UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-QSB  (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2006 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to ______ Commission File Number 000-30675 EnXnet, Inc.(Name of small business issuer in its charter) Oklahoma73-1561191(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.) 11333 E. Pine Street, Suite 75 - Tulsa, Ok 74116(Address of principal executive offices & zip code) (918) 592 - 0015Registrant's telephone number, including area code: (Former Name or Former Address, if Changed Since Last Report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [_] Yes  [_] No Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [_] Yes  [_] No Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. [_] Yes  [_] No  State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of July 19, 2006, there were 29,077,893 shares of Common Stock, $0.00005 par value, of the issuer outstanding. Transitional Small Business Disclosure Format (Check one): [_] Yes  [_] No      Table of Contents  Part I. FINANCIAL INFORMATIONItem I. Financial StatementsBalance Sheets June 30, 2006 and March 31, 20063Statements of Loss For the three months ended June 30, 2006 and 20054Statements of Changes in Stockholders Equity (deficit)5Statements of Cash Flows For the three months ended June 30, 2006 and 20056Summary of Accounting Policies7Notes to Financial Statements9Item 2. Managements Discussion and Analysis or Plan of Operation16Item 3. Controls and Procedures17PART II. OTHER INFORMATIONItem 1. Legal Proceedings18Item 2. Changes in Securities18Item 3. Defaults Upon Senior Securities18Item 4. Submission of Matters to a Vote to Security Holders18Item 5. Other Information18Item 6. Exhibits and Reports on Form 8-K18SIGNATURESExhibit 31.1 - Certification of financial statements Chief Executive Officer & Chief Financial OfficerExhibit 31.2  - Certification of financial statements Chief Financial OfficerExhibit 32.1  - Certification pursuant to 18 U. S. C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002      ITEM 1. Financial Statements  ENXNET, INC
BALANCE SHEETSJune 30,March 31,20062006ASSETS(Unaudited)(Audited)CURRENT ASSETSCash$147,379$121,047Accounts receivable--Prepaid expenses299645TOTAL CURRENT ASSETS147,678121,692FIXED ASSETSFurniture & fixtures6,1606,160Machinery & equipment46,97846,978Less accumulated depreciation(49,698)(49,480)TOTAL FIXED ASSETS3,4403,658OTHER ASSETSLicenses, net150,119159,905Investment25,00025,000Deposits1,1371,137TOTAL OTHER ASSETS176,256186,042TOTAL ASSETS$327,374$311,392LIABILITIES AND STOCKHOLDERS' DEFICITCURRENT LIABILITIESAccounts payable and accrued expenses$132,123$167,437Advances from officer - related party4,0054,005Advances from stockholder31,00031,000Notes payable272,188270,942Notes payable - related party638,603638,603TOTAL CURRENT LIABILITIES1,077,9191,111,987COMMITMENTS AND CONTINGENCIES--STOCKHOLDERS' EQUITY (DEFICIT)Common stock, $0.00005 par value; 200,000,000 shares authorized,29,077,893 and 28,627,893 shares issued and outstanding1,4541,431Additional paid-in capital2,697,5772,506,472Accumulated deficit(3,374,576)(3,193,498)Deferred consideration-(40,000)Other comprehensive income(75,000)(75,000)TOTAL STOCKHOLDERS' EQUITY (DEFICIT)(750,545)(800,595)TOTAL LIABILITIES ANDSTOCKHOLDERS' EQUITY (DEFICIT)$327,374$311,392  See accompanying summary of accounting policies and notes to condensed financial statements  3    ENXNET, INC
CONSOLIDATED STATEMENTS OF OPERATIONSThree Months EndedJune 30,June 30,20062005REVENUES$-$1,790COST OF SALES-750Gross Profit-1,040EXPENSESConsulting fees47,84317,545Depreciation & amortization10,00410,115Royalties5,000570Advertising100-Payroll67,44344,222Professional services20,77526,575Occupancy5,6117,128Office4,7495,132Travel4,2891,559Other266120Total Expenses166,080112,966LOSS FROM OPERATIONS(166,080)(111,926)OTHER INCOME (EXPENSE)Interest expense(15,002)(13,714)Loss on sale of marketable securities-(1,543)Interest income42Total Other Income (Expense)(14,998)(15,255)NET LOSS(181,078)(127,181)Net unrealizable gain (loss) on marketable securities-(6,958)COMPREHENSIVE LOSS$(181,078)$(134,139)BASIC AND DILUTED NET LOSS PER SHARE$(0.006)$(0.005)WEIGHTED AVERAGE NUMBER OFCOMMON SHARES OUTSTANDING,BASIC AND DILUTED28,771,30025,265,122   See accompanying summary of accounting policies and notes to condensed financial statements   4


ENXNET, INC
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)AdditionalOtherTotalCommon StockPaid-inAccumulatedDeferredComprehensiveStockholders'SharesAmountCapital(Deficit)ConsiderationIncomeEquity(Deficit)Balance, March 31, 200525,058,043$1,253$1,714,689$(2,523,174)$-$(5,673)(812,905)Common stock issued for:Cash200,0001049,990---50,000Services1,564,85078242,243---242,321Options exercised705,00035178,265---178,3001,100,00055321,285---321,340Deferred consideration----(40,000)-(40,000)Net loss for the year ended March 31, 2006---(670,324)--(670,324)Other comprehensive income-----(69,327)(69,327)Balance, March 31, 200628,627,8931,4312,506,472(3,193,498)(40,000)(75,000)(800,595)Common stock issued for:Options exercised for cash450,00023164,977---165,000Stock options issued--26,12826,128Deferred consideration----40,000-40,000Net loss for the three months ended June 30, 2006---(181,078)--(181,078)Balance, June 30, 200629,077,893$1,454$2,697,577$(3,374,576)$-$(75,000)(750,545)  See accompanying summary of accounting policies and notes to condensed financial statements


