UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549











FORM 10-Q











(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, 2009





OR




r           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 issuer in its charter)








Oklahoma
73-1561191(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)





11333 E. Pine Street, Suite 92 - Tulsa, Ok 74116(Address of principal executive offices & zip code)





(918) 592 - 0015Registrant's telephone number, including area code:





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. Yesx   Noo





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.





Large accelerated filer
o
Accelerated fileroNon-accelerated filer
o
Smaller reporting companyx(Do not check if a smaller reporting company)





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





As of August 11, 2009, there were outstanding 33,399,226 shares of the registrant’s common stock, $.0005 par value.




Table of Contents




Table of Contents





PagePART I. FINANCIAL INFORMATIONItem 1.
Financial Statements
3Balance Sheets June 30, 2009 and March 31, 2009
3Statements of Loss For the three months ended June 30, 2009 and 2008
4Statements of Changes in Stockholders Deficit
5Statements of Cash Flows For the three months ended June 30, 2009 and 2008
6Summary of Accounting Policies
7Notes to Financial Statements
9Item 2.
Management’s Discussion and Analysis
15Item 3.
Quantitative and Qualitative Disclosures About Market Risk
17Item 4.
Controls and Procedures
17PART II. OTHER INFORMATIONItem 1.
Legal Proceedings
18Item 1A.
Risk Factors
18Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
18Item 3.
Defaults Upon Senior Securities
18Item 4.
Submission of Matters to a Vote to Security Holders
18Item 5.
Other Information
18Item 6.
Exhibits and Reports on Form 8-K
18SIGNATURES
19Exhibit Index
20




Table of Contents





PART I.    FINANCIAL INFORMATION




ITEM 1.     FINANCIAL STATEMENTS





ENXNET, INC


BALANCE SHEETS





June 30,
2009


March 31,
2009ASSETS

(Unaudited)


(Audited)CURRENT ASSETSCash

$
7,304


$
10,630Accounts receivable


21,281



17,290Prepaid expenses


24,426



16,306TOTAL CURRENT ASSETS


53,011



44,226FIXED ASSETSFurniture & fixtures


6,160



6,160Machinery & equipment


74,516



74,516Less accumulated depreciation


(66,443
)


(64,876
)TOTAL FIXED ASSETS


14,233



15,800OTHER ASSETSLicenses, net


-



-Investment


-



-Deposits


1,137



1,137TOTAL OTHER ASSETS


1,137



1,137TOTAL ASSETS

$
68,381


$
61,163LIABILITIES AND STOCKHOLDERS' DEFICITCURRENT LIABILITIESAccounts payable and accrued expenses

$
539,832


$
533,509Advances from officer - related party


77,587



41,487Advances from stockholder


31,000



31,000Notes payable


175,000



175,000Notes payable - related party


695,558



695,558TOTAL CURRENT LIABILITIES


1,518,977



1,476,554COMMITMENTS AND CONTINGENCIES


-



-STOCKHOLDERS' EQUITY (DEFICIT)Common stock, $0.00005 par value; 200,000,000 shares authorized,33,399,809 and 32,694,226 shares issued and outstanding


1,670



1,635Additional paid-in capital


4,456,086



4,370,440Accumulated deficit


(5,808,352
)


(5,687,466
)Other comprehensive income


(100,000
)


(100,000
)TOTAL STOCKHOLDERS' EQUITY (DEFICIT)


(1,450,596
)


(1,415,391
)TOTAL LIABILITIES ANDSTOCKHOLDERS' EQUITY (DEFICIT)

$
68,381


$
61,163





See accompanying summary of accounting policies and notes to condensed financial statements




3
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ENXNET, INC


CONSOLIDATED STATEMENTS OF OPERATIONS





Three Months EndedJune 302009


2008REVENUES

$
3,990


$
3,990COST OF SALES


1,325



1,325Gross Profit


2,665



2,665EXPENSESConsulting fees


56,250



44,160Depreciation & amortization


242



10,303Advertising


2,350



-Payroll


39,694



94,595Professional services


14,390



88,800Occupancy


4,148



6,037Office


2,496



3,043Travel


394



2,297Other


425



240Total Expenses


120,389



249,475LOSS FROM OPERATIONS


(117,724
)


(246,810
)OTHER INCOME (EXPENSE)Interest expense


(11,930
)


(12,655
)Other income


8,768



-Interest income


-



3Total Other Income (Expense)


(3,162
)


(12,652
)COMPREHENSIVE LOSS

$
(120,886
)

