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, 2009

[ ] 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)

             17120 N. Dallas Parkway, Suite 235, Dallas, Texas 75248
          (Former name or former address, if changed since last report)

--------------------------------------------------------------------------------

        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 [ ]

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. [ ]

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 15,  2010 was  approximately  $1,118,419  based upon
44,736,750  shares held by  non-affiliates  and a closing market price of $0.025
per share on April 14, 2010, as reported on www.bigcharts.com.

As of April 15, 2010, there were  136,089,746  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   Submission of Matters to a Vote of Security Holders                 6

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         14
Item 8   Financial Statements and Supplementary Data                        14
Item 9   Changes in and Disagreements with Accountants
            on Accounting and Financial Disclosure                          14
Item 9A  Controls and Procedures                                            15

PART III

Item 10  Directors, Executive Officers and Corporate Governance             16
Item 11  Executive Compensation                                             19
Item 12  Security Ownership of Certain Beneficial Owners and Management
         and Related Stockholder Matters                                    19
Item 13  Certain Relationships and Related Transactions, and Director
         Independence                                                       20
Item 14  Principal Accountant Fees and Services                             20

PART IV

Item 15  Exhibits and Financial Statement Schedules                         21

SIGNATURES                                                                  44

                                       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 have disposed of all of the assets and operations.

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.

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.

                                       3
<PAGE>
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.

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.

Our current business plan is discussed below.

OUR IMMEDIATE PAST BUSINESS OPERATIONS

Our former  business  plan was focused on  furthering  the success of our former
wholly-owned  subsidiary AirGATE  Technologies,  Inc.  (AirGATE).  AirGATE was a
solution-based  company  specializing in wireless  technologies  including radio
frequency identification ("RFID") for the business-to-business customer. AirGATE
was focused on wireless products and services in vertical markets,  primarily in
the oil & gas industry, that differ from the more widely known RFID supply chain
model.  Our former  business plan  emphasized  generating  royalty  payments and
long-term  transaction  based revenues  through its  customers.  The Company had
designed and developed  intellectual property and patents, for the manufacturing
and oil and gas vertical markets.  Most of AirGATE's products and other services
were  developed on behalf of its  multi-billion  dollar  customers.  AirGATE had
developed  a downhole  radar  tool for  Hexion  Specialty  Chemicals,  Inc.;  an
ultra-wide band traveling block solution to determine  real-time  measurement of
drilling  speed and depths;  and a drill pipe and down -hole tool tagging system
utilizing surface acoustic wave (SAW)  technology.  Former management was of the
opinion that other potential clients included national and international oil and
gas companies that  manufacture  down- hole products for oil wells such as drill
collars, jars, stabilizers,  mud motors, and other components.  AirGATE products
were  designed  to provide for asset  tracking,  including  pedigree  history of
pipe/tools,  and real time data analysis of down-hole and equipment  conditions.
AirGATE  also  developed  SAW  tags  for  a  variety  of  other  industries  and
applications.

In November 2008, the Company  defaulted on its  promissory  note  obligation to
Melissa CR 364,  LTD. for failing to remit the  outstanding  balance and unpaid,
but accrued,  interest payable on the contractual maturity date. On December 15,
2008,  Melissa CR 364, LTD. served the Company with a demand for payment in full
of the  promissory  note.  As of the demand  date,  the Company did not have the
funds available to pay Melissa CR 364, LTD.  Melissa CR 364, LTD. had a security
interest in the shares of stock of our then  wholly-owned  subsidiary,  AirGATE.
Additionally,  a default under the Melissa CR 364, LTD. note triggered a default
under our loan agreement with La Jolla Cove Investors.  Upon an event of default
under the La Jolla Cove  Investors,  the  Company  may be (i)  required to pay a
default  rate equal to 3.75%  percent  and (ii)  accelerate  the  payment of the
entire outstanding amounts owed at 120% of the outstanding  principal amount. La
Jolla Cove has not requested the default rate or sent a notice of acceleration.

On January 21, 2009,  Melissa CR 364, LTD. informed the Company it had completed
a foreclosure on its security interest in the 100% of the issued and outstanding
shares of the stock of our wholly-owned subsidiary,  AirGATE Technologies,  Inc.
and held a sale of the AirGATE stock on January 16, 2009, which was disclosed in
the  Company's  Form 8-K,  filed on January  26,  2009.  Melissa CR 364,  LTD.'s
foreclosures and auction of their holdings reduced the Company's debt to Melissa
CR 364,  LTD. by  $10,000,  the amount  realized  from the  auction.  After this
foreclosure  action and auction sale, the Company had no operations or operating
assets.

On January 26, 2009, we received notice of a default on our Amended and Restated
Senior  Secured  Convertible  Term  Notes -  Tranche  A and our  Senior  Secured
convertible  Term Note - Tranche B from Samson  Investment  Company,  Ironman PI
Fund (QP),  L.P.  and John Thomas  Bridge and  Opportunity  Fund,  L.P.,  with a
collective  principal amount of $3,600,000,  plus unpaid, but accrued,  interest
payable,  related to Melissa CR 364, LTD.'s notice of foreclosure on the AirGATE
stock.  Samson  Investment  Company,  Ironman PI fund (QP), L.P. and John Thomas
Bridge and Opportunity Fund, L.P.  collectively demanded redemption of the notes
within seven days of the notice of default date for $1,975,162.87, $1,975,162.87
and $637,149.31,  respectively.  At the time notice of default was received, the
Company did not have the funds available to satisfy the collective  obligations.
Samson Investment Company, Ironman PI Fund (QP), L.P. and John Thomas Bridge and
Opportunity Fund, L.P., has a security interest in all of the assets of AirGATE.

                                       4
<PAGE>
On May 28, 2009,  the Company  entered into a Settlement  Agreement  and Release
with AirGATE  Technologies Inc. (AirGATE),  HM Energy Technologies Inc. (HM), WM
Chris Mathers  (Mathers),  Kathleen Hanafan  (Hanafan),  Duke Loi (Loi),  Samson
Investment Company (Samson),  Ironman PI Fund (QP), L.P. (Ironman),  John Thomas
Bridge and Opportunity  Fund, LP (John Thomas and,  collectively with Samson and
Ironman, SIJ) and Melissa CR 364, LTD (Melissa).

Under the terms of the  Agreement,  (i) SIJ foreclosed on the assets of AirGATE,
which had been  security for the SIJ Notes;  (ii) SIJ  transferred  and assigned
7,196,429 shares of the Company's common stock held by Samson,  7,196,429 shares
of the  Company's  common  stock held by  Ironman  and  2,321,428  shares of the
Company's  common  stock held by John  Thomas,  comprising  all of the shares of
Company  common stock owned by them, to Melissa and others;  (iii) SIJ cancelled
the SIJ Notes,  SIJ Guaranty,  the Tranche A Warrants and the Tranche B Warrants
issued in connection with the SIJ Notes,  and any other security  convertible or
exchangeable  into the  common  stock of  X-Change;  (iv) SIJ and  Hanafan  paid
$75,000.00  to  Melissa  to  defray  costs to be  incurred  by the  Company  for
completion of an audit of the consolidated  financial  statements of the Company
and AirGATE for the fiscal year ended December 31, 2008; and (v) all the parties
agree to mutual  releases  and  confidentiality,  except  that  Melissa  did not
release the Company from the balance of the Melissa Note.

In  summary,  as a  result  of  the  various  transactions  effected  under  the
Agreement,  SIJ  surrendered  all of  their  shares  in the  Company;  cancelled
financial  obligations of the Company that exceeded $3.6 million, with interest;
and terminated their rights under 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.  To the
extent that the cancellation of debt constitutes a taxable event,  management is
of the opinion that the Company's  cumulative  net operating  loss  carryforward
will more than offset any taxes due as a result of this event.

On May  26,  2009,  effective  as of  December  15,  2008,  the  Company  issued
51,000,000  shares  of  its  $0.001  par  value  common  stock  to K & D  Equity
Investments,  Inc.  (K&D)  ,  a  Texas  corporation,  pursuant  to  the  amended
conversion  features of the  Convertible  Promissory  Note  between the Company,
AirGATE and Melissa CR 364, LTD., a portion of which was  subsequently  assigned
to K & D. The issuance was  originally  approved by the Board in December  2008,
but was not accepted by K & D until May 26, 2009.  This issuance is reflected in
the accompanying financial statements as of the effective date.

OUR CURRENT BUSINESS PLAN

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.

We anticipate  forming two distinct  divisions and operating each within a newly
formed subsidiary  corporation - one, a  Latino-targeted  media delivery service
and one, a bilingual home shopping network.

Our management intends to develop and leverage  relationships with existing home
shopping  networks  to  build  significant   Hispanic  audiences  that  purchase
merchandise  via internet  connections  and through other smart mobile  devices.
These  relationships  and the know-how of management will conserve  capital that
would  ordinarily  be required  for buying,  inventory  warehousing  management,
development of an online sales  infrastructure,  shipping and returns,  customer
service, and the focus on effective merchandising and marketing.  Our management
understands and is in a position to monitor the buying preferences and behaviors
of its markets--each of which has unique  characteristics.  We intend to develop
intriguing  episodic  productions that feature popular Hispanic talent promoting
their product lines, an approach that has been successfully implemented at other
home shopping platforms such as QVC.

Our  media-delivery  network  will be  similar  to the  approach  taken by video
services such as Hulu(R) with a focus on providing popular Hispanic entertaining
and informative  content as streaming  media to the web and mobile devices.  The
state of the art of video-delivery technology is sophisticated and advanced, and
this business is considered a  content-licensing  and promotion play,  where the
entity's value grows with viewership. Revenue shall be derived from advertising,
subscriptions,  and the sale of smartphone applications.  Channels will organize
content on offer to the widely  varying  tastes of its  markets  and  individual
subscribers,  ranging  from  romance to  mystery to science  fiction to drama to
police  procedurals.  The content will be a combination of individual  segments,
serial productions, and motion pictures.