5


ENXNET, INC
CONSOLIDATED STATEMENTS OF CASH FLOWSThree Months EndedJune 30,June 30,20062005CASH FLOWS FROM OPERATING ACTIVITIESNet loss$(181,078)$(127,181)Depreciation and amortization11,25011,616Loss on sale of marketable securities-1,543Common stock issued for services40,00027,485Stock options issued26,128-Adjustments to reconcile net loss to net cashused by operations:Decrease (increase) in accounts receivable-9,894Decrease (increase) in prepaid expenses3466,941Increase (decrease)  in accounts payable & accrued expenses(35,314)15,416Net cash provided (used) by operating activities(138,668)(54,286)CASH FLOWS FROM INVESTING ACTIVITIESProceeds from the sale of marketable securities-5,807Net cash provided (used) in investing activities-5,807CASH FLOWS FROM FINANCING ACTIVITIESProceeds from stock options exercise165,000-Proceeds from advances from officer and stockholder-48,700Repayment of advances-(4,200)Net cash used by financing activities165,00044,500NET INCREASE (DECREASE) IN CASH26,332(3,979)CASH - Beginning of period121,0476,345CASH - End of period$147,379$2,366SUPPLEMENTAL CASH FLOW DISCLOSURES:Interest expense$-$-Income taxes$-$-NON-CASH FINANCING AND INVESTING TRANSACTIONS:Common stock issued for services$40,000$27,485  See accompanying summary of accounting policies and notes to condensed financial statements  6   EnXnet, Inc. SUMMARY OF ACCOUNTING POLICIES  The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-QSB and Items 303 and 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.  Operating results for the three months ended June 30, 2006, are not necessarily indicative of the results that may be expected for the year ended March 31, 2007. For further information, refer to the financial statements and footnotes thereto included in the EnXnet, Inc. or the "Company" audited financial statements for the year ended March 31, 2006 included in the Company Form 10-KSB.  THE BUSINESS  EnXnet, Inc. (the "Company") was formed under the laws of the State of Oklahoma on March 30, 1999 as Southern Wireless, Inc. It is a business and technology development enterprise engaged in the development, marketing, and licensing of emerging technologies and innovative business strategies and practices, focusing primarily on products, solutions, and services which support and enhance multimedia management. The Company changed its name to eMajix.com, Inc. on April 5, 2000 and on August 1, 2001 the name was changed to EnXnet, Inc.  Products and Services  ThinDisc  The ThinDisc has many applications, a primary and high-volume use is stored value cards combining magnetic stripe and bar code data with optical media, in Compact Disc (CD), Digital Video Disc (DVD) format, or any other optical disc readable products. Including the optical disc readability allows issuers to promote their products with both audio and video messages while providing their customers with added value and convenience when using a stored value card. Stored value cards include, but are not limited to, debit, event tickets, gift, health services, incentive, loyalty, merchandise, payroll, prepaid phone, promotion, room key, or other monetary transaction cards. Stored value cards are one of the most dynamic and fastest growing products in the financial industry. Anyone who makes purchases with a merchant gift card, places phone calls with a prepaid telephone card, or buys goods or services with a prepaid debit card is using a stored value card. The Company has filed for a United States and an international patent covering the technology included in the Thin Disc.  DVDPlus  The Company entered into a license on June 2, 2003 with DVDPlus International, Inc. to manufacture and market DVDPlus in the United States, Canada, and Mexico. DVDPlus is a dual sided, hybrid optical disc media that uniquely combines two distinct content storage formats for distribution on a single disc, a DVD (digital versatile disc) on one side and a CD (compact disc) on the other. DVDPlus allows content publishers to integrate their visual and audio assets into a single distribution. Utilizing the latest in manufacturing technology, the CD and DVD layers are bonded together to provide a multi-format hybrid disc, which is compatible to all CD, CD-ROM, DVD ROM formats, and is readable and capable of playback in conventional CD and DVD players and personal computers alike. DVDPlus allows content publishers to integrate their visual and audio assets into a single distribution, such as releasing a DVD movie and its soundtrack together.  