UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    Form 10-K

(Mark one)
[X] Annual Report Under Section 13 or 15(d) of The Securities Exchange
    Act of 1934

                   For the fiscal year ended December 31, 2011

[ ] Transition Report Under Section 13 or 15(d) of The Securities Exchange
    Act of 1934

            For the transition period from ___________ to ___________

                        Commission File Number: 002-41703


                            The X-Change Corporation
             (Exact Name of Registrant as Specified in Its Charter)

        Nevada                                              90-0156146
(State of Incorporation)                           (I. R. S. Employer ID Number)

         12655 North Central Expressway, Suite 1000, Dallas, Texas 75243
                    (Address of Principal Executive Offices)

                                 (972) 386-7350
                         (Registrant's Telephone Number)

          Securities registered pursuant to Section 12 (b) of the Act:

                                      None

          Securities registered pursuant to Section 12(g) of the Act:

                         Common Stock - $0.001 par value

Indicate by check mark if the  registrant is a well known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate  by  check  mark if the  registrant  is not  required  to file  reports
pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [ ] No [X]

Indicate by check mark whether the registrant has (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 the Company was required to file such reports),  and
(2) has been subject to such filing  requirements  for the past 90 days. Yes [ ]
No [X]

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 during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post files). Yes [ ] No [X]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]

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 [X] No [ ]

The  aggregate  market  value of voting and  non-voting  common  equity  held by
non-affiliates  as of April 27,  2012 was  approximately  $5,351,662  based upon
15,290,463 shares held by non-affiliates and a closing market price of $0.35 per
share on April 27, 2012, as reported on www.bigcharts.com.

As of April 19, 2012,  there were  41,564,155  shares of Common Stock issued and
outstanding.
<PAGE>
                            THE X-CHANGE CORPORATION

                                INDEX TO CONTENTS
                                                                           Page
                                                                          Number
                                                                          ------
PART I

Item 1   Business                                                              3
Item 1A  Risk Factors                                                          6
Item 1B  Uncleared Staff Comments                                              6
Item 2   Properties                                                            6
Item 3   Legal Proceedings                                                     6
Item 4   Mine Safety Disclosures                                               7

PART II

Item 5   Market for Registrant's Common Equity, Related Stockholder Matters
         and Issuer Purchases of Equity Securities                             7
Item 6   Selected Financial Data                                              10
Item 7   Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                                10
Item 7A  Quantitative and Qualitative Disclosures About Market Risk           13
Item 8   Financial Statements and Supplementary Data                          13
Item 9   Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure                                                 13
Item 9A  Controls and Procedures                                              13
Item 9B  Other Information                                                    14

PART III

Item 10  Directors, Executive Officers and Corporate Governance               14
Item 11  Executive Compensation                                               16
Item 12  Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters                                          17
Item 13  Certain Relationships and Related Transactions, and Director
         Independence                 17
Item 14  Principal Accountant Fees and Services                               18

PART IV

Item 15  Exhibits and Financial Statement Schedules                           18

SIGNATURES                                                                    19

                                       2
<PAGE>
In this filing, the terms "we", "our", "us", "X-Change",  and/or "Company" refer
to the Registrant, The X-Change Corporation.

                  CAUTION REGARDING FORWARD-LOOKING INFORMATION

Certain  statements  contained  in  this  annual  filing,   including,   without
limitation, statements containing the words "believes", "anticipates", "expects"
and  words  of  similar  import,  constitute  forward-looking  statements.  Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors that may cause the actual results,  performance or achievements of
the Company,  or industry  results,  to be materially  different from any future
results,   performance   or   achievements   expressed   or   implied   by  such
forward-looking statements.

Such factors include, among others, the following:  international,  national and
local general economic and market conditions:  demographic  changes; the ability
of the Company to sustain,  manage or  forecast  its growth;  the ability of the
Company to successfully  make and integrate  acquisitions;  existing  government
regulations  and  changes  in,  or  the  failure  to  comply  with,   government
regulations;  adverse  publicity;  competition;  fluctuations  and difficulty in
forecasting  operating  results;  changes in business  strategy  or  development
plans;  business  disruptions;  the  ability  to attract  and  retain  qualified
personnel; and other factors referenced in this and previous filings.

Given these uncertainties, readers of this Form 10-K and investors are cautioned
not to place undue  reliance  on such  forward-looking  statements.  The Company
disclaims any obligation to update any such factors or to publicly  announce the
result  of any  revisions  to any of the  forward-looking  statements  contained
herein to reflect future events or developments.

                                     PART I

ITEM 1 - BUSINESS

GENERAL

The X-Change Corporation  (Company) was incorporated under the laws of the State
of Delaware on February 5, 1969 and changed its corporate  domicile to the State
of Nevada on October 4, 2000. We were originally organized to seek merger and/or
acquisition  candidates and engaged in various transactions since our inception.
As of December 31, 2008, we had disposed of all assets and operations.

We are currently  classified as a shell company as defined in Rule 405 under the
Securities  Act of 1933,  or the  Securities  Act,  and  Rule  12b-2  under  the
Securities  Exchange Act of 1934,  or the Exchange Act. As a shell  company,  we
have no operations and no or nominal assets.  Our principal office is located at
12655  North  Central  Expressway,  Suite  1000,  Dallas,  Texas  75243  and our
telephone number is (972) 386-7350.

Currently, the Company has no known exposures to any current or proposed climate
change  legislation  which could negatively  impact the Company's  operations or
require capital expenditures to become compliant.

Unsuccessful Business Endeavors

On July 20, 2005, the Company  exchanged  10,000,000  shares of common stock for
100%  of  the  issued  and  outstanding  stock  of  AirGATE  Technologies,  Inc.
(AirGATE).  This  transaction  made  AirGATE a  wholly-owned  subsidiary  of the
Company.

In December  2008,  the lender of a note  payable by AirGATE  began  foreclosure
proceedings  against  its  collateral,  which  included  100%  of the  Company's
holdings  in  AirGATE  and the  right  to  convert  the  note  into  restricted,
unregistered  shares of the Company's  common stock.  The note and accrued,  and
unpaid,  interest was  converted to 51,000,000  shares of the  Company's  common
stock and the foreclosure proceeding was consummated on January 16, 2009. Due to
the timing of this  transaction,  the  foreclosure  and related  disposition  of
AirGATE is reflected in the accompanying financial statements as of December 31,
2008.

On May 4, 2009, the Company entered into a Settlement Agreement and Release with
AirGATE,  HM Energy  Technologies,  Inc. (HM), Wm. Chris Mathers,  the Company's
former CFO,  (Mathers),  Kathleen Hanafan,  the Company's former CEO, (Hanafan),
Duke Loi, an employee of AirGATE,  (Loi),  Samson  Investment  Company (Samson),
Ironman PI Fund (QP), L.P.  (Ironman),  John Thomas Bridge and Opportunity Fund,
LP ("John Thomas" collectively with Samson and Ironman, SIJ) and Melissa CR 364,
LTD  (Melissa).  As a result  of the  various  transactions  effected  under the
Agreement,  SIJ  surrendered  all of their shares in the Company;  cancelled all
financial  obligations  of  the  Company,   which  approximated  $3.96  million,
including  accrued but unpaid  interest);  and terminated their rights under the
various warrant and guaranty agreements. The Company provided all parties with a
full  release  of claims,  known and  unknown,  in  exchange  for these  various
surrenders, cancellations and terminations.

                                       3
<PAGE>
On February 17, 2010, the Company entered into a Contract of Sale with Nydia Del
Valle to acquire 100% of the issued and  outstanding  stock of  Connected  Media
Technologies,   Inc.  (Connected),  a  Delaware  Corporation,  in  exchange  for
400,000,000  shares of restricted,  unregistered  common stock of the Company. A
copy of the Contract of Sale was filed as an Exhibit to a Current Report on Form
8-K filed on or about February 22, 2010. At the time, Connected represented that
it owned 52% of Global Broadcasting Systems, LLC and 52% of Cinemania TV, LLC.

On March 10, 2010,  we  discovered  certain  improprieties  in  Connected  Media
Technologies,  Inc.'s, its officers and directors' representations of its assets
owned and other matters in the above proposed  acquisition  transaction and took
the appropriate  steps to remove the previously  seated  executive  officers and
directors affiliated with the acquisition target,  Connected Media Technologies,
Inc. We did not issue the  aforementioned 400 million shares of its common stock
for this  transaction  and will not be acquiring any assets from Connected Media
Technologies, Inc.

On March 11, 2010, we announced a change in our strategic direction and business
plan to focus on offering  multimedia  and e-commerce to the diverse and growing
Hispanic markets within the United States and in other countries. In March 2010,
the   Company   formed   the   wholly-owned   subsidiaries   -  Caballo   Blanco
Communications, Ltd. and Commerce Services, Inc. - as Colorado corporations - to
conduct these proposed  operations of a  Latino-targeted  media delivery service
and a bilingual home shopping network.

On August 16, 2010,  The X-Change  Corporation  (Company)  announced the pending
acquisition  of  IPTV  World,  a  company  based  in Los  Angeles  with  hosting
facilities  in the famous One  Wilshire  carrier  hotel.  This  acquisition  was
subject  to the  execution  of a  definitive  agreement  and the  completion  of
appropriate due diligence by all parties

On September 8, 2010, in  conjunction  with the  abandonment  of the  previously
disclosed current business plan consisting of the development and implementation
of a  Latino-targeted  media  delivery  service  and a bilingual  home  shopping
network,  The  X-Change  Corporation  (Company)  announced  the  resignation  of
Fernando Gomez,  Richard Steele,  and Ron Vigdor from its Board of Directors and
as officers of the Company.

On September 8, 2010, The X-Change  Corporation  (Company) announced the pending
acquisition of Genesis Key, Inc.  (Genesis Key),  based in Washington,  DC. This
acquisition  was subject to the  execution  of a  definitive  agreement  and the
completion of appropriate due diligence by all parties.

On September 20, 2010,  The X-Change  Corporation  (Company)  announced that the
Company has signed an  agreement to acquire  Cybertel  USA,  Inc.,  based in Los
Angeles,  California,  for $800,000 cash payable to the shareholders of Cybertel
USA in exchange for 100% of the issued and  outstanding  stock of Cybertel  USA,
Inc.  The  closing of this  transaction  remains  subject to the  completion  of
appropriate due diligence by all parties.

On  October 7,  2010,  the  Company  announced  that it was  unable to  conclude
definitive  agreements in all previously  announced  acquisitions of IPTV World,
Genesis Key, Inc. and Cybertel USA and will not be acquiring these companies.

On October 7, 2010,  The X-Change  Corporation  (Company)  announced that it has
signed an agreement to acquire  21-Century  Silicon,  Inc., based in Richardson,
Texas  (21-Century  Silicon).  The terms of the  acquisition  is  anticipated to
involve a change in control of the Company and the appointment of new directors.
As of the date of this report,  the Company has issued  1,000,000  shares of the
Company's   unregistered,   restricted  common  stock  to  the  stockholders  of
21-Century  Silicon in  exchange  for a  technology  license  agreement  and the
exclusive  right to  acquire  100  percent  of  intellectual  property  owned by
21-Century   Silicon,   subject  to  the  approval  and  assumption  of  certain
outstanding 21-Century Silicon debt.

21-Century  Silicon's  technology  was developed in 2005 by Dr. H. Bruce Li, and
21-Century Silicon was formed in 2006. To date,  21-Century Silicon has received
in excess of $5 million in research and development capital.  21-Century Silicon
(www.21-centurysilicon.com)    manufactures    high-purity   silicon   for   the
photovoltaics/solar-energy industry. The company's core manufacturing technology
is based upon a proprietary furnace design that achieves solar-grade polysilicon
manufacturing  at half  the  cost of  conventional  methods.  Combined  with its
patent-pending methods, 21-Century Silicon's manufacturing process is a believed
to be a  revolution  within the  industry  and should  position the company as a
major player within the solar energy supply chain.

Known  in  the  industry  as  6N  Silicon,   the  company's  product  meets  the
specifications of photovoltaic supply companies. In contrast to its competition,
the company  manufactures  silicon at a low cost, with minimal  production time,
and with virtually no  environmental  hazards.  21-Century is focused on meeting
the supply needs of the solar industry  while  maintaining  its  environmentally
friendly manufacturing process.

On November 8, 2010,  21-Century  executed a note  payable to the Company in the
amount of approximately  $28,500,  bearing interest at 10.0% for working capital
advances made by the Company on  21-Century's  behalf.  On January 17, 2011, the

                                       4
<PAGE>
Company announced that through its wholly-owned subsidiary, PolySilicon, Inc, it
had completed the purchase of the intangible assets of 21-Century, subject to an
agreement  to  purchase a  $3,500,000  note  payable  owed to the State of Texas
(Texas Note) by 21-Century.

On December  27,  2010,  the Company  formally  changed  the  corporate  name of
Commerce Services, Inc. to PolySilicon,  Inc. to conduct the business activities
related to the acquisition of any intellectual  property of 21-Century  Silicon,
Inc.  PolySilicon,  Inc. (formerly  Commerce  Services,  Inc.) had no history of
operations or other economic activity since its formation on March 24, 2010.

On January 28, 2011, the Company announced that it had cancelled the purchase of
21-Century  and canceled  its offer to purchase the Texas Note.  The purchase of
the assets was conditioned on the Company being able to purchase the Texas Note.
The State of Texas' insistence on additional  repetitive reviews of the proposed
transaction,  which  was  scheduled  for  closing,  resulted  in  the  Company's
inability  to  complete   and  close  the   financing   necessary   for  silicon
manufacturing.  Concurrent with this action, the Company rescinded the 1,000,000
shares  issued in the October 7, 2010 event and  executed its lien on the assets
of 21-Century  Silicon in satisfaction of a note receivable and accrued interest
totaling  approximately  $41,200. Upon foreclosure on said assets, the Company's
management  elected  to take a 100%  impairment  against  the  foreclosed  value
resulting  in  a  charge  to   operations  in  the  first  quarter  of  2011  of
approximately  $41,200.  Any gain, if any, upon the ultimate disposition of said
assets will be recognized at the point of future sale.

On March 7, 2011,  the Company  announced  that it had entered into an Agreement
and  Plan  of  Exchange  with  Surrey  Vacation  Properties,  Inc.  (a  Missouri
corporation) (Seller) to acquire 100% of the issued and outstanding stock of the
Seller.  In the  transaction,  it is  anticipated  that the  Company  will issue
63,283,391 restricted, unregistered shares of its $0.001 par value common stock.
A copy of the Contract  for Sale was filed as an exhibit to a Current  Report on
Form 8-K filed with the SEC on or about March 11, 2011.  On April 26,  2011,  as
reported  on a Current  Report on Form 8-K filed with the SEC on or about  April
28, 2011, the CEO of Surrey Vacation Resorts, Inc. (Surrey) informed the Company
that Surrey would not able to meet a condition of closing of the  acquisition of
Surrey by the Company.  Surrey had been unable to obtain the  necessary  written
approval of the acquisition  transaction  from its lenders and further  informed
the Company that Surrey would be unable to close the  transaction.  Upon receipt
of this information, the Company agreed to terminate the aforementioned contract
to acquire Surrey Vacation Resorts, Inc.

