WAYTRONX,
INC.





UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





QUARTERLY
REPORT UNDER SECTION 13 OR 15(D)


OF THE
SECURITIES EXCHANGE ACT OF 1934




For
quarter ended September 30, 2009





Commission
File Number 0-29195





WAYTRONX,
INC.


(Name of
Small Business Issuer in Its Charter)





Colorado
            
            (3990)
            
            84-1463284(State
      or jurisdiction of
            
            (Primary
      Standard Industrial
            
            (I.R.S.
      Employerincorporation
      or organization)
            
            Classification
      Code Number)
            
            Identification
      No.)





20050 SW
112th Avenue


Tualatin,
Oregon 97062


(503)
612-2300.


(Address
and Telephone Number of Principal Executive Offices and Principal Place of
Business)





William
J. Clough, CEO/President


Waytronx,
Inc.


20050 SW
112th Avenue


Tualatin,
Oregon 97062


(503)
612-2300.


(Name,
Address and Telephone Number of Agent for Service)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.


YES x NO  ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).


YES  ̈ NO x





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange act.





Large
      accelerated filer  ̈
            
            Accelerated
      filer  ̈Non-accelerated
      filer  ̈ (Do
      not check if a smaller reporting company)
            
            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  ̈ NO x





As of
November 13, 2009, there were 169,056,165 shares of the Company's common
stock outstanding, 50,543 shares of Series A Convertible Preferred Stock
outstanding, no shares of Series B and Series C Convertible Preferred Stock
outstanding.








WAYTRONX,
INC.





INDEX





PagePart
      IItem
      1
                                    
                                    Financial
      Statements
                                    
                                    
                                    3Condensed
      Consolidated Balance Sheets (unaudited)
                                    
                                    
                                    3Condensed
      Consolidated Statements of Operations (unaudited)
                                    
                                    
                                    4Condensed
      Consolidated Statements of Cash Flows (unaudited)
                                    
                                    
                                    5Notes
      to the Condensed Financial Statements (unaudited)
                                    
                                    
                                    7Accounting
      Policies
                                    
                                    
                                    8Item
      2
                                    
                                    Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                    
                                    
                                    20Overview
                                    
                                    
                                    20Intellectual
      Property
                                    
                                    
                                    21Liquidity
      and Capital Resources
                                    
                                    
                                    21Results
      of Operations
                                    
                                    
                                    23Item
      3.
                                    
                                    Controls
      and Procedures
                                    
                                    
                                    25Part
      IIItem
      1
                                    
                                    Legal
      Proceedings.
                                    
                                    
                                    26Item
      1A
                                    
                                    Risk
      Factors
                                    
                                    
                                    26Item
      2
                                    
                                    Unregistered
      Sales of Equity Securities and Use
      of Proceeds
                                    
                                    
                                    26Item
      3
                                    
                                    Defaults
      Upon Senior Securities
                                    
                                    
                                    27Item
      4
                                    
                                    Submission
      of Matters to a Vote of Security Holders
                                    
                                    
                                    27Item
      5
                                    
                                    Other
      Information
                                    
                                    
                                    28Item
      6
                                    
                                    Exhibits
      and Reports on Form 8-K
                                    
                                    
                                    28Signatures
                                    
                                    
                                    29Exhibits


2


PART I.
FINANCIAL INFORMATION


Item
1.  Financial Statements


Waytronx,
Inc.


Condensed
Consolidated Balance Sheets





September
      30,
                                      2009
                                    
                                    
                                    December
      31,
                                      2008(unaudited)Assets:Current
      Assets:Cash
      and cash equivalents
                                    
                                    $
                                    227,978
                                    
                                    
                                    $
                                    599,200Trade
      accounts receivable, net of allowance of $165,000 and $135,000,
      respectively
                                    
                                    
                                    4,259,429
                                    
                                    
                                    
                                    2,762,416Other
      accounts receivable
                                    
                                    
                                    60,575
                                    
                                    
                                    
                                    110,952Other
      accounts receivable, related party
                                    
                                    
                                    200,015
                                    
                                    
                                    
                                    194,984Inventories,
      net
                                    
                                    
                                    4,273,393
                                    
                                    
                                    
                                    4,077,367Prepaid
      expenses and other
                                    
                                    
                                    354,534
                                    
                                    
                                    
                                    186,520Total
      current assets
                                    
                                    
                                    9,375,924
                                    
                                    
                                    
                                    7,931,439Property
      and equipment, net
                                    
                                    
                                    1,460,897
                                    
                                    
                                    
