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, 2008

[ ] 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)

             17120 N. Dallas Parkway, Suite 235, Dallas, Texas 75248
                    (Address of Principal Executive Offices)

                                 (972) 361-0036
                         (Registrant's Telephone Number)

        Securities registered pursuant to Section 12 (b) of the Act: None

          Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock - $0.001 par value

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

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

Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period the Company was required to file such reports),  and
(2) has been subject to such filing  requirements  for the past 90 days.
Yes [ ] No [X]

Indicate by check mark 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 November 19, 2009 was approximately $ 1,184,195 based upon
40,834,311  shares held by  non-affiliates  and a closing market price of $0.029
per share on December 21, 2009, as reported on www.bigcharts.com.

As of December 21, 2009,  there were  106,227,169  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 2   Properties                                                          9
Item 3   Legal Proceedings                                                  10
Item 4   Submission of Matters to a Vote of Security Holders                10

PART II

Item 5   Market for Registrant's Common Equity, Related Stockholder
         Matters and Issuer Purchases of Equity Securities                  10
Item 6   Selected Financial Data                                            13
Item 7   Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                          13
Item 7A  Quantitative and Qualitative Disclosures About Market Risk         16
Item 8   Financial Statements and Supplementary Data                        17
Item 9   Changes in and Disagreements with Accountants
            on Accounting and Financial Disclosure                          17
Item 9A  Controls and Procedures                                            17

PART III

Item 10  Directors, Executive Officers and Corporate Governance             19
Item 11  Executive Compensation                                             21
Item 12  Security Ownership of Certain Beneficial Owners and Management
         and Related Stockholder Matters                                    22
Item 13  Certain Relationships and Related Transactions, and Director
         Independence                                                       23
Item 14  Principal Accountant Fees and Services                             23

PART IV

Item 15  Exhibits and Financial Statement Schedules                         24

SIGNATURES                                                                  26

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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.

The Company's  current  business plan is to locate and combine with an existing,
privately-held  company which is profitable or, in management's view, has growth
potential,  irrespective  of the industry in which it is engaged.  However,  the
Company does not intend to combine with a private company which may be deemed to
be an  investment  company  subject to the  Investment  Company  Act of 1940.  A
combination  may be  structured  as a  merger,  consolidation,  exchange  of the
Company's  common  stock for stock or assets or any other form which will result
in the combined enterprise's becoming a publicly-held corporation.

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

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<PAGE>
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.

FORECLOSURE ACTIONS AND LIQUIDATION OF SUBSIDIARY

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.

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.

                                       4
<PAGE>
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

Our current  business  plan is to seek and identify a  privately-held  operating
company  desiring to become a publicly held company by combining with us through
a reverse merger or acquisition type  transaction.  Private companies wishing to
have their  securities  publicly  traded may seek to merge or effect an exchange
transaction  with a shell  company with a  significant  stockholder  base.  As a
result of the merger or exchange  transaction,  the  stockholders of the private
company will hold a majority of the issued and  outstanding  shares of the shell
company. Typically, the directors and officers of the private company become the
directors  and  officers  of the shell  company.  Often the name of the  private
company becomes the name of the shell company.

We have no capital and must depend on our controlling shareholders to provide us
with the  necessary  funds to  implement  our business  plan.  We intend to seek
opportunities  demonstrating  the  potential of  long-term  growth as opposed to
short-term  earnings.  However,  at the present time, we have not identified any
business  opportunity that we plan to pursue,  nor have we reached any agreement
or definitive understanding with any person concerning an acquisition or merger.

R. Wayne Duke, our sole officer and director,  will be primarily responsible for
investigating  combination  opportunities.  However,  we believe  that  business
opportunities  may also come to our attention  from various  sources,  including
professional advisors such as attorneys, accountants, securities broker-dealers,
venture  capitalists,  members of the  financial  community,  and others who may
present unsolicited proposals. We have no plan,  understanding,  agreements,  or
commitments  with  any  individual  for  such  person  to  act  as a  finder  of
opportunities for us.

No direct  discussions  regarding the possibility of a combination are currently
ongoing and we can give no  assurances  that we will be successful in finding or
acquiring a desirable  business  opportunity,  given the limited  funds that are
expected  to be  available  to us  for  implementation  of  our  business  plan.
Furthermore,  we can give no assurances that any acquisition, if it occurs, will
be on terms that are favorable to us or our current stockholders.

We do not  propose to  restrict  our search for a  candidate  to any  particular
industry,  and  therefore,  we are  unable to  predict  the nature of our future
business  operations.  Our management's  discretion in the selection of business
opportunities   is   unrestricted,   subject   to  the   availability   of  such
opportunities, economic conditions, and other factors.

Any entity  which has an interest in being  acquired  by, or merging into us, is
expected to be an entity that desires to become a public company and establish a
public trading market for its  securities.  In connection  with such a merger or
acquisition,  it is  anticipated  that an amount of  common  stock  constituting
control of us would be issued by us.

We do not foresee  that we will enter into a merger or  acquisition  transaction
with any business with which R. Wayne Duke is currently affiliated.

INVESTIGATION AND SELECTION OF BUSINESS OPPORTUNITIES

Certain  types of business  acquisition  transactions  may be completed  without
requiring  us to first  submit the  transaction  to our  stockholders  for their
approval.  If the  proposed  transaction  is  structured  in such a fashion  our
stockholders  (other than R. Wayne Duke, our sole officer and director) will not
be provided with financial or other information  relating to the candidate prior
to the completion of the transaction.

If a proposed  business  combination  or  business  acquisition  transaction  is
structured  that  requires  our  stockholder  approval,  and we are a  reporting
company,  we will be required to provide our  stockholders  with  information as
applicable under Regulations 14A and 14C under the Exchange Act.

The  analysis  of  business  opportunities  will be  undertaken  by or under the
supervision  of R. Wayne Duke,  our  President and sole  director.  In analyzing
potential merger candidates,  our management will consider,  among other things,
the following factors:

     *    Potential for future earnings and appreciation of value of securities;
     *    Perception of how any particular business opportunity will be received
          by the investment community and by our stockholders;

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     *    Eligibility  of a candidate,  following the business  combination,  to
          qualify  its  securities  for  listing on a national  exchange or on a
          national automated securities quotation system, such as NASDAQ.
     *    Historical results of operation;
     *    Liquidity and availability of capital resources;
     *    Competitive  position as compared to other  companies  of similar size
          and  experience  within  the  industry  segment  as well as within the
          industry as a whole;
     *    Strength and diversity of existing management or management  prospects
          that are scheduled for recruitment;
     *    Amount of debt and contingent liabilities; and
     *    The  products  and/or  services and  marketing  concepts of the target
          company.

There is no  single  factor  that  will be  controlling  in the  selection  of a
business  opportunity.  Our  management  will  attempt  to analyze  all  factors
appropriate to each  opportunity and make a determination  based upon reasonable
investigative  measures  and  available  data.  Potentially  available  business
opportunities  may occur in many  different  industries and at various stages of
development,  all of which will make the task of comparative  investigation  and
analysis of such business opportunities extremely difficult and complex. Because
of our limited  capital  available for  investigation  and our dependence on one
person, R. Wayne Duke, we may not discover or adequately  evaluate adverse facts
about the business opportunity to be acquired.

We are unable to predict when we may participate in a business  opportunity.  We
expect,  however, that the analysis of specific proposals and the selection of a
business opportunity may take several months.

Prior to making a decision to  participate  in a business  transaction,  we will
generally  request that we be provided  with  written  materials  regarding  the
business  opportunity  containing  as much  relevant  information  as  possible,
including,  but not limited to, a description of products,  services and company
history; management resumes; financial information;  available projections, with
related  assumptions  upon which they are based;  an  explanation of proprietary
products and  services;  evidence of existing  patents,  trademarks,  or service
marks,  or  rights  thereto;  present  and  proposed  forms of  compensation  to
management;   a  description  of  transactions  between  such  company  and  its
affiliates  during the relevant  periods;  a description of present and required
facilities; an analysis of risks and competitive conditions; a financial plan of
operation and estimated capital requirements;  audited financial statements,  or
if  audited  financial   statements  are  not  available,   unaudited  financial
statements, together with reasonable assurance that audited financial statements
would be able to be produced to comply with the requirements of a Current Report
on Form  8-K to be  filed  with  the  Securities  and  Exchange  Commission,  or
Commission, upon consummation of the business combination.

