UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C.   20549
 
 FORM
10-Q
 
 x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
 
 For
the quarterly period ended June 30, 2009
 
  ̈ TRANSITION 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, 21st
Floor
 New York, NY
 10005
 (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.
 Yes xNo  ̈
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.323.405 of this
chapter) during the preceding 12 months (or shorter period that the registrant
was required to submit and post such files). Yes  ̈No  ̈
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
 Large
      Accelerated Filer
               ̈
              Accelerated
      Filer
               ̈Non-Accelerated
      Filer
               ̈
              Smaller
      Reporting Company
              x
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
 Yes  ̈No x
 
 As of
August 19, 2009, the Issuer had 44,179,540 shares of its Common Stock
outstanding.
  
  TABLE
OF CONTENTS
  PART
      I: FINANCIAL INFORMATIONItem
      1: Financial Statements
                  4Item 2: Management’s Discussion
      and Analysis of Financial Condition and Results of
      Operations
                  15Item
      3: Quantitative and Qualitative Disclosures about Market
    Risk
                  21Item
      4: Controls and Procedures
                  21PART
      II: OTHER INFORMATIONItem
      1: Legal Proceedings
                  22Item
      1A: Risk Factors
                  22Item
      2: Unregistered Sales of Equity Securities and Use of
    Proceeds
                  22Item
      3: Defaults Upon Senior Securities
                  22Item
      4: Submission of Matters to a Vote of Security Holders
                  22Item
      5: Other Information
                  22Item
      6: Exhibits
                  23SIGNATURES
                  24
  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.
  3
  4C Controls Inc.
 (A
Development Stage Company)
 Consolidated
Balance Sheets
 
 June 30
                            
                            
                            December 312009
                            
                            
                            2008(Unaudited)ASSETSCurrent
      AssetsCash
                            
                            $
                            1,399
                            
                            
                            $
                            104,708Prepaid
      expenses and other current assets
                            
                            
                            300,015
                            
                            
                            
                            43,097Total
      Current Assets
                            
                            
                            301,414
                            
                            
                            
                            147,805Property
      & Equipment
                            
                            
                            1,022,900
                            
                            
                            
                            14,343Investment
      in and Advances to 4C Security Solutions, Ltd.
                            
                            
                            3,424,644
                            
                            
                            
                            3,806,601Total
      Assets
                            
                            $
                            4,748,958
                            
                            
                            $
                            3,968,749LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIENCY)Current
      LiabilitiesAccrued
      liabilities
                            
                            $
                            1,861,587
                            
                            
                            $
                            1,579,845Loan
      payable - officer
                            
                            
                            29,964
                            
                            
                            
                            -Interest
      payable - related party
                            
                            
                            100,610
                            
                            
                            
                            23,305Loan
      payable - related party
                            
                            
                            2,495,875
                            
                            
                            
                            1,539,175Total
      Current Liabilities and Total Liabilities
                            
                            
                            4,488,036
                            
                            
                            
                            3,142,325Stockholders'
      Equity (Deficiency):Common
      Stock, par value $.00001 per share100,000,000
      shares authorized,44,179,540
      shares issued and outstanding at June 30, 2009and
      December 31, 2008
                            
                            
                            441
                            
                            
                            
                            441Additional
      paid in capital
                            
                            
                            13,543,779
                            
                            
                            
                            13,428,602Donated
      Capital
                            
                            
                            24,000
                            
                            
                            
                            24,000Treasury
      Stock, 470,450 shares at cost
                            
                            
                            (940,895
                            )
                            
                            
                            (940,895
                            )Deficit
      accumulated during development stage
                            
                            
                            (9,667,853
                            )
                            
                            
                            (5,867,715
                            )Deferred
      Compensation
                            
                            
                            (4,668,007
                            )
                            
                            
                            (5,818,009
                            )Total
      4c Controls Stockholders' Equity (Deficiency)
                            
                            
                            (1,708,535
                            )
                            
                            
                            -Non
      Controlling Interest in Subsidiaries
                            
                            
                            1,969,457
                            
                            
                            