$
( 259,462
)BASIC AND DILUTED NET LOSS PER SHARE

$
(0.004
)

$
(0.008
)WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED


33,218,161



30,948,447





See accompanying summary of accounting policies and notes to condensed financial statements




4
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ENXNET, INC


CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)





Additional





Other


TotalCommon Stock


Paid-in


Accumulated


Comprehensive


Stockholders'Shares


Amount


Capital


(Deficit)


Income


Equity (Deficit)Balance, March 31, 2008


30,670,226


$
1,534


$
3,836,148


$
(4,937,753
)

$
(100,000
)

$
(1,200,071
)Common stock issued for:Cash


722,500



36



149,464



-



-



149,500Services


450,955



23



108,410



-



-



108,433Note payable conversion


851,128



42



127,627



-



-



127,669Stock options issued


-



-



1482791



-



-



148,791Net loss for the year ended March 31, 2009


-



-



-



(749,713
)


-



(749,713
)Balance, March 31, 2009


32,694,809



1,635



4,370,440



(5, 687,466
)


(100,000
)


(1,415,391
)Common stock issued for:Services


705,000



35



46,965



-



-



47,000Stock options issued


-



-



38,681



-



-



38,681Net loss for the three months ended June 30, 2009


-



-



-



(120,886
)


-



(120,886
)Balance, June 30, 2009


33,399,809


$
1,670


$
4,456,086


$
(5,808,352
)

$
(100,000
)

$
(1,450,596
)





See accompanying summary of accounting policies and notes to condensed financial statements


5
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ENXNET, INC


CONSOLIDATED STATEMENTS OF CASH FLOWS





Three months Ended
June 30,2009


2008CASH FLOWS FROM OPERATING ACTIVITIESNet Loss

$
(120,886
)

$
(259,462
)Depreciation and amortization


1,567



11,628Common stock issued for expenses


47,000



49,636Stock options issued


38,681



82,957Adjustments to reconcile net loss to net cash used by operations:Decrease (increase) in accounts receivable


(3,991
)


(3,990
)Decrease (increase) in prepaid expenses


(8,120
)


21,229Increase (decrease) in accounts payable & accrued expenses


5,123



27,977Net cash provided (used) by operating activities


(40,626
)


(70,025
)CASH FLOWS FROM INVESTING ACTIVITIESPurchase of equipment


-



-Net cash provided (used) in investing activities


-



-CASH FLOWS FROM FINANCING ACTIVITIESProceeds from stock options exercise


-



-Proceeds from stock sales


-



88,500Proceeds from advances from officer and stockholder


39,300



16,900Repayment of advances


(2,000
)


(21,065
)Net cash used by financing activities


37,300



84,335NET INCREASE (DECREASE) IN CASH


(3,326
)


14,310CASH – Beginning of period


10,630



27,314CASH – End of period

$
7,304


$
41,624SUPPLEMENTAL CASH FLOW DISCLOSURES:Interest expense

$
-


$
-Income taxes

$
-


$
-NON-CASH FINANCING AND INVESTING TRANSACTIONS:Common stock issued for expenses


47,000



49,636Common stock issued for payment of debt


38,681



69,318




See accompanying summary of accounting policies and notes to condensed financial statement




6
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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-Q 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, 2009, are not necessarily indicative of the results that may be expected for the year ended March 31, 2009. 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, 2009 included in the Company Form 10-K.





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.





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
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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 was awarded the patent on June 19, 2006.





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.


Medical D-Tect-OR
 
 We are partners with BAHF, LLC in a joint effort called Medical D-Tect-OR. Medical D-Tect-OR has developed a Retained Foreign Object Detection System that uses a hand held wand that is capable of detecting surgical instruments and surgical products such as gauze, laparoscopy sponges, and OR towels manufactured with d-Tect-OR’s TM
detection technology that may have been left in the body during a surgical procedure.  Medical D-Tect-OR has filed for patent protection.


8
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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.





Depreciation expenses for the three months ended June 30, 2009 and 2008 was $1,567 and $1,565, respectively.





Advertising


Advertising costs are expensed as incurred.





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.





RevenueRecognition


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) collectability 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 collectability is reasonably assured we perform ongoing credit evaluations of all of our customers.




9
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ENXNET, INC


NOTES TO FINANCIAL STATEMENTS





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 thirty days or thirty 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.