On March 17, 2010, we announced that we reached agreement with Los Angeles-based
technology company  IPTVWorld,  Inc., to work as partners in the development and
deployment of a broad range of Internet-based  services, with a first release of
a new product line  scheduled for staged release  starting in May,  2010.  These
services will include  compelling video  programming,  including  entertainment,
information,  news, sports, religion, lifestyle,  shopping, and country-specific
programs.  These  offerings are  anticipated to be made available  several ways,
including on a subscription basis through television set-top boxes,  through web

                                       5
<PAGE>
browsers, and, in future versions, through mobile devices. Subscriptions will be
offered that are similar to but far less  expensive  than  traditional  cable or
satellite plans. Also, among the completely  integrated  Internet services to be
offered  will be a home  telephone  service  featuring a low-cost  international
calling  component  which is  expected  to be a popular  option in the  targeted
consumer markets.

On March 25, 2010,  we formed the  wholly-owned  subsidiaries  - Caballo  Blanco
Communications,  Ltd. and Commerce Services,  Inc. - as Colorado corporations to
conduct these  operations.  We anticipate  that the operations of Caballo Blanco
Communications,  Ltd. will be housed at One Wilshire,  a premier  communications
hub located in Southern  California to assure  reliable and fast delivery of our
programming.

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,  but it is not possible to predict
what   arrangements  will  actually  be  made  with  respect  to  future  office
facilities.

ITEM 3 - LEGAL PROCEEDINGS

The  Company  is not a  party  to any  pending  legal  proceedings,  and no such
proceedings are known to be contemplated.

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

Reserved.

                                       6
<PAGE>
                                     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 April 15,  2010,  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, 2008
  Quarter ended March 31                              $0.25           $0.096
  Quarter ended June 30                               $0.135          $0.06
  Quarter ended September 30                          $0.09           $0.025
  Quarter ended December 31                           $0.03           $0.001

Year ended December 31, 2009
  Quarter ended March 31                              $0.002          $0.001
  Quarter ended June 30                               $0.013          $0.001
  Quarter ended September 30                          $0.09           $0.01
  Quarter ended December 31                           $0.06           $0.01

Year ended December 31, 2010
   Quarter ended March 31                             $0.029          $0.01

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.

During the year  ended  December  31,  2008,  the  Company  issued an  aggregate
17,202,139 shares of restricted,  unregistered common stock as consideration for
financing fees in conjunction  with the receipt of  approximately  $1,800,000 in
new debt financing.

During the year ended December 31, 2008, the Company issued an aggregate 600,000
shares  of  restricted,  unregistered  common  stock  to a  consulting  firm  as
consideration for services rendered.

During the year  ended  December  31,  2008,  the  Company  issued an  aggregate
3,812,161  shares of registered  common stock in exchange for the  conversion of
approximately $36,500 in convertible debenture debt. As the conversion price was
below the "fair  value" of the  securities  issued,  the Company  experienced  a
non-cash charge to operations of  approximately  $22,500 which was classified as
"interest expense" in the accompanying financial statements.

In  December  2008,  the  Company  issued   51,000,000   shares  of  restricted,
unregistered  common  stock in  connection  with the  redemption  of  $51,000 in
principal against a note payable in conjunction with a foreclosure action by the
noteholder.

In January 2009, the Company issued an aggregate 2,118,506 shares of restricted,
unregistered  common  stock in  connection  with the  redemption  of  $1,550  in
convertible  debenture debt. As the conversion  price was below the "fair value"
of  the  securities  issued,  the  Company  experienced  a  non-cash  charge  to
operations of approximately  $568 which was classified as "interest  expense" in
the accompanying financial statements.

In March 2010, the Company issued an aggregate  3,902,439  shares of restricted,
unregistered  common  stock in  connection  with the  redemption  of  $32,000 in
convertible  debenture debt. 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 will be  classified  as  "interest
expense" in the financial statements for the quarter ended March 31, 2010.

                                       7
<PAGE>
COMMON STOCK WARRANTS

In conjunction with, and as a component of, certain debt issuances,  the Company
has issued an  aggregate  15,819,352  and  46,033,638  warrants  to  purchase an
equivalent  number of shares of common stock at prices  between  $0.07 and $1.00
per share as of December 31, 2009 and 2008, respectively.

                                                Number of           Weighted
                                                 Warrant            Average
                                                 Shares              Price
                                                 ------              -----
Balance at January 1, 2008                      16,780,002           $ 0.70
  Issued                                        29,253,636           $ 0.16
  Exercised                                             --               --
  Expired                                               --               --
                                              ------------

Balance at December 31, 2008                    46,033,638           $ 0.36
  Issued                                                --               --
  Exercised                                             --               --
  Surrendered at debt cancellation             (30,214,286)          $ 0.22
  Expired                                               --               --
                                              ------------

Balance at December 31, 2009                    15,819,352           $ 0.63
                                              ============

As of December 31, 2009, the warrants break down as follows:

                                                # warrants        exercise price
                                                ----------        --------------
                                                 3,404,000           $ 0.07
                                                   630,000           $ 0.20
                                                   200,000           $ 0.40
                                                 3,860,351           $ 0.60
                                                 3,725,001           $ 0.84
                                                 4,000,000           $ 1.00
                                              ------------

                                                15,819,352           $ 0.63
                                              ============

                                                # warrants         expiring in
                                                ----------         -----------
                                                 4,000,000            2010
                                                   569,350            2011
                                                 7,650,002            2012
                                                   630,000            2017
                                                 2,970,000            2018
                                              ------------

                                                15,819,352
                                              ============

On May 28, 2009, as previously discussed,  the Company entered into a Settlement
Agreement  and Release  with  AirGATE  Technologies  Inc.  (AirGATE),  HM Energy
Technologies Inc. (HM), WM Chris Mathers (Mathers),  Kathleen Hanafan (Hanafan),
Duke Loi (Loi),  Samson Investment Company (Samson),  Ironman PI Fund (QP), L.P.
(Ironman),  John  Thomas  Bridge and  Opportunity  Fund,  LP (John  Thomas  and,
collectively with Samson and Ironman, SIJ) and Melissa CR 364, LTD (Melissa). In
this Agreement, approximately 30,214,286 warrants were cancelled on that date.

REPURCHASES OF EQUITY SECURITIES

We did not purchase any of our equity securities during 2009 or 2008.

EQUITY COMPENSATION

During  2009 and 2008,  respectively,  we issued -0- and  600,000  shares of our
common stock to  consultants,  in the  aggregate.  These  issuances  were all in
exchange for services  rendered.  These issuances were not approved by a vote of
our security  holders.  We may from time to time issue additional  shares to our
consultants, employees or directors at the discretion of our board of directors.

                                       8
<PAGE>
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  foreclosure  upon our operating
subsidiary,  AirGATE,  all outstanding stock options were cancelled.  No options
were exercised from their initial issuance through December 31, 2008.

COMMON STOCK

Our authorized  capital stock consists of 750,000,000 shares of $0.001 par value
common stock and 75,000,000  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 75,000,000
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.

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 10 million
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 75,000,000  shares of $0.001
par value  Preferred  Stock.  The Company's  Board of Directors  has  designated
5,000,000 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,  2009 and  2008,  respectively,  there  were no  shares  of
preferred stock issued and outstanding.

RESTRICTED SECURITIES

As of December 31, 2009, we had approximately  83,573,345 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.

                                       9
<PAGE>
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.

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) 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 have disposed of all of the assets and operations.

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.

                                       10
<PAGE>
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.

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.  On March 25,
2010, we formed the wholly-owned  subsidiaries - Caballo Blanco  Communications,
Ltd. and Commerce  Services,  Inc. - as Colorado  corporations  to conduct these
operations.  We anticipate that the operations of Caballo Blanco Communications,
Ltd. will be housed at One  Wilshire,  a premier  communications  hub located in
Southern California to assure reliable and fast delivery of our programming.

(3) RESULTS OF OPERATIONS

The Company  had no  separately  earned  revenue,  except for  nominal  interest
income,  for either of the years ended December 31, 2009 or 2008,  respectively.
All operating  revenues  through  December 31, 2008 were earned in the Company's
former wholly-owned subsidiary, AirGATE Technologies, Inc.

General and  administrative  expenses  for each of the years ended  December 31,
2009 and 2009 and 2008 were approximately $41,000 and $26,000, respectively. The
increase in 2009 expenditures relate,  principally, to 4th quarter 2009 expenses
related to professional  and consulting fees related to the  preparation,  audit
and filing of the Company's financial  statements and Annual Report on Form 10-K
for the year ended December 31, 2008.

The Company recognized  interest  accruals,  amortization of debt financing fees
and accretion of debt discounts of approximately  $744,000 and $1,846,000 during
each of the years ended December 31, 2009 and 2008, respectively.  The Company's
convertible debenture with La Jolla Cove Investors, Inc. matures 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).

On May 4, 2009, the Company entered into a Settlement Agreement and Release with
AirGATE Technologies Inc. (AirGATE),  HM Energy Technologies Inc. (HM), WM Chris
Mathers (Mathers), Kathleen Hanafan (Hanafan), Duke Loi (Loi), Samson Investment
Company (Samson),  Ironman PI Fund (QP), L.P. (Ironman),  John Thomas Bridge and
Opportunity  Fund,  LP (John Thomas and,  collectively  with Samson and Ironman,
SIJ) and Melissa CR 364, LTD (Melissa).  In summary,  as a result of the various
transactions  effected under the Agreement,  SIJ surrendered all of their shares
in the Company;  cancelled  financial  obligations  of the Company that exceeded
$3.6  million,  with  interest;  and  terminated  their rights under 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.  The Company recognized a gain on extinguishment
of debt of  approximately  $465,000 as a result of these actions.  To the extent
that the cancellation of debt constitutes a taxable event,  management is of the
opinion that the Company's  cumulative net operating loss carryforward will more
than offset any taxes due as a result of this event.

Due to the minimal  expenditures  in 2009,  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, 2009 and 2008
were  $(0.00)  and  $(0.07)  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.

