
and other standard terms and conditions.





9




SUBSEQUENT EVENTS





Subsequent to the period covered by this
Report, we jointly announced with ITIGROUP Corporation, an international
logistics and software security group, that ITIGROUP has become a shareholder
and strategic partner of 4C SatImage Ltd., a subsidiary 4C Controls
Inc.





Subsequent to the period covered by this
Report, we have decided to scale down some activities and concentrate the
Company’s efforts on certain projects which we expect to have accelerated rates
of return on investment – sales of Satellite Images through strategic alliances,
business development of integrated security systems and solutions for
residential projects (through our 4C Systems Engineering Limited majority owned
subsidiary) and ID systems and solutions (through our 4C ID Systems Limited
majority owned subsidiary). We have also decided to take a hiatus from the
development of theSpecialized & Proprietary Security
Products until the achievement of key milestones in the Satellite Imagery and
Integrated Security Systems & Solutions.





Subsequent to the period covered by this
Report, in view of completing our prospective agreement with Thales Alenia Space
Italia S.p.A. (TASI) for building our first two SAR satellites, we have started
finalizing the project financing and bankable feasibility study together with
selected investors and financial consultants in a joint endeavor to obtain
adequate equity funds for the project.





OFF-BALANCE SHEET
ARRANGEMENTS





The Company has no off-balance sheet
arrangements.





ITEM 3.QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not Applicable.




ITEM 4T.CONTROLS AND
PROCEDURES





As of the end of the period covered by
this report, the Company carried out, under the supervision and with the
participation of the Company’s management, including its Chief Executive Officer
and Chief Financial Officer, an evaluation of the effectiveness of the design
and operation of the Company’s disclosure controls and procedures (as defined in
Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) in
ensuring that information required to be disclosed by the Company in its reports
is recorded, processed, summarized and reported within the required time
periods. In carrying out that evaluation, management identified a material
weakness (as defined in Public Company Accounting Oversight Board Standard No.
2) in our internal control over financial reporting.





The material weakness identified by
Management consisted of inadequate staffing and supervision within the
bookkeeping and accounting operations of the Company. The relatively small
number of employees who have bookkeeping and accounting functions prevents us
from segregating duties within the Company’s internal control system. The
inadequate segregation of duties is a weakness because it could lead to the
untimely identification and resolution of accounting and disclosure matters or
could lead to a failure to perform timely and effective reviews. Accordingly,
based on their evaluation of the Company’s disclosure controls and procedures as
ofMarch 31,
2009, the Company’s Chief
Executive Officer and its Chief Financial Officer have concluded that, as of
that date, the Company’s controls and procedures were not effective for the
purposes described above. Subsequent to the period covered by this Report, the
Company has initiated steps to remediate such procedures as soon as reasonably
possible.





There was no change in the Company’s
internal control over financial reporting (as defined in Rule 13a-15(f) and
15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended
March 31, 2009 that has materially affected or is reasonably likely to
materially affect the Company’s internal control over financial reporting.
Subsequent to the period covered by this Report, the Company has commenced such
changes in its internal control over financial reporting. Such changes include
the retention of a full-time employee to handle the Company’s bookkeeping and
accounting functions.




10




PART II.OTHER
INFORMATION




ITEM 1.LEGAL
PROCEEDINGS




The Company is not, and has not been
during the period covered by this Report, a party to any legal
proceedings.





ITEM 2:UNREGISTERED SALES OF
EQUITY SECURITIES AND USE OF PROCEEDS




None.




ITEM 3:DEFAULTS UPON SENIOR
SECURITIES





Not Applicable.




ITEM 4:SUBMISSION OF MATTERS
TO A VOTE OF SECURITY HOLDERS




No matters were submitted to the vote of
the Company’s security holders during the period covered by this
Report.




ITEM 5:OTHER
INFORMATION





Not Applicable.




11


ITEM 6.EXHIBITS




Exhibit
                
                Description10.17
                
                StrategicAllianceand Cosmo Skymed Distribution
      Agreement, by and between the Company, 4C Satellite Images &
      Technologies S.A. and e-GEOS S.p.A., dated as ofJanuary 23, 2009, to be filed by
      amendment.10.18
                
                Commercial User Terminal Purchase
      Agreement, by and between 4C Satellite Images & Technologies S.A. and
      e-GEOS S.p.A., dated as of January 23, 2009, to be filed by
      amendment.10.19
                
                Shareholder’s Agreement, by and
      between the Company and International Security & Defence Systems, ISDS
      Hellas, dated as ofJanuary 26, 2009, to be filed by
      amendment.10.20
                
                Shareholder’s Agreement, by and
      between the Company and Hellenic Technologies One-Partner EPE, dated as of
      January 27, 2009, to be filed by amendment.10.21
                
                Shareholder’s Agreement, by and
      between the Company and TheronS.A., dated as of January 27, 2009, to
      be filed by amendment.10.22
                
                Provision of Services Agreement,
      by and between the Company and 4C Security Solutions Limited, dated as of
      February 5, 2009, to be filed by amendment.10.23
                
                Provision of Services Agreement,
      by and between the Company and 4C Security Solutions Limited, dated as of
      February 5, 2009, to be filed by amendment.10.24
                
                Employment Agreement, by and
      between the Company and Anastasios Angeloglou, dated as of March 12, 2009,
      to be filed by amendment.10.25
                
                ServicesAgreement, by and between the
      Company andGeneral Khalid Abdulla Mabarak Al
      Buainain, dated as of
      February 24, 2009, to be filed by amendment.31.1
                
                Certification of Principal
      Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.31.2
                
                Certification of Principal
      Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.32.1
                
                Certification of the Principal
      Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of
2002.32.2
                
                Certification of the Principal
      Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of
  2002.







12






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.











4C CONTROLS
      INC.By:
                        /s/ Anastasios
      AngeloglouName: Anastasios
      AngeloglouTitle:   Chief Executive
      OfficerBy:
                        /s/ Mathias
      KaiserName: Mathias
      KaiserTitle:   Chief Financial
      Officer





Dated:May 20, 2009