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 so long as it is seeking and  evaluating
business  opportunities.  The need for employees and their  availability will be
addressed  in  connection  with  the  decision  whether  or  not to  acquire  or
participate in specific business opportunities.

ITEM 1A - RISK FACTORS

The  Company's  business  and plan of  operation  is  subject to  numerous  risk
factors, including, but not limited to, the following:

LIMITED OPERATING HISTORY MAKES POTENTIAL DIFFICULT TO ASSESS

The Company has limited  financial  resources and no operating  activities.  The
Company will, in all likelihood,  continue to sustain operating expenses without
corresponding   revenues,   at  least  until  the  consummation  of  a  business
combination.  This  will  most  likely  result in the  Company  incurring  a net
operating loss which will increase continuously until the Company can consummate
a business  combination  with a target  company.  There is no assurance that the
Company  can  identify  such a target  company  and  consummate  such a business
combination.

THERE IS NO AGREEMENT FOR A BUSINESS COMBINATION AND NO MINIMUM REQUIREMENTS FOR
A BUSINESS COMBINATION

The Company has no current arrangement,  agreement or understanding with respect
to engaging in a business  combination with a specific  entity.  There can be no
assurance  that the Company will be successful  in  identifying  and  evaluating
suitable  business  opportunities  or in concluding a business  combination.  No
particular  industry or specific  business  within an industry has been selected
for a target  company.  The Company  has not  established  a specific  length of
operating history or a specified level of earnings,  assets,  net worth or other
criteria  which it will require a target  company to have  achieved,  or without
which the Company would not consider a business  combination  with such business

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entity.  Accordingly,  the Company may enter into a business  combination with a
business entity having no significant operating history,  losses,  limited or no
potential for immediate  earnings,  limited assets,  negative net worth or other
negative characteristics. There is no assurance that the Company will be able to
negotiate a business combination on terms favorable to the Company.

NO ASSURANCE OF SUCCESS OR PROFITABILITY

There is no  assurance  that the  Company  will  acquire  a  favorable  business
opportunity.   Even  if  the  Company  should  become  involved  in  a  business
opportunity, there is no assurance that it will generate revenues or profits, or
that the market  price of the  Company's  outstanding  shares will be  increased
thereby.

TYPE OF BUSINESS ACQUIRED

The business to be acquired may wish to avoid  effecting its own public offering
and  the  accompanying  expense,  delays,  and  uncertainties.  Because  of  the
Company's  limited  capital,  it is more likely than not that any acquisition by
the Company will involve other parties whose primary interest is the acquisition
of control of a publicly  traded  Company.  Moreover,  any business  opportunity
acquired may be currently unprofitable or present other negative factors.

LACK OF DIVERSIFICATION

Because of the limited financial  resources that the Company has, it is unlikely
that the Company will be able to diversify its  acquisitions or operations.  The
Company's probable inability to diversify its activities into more than one area
will subject the Company to economic  fluctuations  within a particular business
or industry and  therefore  increase  the risks  associated  with the  Company's
operations.

DEPENDENCE UPON MANAGEMENT; LIMITED PARTICIPATION OF MANAGEMENT

Because  management  consists  of only one  person,  while  seeking  a  business
combination,  R. Wayne Duke,  the  President  of the  Company,  will be the only
person responsible in conducting the day-to-day  operations of the Company.  The
Company  does not  benefit  from  multiple  judgments  that a greater  number of
directors or officers would provide, and the Company will rely completely on the
judgment of its one officer and director when  selecting a target  company.  Mr.
Galoppi  anticipates  devoting  only a  limited  amount of time per month to the
business of the Company.  Mr. Galoppi has not entered into a written  employment
agreement with the Company and he is not expected to do so. The Company does not
anticipate  obtaining  key man life  insurance on Mr.  Galoppi.  The loss of the
services of Mr.  Galoppi would  adversely  affect  development  of the Company's
business and its likelihood of continuing operations.

CONFLICTS OF INTEREST

The Company's sole officer and director has other business interests to which he
currently devotes attention,  and is expected to continue to do so. As a result,
conflicts  of interest may arise that can be resolved  only through  exercise of
judgment  in a manner  which is  consistent  with his  fiduciary  duties  to the
Company.

It  is  anticipated  that  the  Company's  principal  stockholder  may  actively
negotiate or otherwise  consent to the purchase of a portion of his common stock
as a condition  to, or in  connection  with,  a proposed  merger or  acquisition
transaction.  In this process, the Company's principal  stockholder may consider
his own  personal  pecuniary  benefit  rather  than the best  interest  of other
Company  stockholders.  Depending  upon the  nature of a  proposed  transaction,
Company  stockholders  other than the principal  stockholder may not be afforded
the opportunity to approve or consent to a particular transaction.

POSSIBLE NEED FOR ADDITIONAL FINANCING

The Company has very limited funds,  and such funds, may not be adequate to take
advantage  of any  available  business  opportunities.  Even  if  the  Company's
currently available funds prove to be sufficient to pay for its operations until
it is able to acquire an interest in, or complete a transaction with, a business
opportunity,  such funds will clearly not be  sufficient to enable it to exploit
the opportunity. Thus, the ultimate success of the Company will depend, in part,
upon its availability to raise additional capital. In the event that the Company
requires modest amounts of additional capital to fund its operations until it is
able to complete a business acquisition or transaction, such funds, are expected
to be provided by the principal  stockholder.  The Company has not  investigated
the  availability,  source,  or terms that might govern the  acquisition  of the
additional  capital  which is  expected  to be  required  in order to  exploit a
business  opportunity,  and will not do so until it has  determined the level of
need for  such  additional  financing.  There is no  assurance  that  additional
capital  will be  available  from any  source or, if  available,  that it can be

                                       7
<PAGE>
obtained on terms  acceptable to the Company.  If not  available,  the Company's
operations  will be  limited  to those  that  can be  financed  with its  modest
capital.

DEPENDENCE UPON OUTSIDE ADVISORS

To supplement the business  experience of its officer and director,  the Company
may be required to employ accountants, technical experts, appraisers, attorneys,
or other  consultants  or advisors.  The  selection of any such advisors will be
made by the Company's officer,  without any input by stockholders.  Furthermore,
it is anticipated that such persons may be engaged on an as needed basis without
a continuing  fiduciary  or other  obligation  to the Company.  In the event the
officer of the Company considers it necessary to hire outside  advisors,  he may
elect  to hire  persons  who are  affiliates,  if those  affiliates  are able to
provide the required services.

REGULATION OF PENNY STOCKS

The U. S. Securities and Exchange Commission (SEC) has adopted a number of rules
to  regulate  "penny  stocks."  Such rules  include  Rule 3a51-1 and Rules 15g-1
through 15g-9 under the Exchange Act.  Because the securities of the Company may
constitute  "penny  stocks"  within  the  meaning  of the rules  (as any  equity
security  that  has a market  price  of less  than  $5.00  per  share or with an
exercise price of less than $5.00 per share,  largely traded in the OTC Bulletin
Board or the "Pink  Sheets",  the rules  would  apply to the  Company and to its
securities.  The  Commission  has  adopted  Rule 15g-9 which  established  sales
practice  requirements for certain low price securities.  Unless the transaction
is exempt, it shall be unlawful for a broker or dealer to sell a penny stock to,
or to effect the  purchase of a penny stock by, any person  unless  prior to the
transaction:  (i) the broker or dealer has  approved  the  person's  account for
transactions  in penny stock pursuant to this rule and (ii) the broker or dealer
has  received  from the person a written  agreement to the  transaction  setting
forth the identity and quantity of the penny stock to be purchased.  In order to
approve a person's account for transactions in penny stock, the broker or dealer
must: (a) obtain from the person  information  concerning the person's financial
situation,  investment  experience,  and investment  objectives;  (b) reasonably
determine  that  transactions  in penny stock are suitable for that person,  and
that the person has  sufficient  knowledge and  experience in financial  matters
that the person reasonably may be expected to be capable of evaluating the risks
of  transactions in penny stock;  (c) deliver to the person a written  statement
setting forth the basis on which the broker or dealer made the determination (i)
stating in a highlighted  format that it is unlawful for the broker or dealer to
affect a  transaction  in penny stock unless the broker or dealer has  received,
prior to the  transaction,  a  written  agreement  to the  transaction  from the
person;  and (ii) stating in a  highlighted  format  immediately  preceding  the
customer  signature  line that (iii) the broker or dealer is required to provide
the person with the written  statement;  and (iv) the person should not sign and
return the written  statement to the broker or dealer if it does not  accurately
reflect the person's financial situation,  investment experience, and investment
objectives;  and (d) receive from the person a manually signed and dated copy of
the written  statement.  It is also required  that  disclosure be made as to the
risks  of  investing  in  penny  stock  and  the  commissions   payable  to  the
broker-dealer,  as well as current price  quotations and the remedies and rights
available  in  cases of fraud in  penny  stock  transactions.  Statements,  on a
monthly basis,  must be sent to the investor listing recent prices for the Penny
Stock and information on the limited market.  Stockholders should be aware that,
according to Commission  Release No.  34-29093,  the market for penny stocks has
suffered in recent years from patterns of fraud and abuse. Such patterns include
(i) control of the market for the security by one or a few  broker-dealers  that
are often related to the promoter or issuer; (ii) manipulation of prices through
prearranged  matching  of  purchases  and sales and false and  misleading  press
releases;  (iii) "boiler room" practices  involving  high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differential and markups by selling broker-dealers;  and
(v) the wholesale dumping of the same securities by promoters and broker dealers
after prices have been manipulated to a desired level,  along with the resulting
inevitable  collapse of those prices and with consequent  investor  losses.  The
Company's  management is aware of the abuses that have occurred  historically in
the penny stock market. Although the Company does not expect to be in a position
to dictate the behavior of the market or of  broker-dealers  who  participate in
the market,  management will strive within the confines of practical limitations
to prevent the  described  patterns from being  established  with respect to the
Company's securities.