                            -Total
      Equity
                            
                            
                            260,922
                            
                            
                            
                            826,424Total
      Liabilities and Stockholders' Equity (Deficiency)
                            
                            $
                            4,748,958
                            
                            
                            $
                            3,968,749
 
 See Notes
to Financial Statements
  4
  4C
Controls Inc.
 (A
Development Stage Company)
 (Unaudited)
Consolidated Statements of Operations
 
 Accumulated fromFor the Three Months Ended
                                      
                                      
                                      For the Six Months Ended
                                      
                                      
                                      December 28, 2004June 30
                                      
                                      
                                      June 30
                                      
                                      
                                      (Date of Inception)2009
                                      
                                      
                                      2008
                                      
                                      
                                      2009
                                      
                                      
                                      2008
                                      
                                      
                                      to June 30, 2009RevenueInterest
      Income
                                      
                                      $
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      $
                                      3,219ExpensesDirector
      fees and expenses
                                      
                                      
                                      6,000
                                      
                                      
                                      
                                      12,067
                                      
                                      
                                      
                                      118,439
                                      
                                      
                                      
                                      18,067
                                      
                                      
                                      
                                      439,322Donated
      Services
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      24,000General
      & Administrative
                                      
                                      
                                      922,096
                                      
                                      
                                      
                                      116,752
                                      
                                      
                                      
                                      1,903,836
                                      
                                      
                                      
                                      151,017
                                      
                                      
                                      
                                      4,385,631Interest
      - related party
                                      
                                      
                                      47,902
                                      
                                      
                                      
                                      4,563
                                      
                                      
                                      
                                      77,305
                                      
                                      
                                      
                                      4,563
                                      
                                      
                                      
                                      129,926Marketing
      and public relations
                                      
                                      
                                      333,489
                                      
                                      
                                      
                                      85,685
                                      
                                      
                                      
                                      471,085
                                      
                                      
                                      
                                      93,825
                                      
                                      
                                      
                                      986,514Professional
      fees
                                      
                                      
                                      347,845
                                      
                                      
                                      
                                      286,268
                                      
                                      
                                      
                                      859,260
                                      
                                      
                                      
                                      413,982
                                      
                                      
                                      
                                      3,299,292Equity
      in loss of unconsolidated subsidiary
                                      
                                      
                                      306,019
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      381,957
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      418,130Total
      expenses
                                      
                                      
                                      1,963,351
                                      
                                      
                                      
                                      505,335
                                      
                                      
                                      
                                      3,811,882
                                      
                                      
                                      
                                      681,454
                                      
                                      
                                      
                                      9,682,815Net
      Loss
                                      
                                      $
                                      (1,963,351
                                      )
                                      
                                      $
                                      (505,335
                                      )
                                      
                                      $
                                      (3,811,882
                                      )
                                      
                                      $
                                      (681,454
                                      )
                                      
                                      $
                                      (9,679,596
                                      )Net
      Loss attributable to noncontrolling interest
                                      
                                      $
                                      11,743
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      11,743
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      11,743Net
      Loss attributable to 4C Controls
                                      
                                      $
                                      (1,951,608
                                      )
                                      
                                      $
                                      (505,335
                                      )
                                      
                                      $
                                      (3,800,139
                                      )
                                      
                                      $
                                      (681,454
                                      )
                                      
                                      $
                                      (9,667,853
                                      )Net
      Loss Per Share
                                      
                                      
                                      (0
                                      )
                                      
                                      
                                      (0
                                      )
                                      
                                      
                                      (0
                                      )
                                      
                                      
                                      (0
                                      )Weighted
      Average Shares Outstanding
                                      
                                      
                                      44,179,540
                                      
                                      
                                      
                                      45,524,000
                                      
                                      
                                      
                                      44,179,540
                                      
                                      
                                      
                                      42,353,397
 
 See Notes
to Financial Statements
  5
  4C
Controls Inc.
 (A
Development Stage Company)
 (Unaudited)
Consolidated Statement of Stockholders' Equity
 For the
Period from December 28, 2004 (Date of Inception) to June 30, 2009
  Deficit
                                                                AccumulatedCommon Stock
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              During thePar
                                                              