7   EnXnet, Inc. SUMMARY OF ACCOUNTING POLICIES  Disc Security Tag  Disc Security Tag, (DSTag), is an invention which utilizes proprietary Electronic Article Surveillance (EAS) tags embedded or adhered to a DVD or CD during the injection mold phase of the manufacturing process.  Products, to which this process is applied, provide unique item identification for its customers and clients.  With this product, manufacturers are given the opportunity to enhance the integrity of their product while providing added value to their customers (retailers) that are desperate to reduce or stop the enormous losses attributed to employee and retail theft.  Additionally, it can give content developers, manufacturers, and distributors the ability to protect their investment by providing an efficient means to authenticate legitimate products over counterfeit products produced by unauthorized manufacturers. On May 23, 2003, the Company filed a patent for DSTag and on May 21, 2004, the Company filed an international patent for DSTag.  EnXcase  EnXcase combines two distinct features for the DVDPlus (OneDisc) two-sided (DVD-CD)optical disc media market. The outer styling of the case has the unique feature of a semi-rounded top. The second feature is a theft deterrent ring found within the inner structure of the EnXcase. The Company developed this unique case primarily for use with the DVDPlus (OneDisc) two-sided disc format. On October 10, 2003, the Company filed for a United States patent on EnXcase and on September 27, 2004 the Company filed for an international patent.  ClearVideo License  In March 2000, the Company acquired exclusive licensing rights, from Iterated Systems, Inc., to compile, use, copy and modify ClearVideo Source Code and to create and manufacture products and services.  As part of this acquisition Ryan Corley acquired the rights for using the ClearVideo Source Code for video/audio streaming over the internet of TV type programming and content.  Additionally, the license agreement provides that the Company may sublicense any products and services that it creates using the technology under the licensing agreement.  The license was acquired for a $250,000 note payable and the issuance of 297,500 shares of common stock, valued at $2,975.  On January 2, 2002, the company entered into an agreement with Ryan Corley, the President and majority stockholder of the Company, whereby the Company acquired his license agreement for video/audio streaming over the internet of TV type programming and content using the ClearVideo Source Code.  The Company issued 1,000,000 shares of restricted common stock valued at $100,000 for the license.  The licenses are being amortized over 10 years which is the estimated useful life of the patent covering the technology.  ClearVideo Technology  ClearVideo utilizes fractal digitization creating the smallest file possible while virtually duplicating the quality of the original. ClearVideo can reduce video file sizes by approximately 95-99% and virtually duplicates the quality of the original files.  ClearVideo enhances how video with synchronized audio files are transmitted over both narrow and broadband lines.  ClearVideo works equally well with NTSC, PAL, or SECAM (the three different TV formats used around the world) television as well as the Internet.  It can be effectively used worldwide for the compression and transmission of video files for the broadcast industry.   8   EnXnet, Inc. NOTES TO FINANCIAL STATEMENTS  NOTE 1 - SUMMARY OF ACCOUNTING POLICIES  Cash Equivalents  For financial reporting purposes, the Company considers all highly liquid investments with an original maturity of three months or less when purchased to be a cash equivalent.  Financial instruments, which potentially subject the Company to a concentration of credit risk, consist of cash and cash equivalents.  Cash and cash equivalents consist of funds deposited with various high credit quality financial institutions.  Equipment  Equipment is recorded at cost. Depreciation and amortization are provided using the straight-line method over the useful lives of the respective assets, typically 3-10 years. Major additions and betterments are capitalized. Upon retirement or disposal, the cost and related accumulated depreciation or amortization is removed from the accounts and any gain or loss is reflected in operations.  The following table details the Company's equipment:  June 30, 2006March 31, 2006Equipment$ 53,137$ 53,138Accumulated depreciation(49,698)(49,480)Equipment, net$  3,990$  3,658  Depreciation expenses for the three months ended June 30, 2006 and 2005 were $218 and $328, respectively.  Advertising  Advertising costs are expensed as incurred. Advertising expenses for the three months ended June 30, 2006 and 2005 were $100 and $ -, respectively.  Licenses  The costs associated with acquiring exclusive licensing rights to patented technology have been capitalized and are being charged to expense using the straight line method of amortization over ten years, the estimated remaining useful lives of the patents.  In accordance with the provisions of Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets", management of the Company reviews the carrying value of its intangible assets on a regular basis.  