THERE  MAY  BE  A  SCARCITY  OF  AND/OR  SIGNIFICANT  COMPETITION  FOR  BUSINESS
OPPORTUNITIES AND COMBINATIONS

The  Company is and will  continue  to be an  insignificant  participant  in the
business of seeking  mergers with and  acquisitions  of privately  held business
entities.  A large number of established and well-financed  entities,  including
venture capital firms, are active in mergers and acquisitions of companies which
may be merger or acquisition target candidates for the Company.  Nearly all such
entities have significantly greater financial resources, technical expertise and
managerial capabilities than the Company and, consequently,  the Company will be
at a competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination.  Moreover, the Company will also
compete in seeking  merger or  acquisition  candidates  with other  public shell
companies, some of which may also have funds available for use by an acquisition
candidate.

                                       8
<PAGE>
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION

Pursuant to the  requirements  of Section 13 of the Exchange Act, the Company is
required to provide certain information about significant acquisitions including
audited  financial  statements  of  the  acquired  company.   Obtaining  audited
financial statements are the economic  responsibility of the target company. The
additional  time  and  costs  that  may be  incurred  by some  potential  target
companies  to prepare  such  financial  statements  may  significantly  delay or
essentially preclude  consummation of an otherwise desirable  acquisition by the
Company.  Acquisition  prospects  that do not have or are  unable to obtain  the
required  audited  statements may not be appropriate  for acquisition so long as
the reporting requirements of the Exchange Act are applicable. Notwithstanding a
target company's  agreement to obtain audited  financial  statements  within the
required time frame, such audited financials may not be available to the Company
at the  time of  effecting  a  business  combination.  In  cases  where  audited
financials  are  unavailable,  the  Company  will  have to rely  upon  unaudited
information  that has not been  verified  by  outside  auditors  in  making  its
decision  to  engage  in a  transaction  with the  business  entity.  This  risk
increases the prospect that a business  combination  with such a business entity
might prove to be an unfavorable one for the Company.

LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION

The Company has neither conducted,  nor have others made available to it, market
research indicating that demand exists for the transactions  contemplated by the
Company.  In the event demand exists for a transaction of the type  contemplated
by the  Company,  there  is no  assurance  the  Company  will be  successful  in
completing any such business combination.

PROBABLE CHANGE IN CONTROL OF THE COMPANY AND/OR MANAGEMENT

In conjunction with completion of a business acquisition, it is anticipated that
the Company will issue an amount of the Company's authorized but unissued common
stock that represents the greater majority of the voting power and equity of the
Company,  which will,  in all  likelihood,  result in  stockholders  of a target
company obtaining a controlling interest in the Company. The resulting change in
control of the Company will likely result in removal of the present  officer and
director of the Company and a  corresponding  reduction in or elimination of his
participation in the future affairs of the Company.

POSSIBLE DILUTION OF VALUE OF SHARES UPON BUSINESS COMBINATION

A business  combination  normally  will  involve the  issuance of a  significant
number of additional shares.  Depending upon the value of the assets acquired in
such business combination, the per share value of the Company's common stock may
increase or decrease, perhaps significantly.

ADDITIONAL RISKS--DOING BUSINESS IN A FOREIGN COUNTRY

As the Company intends to effectuate a business combination with a merger target
whose business operations,  headquarters, place of formation or primary place of
business  may be located  outside  the United  States,  the Company may face the
significant  additional risks associated with doing business in such region.  In
addition  to  the  language  barriers,   different  presentations  of  financial
information,  different business practices,  and other cultural  differences and
barriers  that may make it difficult to evaluate such a merger  target,  ongoing
business risks result from the applicable political  situation,  uncertain legal
systems  and  applications  of  law,  prejudice  against   foreigners,   corrupt
practices,  uncertain  economic  policies and  potential  political and economic
instability that may be exacerbated in various foreign countries.

TAXATION

Tax  consequences  will,  in all  likelihood,  be  major  considerations  in any
business  combination  that the Company may  undertake.  The Company  intends to
structure any business  combination  so as to minimize the tax  consequences  to
both the Company and the target entity;  however, there can be no assurance that
such business  combination  will meet the statutory  requirements  of a tax-free
reorganization or that the parties will obtain the intended  tax-free  treatment
upon a transfer of stock or assets. A non-qualifying reorganization could result
in the imposition of taxes,  which may have an adverse effect on both parties to
the transaction.

ITEM 2 - PROPERTIES

The Company  currently  maintains a mailing  address at 17120 N. Dallas Parkway,
Suite 235, Dallas,  Texas 75248.  The Company's  telephone number there is (972)
361-0036.  Other than this  mailing  address,  the  Company  does not  currently

                                       9
<PAGE>
maintain  any other  office  facilities,  and does not  anticipate  the need for
maintaining office facilities at any time in the foreseeable future. The Company
pays 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 sole officer
and director.

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

The Company has not conducted any meetings of stockholders  during the preceding
quarter or periods subsequent thereto.

                                     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 December 21, 2009,  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.  Prices reported are based on quotations between dealers,  and do not
reflect  retail  mark-up,  mark-down  or  commissions,  and may not  necessarily
represent actual transactions.

                                                        High               Low
                                                        ----               ---
Year ended December 31, 2007
   Quarter ended March 31                               $1.38            $0.53
   Quarter ended June 30                                $0.65            $0.17
   Quarter ended September 30                           $0.40            $0.21
   Quarter ended December 31                            $0.35            $0.18

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

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, 2007, the Company issued an aggregate 100,000
shares  of  restricted,  unregistered  common  stock  to a  consulting  firm  as
consideration for services rendered.

During the year ended December 31, 2007, the Company issued  3,725,001 shares of
common  stock to outside  investors  under a private  placement  memorandum  for
proceeds in the amount of  $1,117,500.  Warrants  were also issued in connection
with this financing as discussed separately.

                                       10
<PAGE>
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.

COMMON STOCK WARRANTS

In conjunction with, and as a component of, certain debt issuances,  the Company
has issued an aggregate  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, 2008, the warrants break down as follows:

                           # warrants       exercise price
                           ----------       --------------
                            3,404,000           $0.07
                           25,714,286           $0.17
                              630,000           $0.20
                              200,000           $0.40
                            4,500,000           $0.50
                            3,860,351           $0.60
                            3,725,001           $0.84
                            4,000,000           $1.00
                           ----------
                           46,033,638           $0.36
                           ==========

                           # warrants        initial term
                           ----------        ------------
                            4,000,000          3 years
                              569,350          4 years
                           37,864,288          5 years
                              630,000          9 years
                            2,970,000          10 years
                           ----------
                           46,033,638
                           ==========

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 2008 or 2007.

EQUITY COMPENSATION

During 2008 and 2007, respectively,  we issued 600,000 and 100,000 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.

                                       11
<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,  2008 and  2007,  respectively,  there  were no  shares  of
preferred stock issued and outstanding.

RESTRICTED SECURITIES

As of December 31, 2008, 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.  We do not intend to issue any  additional
securities prior to consummating a reverse merger transaction. The securities we
issue in a merger transaction will most likely be restricted securities.