                                                              
                                                              Additional
                                                              
                                                              
                                                              Treasury Stock
                                                              
                                                              
                                                              Donated
                                                              
                                                              
                                                              Deferred
                                                              
                                                              
                                                              DevelopmentShares
                                                              
                                                              
                                                              Value
                                                              
                                                              
                                                              Paid-in Capital
                                                              
                                                              
                                                              Shares
                                                              
                                                              
                                                              Value
                                                              
                                                              
                                                              Capital
                                                              
                                                              
                                                              Compensation
                                                              
                                                              
                                                              Stage
                                                              
                                                              
                                                              TotalCommon
      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
                                                              )Non
      cash compensation
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              55,581
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              55,581Amortization
      of deferred compensation
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              575,001
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              575,001Net
      loss for the period
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              (1,951,608
                                                              )
                                                              
                                                              
                                                              (1,951,608
                                                              )Balance
      - June 30, 2009
                                                              
                                                              
                                                              44,179,540
                                                              
                                                              
                                                              
                                                              441
                                                              
                                                              
                                                              
                                                              13,543,779
                                                              
                                                              
                                                              
                                                              470,450
                                                              
                                                              
                                                              
                                                              (940,895
                                                              )
                                                              
                                                              
                                                              24,000
                                                              
                                                              
                                                              
                                                              (4,668,007
                                                              )
                                                              
                                                              
                                                              (9,667,853
                                                              )
                                                              
                                                              
                                                              (1,708,535
                                                              )
  See Notes
to Financial Statements
  6
  4C
Controls Inc.
 (A
Development Stage Company)
 (Unaudited)
Consolidated Statement of Cash Flows
 
 Accumulated fromFor the Six Months Ended
                                                
                                                
                                                December 28,2004June 30
                                                
                                                
                                                (Date of Inception)2009
                                                
                                                
                                                2008
                                                
                                                
                                                to June 30, 2009Operating
      ActivitiesNet
      loss
                                                
                                                $
                                                (3,800,139
                                                )
                                                
                                                $
                                                (681,454
                                                )
                                                
                                                $
                                                (9,667,853
                                                )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Amortization
      of deferred compensation
                                                
                                                
                                                1,150,002
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (4,668,007
                                                )Interest
      payable
                                                
                                                
                                                77,305
                                                
                                                
                                                
                                                4,563
                                                
                                                
                                                
                                                100,610Depreciation
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Issuance
      of stock options
                                                
                                                
                                                115,177
                                                
                                                
                                                
                                                3,862
                                                
                                                
                                                
                                                215,968Donated
      Services
                                                
                                                
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                24,000Impairment
                                                
                                                
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                5,000Equity
      in loss of unconsolidated subsidiary
                                                
                                                
                                                381,957
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                418,130Minority
      interest in subsidiary losses
                                                
                                                
                                                (11,743
                                                )
                                                
                                                
                                                
                                                
                                                
                                                
                                                (11,743
                                                )Change
      in operating assets and liabilities
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Accrued
      expenses
                                                
                                                
                                                395,582
                                                
                                                
                                                
                                                151,894
                                                
                                                
                                                
                                                1,861,587Prepaid
      expenses and other current assets
                                                
                                                
                                                (256,918
                                                )
                                                
                                                
                                                (37,818
                                                )
                                                
                                                
                                                (300,015
                                                )Net
      Cash Used in Operating Activities
                                                
                                                
                                                (1,948,777
                                                )
                                                
                                                
                                                (558,953
                                                )
                                                
                                                
                                                (12,022,323
                                                )Investing
      ActivitiesInvestments
      in 4C Security Solutions, Ltd.
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (1,602,268
                                                )
                                                
                                                
                                                (3,690,808
                                                )Advances
      to 4C Security Solutions, Ltd.
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (151,966
                                                )Acquisition
      of Property and Equipment
                                                
                                                
                                                (1,022,900
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (1,022,900
                                                )Website
      development costs
                                                