On May 25, 2011,  the Company  announced that it had closed on the purchase of a
Casino Ship located in Freeport,  Texas.  The  acquisition  was purchased by LDC
Collection   Systems,   Inc.,  a  newly-formed   and   wholly-owned   subsidiary
incorporated  under  the Laws of the  State of  Texas.  The  purchase  price was
2,000,000 shares of restricted, unregistered common stock of the Company with an
agreed-upon  valuation of  approximately  $1,750,000.  The Casino ship, known as
"The Texas Star Casino", is a 155-foot ocean going vessel equipped with 250 slot
machines  and  various   table  games.   The  ship  also  has   facilities   for
entertainment,  beverage  service and dining.  The ship was  purchased  from CJP
Entertainment  LLC,  a  Missouri  corporation.  The ship  was  built in 1977 and
updated in 1986.  The ship  previously  operated out of ports located in Georgia
and Florida.

On June 6, 2011,  the Company has also entered  into a Letter of Intent  ("LOI")
with George J. Akmon and Jerry Monday & Associates,  LLC (collectively  referred
to as  "Operators")  to operate  "The Texas Star  Casino"  outside the nine mile
territorial waters of Texas, in international waters, as a casino ship. As it is
the intent to operate  the ship  outside the 9-mile  State of Texas  territorial
limit means that the Company, nor its operators,  will be required to acquire or
hold a gaming license from the State of Texas.

On July 25, 2011,  the Company,  its  wholly-owned  subsidiary,  LDC  Collection
Systems, Inc. and CJP Entertainment LLC, mutually agreed to execute a Repurchase
Agreement  whereby  the May 25,  2011  transaction  was  reversed.  The  Company
retained no rights to own or operate  the cruise ship and no further  action was
taken on the June 6, 2011 LOI to operate said casino ship.

On August 18, 2011,  The X-Change  Corporation  (Company)  entered into an Asset
Purchase Agreement  (Agreement) with Old West Entertainment  Corp. (Old West), a
Nevada corporation,  a privately-owned company which was not affiliated with the
Company.  As part of the Agreement,  the Company  acquired all right,  title and
interest in all of Old West's Operating  Entertainment  Business  (Assets).  The
Assets  included a website,  client base,  capital assets,  hardware,  software,
intellectual property as well as all of Old West's artists, properties, patents,
trademarks and distribution  rights and agreements  relating to Old West's music
and  entertainment  business.  The  Company  would  also  assume  all rights and
obligations under a Management  Consulting Agreement between Old West and Arturo
Molina  Jr.  (Molina),   also  known  in  the  music  business  as  "Frost."  As
consideration  for  this  Agreement,  the  Company  issued  one  million  shares
(1,000,000) of its common stock, in restricted form, to Old West.

As part of this Agreement,  Molina was issued five million shares (5,000,000) of
the Company's common stock for his management  services for a period of one year
and Molina was appointed President and CEO of the Company as well as acting CFO.
The Company also issued five million  shares  (5,000,000) of its common stock in

                                       5
<PAGE>
restricted  form to the Bogat Family  Trust  (Bogat  Trust) on behalf of Raymond
Dabney (Dabney) as consideration  for the management  services Mr. Dabney was to
provide to the Company in operating the music and  entertainment  portion of the
business  for a period of one year.  Neither  Molina,  Dabney or the Bogat Trust
were shareholders of Old West. Old West's sole shareholder, officer and director
is Mark Jordan.  Mr.  Jordan,  Molina and the Bogat Trust were  non-related  and
non-affiliates of the Company prior to this transaction.

On  February  22,  2012,  the  Company  entered  into  a  Repurchase   Agreement
(Repurchase  Agreement) with Old West,  Molina and the Bogat Trust. As a part of
the Repurchase  Agreement,  the Company  transferred  all of the  aforementioned
assets back to Old West in exchange for Old West  returning the shares which the
Company  issued  to it as part  of the  original  Asset  Purchase  Agreement.  A
complete  copy of the  Repurchase  Agreement  was  attached  as an  exhibit to a
Current  Report  on Form 8-K on or about  March 5,  2012 and the  effect  of the
Repurchase Agreement was to make the initial agreement null and void Ab Initio.

EMPLOYEES

The Company currently has no employees. Management of the Company expects to use
consultants,  attorneys and accountants as necessary,  and does not anticipate a
need to engage any full-time  employees until such time that the  aforementioned
business opportunities become successful.

ITEM 1A - RISK FACTORS

Not required.

ITEM 1B - UNCLEARED STAFF COMMENTS

None

ITEM 2 - PROPERTIES

We currently maintain a mailing address at 12655 North Central Expressway, Suite
1000,  Dallas,  Texas 75243. Our telephone number is (972) 386-7350.  Other than
this mailing address,  we do not currently maintain any other office facilities,
and does not anticipate the need for maintaining  office  facilities at any time
in the  foreseeable  future as all of our  officers and  directors  are employed
full-time in other business  ventures.  We pay no rent or other fees for the use
of the mailing  address as these offices are used  virtually  full-time by other
businesses of the Company's controlling stockholder.

It is  likely  that  the  Company  will not  establish  an  office  until it has
completed  a  business  acquisition   transaction  or  otherwise  commences  the
operations of a business activity;  however,  it is not possible to predict what
arrangements will actually be made with respect to future office facilities.

ITEM 3 - LEGAL PROCEEDINGS

"La Jolla Cove  Investors,  Inc.  v. The  X-Change  Corporation  and Does 1-10",
Superior Court of California,  County of San Diego, filed December 8, 2011, Case
37-2011-00102204-CU-CO-CTL.  Plaintiff  "La Jolla Cove  Investors,  Inc." (LJII)
filed a Complaint for Breach of Contract  against the Company  alleging that the
Company failed to comply with the terms and conditions of the 6-1/4% Convertible
Note,  dated August 29, 2007 and the 6-1/4%  Convertible  Note, dated October 9,
2007 and has refused to honor  Conversion  Notices tendered on and subsequent to
July 6, 2011. LJII is requesting an acceleration of the cumulative debt totaling
approximately  $400,838 and  additional  interest of  approximately  $48 per day
after October 1, 2011, plus fees, costs,  expenses and disbursements  associated
with this action.

On April 19, 2012, the Company filed a Cross  Complaint  against LJII alleging a
default by LJII due to LJII's  failure to  exercise  and fund the  contractually
linked  proportionate  number  of  warrants   accompanying   Conversion  Notices
exercised  between October 2008 and January 2011 despite the Company's tender of
demand letters for payment. The Company is requesting approximately $475,000 for
the unfunded mandatory warrant exercise; prejudgment interest at 10%, commencing
March 26, 2010; various injunctive releases and associated costs and fees.

The Company is unable to ascertain the potential outcome of these actions and is
of the opinion that no material impact on the Company's  financial position will
occur.

                                       6
<PAGE>
ITEM 4 - MINE SAFETY DISCLOSURES

None

                                     PART II

ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY,  RELATED STOCKHOLDER MATTERS
         AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is currently quoted on the NASDAQ OTC Bulletin Board, under the
trading  symbol  "XCHC." As of January 12, 2011,  there were  approximately  142
registered holders of record of the common stock. The following table sets forth
the  range of the high  and low bid  prices  per  share of our  common  stock as
reported on www.bigcharts.com  during the last two calendar years for the period
indicated.

                                                        High             Low
                                                        ----             ---
Year ended December 31, 2010
  Quarter ended March 31                               $ 0.184          $ 0.78
  Quarter ended June 30                                $ 0.32           $ 1.58
  Quarter ended September 30                           $ 0.05           $ 1.00
  Quarter ended December 31                            $ 0.441          $ 1.00

Year ended December 31, 2011
  Quarter ended March 31                               $ 0.74           $ 0.27
  Quarter ended June 30                                $ 0.40           $ 0.15
  Quarter ended September 30                           $ 0.20           $ 0.05
  Quarter ended December 31                            $ 0.30           $ 0.04

Year ending December 31, 2012
  Quarter ended March 31                               $ 0.30           $ 0.04

Dividends

We have never paid any cash  dividends on our common stock.  We intend to retain
and use any future earnings for the development and expansion of business and do
not anticipate paying any cash dividends in the foreseeable future.

Recent Sales of Unregistered Securities

We believe that all of the  following  offerings  and sales were exempt from the
registration  requirements  of the  Securities  Act of 1933 under  Section  4(2)
thereunder.

On March 26, 2010, LJII issued a Debenture  Conversion Notice to the Company for
the conversion of $32,000 of the  outstanding  debenture  balance into 3,902,439
shares (approximately 195,122 post-reverse split shares) of the Company's common
stock.  This conversion was completed on April 12, 2010 with the delivery of the
shares to LJII.  As the  conversion  price  was  below  the "fair  value" of the
securities  issued,  the Company  experienced a non-cash charge to operations of
approximately  $57,760  which  was  classified  as  "interest  expense"  in  the
accompanying financial statements.

In September 2010 and December  2010, the Company issued an aggregate  9,797,416
restricted,  unregistered  post-reverse  split  shares to Melissa CR 364 LTD. to
retire a combination  of  approximately  $50,000 on the  aforementioned  line of
credit and  approximately  $146,000 in accumulated  accrued interest on both the
AirGATE and line of credit notes.  As the valuation of the  conversion as stated
in the separate  note  agreements  was below the "fair value" of the  securities
issued, the Company experienced a non-cash charge to operations of approximately
$4,950,000  which was  classified  as  "interest  expense"  in the  accompanying
financial statements.

On  October  7,  2010,  the  Company  issued  1,000,000  shares  of  restricted,
unregistered  post-reverse split shares, valued at approximately  $530,000 which
was  equal  to  the  closing  quotation  of  the  Company's  securities  on  the
transaction date, to 21-Century  Silicon,  Inc. (a Texas corporation) to license
the use of 21-Century's technology and to secure an exclusive right to negotiate
to acquire certain intellectual  property from 21-Century.  On January 28, 2011,
concurrent  with the  abandonment  of the  21-Century  transaction,  the Company
rescinded the October 2010  transaction  where  1,000,000  shares of restricted,
unregistered  common  stock  was  issued  to  license  the  use of  21-Century's
technology  and to secure an exclusive  right to  negotiate  to acquire  certain
intellectual property from 21-Century. Further, concurrent with this action, the
Company executed its lien on the assets pledged by 21-Century in satisfaction of
a note receivable and accrued  interest  totaling  approximately  $41,200.  Upon
foreclosure  on said assets,  the  Company's  management  elected to take a 100%

                                       7
<PAGE>
impairment  against the foreclosed  value resulting in a charge to operations in
the first quarter of 2011 of approximately  $41,200.  Any gain, if any, upon the
ultimate  disposition  of said assets will be  recognized at the point of future
sale.

On January 3, 2011, LJII issued a Debenture Conversion Notice to the Company for
the conversion of $1,000 of the outstanding debenture balance into 21,375 shares
of the Company's common stock.  Additionally,  LJII exercised 10,000 outstanding
warrants to obtain 10,000 shares of the Company's common stock for $10,000 cash.
This conversion was completed on January 5, 2011 with the delivery of the shares
to LJII.  As the  aggregate  conversion  and exercise  price was below the "fair
value" of the securities  issued,  the Company  experienced a non-cash charge to
operations of approximately  $10,962 which was classified as "interest  expense"
in the accompanying financial statements.

In May 2011, the Company issued an aggregate  575,000  restricted,  unregistered
post-reverse  split  shares to Melissa CR 364 LTD.  to retire a  combination  of
approximately  $75,000 on the aforementioned notes and approximately  $40,000 in
accumulated  accrued  interest.  As the valuation of the conversion as stated in
the  separate  note  agreements  was below the  "fair  value" of the  securities
issued, the Company experienced a non-cash charge to operations of approximately
$115,000  which  was  classified  as  "interest  expense"  in  the  accompanying
financial statements.

In July 2011,  in connection  with the  execution of a Letter of Intent  ("LOI")
with George J. Akmon and Jerry Monday & Associates,  LLC (collectively  referred
to as  "Operators")  to operate  "The Texas Star  Casino"  outside the nine mile
territorial  waters of Texas,  in  international  waters,  as a casino ship, the
Company issued 100,000  shares of  restricted,  unregistered  common stock as an
inducement  to execute the LOI.  This  transaction  was valued at  approximately
$25,000 which approximated "fair value" of the Company's  securities on the date
of issuance.

In August 2011, the Company issued an aggregate 12,252,136 shares of restricted,
unregistered common stock to Old West, Molina and the Bogat Trust, as previously
discussed.  Concurrent  with the  rescission  of this  transaction,  the Company
recovered   11,000,000  shares  of  the  12,252,136  shares  originally  issued.
Approximately  1,252,136  shares remained in the possession of Old West,  Molina
and/or the Bogat Trust.  These net 1,252,136 shares  remaining  outstanding were
initially  valued  at an  agreed-upon  value of  approximately  $25,042.  As the
agreed-upon  transaction  valuation  was below the  "fair  value" of the  shares
issued, the Company  experienced an additional  non-cash charge to operations of
approximately  $475,812.  The  aggregate  approximately  $500,854 was charged to
operations as "Loss on rescinded acquisition of Old West Entertainment Corp." in
the accompanying  financial statements to reflect the net economic event related
to these transactions.

In October and November 2011, the Company issued an aggregate  6,800,000  shares
of free-trading  common stock in settlement of approximately  $13,600 of debt on
the  books of Old  West  Entertainment  Corp.  while  Old West was an  operating
component  of the Company and prior to the March 2012  rescission  of the entire
transaction.  As the debt reduction was less than the "fair value" of the shares
issued,  the Company  recognized an additional  non-cash charge to operations of
approximately $1,091,000 was recognized as "Loss on rescinded acquisition of Old
West Entertainment Corp." during the 4th quarter.

Common Stock Warrants

In conjunction with, and as a component of, certain debt issuances,  the Company
has issued an aggregate  607,016  warrants issued and outstanding as of December
31, 2011 with exercise prices between $0.70 and $20.00 per share.

                                                        Number of      Weighted
                                                         Warrant       Average
                                                         Shares         Price
                                                         ------         -----
Balance at January 1, 2010                             15,819,352       $0.63
                                                      ===========       =====
Exercised                                                (320,000)
Cancelled pursuant to 2009 debt cancellation           (2,591,500)
Effect of reverse split                               (11,533,096)
Cancellation of 2007 A & B warrants                      (372,500)
Issue of replacement 2007 A & B warrants                  372,510
                                                      -----------

Balance at December 31, 2010                              607,016       $5.72
                                                      ===========       =====
Issued                                                         --
Exercised                                                 (10,000)
Surrendered at debt cancellation                               --
Expired                                                        --
                                                      -----------

Balance at December 31, 2011                              597,016       $5.72
                                                      ===========       =====

                                       8
<PAGE>
As of December 31, 2011, the warrants break down as follows:

                          # warrants      exercise price
                          ----------      --------------
                            372,510          $    0.70
                             58,825          $    1.40
                             13,300          $    4.00
                             10,000          $    8.00
                              6,768          $   12.00
                             13,613          $   20.00
                            597,016          $    5.72

                          # warrants       expiring in
                          ----------       -----------
                            135,613          2010 (*)
                            424,278          2012
                             37,125          2018
                            -------

                            597,016
                            =======

----------
(*)  The warrants  which  expired in 2010 are an integral  component of the LJII
     financing as previously discussed. See Item 3 - Legal Proceedings.

Repurchases of Equity Securities

We did not purchase any of our equity securities during 2011 and 2010.

Equity Compensation

During  2011 and 2010,  respectively,  we did not issue any shares of our common
stock to consultants.  We may from time to time issue  additional  shares to our
consultants, employees or directors at the discretion of our board of directors.