                                       12
<PAGE>
Generally,  restricted  securities  can be resold  under Rule 144 once they have
been  held for the  required  statutory  period,  provided  that the  securities
satisfies the current public information requirements of the Rule.

TRANSFER AGENT

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

REPORTS TO STOCKHOLDERS

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

ITEM 6 - SELECTED FINANCIAL DATA

Not applicable

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

(1) CAUTION REGARDING FORWARD-LOOKING INFORMATION

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

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

                                       13
<PAGE>
the timing of this  transaction,  the  foreclosure  and related  disposition  of
AirGATE is reflected in the accompanying financial statements as of December 31,
2008.

The Company's  current  business plan is to locate and combine with an existing,
privately-held  company which is profitable or, in management's view, has growth
potential,  irrespective  of the industry in which it is engaged.  However,  the
Company does not intend to combine with a private company which may be deemed to
be an  investment  company  subject to the  Investment  Company  Act of 1940.  A
combination  may be  structured  as a  merger,  consolidation,  exchange  of the
Company's  common  stock for stock or assets or any other form which will result
in the combined enterprise's becoming a publicly-held corporation.

The Company  had no  separately  earned  revenue,  except for  nominal  interest
income,  for either of the years ended December 31, 2008 or 2007,  respectively.
All  operating  revenues for 2008 and 2007 were earned in the  Company's  former
wholly-owned subsidiary, AirGATE Technologies, Inc.

General and  administrative  expenses for the years ended  December 31, 2008 and
2007 were  approximately  $26,000 and $424,000,  respectively.  The  significant
decline in 2008 expenditures  related directly to the decreased activity and the
ultimate  disposition of the Company's former wholly-owned  subsidiary,  AirGATE
Technologies, Inc. which was foreclosed upon as of December 31, 2008.

(3) RESULTS OF OPERATIONS AND DISCONTINUED  OPERATIONS OF AIRGATE  TECHNOLOGIES,
    INC.

All discussions  and comparisons of our business  activity prior to December 31,
2008 is irrelevant  as the  operations  of our former  wholly-owned  subsidiary,
AirGATE ceased, effective December 31, 2008.

On August 15, 2006, the Company executed a long-term  $1,000,000  Line-of-Credit
Promissory Note with Melissa CR 364 Ltd. (Lender),  a Texas limited partnership.
The Lender is managed by a former officer and shareholder of the Company.  As of
September  30,  2007,  the  Company  and the  Lender  modified  the note with an
outstanding balance of approximately $797,794.  Concurrent with the execution of
this  modification,  the Company agreed not to draw any further  amounts on this
facility.

This note matured on August 14, 2008 and bore interest at 10% per annum. Accrued
interest under the note was payable  quarterly  beginning  November 1, 2006, and
the principal  and any remaining  accrued  interest are due upon  maturity.  The
Company  has  pledged  100%  of the  outstanding  common  stock  of  AirGATE  as
collateral for the note.  Further,  at the sole  discretion of the Lender,  this
note may be converted into restricted common stock of the Company at any time at
a conversion rate equal to $0.825 per share.

During  December  2008,  the Lender began  foreclosure  proceedings  against the
collateral  underlying the note payable to the Lender.  On January 16, 2009, the
foreclosure  proceedings were completed and the Lender took formal possession of
100% of the Company's holdings in the AirGATE subsidiary. 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  consolidated
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 and 2007, respectively, are as follows:

                                             December 31,          December 31,
                                                2008                  2007
                                             -----------           -----------

Net sales                                    $   386,755           $ 1,626,654
                                             ===========           ===========
Operating income (loss)                      $(1,076,181)          $(2,184,863)
                                             ===========           ===========
Loss from discontinued operations            $(1,140,199)          $(2,282,724)
                                             ===========           ===========

                                       14
<PAGE>
(4) FUTURE OPERATIONS

The Company anticipates having expenditures in future periods relating solely to
the Company's  requirement to file periodic reports pursuant to the Exchange Act
and  maintaining  the  corporate  entity  until such time that it  completes  an
acquisition or merger transaction with an operating company.

It is anticipated  that future  expenditure  levels will increase as the Company
intends to fully comply with its periodic reporting requirements.

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  Exchange  Act unless and until such time that the
Company executes upon its current business plan.

(5) PLAN OF BUSINESS

GENERAL

The Company's current purpose is to seek, investigate and, if such investigation
warrants, merge or acquire an interest in business opportunities which desire to
seek the perceived advantages of an Exchange Act registered  corporation.  As of
the date of this report, the Company has no particular  acquisitions in mind and
has not entered into any negotiations regarding such an acquisition, and neither
the Company's officer and director nor any promoter and affiliate has engaged in
any  negotiations  with any  representatives  of the owners of any  business  or
company regarding the possibility of a merger or acquisition between the Company
and such other company.

Pending  negotiation and consummation of a combination,  the Company anticipates
that it will have, aside from carrying on its search for a combination  partner,
no business  activities,  and, thus, will have no source of revenue.  Should the
Company incur any significant  liabilities prior to a combination with a private
company, it may not be able to satisfy such liabilities as are incurred.

If the Company's management pursues one or more combination opportunities beyond
the  preliminary  negotiations  stage and those  negotiations  are  subsequently
terminated,  it is  foreseeable  that such efforts  will  exhaust the  Company's
ability to continue to seek such combination opportunities before any successful
combination can be consummated.  In that event,  the Company's common stock will
become  worthless  and  holders of the  Company's  common  stock will  receive a
nominal distribution, if any, upon the Company's liquidation and dissolution.

MANAGEMENT

The Company is a shell corporation, and currently has no full-time employees. R.
Wayne Duke is the  Company's  sole  officer  and  director  and is also the sole
officer and director of the Company's  controlling  stockholder.  All references
herein to management  of the Company are to Mr. Duke.  Mr. Duke, as President of
the  Company,  has  agreed  to  allocate  a limited  portion  of his time to the
activities of the Company without  compensation.  Potential  conflicts may arise
with  respect to the  limited  time  commitment  by Mr.  Duke and the  potential
demands of the Company's activities.

The amount of time spent by Mr.  Duke on the  activities  of the  Company is not
predictable. Such time may vary widely from an extensive amount when reviewing a
target company to an essentially  quiet time when activities of management focus
elsewhere,  or some  amount in between.  It is  impossible  to predict  with any
precision  the exact amount of time Mr. Duke will  actually be required to spend
to locate a suitable target  company.  Mr. Duke estimates that the business plan
of the Company can be  implemented  by devoting  less than 4 hours per month but
such figure cannot be stated with precision.

(6) LIQUIDITY AND CAPITAL RESOURCES

At  December  31,  2008,  the  Company  had  working  capital  of  approximately
$(958,000).

The  Company's  operating  history  consists of  discontinued  and  unsuccessful
business  ventures  and  currently  has  limited  cash on hand,  no assets and a
business  plan with  inherent  risk.  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  ultimate  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

                                       15
<PAGE>
timely basis.  Further, the Company faces considerable risk in its business plan
and a potential  shortfall of funding due to our  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's  business plan is to seek an  acquisition or merger with a private
operating   company  which  offers  an  opportunity   for  growth  and  possible
appreciation of our stockholders'  investment in the then issued and outstanding
common stock.  However,  there is no assurance  that the Company will be able to
successfully  consummate  an  acquisition  or merger  with a  private  operating
company or, if  successful,  that any  acquisition  or merger will result in the
appreciation  of our  stockholders'  investment in the then  outstanding  common
stock.

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

In the event that insufficient  working capital to maintain the corporate entity
and  implement  our  business  plan is not  available,  the  Company's  majority
stockholder  intends to maintain the corporate status of the Company and provide
all necessary  working  capital  support on the Company's  behalf.  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  the  Company's  majority  stockholder  to  have  the  resources
available 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.

The  Company's  need for  capital  may  change  dramatically  as a result of any
business acquisition or combination transaction.  There can be no assurance that
the Company will  identify any such  business,  product,  technology  or company
suitable for acquisition in the future.  Further, there can be no assurance that
the Company would be successful in  consummating  any  acquisition  on favorable
terms  or that it will be able  to  profitably  manage  the  business,  product,
technology or company it acquires.

The Company has no current plans, proposals, arrangements or understandings with
respect to the sale or issuance of additional  securities  prior to the location
of a merger or  acquisition  candidate.  Accordingly,  there can be no assurance
that sufficient  funds will be available to the Company to allow it to cover the
expenses related to such activities.