Estimated undiscounted future cash flows from the intangible assets are compared with the current carrying value. Reductions to the carrying value are recorded to the extent the net book value of the property exceeds the estimate of future discounted cash flows.  9   EnXnet, Inc. NOTES TO FINANCIAL STATEMENTS  NOTE 1 - SUMMARY OF ACCOUNTING POLICIES - Continued  Revenue Recognition  Revenue is generally recognized and earned when all of the following criteria are satisfied: a) persuasive evidence of sales arrangements exists; b) delivery has occurred; c) the sales price is fixed or determinable, and d) collectibility is reasonably assured.  Persuasive evidence of an arrangement is demonstrated via a purchase order from our customers. Delivery occurs when title and all risks of ownership are transferred to the purchaser which generally occurs when the products are shipped to the customer. No right of return exists on sales of products except for defective or damaged products. The sales price to the customer is fixed upon acceptance of purchase order. To assure that collectibility is reasonably assured we perform ongoing credit evaluations of all of our customers.  Income Taxes  Income taxes are provided based on the liability method of accounting pursuant to SFAS No. 109, "Accounting for Income Taxes." Under this approach, deferred income taxes are recorded to reflect the tax consequences on future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year end.  A valuation allowance is recorded against deferred tax assets as management does not believe the Company has met the "more likely than not" standard imposed by SFAS No. 109 to allow recognition of such an asset.  Accounts Receivable  Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within thirty days from the invoice date or as specified by the invoice and are stated at the amount billed to the customer.  Customer account balances with invoices dated over ninety days or ninety days past the due date are considered delinquent.  The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management's best estimate of the amount that will not be collected. Management individually reviews all accounts receivable balances that are considered delinquent and based on an assessment of current credit worthiness, estimates the portion, if any, of the balance that will not be collected.  In addition, management periodically evaluates the adequacy of the allowance based on the Company's past experience.  Estimates  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.  10   EnXnet, Inc. NOTES TO FINANCIAL STATEMENTS  NOTE 1 - SUMMARY OF ACCOUNTING POLICIES - Continued  Fair Value of Financial Instruments  The carrying amounts reported in the balance sheets as of June 30, 2006 and March 31, 2006 for cash equivalents and accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments.  Compensated Absences  Employees of the Company do not earn annual leave or sick leave. There is no compensated absences accrued liability on June 30, 2006 and March 31, 2006.  Research and Development Costs  Research and development costs are charged to expense as incurred.  Stock Based Compensation  The Company measures compensation cost for its stock based compensation plans under the provisions of Statement of Financial Accounting Standards No. 123(R), Accounting for Stock Based Compensations.  This statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance.  This statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services.  It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entitys equity instruments or that may be settled by the issuance of those equity instruments.  This statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions.  SFAS No. 123(R) , "Accounting for Stock-Based Compensation",  requires companies to include expenses in net income (loss) and earnings (loss) for each issuance of options and warrants.  The Company uses the Black-Scholes option valuation model to value its issuance of options and warrants.  Net Loss Per Share  SFAS No. 128 requires dual presentation of basic EPS and diluted EPS on the face of all income statements for all entities with complex capital structures.   Basic EPS is computed as net income divided by the weighted average number of common shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants and other convertible securities.  11   EnXnet, Inc. NOTES TO FINANCIAL STATEMENTS  NOTE 2  GOING CONCERN  The Company has a working capital deficit and has incurred losses since inception.  These factors raise substantial doubt about the Company's ability to continue as a going concern.  The financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.  Management of the Company has undertaken certain actions to address these conditions.  Management is currently in negotiations with potential customers and with marketing representatives to establish a more developed product channel.  