                                    1,245,203Other
      assets:Investment
      - equity method
                                    
                                    
                                    65,466
                                    
                                    
                                    
                                    120,499Investments
      - long term
                                    
                                    
                                    102,581
                                    
                                    
                                    
                                    -Technology
      rights, net
                                    
                                    
                                    4,072,551
                                    
                                    
                                    
                                    4,134,202Patent
      costs, net
                                    
                                    
                                    431,223
                                    
                                    
                                    
                                    558,269Other
      intangible assets, net
                                    
                                    
                                    15,644
                                    
                                    
                                    
                                    27,878Deposits
      and other
                                    
                                    
                                    163,221
                                    
                                    
                                    
                                    40,411Notes
      receivable, net
                                    
                                    
                                    94,808
                                    
                                    
                                    
                                    182,025Debt
      offering costs, net
                                    
                                    
                                    1,107,517
                                    
                                    
                                    
                                    1,618,678Goodwill,
      net
                                    
                                    
                                    21,851,923
                                    
                                    
                                    
                                    32,281,148Total
      other assets
                                    
                                    
                                    27,904,934
                                    
                                    
                                    
                                    38,963,110Total
      assets
                                    
                                    $
                                    38,741,755
                                    
                                    
                                    $
                                    48,139,752Liabilities
      and stockholders' equity:Current
      liabilities:Accounts
      payable
                                    
                                    $
                                    1,686,257
                                    
                                    
                                    $
                                    1,106,114Preferred
      stock dividends payable
                                    
                                    
                                    5,054
                                    
                                    
                                    
                                    5,054Demand
      notes payable
                                    
                                    
                                    2,002,547
                                    
                                    
                                    
                                    1,373,993Accrued
      expenses
                                    
                                    
                                    2,245,926
                                    
                                    
                                    
                                    1,912,592Accrued
      compensation
                                    
                                    
                                    497,916
                                    
                                    
                                    
                                    770,625Unearned
      revenue
                                    
                                    
                                    120,181
                                    
                                    
                                    
                                    -Notes
      payable, current portion due
                                    
                                    
                                    7,412,261
                                    
                                    
                                    
                                    49,200Notes
      payable, related party, current portion due
                                    
                                    
                                    138,554
                                    
                                    
                                    
                                    1,197,865Convertible
      notes payable, current portion due
                                    
                                    
                                    300,000
                                    
                                    
                                    
                                    1,350,000Total
      current liabilities
                                    
                                    
                                    14,408,696
                                    
                                    
                                    
                                    7,765,443Long
      term notes payable, net of current portion due of $65,585 and $49,200,
      respectively
                                    
                                    
                                    1,531,210
                                    
                                    
                                    
                                    6,095,740Long
      term notes payable, related party, net of current portion due of $138,554
      and $197,865 and discounts of $436,701 and $638,255,
      respectively
                                    
                                    
                                    13,136,737
                                    
                                    
                                    
                                    13,022,465Long
      term convertible notes payable
                                    
                                    
                                    1,000,000
                                    
                                    
                                    
                                    -Long
      term convertible notes payable, related party, net of discounts of
      $3,277,838 and $5,711,395, respectively
                                    
                                    
                                    1,622,162
                                    
                                    
                                    
                                    11,788,605Total
      liabilities
                                    
                                    
                                    31,698,805
                                    
                                    
                                    
                                    38,672,253Commitments
      and contingencies
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Stockholders'
      equity:Preferred
      stock, par value $0.001; 10,000,000 shares authorized
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Convertible
      Series A preferred stock, 5,000,000 shares authorized, 50,543 shares
      issued  and outstanding liquidation preference of $50,543 at
      September 30, 2009 and December  31, 2008,
    respectively
                                    
                                    
                                    51
                                    
                                    
                                    
                                    51Convertible
      Series B preferred stock, 30,000 shares authorized, and no shares 
      outstanding at September 30, 2009 and December 31, 2008,
      respectively
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Common
      stock, par value $0.001; 325,000,000 and 200,000,000 shares authorized
      and 167,105,919 and 166,208,406 shares issued and outstanding at
      September 30, 2009 and December 31, 2008,
respectively
                                    
                                    
                                    167,106
                                    
                                    
                                    
                                    166,208Common
      stock issuable, par value $0.001; (1,500,000 shares at September 30,
      2009)
                                    
                                    
                                    1,500
                                    
                                    
                                    
                                    -Additional
      paid-in capital
                                    
                                    
                                    60,284,146
                                    
                                    
                                    