During  2007,  the  Board of  Directors  approved  and  adopted  the 2007  Stock
Incentive  Plan allowing for stock options to be issued to employees,  directors
and  consultants of up to 6,000,000  shares in the  aggregate.  The Plan was not
presented to nor approved by a vote of the Company's  stockholders  and provides
for the issuance of incentive stock options and non-statutory options for common
stock to the Company's employees,  directors and consultants. The exercise price
of each option may not be less than the trading price of the Company's  stock on
the date of the option grant. The options generally vest over a four year period
and have a maximum term of ten years. Upon the 2008 foreclosure on our operating
subsidiary,  AirGATE,  all outstanding stock options were cancelled.  No options
were  exercised  from their  initial  issuance  through  the  December  31, 2008
effective  disposition of this  subsidiary.  Additionally,  no options have been
granted subsequent to December 31, 2008.

Common Stock

Our authorized  capital stock consists of 37,500,000  shares of $0.001 par value
common stock and  3,750,000  shares of $0.001 par value  preferred  stock.  Each
share of common  stock  entitles a  stockholder  to one vote on all matters upon
which  stockholders  are permitted to vote. No  stockholder  has any  preemptive
right or other  similar  right  to  purchase  or  subscribe  for any  additional
securities  issued by us, and no stockholder has any right to convert the common
stock into other securities. No shares of common stock are subject to redemption
or any sinking fund provisions.  All the outstanding  shares of our common stock
are fully paid and  non-assessable.  Subject to the rights of the holders of the
preferred  stock,  if any,  our  stockholders  of common  stock are  entitled to
dividends  when,  as and if declared by our board from funds  legally  available
therefore  and, upon  liquidation,  to a pro-rata share in any  distribution  to
stockholders. We do not anticipate declaring or paying any cash dividends on our
common stock in the foreseeable future.

Pursuant to our Articles of Incorporation,  our board has the authority, without
further  stockholder  approval,  to provide for the  issuance of up to 3,750,000
shares  of our  preferred  stock  in one or more  series  and to  determine  the
dividend  rights,   conversion  rights,   voting  rights,  rights  in  terms  of
redemption,  liquidation preferences, the number of shares constituting any such
series and the  designation  of such  series.  Our board has the power to afford
preferences,  powers and rights  (including voting rights) to the holders of any
preferred stock  preferences,  such rights and  preferences  being senior to the
rights  of  holders  of common  stock.  No  shares  of our  preferred  stock are
currently outstanding. Although we have no present intention to issue any shares
of preferred  stock,  the issuance of shares of preferred stock, or the issuance
of rights to purchase such shares, may have the effect of delaying, deferring or
preventing a change in control of our company.

                                       9
<PAGE>
Provisions Having A Possible Anti-Takeover Effect

Our Articles of  Incorporation  and Bylaws contain  certain  provisions that are
intended  to  enhance  the   likelihood  of  continuity  and  stability  in  the
composition  of our board  and in the  policies  formulated  by our board and to
discourage  certain  types of  transactions  which  may  involve  an  actual  or
threatened change of our control. Our board is authorized to adopt, alter, amend
and repeal our Bylaws or to adopt new  Bylaws.  In  addition,  our board has the
authority, without further action by our stockholders,  to issue up to 3,750,000
shares  of our  preferred  stock in one or more  series  and to fix the  rights,
preferences,  privileges and restrictions thereof. The issuance of our preferred
stock or  additional  shares of common stock could  adversely  affect the voting
power of the  holders of common  stock and could  have the  effect of  delaying,
deferring or preventing a change in our control.

Preferred Stock

The Company is authorized  to issue up to a total of 3,750,000  shares of $0.001
par value  Preferred  Stock.  The Company's  Board of Directors  has  designated
250,000 shares as "Series A Convertible Preferred Stock".

The Company is under no  obligation  to pay  dividends or to redeem the Series A
Convertible  Preferred Stock. This series of stock is convertible into 10 shares
of Common Stock at the option of the  shareholder or upon automatic  conversion.
In the event of any liquidation,  dissolution or winding-up of the Company,  the
holders of outstanding shares of Series A Preferred shall be entitled to be paid
out of the assets of the Corporation available for distribution to shareholders,
before  any  payment  shall be made to or set aside for  holders  of the  Common
Stock, at an amount of $1 per share.

As of  December  31,  2011 and  2010,  respectively,  there  were no  shares  of
preferred stock issued and outstanding.

Restricted Securities

As of December 31, 2011,  per our stock  transfer  agent,  we had  approximately
17,545,728 shares of common stock which may be considered to meet the definition
and requirements of "restricted  securities" as defined in Rule 144.  Generally,
restricted  securities can be resold under Rule 144 once they have been held for
the required  statutory  period,  provided  that the  securities  satisfies  the
current public information requirements of the Rule.

Transfer Agent

Our independent  stock transfer agent is Signature  Stock  Transfer,  Inc. Their
address is 2220 Coit Road, Suite 480, PMB 317, Plano, Texas 75075. Their contact
numbers  are  (972)  612-4120  for  voice  calls  and  (972)  612-4122  for  fax
transmissions.

Reports to Stockholders

The Company intends to remain compliant with its obligations  under the Exchange
Act and, therefore,  plans to furnish its stockholders with an annual report for
each fiscal year ending December 31 containing  financial  statements audited by
its  registered  independent  public  accounting  firm. In the event the Company
enters  into a business  combination  with  another  company,  it is the present
intention of management to continue  furnishing  annual reports to stockholders.
Additionally, the Company may, in its sole discretion, issue unaudited quarterly
or other interim  reports to its  stockholders  when it deems  appropriate.  The
Company intends to maintain compliance with the periodic reporting  requirements
of the Exchange Act.

ITEM 6 - SELECTED FINANCIAL DATA

Not applicable

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

(1) CAUTION REGARDING FORWARD-LOOKING INFORMATION

Certain  statements  contained  in  this  annual  filing,   including,   without
limitation, statements containing the words "believes", "anticipates", "expects"
and  words  of  similar  import,  constitute  forward-looking  statements.  Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors that may cause the actual results,  performance or achievements of
the Company,  or industry  results,  to be materially  different from any future
results,   performance   or   achievements   expressed   or   implied   by  such
forward-looking statements.

                                       10
<PAGE>
Such factors include, among others, the following:  international,  national and
local general economic and market conditions:  demographic  changes; the ability
of the Company to sustain,  manage or  forecast  its growth;  the ability of the
Company to successfully  make and integrate  acquisitions;  existing  government
regulations  and  changes  in,  or  the  failure  to  comply  with,   government
regulations;  adverse  publicity;  competition;  fluctuations  and difficulty in
forecasting  operating  results;  changes in business  strategy  or  development
plans;  business  disruptions;  the  ability  to attract  and  retain  qualified
personnel; and other factors referenced in this and previous filings.

Given these uncertainties, readers of this Form 10-K and investors are cautioned
not to place undue  reliance  on such  forward-looking  statements.  The Company
disclaims any obligation to update any such factors or to publicly  announce the
result  of any  revisions  to any of the  forward-looking  statements  contained
herein to reflect future events or developments.

(2) RESULTS OF OPERATIONS

The Company had no revenue,  except for nominal interest  income,  for either of
the years ended December 31, 2011 and 2010, respectively.

General and  administrative  expenses  for each of the years ended  December 31,
2011 and 2010 were approximately $111,000 and $127,000,  respectively.  The 2011
and 2010 expenditures relate,  principally,  to the Company's attempts to find a
suitable business combination partner as well as adminstrative costs,  including
professional  and consulting  fees,  related to the maintenance of the corporate
entity and the  Company's  continued  compliance  with the  requirements  of the
Securities Exchange Act of 1934.

The  Company  recognized  aggregate  interest  accruals,  amortization  of  debt
financing  fees and accretion of debt  discounts of  approximately  $223,000 and
$5,176,000  during  each  of  the  years  ended  December  31,  2011  and  2010,
respectively.  The Company's convertible debenture with La Jolla Cove Investors,
Inc. matured in August 2010. This debenture is discussed more fully in the Notes
to our Financial  Statements  contained  elsewhere in this Annual Report on Form
10-K. We  specifically  note that all of the Company's debt is in default due to
the December 2008 foreclosure  action and,  accordingly,  has been classified as
"current" on the  Company's  balance  sheet  regardless  of the stated  maturity
date(s).  As of this filing,  La Jolla Cove  Investors has not made a demand for
payment on the matured debenture.

Management anticipates that future expenditure levels will fluctuate,  either up
or down, as the Company  complies with its periodic  reporting  requirements and
implements the business plan of identifying a suitable  situation for a business
combination transaction.

Earnings  per share for the  respective  years ended  December 31, 2011 and 2010
were  $(0.11)  and  $(0.83)  based on the  weighted-average  shares  issued  and
outstanding at the end of each respective period.

The  Company  does not  expect  to  generate  any  meaningful  revenue  or incur
operating  expenses for purposes  other than  fulfilling  the  obligations  of a
reporting  company  under the  Securities  Exchange Act of 1934 unless and until
such time that the Company completes a business combination transaction.

(4) PLAN OF BUSINESS

During March and April 2012, the Company has placed approximately  100,000 acres
in  eastern  Montana  and  western  North  Dakota  under  lease  for oil and gas
exploration,  subject to the completion of due diligence and the  acquisition of
capital  necessary to perform under the terms of the arrangement.  Our immediate
future plans involve the  development of capital and  commencement of operations
to facilitate the exploration of these properties.

(5) LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2011 and 2010,  respectively,  the Company had a working capital
of approximately $(1,235,000) and $(1,137,000).

Our  current  business  plan  will  require  additional  capital;  however,  our
management  team has  identified  the  potential  future  needs  related  to the
eastern-Montana/western-North  Dakota oil & gas  leases;  however,  has not been
able to predict the  availability  of  additional  capital with any  appropriate
degree of accuracy at this time. However,  there is no assurance that we will be
successful  in  the  development  or  operation  of  the  business  ventures  we
anticipate developing.

The  Company's  continued  existence is  dependent  upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis.  Further, the Company faces considerable risk in its business plan
and a potential  shortfall of funding due to any  inability to raise  capital in
the equity  securities  market.  If no additional  operating capital is received

                                       11
<PAGE>
during the next twelve  months,  the Company  will be forced to rely on existing
cash in the bank and additional  funds loaned by management  and/or  significant
stockholders.

The Company may become dependent upon additional  external sources of financing;
including being dependent upon its management and/or significant stockholders to
provide   sufficient   working  capital  in  excess  of  the  Company's  initial
capitalization to preserve the integrity of the corporate entity.

The Company  anticipates  offering future sales of equity  securities.  However,
there is no assurance that the Company will be able to obtain additional funding
through the sales of additional  equity  securities  or, that such  funding,  if
available, will be obtained on terms favorable to or affordable by the Company.

The Company's  certificate  of  incorporation  authorizes  the issuance of up to
3,750,000  shares of preferred stock and 37,500,000  shares of common stock. The
Company's  ability to issue preferred  stock may limit the Company's  ability to
obtain debt or equity financing, The Company's ability to issue these authorized
but  unissued  securities  may  also  negatively  impact  our  ability  to raise
additional capital through the sale of our debt or equity securities.

The Company's  current  controlling  stockholder  has  maintained  the corporate
status of the Company and has provided all nominal  working  capital  support on
the Company's behalf since the December 2008 foreclosure action.  Because of the
Company's lack of operating assets,  its continuance is fully dependent upon the
majority stockholder's  continuing support. It is the intent of this controlling
stockholder  to continue the funding the nominal  necessary  expenses to sustain
the corporate entity.  However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist. There is
no legal obligation for either management or significant stockholders to provide
additional  future  funding.  Further,  the  Company  is at the  mercy of future
economic trends and business operations for this controlling stockholder to have
the  resources  available  to support  the  Company.  Should this pledge fail to
provide  financing,  the Company has not identified any  alternative  sources of
working capital to support the Company.

In such a restricted cash flow scenario, the Company would be unable to complete
its  business  plan  steps,  and  would,  instead,   delay  all  cash  intensive
activities.  Without  necessary cash flow, the Company may become dormant during
the next twelve months, or until such time as necessary funds could be raised in
the equity securities market.

While the Company is of the opinion that good faith  estimates of the  Company's
ability to secure additional  capital in the future to reach its goals have been
made, there is no guarantee that the Company will receive  sufficient funding to
sustain operations or implement any future business plan steps.

Regardless of whether the  Company's  cash assets prove to be inadequate to meet
the Company's  operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash.

(6) CRITICAL ACCOUNTING POLICIES

Our financial  statements and related public financial  information are based on
the application of accounting principles generally accepted in the United States
(GAAP).  GAAP  requires  the  use  of  estimates;  assumptions,   judgments  and
subjective  interpretations of accounting  principles that have an impact on the
assets,  liabilities,  revenue and expense amounts reported. These estimates can
also affect  supplemental  information  contained  in our  external  disclosures
including information regarding contingencies,  risk and financial condition. We
believe our use of estimates and  underlying  accounting  assumptions  adhere to
GAAP and are consistently and conservatively  applied.  We base our estimates on
historical  experience  and on various other  assumptions  that we believe to be
reasonable under the  circumstances.  Actual results may differ  materially from
these  estimates  under  different  assumptions  or  conditions.  We continue to
monitor  significant  estimates  made during the  preparation  of our  financial
statements.

Our  significant  accounting  policies are summarized in Note D of our financial
statements. While all these significant accounting policies impact our financial
condition  and  results of  operations,  we view  certain of these  policies  as
critical.  Policies  determined to be critical are those  policies that have the
most significant  impact on our financial  statements and require  management to
use a greater degree of judgment and  estimates.  Actual results may differ from
those  estimates.   Our  management   believes  that  given  current  facts  and
circumstances,  it is unlikely that applying any other  reasonable  judgments or
estimate  methodologies  would  cause  effect  on our  consolidated  results  of
operations,  financial  position or liquidity for the periods  presented in this
report.

(7) EFFECT OF CLIMATE CHANGE LEGISLATION

The  Company  currently  has no known or  identified  exposure to any current or
proposed climate change  legislation which could negatively impact the Company's
operations or require capital  expenditures to become  compliant.  Additionally,
any currently proposed or  to-be-proposed-in-the-future  legislation  concerning
climate change  activities,  business  operations  related thereto or a publicly
perceived risk  associated  with climate change could,  potentially,  negatively

                                       12
<PAGE>
impact the Company's efforts to identify an appropriate target company which may
wish to enter into a business combination transaction with the Company.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The carrying amount of cash,  accounts  receivable,  accounts  payable and notes
payable, as applicable,  approximates fair value due to the short term nature of
these items  and/or the current  interest  rates  payable in relation to current
market conditions.

Interest  rate risk is the risk  that the  Company's  earnings  are  subject  to
fluctuations  in interest  rates on either  investments  or on debt and is fully
dependent  upon  the  volatility  of  these  rates.  The  Company  does  not use
derivative instruments to moderate its exposure to interest rate risk, if any.

Financial  risk  is  the  risk  that  the  Company's  earnings  are  subject  to
fluctuations in interest rates or foreign exchange rates and are fully dependent
upon the  volatility  of  these  rates.  The  Company  does  not use  derivative
instruments to moderate its exposure to financial risk, if any.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The required financial statements begin on page F-1 of this document.

ITEM 9 -  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

None.