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.

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.

                                       16
<PAGE>
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.

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

                                       17
<PAGE>
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,  2008.  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, 2008.

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, 2008 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.


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                                       18
<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
     ----                 ---                   ------------------------

R. Wayne Duke             69              President, Chief Executive Officer
                                          Chief Financial Officer and Director

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

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

BIOGRAPHICAL INFORMATION

R. Wayne Duke  became our  Chairman,  President,  Chief  Financial  Officer  and
Secretary  on  October  1, 2009 and is  responsible  for the  Company's  overall
operations.

Mr. Duke was appointed as a Company Director on September 9, 2009. On October 1,
2009, in conjunction with the resignation of the Company's then-sole officer, as
the Company's sole  remaining  director,  he appointed  himself as the Company's
Chief  Executive and Chief Financial  Officer.  Mr. Duke is the sole officer and
director of K&D Equity Investments, Inc., the Company's controlling shareholder.
He is also the Chief  Executive  Officer of USMetrics,  Inc. a parts supplier to
the  Maintenance,  Repair and  Overhaul  industry,  and the  Chairman and CEO of
Industrial Clearinghouse,  Inc., an MRO excess inventory clearinghouse.  Through
February  2008,  Mr. Duke was an officer or director of Brighton Oil & Gas, Inc.
(currently  Cannabis  Science,  Inc.  (OTCBB:  CBIS)).  Mr.  Duke holds a BBA in
Finance and a Masters Degree in Business from The University of North Texas.

INDEMNIFICATION OF OFFICERS AND DIRECTORS.

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

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

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

                                       19
<PAGE>
Our  Articles of  Incorporation  provides  that none of our  directors  shall be
personally  liable to us or our  stockholders for monetary damages for an act or
omission in such directors' capacity as a director;  provided, however, that the
liability  of such  director is not limited to the extent that such  director is
found  liable  for (a) a breach of the  directors'  duty of loyalty to us or our
stockholders, (b) an act or omission not in good faith that constitutes a breach
of duty of the director to us or an act or omission  that  involves  intentional
misconduct or a knowing  violation of the law, (c) a transaction  from which the
director received an improper benefit,  whether or not the benefit resulted from
an action  taken  within the scope of the  director's  office,  or (d) an act or
omission for which the  liability of the  director is expressly  provided  under
Nevada  law.   Limitations  on  liability   provided  for  in  our  Articles  of
Incorporation do not restrict the  availability of non-monetary  remedies and do
not affect a director's  responsibility under any other law, such as the federal
securities laws or state or federal environmental laws.

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

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

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

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires our executive  officers and directors
and persons who own more than 10% of our common stock to file reports  regarding
ownership of and transactions in our securities with the Securities and Exchange
Commissioner and to provide us with copies of those filings. Based solely on our
review of the  copies  received  by or a  written  representation  from  certain
reporting  persons we believe  that during  fiscal year ended  December 31, 2008
that all eligible  persons are in compliance  with the  requirements  of Section
16(a).

CONFLICTS OF INTEREST

The sole officer of the Company 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  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.

The officer,  director  and  principal  stockholder  of the Company may actively
negotiate for the purchase of a portion of their common stock as a condition to,
or in  connection  with, a proposed  merger or  acquisition  transaction.  It is
anticipated  that  a  substantial  premium  may be  paid  by  the  purchaser  in
conjunction  with any sale of  shares by the  Company's  officer,  director  and
principal  stockholder made as a condition to, or in connection with, a proposed
merger or acquisition  transaction.  The fact that a substantial  premium may be
paid to the Company's  sole officer and director to acquire his shares creates a
conflict of interest for him and may compromise  his state law fiduciary  duties
to the Company's other stockholders. In making any such sale, the Company's sole
officer and director may consider his own personal pecuniary benefit rather than
the best interests of the Company and the Company's other stockholders,  and the
other stockholders are not expected to be afforded the opportunity to approve or
consent to any particular buy-out  transaction  involving shares held by Company
management.

The Company has adopted a policy under which any  consulting or finders fee that
may be paid to a third party for  consulting  services to assist  management  in
evaluating a prospective business opportunity would be paid in stock rather than
in  cash.  Any  such  issuance  of  stock  would  be  made  on an ad hoc  basis.
Accordingly,  the Company is unable to predict whether,  or in what amount, such
stock issuance might be made.

                                       20
<PAGE>
It is not currently anticipated that any salary,  consulting fee, or finders fee
shall be paid to any of the Company's directors or executive officers, or to any
other affiliate of the Company except as described under Executive  Compensation
above.

Although  management  has no current  plans to cause the Company to do so, it is
possible  that the  Company  may enter  into an  agreement  with an  acquisition
candidate requiring the sale of all or a portion of the Common Stock held by the
Company's  current  stockholders  to the  acquisition  candidate  or  principals
thereof,  or to other individuals or business entities,  or requiring some other
form of payment to the Company's current  stockholders,  or requiring the future
employment  of specified  officers  and payment of salaries to them.  It is more
likely  than  not  that  any  sale  of  securities  by  the  Company's   current
stockholders  to an  acquisition  candidate  would  be at a price  substantially
higher than that  originally paid by such  stockholders.  Any payment to current
stockholders  in the context of an  acquisition  involving  the Company would be
determined  entirely by the largely  unforeseeable  terms of a future  agreement
with an unidentified business entity.

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

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

ITEM 11 - EXECUTIVE COMPENSATION

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

                           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>
R. Wayne Duke   2008   $    -0-     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $    -0-
President, CEO  2007   $    -0-     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $    -0-
                2006   $    -0-     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $    -0-

Mike Sheriff    2008   $133,917     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $133,917
Former CEO      2007   $155,625     $22,000     $  -0-     $    -0-      $-0-          $-0-        $-0-     $177,625
                2006   $125,000     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $125,000

Kathleen        2008   $203,031     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $203,031
Hanafan         2007   $147,667     $22,000     $  -0-     $362,900      $-0-          $-0-        $-0-     $352,567
Former COO      2006   $    -0-     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $    -0-

George DeCourcy 2008   $148,822     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $148,822
Former CFO      2007   $ 64,164     $10,000     $  -0-     $291,975      $-0-          $-0-        $-0-     $366,139
                2006   $    -0-     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $    -0-

Karey Daniels   2008   $    -0-     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $    -0-
Former CFO      2007   $ 64,164     $   -0-     $  -0-     $    -0-      $-0-          $-0-        $-0-     $ 64,164
                2006   $120,000     $   -0-     $8,200     $    -0-      $-0-          $-0-        $-0-     $128,120
</TABLE>

                                       21
<PAGE>
----------
1)   A direct  stock  grant of  50,000  shares  was made to Karey  Daniels,  the
     Company's former CFO. These shares were valued at approximately $8,200.
2)   The stock option  awards were valued using the grant date value  calculated
     in accordance with the Compensation topic of the FASB Accounting  Standards
     Codification   and  are  not   discounted   for  factors  such  as  trading
     restrictions,  vesting limitations and other traditional discounts. See the
     notes to the accompanying financial statements for a discussion of relevant
     assumptions used in calculating these values.
3)   Ms.  Hanafan's  compensation  is  reflected  from January 15, 2007 (date of
     hire)  through the end of the year.  Ms.  Hanafan was awarded an additional
     100,000  shares  of  common  stock  prior to her  employment  for work as a
     consultant on a financing matter.
4)   Mr. DeCourcy's  compensation is reflected from July 17, 2007 (date of hire)
     through the end of the year. 5) Mr. Daniels' compensation is reflected from
     January 1, 2007 through June 11, 2007 (date of departure).

As of December 31, 2008, 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)      51,000,000                --           51,000,000       41.35%
</TABLE>

----------
(1)  On December 21,  2009,  there were  106,227,169  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,  2008 (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 106,227,169  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
     warrants or conversion of convertible securities  (approximately  3,197,750
     shares  on  the   exercise  of  the  LaJolla   outstanding   warrants   and
     approximately  13,902,174 shares to be issued if there was total conversion
     of the LaJolla debenture at December 21, 2009) - approximately  123,327,093
     beneficial  shares in total.  Neither  the  numerator  nor the  denominator
     includes  shares which may be issued upon the exercise of any other options
     or warrants or the conversion of any other convertible securities.
(3)  The contact address for the listed  stockholder is 17120 N. Dallas Parkway,
     Suite 235,  Dallas,  TX 75248.  (4) R. Wayne  Duke,  our sole  officer  and
     director is the sole officer and director of K&D Equity Investment, Inc.