                                       11
<PAGE>
(4) PLAN OF BUSINESS

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.

We anticipate  forming two distinct  divisions and operating each within a newly
formed subsidiary corporation - one a Latino-targeted media delivery service and
one a bilingual home shopping network.

Our management intends to develop and leverage  relationships with existing home
shopping  networks  to  build  significant   Hispanic  audiences  that  purchase
merchandise  via internet  connections  and through other smart mobile  devices.
These  relationships  and the know-how of management will conserve  capital that
would  ordinarily  be required  for buying,  inventory  warehousing  management,
development of an online sales  infrastructure,  shipping and returns,  customer
service, and the focus on effective merchandising and marketing.  Our management
understands and is in a position to monitor the buying preferences and behaviors
of its markets--each of which has unique  characteristics.  We intend to develop
intriguing  episodic  productions that feature popular Hispanic talent promoting
their product lines, an approach that has been successfully implemented at other
home shopping platforms such as QVC.

Our  media-delivery  network  will be  similar  to the  approach  taken by video
services such as Hulu(R) with a focus on providing popular Hispanic entertaining
and informative  content as streaming  media to the web and mobile devices.  The
state of the art of video-delivery technology is sophisticated and advanced, and
this business is considered a  content-licensing  and promotion play,  where the
entity's value grows with viewership. Revenue shall be derived from advertising,
subscriptions,  and the sale of smartphone applications.  Channels will organize
content on offer to the widely  varying  tastes of its  markets  and  individual
subscribers,  ranging  from  romance to  mystery to science  fiction to drama to
police  procedurals.  The content will be a combination of individual  segments,
serial productions, and motion pictures.

On March 17, 2010, we announced that we reached agreement with Los Angeles-based
technology company  IPTVWorld,  Inc., to work as partners in the development and
deployment of a broad range of Internet-based  services, with a first release of
a new product line  scheduled for staged release  starting in May,  2010.  These
services will include  compelling video  programming,  including  entertainment,
information,  news, sports, religion, lifestyle,  shopping, and country-specific
programs.  These  offerings are  anticipated to be made available  several ways,
including on a subscription basis through television set-top boxes,  through web
browsers, and, in future versions, through mobile devices. Subscriptions will be
offered that are similar to but far less  expensive  than  traditional  cable or
satellite plans. Also, among the completely  integrated  Internet services to be
offered  will be a home  telephone  service  featuring a low-cost  international
calling  component  which is  expected  to be a popular  option in the  targeted
consumer markets.

On March 25, 2010,  we formed the  wholly-owned  subsidiaries  - Caballo  Blanco
Communications,  Ltd. and Commerce Services,  Inc. - as Colorado corporations to
conduct these  operations.  We anticipate  that the operations of Caballo Blanco
Communications,  Ltd. will be housed at One Wilshire,  a premier  communications
hub located in Southern  California to assure  reliable and fast delivery of our
programming.

(5) LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2009 and 2008,  respectively,  the Company had a working capital
of approximately $(1,071, 000) and $(1,626,000).

Our  business  plan  announced in March 2010 will  require  additional  capital;
however,  our management team has not fully developed the projections  necessary
to  disclose  our future  needs with an  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
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.

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

                                       13
<PAGE>
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

On April 12, 2007,  the Company  dismissed its certifying  accountant,  Robison,
Hill  &  Co.  ("Robison,  Hill").  Robison,  Hill's  reports  on  the  financial
statements  for the years  ended  December  31, 2006 and 2005 did not contain an
adverse opinion or disclaimer of opinion,  and were not qualified or modified as
to uncertainty,  audit scope or accounting principles other than with respect to
a  modification  concerning  the  company  continuing  as a going  concern.  The
decision to change its certifying accountant was approved by the Company's Board
of  Directors.  During  the years  ended  December  31,  2006 and 2005,  and the
subsequent  interim  period  through April 12, 2007, the Company has not had any
disagreements  with  Robison,  Hill on any matter of  accounting  principles  or
practices, financial statement disclosure or auditing scope or procedure.

Effective  April 19, 2007, the Company's  Board of Directors  engaged KBA Group,
LLP (KBA) as the Company's independent registered public accounting firm. During
the two fiscal years ended December 31, 2006 and the  subsequent  interim period
through April 19, 2007, we did not consult with KBA  regarding  either:  (i) the
application  of  accounting  principles  to  a  specified  transaction,   either
completed  or proposed,  or the type of audit  opinion that might be rendered on
our financial statements,  nor did KBA provide written or oral advice to us that
was an  important  factor  considered  by us in  reaching a  decision  as to the
accounting,  auditing or financial  reporting issue; or (ii) any matter that was
either the subject of a disagreement, or a reportable event.

On June 26, 2009,  KBA advised the  Company's  Board of Directors  that they had
resigned  as  the  Company's  independent  registered  public  accounting  firm.
Effective June 1, 2009,  KBA merged with the accounting  firm of BKD, LLP. It is
the  Company's  understanding  that it did not  meet  BKD,  LLP's  audit  client
acceptance  criteria.  The  audit  report  of  KBA on  the  Company's  financial
statements for the year ended December 31, 2007 expressed an unqualified opinion
and  included an  explanatory  paragraph  relating to the  Company's  ability to
continue  as a going  concern  due to  significant  recurring  losses  and other
matters.  Such  audit  report  did not  contain  any other  adverse  opinion  or
disclaimer of opinion or qualification. The Company and KBA have not, during the
Company's two most recent fiscal years or any subsequent period through the date
of dismissal,  had any  disagreement  on any matter of accounting  principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreement,  if not resolved to KBA's  satisfaction,  would have caused KBA to
make reference to the subject matter of the  disagreement in connection with its
reports.

On August 17, 2009,  the Company  engaged S. W. Hatfield,  CPA of Dallas,  Texas
(SWHCPA) as the Company's registered independent public accounting firm to audit
the Company's  financial  statements  for the year ended  December 31, 2008, and
conduct audits and reviews for subsequent  periods as required.  The Company did
not consult  with SWHCPA at any time prior to August 17,  2009,  including  with
regard to the Company's  two most recent  fiscal years ended  December 31, 2007,
and the subsequent interim periods through the date of this Report, with respect
to the application of accounting principles to any specified transaction, either
completed  or proposed,  or the type of audit  opinion that might be rendered on
the Company's  financial  statements,  or any other matters or reportable events
set forth in Item 304(a)(1)(v) of Regulation S-K.

                                       14
<PAGE>
ITEM 9A - CONTROLS AND PROCEDURES

DISCLOSURE  CONTROLS AND PROCEDURES.  Our management,  under the supervision and
with the  participation of our Chief Executive Officer (CEO) and Chief Financial
Officer (CFO), 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.  Based on such  evaluation,
our CEO and CFO have concluded that, as of the end of the period covered by this
Annual Report, our disclosure controls and procedures are effective.  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 CEO
and  CFO,  as  appropriate,   to  allow  timely  decisions   regarding  required
disclosure.

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.

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,  2009.  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, 2009.

This  Annual  Report does not include an  attestation  report of our  registered
public accounting firm regarding our internal control over financial  reporting.
Management's  report was not subject to  attestation  by our  registered  public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only management's report in this Annual Report.

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, 2009 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 merger
transaction  or acquisition  of an operating  business at which time  management
will be able to implement effective controls and procedures.

                                       15
<PAGE>
                                    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
     ----                     ---               ------------------------

Haviland Wright               61              President, Chief Executive Officer
                                              Acting Chief Financial Officer
                                              and Director

Fernando Antonio Gomez        51              Executive Vice President,
                                              Corporate Secretary and Director

Richard T. Steele             62              Director

Ron Vigdor                    41              Corporate Treasurer and Director

The  directors  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

Haviland Wright, Ph.D., President & Chief Executive Officer

Dr. Wright is an international  technology consultant and investor who served as
chief development officer for Profitability of Hawaii, a Honolulu-based software
development  firm.  In  addition,  he is a director  of  Ventura-based  software
company,  Elixir  Technologies  Corporation,  where he was  chairman  from  2003
through  2006  and  managed  a  successful  turnaround.  He  also  serves  as an
Independent  Director of Boston-based  Compass Group of Mutual Funds, managed by
MFS, a wholly owned  subsidiary of Sun Life of Canada.  He was a director of LCD
display  developer Nano Loa, Inc.,  based in Kanagawa,  Japan,  which he founded
with LCD pioneer Akihiro Mochizuki.  Dr. Wright was formerly chairman and CEO of
LCOS  (liquid  crystal on silicon)  display  manufacturer  Displaytech,  Inc. He
served  as chief  scientist  and  senior  vice  president  of  Interleaf,  Inc.,
following  Interleaf's  acquisition of Avalanche  Development  Company,  an SGML
pioneer  that he founded in Boulder,  Colorado.  Dr.  Wright  received  his B.A.
degree from the  University of  Pennsylvania  in  mathematics  and history;  his
M.B.A. and Ph.D. from the University of Pennsylvania,  The Wharton School, where
his areas of concentration  were accounting and systems  sciences.  He completed
the CPA and CMA  accounting  certifications,  has held faculty  positions at the
University of Colorado and the University of Denver,  and has authored  numerous
articles for research and industry publications.

Fernando Antonio Gomez, Executive Vice President and Corporate Secretary

Mr. Gomez is a senior sales and marketing  executive with over twenty-five years
of  experience  in  broadcasting,  cable  television,  and news media within the
United States and  international  markets.  His  background  includes  strategic
marketing planning and sales and affiliate  relations work throughout his career
with Maya  Entertainment,  Batanga.com,  Starmedia/Wanadoo,  MSN  Latino,  Prime
Deportiva, C3D Digital, Bravo International,  The Weather Channel Latin America,
The Inspirational Network, Univision, and Galavision.