ITEM 9A - CONTROLS AND PROCEDURES

DISCLOSURE  CONTROLS AND PROCEDURES.  Our management,  under the supervision and
with the participation of our Chief Executive and Financial Officer  (Certifying
Officer),  has  evaluated  the  effectiveness  of our  disclosure  controls  and
procedures as defined in Rules 13a-15  promulgated  under the Exchange Act as of
the end of the period  covered by this Annual  Report.  Disclosure  controls and
procedures  are  controls  and  procedures  designed to ensure that  information
required to be  disclosed in our reports  filed or submitted  under the Exchange
Act is recorded,  processed,  summarized  and  reported  within the time periods
specified  in  the  Commission's  rules  and  forms  and  include  controls  and
procedures  designed to ensure that  information  we are required to disclose in
such reports is  accumulated  and  communicated  to  management,  including  our
Certifying Officer, as appropriate, to allow timely decisions regarding required
disclosure. Based upon that evaluation, our Certifying Officer concluded that as
of such date,  our  disclosure  controls and  procedures  were not  effective to
ensure that the  information  required to be  disclosed  by us in our reports is
recorded,  processed,  summarized and reported within the time periods specified
by the SEC due to a weakness  in our  controls  described  below.  However,  our
Certifying  Officer  believes  that the  financial  statements  included in this
report  fairly  present,  in all material  respects,  our  financial  condition,
results of operations and cash flows for the respective periods presented.

MANAGEMENT'S  ANNUAL  REPORT  ON  INTERNAL  CONTROL  OVER  FINANCIAL  REPORTING.
Management is responsible for  establishing  and maintaining  adequate  internal
control over financial  reporting,  as such term is defined in Rule 13a-15(f) of
the Exchange Act.

Internal control over financial reporting is defined under the Exchange Act as a
process  designed by, or under the  supervision of, our CEO and CFO and effected
by our board of directors, management and other personnel, to provide reasonable
assurance  regarding the reliability of financial  reporting and the preparation
of financial  statements  for external  purposes in  accordance  with  generally
accepted accounting principles and includes those policies and procedures that:

*    Pertain to the maintenance of records that in reasonable  detail accurately
     and fairly reflect the transactions and dispositions of our assets;
*    Provide reasonable assurance that transactions are recorded as necessary to
     permit  preparation  of financial  statements in accordance  with generally
     accepted accounting principles,  and that our receipts and expenditures are
     being made only in accordance  with  authorizations  of our  management and
     directors; and
*    Provide reasonable  assurance  regarding  prevention or timely detection of
     unauthorized acquisition,  use or disposition of our assets that could have
     a material  effect on the  financial  statements.

                                       13
<PAGE>
Because of its inherent  limitation,  internal control over financial  reporting
may not prevent or detect misstatements. Also, projections of any evaluations of
effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in  conditions,  or that the degree of compliance
with the policies and procedures may deteriorate. Accordingly, even an effective
system of internal control over financial reporting will provide only reasonable
assurance with respect to financial statement preparation.

Management's  assessment of the effectiveness of the Company's  internal control
over  financial  reporting is as of the year ended  December  31,  2011.  We are
currently  considered  to be a shell  company in as much as we have no  specific
business plans, no operations,  revenues or employees.  Because we have only one
officer and  director,  the  Company's  internal  controls are deficient for the
following reasons,  (1) there are no entity level controls because there is only
one person serving in the dual capacity of sole officer and sole  director,  (2)
there are no segregation  of duties as that same person  approves,  enters,  and
pays the Company's  bills,  and (3) there is no separate audit  committee.  As a
result,  the Company's  internal  controls have an inherent  weakness  which may
increase the risks of errors in financial reporting under current operations and
accordingly  are  deficient as  evaluated  against the criteria set forth in the
Internal  Control - Integrated  Framework  issued by the committee of Sponsoring
Organizations  of  the  Treadway  Commission.   Based  on  our  evaluation,  our
management  concluded that our internal  controls over financial  reporting were
not effective as of December 31, 2011.

This  Annual  Report does not include an  attestation  report of our  registered
public accounting firm regarding our internal control over financial  reporting,
pursuant to the current appropriate Laws and Regulations.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING. There was no change in our
internal control over financial reporting that occurred during the quarter ended
December  31, 2011 that has  materially  affected,  or is  reasonably  likely to
materially affect, our internal control over financial  reporting which internal
controls  will  remain  deficient  until such time as the  Company  completes  a
business  combination  transaction or  acquisition  of an operating  business at
which  time  management  will  be  able  to  implement  effective  controls  and
procedures.

ITEM 9B - OTHER INFORMATION

Not applicable.

                                    PART III

ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The directors and executive officers serving the Company are as follows:

Name                  Age                Position Held and Tenure
----                  ---                ------------------------
R. Wayne Duke         72          President, Chief Executive Officer, Chief
                                  Financial Officer and Director

The  director  named  above  will  serve  until the next  annual  meeting of the
Company's  stockholders  or  until  any  successors  are duly  elected  and have
qualified.   Directors  will  be  elected  for  one-year  terms  at  the  annual
stockholders meeting.  Officers will hold their positions at the pleasure of the
board of directors,  absent any  employment  agreement,  of which none currently
exists or is contemplated.  There is no arrangement or understanding between any
of the  directors  or officers of the Company and any other  person  pursuant to
which any director or officer was or is to be selected as a director or officer,
and there is no arrangement,  plan or understanding as to whether non-management
stockholders  will exercise their voting rights to continue to elect the current
directors to the Company's board. There are also no arrangements,  agreements or
understandings  between   non-management   stockholders  that  may  directly  or
indirectly participate in or influence the management of the Company's affairs.

The sole director and officer will devote his time to the  Company's  affairs on
an as needed basis. There are no agreements or understandings for the officer or
director  to resign at the  request of another  person,  and he is not acting on
behalf of, and will not act at the direction of, any other person.

BIOGRAPHICAL INFORMATION

R. Wayne Duke  became our  Chairman,  President,  Chief  Financial  Officer  and
Secretary in March 2012 and is responsible for the Company's overall operations.
Mr. Duke was formerly our Chairman,  President,  acting Chief Financial  Officer
and Secretary during parts of 2008 and 2009.

                                       14
<PAGE>
Mr. Duke is the sole officer and director of K&D Equity Investments,  Inc. He is
also the Chief  Executive  Officer of  USMetrics,  Inc. a parts  supplier to the
Maintenance,  Repair  and  Overhaul  industry,  and  the  Chairman  and  CEO  of
Industrial Clearinghouse,  Inc., an MRO excess inventory clearinghouse.  Through
February  2008,  Mr. Duke was an officer or director of Brighton Oil & Gas, Inc.
(currently  Cannabis  Science,  Inc.  (OTCBB:  CBIS)).  Mr.  Duke holds a BBA in
Finance and a Masters Degree in Business from The University of North Texas.

INDEMNIFICATION OF OFFICERS AND DIRECTORS.

We have the authority under the Nevada General  Corporation Law to indemnify our
directors  and officers to the extent  provided for in such  statute.  Set forth
below is a discussion of Nevada law regarding  indemnification  which we believe
discloses  the  material  aspects  of such law on this  subject.  The Nevada law
provides,  in part,  that a  corporation  may indemnify a director or officer or
other  person  who was,  is or is  threatened  to be made a named  defendant  or
respondent  in a proceeding  because such person is or was a director,  officer,
employee or agent of the corporation, if it is determined that such person:

     *    conducted himself in good faith;
     *    reasonably  believed,  in the case of conduct in his official capacity
          as a director or officer of the  corporation,  that his conduct was in
          the  corporation's  best  interest  and, in all other cases,  that his
          conduct was at least not opposed to the corporation's  best interests;
          and
     *    in the case of any criminal  proceeding,  had no  reasonable  cause to
          believe that his conduct was unlawful.

A  corporation  may  indemnify a person under the Nevada law against  judgments,
penalties,  including excise and similar taxes, fines, settlement,  unreasonable
expenses actually  incurred by the person in connection with the proceeding.  If
the person is found  liable to the  corporation  or is found liable on the basis
that personal benefit was improperly received by the person, the indemnification
is limited to reasonable  expenses actually incurred by the person in connection
with the proceeding, and shall not be made in respect of any proceeding in which
the person shall have been found liable for willful or intentional misconduct in
the performance of his duty to the corporation.  The corporation may also pay or
reimburse  expenses  incurred by a person in connection  with his  appearance as
witness or other  participation in a proceeding at a time when he is not a named
defendant or respondent in the proceeding.

Our  Articles of  Incorporation  provides  that none of our  directors  shall be
personally  liable to us or our  stockholders for monetary damages for an act or
omission in such directors' capacity as a director;  provided, however, that the
liability  of such  director is not limited to the extent that such  director is
found  liable  for (a) a breach of the  directors'  duty of loyalty to us or our
stockholders, (b) an act or omission not in good faith that constitutes a breach
of duty of the director to us or an act or omission  that  involves  intentional
misconduct or a knowing  violation of the law, (c) a transaction  from which the
director received an improper benefit,  whether or not the benefit resulted from
an action  taken  within the scope of the  director's  office,  or (d) an act or
omission for which the  liability of the  director is expressly  provided  under
Nevada  law.   Limitations  on  liability   provided  for  in  our  Articles  of
Incorporation do not restrict the  availability of non-monetary  remedies and do
not affect a director's  responsibility under any other law, such as the federal
securities laws or state or federal environmental laws.

We believe that these  provisions  will assist us in  attracting  and  retaining
qualified  individuals  to  serve  as  executive  officers  and  directors.  The
inclusion  of these  provisions  in our Articles of  Incorporation  may have the
effect of reducing a likelihood of derivative  litigation  against our directors
and may discourage or deter  stockholders  or management from bringing a lawsuit
against  directors for breach of their duty of case, even though such an action,
if successful, might otherwise have benefitted us or our stockholders.

Our Bylaws  provide that we will  indemnify our directors to the fullest  extent
provided  by Nevada  General  Corporation  Law and we may,  if and to the extent
authorized  by our board of  directors,  so  indemnify  our  officers  and other
persons  whom we have  the  power to  indemnify  against  liability,  reasonable
expense or other matters.

Insofar  as  indemnification  for  liabilities  arising  under  the  Act  may be
permitted to our directors,  officers and  controlling  persons  pursuant to the
foregoing provisions,  or otherwise, we have been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Act  and  is,  therefore,   unenforceable.   In  the  event  that  a  claim  for
indemnification against such liabilities is asserted by such director,  officer,
or controlling  person in connection with the securities  being  registered,  we
will  (unless in the  opinion  of our  counsel  the  matter has been  settled by
controlling  precedent)  submit  to a  court  of  appropriate  jurisdiction  the
question  whether  such  indemnification  by  it is  against  public  policy  as
expressed in the Securities  Act and will be governed by the final  adjudication
of such issue.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires our executive  officers and directors
and persons who own more than 10% of our common stock to file reports  regarding
ownership of and transactions in our securities with the Securities and Exchange

                                       15
<PAGE>
Commissioner and to provide us with copies of those filings. Based solely on our
inquiries   and  absence  of  any  copies   received  by  us  and/or  a  written
representation from certain reporting persons, we believe that during the fiscal
year ended  December 31, 2011 that all eligible  persons were not in  compliance
with the requirements of Section 16(a).

CONFLICTS OF INTEREST

Our officers and directors are currently  involved in other  full-time  ventures
and, accordingly, at the present time, will not devote more than a small portion
of his time to the affairs of the Company. There will be occasions when the time
requirements  of the  Company's  business may  conflict  with the demands of the
officer's other business and investment  activities.  Such conflicts may require
that the Company attempt to employ additional  personnel.  There is no assurance
that the services of such persons will be available or that they can be obtained
upon terms favorable to the Company.

INVOLVEMENT ON CERTAIN MATERIAL LEGAL PROCEEDINGS DURING THE PAST FIVE (5) YEARS

     (1)  No director,  officer,  significant  employee or  consultant  has been
          convicted in a criminal proceeding, exclusive of traffic violations or
          is subject to any pending criminal proceeding.
     (2)  No bankruptcy  petitions have been filed by or against any business or
          property of any director, officer,  significant employee or consultant
          of the Company nor has any  bankruptcy  petition  been filed against a
          partnership or business  association  where these persons were general
          partners or executive officers.
     (3)  No director,  officer,  significant  employee or  consultant  has been
          permanently or temporarily  enjoined,  barred,  suspended or otherwise
          limited  from  involvement  in any  type of  business,  securities  or
          banking activities.
     (4)  No director,  officer or  significant  employee has been  convicted of
          violating a federal or state securities or commodities law.

ITEM 11 - EXECUTIVE COMPENSATION

The current  management and oversight of the Company requires less than four (4)
hours per month.  As the Company's sole officer and director is engaged in other
full-time  income producing  activities,  the Company's sole officer or director
has  not  received  any  compensation  from  the  Company.  In  future  periods,
subsequent  to the  consummation  of a  business  combination  transaction,  the
Company  anticipates  that it will pay  compensation  to its  officer(s)  and/or
director(s). See Certain Relationships and Related Transactions.

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE
                                                                                   Change in
                                                                                    Pension
                                                                                   Value and
                                                                     Non-Equity   Non-qualified
                                                                     Incentive     Deferred        All
 Name and                                                              Plan         Compen-       Other
 Principal                                      Stock       Option    Compen-       sation       Compen-
 Position       Year   Salary($)    Bonus($)   Awards($)   Awards($)  sation($)    Earnings($)   sation($)  Totals($)
 --------       ----   ---------    --------   ---------   ---------  ---------    -----------   ---------  ---------
<S>             <C>       <C>         <C>          <C>        <C>        <C>           <C>         <C>        <C>
Arturo Molina   2011   $    -0-     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $    -0-
Former CEO

Haviland Wright 2011   $    -0-     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $    -0-
Former CEO      2010   $    -0-     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $    -0-
                2009   $    -0-     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $    -0-

R. Wayne Duke   2009   $    -0-     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $    -0-
CEO
</TABLE>

                                       16
<PAGE>
As of December 31, 2011, the Company has no other Executive  Compensation issues
which would require the inclusion of other mandated table disclosures.

ITEM 12 - SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

The following table sets forth, as of the date of this Annual Report, the number
of  shares  of  Common  Stock  owned of record  and  beneficially  by  executive
officers,  directors and persons who hold 5% or more of the  outstanding  Common
Stock  of the  Company.  Also  included  are the  shares  held by all  executive
officers and directors as a group.

<TABLE>
<CAPTION>
                                       Number of shares      Number of shares     Beneficial        Percent
     Name and address                   directly owned       indirectly owned     ownership(1)     of class(2)
     ----------------                   --------------       ----------------     -----------      ----------
<S>                                     <C>                 <C>                  <C>             <C>
Melissa CR 364 LTD (3)                   17,495,728                --             17,495,728         42.09%
Deutsche Holdings, Ltd. (4)               2,465,894                --              2,465,894          5.93%
South Beach Live, Inc. (3)                   50,000                --                 50,000           .12%
Officers and Directors as a group (5)            --                --                     --          0.00%
</TABLE>

----------
(1)  On April  19,  2012,  there  were  41,564,155  shares of our  common  stock
     outstanding and no shares of preferred stock issued and outstanding.  Under
     applicable  SEC  rules,  a person is  deemed  the  "beneficial  owner" of a
     security  with regard to which the person  directly or  indirectly,  has or
     shares (a) the voting power, which includes the power to vote or direct the
     voting of the security,  or (b) the  investment  power,  which includes the
     power to dispose, or direct the disposition,  of the security, in each case
     irrespective of the person's economic  interest in the security.  Under SEC
     rules, a person is deemed to beneficially  own securities  which the person
     has the right to acquire  within 60 days through the exercise of any option
     or warrant or through the conversion of another security.
(2)  In  determining  the percent of voting stock owned by a person on April 19,
     2012 (a) the numerator is the number of shares of common stock beneficially
     owned by the person, including shares the beneficial ownership of which may
     be  acquired  within 60 days upon the  exercise  of options or  warrants or
     conversion of convertible securities,  and (b) the denominator is the total
     of (i) the 41,564,155 shares of common stock outstanding on April 19, 2012,
     and (ii) any  shares of common  stock  which  the  person  has the right to
     acquire  within  60 days  upon the  exercise  of  options  or  warrants  or
     conversion of convertible  securities  (approximately 135,603 shares on the
     exercise of the LaJolla  outstanding  warrants and approximately  5,704,500
     shares to be issued if there was total conversion of the LaJolla  debenture
     at January 12, 2011,  the date of the last debenture  conversion  notice) -
     approximately  5,840,103  beneficial  shares in total.  Given the  existing
     litigation, it is currently uncertain on the ultimate ability of LaJolla to
     convert  or the  Company's  obligation  to accept  any  conversion  notice.
     Accordingly,  neither the  numerator  nor the  denominator  includes the La
     Jolla  shares  which may be issued  upon the  exercise  of any  options  or
     warrants or the conversion of any other convertible securities in existence
     as of the date of this filing.
(3)  The contact  address  for the listed  stockholder  is 12655  North  Central
     Expressway, Suite 1000, Dallas, Texas 75243.
(4)  The contact address for Deutsche  Holdings,  Ltd. is Shirley St., P. O. Box
     N-3950, Nassau, Bahamas.
(5)  Our  current  sole  officer  and  director  does not own any of our  equity
     securities.