CHANGES IN CONTROL

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

                                       22
<PAGE>
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.

The Company  currently  maintains a mailing  address at 17120 N. Dallas Parkway,
Suite 325, Dallas,  Texas 75248.  The Company's  telephone number there is (972)
361-0036.  Other than this  mailing  address,  the  Company  does not  currently
maintain  any other  office  facilities,  and does not  anticipate  the need for
maintaining office facilities at any time in the foreseeable future. The Company
pays 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 sole officer
and director.

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,  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,
                                                  2008              2007
                                                 -------           -------
     1. Audit fees
          KBA                                    $83,000           $37,219
          RHC                                      4,800            26,400
     1. Audit-related fees                            --                --
     2. Tax fees                                      --                --
     3. All other fees                                --                --
                                                 -------           -------

        Totals                                   $87,800           $63,619
                                                 =======           =======

----------
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, in connection with statutory and regulatory filings or
     engagements.
2.   Audit  Related  fees  consist of fees  billed  for  assurance  and  related
     services by our principal accountant that are related to the performance of
     the audit or review of our financial  statements and are not reported under
     Audit Fees.
3.   Tax  fees  consist  of  fees  billed  for  professional  services  for  tax
     compliance,  tax advice and tax planning. These services include assistance
     regarding  federal,  state and local tax  compliance  and  consultation  in
     connection with various transactions and acquisitions.

We have considered whether the provision of any non-audit  services,  currently,
in the past or in the future, is compatible with either 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,  (2007)  Robison,  Hill & Company or KBA
Group,  LLC or (2008) S. W.  Hatfield,  CPA, did not engage any other persons or
firms other than the principal accountant's full-time, permanent employees.

                                       23
<PAGE>
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.
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.

                                       24
<PAGE>
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, 2008
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)

                                       25
<PAGE>
                            THE X-CHANGE CORPORATION

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                            Page
                                                                            ----

REPORT OF REGISTERED INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM
   S. W. Hatfield, CPA                                                      F-2
   KBA Group, LLP                                                           F-3

CONSOLIDATED FINANCIAL STATEMENTS

   Consolidated Balance Sheet
      as of December 31, 2008                                               F-4

   Consolidated Statements of Operations and Comprehensive Loss
      for the years ended December 31, 2008 and 2007                        F-5

   Consolidated Statement of Changes in Stockholders' Equity (Deficit)
      for the years ended December 31, 2008 and 2007                        F-6

   Consolidated Statements of Cash Flows
      for the years ended December 31 2008 and 2007                         F-7

   Notes to Consolidated Financial Statements                               F-8


                                      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,  2008  and the  related  consolidated
statements of operations and comprehensive loss, changes in stockholders' equity
(deficit)  and cash flows for the years ended  December 31, 2008,  respectively.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

The  financial  statements  of the Company for the year ended  December 31, 2007
were  audited  by other  auditors  whose  report  was dated  April 10,  2008 and
included a paragraph expressing substantial doubt about the Company's ability to
continue as a going concern. This auditor has not performed any additional audit
procedures subsequent to the date of their report.

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

The consolidated 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 their  consolidated
operations  and cash flows for the year ended  December 31, 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 as of
December  31, 2008 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
December 8, 2009 (except for Note O
 as to which the date is December 21, 2009)

                                      F-2
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
The X-Change Corporation

We have audited the  accompanying  consolidated  statements  of  operations  and
comprehensive  loss,  stockholders'  equity,  and  cash  flows  of The  X-Change
Corporation and subsidiary (the "Company") for the year ended December 31, 2007.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit.

We conducted  our audit 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 their  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,   assessing  the  accounting  principles  used  and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the consolidated  results of operations and
cash flows of The X-Change  Corporation  and its  subsidiary  for the year ended
December 31, 2007, in conformity with accounting  principles  generally accepted
in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note C to the
financial  statements,  the Company has no operations  and limited cash on hand.
These  conditions  raise  substantial  doubt  about its ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in Note C. The consolidated  financial statements do not include any adjustments
that might result from the outcome of this uncertainty.


/s/ KBA Group LLP
-----------------------------
KBA Group LLP

Dallas, Texas
April 10, 2008

                                      F-3
<PAGE>
                            THE X-CHANGE CORPORATION
                                  BALANCE SHEET
                                December 31, 2008

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

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

      TOTAL CURRENT ASSETS                                               18,503
                                                                   ------------

OTHER ASSETS
  Debt financing fees, net of accumulated
   amortization of approximately $168,507                               914,880
                                                                   ------------

      TOTAL OTHER ASSETS                                                914,880
                                                                   ------------

TOTAL ASSETS                                                       $    933,383
                                                                   ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
  Convertible debenture payable, net of unamortized discount       $    137,750
  Convertible notes payable, net of unamortized discount              1,502,582
  Accrued interest payable                                                4,600
                                                                   ------------

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

      TOTAL LIABILITIES                                               1,644,932
                                                                   ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (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
    104,108,673 shares issued and outstanding                           104,109
  Additional paid-in capital                                         17,938,909
  Accumulated deficit                                               (18,545,328)
                                                                   ------------
      TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                             (711,549)
                                                                   ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)               $    933,383
                                                                   ============

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

                                      F-4
<PAGE>
                            THE X-CHANGE CORPORATION
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                     Years ended December 31, 2008 and 2007

<TABLE>
<CAPTION>
                                                              Year ended             Year ended
                                                             December 31,           December 31,
                                                                 2008                   2007
                                                             ------------           ------------
<S>                                                          <C>                    <C>
REVENUES - net of returns and allowances                     $         --           $         --
COST OF SALES                                                          --                     --
                                                             ------------           ------------

GROSS PROFIT                                                           --                     --
                                                             ------------           ------------

OPERATING EXPENSES
  General and administrative expenses                              25,832                424,253
                                                             ------------           ------------
      TOTAL OPERATING EXPENSES                                     25,832                424,253
                                                             ------------           ------------

LOSS FROM OPERATIONS                                              (25,832)              (424,253)

OTHER INCOME (EXPENSE)
  Interest income                                                   3,559                  2,657
  Interest expense                                               (725,722)               (75,367)
  Amortization of financing fees and note discounts            (1,120,241)              (420,106)
  Other                                                            (4,807)                    --
                                                             ------------           ------------
      TOTAL OTHER INCOME (EXPENSE)                             (1,847,211)              (492,816)
                                                             ------------           ------------

LOSS FROM CONTINUING OPERATIONS
 BEFORE PROVISION FOR INCOME TAXES                             (1,873,043)              (917,029)

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

LOSS FROM CONTINUING OPERATIONS                                (1,873,043)              (917,029)

DISCONTINUED OPERATIONS, NET OF INCOME TAXES
  Loss from discontinued operations,
   net of provision for income taxes of
   $-0- and $-0-,  respectively                                (1,140,199)            (2,282,724)
  Loss on disposition of discontinued operations,
   net of provision for income taxes of
   $-0- and $-0-, respectively                                   (101,021)                    --
                                                             ------------           ------------

LOSS FROM DISCONTINUED OPERATIONS                              (1,241,220)            (2,282,724)
                                                             ------------           ------------

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

COMPREHENSIVE LOSS                                           $ (3,114,263)          $ (3,199,753)
                                                             ============           ============
Netloss per weighted-average share of
 common stock outstanding, calculated
 on Net Loss - basic and fully diluted
   From continuing operations                                $      (0.04)          $      (0.03)
   From discontinued operations                                     (0.03)                 (0.08)
                                                             ------------           ------------
      Total                                                  $      (0.07)          $      (0.11)
                                                             ============           ============
Weighted-average number of shares
 of common stock outstanding                                   43,567,672             30,326,515
                                                             ============           ============
</TABLE>

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

                                      F-5
<PAGE>
                            THE X-CHANGE CORPORATION
       CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                     Years ended December 31, 2008 and 2007

<TABLE>
<CAPTION>
                                                   Common Stock            Additional
                                               ---------------------        paid-in         Accumulated
                                               Shares         Amount        capital           deficit            Total
                                               ------         ------        -------           -------            -----
<S>                                          <C>            <C>          <C>               <C>               <C>
BALANCES AT JANUARY 1, 2007                  27,764,500     $ 27,765     $ 11,717,497      $(12,231,312)     $   (486,050)