Funds required to carry out management's plans are expected to be derived from future stock sales and borrowings from outside parties.  There can be no assurances that the Company will be successful in executing its plans.  NOTE 3 - MARKETABLE SECURITIES AND INVESTMENT  The Company does not own any marketable securities at June 30, 2006 and March 31, 2006.  The Company sold certain available-for-sale securities during the three months ended June 30, 2005 and received $5,807 in proceeds. Sales of these securities also resulted in a realized loss of $1,543.  NOTE 4 - LICENSES  In March 2000, the Company acquired exclusive licensing rights, from Iterated Systems, Inc., to compile, use, copy and modify ClearVideo Source Code and to create and manufacture products and services.  As part of this acquisition Ryan Corley acquired the rights for using the ClearVideo Source Code for video/audio streaming over the internet of TV type programming and content. Additionally, the license agreement provides that the Company may sublicense any products and services that it creates using the technology under the licensing agreement.  The license was acquired for a $250,000 note payable and the issuance of 97,500 shares of common stock, valued at $2,975. In addition during 2004, the Company issued 74,000 shares valued at $14,800 under an anti-dilution clause in the license agreement.  On January 2, 2002, the Company entered into an agreement with Ryan Corley, the President and majority stockholder of the Company, whereby the Company acquired his license agreement for video/audio streaming over the internet of TV type programming and content using the ClearVideo Source Code. The Company issued 1,000,000 shares of restricted common stock valued at $100,000 for the license.  The licenses are being amortized over 10 years which is the estimated useful life of the patent covering the technology. Amortization expense for the three months ended June 30, 2006 and 2005 was $9,787 and $9,787 and at June 30, 2006 and March 31, 2006 accumulated amortization was $207,870 and $217,657.   12   EnXnet, Inc. NOTES TO FINANCIAL STATEMENTS  NOTE 5  INCOME TAXES  At June 30, 2006 and March 31, 2006, the Company had net deferred tax assets of approximately $1,147,000 and $1,086,000 principally arising from net operating loss carry forwards for income tax purposes.  As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset has been established at June 30, 2006 and March 31, 2006. At June 30, 2006, the Company has net operating loss carry forwards totaling approximately $3,374,000 which will begin to expire in the year 2015.  NOTE 6  NOTES PAYABLE  Notes payable-related party consists of the following:  June 30, 
2006March 31, 
20068% convertible note payable to Ryan Corley, President of the Company, due November 15, 2003, Convertible into a maximum of 1,100,000 common shares$ 110,000$ 110,0006% convertible note payable to Ryan Corley, President of the Company, due on demand, convertible into a maximum of  3,524,020 common shares528,603528,603Total notes payable-related party$ 638,603$ 638,603Notes payable consist of the following:6% convertible notes payable to a stockholder, due on demand, convertible into a maximum of 462,120 common shares$  69,318$ 69,3184% convertible notes payable to a stockholder, due on demand, convertible into a maximum of 350,000 common shares175,000175,000Non-interest bearing note payable to a   stockholder, payments begin May 2005 in the amount of $5,000 per month, option to purchase 150,000 common shares at $.20 per share, note was discounted using an imputed interest rate of 6%. The note matured in October 2005.27,87026,624Total notes payable$ 272,188$270,942   NOTE 7 - COMMON STOCK TRANSACTIONS  Stock option holders exercised 450,000 options and the Company issued 450,000 shares of common stock in exchange for $165,000 during the three months ended June 30, 2006.  The Company issued 274,850 shares of restricted common stock in exchange for services in the amount of $27,485 during the three months ended June 30, 2005.  NOTE 8  STOCK OPTIONS  On July 24, 2001, the Company filed with the SEC Form S-8, for its 2002 Stock Option Plan, (the Plan). An aggregate amount of common stock that may be awarded and purchased under the Plan is 3,000,000 shares of the Company's common stock. Under the Plan during the three months ended June 30, 2006 and 2005, the Company did not grant any stock options.  Options granted after December 15, 2005 were valued using the fair value method as prescribed by SFAS No 123(R), resulting in a total value associated with those options of $185,802. Pursuant to SFAS 123(R), this amount will be accrued to compensation expense over the expected service term as vested. The accrued compensation expense related to these options for the three months ended June 30, 2006 is $26,128 and has been expensed in the three months ended June 30, 2006 pursuant to the application of SFAS 123(R), and credited to additional paid-in capital.  A summary of the status of the Company's stock options as of June 30, 2006 and March 31, 2006, is presented below:  June 30, 2006March 31, 2006Options outstanding at beginning of year3,975,8004,400,800Options granted-420,000Options exercised(450,000)(705,000)Options canceled-(140,000)Options outstanding at end of year3,525,8003,975,800    13   EnXnet, Inc. NOTES TO FINANCIAL STATEMENTS  NOTE 8  STOCK OPTIONS - Continued  The following table summarizes the information about the stock options as of June 30, 2006:  Range of Exercise PriceNumber Outstanding at June 30Weighted Average Remaining Contractual Life YearsWeighted Average Exercise Price (Total shares)Number Exercisable at 