CHANGES IN CONTROL

There are currently no  arrangements  which may result in a change in control of
the Company.

ITEM  13  -  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS,   AND  DIRECTOR
             INDEPENDENCE

There are no relationships or transactions  between us and any of our directors,
officers and principal stockholders.

We currently maintain a mailing address at 12655 North Central Expressway, Suite
1000,  Dallas,  Texas 75243. Our telephone number is (972) 386-7350.  Other than
this mailing address,  we do not currently maintain any other office facilities,
and does not anticipate the need for maintaining  office  facilities at any time
in the  foreseeable  future as all of our  officers and  directors  are employed
full-time in other business  ventures.  We pay no rent or other fees for the use
of the mailing  address as these offices are used  virtually  full-time by other
businesses of the Company's controlling stockholder.

                                       17
<PAGE>
DIRECTOR INDEPENDENCE

Pursuant to the Company's  current  structure of having a sole director,  who is
also the Company's sole officer and controlling shareholder,  the Company has no
independent  directors,  as  defined  in  Rule  4200  (a)  (15)  of  the  NASDAQ
Marketplace Rules.

ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Company paid or accrued the  following  fees in each of the prior two fiscal
years to its principal accountant, S. W. Hatfield, CPA:

                                                   Year ended       Year ended
                                                   December 31,     December 31,
                                                      2011              2010
                                                    --------          --------
1 Audit fees                                        $ 26,610          $ 27,138
1 Audit-related fees                                      --                --
2 Tax fees                                                --                --
3 All other fees                                          --                --
                                                    --------          --------

Totals                                              $ 26,610          $ 27,138
                                                    ========          ========

1.   Audit fees consist of amounts billed for professional services rendered for
     the audits of our financial statements, reviews of our interim consolidated
     financial  statements included in quarterly reports,  services performed in
     connection  with filings  with the  Securities  & Exchange  Commission  and
     related comfort letters and other services that are normally provided by S.
     W. Hatfield,  CPA, our current  independent  auditors,  in connection  with
     statutory and regulatory filings or engagements.
2.   Audit  Related  fees  consist of fees  billed  for  assurance  and  related
     services by our principal accountant that are related to the performance of
     the audit or review of our financial  statements and are not reported under
     Audit Fees.
3.   Tax  fees  consist  of  fees  billed  for  professional  services  for  tax
     compliance,  tax advice and tax planning. These services include assistance
     regarding  federal,  state and local tax  compliance  and  consultation  in
     connection with various transactions and acquisitions.

We have considered whether the provision of any non-audit  services,  currently,
in the past or in the future,  is  compatible  with either S. W.  Hatfield,  CPA
maintaining  their  respective  independence  and  have  determined  that  these
services do not compromise their independence.

Financial Information System Design and Implementation:  S. W. Hatfield, CPA did
not charge the  Company any fees for  financial  information  system  design and
implementation fees.

The  Company  has no  formal  audit  committee.  However,  the  entire  Board of
Directors (Board) is the Company's  defacto audit committee.  In discharging its
oversight  responsibility  as to the audit process,  the Board obtained from the
independent  auditors a formal written  statement  describing all  relationships
between  the  auditors  and  the  Company  that  might  bear  on  the  auditors'
independence as required by the appropriate Professional Standards issued by the
Public Company  Accounting  Oversight  Board,  the U. S. Securities and Exchange
Commission and/or the American  Institute of Certified Public  Accountants.  The
Board  discussed  with the  auditors  any  relationships  that may impact  their
objectivity  and  independence,  including  fees  for  non-audit  services,  and
satisfied itself as to the auditors' independence. The Board also discussed with
management,  the internal auditors and the independent  auditors the quality and
adequacy of the Company's internal controls.

The Company's  principal  accountants,  S. W. Hatfield,  CPA, did not engage any
other  persons  or  firms  other  than  the  principal  accountant's  full-time,
permanent employees.

ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES

21.1     List of subsidiaries
31.1     Certification  of Chief Executive and Financial  Officer Pursuant to 18
         U.S.C.  Section  1350  as  Adopted  Pursuant  to  Section  302  of  the
         Sarbanes-Oxley Act of 2002.
32.1     Certification  of Chief Executive and Financial  Officer Pursuant to 18
         U.S.C.  Section  1350  as  Adopted  Pursuant  to  Section  302  of  the
         Sarbanes-Oxley Act of 2002.

                    (Financial Statements begin on next page)

                                       18
<PAGE>
                            THE X-CHANGE CORPORATION

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                            PAGE
                                                                            ----

REPORT OF REGISTERED INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM            F-2

CONSOLIDATED FINANCIAL STATEMENTS
  Consolidated Balance Sheets as of December 31, 2011 and 2010               F-3

  Consolidated Statements of Operations and Comprehensive Loss for the
   years ended December 31, 2011 and 2010                                    F-4

  Consolidated Statement of Changes in Stockholders' Equity (Deficit) for
   the years ended December 31, 2011 and 2010                                F-5

  Consolidated Statements of Cash Flows for the years ended
   December 31, 2011 and 2010                                                F-6

  Notes to Consolidated Financial Statements                                 F-7

                                      F-1
<PAGE>
        REPORT OF REGISTERED INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
The X-Change Corporation

We have audited the  accompanying  consolidated  balance  sheets of The X-Change
Corporation  (a Nevada  corporation)  as of  December  31, 2011 and 2010 and the
related   consolidated   statements  of  operations  and   comprehensive   loss,
consolidated   statement  of  changes  in  stockholders'  equity  (deficit)  and
consolidated  statements of cash flows for each of the years ended  December 31,
2011 and 2010,  respectively.  These consolidated  financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated financial statements are free of material misstatement. The Company
is not  required  to  have,  nor were we  engaged  to  perform,  an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the  effectiveness  of the Company's  internal  control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

The consolidated financial statements referred to above, in our opinion, present
fairly, in all material  respects,  the consolidated  financial  position of The
X-Change  Corporation  as of  December  31,  2011 and 2010 and the  consolidated
results of its  operations  and cash flows for each of the years ended  December
31, 2011 and 2010, in conformity with accounting  principles  generally accepted
in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note C to the
consolidated financial statements,  the Company has no operations or significant
assets and is dependent  upon  significant  stockholders  to provide  sufficient
working  capital to  maintain  the  integrity  of the  corporate  entity.  These
circumstances  create  substantial doubt about the Company's ability to continue
as a going  concern and  Management's  plans in regard to these matters are also
described in Note C. The  consolidated  financial  statements do not contain any
adjustments that might result from the outcome of these uncertainties.


                                            /s/ S. W. Hatfield, CPA
                                            ------------------------------------
                                            S.W. HATFIELD, CPA
Dallas, Texas
April 30, 2012

                                      F-2
<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2011 and 2010

<TABLE>
<CAPTION>
                                                                            December 31,           December 31,
                                                                                2011                   2010
                                                                            ------------           ------------
<S>                                                                         <C>                    <C>
                                     ASSETS

CURRENT ASSETS
  Cash on hand and in bank                                                  $         --           $         --
  Note receivable                                                                     --                 40,714
  Interest receivable                                                                 --                    546
                                                                            ------------           ------------
      TOTAL CURRENT ASSETS                                                            --                 41,260
                                                                            ------------           ------------
OTHER ASSETS
  License agreement                                                                   --                530,000
  Prepaid debt financing fees, net of accumulated
   amortization of approximately $29,333, respectively                                --                     --
                                                                            ------------           ------------
      TOTAL OTHER ASSETS                                                              --                530,000
                                                                            ------------           ------------

      TOTAL ASSETS                                                          $         --           $    571,260
                                                                            ============           ============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
  Convertible debenture payable, net of unamortized discount                $    285,225           $    286,225
  Notes payable to shareholder                                                   829,598                834,490
  Accounts payable - trade                                                        13,704                  4,570
  Accrued interest payable                                                       106,632                 50,072
                                                                            ------------           ------------
      TOTAL CURRENT LIABILITIES                                                1,235,159              1,178,357
                                                                            ------------           ------------
      TOTAL LIABILITIES                                                        1,235,159              1,178,357
                                                                            ------------           ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
  Preferred stock - $0.001 par value. 3,750,000 shares authorized
   none issued and outstanding                                                        --                     --
  Common stock - $0.001 par value. 37,500,000 shares authorized
   24,068,427 and 16,309,916 shares issued and outstanding                        24,068                 16,310
  Additional paid-in capital                                                  24,924,147             23,579,289
  Accumulated deficit                                                        (26,183,374)           (24,202,696)
                                                                            ------------           ------------
      TOTAL STOCKHOLDERS' DEFICIT                                             (1,235,159)              (607,097)
                                                                            ------------           ------------

      TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                           $    571,260           $    571,260
                                                                            ============           ============
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                      F-3
<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                     Years ended December 31, 2011 and 2010

<TABLE>
<CAPTION>
                                                                           Year ended             Year ended
                                                                           December 31,           December 31,
                                                                               2011                   2010
                                                                           ------------           ------------
<S>                                                                        <C>                    <C>
REVENUES - net of returns and allowances                                   $         --           $         --
COST OF SALES                                                                        --                     --
                                                                           ------------           ------------
GROSS PROFIT                                                                         --                     --
                                                                           ------------           ------------
OPERATING EXPENSES
  General and administrative expenses                                           111,242                127,417
                                                                           ------------           ------------
TOTAL OPERATING EXPENSES                                                        111,242                127,417
                                                                           ------------           ------------
LOSS FROM OPERATIONS                                                           (111,242)              (127,417)

OTHER INCOME (EXPENSE)
  Interest income                                                                    --                    546
  Interest expense                                                             (222,522)            (5,100,478)
  Amortization of financing fees and note discounts                                  --                (76,694)
  Loss on rescinded acquisition of Old West Entertainment Corp.              (1,605,654)                    --
  Impairment of non-operating assets acquired in note foreclosure               (41,260)                    --
                                                                           ------------           ------------
TOTAL OTHER INCOME (EXPENSE)                                                 (1,869,436)            (5,176,626)
                                                                           ------------           ------------
LOSS FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES                       (1,980,678)            (5,304,043)

PROVISION FOR INCOME TAXES                                                           --                     --
                                                                           ------------           ------------
LOSS FROM OPERATIONS                                                         (1,980,678)            (5,304,043)

OTHER COMPREHENSIVE INCOME                                                           --                     --
                                                                           ------------           ------------

COMPREHENSIVE LOSS                                                         $ (1,980,678)          $ (5,304,043)
                                                                           ============           ============
Net loss per weighted-average share of common stock outstanding,
 calculated on Net Loss - basic and fully diluted                          $      (0.11)          $      (0.83)
                                                                           ============           ============

Weighted-average number of shares of common stock outstanding                17,541,720              6,403,235
                                                                           ============           ============
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                      F-4
<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
                     Years ended December 31, 2011 and 2010

<TABLE>
<CAPTION>
                                                Common Stock        Additional
                                           ---------------------      Paid-in        Accumulated
                                           Shares         Amount      Capital         Deficit           Total
                                           ------         ------      -------         -------           -----
<S>                                        <C>            <C>         <C>             <C>               <C>
BALANCES AT JANUARY 1, 2010                5,317,378     $  5,317    $17,830,580    $(18,898,653)    $(1,062,756)

Common stock issued for
  Debenture conversion                       195,122          195         31,805              --          32,000
  Effect of issuance at less than
   "fair value"                                   --           --         57,756              --          57,756
  Payment of note principal and
   accrued interest                        9,797,416        9,798        186,150              --         195,948
  Effect of issuance at less than
   "fair value"                                   --           --      4,943,998              --       4,943,998
  Acquisition of License Agreement         1,000,000        1,000        529,000              --         530,000

Replacement and  repricing of 2007
 A & B stock  warrants  issued in
  conjunction with a private placement
  sale of common stock                            --           --        298,000              --         298,000
 Less cost of raising capital                     --           --       (298,000)             --        (298,000)

Net loss for the year                             --           --             --      (5,304,043)     (5,304,043)
                                         -----------     --------    -----------    ------------     -----------
BALANCES AT DECEMBER 31, 2011             16,609,916       16,310     23,579,289     (24,202,696)       (607,097)

Rescission of License Agreement           (1,000,000)      (1,000)      (529,000)             --        (530,000)

Common stock issued for
  Debenture conversion and
   exercise of warrant                        31,375           31         10,969              --          11,000
  Effect of issuance at
   less than "fair value"                         --           --         10,963              --          10,963
  Debt conversion                            575,000           57        114,943              --         115,000
  Effect of issuance at
   less than "fair value"                         --           --        115,000              --         115,000
  Consulting fees                            100,000          100         24,900              --          25,000

Acquisition of Old West
  Entertainment Corp.                     12,252,136       12,252         42,791              --          55,053
  Recovery of shares upon
   rescission of transaction             (11,000,000)     (11,000)       (19,000)             --         (30,000)
  Effect of issuance at
   less than "fair value"                         --           --        475,812              --         475,812
  Settlement of Old West
   Entertainment Corp. debt                6,800,000        6,800          6,800              --          13,600
  Effect of issuance at
   less than "fair value"                         --           --      1,091,000              --       1,091,000

Net loss for the year                             --           --             --      (1,980,678)     (1,980,678)
                                         -----------     --------    -----------    ------------     -----------

BALANCES AT DECEMBER 31, 2010             16,309,916     $ 16,310    $23,579,289    $(26,183,374)    $(1,235,139)
                                         ===========     ========    ===========    ============     ============
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                      F-5
<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Years ended December 31, 2011 and 2010