Fair Value Measurements


In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements” (SFAS 157). This Statement establishes a framework for fair value measurements in the financial statements by providing a definition of fair
value, provides guidance on the methods used to estimate fair value and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. In February 2008, the FASB issued FASB Staff Position (FSP) No. FAS 157-2, permitting entities to delay application of SFAS 157 to fiscal years beginning after November 15, 2008, for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed
at fair value in the financial statements on a recurring basis (at least annually). On April 1, 2008, we adopted SFAS 157. We had no assets or liabilities measured at fair value on a recurring basis. Therefore, the initial adoption of SFAS 157 had no impact on our Consolidated Financial Statements. Beginning April 1, 2009, we will apply SFAS 157 fair value requirements to nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed on a recurring basis. Application
will be prospective when nonrecurring fair value measurements are required. We will assess the impact on our Consolidated Financial Statements of applying these requirements to nonrecurring fair value measurements for nonfinancial assets and nonfinancial liabilities.





Compensated Absences


Employees of the Company do not earn annual leave or sick leave. There is no compensated absences accrued liability on June 30, 2009 and March 31, 2009.





Research and Development Costs


Research and development costs are charged to expense as incurred.




10
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ENXNET, INC


NOTES TO FINANCIAL STATEMENTS





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.





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 - 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 have been amortized over the estimated useful life of the patent covering the technology. Amortization expense for the three months ended June 30, 2009 and 2008 was $-0- and $10,063 and at June 30, 2009 and March 31, 2009 the license was fully amortized.





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ENXNET, INC


NOTES TO FINANCIAL STATEMENTS





NOTE 4 – INCOME TAXES





At June 30, 2009 and March 31, 2009, the Company had net deferred tax assets of approximately $1,975,000 and $1,920,000 principally arising from net operating loss carryforward 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, 2009 and March 31, 2009. At June 30, 2009, the Company has net operating loss carry forwards totaling approximately $5,809,000 which will begin to expire in the year 2015.





NOTE 5 – NOTES PAYABLE





Notes payable-related party consists of the following:





Notes payable-related party consists of the following:
June 30,

March 31,2009

20098% 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 3,219,018 common shares


482,853



528,6033% convertible note payable to Ryan Corley, President of the Company, due on demand,convertible into a maximum of 271,311 common shares


21,705



-3% convertible note payable to an entity controlled by Ryan Corley the President of the Company,  due on demand, convertible into a maximum of 1,012,500 common shares


81,000



-Total notes payable-related party

$
695,558


$
638,603Notes payable consist of the following:
March 31,2009

20086% convertible notes payable to a stockholder, due on demand, convertible into a maximum of 462,120 common shares

$
-


$
69,3184% convertible notes payable to a stockholder, due on demand, convertible into a maximum of 350,000 common shares


175,000



175,000Total notes payable

$
175,000


$
270,942





NOTE 6 – ADVANCES FROM OFFICER AND STOCKHOLDER





At June 30, 2009 and March 31, 2009, advances from one stockholder were $31,000 and $31,000, respectively.





At June 30, 2009 and March 31, 2009, advances from the CEO were $40,287 and $35,987, respectively.


During the three months ended June 30, 2009, the CEO made additional unsecured advances totaling $6,300. During the three months ended June 30, 2009 the Company made payments on these advances of $2,000.





At June 30, 2009 and March 31, 2009, advances from an entity controlled by the CEO were $37,300 and $5,500. During the three months ended June 30, 2009, the entity made additional unsecured advances totaling $33,000. During the three months ended June 30, 2009, the Company charged the entity $1,200 for office space use and reduced
these advances by that amount.




12
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ENXNET, INC


NOTES TO FINANCIAL STATEMENTS





NOTE 7 - COMMON STOCK TRANSACTIONS





The Company issued -0- and 722,500 shares of restricted common stock in exchange for cash in the amount of $-0- and $149,500 during the three months ended June 30, 2009 and the year ended March 31, 2009.





The Company issued 705,000 and 450,955 shares of restricted common stock in exchange for services in the amount of $47,000 and $108,433 during the three months ended June 30, 2009 and the year ended March 31, 2009.





The Company issued 851,128 shares of restricted common stock in exchange for debt and accrued interest in the amount of $127,669 during the three months ended June 30, 2008.





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, 2009 and 2008, the Company did not grant
any options under the plan.





The Company also issues stock options to consultants to purchase Rule 144 restricted common stock which is not issued under the Plan. During the three months ended June 30, 2009 and 2008, the Company granted 250,000 and -0- to a consultant.