                                                
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (5,000
                                                )Net
      Cash Used in Investing Activities
                                                
                                                
                                                (1,022,900
                                                )
                                                
                                                
                                                (1,602,268
                                                )
                                                
                                                
                                                (4,870,674
                                                )Financing
      ActivitiesProceeds
      of Loan from related party
                                                
                                                
                                                986,664
                                                
                                                
                                                
                                                1,163,709
                                                
                                                
                                                
                                                2,525,839Deposit
      for subscription of common stock
                                                
                                                
                                                
                                                
                                                
                                                
                                                280,000Net
      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
                                                
                                                
                                                2,967,864
                                                
                                                
                                                
                                                2,384,609
                                                
                                                
                                                
                                                16,894,396Increase
      (Decrease) in Cash
                                                
                                                
                                                (3,813
                                                )
                                                
                                                
                                                223,388
                                                
                                                
                                                
                                                1,399Cash-
      Beginning of Period
                                                
                                                
                                                5,212
                                                
                                                
                                                
                                                6,313
                                                
                                                
                                                
                                                -Cash
      - End of Period
                                                
                                                $
                                                1,399
                                                
                                                
                                                $
                                                229,701
                                                
                                                
                                                $
                                                1,399See
      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
    receivable
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                1,522,164Treasury
      stock acquired through offset of loan to related party
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                940,895
  7
  4C
CONTROLS INC.
  (A
Development Stage Company)
  NOTES TO
FINANCIAL STATEMENTS
  June
30, 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 six month period ended June
30, 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.
  8
  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.
  9
 
  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 June 30, 2009 and December 31, 2008, the
Company has no items that represent other 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.
  10
  In May
2009, the FASB issued SFAS No.165 “Subsequent Events” (“SAFS 165”). This
statement sets forth the period after the balance sheet date during which
management or a reporting entity should evaluate events or transactions that may
occur for potential recognition or disclosure, the circumstances under which an
entity should recognize events or transactions occurring after the balance sheet
date, and the disclosures that an entity should make about events or
transactions that occurred after the balance sheet date. It requires disclosure
of the date through which an entity has evaluated subsequent events and the
basis for that date, whether that date represents the date the financial
statements were issued or were available to be issued. SFAS 165 is effective for
interim and annual periods ending after June 15, 2009. Our adoption of SFAS 165
on June 30, 2009 did not have a material impact on our consolidated condensed
financial statements. See Note 12 – Subsequent Events for additional
information.
 
 In June
2009, the FASB issued SFAS 167 “Amendment to FASB Interpretation No. 46 (R)”.
This Statement amends FIN46R to replace the quantitative-based risks and rewards
calculation for determining which enterprise has a controlling financial
interest in a VIE with a primarily qualitative approach focused on identifying
which enterprise has the power to direct the activities of a VIE that most
significantly impact the entity’s economic performance. It also requires ongoing
assessments of whether an enterprise is the primary beneficiary or a VIE and
requires additional disclosures about an enterprise’s involvement in VIEs. SFAS
167 is effective as of the beginning of the reporting entity’s first annual
reporting period that begins after November 15, 2009 and earlier adoption is not
permitted. We are currently evaluating the potential impact, if any, of the
adoption of SFAS 167 on our consolidated condensed financial
statements.
 