<TABLE>
<CAPTION>
                                                                                 Year ended             Year ended
                                                                                December 31,           December 31,
                                                                                    2011                   2010
                                                                                ------------           ------------
<S>                                                                             <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss for the year                                                         $ (1,980,678)          $ (5,304,043)
  Adjustments to reconcile net loss to net cash
   provided by operating activities
     Depreciation and amortization                                                        --                 76,694
     Effect of issuance of common stock at less than "fair value"                  1,692,775              5,001,754
     Loss on rescinded acquisition of Old West Entertainment Corp.                    38,841                     --
     Impairment of non-operating assets acquired in note foreclosure                  41,260                     --
     Expenses paid with common stock                                                  25,000                     --
     Interest expense capitalized as principal                                            --                     --
     Interest expense paid with common stock                                              --                    568
  (Increase) Decrease in
     Interest receivable                                                                  --                   (546)
  Increase (Decrease) in
     Accounts payable - trade                                                          9,134                  3,325
     Accrued interest payable                                                         96,560                 98,724
                                                                                ------------           ------------
           NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                       (77,108)              (124,092)
                                                                                ------------           ------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Cash advanced on note receivable                                                        --                (40,714)
                                                                                ------------           ------------
           NET CASH USED IN INVESTING ACTIVITIES                                          --                (40,714)
                                                                                ------------           ------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Cash received on exercise of warrant                                                10,000                     --
  Cash received on related party notes payable                                        67,108                163,726
                                                                                ------------           ------------
           NET CASH USED IN FINANCING ACTIVITIES                                      77,108                163,726
                                                                                ------------           ------------
INCREASE (DECREASE) IN CASH                                                               --                 (1,080)
Cash at beginning of period                                                               --                  1,080
                                                                                ------------           ------------

CASH AT END OF PERIOD                                                           $         --           $         --
                                                                                ============           ============
SUPPLEMENTAL DISCLOSURE OF INTEREST AND INCOME TAXES PAID
  Interest paid for the period                                                  $         --           $         --
                                                                                ============           ============
  Income taxes paid for the period                                              $         --           $         --
                                                                                ============           ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
  Convertible debenture converted to common stock                               $      1,000           $     32,000
                                                                                ============           ============
  Note payable and accrued interest payable to related party converted
   to common stock                                                              $    115,000           $    195,948
                                                                                ============           ============
  Common stock issued for license agreement                                     $         --           $    530,000
                                                                                ============           ============
  Common Stock returned with cancellation of license agreement                  $   (530,000)          $         --
                                                                                ============           ============
  Conversion of Debenture Payable into Common Stock                             $      1,000           $         --
                                                                                ============           ============
  Repayment of Note Payable to Stockholder with Common Stock                    $     75,000           $         --
                                                                                ============           ============
  Payment of Accrued Interest Payable to Stockholder with Common Stock          $     40,000           $         --
                                                                                ============           ============
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                      F-6
<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2011 and 2010


NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS

The X-Change Corporation  (Company) was incorporated under the laws of the State
of Delaware on February 5, 1969 and changed its corporate  domicile to the State
of Nevada on October 4, 2000. We were originally organized to seek merger and/or
acquisition  candidates and engaged in various transactions since our inception.
As of December 31, 2008,  the Company has disposed of all  operating  assets and
operating activities.

In March 2010, the Company formed the wholly-owned subsidiaries - Caballo Blanco
Communications,  Ltd. and Commerce Services,  Inc. - as Colorado corporations to
conduct operations related to the various proposed acquisitions. On December 27,
2010,  the Company  changed the  corporate  name of Commerce  Services,  Inc. to
PolySilicon,  Inc. to conduct the business activities related to a then proposed
acquisition.  There  has  been no  economic  activity  conducted  within  either
subsidiary since their formation.

Between March 2010 and October 2010, the Company announced and abandoned several
proposed acquisitions.  On October 7, 2010, the Company announced that it signed
an  agreement  in  principle  to  acquire  21-Century  Silicon,  Inc.,  based in
Richardson, Texas (21-Century).  The terms of the acquisition was anticipated to
involve a change in control of the Company and the appointment of new directors.
Concurrent with the execution of the agreement in principle,  the Company issued
1,000,000   shares  of   restricted,   unregistered   common  stock  to  license
21-Century's technology and to secure an exclusive right to negotiate to acquire
certain intellectual property. The closing of the acquisition was subject to the
completion of all  appropriate  due diligence.  On November 8, 2010,  21-Century
executed a note payable to the Company in the amount of  approximately  $28,500,
bearing  interest at 10.0% for working  capital  advances made by the Company on
21-Century's behalf. On January 17, 2011, the Company announced that through its
wholly-owned subsidiary,  PolySilicon, Inc, it had completed the purchase of the
intangible  assets  of  21-Century,  subject  to  an  agreement  to  purchase  a
$3,500,000  note payable owed to the State of Texas (Texas Note) by  21-Century.
On January 28, 2011, the Company announced that it had cancelled the purchase of
21-Century  and canceled  its offer to purchase the Texas Note.  The purchase of
the assets was conditioned on the Company being able to purchase the Texas Note.
The State of Texas' insistence on additional  repetitive reviews of the proposed
transaction,  which  was  scheduled  for  closing,  resulted  in  the  Company's
inability  to  complete   and  close  the   financing   necessary   for  silicon
manufacturing.  Concurrent with this action, the Company rescinded the 1,000,000
shares  issued in the October 7, 2010 event and  executed its lien on the assets
of 21-Century  Silicon in satisfaction of a note receivable and accrued interest
totaling  approximately  $41,200. Upon foreclosure on said assets, the Company's
management  elected  to take a 100%  impairment  against  the  foreclosed  value
resulting  in  a  charge  to   operations  in  the  first  quarter  of  2011  of
approximately  $41,200.  Any gain, if any, upon the ultimate disposition of said
assets will be recognized at the point of future sale.

On March 7, 2011,  the Company  announced  that it had entered into an Agreement
and  Plan  of  Exchange  with  Surrey  Vacation  Properties,  Inc.  (a  Missouri
corporation) (Seller) to acquire 100% of the issued and outstanding stock of the
Seller.  In the  transaction,  it is  anticipated  that the  Company  will issue
63,283,391 restricted, unregistered shares of its $0.001 par value common stock.
A copy of the Contract  for Sale was filed as an exhibit to a Current  Report on
Form 8-K filed with the SEC on or about March 11, 2011.  On April 26,  2011,  as
reported  on a Current  Report on Form 8-K filed with the SEC on or about  April
28, 2011, the CEO of Surrey Vacation Resorts, Inc. (Surrey) informed the Company
that Surrey would not able to meet a condition of closing of the  acquisition of
Surrey by the Company.  Surrey had been unable to obtain the  necessary  written
approval of the acquisition  transaction  from its lenders and further  informed
the Company that Surrey would be unable to close the  transaction.  Upon receipt
of this information, the Company agreed to terminate the aforementioned contract
to acquire Surrey Vacation Resorts, Inc.

On May 25, 2011,  the Company  announced that it had closed on the purchase of a
Casino Ship located in Freeport,  Texas.  The  acquisition  was purchased by LDC
Collection   Systems,   Inc.,  a  newly-formed   and   wholly-owned   subsidiary
incorporated  under  the Laws of the  State of  Texas.  The  purchase  price was
2,000,000 shares of restricted, unregistered common stock of the Company with an
agreed-upon  valuation of  approximately  $1,750,000.  The Casino ship, known as
"The Texas Star Casino", is a 155-foot ocean going vessel equipped with 250 slot
machines  and  various   table  games.   The  ship  also  has   facilities   for
entertainment,  beverage  service and dining.  The ship was  purchased  from CJP
Entertainment  LLC,  a  Missouri  corporation.  The ship  was  built in 1977 and
updated in 1986.  The ship  previously  operated out of ports located in Georgia
and Florida.

                                      F-7
<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2011 and 2010


NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS

On June 6, 2011,  the Company has also entered  into a Letter of Intent  ("LOI")
with George J. Akmon and Jerry Monday & Associates,  LLC (collectively  referred
to as  "Operators")  to operate  "The Texas Star  Casino"  outside the nine mile
territorial waters of Texas, in international waters, as a casino ship. As it is
the intent to operate  the ship  outside the 9-mile  State of Texas  territorial
limit means that the Company, nor its operators,  will be required to acquire or
hold a gaming license from the State of Texas.

On July 25, 2011,  the Company,  its  wholly-owned  subsidiary,  LDC  Collection
Systems, Inc. and CJP Entertainment LLC, mutually agreed to execute a Repurchase
Agreement  whereby  the May 25,  2011  transaction  was  reversed.  The  Company
retained no rights to own or operate  the cruise ship and no further  action was
taken on the June 6, 2011 LOI to operate said casino ship.

On August 18, 2011,  The X-Change  Corporation  (Company)  entered into an Asset
Purchase Agreement  (Agreement) with Old West Entertainment  Corp. (Old West), a
Nevada corporation,  a privately-owned company which was not affiliated with the
Company.  As part of the Agreement,  the Company  acquired all right,  title and
interest in all of Old West's Operating  Entertainment  Business  (Assets).  The
Assets  included a website,  client base,  capital assets,  hardware,  software,
intellectual property as well as all of Old West's artists, properties, patents,
trademarks and distribution  rights and agreements  relating to Old West's music
and  entertainment  business.  The  Company  would  also  assume  all rights and
obligations under a Management  Consulting Agreement between Old West and Arturo
Molina  Jr.  (Molina),   also  known  in  the  music  business  as  "Frost."  As
consideration  for  this  Agreement,  the  Company  issued  one  million  shares
(1,000,000) of its common stock, in restricted form, to Old West.

As part of this Agreement,  Molina was issued five million shares (5,000,000) of
the Company's common stock for his management  services for a period of one year
and Molina was appointed President and CEO of the Company as well as acting CFO.
The Company also issued five million  shares  (5,000,000) of its common stock in
restricted  form to the Bogat Family  Trust  (Bogat  Trust) on behalf of Raymond
Dabney (Dabney) as consideration for the management  services Mr. Dabney will be
providing to the Company in operating the music and entertainment portion of the
business for a period of one year. Neither Molina, Dabney or the Bogat Trust are
shareholders of Old West. Old West's sole  shareholder,  officer and director is
Mark  Jordan.  Mr.  Jordan,  Molina  and the Bogat  Trust were  non-related  and
non-affiliates of the Company prior to this transaction.

On  February  22,  2012,  the  Company  entered  into  a  Repurchase   Agreement
(Repurchase  Agreement) with Old West,  Molina and the Bogat Trust. As a part of
the Repurchase  Agreement,  the Company  transferred  all of the  aforementioned
assets back to Old West in exchange for Old West  returning the shares which the
Company  issued  to it as part  of the  original  Asset  Purchase  Agreement.  A
complete  copy of the  Repurchase  Agreement  was  attached  as an  exhibit to a
Current  Report  on Form 8-K on or about  March 5,  2012 and the  effect  of the
Repurchase Agreement was to make the initial agreement null and void Ab Initio.

NOTE B - PREPARATION OF FINANCIAL STATEMENTS

The  Company  follows  the  accrual  basis  of  accounting  in  accordance  with
accounting principles generally accepted in the United States of America and has
adopted a year-end of December 31.

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 date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

Management further acknowledges that it is solely responsible for adopting sound
accounting  practices,   establishing  and  maintaining  a  system  of  internal
accounting  control and preventing and detecting  fraud. The Company's system of
internal  accounting  control is designed to assure,  among other items, that 1)
recorded  transactions  are valid; 2) valid  transactions  are recorded;  and 3)
transactions  are  recorded in the proper  period in a timely  manner to produce
financial  statements which present fairly the financial  condition,  results of
operations  and cash  flows of the  Company  for the  respective  periods  being
presented.

                                      F-8
<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2011 and 2010


NOTE B - PREPARATION OF FINANCIAL STATEMENTS - CONTINUED

For  segment  reporting  purposes,  the Company  operated  in only one  industry
segment during the periods represented in the accompanying  financial statements
and makes all  operating  decisions and  allocates  resources  based on the best
benefit to the Company as a whole.

These  financial  statements  reflect the books and records of the Company as of
and for years ended December 31, 2011 and 2010, respectively.

NOTE C - GOING CONCERN UNCERTAINTY

As of December 31, 2011 and 2010,  respectively,  the Company has no operations,
limited  cash on hand,  and  significant  debt  related to the  financing of the
operations of its former  subsidiary,  AirGATE.  Because of these  factors,  the
Company's  auditors  have  issued an audit  opinion on the  Company's  financial
statements which includes a statement  describing our going concern status. This
means, in the auditor's opinion, substantial doubt about our ability to continue
as a going concern exists at the date of their opinion.

The Company's  business plan is to seek an  acquisition or merger with a private
operating   company  which  offers  an  opportunity   for  growth  and  possible
appreciation of our stockholders'  investment in the then issued and outstanding
common stock.  However,  there is no assurance  that the Company will be able to
successfully  consummate  an  acquisition  or merger  with a  private  operating
company or, if  successful,  that any  acquisition  or merger will result in the
appreciation  of our  stockholders'  investment in the then  outstanding  common
stock.

The Company's  current  controlling  stockholder  has  maintained  the corporate
status of the  Company  and has  provided  all  working  capital  support on the
Company's  behalf since the December  2008  foreclosure  action.  Because of the
Company's lack of operating assets,  its continuance is fully dependent upon the
majority stockholder's  continuing support. It is the intent of this controlling
stockholder  to continue the funding the nominal  necessary  expenses to sustain
the corporate entity.  However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist. There is
no legal obligation for either management or significant stockholders to provide
additional  future  funding.  Further,  the  Company  is at the  mercy of future
economic trends and business operations for this controlling stockholder to have
the  resources  available  to support  the  Company.  Should this pledge fail to
provide  financing,  the Company has not identified any  alternative  sources of
working capital to support the Company.

The  Company's  ultimate  continued  existence is dependent  upon its ability to
generate  sufficient cash flows from operations to support its daily  operations
as well as provide  sufficient  resources  to retire  existing  liabilities  and
obligations  on a timely  basis.  The Company  faces  considerable  risk in it's
business plan and a potential  shortfall of funding due any potential  inability
to raise capital in the equity securities  market. If adequate operating capital
and/or cash flows are not received  during the next twelve  months,  the Company
could become dormant until such time as necessary funds could become available.

The Company  anticipates  future  sales or  issuances  of equity  securities  to
fulfill its business plan. However,  there is no assurance that the Company will
be able to obtain  additional  funding  through the sales of  additional  equity
securities  or,  that such  funding,  if  available,  will be  obtained on terms
favorable to or affordable by the Company.

The  Company's  Articles  of  Incorporation  authorize  the  issuance  of  up to
75,000,000 shares of preferred stock and 750,000,000 shares of common stock. The
Company's  ability to issue preferred  stock may limit the Company's  ability to
obtain  debt or equity  financing  as well as impede  potential  takeover of the
Company,  which  may be in the best  interest  of  stockholders.  The  Company's
ability to issue these  authorized but unissued  securities may also  negatively
impact our ability to raise  additional  capital through the sale of our debt or
equity securities.

While the Company is of the opinion that good faith  estimates of the  Company's
ability to secure additional  capital in the future to reach its goals have been
made, there is no guarantee that the Company will receive  sufficient funding to
sustain operations or implement any future business plan steps.

Regardless of whether the  Company's  cash assets prove to be inadequate to meet
the Company's  operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash.

                                      F-9
<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2011 and 2010


NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Cash and cash equivalents

For Statement of Cash Flows purposes, the Company considers all cash on hand and
in banks,  certificates  of deposit  and other  highly-liquid  investments  with
maturities  of  three  months  or  less,  when  purchased,  to be cash  and cash
equivalents.

Cash overdraft positions may occur from time to time due to the timing of making
bank  deposits and releasing  checks,  in  accordance  with the  Company's  cash
management policies.

2. Financing Fees

Financing  fees recorded in connection  with debt  issuances were amortized on a
straight-line basis over the maturity term of the related debt.

3. Convertible Debt Instruments

The Company records debt net of debt discount for beneficial conversion features
and warrants, on a relative fair value basis. Beneficial conversion features are
recorded  pursuant to the Beneficial  Conversion  Feature and Debt Topics of the
FASB Accounting  Standards  Codification.  The amounts allocated to warrants and
beneficial  conversion  rights are recorded as debt  discount and as  additional
paid-in-capital. Debt discount is amortized to interest expense over the life of
the debt.