Common stock issued for
  Cash                                        3,725,001        3,725        1,113,775                --         1,117,500
  Services                                      100,000          100             (100)               --                --
Stock based compensation earned                      --           --          488,517                --           488,517
Debt discount on convertible
 notes and debentures payable                        --           --        2,202,160                --         2,202,160
Warrants issued for financing fees                   --           --          227,149                --           227,149
Net loss for the year                                --           --               --        (3,199,753)       (3,199,753)
                                            -----------     --------     ------------      ------------      ------------
BALANCES AT DECEMBER 31, 2007                31,589,501       31,590       15,748,998       (15,431,065)          349,523

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)
                                            ===========     ========     ============      ============      ============
</TABLE>


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

                                      F-6
<PAGE>
                            THE X-CHANGE CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Years ended December 31, 2008 and 2007

<TABLE>
<CAPTION>
                                                                   Year ended            Year ended
                                                                   December 31,          December 31,
                                                                       2008                  2007
                                                                   -----------           -----------
<S>                                                                <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss for the year                                            $(3,114,263)          $(3,199,753)
  Adjustments to reconcile net loss to net cash
   provided by operating activities
     Equity in loss of foreclosed subsidiary                         1,140,199                    --
     Depreciation and amortization                                   1,108,499               488,992
     Stock based compensation                                               --               488,517
     Expenses paid with common stock                                    25,500                    --
     Interest expense capitalized as principal                         217,758                    --
     Interest expense paid with common stock                           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)               59,661
     Current assets of foreclosed subsidary                                 --                14,439
  Increase (Decrease) in
     Current liabilities of foreclosed subsidiary                           --                65,583
     Accrued interest payable                                           (2,952)                   --
                                                                   -----------           -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                   (406,141)           (2,082,561)
                                                                   -----------           -----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Fixed assets acquired by foreclosed subsidiary                            --                (5,637)
  Cash advanced to foreclosed subsidiary                            (2,049,000)                   --
                                                                   -----------           -----------
NET CASH USED IN INVESTING ACTIVITIES                               (2,049,000)               (5,637)
                                                                   -----------           -----------
CASH FLOWS FROM FINANCING ACTIVITIES
  Cash received on sale of common stock                                     --             1,117,500
  Cash received on notes payable, net of fees paid                   1,800,000             1,828,612
  Cash paid on related party notes payable                                  --              (120,000)
  Cash paid on convertible debenture principal                         (66,225)                   --
                                                                   -----------           -----------
NET CASH USED IN FINANCING ACTIVITIES                                1,733,775             2,826,112
                                                                   -----------           -----------

INCREASE (DECREASE) IN CASH                                           (721,366)              737,914

Cash at beginning of period                                            739,869                 1,955
                                                                   -----------           -----------

CASH AT END OF PERIOD                                              $    18,503           $   739,869
                                                                   ===========           ===========

SUPPLEMENTAL DISCLOSURE OF INTEREST AND INCOME TAXES PAID
  Interest paid for the period                                     $    45,948           $        --
                                                                   ===========           ===========
  Income taxes paid for the period                                 $        --           $        --
                                                                   ===========           ===========
</TABLE>


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

                                      F-7
<PAGE>
                            THE X-CHANGE CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2008 and 2007

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, 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 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.

The Company's  current  business plan is to locate and combine with an existing,
privately-held  company which is profitable or, in management's view, has growth
potential,  irrespective  of the industry in which it is engaged.  However,  the
Company does not intend to combine with a private company which may be deemed to
be an  investment  company  subject to the  Investment  Company  Act of 1940.  A
combination  may be  structured  as a  merger,  consolidation,  exchange  of the
Company's  common  stock for stock or assets or any other form which will result
in the combined enterprise's becoming a publicly-held corporation.

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  X-Change
Corporation  and AirGATE  Technologies,  Inc. as of and for years ended December
31, 2008 and 2007, respectively.  All significant intercompany transactions have
been eliminated in consolidation.  The consolidated  entities are referred to as
Company.

Certain amounts have been  reclassified in the December 31, 2007 presentation to
conform to the December 31, 2008  presentation  caused by the foreclosure of the
Company's holdings in AirGATE.  The operations of AirGATE have been presented as
"Discontinued Operations" for all periods presented.

                                      F-8
<PAGE>
                            THE X-CHANGE CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2008 and 2007

NOTE C - GOING CONCERN UNCERTAINTY

As of December 31, 2008,  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 majority  stockholder  currently maintains the corporate status of
the  Company  and has  provided  all  nominal  working  capital  support  on the
Company's behalf since the bankruptcy  discharge date.  Because of the Company's
lack of operating  assets,  its continuance is fully dependent upon the majority
stockholder's  continuing support.  The majority stockholder intends to continue
the  funding of nominal  necessary  expenses to sustain  the  corporate  entity.
However,  the Company is  dependent  upon future  economic  trends and  business
operations  for  the  Company's  majority  stockholder  to  have  the  resources
available to support the Company.  Should this pledge fail to provide financing,
the Company has not identified  any  alternative  sources of working  capital to
support the Company.

The  Company's  ultimate  continued  existence is dependent  upon its ability to
generate  sufficient cash flows from operations to support its daily  operations
as well as provide  sufficient  resources  to retire  existing  liabilities  and
obligations on a timely basis.  Further,  the Company faces considerable risk in
its business  plan and a potential  shortfall of funding due to our 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 required
to rely on existing cash in the bank and  additional  funds loaned by management
and/or significant stockholders.

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

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

It  is  the  intent  of  management  and  significant  stockholders  to  provide
sufficient  working  capital  necessary to support and preserve the integrity of
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.

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-9
<PAGE>
                            THE X-CHANGE CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2008 and 2007

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. Trade Receivables and Allowance for Doubtful Accounts

     In the normal course of business,  the Company extended unsecured credit to
     virtually  all of its  customers  which are located  throughout  the United
     States  with  no  geographic  concentration.  Because  of the  credit  risk
     involved,  management has provided an allowance for doubtful accounts which
     reflects its opinion of amounts which will eventually become uncollectible.
     Management   considered  the  following   factors  when   determining   the
     collectibility of specific customer  accounts:  customer  creditworthiness,
     past  transaction  history with the  customer,  current  economic  industry
     trends,  and changes in customer payment terms. If the financial  condition
     of the Company's  customers were to deteriorate,  adversely affecting their
     ability to make payments,  additional  allowances would be required. In the
     event of complete  non-performance,  the maximum exposure to the Company is
     the recorded amount of trade accounts receivable shown on the balance sheet
     at the date of non-performance.  Balances that remain outstanding after the
     Company has used  reasonable  collection  efforts are written off through a
     charge to the valuation allowance.

3. 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  records  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.

4. 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.

5. 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.

                                      F-10
<PAGE>
                            THE X-CHANGE CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2008 and 2007

NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

6. Revenue Recognition

     The Company generated  revenues through its forclosed 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 is  recognized at the time the product is
     shipped  and the title  transfers  to  customers,  provided  no  continuing
     obligation  exists  and  there  is  reasonable   assurance  of  collection.
     Non-refundable  upfront  payments  received upon execution of collaborative
     agreements are recorded as deferred revenue and 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  are  recognized  over  the  term  of  those  contracts  and are
     generally  separate  from  research and  development  agreements or product
     delivery agreements.

7. Accounting for Stock Options

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

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

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

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

8. Research and Development

     Research and development costs are expensed as incurred.

9. 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, 2005. The Company does not
     anticipate  any  examinations  of returns  filed for periods  ending  after
     December 31, 2005.

                                      F-11
<PAGE>
                            THE X-CHANGE CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2008 and 2007

NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

9. Income taxes - continued

     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.

10. Income (Loss) per share

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

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

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

     As of December 31, 2008 and 2007, the Company's  outstanding stock options,
     warrants, and convertible debentures are considered to be anti-dilutive due
     to the Company's net operating losses.

11. 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.

                                      F-12
<PAGE>
                            THE X-CHANGE CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2008 and 2007

NOTE F - CONCENTRATIONS OF CREDIT RISK

Financial instruments,  which potentially subject us to a concentration of risk,
include  cash and accounts  receivable.  All of our  customers  are based in the
United  States at this time and we are 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, 2008 and 2007, and subsequent
thereto,  respectively,  the  Company,  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 credit risk
exposures.