                                       16
<PAGE>
Richard T. Steele, Director

Mr. Steele is President and Chief Executive of Network Distribution Group, Ltd.,
a Cable Television, Satellite, Broadcast, Media and Internet consulting company,
which  assists  cable  television   networks  with  their   respective   network
distribution  onto cable  television  systems,  broadcast  stations,  as well as
satellite,   and  assists  start-up  internet/media   companies  with  financial
planning,  funding  and  distribution.  In the past four years,  Mr.  Steele has
become involved with a number of  Spanish-language  media projects,  including a
children's cable television  network, a cable television shopping channel, a web
membership-based enterprise, and an online shopping venture.

Ron Vigdor, Treasurer

Mr. Vigdor is an  entrepreneur  and active member of his family's  international
trading  and  investment  company,  where he has worked from a young age. In the
late 80's,  Vigdor  founded an ISP and  long-distance  calling-card  company and
gained  telecommunications  and trade-financing  experience in South America and
the Caribbean. Vigdor served as lead investor and founding Chairman of the Board
of Fort  Lauderdale-based  Balize,  Inc., an  early-to-market  social-networking
venture.  He has  served in  senior  executive  and  directorial  capacities  at
companies around the world. In the last several years, Vigdor has been active in
several  companies,  including  the Canadian  e-commerce  and auction  processor
Kyozou   (www.kyozou.com),   GPS   vehicle   locator   system   Skyewatch,   and
safe-baby-bottle manufacturer BornFree, Inc. (www.newbornfree.com).  Vigdor is a
US citizen, married with children and living in Boca Raton, Florida.

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.

                                       17
<PAGE>
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
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, 2009 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.


                (Remainder of this page left blank intentionally)

                                       18
<PAGE>
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.

                           SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                                                                                   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>
Haviland Wright 2009   $    -0-     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $    -0-
President, CEO

R. Wayne Duke   2009   $    -0-     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $    -0-
Former CEO      2008   $    -0-     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $    -0-
                2007   $    -0-     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $    -0-
</TABLE>

As of December 31, 2009, 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      of class
     ----------------                   --------------       ----------------     ---------      --------
<S>                                     <C>                 <C>                  <C>             <C>
K&D Equity Investment, Inc. (3)           51,000,000                --           51,000,000       41.35%
Midland Trading, Inc. (3)                  7,196,429                --            7,196,429        5.84%
South Beach Live, Inc. (3)                 7,196,429                --            7,196,429        5.84%

Officers and Directors as a group (4)            -0-                --                  -0-        0.00%
</TABLE>

----------
(1)  On April 15,  2010,  there  were  136,089,746  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 December
     31,  2009 (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 106,337,307  shares of common stock  outstanding on
     December 31, 2008, and (ii) any shares of common stock which the person has
     the right to  acquire  within  60 days  upon the  exercise  of  options  or

                                       19
<PAGE>
     warrants or conversion of convertible securities  (approximately  3,337,750
     shares  on  the   exercise  of  the  LaJolla   outstanding   warrants   and
     approximately  34,905,488 shares to be issued if there was total conversion
     of the LaJolla  debenture at March 26, 2010, the date of the last debenture
     conversion notice) - approximately38,243,238 beneficial shares in total. As
     the Company's common stock is trading below $0.30 per share, LaJolla is not
     required to convert,  nor is the Company obligated 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 17120 N. Dallas Parkway,
     Suite 235, Dallas, TX 75248.
(4)  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.

DIRECTOR INDEPENDENCE

Pursuant to the Company's current structure,  we believe that Mr. Steele and Mr.
Vigdor  meet  the  requirements  of  being  "independent"  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  (SWHCPA) of Dallas,
Texas, KBA Group, LLP (KBA) of Dallas, Texas or Robison, Hill & Company (RHC) of
Salt Lake City, UT.

                                               Year ended        Year ended
                                               December 31,      December 31,
                                                  2009              2008
                                                 -------           -------
1.  Audit fees
    SWH                                          $12,500           $    --
    KBA                                           15,000            83,000
    RHC                                               --             4,800
2.  Audit-related fees                                --                --
3.  Tax fees                                          --                --
4.  All other fees                                    --                --
                                                 -------           -------

          Totals                                 $27,500           $87,800
                                                 =======           =======

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
     Robison,  Hill & Company  or KBA Group  LLP,  both our  former  independent
     accountants,  or 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.

                                       20
<PAGE>
We have considered whether the provision of any non-audit  services,  currently,
in the past or in the future, is compatible with either Robison, Hill & Company,
KBA Group, LLC or 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:  Neither Robison, Hill &
Company, KBA Group, LLC or S. W. Hatfield,  CPA charged 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

3.1      Articles of Incorporation.  Incorporated herein by reference to Exhibit
         3.01(i) on Form 8-K filed on January 23,2008.
3.2      Amended and Restated Bylaws of The X-Change  Corporation.  Incorporated
         herein by  reference  to Exhibit  3.01(ii) on Form 8-K filed on January
         23, 2008.
10.1     Promissory   Note,   dated  August  15,  2006,   between  the  X-Change
         Corporation and Melissa CR 364 Ltd. Incorporated herein by reference to
         Exhibit 10.01  included with our Current  Report on Form 8-K filed with
         the SEC on August 21, 2006.
10.2     Promissory   note,   dated  August  15,  2008,   between  the  X-Change
         Corporation and Melissa CR 364 Ltd. Incorporated herein by reference to
         Exhibit 10.02  included with our Current  Report on Form 8-K filed with
         the SEC on August 21, 2008.
10.3     Securities  Purchase  Agreement,  dated  December 4, 2007, by and among
         X-Change, AirGATE, and Samson Investment Company, Ironman PI Fund (QP),
         LP, and John Thomas Bridge & Opportunity Fund, LP.  Incorporated herein
         by reference to Exhibit 4.1 on Form 8-K filed on December 10, 2007.
10.4     Securities  Purchase  Agreement,  dated  December 4, 2007, by and among
         X-Change, AirGATE, and Samson Investment Company, Ironman PI Fund (QP),
         LP, and John Thomas Bridge & Opportunity Fund, LP.  Incorporated herein
         by reference to Exhibit 4.1 on Form 8-K filed on December 10, 2007.
10.5     Form of Senior Secured Convertible Term Note--Tranche A, dated December
         4, 2007, by and among X-Change and Samson Investment  Company,  Ironman
         PI Fund (QP),  LP,  and John  Thomas  Bridge &  Opportunity  Fund,  LP.
         Incorporated  herein by  reference  to Exhibit 4.2 on Form 8-K filed on
         December 10, 2007.
10.6     Form of Tranche A Warrant dated December 4, 2007, by and among X-Change
         and Samson  Investment  Company,  Ironman  PI Fund  (QP),  LP, and John
         Thomas Bridge & Opportunity Fund, LP.  Incorporated herein by reference
         to Exhibit 10.1 on Form 8-K filed on December 10, 2007.
10.7     Registration  Rights  Agreement  dated  December 4, 2007,  by and among
         X-Change and Samson Investment  Company,  Ironman PI Fund (QP), LP, and
         John Thomas Bridge & Opportunity  Fund, LP, and Tejas Securities Group,
         Inc. Incorporated herein by reference to Exhibit 10.2 on Form 8-K filed
         on December 10, 2007.
10.8     Security and Guaranty  Agreements  dated  December 4, 2007 by and among
         X-Change,  AirGATE and Samson Investment Company, Ironman PI Fund (QP),
         LP, and John Thomas Bridge & Opportunity Fund, LP.  Incorporated herein
         by reference to Exhibits 10.3 and 10.4  respectively  on Form 8-K filed
         on December 10, 2007.
10.9     Amendment No. 1 to the Securities  Purchase  Agreement,  dated July 10,
         2008, by and among The X-Change Corporation, a Nevada corporation,  and
         AirGATE Technologies, Inc., a Texas corporation), and Samson Investment
         Company,  a Nevada  corporation,  Ironman PI Fund (QP),  L.P.,  a Texas
         limited partnership, and John Thomas Bridge and Opportunity Fund, LP, a
         Delaware  limited  partnership.  Incorporated  herein by  reference  to
         Exhibit 4.1 on Form 8-K filed on July 16, 2008.
10.10    Form of Amended and Restated  Senior  Secured  Convertible  Term Note -
         Tranche  A,  effective  December  4,  2007,  by and among The  X-Change
         Corporation,  a Nevada corporation,  and AirGATE Technologies,  Inc., a
         Texas   corporation),   and  Samson   Investment   Company,   a  Nevada
         corporation,  Ironman PI Fund (QP), L.P., a Texas limited  partnership,
         and John Thomas Bridge and  Opportunity  Fund,  LP, a Delaware  limited
         partnership.  Incorporated  herein by  reference to Exhibit 4.2 on Form
         8-K filed on July 16, 2008.