4. Accounting for Stock Options

The Company has adopted the  provisions  of the  Compensation  Topic of the FASB
Accounting Standards Codification which requires the measurement and recognition
of compensation expense for all share-based payment awards made to its employees
and directors  based on estimated fair values at the time of grant. In addition,
the Securities and Exchange  Commission issued Staff Accounting Bulletin No. 107
"Share-Based  Payment"  (SAB 107) in March  2005,  which  provides  supplemental
accounting guidance.

The valuation  techniques  used in applying  these  provisions  are sensitive to
certain  assumptions  and parameters used including the volatility and liquidity
of the Company's  stock.  The Black Scholes option  valuation model used in this
process was developed for use in  estimating  the fair value of trading  options
that have no  vesting  restrictions  and are  fully  transferable.  Because  the
Company's stock options have characteristics  significantly different from those
of traded options,  and because changes in the subjective input  assumptions can
materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of
its stock options.

The Company has recorded in the past, and may record in the future,  substantial
non-cash compensation expense which is not expected to have a significant effect
on our financial condition or cash flows but are expected to have a significant,
adverse effect on our reported results of operations.

The  Company  follows  the  provisions  of the  Compensation  topic  of the FASB
Accounting   Standards   Codification   for   equity   instruments   granted  to
non-employees.

5. Income taxes

The Company files income tax returns in the United States of America and various
states, as appropriate and applicable.  The Company is no longer subject to U.S.
federal,  state and local, as applicable,  income tax examinations by regulatory
taxing  authorities  for any period prior to December 31, 2006. The Company does
not  anticipate  any  examinations  of returns  filed for periods  ending  after
December 31, 2006.

The Company uses the asset and liability  method of accounting for income taxes.
At December 31, 2011 and 2010, the deferred tax asset and deferred tax liability
accounts,  as recorded when material to the financial  statements,  are entirely
the result of temporary  differences.  Temporary differences generally represent
differences in the  recognition of assets and  liabilities for tax and financial
reporting  purposes,   primarily  accumulated   depreciation  and  amortization,
allowance for doubtful accounts and vacation accruals.

                                      F-10
<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2011 and 2010


NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

5. Income taxes - continued

The Company has adopted the provisions required by the Income Taxes topic of the
FASB Accounting  Standards  Codification.  The  Codification  Topic requires the
recognition of potential  liabilities as a result of management's  acceptance of
potentially    uncertain    positions    for   income   tax   treatment   on   a
"more-likely-than-not"  probability  of  an  assessment  upon  examination  by a
respective taxing authority. As a result of the implementation of Codification's
Income Tax Topic,  the Company did not incur any liability for  unrecognized tax
benefits.

6. Income (Loss) per share

Basic  earnings  (loss) per share is computed by dividing the net income  (loss)
available to common stockholders by the weighted-average number of common shares
outstanding during the respective period presented in our accompanying financial
statements.

Fully  diluted  earnings  (loss) per share is computed  similar to basic  income
(loss) per share except that the  denominator is increased to include the number
of common stock equivalents (primarily outstanding options and warrants).

Common stock  equivalents  represent the dilutive effect of the assumed exercise
of the outstanding stock options and warrants,  using the treasury stock method,
at either  the  beginning  of the  respective  period  presented  or the date of
issuance,  whichever  is later,  and only if the common  stock  equivalents  are
considered  dilutive based upon the Company's net income (loss)  position at the
calculation date.

As of December 31, 2011 and 2010, respectively,  the Company's outstanding stock
options, warrants, and convertible debentures are considered to be anti-dilutive
due to the Company's net operating loss.

7. Accounting for Stock Options

The Company has adopted the  provisions  of the  Compensation  Topic of the FASB
Accounting Standards Codification which requires the measurement and recognition
of compensation expense for all share-based payment awards made to its employees
and directors  based on estimated fair values at the time of grant. In addition,
the Securities and Exchange  Commission issued Staff Accounting Bulletin No. 107
"Share-Based  Payment"  (SAB 107) in March  2005,  which  provides  supplemental
accounting guidance.

The valuation  techniques  used in applying  these  provisions  are sensitive to
certain  assumptions  and parameters used including the volatility and liquidity
of the Company's  stock.  The Black Scholes option  valuation model used in this
process was developed for use in  estimating  the fair value of trading  options
that have no  vesting  restrictions  and are  fully  transferable.  Because  the
Company's stock options have characteristics  significantly different from those
of traded options,  and because changes in the subjective input  assumptions can
materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of
its stock options.

The Company has recorded in the past, and may record in the future,  substantial
non-cash compensation expense which is not expected to have a significant effect
on our financial condition or cash flows but are expected to have a significant,
adverse effect on our reported results of operations.

The  Company  follows  the  provisions  of the  Compensation  topic  of the FASB
Accounting   Standards   Codification   for   equity   instruments   granted  to
non-employees.

8. New and Pending Accounting Pronouncements

The   Company  is  of  the  opinion   that  any  and  all   pending   accounting
pronouncements,  either in the adoption phase or not yet required to be adopted,
will not have a  significant  impact  on the  Company's  financial  position  or
results of operations.

                                      F-11
<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2011 and 2010


NOTE E - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash,  accounts  receivable,  accounts  payable and notes
payable, as applicable,  approximates fair value due to the short term nature of
these items  and/or the current  interest  rates  payable in relation to current
market conditions.

Interest  rate risk is the risk  that the  Company's  earnings  are  subject  to
fluctuations  in interest  rates on either  investments  or on debt and is fully
dependent  upon  the  volatility  of  these  rates.  The  Company  does  not use
derivative instruments to moderate its exposure to interest rate risk, if any.

Financial  risk  is  the  risk  that  the  Company's  earnings  are  subject  to
fluctuations in interest rates or foreign exchange rates and are fully dependent
upon the  volatility  of  these  rates.  The  Company  does  not use  derivative
instruments to moderate its exposure to financial risk, if any.

NOTE F - CONCENTRATIONS OF CREDIT RISK

The Company  maintains its cash in domestic  financial  institutions  subject to
insurance coverage issued by the Federal Deposit Insurance  Corporation  (FDIC).
Under FDIC rules,  the Company is entitled to  aggregate  coverage as defined by
Federal  regulation  per account  type per separate  legal entity per  financial
institution.  During the years ended  December 31, 2011 and 2010,  respectively,
the Company has not had any had deposits in a financial  institution with credit
risk exposures in excess of statutory FDIC coverage. The Company has incurred no
losses as a result of any unsecured credit risk exposures.

NOTE G - DEBT FINANCING ARRANGEMENTS

Melissa Note

On August 15, 2006, the Company  executed a long-term  Promissory  Note (Melissa
Note) with  Melissa CR 364 Ltd.,  a Texas  limited  partnership  (Melissa  Ltd.)
providing  a  $1,000,000  line of credit.  Melissa  Ltd.  is managed by a former
officer and shareholder of the Company.

The Melissa Note had an initial term of 24 months with interest  accruing at 10%
per annum.  Accrued  interest  under the note was  payable  quarterly  beginning
November 1, 2006, and the principal and any remaining  accrued  interest was due
at  maturity on August 14,  2008.  The  Company  pledged  100% of the issued and
outstanding  common  stock  of  AirGATE  as  collateral  for  the  note.  At the
discretion  of Melissa Ltd, the Melissa  Note may be converted  into  restricted
common  stock of the  Company at any time at an agreed upon  conversion  rate of
$0.825 per  share.  In  addition,  the  Melissa  Note may be prepaid at any time
without penalty.

The Company  valued and recorded an embedded  beneficial  conversion  feature in
connection with the Melissa Note of $756,950, and amortized this amount over the
initial two year life of the note resulting in non-cash charges to earnings as a
component of interest expense through December 31, 2008.

At  maturity,  the  Company  failed to make the  required  payment of the entire
outstanding principal and accrued interest due under the Melissa Note. On August
22, 2008, the Company, AirGATE and the Melissa Ltd. entered into an Amendment to
Promissory  Note (the  Amendment)  amending  the  Melissa  Note.  The  Amendment
extended  the  maturity  date  of the  Note  to  December  15,  2008  and,  in a
supplemental Board action,  changed the conversion rate to par value ($0.001 per
share). In connection with the Amendment, AirGATE paid Melissa Ltd. (I) $100,000
to be applied  against the  outstanding  principal of the Melissa Note, (ii) all
interest  on the Note  accrued  through  August  15,  2008,  and  (iii)  $4,500,
representing  Melissa Ltd's  attorneys'  fees and costs in  connection  with the
Amendment.

After the application of the $100,000  principal payment against the outstanding
principal  under the Note,  the  outstanding  principal  owed under the Note was
$697,794.  Interest  payments  were  due on the  15th  of each  month  beginning
December 15, 2008. If either the Company  and/or  AirGATE  completes a corporate
financing  transaction  before  December  15, 2008,  whereby  either the Company
and/or  AirGATE  receives in excess of $300,000  through the issuance of debt or
equity or a combination  thereof,  the Company and/or AirGATE agreed to remit to
Melissa Ltd. in payment of the  obligations  under the Melissa Note,  the entire
net proceeds of such  transaction,  or such smaller amount of net proceeds as is
necessary to pay the entire  outstanding  principal  amount of the Melissa Note,
plus all accrued interest.

                                      F-12
<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2011 and 2010


NOTE G - DEBT FINANCING ARRANGEMENTS

Melissa Note - continued

In  December  2008,  Melissa  Ltd.  began  foreclosure  proceedings  against its
collateral,  which included 100% of the Company's  holdings in AirGATE,  and the
right to convert the Melissa Note into  restricted,  unregistered  shares of the
Company's  common stock.  The foreclosure  proceeding was consummated on January
16, 2009 and the  Company's  holdings in AirGATE were  forfeited.  Additionally,
Melissa Ltd. converted approximately $51,000 of principal on the Melissa Note to
51,000,000  shares of the Company's  common stock,  concurrent with the maturity
date of December 15, 2008.

In May 2011,  Melissa,  Ltd.  converted  approximately  $75,000 in principal and
$40,000 of accrued  interest  into 575,000  shares of  restricted,  unregistered
common stock.

As of December 31, 2011 and , 2010, respectively, the outstanding balance on the
Melissa Note is  approximately  $615,025 and $668,239,  inclusive of capitalized
accrued interest. Interest continues to accrue at 10% per annum.

South Beach Live, Ltd. Note

During  Calendar  2009,  the  Company  executed a $100,000  Line of Credit  Note
Payable  with South  Beach Live,  Ltd.  (South  Beach),  a  significant  Company
stockholder,  to provide  funds  necessary to support the  corporate  entity and
comply with the periodic reporting  requirements of the Securities  Exchange Act
of 1934, as amended.  This note bears  interest at 10.0% and matures in Calendar
2011.  Through  December  31,  2011 and  2010,  respectively,  an  aggregate  of
approximately $236,359 and $169,250 has been advanced against this note.

LCII Debentures

During the  quarter  ending  December  30,  2007,  the  Company  entered  into a
Securities  Purchase  Agreement  with La Jolla  Cove  Investors,  Inc.  ("LCII")
providing   for  two   convertible   debentures   totaling   $400,000  with  two
corresponding sets of non-detachable  warrants totaling 4,000,000 shares with an
exercise price of $1.00.  The convertible  debentures  accrue interest at 6-1/4%
until  converted  or the  expiration  of their three year term.  The  respective
debentures matured in August 2010; however, in the absence of a formal extension
agreement,  both  parties  have  agreed to stay the  maturity  and allow  future
conversions and warrant exercises to occur.

The debentures and warrants have mandatory conversion features. These conversion
features  becomes  effective in the first full  calendar  month after the common
stock  underlying the debenture is either i) registered under the Securities Act
of 1933 (the "Act"),  which is at the Company's option, or ii) available by LCII
to be resold pursuant to Rule 144 of the Act. If the conversion  feature becomes
effective, LCII is obliged to convert an average of 10% of the face value of the
debenture each calendar month into a variable  number of shares of the Company's
common  stock.  The number of shares is determined by a formula where the dollar
amount of the debenture being converted is multiplied by eleven,  from which the
product of the conversion price and ten times the dollar amount of the debenture
being  converted  is  then  subtracted,  all of  which  is then  divided  by the
conversion  price.  The conversion price is equal to the lesser of (i) $1.00, or
(ii) 80% of the average of the 3 lowest volume  weighted  average  prices during
the twenty  trading  days prior to the  conversion  election.  The  Company  can
prevent  conversion if the trading price falls below $0.30 per share on the date
LCII elects to convert.  Under certain  provisions,  if LCII does not convert an
average  of at least 5% of the face  value of the  debenture,  the  Company  may
prepay portions of the debenture.  As contractually  linked,  if LCII converts a
portion of the debenture,  LCII must also exercise a proportionate amount of the
warrants.

In the event that the entire $400,000 of the convertible debentures is converted
in conjunction with the required exercise of warrants,  the Company will receive
a total of $4.4 million from LCII.  The aggregate  number of shares  issuable to
LCII in this event is dependent  on the trading  price of the  Company's  common
stock over the term of the conversion process.

The Company allocated the proceeds from the debentures  between the warrants and
the debt based on the  estimated  relative  fair value of the  warrants  and the
debt.   The  value  of  the  warrants  was  calculated  at  $273,634  using  the
Black-Scholes  model  and the  following  assumptions:  discount  rate of  4.1%,
volatility of 156% and expected term of three years. The Company also calculated
a beneficial  conversion  feature totaling  $126,366.  The Company is amortizing
both the warrant value and value attributed to the beneficial conversion feature
(total $400,000) over the term of the debentures. This non-cash charge to income
is included in interest expense.

                                      F-13
<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2011 and 2010


NOTE G - DEBT FINANCING ARRANGEMENTS - CONTINUED

LCII Debentures - continued

At December 30, 2011 and 2010, respectively, the outstanding principal amount of
convertible debentures totaled approximately $285,225 and $286,225.

NOTE H - INCOME TAXES

The  components  of income tax  (benefit)  expense  for each of the years  ended
December 31, 2011 and 2010, respectively, are as follows:

                                               Year ended           Year ended
                                               December 31,         December 31,
                                                  2011                 2010
                                                --------             --------
Federal:
  Current                                       $     --             $     --
  Deferred                                            --                   --
                                                --------             --------
State:
  Current                                             --                   --
  Deferred                                            --                   --
                                                --------             --------

  Total                                         $     --             $     --
                                                ========             ========

The Company has a cumulative net operating loss  carryforward  of  approximately
$4,300,000 as of December 31, 2011 to offset future taxable  income.  Subject to
current  regulations,  components of this cumulative  carryforward will begin to
expire  at the  end of each  fiscal  year  starting  in  2023.  The  amount  and
availability  of  the  net  operating  loss  carryforwards  may  be  subject  to
limitations set forth by the Internal  Revenue Code.  Factors such as the number
of shares ultimately issued within a three year look-back period;  whether there
is a deemed more than 50 percent change in control; the applicable long-term tax
exempt bond rate;  continuity of historical  business;  and subsequent income of
the  Company  all  enter  into  the  annual   computation  of  allowable  annual
utilization of the carryforwards.