The Company estimated the fair value of each stock option for employees and consultants at the grant date by using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants as follows:





Dividends yield


0
%Expected volatility

4.58% to .77
%Risk-free interest rate


2.0 to .50
%Expected life

.23 to 4.32 years





For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period.





Option valuation models incorporate highly subjective assumptions. Because changes in the subjective assumptions can materially affect the fair value estimate, the existing models do not necessarily provide a reliable single measure of the fair value of the Company's employee stock options. Because the determination of fair value of all
employee stock options granted after such time as the Company becomes a public entity will include an expected volatility factor and because, for pro forma disclosure purposes, the estimated fair value of the Company's employee stock options is treated as if amortized to expense over the options' vesting period, the effects of applying SFAS No. 123(R) for pro forma disclosures are not necessarily indicative of future amounts.




13
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ENXNET, INC


NOTES TO FINANCIAL STATEMENTS





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 $555,402. Pursuant to SFAS No. 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, 2009 and 2008 is $38,681 and $82,957 and has been expensed pursuant to the application of SFAS No. 123(R), and credited to additional paid-in capital.





A summary of the status of the Company's stock options as of June 30, 2009 and March 31, 2009 is presented below:





June 30,


March 31,2009


2009Options outstanding at beginning of year


2,880,800



2,310,800Options granted


250,000



620,000Options exercised


-



-Options canceled


-



(50,000
)Options outstanding at end of year


3,130,800



2,880,800





The following table summarizes the information about the stock options as of June 30, 2009:


Range of Exercise Price


Number Outstanding at March 31


Weighted Average Remaining Contractual Life Years


Weighted Average Exercise Price (Total shares)


Number Exercisable at March 31


Weighted Average Exercise Price (Exercisable shares)$
.10 - .50



555,800



1.40


$
.39



555,800


$
.39.50



795,000



1.40



.50



795,000



.50.40 - .50



45,000



1.40



.43



45,000



.43.40 - .66



330,000



1.92



.43



330,000



.43.43



200,000



2.00



.43



200,000



.43.38



135,000



2.00



.38



135,000



.38.15 - 51



870,000



0.34



.23



825,000



.22$
.10 – .66



3,130,800



1.27


$
.40



3,085,800


$
.40





The following table summarizes the information about the stock options as of March 31, 2009:


Range of Exercise Price


Number Outstanding at March 31


Weighted Average Remaining Contractual Life Years


Weighted Average Exercise Price (Total shares)


Number Exercisable at March 31


Weighted Average Exercise Price (Exercisable shares)$
.10 - .50



555,800



1.64


$
.39



555,800


$
.39.50



795,000



1.64



.50



795,000



.50.40 - .50



45,000



1.64



.43



45,000



.43.40 - .66



330,000



2.17



.43



330,000



.43.43



200,000



2.25



.43



200,000



.43.38



135,000



2.26



.38



135,000



.38.15 - 51



620,000



0.73



.27



500,000



.25$
.10 – .66



2,880,800



1.62


$
.42



2,760,800


$
.43





NOTE 9 – COMMITMENTS AND CONTINGENCIES





The Company is not involved in litigation at this time.  We may from time to time be a party to various legal actions in the ordinary course of business.  There can be no assurance that the Company will not be a party to litigation in the future that could have an adverse effect on the Company.


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ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





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.





The following 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 30 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.





The Company currently has three 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 affiliate Duplium 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, 2009 and 2008.





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, 2009 and 2008, the Company had revenues of $3,990 and $3,990.





The Company incurred operating expenses of $120,389 and $249,475 for the three months ended June 30, 2009 and 2008, a decrease of $129,086 or 51.74%. The decrease in operating expenses of $129,086 for the three months ended June 30, 2009 when compared to the three month period ended June 30, 2008 is attributed to:


Increases in:




·
Consulting fees of $12,090,


·
Advertising of $2,350 and,


·
Other expense of $185.





Decreases in:




·
Depreciation and amortization expenses of $10,061,


·
Payroll expenses of $54,901,


·
Professional fees of $74,410,


·
Occupancy expense of $1,889,


·
Office expense of $547 and,


·
Travel and entertainment expense of $1,903





The increase in consulting fees of $12,090 or 27.38% is attributed to the valuation of restricted common stock and warrants issued for consulting services for the three months ended June 30, 2009 and 2008.





The increase in advertising of $2,350 is attributed the purchase of demonstration ThinDisc gift cards for use by our marketing affiliates as we get prepared to bring the ThinDisc gift cards to market. We had no advertising cost in the three months ended June 30, 2008.