                                       21
<PAGE>
10.11    Form of Senior  Secured  Convertible  Term Note - Tranche B, dated July
         10, 2008, by and among The X-Change Corporation,  a Nevada corporation,
         and  AirGATE  Technologies,  Inc.,  a Texas  corporation),  and  Samson
         Investment Company, a Nevada corporation, Ironman PI Fund (QP), L.P., a
         Texas limited partnership, and John Thomas Bridge and Opportunity Fund,
         LP, a Delaware limited partnership. Incorporated herein by reference to
         Exhibit 4.3 on Form 8-K filed on July 16, 2008.
10.12    Form of Amended and Restated  Tranche A Warrant  effective  December 4,
         2007, by and among The X-Change Corporation, a Nevada corporation,  and
         AirGATE Technologies, Inc., a Texas corporation), and Samson Investment
         Company,  a Nevada  corporation,  Ironman PI Fund (QP),  L.P.,  a Texas
         limited partnership, and John Thomas Bridge and Opportunity Fund, LP, a
         Delaware  limited  partnership.  Incorporated  herein by  reference  to
         Exhibit 10.1 on Form 8-K filed on July 16, 2008.
10.13    Form of  Tranche  B  Warrant  dated  July 10,  2008,  by and  among The
         X-Change Corporation,  a Nevada corporation,  and AirGATE Technologies,
         Inc., a Texas  corporation),  and Samson Investment  Company,  a Nevada
         corporation,  Ironman PI Fund (QP), L.P., a Texas limited  partnership,
         and John Thomas Bridge and  Opportunity  Fund,  LP, a Delaware  limited
         partnership.  Incorporated  herein by reference to Exhibit 10.2 on Form
         8-K filed on July 16, 2008.
10.14    Amendment No. 1 to the  Registration  Rights  Agreement  dated July 10,
         2008, by and among The X-Change Corporation, a Nevada corporation,  and
         AirGATE Technologies, Inc., a Texas corporation), and Samson Investment
         Company,  a Nevada  corporation,  Ironman PI Fund (QP),  L.P.,  a Texas
         limited partnership, and John Thomas Bridge and Opportunity Fund, LP, a
         Delaware limited  partnership and Tejas Securities Group, Inc., a Texas
         corporation.  Incorporated  herein by reference to Exhibit 10.3 on Form
         8-K filed on July 16, 2008.
10.15    Voting  Agreement  entered  into on July 10,  2008,  by and  among  The
         X-Change Corporation,  a Nevada corporation,  and AirGATE Technologies,
         Inc., a Texas  corporation),  and Samson Investment  Company,  a Nevada
         corporation,  Ironman PI Fund (QP), L.P., a Texas limited  partnership,
         and John Thomas Bridge and  Opportunity  Fund,  LP, a Delaware  limited
         partnership  and certain of The  X-Change  Corporation's  shareholders.
         Incorporated  herein by  reference to Exhibit 10.4 on Form 8-K filed on
         July 16, 2008.
10.16    Amendment to Convertible  Promissory Note, dated as of August 22, 2008,
         by and among The X-Change Corporation,  AirGATE Technologies,  Inc. and
         Melissa CR 364 Ltd. Incorporated herein by reference to Exhibit 10.1 on
         Form 8-K filed on August 28, 2008.
21.1     List of subsidiaries - Not applicable as of December 31, 2009
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 follow beginning on page F-1)

                                       22
<PAGE>
                            THE X-CHANGE CORPORATION

                          INDEX TO FINANCIAL STATEMENTS

                                                                            Page
                                                                            ----

REPORT OF REGISTERED INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM           F-2

FINANCIAL STATEMENTS

   Balance Sheets
      as of December 31, 2009 and 2008                                      F-3

   Statements of Operations and Comprehensive Loss
      for the years ended December 31, 2009 and 2008                        F-4

   Statement of Changes in Stockholders' Equity (Deficit)
      for the years ended December 31, 2009 and 2008                        F-5

   Statements of Cash Flows
      for the years ended December 31 2009 and 2008                         F-6

   Notes to Financial Statements                                            F-7


                                      F-1
<PAGE>
                        LETTERHEAD OF S. W. HATFIELD, CPA


        REPORT OF REGISTERED INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
The X-Change Corporation

We have audited the  accompanying  balance sheet of The X-Change  Corporation (a
Nevada  corporation) as of December 31, 2009 and 2008 and the related statements
of operations and comprehensive loss, changes in stockholders'  equity (deficit)
and  cash  flows  for each of the  years  ended  December  31,  2009  and  2008,
respectively. These financial statements are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  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 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 financial  statements referred to above, in our opinion,  present fairly, in
all material respects,  the financial position of The X-Change Corporation as of
December 31, 2008 and the results of its  operations  and cash flows for each of
the years  ended  December  31, 2009 and 2008,  in  conformity  with  accounting
principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note C to the
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
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
March 31, 2010 (except for Note O
 as to which the date is April 20, 2010)

                                      F-2
<PAGE>
                            THE X-CHANGE CORPORATION
                                 BALANCE SHEETS
                           December 31, 2009 and 2008

<TABLE>
<CAPTION>
                                                                      December 31,           December 31,
                                                                          2009                   2008
                                                                      ------------           ------------
<S>                                                                   <C>                    <C>
                                     ASSETS

CURRENT ASSETS
  Cash on hand and in bank                                            $      1,080           $     18,503
                                                                      ------------           ------------

      TOTAL CURRENT ASSETS                                                   1,080                 18,503
                                                                      ------------           ------------
OTHER ASSETS
  Prepaid debt financing fees, net of accumulated
   amortization of approximately $21,332 and $168,507                        8,001                914,880
                                                                      ------------           ------------

      TOTAL OTHER ASSETS                                                     8,001                914,880
                                                                      ------------           ------------

TOTAL ASSETS                                                          $      9,081           $    933,383
                                                                      ============           ============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
  Convertible debenture payable, net of unamortized discount          $    249,532           $    137,750
  Convertible notes payable, net of unamortized discount                        --                834,343
  Notes payable to shareholder                                             723,926                668,239
  Accounts payable - trade                                                   1,245                     --
  Accrued interest payable                                                  97,134                  4,600
                                                                      ------------           ------------

      TOTAL CURRENT LIABILITIES                                          1,071,837              1,644,932
                                                                      ------------           ------------

      TOTAL LIABILITIES                                                  1,071,837              1,644,932
                                                                      ------------           ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
  Preferred stock - $0.001 par value
    75,000,000 shares authorized
    none issued and outstanding                                                 --                     --
  Common stock - $0.001 par value
    750,000,000 shares authorized
    106,337,307 and 104,108,673 shares
    issued and outstanding                                                 106,337                104,109
  Additional paid-in capital                                            17,729,560             17,938,909
  Accumulated deficit                                                  (18,898,653)           (18,545,328)
                                                                      ------------           ------------
      TOTAL STOCKHOLDERS' DEFICIT                                       (1,062,756)              (711,549)
                                                                      ------------           ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                           $      9,081           $    933,383
                                                                      ============           ============
</TABLE>

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

                                      F-3
<PAGE>
                            THE X-CHANGE CORPORATION
                 STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                     Years ended December 31, 2009 and 2008
<TABLE>
<CAPTION>
                                                                        Year ended             Year ended
                                                                        December 31,           December 31,
                                                                            2009                   2008
                                                                        ------------           ------------
<S>                                                                     <C>                    <C>
REVENUES - net of returns and allowances                                $         --           $         --
COST OF SALES                                                                     --                     --
                                                                        ------------           ------------
GROSS PROFIT                                                                      --                     --
                                                                        ------------           ------------

OPERATING EXPENSES
  General and administrative expenses                                         40,852                 25,832
                                                                        ------------           ------------
      TOTAL OPERATING EXPENSES                                                40,852                 25,832
                                                                        ------------           ------------

LOSS FROM OPERATIONS                                                         (40,852)               (25,832)

OTHER INCOME (EXPENSE)
  Interest income                                                                 --                  3,559
  Interest expense                                                          (211,503)              (725,722)
  Amortization of financing fees and note discounts                         (532,445)            (1,120,241)
  Gain on forgiveness of debt                                                464,975                     --
  Other                                                                           --                 (4,807)
                                                                        ------------           ------------
      TOTAL OTHER INCOME (EXPENSE)                                          (278,973)            (1,847,211)
                                                                        ------------           ------------
LOSS FROM CONTINUING OPERATIONS
 BEFORE PROVISION FOR INCOME TAXES                                          (319,825)            (1,873,043)

PROVISION FOR INCOME TAXES                                                        --                     --
                                                                        ------------           ------------

LOSS FROM CONTINUING OPERATIONS                                             (319,825)            (1,873,043)

DISCONTINUED OPERATIONS, NET OF INCOME TAXES
  Loss from discontinued operations, net of provision
   for income taxes of $-0- and $-0-, respectively                                --             (1,140,199)
  Loss on disposition of discontinued operations, net of
   provision for income taxes of $-0- and $-0-, respectively                 (33,500)              (101,021)
                                                                        ------------           ------------

LOSS FROM DISCONTINUED OPERATIONS                                            (33,500)            (1,241,220)
                                                                        ------------           ------------

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

COMPREHENSIVE LOSS                                                      $   (353,325)          $ (3,114,263)
                                                                        ============           ============
Net loss per weighted-average share of common stock
 outstanding, calculated on Net Loss - basic and fully diluted
   From continuing operations                                           $      (0.00)          $      (0.04)
   From discontinued operations                                                (0.00)                 (0.03)
                                                                        ------------           ------------
      TOTAL                                                             $      (0.00)          $      (0.07)
                                                                        ============           ============
Weighted-average number of shares
 of common stock outstanding                                             106,259,007             43,567,672
                                                                        ============           ============
</TABLE>

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

                                      F-4
<PAGE>
                            THE X-CHANGE CORPORATION
                  STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
                     Years ended December 31, 2009 and 2008

<TABLE>
<CAPTION>
                                                   Common Stock            Additional
                                               ---------------------        paid-in       Accumulated
                                               Shares         Amount        capital         deficit          Total
                                               ------         ------        -------         -------          -----
<S>                                          <C>            <C>          <C>             <C>             <C>
Common stock issued for
  Financing fees                             17,202,139      $ 17,202    $   448,727     $         --    $   465,929
  Services                                      600,000           600         24,900               --         25,500
  Debenture conversion                        3,812,161         3,812         32,705               --         36,517
  Foreclosure on and conversion of
   subsidiary debt                           51,000,000        51,000        459,000               --        510,000
Stock based compensation earned                      --            --        130,299               --        130,299
Stock based compensation forfeited
 at foreclosure                                      --            --       (618,816)              --       (618,816)
Debt discount on convertible
 notes and debentures payable                        --            --        713,599               --        713,599
Warrants issued for financing fees                   --            --        790,163               --        790,163
Balancing of issued and outstanding
 stock to transfer agent and historical
 corporate records                              (95,128)          (95)            95               --             --
Net loss for the year                                --            --             --       (3,114,263)    (3,114,263)
                                           ------------      --------    -----------     ------------    -----------

BALANCES AT DECEMBER 31, 2008               104,108,673       104,109     17,729,670      (18,545,328)      (711,549)