The Company's income tax expense (benefit) for the years ended December 31, 2011
and 2010,  respectively,  differed from the statutory federal rate of 34 percent
as follows:

<TABLE>
<CAPTION>
                                                             Year ended             Year ended
                                                             December 31,           December 31,
                                                                 2011                   2010
                                                             ------------           ------------
<S>                                                          <C>                    <C>
Statutory rate applied to loss before income taxes           $   (636,000)          $ (1,803,000)
Increase (decrease) in income taxes resulting from:
  State income taxes                                                   --                     --
  Nondeductible charge for stock issued at less
   than "fair value"                                              576,000              1,701,000
  Nondeductible charge for non-operating asset
   impairment                                                      14,000                     --
  Amortization of nondeductible debt discount                          --                 23,000
  Stock based compensation                                             --                     --
  Tax basis gain on forgiveness of debt                                --                     --
  Other, including use of net operating loss
   carryforward and reserve for deferred tax asset                 46,000                 79,000
                                                             ------------           ------------

       Income tax expense                                    $         --           $         --
                                                             ============           ============
</TABLE>

                (Remainder of this page left blank intentionally)

                                      F-14
<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2011 and 2010


NOTE H - INCOME TAXES - CONTINUED

Temporary differences due to statutory requirements in the recognition of assets
and liabilities for tax and financial  reporting  purposes,  generally including
such items as organizational costs,  accumulated  depreciation and amortization,
allowance for doubtful accounts,  organizational and start-up costs and vacation
accruals.  These  differences  give  rise to the  financial  statement  carrying
amounts and tax bases of assets and  liabilities  causing  either  deferred  tax
assets  or  liabilities,  as  necessary,  as of  December  31,  2011  and  2010,
respectively:

                                              December 31,        December 31,
                                                  2011                2010
                                              ------------        ------------
Deferred tax assets
  Net operating loss carryforwards            $  1,354,000        $  1,360,000
  Stock based compensation                              --                  --
  Debt discount amortization                       657,000             657,000
  Other                                                 --                  --
                                              ------------        ------------
                                                 2,011,000           2,017,000

Less valuation allowance                        (2,011,000)         (2,017,000)
                                              ------------        ------------

Net Deferred Tax Asset                        $         --        $         --
                                              ============        ============

During the years ended December 31, 2011 and 2010,  respectively,  the valuation
allowance  for the deferred tax asset  increased  (decreased)  by  approximately
4(6,000) and $111,000, respectively.

NOTE I - PREFERRED STOCK

The Company is authorized to issue up to a total of 75,000,000  shares of $0.001
par value  Preferred  Stock.  The Company's  Board of Directors  has  designated
250,000 shares as "Series A Convertible Preferred Stock".

The Company is under no  obligation  to pay  dividends or to redeem the Series A
Convertible  Preferred Stock. This series of stock is convertible into 10 shares
of Common Stock at the option of the  shareholder or upon automatic  conversion.
In the event of any liquidation,  dissolution or winding-up of the Company,  the
holders of outstanding shares of Series A Preferred shall be entitled to be paid
out of the assets of the Corporation available for distribution to shareholders,
before  any  payment  shall be made to or set aside for  holders  of the  Common
Stock, at an amount of $1 per share.

As of  December  31,  2011 and  2010,  respectively,  there  were no  shares  of
preferred stock issued and outstanding.

NOTE J - COMMON STOCK TRANSACTIONS

Amendment to the Articles of Incorporation

On January 31,  2011,  the Board of  Directors  of the Company and its  majority
shareholder  approved an amendment to its Articles of  Incorporation  increasing
the authorized  capital of the Company from  37,500,000  shares of common stock,
par value $.001 and 3,750,000  shares of preferred  stock,  par value $.001,  to
750,000,000  shares of common stock and 75,000,000 share of preferred stock. The
Amended  Articles  were filed with the  Nevada  Secretary  of State on March 22,
2011, the effective date of the amendment.

Reverse Stock split

Effective  August 9,  2010,  Company's  Board of  Directors  declared a 1-for-20
reverse split of the issued and outstanding  shares of common stock. The reverse
stock split was implemented by adjusting the  stockholders'  book entry accounts
to reflect the number of shares held by each stockholder following the split. No
fractional shares were issued in connection with the reverse stock split and any
fractional  shares  resulting  from the  reverse  split  were  rounded up to the
nearest whole share. The reverse stock split reduced the number of the Company's
issued and outstanding  shares of common stock on this date from  136,089,746 to
approximately 5,513,000.

                                      F-15
<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2011 and 2010


NOTE J - COMMON STOCK TRANSACTIONS - CONTINUED

Reverse Stock split - continued

On  January  31,  2011,  the  Company's  Board  of  Directors  and its  majority
shareholder  approved an amendment to its Articles of  Incorporation  increasing
the authorized capital of the Company from 37,500,000 shares of $0.001 par value
common  stock  and  3,750,000  shares of $0.001  par  value  preferred  stock to
750,000,000  shares of $0.001 par value  common stock and  75,000,000  shares of
$0.001 par value  preferred  stock.  The  Amended  Articles  were filed with the
Nevada  Secretary  of  State  on  March  22,  2011,  the  effective  date of the
amendment.

The  effects  of these  actions  are  reflected  in the  accompanying  financial
statements as of the first day of the first period presented.

Stock issuances

On March 26, 2010, LJII issued a Debenture  Conversion Notice to the Company for
the conversion of $32,000 of the  outstanding  debenture  balance into 3,902,439
shares (approximately 195,122 post-reverse split shares) of the Company's common
stock.  This conversion was completed on April 12, 2010 with the delivery of the
shares to LJII.  As the  conversion  price  was  below  the "fair  value" of the
securities  issued,  the Company  experienced a non-cash charge to operations of
approximately  $57,760  which  was  classified  as  "interest  expense"  in  the
accompanying financial statements.

In December 2010 and December 2010,  the Company  issued an aggregate  9,797,416
restricted,  unregistered  post-reverse  split  shares to Melissa CR 364 LTD. to
retire a combination  of  approximately  $50,000 on the  aforementioned  line of
credit and  approximately  $146,000 in accumulated  accrued interest on both the
AirGATE and line of credit notes.  As the valuation of the  conversion as stated
in the separate  note  agreements  was below the "fair value" of the  securities
issued, the Company experienced a non-cash charge to operations of approximately
$4,950,000  which was  classified  as  "interest  expense"  in the  accompanying
financial statements.

On  October  7,  2010,  the  Company  issued  1,000,000  shares  of  restricted,
unregistered  post-reverse split shares, valued at approximately  $530,000 which
was  equal  to  the  closing  quotation  of  the  Company's  securities  on  the
transaction date, to 21-Century  Silicon,  Inc. (a Texas corporation) to license
the use of 21-Century's technology and to secure an exclusive right to negotiate
to acquire certain intellectual  property from 21-Century.  On January 28, 2011,
concurrent  with the  abandonment  of the  21-Century  transaction,  the Company
rescinded the October 2010  transaction  where  1,000,000  shares of restricted,
unregistered  common  stock  was  issued  to  license  the  use of  21-Century's
technology  and to secure an exclusive  right to  negotiate  to acquire  certain
intellectual property from 21-Century. Further, concurrent with this action, the
Company executed its lien on the assets pledged by 21-Century in satisfaction of
a note receivable and accrued  interest  totaling  approximately  $41,200.  Upon
foreclosure  on said assets,  the  Company's  management  elected to take a 100%
impairment  against the foreclosed  value resulting in a charge to operations in
the first quarter of 2011 of approximately  $41,200.  Any gain, if any, upon the
ultimate  disposition  of said assets will be  recognized at the point of future
sale.

On January 3, 2011, LJII issued a Debenture Conversion Notice to the Company for
the conversion of $1,000 of the outstanding debenture balance into 21,375 shares
of the Company's common stock.  Additionally,  LJII exercised 10,000 outstanding
warrants to obtain 10,000 shares of the Company's common stock for $10,000 cash.
This conversion was completed on January 5, 2011 with the delivery of the shares
to LJII.  As the  aggregate  conversion  and exercise  price was below the "fair
value" of the securities  issued,  the Company  experienced a non-cash charge to
operations of approximately  $10,962 which was classified as "interest  expense"
in the accompanying financial statements.

In May 2011, the Company issued an aggregate  575,000  restricted,  unregistered
post-reverse  split  shares to Melissa CR 364 LTD.  to retire a  combination  of
approximately  $75,000 on the aforementioned notes and approximately  $40,000 in
accumulated  accrued  interest.  As the valuation of the conversion as stated in
the  separate  note  agreements  was below the  "fair  value" of the  securities
issued, the Company experienced a non-cash charge to operations of approximately
$115,000  which  was  classified  as  "interest  expense"  in  the  accompanying
financial statements.

                                      F-16
<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2011 and 2010


NOTE J - COMMON STOCK TRANSACTIONS - CONTINUED

Stock issuances - continued

In July 2011,  in connection  with the  execution of a Letter of Intent  ("LOI")
with George J. Akmon and Jerry Monday & Associates,  LLC (collectively  referred
to as  "Operators")  to operate  "The Texas Star  Casino"  outside the nine mile
territorial  waters of Texas,  in  international  waters,  as a casino ship, the
Company issued 100,000  shares of  restricted,  unregistered  common stock as an
inducement  to execute the LOI.  This  transaction  was valued at  approximately
$25,000 which approximated "fair value" of the Company's  securities on the date
of issuance.

In August 2011, the Company issued an aggregate 12,252,136 shares of restricted,
unregistered common stock to Old West, Molina and the Bogat Trust, as previously
discussed.  Concurrent  with the  rescission  of this  transaction,  the Company
recovered   11,000,000  shares  of  the  12,252,136  shares  originally  issued.
Approximately  1,252,136  shares remained in the possession of Old West,  Molina
and/or the Bogat Trust.  These net 1,252,136 shares  remaining  outstanding were
initially  valued  at an  agreed-upon  value of  approximately  $25,042.  As the
agreed-upon  transaction  valuation  was below the  "fair  value" of the  shares
issued, the Company  experienced an additional  non-cash charge to operations of
approximately  $475,812.  The  aggregate  approximately  $500,854 was charged to
operations as "Loss on rescinded acquisition of Old West Entertainment Corp." in
the accompanying  financial statements to reflect the net economic event related
to these transactions.

In October and November 2011, the Company issued an aggregate  6,800,000  shares
of free-trading  common stock in settlement of approximately  $13,600 of debt on
the  books of Old  West  Entertainment  Corp.  while  Old West was an  operating
component  of the Company and prior to the March 2012  rescission  of the entire
transaction.  As the debt reduction was less than the "fair value" of the shares
issued,  the Company  recognized an additional  non-cash charge to operations of
approximately $1,091,000 was recognized as "Loss on rescinded acquisition of Old
West Entertainment Corp." during the 4th quarter.

NOTE K - COMMON STOCK WARRANTS

In conjunction with, and as a component of, certain debt issuances,  the Company
has issued an aggregate  607,016  warrants to purchase an  equivalent  number of
shares of common stock at prices between $0.70 and $20.00 per share, as adjusted
by the Company's reverse stock split.

                                                       Number of       Weighted
                                                        Warrant        Average
                                                        Shares          Price
                                                        ------          -----
Balance at January 1, 2010                             15,819,352       $0.63
                                                      ===========       =====
Exercised                                                (320,000)
Cancelled pursuant to 2009 debt cancellation           (2,591,500)
Effect of reverse split                               (11,533,096)
Cancellation of 2007 A & B warrants                      (372,500)
Issue of replacement 2007 A & B warrants                  372,510
                                                      -----------

Balance at December 31, 2010                              607,016       $5.72
                                                      ===========       =====
Issued                                                         --          --
Exercised                                                 (10,000)         --
Expired                                                        --          --
                                                      -----------

Balance at December 31, 2011                              597,016       $5.72
                                                      ===========       =====

As of December 31, 2011, the warrants break down as follows:

                           # warrants     exercise price
                           ----------     --------------
                            372,510          $  0.70
                             58,825          $  1.40
                             13,300          $  4.00
                             10,000          $  8.00
                              6,768          $ 12.00
                             13,613          $ 20.00
                            597,016          $  5.72

<PAGE>
                    THE X-CHANGE CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2011 and 2010


NOTE K - COMMON STOCK WARRANTS - CONTINUED

                           # warrants       expiring in
                           ----------       -----------
                            135,613           2010 (*)
                                 --           2011
                            424,278           2012
                                 --           2017
                             37,125           2018
                            -------

                            597,016
                            =======

----------
(*)  The  warrants  expiring  in 2010  are an  integral  component  of the  LJII
     financing as previously discussed. As the debenture remains unpaid and LJII
     is continuing,  with the Company's approval,  to convert the debenture into
     common  stock  and  exercise  warrants,   they  are  considered  to  remain
     outstanding at and subsequent to December 31, 2011.

NOTE L - LITIGATION CONTINGENCY

"La Jolla Cove  Investors,  Inc.  v. The  X-Change  Corporation  and Does 1-10",
Superior Court of California,  County of San Diego, filed December 8, 2011, Case
37-2011-00102204-CU-CO-CTL.

Plaintiff "La Jolla Cove Investors, Inc." (LJII) filed a Complaint for Breach of
Contract against the Company alleging that the Company failed to comply with the
terms and  conditions of the 6-1/4%  Convertible  Note dated August 29, 2007 and
the  6-1/4%  Convertible  Note dated  October  9, 2007 and has  refused to honor
Conversion  Notices  tendered  on and  subsequent  to  July  6,  2011.  LJII  is
requesting  an  acceleration  of  the  cumulative  debt  totaling  approximately
$400,838 and additional  interest of approximately  $48 per day after October 1,
2011, plus fees, costs, expenses and disbursements associated with this action.

On April 19, 2012, the Company filed a Cross  Complaint  against LJII alleging a
default by LJII due to LJII's  failure to  exercise  and fund the  contractually
linked  proportionate  number  of  warrants   accompanying   Conversion  Notices
exercised  between October 2008 and January 2011 despite the Company's tender of
demand letters for payment. The Company is requesting approximately $475,000 for
the  unfunded  contractually  linked  mandatory  warrant  exercise;  prejudgment
interest at 10%,  commencing  March 26, 2010;  various  injunctive  releases and
associated costs and fees.

The Company is unable to ascertain the potential outcome of these actions and is
of the opinion that no material impact on the Company's  financial position will
occur.

NOTE M - SUBSEQUENT EVENTS

On  March  20,  2012,  the  Company  issued   8,747,864  shares  of  restricted,
unregistered   shares  to  Melissa  CR  364,   Ltd.  in  partial   repayment  of
approximately  $17,496  in notes  payable  principal.  As the  valuation  of the
conversion  as  stated in the  respective  note  agreements  was below the "fair
value" of the securities  issued,  the Company will experience a non-cash charge
to operations of approximately  $1,494,684 which will be classified as "interest
expense" in the Company's financial statements.

During March and April 2012, the Company has placed approximately  100,000 acres
in  eastern  Montana  and  western  North  Dakota  under  lease  for oil and gas
exploration,  subject to the completion of due diligence and the  acquisition of
capital necessary to perform under the terms of the arrangement.

Management has evaluated all activity of the Company through April 30, 2012 (the
issue  date  of  the  restated  financial  statements)  and  concluded  that  no
subsequent  events,  other than as disclosed  above,  have  occurred  that would
require  recognition  in the financial  statements or disclosure in the notes to
financial statements.

                        (Signatures follow on next page)

                                      F-17
<PAGE>
                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) 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.

                                           THE X-CHANGE CORPORATION


Dated: May 4, 2012                         /s/ R. Wayne Duke
                                           -------------------------------------
                                           R. Wayne Duke
                                           President, Chief Executive Officer
                                           Acting Chief Financial Officer
                                           and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates as indicated.


Dated: May 4, 2012                         /s/ R. Wayne Duke
                                           -------------------------------------
                                           R. Wayne Duke
                                           President, Chief Executive Officer
                                           Acting Chief Financial Officer
                                           and Director

                                       19