 In June
2009, the FASB issued SFAS 168 “The FASB Accounting Standards Codification and
the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB
Statement No. 162” (“SFAS 168”). This Statement states that the FASB Accounting Standards
Codification(“Codification”) will become the source of authoritative
U.S. GAAAP recognized by the FASB to be applied by nongovernmental entities.
Once effective, the Codification’s content will carry the same level of
authority and effectively supersede SFAS 162. Thus, the U.S. GAAP hierarchy will
be modified to include only two levels of U.S. GAAP: authoritative and
non-authoritative. SFAS 168 is effective for financial statements issued for
interim and annual periods ending after September 15, 2009. We are currently
evaluating the potential impact, if any, of the adoption of SFAS 168 on our
consolidated condensed financial statements.
  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 June 30, 2009, the Company has an accumulated deficit
of $9,667,853, has a working capital deficiency of $4,186,622 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.
  11
  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.
  NOTE
7 - RELATED PARTY TRANSACTIONS
  As of
June 30, 2009, Rudana the Company’s majority shareholder and companies
controlled by Rudana has advanced several loans to the Company with a cumulative
balance of $2,495,875. 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
$77,305 and $47,902 the six and three months ended June 30, 2009.
  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 $191,667 relating to this agreement during
the six months ended June 30,, 2009, which is included in professional fees on
the Statement of Operations for the six months ended June 30,, 2009, and is
included in Accrued Liabilities on the accompanying Balance Sheet at June 30,,
2009.  The Company has recorded total expenses of $319,445 from
inception through June 30,, 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).
  12
  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 approximately $9,700,000 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 $3,400,000 relating to
available net operating loss carryforwards for which a full valuation allowance
has been provided.  Utilization of the net operating loss carry
forwards may be limited due to the change in control referred to in Note 2.
The Company has provided a full valuation allowance of the referred tax asset
since it is more likely than not that the net operating losses will be
utilized.
  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.
  13
  NOTE
11 – MINORITY INTEREST
 
 Effective
March 31, 2009, 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.
  NOTE
12 – SUBSEQUENT EVENTS
 
 We have
evaluated events after the date of the financial statements, June 30, 2009
through August 19, 2009, the date that these financial statements were available
to be issued.
 
 Effective
as of August 4, 2009, Dr. Augustine Fou has resigned as a member of the Board of
Directors of the Company.
 
 *           *
  *
  14
 ITEM 2.
              MANAGEMENT'S DISCUSSION AND
      ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS
 
 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.
 
 We were
incorporated in the State of Nevada on December 28, 2004 as Amecs
Inc.  Initially, the intention of the original founders of the Company
in 2004 was to provide Internet-based business to business
services.  The original founders subsequently decided that the Company
should pursue another type of business.  A change of control of the
Company occurred on December 18, 2007 and Rudana Investment Group AG, a Swiss
investment company, became the owner of a majority of our issued and outstanding
shares.  In connection with the change of control, on February 12,
2008 we changed our name from “Amecs Inc.” to “4C Controls Inc.” and our trading
symbol on the over-the-counter bulletin board changed to FOUR.  On
March 3, 2008, we announced a change in our business model as described
above.
 
 Our
principal business address is 100 Wall Street, 21st Floor,
New York, NY 10005 and our telephone number is 866-515-7069.
 
 Our
trading symbol on the over-the-counter bulletin board is FOUR.
 
 Current
Company Status
 
 At the
present time, the Company has no revenues, and has had no revenues since
inception.  The Company has insufficient capital to continue its
current limited operations, and without additional investment or loans, we can
not continue the development of our Company.  Without additional
investment or loans, the Company will not be able to take the necessary actions
to commence earning revenues.  Assuming the Company is able to raise
sufficient funds, there will remain a significant risk to investors that they
will lose all of their investment in the Company.
 
 Plan
of Operations
 
 The
Company has developed a strategic vision to enter into the niche markets
described below. During the quarter ended June 30, 2009 and 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.
  15
  1.
Satellite Imagery Infrastructure, Sales & Support
 
 The
Company is positioning itself to generate revenues 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 through 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.  The
Company has initiated establishing a strategic alliance network of sales offices
throughout the Middle East and Africa, 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.
 
 Strategic
Alliance and Distribution Agreement with e-GEOS
 
 On
January 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) and South 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.
 
 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.
 
 We have
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.
 
 4C
Satimage has commenced its satellite images sales program in seven nations in
the Middle East, three nations in Africa, and one nation in South East
Asia.  Representatives of 4C Satimage have attended major industry
presentation events, including the Le Bourget Paris Air Show.
 