Common stock issued for
 Debenture conversion                         2,118,506         2,118             --               --          2,118
Balancing of issued and outstanding
 stock to transfer agent and historical
 corporate records                              110,128           110           (110)              --             --
Net loss for the year                                --            --             --         (353,325)      (353,325)
                                           ------------      --------    -----------     ------------    -----------

BALANCES AT DECEMBER 31, 2009               106,337,307      $106,337    $17,729,560     $(18,898,653)   $(1,062,756)
                                           ============      ========    ===========     ============    ===========
</TABLE>


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

                                      F-5
<PAGE>
                            THE X-CHANGE CORPORATION
                            STATEMENTS OF CASH FLOWS
                     Years ended December 31, 2009 and 2008

<TABLE>
<CAPTION>
                                                                   Year ended            Year ended
                                                                   December 31,          December 31,
                                                                      2009                  2008
                                                                   -----------           -----------
<S>                                                                <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss for the year                                            $  (353,325)          $(3,114,263)
  Adjustments to reconcile net loss to net cash
   provided by operating activities
     Depreciation and amortization                                     532,443             1,108,499
     Gain on forgiveness of debt                                      (464,975)                   --
     Equity in loss of foreclosed subsidiary                                --             1,140,199
     Expenses paid with common stock                                        --                25,500
     Interest expense capitalized as principal                         118,400               217,758
     Interest expense paid with common stock                               568               481,517
     Loss on foreclosure of subsidiary                                 101,021
     Net cash used by foreclosed subsidiary                                 --              (104,619)
  (Increase) Decrease in
     Deferred financing fees and other prepaid expenses                     --              (258,801)
  Increase (Decrease) in
     Accounts payable - trade                                            1,245                    --
     Accrued interest payable                                           92,534                (2,952)
                                                                   -----------           -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                    (73,110)             (406,141)
                                                                   -----------           -----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Cash advanced to foreclosed subsidiary                                    --            (2,049,000)
                                                                   -----------           -----------
NET CASH USED IN INVESTING ACTIVITIES                                       --            (2,049,000)
                                                                   -----------           -----------
CASH FLOWS FROM FINANCING ACTIVITIES
  Cash received on sale of common stock                                     --                    --
  Cash received on notes payable, net of fees paid                          --             1,800,000
  Cash paid on related party notes payable                              55,687                    --
  Cash paid on convertible debenture principal                              --               (66,225)
                                                                   -----------           -----------
NET CASH USED IN FINANCING ACTIVITIES                                   55,687             1,733,775
                                                                   -----------           -----------

INCREASE (DECREASE) IN CASH                                            (17,423)             (721,366)

Cash at beginning of period                                             18,503               739,869
                                                                   -----------           -----------

CASH AT END OF PERIOD                                              $     1,080           $    18,503
                                                                   ===========           ===========
SUPPLEMENTAL DISCLOSURE OF INTEREST AND INCOME TAXES PAID
  Interest paid for the period                                     $        --           $     4,454
                                                                   ===========           ===========
  Income taxes paid for the period                                 $        --           $        --
                                                                   ===========           ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
  Convertible debenture converted to common stock                  $     1,550           $        --
                                                                   ===========           ===========
</TABLE>


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

                                      F-6
<PAGE>
                            THE X-CHANGE CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2009 and 2008

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.

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 foreclosure  proceeding
was  consummated  on January 16,  2009 and  Company's  holdings in AirGATE  were
forfeited.  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 March 11, 2010, The Company 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.  The
Company  anticipates  having two distinct  divisions and operating each within a
wholly-owned  operating subsidiary  corporation  consisting of a Latino-targeted
media delivery service and a bilingual home shopping network. On March 25, 2010,
we formed the wholly-owned  subsidiaries - Caballo Blanco  Communications,  Ltd.
and  Commerce  Services,  Inc.  - as  Colorado  corporations  to  conduct  these
operations.

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.

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,  2009 and  2008,  respectively.  Due to the
foreclosure on the Company's  former  subsidiary as of December 31, 2008,  there
were no intercompany transactions to eliminate in consolidation.

                                      F-7
<PAGE>
                            THE X-CHANGE CORPORATION
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2009 and 2008

NOTE C - GOING CONCERN UNCERTAINTY

As of December 31, 2009,  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  current  business  plan is to focus on offering  multimedia  and
e-commerce to the diverse and growing  Hispanic markets within the United States
and in other countries.  The Company  anticipates  having two distinct divisions
and  operating  each  within a  wholly-owned  operating  subsidiary  corporation
consisting of a  Latino-targeted  media  delivery  service and a bilingual  home
shopping network.  On March 25, 2010, we formed the wholly-owned  subsidiaries -
Caballo Blanco  Communications,  Ltd. and Commerce Services,  Inc. - as Colorado
corporations to conduct these operations.

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
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
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, 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.

                                      F-8
<PAGE>
                            THE X-CHANGE CORPORATION
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2009 and 2008

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.   Property and Equipment

     Property and equipment were recorded at cost.  Depreciation  was calculated
     on a  straight-line  basis over the  estimated  useful lives of five years.
     Maintenance and repairs are charged to operations as incurred.

     The  Company  recorded  impairment  losses  on  long-lived  assets  used in
     operations when events and circumstances  indicate assets might be impaired
     and the  undiscounted  cash flows estimated to be generated by those assets
     are less  than  their  carrying  amounts.  The  amount of  impairment  loss
     recognized is the amount by which the carrying amounts of the assets exceed
     the estimated fair values.

3.   Financing Fees

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

4.   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.

5.   Revenue Recognition

     The Company generated revenues through its foreclosed AirGATE subsidiary in
     accordance  with  Securities  and  Exchange   Commission  Staff  Accounting
     Bulletin No. 104, "Revenue Recognition" (SAB 104). Revenue included amounts
     earned  from  collaborative  agreements  and  feasibility  studies  and was
     comprised of reimbursed  research and development  costs as well as upfront
     and milestone payments.

     Revenue  from the sale of products was  recognized  at the time the product
     was shipped and the title transferred to customers,  provided no continuing
     obligation  existed  and  there was  reasonable  assurance  of  collection.
     Non-refundable  upfront  payments  received upon execution of collaborative
     agreements  were recorded as deferred  revenue and were recognized over the
     term of the collaborative agreement.  Such period generally represented the
     research and  development  period set forth in the work plan defined in the
     respective   agreements   between   the   Company   and   its   third-party
     collaborators.   Milestone   payments  were   recognized  as  revenue  upon
     achievement  of  the  "at  risk"  milestone   events  which  represent  the
     culmination of the earnings process related to that milestone. These events
     were generally acknowledged by the customer in a sign-off process. Revenues
     pursuant to servicing or support  agreements  were recognized over the term
     of  those   contracts  and  were  generally   separate  from  research  and
     development agreements or product delivery agreements.

                                      F-9
<PAGE>
                            THE X-CHANGE CORPORATION
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2009 and 2008

NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

6.   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.

7.   Research and Development

     Research and development costs were expensed as incurred.

8.   Income taxes

     The Company  files  income tax returns in the United  States of America and
     various states, as appropriate and applicable. As a result of the Company's
     bankruptcy action, 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,  2008,  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.

     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.

9.   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.

                                      F-10
<PAGE>
                            THE X-CHANGE CORPORATION
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2009 and 2008

NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

9. Income (Loss) per share - continued

     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, 2009 and 2008,  and  subsequent  thereto,  the Company's
     outstanding  stock  options,   warrants,  and  convertible  debentures  are
     considered to be anti-dilutive due to the Company's net operating loss.

10.  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.

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

Financial instruments,  which potentially subject us to a concentration of risk,
include cash and, in prior periods,  accounts  receivable.  The customers of our
former  subsidiary,  AirGATE,  were based in the  United  States and we were not
subject to exchange risk for accounts receivable.

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, 2009 and 2008, and subsequent
thereto,  respectively, the Company may have, from time-to-time, 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.

                                      F-11
<PAGE>
                            THE X-CHANGE CORPORATION
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2009 and 2008

NOTE G - DISCONTINUED OPERATIONS

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.

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. 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.

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.  As  the
foreclosure was in progress at December 31, 2008 and the ultimate outcome of the
action was  complete  within a  determinable  period prior to the release of the
Company's financial  statements;  the effect of this foreclosure is reflected in
the accompanying financial statements as of December 31, 2008.

As of December 31, 2008, the Company has no significant assets or operations.

The results of AirGATE's  operations  for the respective  periods  presented are
reported  as a  component  of  discontinued  operations  in  the  statements  of
operations.  Additionally,  the respective  gain or loss incurred on the sale of
the  Company's  operations  are also  presented  separately  as a  component  of
discontinued operations.

Summarized  results of  operations  for the disposed  operations  for the period
ended December 31, 2008 is as follows:

                                                    December 31,
                                                       2008
                                                    -----------

     Net sales                                      $   386,755
                                                    ===========
     Operating income (loss)                        $(1,076,181)
                                                    ===========
     Loss from discontinued operations              $(1,140,199)
                                                    ===========

NOTE H - DEFERRED COSTS

During  Calendar  2008 and prior  periods,  significant  costs were  incurred in
arranging and placement of various debt financings. The amounts recorded include
commissions,  underwriter  fees,  legal fees and an estimated  value of warrants
issued for services  rendered in connection with debt  issuances.  The valuation
techniques  used in applying the warrant  valuation  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
warrants  issued  have  characteristics  significantly  different  from those of
traded  options,  and because  changes in the subjective  input  assumptions can
materially  affect  the fair  value  estimate,  the  warrant  valuations  do not
necessarily provide a reliable single measure of their fair value. Aggregate net
debt issuance costs of approximately  $76,694 and $914,880 remained  capitalized
as of  December  31, 2009 and 2008,  respectively,  inclusive  of  approximately
$68,693 and $531,599 relating to warrants issued in connection with debt.

                                      F-12
<PAGE>
                            THE X-CHANGE CORPORATION
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2009 and 2008

NOTE I - 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 is amortized this amount over
the initial two year life of the note resulting in non-cash  charges to earnings
included in interest expense over a two year period.  The  amortization  expense
related to this  feature  for the year  ending  December  31,  2008 and 2007 was
approximately $243,039 and $386,292, respectively.