June 30Weighted Average Exercise Price (Exercisable shares)$.10 - .401,155,8003.92$ .451,155,800$ .45.50795,0004.67.50795,000.50.50 - .9045,0004.92.7745,000.77.40 - .66960,0002.14.53960,000.53.43200,0005.33.43200,000.43.20150,000.58.20150,000.20.10  1.55220,0003.00.89100,000.10$ .10  1.553,525,8003.54$ .503,405,800$ .47   The following table summarizes the information about the stock options as of March 31, 2006:  Range of Exercise PriceNumber Outstanding at March 31Weighted Average Remaining Contractual Life YearsWeighted Average Exercise Price (Total shares)Number Exercisable at March 31Weighted Average Exercise Price (Exercisable shares)$.40400,000.25$ .40400,000$ .40.10 - .401,205,8003.92.431,202,800.43.50795,0004.92.50795,000.50.50 - .9045,0004.92.7745,000.77.40 - .66960,0002.39.53960,000.53.43200,0005.58.43200,000.43.20150,000.83.20150,000.20.10 - 1.55220,0003.00.89100,000.10.10 - 1.553,975,8003.54.453,855,800$ .45   11. Commitments and Contingencies  We may from time to time be parties to various legal actions. The Company is involved in litigation in the ordinary course of business. Currently we are being sued by a party to two agreements with the Company alleging breach of contract, fraud, and breach of fiduciary duty. Based on information currently available, it is impossible to determine the outcome or any potential adverse effect the outcome will have on the Company. If there were a potential adverse effect on the Company an estimate of the loss to the Company cannot be made at this time.  14   Item 2. Managements Discussion and Analysis or Plan of Operation  The following plan of operation, discussion of the results of operations and financial conditions should be read in conjunction with the financial statements and related notes appearing in this report.  EnXnet, Inc. was formed under the laws of the State of Oklahoma on March 30, 1999 as Southern Wireless, Inc. It is a business and technology development enterprise engaged in the development, marketing, and licensing of emerging technologies and innovative business strategies and practices, focusing primarily on products, solutions, and services which support and enhance multimedia management.  The Company currently can satisfy its current cash requirements for approximately 60-90 days and has a plan to raise additional working capital by the sale of shares of the Company common stock to select perspective individuals and from additional borrowings. Additionally, holders of outstanding stock options have been exercising those options which have provided additional working capital for the Company. This plan should provide the additional necessary funds required to enable the Company to continue marketing and developing its products until the Company can generate enough cash flow from sales to sustain its operations.  The Company does not anticipate any significant cash requirements for the purchase of any facilities or equipment.  The Company currently has four full-time employees on the payroll. It is anticipated that the Company will not need to hire additional employees in order to expand the marketing and developing of its products. The Company currently has arrangements with marketing affiliates Duplium and Corporate Disk for our DVDPlus product and with One28 Marketing Group and Interactive Affinities for our ThinDisc product. Currently our employees and other outside consultants are used for the further development of our products.  Results of Operations  Three Months Ended June 30, 2006 and 2005.  Revenues have not been substantial as we refocused our efforts on developing the ThinDisc technologies and developing marketing affiliates. For the three months ended June 30, 2006 and 2005, the Company incurred operating expenses of $166,080 and $112,966. The increase in operating expenses of $53,114 (47%) is attributed to an increase in consulting expense of $30,298. Consulting expenses for June 30, 2006 include $40,000 in expenses paid through the issuance of restricted common stock. The increase in operating expenses included an increase in payroll expense of $23,221. The increase in payroll expense included $26,128 in expenses for options issued to employees. Other classifications of expenses did not fluctuate substantially from June 30, 2005 to 2006. During the three months ended June 30, 2006 and 2005 we incurred net losses of $181,078 and $134,139 or $(0.006) and $(0.005) per share.  Liquidity and Capital Resources.  