 On June
19, 2009 the Company announced that based on the principles established in
the Strategic Alliance and Distribution Agreement, the Company and Telespazio
(an affiliate of e-GEOS) are currently in discussion to enter into a joint
investment in the areas of very high resolution (50 cm) optical satellite remote
sensing and other strategic operational areas.
  The Gulf
Satellites program, which the Company will attempt to have funded and owned
mostly by investors of the Gulf region, forsees the development and
construction of two high resolution (1m) SAR (Synthetic Aperture Radar)
satellites and a high resolution (0.5m) optical satellite.
  In
particular, Telespazio and the Company are in discussion for:
 
 ·
              Selection
      by the Company of Telespazio as the prime contractor for the supply
      of a new very high resolution (50 cm) optical satellite, that will be part
      of the 4C Gulf Satellites program.
 
 ·
              Possible
      investment by Telespazio, the Company and Gulf region investors of a
      joint investment for two very high resolution (1 m) SAR satellites in
      addition to the optical satellites.
 
 ·
              Global
      distribution by Telespazio/e-GEOS of image capacity of the 4C Gulf
      Satellites program, except for the MENASEA region which will be covered by
      4C Satimage.
  16
  ·
              Operation
      and maintainance by Telespazio and e-GEOS of the 4C SatImage Direct
      Receiving Station under construction in Abu
      Dhabi.  Telespazio/e-GEOS will also provide and manage the
      training and education programs at the Abu Dhabi Receiving Station to
      end-users in the MENASEA region.
 
 ·
              The
      setting up of a dedicated joint venture for developing applications and
      value-added services based on remote sensing data from different
      sources.
 
 ·
              Joint
      investments by Telespazio and the Company in the Gulf Satellites program
      and acquisition by Telespazio of a minority equity interest in the
      Company.
 
 4C Gulf Earth Observation Center (4C
GEOC) – Creation of the first Direct Receiving Station (DRS) in United Arab
Emirates
 
 We
previously announced our plans to build a 10,000 square meter high resolution
satellite space center in Abu Dhabi to be known as the 4C Gulf Earth Observation
Center (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 in
Europe.  We expect to finance the 4C GEOC with investors. We expect to
own approximately 50% of the equity interests in the 4C GEOC.  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 the Middle East and 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, secured the use of this location and obtained clearance with
respect to technical requirements for installing the DRS antennas and related
systems.  The Company has acquired the necessary license from the
United Arab Emirates’ National Telecommunication Authority.  The
Company has commenced the procedures to obtain the final environmental and
construction licenses with local authorities in Abu Dhabi.  If the
Company is able to raise sufficient funds, we expect to commence construction of
our satellite-data direct receiving station in the fourth quarter of
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.  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
program is still under development and we do not have significant advancement
that should be reported at the date of this report.
 
 Strategic
Alliance with 4C Security Solutions Limited and 4C Satellites
Limited
  Through
our strategic 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 in Australia,
Gulf Cooperation Council (GCC) and the United 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 with
4C Security Solutions, we have also been issued options under which we may
purchase of 9.5 million shares of 4C Security Solutions at 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 alliance 4C 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.
  17
  4C
Polito Space Technologies S.p.A
 
 We expect
to work closely with the Politechnico di Torino on all of our
projects.  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 in Verres,
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 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 expect to
execute prime contractor agreements with TASI during the foreseeable
future.
 
 2.
Integrated Systems Security and Surveillance Solutions
 
 The
Company has previously announced, together with a partner, the formation of a
strategic alliance 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.
 
 The
Company has commenced its sales efforts for Integrated Surveillance Solutions,
including integrated border control and pipeline surveillance solutions in the
United Arab Emirates, Egypt, and Chad.
 
 The
Company is presently engaged in negotiations with a major real estate developer
in Abu Dhabi to 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 services
may include the following elements: 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 in Saudi Arabia and Abu
Dhabi are in the early stages of negotiations.
  18
  3.
ID Systems and Solutions
 
 4C
ID Systems Ltd.
 