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
September 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.

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.

As of December 31, 2009 and 2008,  respectively,  the outstanding balance on the
Melissa  Note  is  approximately  $668,239,  inclusive  of  capitalized  accrued
interest  through  December 31, 2008.  As of December 31, 2009,  the Company has
accrued interest payable of  approximately  $71,000 on this note.  Interest will
continue to accrue at 10% per annum subsequent thereto.

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, 2009, South Beach or its affiliates have advanced an
aggregate of approximately $56,000 against this note.

                                      F-13
<PAGE>
                            THE X-CHANGE CORPORATION
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2009 and 2008

NOTE I - DEBT FINANCING ARRANGEMENTS

LCII Debentures

During the  quarter  ending  September  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 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.  At December 31, 2009 and 2008,  respectively,
the outstanding principal amount of convertible debentures totaled approximately
$318,225 and $319,775.

As of  December  31,  2009,  a  disagreement  between  LCII  and  the  Company's
management  over the  requirements  of the  contractual  mandatory  exercise  of
approximately  155,500  warrants  related  to the  conversion  of  approximately
$15,500 of the  debenture  balance  into  common  stock  during the period  from
October  2008  through  January  2009.  The  disputed  balance is  approximately
$1,555,000  due to the Company on  contractually  exercisable  warrants by LCII.
There is a remote possibility that this delinquency could be deemed a default by
LCII by the  Company's  management.  The Company's  management is  investigating
potential remedies to this situation.

SIJ Financing

On December 4, 2007, the Company  entered into a Securities  Purchase  Agreement
("SPA") with Samson  Investment  Company  ("Samson"),  Ironman PI Fund (QP),  LP
("Ironman"),  and John Thomas Bridge & Opportunity Fund, LP ("Opportunity Fund")
("SIJ  Investors").  In addition to the SPA,  with each of the SIJ Investors the
Company also entered into a Senior  Secured  Convertible  Term  Note--Tranche  A
("Tranche A Notes") and a Tranche A Warrant ("Tranche A Warrants"). The Company,
the SIJ Investors and Tejas  Securities  Group,  Inc.  ("Tejas") also executed a
Registration  Rights Agreement ("RRA").  Finally,  the Company and the Investors
executed a Security Agreement and a Guaranty Agreement.

                                      F-14
<PAGE>
                            THE X-CHANGE CORPORATION
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2009 and 2008

NOTE I - DEBT FINANCING ARRANGEMENTS - CONTINUED

SIJ Financing - continued

The SPA provides the terms on which the SIJ Investors  provided the Company with
$1.8  million in cash and the  Company in return  issuing  the  Tranche A Notes,
Tranche A Warrants and providing certain  registration  obligations as set forth
in the RRA. The SPA also affords the SIJ Investors  with  preemptive  rights.  A
second,  Tranche  B,  financing  is  addressed  in the SPA and  occurred  during
Calendar 2008 pursuant to the defined  terms and  conditions.  The SIJ Investors
provided an  additional  $1.8 million in cash and the Company  issued  Tranche B
documents substantially similar to the Tranche A Notes and Tranche A Warrants.

The Tranche A & B Notes  obligate the Company to repay to the SIJ  Investors the
aggregate  principal  amount of $1.8  million,  together with interest at 8% per
annum.  Principal on these notes is due five years after  issuance.  Interest on
the notes accrues and is payable quarterly,  although the Company has the option
to add accrued and unpaid  interest to the outstanding  principal  amount of the
notes. The Tranche A & B Notes are convertible at the option of the Investors at
a conversion price of $0.20. An automatic conversion feature also exists at this
same conversion  price, and is applicable upon the Company's  achieving  certain
commercialization  milestones.  Due  to the  loss  of  the  Company's  operating
subsidiary  to  foreclosure,   the   commercialization   milestones   triggering
conversion have become moot.

As additional  consideration  for the aggregate  $3.6 million cash,  the Company
issued the SIJ  Investors  Tranche A & Tranche B Warrants  that are  exercisable
into an aggregate  16,608,929  million  shares of the Company's  common stock at
exercise  prices  between  $0.07 and $0.50 per share.  Each issue of warrants is
exercisable for a period of five years from the issue date.

All shares of the Company's common stock issuable upon conversion of the Tranche
A &B Notes and exercise of the Tranche A &B Warrants, as well as shares issuable
to Tejas upon exercise of their warrant rights are subject to the RRA.  Pursuant
to the RRA, the Company agreed to register, at its expense, all such shares upon
request of an SIJ Investor,  provided that no demand may be made within 180 days
of the date of the closing.

The  obligations  of the Company  under the Tranche A & B Notes are secured by a
lien on and security interest in all of AirGATE Technology Inc.'s assets.

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 issued in Calendar 2008 and 2007,  respectively,
was calculated at approximately  $1,025,012 and $740,404 using the Black-Scholes
model.

The following assumptions were used in these calculations

                                              Tranche A        Tranche B
                                                2007             2008
                                              --------         --------

     Discount rate                               3.28%            3.10%
     Volatility                                 154.0%           162.0%
     Expected term                            5 years          5 years

The  Company  also   calculated  a  beneficial   conversion   feature   totaling
approximately  $767,868  and  $1,059,596,  respectively  for the Tranche B Notes
issued  during 2008 and the Tranche A Notes issued  during 2007.  The Company is
amortizing  both the  warrant  value  and  value  attributed  to the  beneficial
conversion  feature over the respective  term of the  debentures.  Additionally,
accrued  interest is being  capitalized to the note on a quarterly basis. As the
accrued interest itself is convertible into common shares, additional beneficial
conversion  amounts are being  calculated  each quarter and  amortized  over the
remaining term of the debentures. The non-cash charge to income for amortization
of both warrant allocation and all beneficial  conversion amounts is included in
interest expense.

                                      F-15
<PAGE>
                            THE X-CHANGE CORPORATION
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2009 and 2008

NOTE I - DEBT FINANCING ARRANGEMENTS - CONTINUED

SIJ Financing - continued

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).

Under the terms of the  Agreement,  (i) SIJ foreclosed on the assets of AirGATE,
which had been  security for the SIJ Notes;  (ii) SIJ  transferred  and assigned
7,196,429 shares of the Company's common stock held by Samson,  7,196,429 shares
of the  Company's  common  stock held by  Ironman  and  2,321,428  shares of the
Company's  common  stock held by John  Thomas,  comprising  all of the shares of
Company  common  stock  owned by them,  to Melissa  and its  assigns;  (iii) SIJ
cancelled the SIJ Notes, SIJ Guaranty,  the Tranche A Warrants and the Tranche B
Warrants  issued  in  connection  with the SIJ  Notes,  and any  other  security
convertible or exchangeable  into the common stock of the Company;  (iv) SIJ and
Hanafan paid  $75,000.00 to Melissa to defray costs to be incurred by Melissa on
behalf of the Company for various general and administrative  expenses;  and (v)
all the  parties  agree to mutual  releases  and  confidentiality,  except  that
Melissa did not release the Company from the Melissa Note, described above.

As a result  of the  various  transactions  effected  under the  Agreement,  SIJ
surrendered  all of their shares in the  Company;  cancelled  and 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.  To the extent that the  cancellation of these
debts   constitutes  a  taxable   event,   the  Company's  net  operating   loss
carry-forward is anticipated to compensate for any taxes due from this event.

At  December  31,  2009 and 2008,  the  principal  amount  of these  convertible
debentures outstanding totaled $-0- and $3,839,358, respectively.

The Company  incurred debt issuance  costs in connection  with the SIJ Financing
which were recorded at approximately  $489,881 and $579,315 during Calendar 2008
and 2007,  respectively,  including  the value of warrants  issued in connection
with debt placement.

NOTE J - INCOME TAXES

The  components  of income tax  (benefit)  expense  for each of the years  ended
December 31, 2009 and 2008, respectively, are as follows:

                                       Year ended               Year ended
                                       December 31,             December 31,
                                          2009                     2008
                                         -------                  -------
     Federal:
       Current                           $    --                  $    --
       Deferred                               --                       --
                                         -------                  -------
                                              --                       --
                                         -------                  -------
     State:
       Current                                --                       --
       Deferred                               --                       --
                                         -------                  -------
                                              --                       --
                                         -------                  -------
       Total                             $    --                  $    --
                                         =======                  =======

                                      F-16
<PAGE>
                            THE X-CHANGE CORPORATION
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2009 and 2008

NOTE J - INCOME TAXES - CONTINUED

The Company has a cumulative net operating loss  carryforward  of  approximately
$3,700,000 as of December 31, 2009 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, 2009
and 2008,  respectively,  differed from the statutory federal rate of 34 percent
as follows:

<TABLE>
<CAPTION>
                                                                  Year ended            Year ended
                                                                  December 31,          December 31,
                                                                     2009                  2008
                                                                  -----------           -----------
<S>                                                               <C>                   <C>
Statutory rate applied to loss before income taxes                $  (120,000)          $(1,059,000)
Increase (decrease) in income taxes resulting from:
  State income taxes                                                       --                    --
  Unconsolidated equity in loss of foreclosed subsidiary                   --               554,000
  Amortization of nondeductible debt discount                         160,000               318,000
  Stock based compensation                                                 --              (166,000)
  Tax basis gain on forgiveness of debt                             1,019,000                    --
  Other, including use of net operating loss
   carryforward and reserve for deferred tax asset                 (1,059,000)              353,000
                                                                  -----------           -----------
      Income tax expense                                          $        --           $        --
                                                                  ===========           ===========
</TABLE>

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,  2009  and  2008,
respectively:

<TABLE>
<CAPTION>
                                                                  December 31,          December 31,
                                                                     2009                  2008
                                                                  -----------           -----------
<S>                                                               <C>                   <C>
Deferred tax assets
  Net operating loss carryforwards                                $ 1,272,000           $ 1,797,000
  Stock based compensation                                                 --                    --
  Debt discount amortization                                          634,000               474,000
  Other                                                                    --                    --
                                                                  -----------           -----------
                                                                    1,906,000             2,271,000
  Less valuation allowance                                         (1,906,000)           (2,271,000)
                                                                  -----------           -----------
Net Deferred Tax Asset                                            $        --           $        --
                                                                  ===========           ===========
</TABLE>

During the years ended December 31, 2009 and 2008,  respectively,  the valuation
allowance  for the deferred tax asset  increased  (decreased)  by  approximately
$(365,000) and $469,000, respectively.