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The decrease in depreciation and amortization expense of ($10,061) or (97.65%) for the three months ended June 30, 2009 compared to the three months ended June 30, 2008 is attributed to the reduction in amortization expense on our license which was fully amortized in the year ended March 31, 2009.





The decrease in payroll expenses of ($54,901) or (58.04%) for the three months ended June 30, 2009 compared to the three month period ended June 30, 2008 is attributed to the following:




·
Decrease in our CEO’s salary and related payroll taxes of ($15,071)


·
Reduction in one employee resulted in a decrease of ($5,383)


·
Decrease in valuation of compensation cost of options issued to employees of ($25,375)


·
Decrease in valuation of restricted common stock issued to employees as compensation of ($7,800)


·
Other miscellaneous decreases of ($1,272)





The decrease in professional services of ($74,410) or (83.80%) for the three months ended June 30, 2009 compared to the three month period ended June 30, 2008 is attributed to:




·
A decrease in legal fees associated with our patent fillings of ($75,785)


·
Other miscellaneous increases of $1,375





Other classifications of expenses did not fluctuate substantially for the three month period ended June 30, 2009 to June 30, 2008.





During the three months ended June 30, 2009 and 2008 we incurred net losses of $120,886 and $259,462 or $(0.004) and $(0.008) per share.




Liquidity and Capital Resources.





From inception through June 30, 2009, the Company has issued 33,399,809 shares of its Common Stock to officers, directors and outside shareholders.  The Company has little operating history and no material assets other than the license agreement for ClearVideo and DVDplus, the patent for EnXcase and the pending patents for ThinDisc,
Disc Security Tag, a Passive Resonant Reflector and a Design Patent covering an Antenna for a Storage Disc.  The Company has $7,304 in cash as of June 30, 2009.





The Company has incurred operating losses each year since its inception and has had a working capital deficit at June 30, 2009. At June 30, 2009 and March 31, 2009 the working capital deficit was $1,465,966 and $1,432,328, respectively. Current liabilities include notes payable, accrued interest on those notes and advances from the CEO
and shareholders in the aggregate amount of $1,212,214 and $1,164,183, respectively. The adjusted working capital deficit without these related party liabilities for June 30, 2009 and March 31, 2009 is $253,752 and $268,145, respectively. The working capital deficit and cash balance 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, 2009 financial statements which expressed substantial doubt about the Company's ability to continue as a going concern.





Contractual Obligations.





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.





CRITICAL ACCOUNTING POLICIES AND ESTIMATES.





Management's discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements. These statements have been prepared in accordance with generally accepted accounting principles in the United States of America.





Use of estimates in preparation of financial statements





The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we
evaluate our estimates, based on historical experience, and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The following critical accounting policies rely upon assumptions, judgments and estimates and were used in the preparation
of our consolidated financial statements:





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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.





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.





Fair Value of Financial Instruments





The carrying amounts reported in the balance sheets as of March 31, 2009 and 2008 for cash equivalents and accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments.





Contingent Liability





In accordance with Statement of Financial Accounting Standards Interpretation No. 14, we may have certain contingent liabilities with respect to material existing or potential claims, lawsuits and other proceedings.  We accrue liabilities when it is probable that future cost will be incurred and such cost can be measured.





Off Balance Sheet Arrangements





We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.





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.





ITEM3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





Not Applicable





ITEM 4. CONTROL 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  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.





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PART II. OTHER INFORMATION





ITEM 1.      LEGAL PROCEEDINGS





The Company is not involved in litigation at this time.  We may from time to time be a party to various legal actions in the ordinary course of business.  There can be no assurance that the Company will not be a party to litigation in the future that could have an adverse effect on the Company.




ITEM 1A.   RISK FACTORS





There have been no material changes with regard to the risk factors previously disclosed in our most recent Annual Report on Form 10-K.





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





None





ITEM 3.      DEFAULTS UPON SENIOR SECURITIES





None





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





None





ITEM 5.      OTHER INFORMATION





None





ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K





The following are included herein:





31.1Rule 15d-14(a) Certification of CEO


31.2Rule 15d-14(a) Certification of CFO


32.1Rule 1350 Certification of CEO


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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.








EnXnetDated: August 11, 2009
By:
/s/ Ryan CorleyRyan Corley, President. Chief Executive Officer(Principal Executive Officer)











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ExhibitDescription


31.1Rule 15d-14(a) Certification of CEO


31.2Rule 15d-14(a) Certification of CFO


32.1Rule 1350 Certification of CEO





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