From inception through June 30, 2006, the Company has issued 29,077,893 shares of its Common Stock to officers, directors and others.  The Company has little operating history and no material assets other than the license agreement for ClearVideo and DVDPlus, and the pending patents for ThinDisc, Disc Security Tag, EnXCase, "acousto-magnetic" EAS tags, ARFIDTag and HyTag. The Company has $147,379 in cash as of June 30, 2006.  The Company had no recurring source of revenue and has incurred operating losses since inception. During the year ended March 31, 2005 the Company started receiving significant revenues from the sales of its products and is no longer considered to be in the development stage, however, during the year ended March 31, 2006 and the three months ended June 30, 2006 we did not receive any significant revenues. The Company has incurred operating losses each year since its inception and has had a working capital deficit at June 30, 2006. At June 30, 2006 and March 31, 2006 the working capital deficit was $930,241 and $990,295, respectively. These factors raise substantial doubt about the Company's ability to continue as a going concern.  As a result of these factors, the Company's independent certified public accountants have included an explanatory paragraph in their reports on the Company's March 31, 2006 and 2005 financial statements which expressed substantial doubt about the Company's ability to continue as a going concern.  At the present time, the Company has no material commitments for capital expenditures.  If capital expenditures are required after operations commence, the Company will pay for the same through the sale of common stock; or through loans from third parties.  There is no assurance, however, that such financing will be available and in the event such financing is not available, the Company may have to cease operations.  STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.  This Quarterly Report includes "forward-looking statements" within the meaning of Section 27A of the Exchange Act which represent the expectations or beliefs concerning future events that involve risks and uncertainties, including but not limited to the demand for Company products and services and the costs associated with such goods and services. All other statements other than statements of historical fact included in this Quarterly Report including, without limitation, the statements under "Managements Discussion and Analysis or Plan of Operations" and elsewhere in the Quarterly Report, are forward-looking statements.  While the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.  CURRENT TRADING MARKET FOR THE COMPANY'S SECURITIES.  Currently the Company's stock is traded under the symbol "EXNT" on the NASD OTC Bulletin Board, and the symbol AOHMDW on the Frankfurt, Berlin and Stuttgart Stock Exchanges in Germany. There can be no assurance that an active or regular trading market for the common stock will develop or that, if developed, will be sustained. Various factors, such as operating results, changes in laws, rules or regulations, general market fluctuations, changes in financial estimates by securities analysts and other factors may have a significant impact on the market of the Company securities. The market price for the securities of public companies often experience wide fluctuations that are not necessarily related to the operating performance of such public companies such as high interest rates or impact of overseas markets.  ITEM 3. CONTROLS AND PROCEDURES  Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures (as defined in Rules 13(a)-15(e) under the Securities Act of 1934, as amended) are effective to ensure that all information required to be disclosed by us in the reports filed or submitted by us under the Securities and Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to the our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate and allow timely decisions regarding required disclosure.  Changes in Internal Controls.In connection with the above-referenced evaluation, no change in our internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.   15   PART II OTHER INFORMATION  Item 1. Legal Proceedings  The Company is involved in litigation in the ordinary course of business. Based on information currently available, it is impossible to determine the outcome or any potential adverse effect the outcome will have on the Company. If there were a potential adverse effect on the Company an estimate of the loss to the Company cannot be made at this time.  Item 2. Changes in Securities   Not applicable  Item 3. Defaults upon Senior Securities   Not applicable  Item 4. Submission of matters to a vote to security holders   Not applicable  Item 5. Other Information   Not applicable  Item 6. Exhibits and Reports on Form 8-K    (a) Exhibits  Exhibit 99.1 Certification of financial statements Chief Executive Officer and Chief Financial Officer   16   SIGNATURES   In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.   EnXnet, Inc.Dated: August 11, 2006/s/ Ryan CorleyRyan Corley - President   17