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  consolidated
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 and 2007, respectively, are as follows:

                                             December 31,          December 31,
                                                2008                  2007
                                             -----------           -----------

Net sales                                    $   386,755           $ 1,626,654
                                             ===========           ===========
Operating income (loss)                      $(1,076,181)          $(2,184,863)
                                             ===========           ===========
Loss from discontinued operations            $(1,140,199)          $(2,282,724)
                                             ===========           ===========

                                      F-13
<PAGE>
                            THE X-CHANGE CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2008 and 2007

NOTE H - DEFERRED COSTS

During Calendar 2008 and 2007,  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.  Net debt  issuance  costs of
approximately $914,880 and $608,648 remained capitalized as of December 31, 2008
and  2007,  respectively,  inclusive  of  approximately  $531,599  and  $223,742
relating to warrants issued in connection with debt.

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.

                                      F-14
<PAGE>
                            THE X-CHANGE CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2008 and 2007

NOTE I - DEBT FINANCING ARRANGEMENTS - CONTINUED

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

 As of  December  31,  2008,  the  outstanding  balance on the  Melissa  Note is
approximately $668,239,  including capitalized interest of approximately $17,445
through that date.  Interest will continue to accrue at 10% per annum subsequent
thereto.

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. If LCII converts a portion of the debenture, a
proportionate amount of the warrants must be similarly exercised.

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, 2008 and 2007,  respectively,
the outstanding principal amount of convertible  debentures totaled $319,775 and
$400,000.

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-15
<PAGE>
                            THE X-CHANGE CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2008 and 2007

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

Discount rate                               3.10%               3.28%
Volatility                                 162.0%              154.0%
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.  At  December  31,  2008 and 2007,  the  principal  amount of
convertible debentures outstanding totaled $3,839,358.

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.

<PAGE>

                            THE X-CHANGE CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2008 and 2007

NOTE J - INCOME TAXES

The  components  of income tax  (benefit)  expense  for each of the years  ended
December 31, 2008 and 2007, respectively, are as follows:

                                       Year ended               Year ended
                                       December 31,             December 31,
                                          2008                     2007
                                         -------                  -------
Federal:
  Current                                $    --                  $    --
  Deferred                                    --                       --
                                         -------                  -------
                                              --                       --
                                         -------                  -------
State:
  Current                                     --                       --
  Deferred                                    --                       --
                                         -------                  -------
                                              --                       --
                                         -------                  -------
  Total                                  $    --                  $    --
                                         =======                  =======

The Company has a cumulative net operating loss  carryforward  of  approximately
$4,835,000 as of December 31, 2008 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 year ended December 31, 2008
differed from the statutory federal rate of 34 percent as follows:

                                                                     Year ended
                                                                    December 31,
                                                                        2008
                                                                    -----------

Statutory rate applied to loss before income taxes                  $(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                           318,000
  Stock based compensation                                             (166,000)
  Other, including reserve for deferred tax asset                       353,000
                                                                    -----------
      Income tax expense                                            $        --
                                                                    ===========

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,  2008  and  2007,
respectively:

                                              December 31,          December 31,
                                                  2008                  2007
                                              -----------           -----------
Deferred tax assets
  Net operating loss carryforwards            $ 1,797,000           $ 1,458,000
  Stock based compensation                             --               166,000
  Debt discount amortization                      474,000               156,000
  Other                                                --                22,000
                                              -----------           -----------

                                                2,271,000             1,802,000
  Less valuation allowance                     (2,271,000)           (1,802,000)
                                              -----------           -----------
Net Deferred Tax Asset                        $        --           $        --
                                              ===========           ===========

                                      F-16
<PAGE>
                            THE X-CHANGE CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2008 and 2007

NOTE J - INCOME TAXES - CONTINUED

During the year ended  December 31, 2008 and 2007,  respectively,  the valuation
allowance  for the deferred tax asset  increased by  approximately  $469,000 and
$1,088,000.

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".

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,  2008 and  2007,  respectively,  there  were no  shares  of
preferred stock issued and outstanding.

NOTE L - COMMON STOCK

During the year ended December 31, 2007, the Company issued an aggregate 100,000
shares  of  restricted,  unregistered  common  stock  to a  consulting  firm  as
consideration for services rendered.

During the year ended December 31, 2007, the Company issued  3,725,001 shares of
common  stock to outside  investors  under a private  placement  memorandum  for
proceeds in the amount of  $1,117,500.  Warrants  were also issued in connection
with this financing as discussed separately.

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.


                (Remainder of this page left blank intentionally)

                                      F-17
<PAGE>
                            THE X-CHANGE CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2008 and 2007

NOTE M - COMMON STOCK WARRANTS

In conjunction with, and as a component of, certain debt issuances,  the Company
has issued an aggregate  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, 2008, the warrants break down as follows:

                           # warrants       exercise price
                           ----------       --------------
                            3,404,000           $0.07
                           25,714,286           $0.17
                              630,000           $0.20
                              200,000           $0.40
                            4,500,000           $0.50
                            3,860,351           $0.60
                            3,725,001           $0.84
                            4,000,000           $1.00
                           ----------
                           46,033,638           $0.36
                           ==========

                           # warrants        initial term
                           ----------        ------------
                            4,000,000          3 years
                              569,350          4 years
                           37,864,288          5 years
                              630,000          9 years
                            2,970,000          10 years
                           ----------
                           46,033,638
                           ==========

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.

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, 2007                  --
   Granted                                       4,800,000           $0.21
   Exercised                                            --
   Forfeited                                      (325,000)          $0.20
                                                ----------
Options outstanding at December 31, 2007         4,475,000           $0.21         9.5         $134,250
   Granted                                              --
   Exercised                                            --
   Forfeited                                    (4,475,000)          $0.21
                                                ----------
Options outstanding at December 31, 2008                --
                                                ==========
Options exercisable at December 31, 2008                --
                                                ==========
</TABLE>

                                      F-18
<PAGE>
                            THE X-CHANGE CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2008 and 2007

NOTE N - STOCK OPTIONS - CONTINUED

Options available for grant at
 December 31, 2008                                   6,000,000
                                                     =========

The  following  table  summarizes  non-cash  stock-based   compensation  expense
recorded  pursuant to the  Compensation  topic of the FASB Accounting  Standards
Codification for the years ended December 31, 2008 and 2007.

                                                 Year ended         Year ended
                                                 December 31,       December 31,
                                                    2008               2007
                                                  ---------          ---------
Loss from discontinued operations
  Stock based compensation earned                 $ 130,299          $ 488,517
  Stock based compensation forfeited
   upon foreclosure of operating subsidiary        (618,816)                --
                                                  ---------          ---------
                                                  $(488,517)         $ 488,517
                                                  =========          =========

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

                                                                    Year ended
                                                                    December 31,
                                                                       2007
                                                                    ---------
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.

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 December 15, 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. 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. has a security  interest in the shares
of stock of our 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,  Inc. Upon an event of default under the La Jolla Cove
Investors, Inc. debenture, 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.

                                      F-19
<PAGE>
                            THE X-CHANGE CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2008 and 2007

NOTE O - SUBSEQUENT EVENTS - CONTINUED

On January  8, 2009 and  January  22,  2009,  the  Company  issued an  aggregate
2,118,506 to LaJolla  Cove  Investors,  Inc. in payment of accrued  interest and
fees through January 31, 2009.

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.  As 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 X-Change  Corporation  (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.

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).

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 a Debt Assignment and
the conversion features of the Convertible  Promissory Note between the Company,
AirGATE and Melissa CR 364,  LTD. The issuance  was  originally  approved by the
Board in  December  2008,  but was not  accepted  by  Melissa CR 364,  LTD.  and
assigned  to K & D  until  May 26,  2009.  This  issuance  is  reflected  in the
accompanying financial statements as of the effective date of the Board Action.

                                      F-20
<PAGE>
                            THE X-CHANGE CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2008 and 2007

NOTE O - SUBSEQUENT EVENTS - CONTINUED

Management has evaluated all activity of the Company  through  December 21, 2009
(the issue date of the consolidated  financial statements) and concluded that no
subsequent  events,  other than as disclosed  above,  have  occurred  that would
require  recognition in the consolidated  financial  statements or disclosure in
the notes to financial statements.



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                                      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: December 21, 2009                   /s/ R. Wayne Duke
       -----------------                   -------------------------------------
                                                                  R. Wayne Duke
                                             President, Chief Executive Officer
                                           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: December 21, 2009                   /s/ R. Wayne Duke
       -----------------                   -------------------------------------
                                                                  R. Wayne Duke
                                             President, Chief Executive Officer
                                           Chief Financial Officer and Director


                                       26