NOTE K - 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
5,000,000 shares as "Series A Convertible Preferred Stock".

                                      F-17
<PAGE>
                            THE X-CHANGE CORPORATION
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2009 and 2008

NOTE K - PREFERRED STOCK - CONTINUED

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,  2009 and  2008,  respectively,  there  were no  shares  of
preferred stock issued and outstanding.

NOTE L - COMMON STOCK

During the year  ended  December  31,  2008,  the  Company  issued an  aggregate
17,202,139 shares of restricted,  unregistered common stock as consideration for
financing fees in conjunction  with the receipt of  approximately  $1,800,000 in
new debt financing.

During the year ended December 31, 2008, the Company issued an aggregate 600,000
shares  of  restricted,  unregistered  common  stock  to a  consulting  firm  as
consideration for services rendered.

During the year  ended  December  31,  2008,  the  Company  issued an  aggregate
3,812,161  shares of registered  common stock in exchange for the  conversion of
approximately $36,500 in convertible debenture debt. As the conversion price was
below the "fair  value" of the  securities  issued,  the Company  experienced  a
non-cash charge to operations of  approximately  $22,500 which was classified as
"interest expense" in the accompanying financial statements.

In  December  2008,  the  Company  issued   51,000,000   shares  of  restricted,
unregistered  common  stock in  connection  with the  redemption  of  $51,000 in
principal against a note payable in conjunction with a foreclosure action by the
noteholder.

In January 2009, the Company issued an aggregate 2,118,506 shares of restricted,
unregistered  common  stock in  connection  with the  redemption  of  $1,550  in
convertible  debenture debt. As the conversion  price was below the "fair value"
of  the  securities  issued,  the  Company  experienced  a  non-cash  charge  to
operations of approximately  $568 which was classified as "interest  expense" in
the accompanying financial statements.

In December  2009,  the Company  undertook  a  reconciliation  of its issued and
outstanding  shares  versus the Company's  independent  stock  transfer  agent's
records.  As a result of this  analysis,  the Company  noted that an  additional
110,128  shares  were  appropriately  issued  and  outstanding  based on various
factors,  principally,  but not limited to, rounding on stock split transactions
and  clerical  errors in the  Company's  files from periods  prior to 2006.  The
Company  has  adjusted  the issued and  outstanding  shares in the  accompanying
financial statements as of the year ended December 31, 2009.


                (Remainder of this page left blank intentionally)

                                      F-18
<PAGE>
                            THE X-CHANGE CORPORATION
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2009 and 2008

NOTE M - COMMON STOCK WARRANTS

In conjunction with, and as a component of, certain debt issuances,  the Company
has issued an  aggregate  15,819,352  and  46,033,638  warrants  to  purchase an
equivalent  number of shares of common stock at prices  between  $0.07 and $1.00
per share as of December 31, 2009 and 2008, respectively.

                                                Number of           Weighted
                                                 Warrant            Average
                                                 Shares              Price
                                                 ------              -----
Balance at January 1, 2008                      16,780,002           $ 0.70
  Issued                                        29,253,636           $ 0.16
  Exercised                                             --               --
  Expired                                               --               --
                                              ------------

Balance at December 31, 2008                    46,033,638           $ 0.36
  Issued                                                --               --
  Exercised                                             --               --
  Surrendered at debt cancellation             (30,214,286)          $ 0.22
  Expired                                               --               --
                                              ------------

Balance at December 31, 2009                    15,819,352           $ 0.63
                                              ============

As of December 31, 2009, the warrants break down as follows:

                                                # warrants        exercise price
                                                ----------        --------------
                                                 3,404,000           $ 0.07
                                                   630,000           $ 0.20
                                                   200,000           $ 0.40
                                                 3,860,351           $ 0.60
                                                 3,725,001           $ 0.84
                                                 4,000,000           $ 1.00
                                              ------------

                                                15,819,352           $ 0.63
                                              ============

                                                # warrants         expiring in
                                                ----------         -----------
                                                 4,000,000            2010
                                                   569,350            2011
                                                 7,650,002            2012
                                                   630,000            2017
                                                 2,970,000            2018
                                              ------------

                                                15,819,352
                                              ============

NOTE N - STOCK OPTIONS

In June  2007,  the Board of  Directors  approved  and  adopted  the 2007  Stock
Incentive  Plan  ("2007  Plan").  The 2007 Plan  provides  for the  issuance  of
incentive  stock  options  and  non-statutory  stock  options  to the  Company's
employees, directors and consultants. Under the 2007 Plan, the Company may grant
up to  6,000,000  shares of common  stock to its  employees  or  directors.  The
exercise  price of each  option  may not be less  than the  market  price of the
Company's stock on the date of grant and an option's  maximum term is ten years.
The options  generally  vest over a four year service  period.  The Plan was not
submitted  for a vote of the  Company's  stockholders.  The Company had no stock
options or stock option plans in effect for periods prior to 2007.

                                      F-19
<PAGE>
                            THE X-CHANGE CORPORATION
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2009 and 2008

NOTE N - STOCK OPTIONS - CONTINUED

The following  table  summarizes  stock options  outstanding  and changes during
years ended December 31, 2008 and 2007.

<TABLE>
<CAPTION>
                                                                   Weighted      Weighted
                                                                    Average       Average      Aggregate
                                                 Number of         Exercise      Remaining     Intrinsic
                                                  Options            Price         Term          Value
                                                  -------            -----         ----          -----
<S>                                               <C>                 <C>            <C>           <C>

Options outstanding at January 1, 2008             4,475,000        $ 0.21         9.5         $ 134,250
  Granted                                                 --
  Exercised                                               --
  Forfeited                                       (4,475,000)       $ 0.21
                                                  ----------

Options outstanding at December 31, 2008                  --
  Granted                                                 --
  Exercised                                               --
  Forfeited                                               --
                                                  ----------

Options outstanding at December 31, 2009                  --
                                                  ==========

Options exercisable at December 31, 2009                  --
                                                  ==========
Options available for grant at
 December 31, 2009                                 6,000,000
                                                  ==========
</TABLE>

The  following  table  summarizes  non-cash  stock-based   compensation  expense
recorded under SFAS 123(R) for the years ended December 31, 2009 and 2008.

                                                 Year ended        Year ended
                                                 December 31,      December 31,
                                                    2009              2008
                                                  ---------         ---------
Loss from discontinued operations
 Stock based compensation earned                  $      --         $ 130,299
 Stock based compensation forfeited
  upon foreclosure of operating subsidiary               --          (618,816)
                                                  ---------         ---------

                                                  $      --         $(488,517)
                                                  =========         =========

The fair values of option awards  granted during 2007 were estimated at the date
of grant using a Black-Scholes  option-pricing  model which utilizes a number of
assumptions as indicated below:

Weighted average assumptions used
  Volatility                                                          157.77%
  Expected option term (years)                                       6 years
  Risk-free interest rate                                               4.60%
  Expected dividend yield                                               0.00%

The Company's  assumption  of expected  volatility  was based on the  historical
volatility  of the  Company's  stock  price  subsequent  to  purchasing  AirGATE
Technologies,  Inc.  The  risk-free  interest  rate is  based  on U.S.  Treasury
zero-coupon  issues with a remaining term equal to the expected life at the date
of grant.  The expected  dividend yield is zero because the Company has not made
any dividend  payments in its history and does not plan to pay  dividends in the
foreseeable future.

                                      F-20
<PAGE>
                            THE X-CHANGE CORPORATION
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2009 and 2008

NOTE N - STOCK OPTIONS - CONTINUED

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options  that have no vesting  restrictions  and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective  assumptions  including the expected stock price volatility.  Because
our employee  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 employee stock options.

NOTE O - SUBSEQUENT EVENTS

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 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 will be  classified  as
"interest  expense" in the financial  statements for the quarter ended March 31,
2010. In  conjunction  with this  conversion,  a continued  disagreement  exists
between  LCII  and  the  Company's  management  over  the  requirements  of  the
contractual  mandatory exercise of approximately 320,000 warrants related to the
conversion of this approximately  $32,000 of the debenture balance. The disputed
balance on this  transaction is  approximately  $3,200,000 due to the Company on
contractually  exercisable  warrants by LCII. There is a remote possibility that
this delinquency could be deemed a default by LCII by the Company's  management.
The Company's management is investigating potential remedies to this situation.

Management has evaluated all activity of the Company through April 20, 2010 (the
issue date of the 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.

                                      F-21
<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: April 20, 2010                        /s/ Haviland Wright
       --------------                        -----------------------------------
                                                                 Haviland Wright
                                              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: April 20, 2010                        /s/ Haviland Wright
       --------------                        -----------------------------------
                                                                 Haviland Wright
                                              President, Chief Executive Officer
                                                  Acting Chief Financial Officer
                                                                    and Director


Dated: April 20, 2010                        /s/ Fernando Antonio Gomez
       --------------                        -----------------------------------
                                                          Fernando Antonio Gomez
                                                       Executive Vice President,
                                                             Corporate Secretary
                                                                    and Director


Dated: April 20, 2010                        /s/ Ron Vigdor
       --------------                        -----------------------------------
                                                                      Ron Vigdor
                                                             Corporate Treasurer
                                                                    and Director


Dated: April 20, 2010                        /s/ Richard T. Steele
       --------------                        -----------------------------------
                                                               Richard T. Steele
                                                                        Director

                                       44