 The
Company has 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 in Africa.  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 in Africa and Commonwealth of Independent States (CIS) regions. The
Company’s team possesses substantial expertise in providing the ID systems to
governments on a global basis. The Company is currently in advanced negotiations
with several governments in Africa and Asia to provide national ID and driver
licenses as well as passport systems. The 4C ID Systems Limited business model
is to build, operate and manage the various systems to provide the Company with
stable recurring revenue 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). As of the date
of this Report, we have not made any improvement s or developments in respect of
these technologies that have resulted in patent s or commercial
applications.
  RESULTS
OF OPERATIONS
 
 Revenues
 
 During
the quarter ended June 30, 2009, the Company had no revenues from
operations.  The Company has had no revenues to date.
 
 Expenses
 
 Our total
expenses for the quarter ended June 30, 2009 were $1,963,351, which consisted
primarily of general and administrative expenses of $922,096, professional fees
of $347,845, marketing and public relations expenses of $333,489, a loss of
equity in an unconsolidated subsidiary of $306,019, interest in the amount of
$47,902 and director fees of $6,000.  Expenses in each of these
categories except director fees have increased over the amounts for the three
months ended June 30, 2008, in which total expenses were
$505,335.  Since the inception of the Company, we have incurred
aggregate total expenses of $9,682,815.  Total expenses for the third
fiscal quarter of 2009 are expected to be comparable to those for the quarter
ended June 30, 2009.  During the fourth quarter of 2009, expenses are
anticipated to increase as the Company’s planned operations are expected to ramp
up during that period.
 
 Liquidity
and Capital Resources
 
 During
the three months ended June 30, 2009 and 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.
  19
  Our total
current assets at June 30, 2009 were $301,414, consisting of $1,399 in cash and
$300,015 in prepaid expenses and other current assets.  As of June 30,
2009, our total assets (consisting of cash, prepaid expenses, property and
equipment, and investment in 4C Security Solutions) were $4,748,958 and our
total liabilities were $4,488,036.
 
 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.
 
 Recent
Events
 
 The
Company has recently 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 the Specialized & Proprietary Security Products until the
achievement of key milestones in the Satellite Imagery and Integrated Security
Systems & Solutions.
 
 In order
to complete 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.
 
 Employees
 
 Effective
as of May 29, 2009, Mr. Mathias Kaiser resigned as the Chief Financial Officer
of the Company.  Mr. Kaiser informed the Company that he resigned for
personal reasons and that he has no disagreements with the Company or its
management.  Mr. Kaiser agreed to provide consulting services to the
Company to facilitate proper transition of the Company’s books and records to
the subsequent Chief Financial Officer.
 
 The
Company has not yet appointed a successor Chief Financial
Officer.  The Company’s Chief Financial Officer functions shall be
performed on an interim basis by Mr. Anastasios Angeloglou.  Mr.
Angeloglou will not receive additional compensation in connection with such
supplemental services.
 
 Mr.
Angeloglou is serving as Group CEO of 4C Controls and all of its operating
units, subsidiaries and joint ventures.  Mr. Angeloglou is serving as
the Chief Executive Officer of 4C Security Solutions Limited, an Australian
company which has a strategic alliance with 4C
Controls.
 
 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 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.
  20
  Subsequent
Events
 
 Resignation
of Dr. Augustine Fou as Director
 
 Effective
as of August 4, 2009, Dr. Augustine Fou has resigned as a member of the Board of
Directors of the Company. Dr. Fou has not expressed any disagreement with the
Company on any matter relating to the Company’s operations, policies or
practices.
  OFF-BALANCE
SHEET ARRANGEMENTS
 
 The
Company has no off-balance sheet arrangements.
 
 ITEM 3.     QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
 
 Not
Applicable.
  ITEM 4.     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 of June 30, 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 June 30, 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.
  21
  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
1A.  RISK
FACTORS
 
 Not
Applicable.
 
 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.
  22
  ITEM 6.     EXHIBITS
  Exhibit
                    
                    Description31.1
                    
                    Certification
      of Principal Executive Officer and Principal Financial Officer pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.32.1
                    
                    Certification
      of the Principal Executive Officer and Principal Financial Officer
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of
2002.
  23
 
 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 Officer andActing
      Principal FinancialOfficer
      and Acting PrincipalAccounting
      Officer
 
 Dated:
August 20, 2009
  24