                                    59,849,326Subscription
      receivable
                                    
                                    
                                    
                                    
                                    
                                    
                                    -Accumulated
      deficit
                                    
                                    
                                    (53,428,252
                                    )
                                    
                                    
                                    (50,548,086
                                    )Noncontrolling
      interest
                                    
                                    
                                    42,400
                                    
                                    
                                    
                                    -Accumulated
      other comprehensive income (loss)
                                    
                                    
                                    (24,001
                                    )
                                    
                                    
                                    -Total
      stockholders' equity
                                    
                                    
                                    7,042,950
                                    
                                    
                                    
                                    9,467,499Total
      liabilities and stockholders' equity
                                    
                                    $
                                    38,741,755
                                    
                                    
                                    $
                                    48,139,752





See
accompanying notes to financial statements


3





Waytronx,
Inc.


Condensed
Consolidated Statement of Operations


(unaudited)





For
      the three months ended September 30,
                                                      
                                                      
                                                      For
      the nine months ended September 30,2009
                                                      
                                                      
                                                      2008
                                                      
                                                      
                                                      2009
                                                      
                                                      
                                                      2008Revenues:Product
      Sales
                                                      
                                                      $
                                                      7,936,409
                                                      
                                                      
                                                      $
                                                      8,496,123
                                                      
                                                      
                                                      $
                                                      20,040,311
                                                      
                                                      
                                                      $
                                                      12,916,133Revenue
      from freight
                                                      
                                                      
                                                      20,291
                                                      
                                                      
                                                      
                                                      47,724
                                                      
                                                      
                                                      
                                                      77,229
                                                      
                                                      
                                                      
                                                      84,813Total
      revenue
                                                      
                                                      
                                                      7,956,700
                                                      
                                                      
                                                      
                                                      8,543,847
                                                      
                                                      
                                                      
                                                      20,117,540
                                                      
                                                      
                                                      
                                                      13,000,946Cost
      of revenues
                                                      
                                                      
                                                      5,033,060
                                                      
                                                      
                                                      
                                                      5,064,281
                                                      
                                                      
                                                      
                                                      12,294,615
                                                      
                                                      
                                                      
                                                      7,791,883Gross
      profit (loss)
                                                      
                                                      
                                                      2,923,640
                                                      
                                                      
                                                      
                                                      3,479,566
                                                      
                                                      
                                                      
                                                      7,822,925
                                                      
                                                      
                                                      
                                                      5,209,063Operating
      expensesSelling,
      general and administrative
                                                      
                                                      
                                                      3,142,720
                                                      
                                                      
                                                      
                                                      2,538,488
                                                      
                                                      
                                                      
                                                      7,967,756
                                                      
                                                      
                                                      
                                                      4,727,331Research
      and development
                                                      
                                                      
                                                      18,438
                                                      
                                                      
                                                      
                                                      141,934
                                                      
                                                      
                                                      
                                                      174,502
                                                      
                                                      
                                                      
                                                      666,875Bad
      debt
                                                      
                                                      
                                                      32,589
                                                      
                                                      
                                                      
                                                      33,989
                                                      
                                                      
                                                      
                                                      84,143
                                                      
                                                      
                                                      
                                                      125,489Impairment
      of goodwill
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      10,698,169
                                                      
                                                      
                                                      
                                                      -Total
      operating expenses
                                                      
                                                      
                                                      3,193,747
                                                      
                                                      
                                                      
                                                      2,714,411
                                                      
                                                      
                                                      
                                                      18,924,570
                                                      
                                                      
                                                      
                                                      5,519,695Profit
      (loss) from operations
                                                      
                                                      
                                                      (270,107
                                                      )
                                                      
                                                      
                                                      765,155
                                                      
                                                      
                                                      
                                                      (11,101,645
                                                      )
                                                      
                                                      
                                                      (310,632
                                                      )Other
      income (expense)Other
      income
                                                      
                                                      
                                                      51,548
                                                      
                                                      
                                                      
                                                      49,219
                                                      
                                                      
                                                      
                                                      150,030
                                                      
                                                      
                                                      
                                                      107,006Other
      expense
                                                      
                                                      
                                                      (17,920
                                                      )
                                                      
                                                      
                                                      (766
                                                      )
                                                      
                                                      
                                                      (163,122
                                                      )
                                                      
                                                      
                                                      (39,321
                                                      )Derivative
      income
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      49,115
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      2,831,688Investment
      income (loss)
                                                      
                                                      
                                                      17,010
                                                      
                                                      
                                                      
                                                      1,959
                                                      
                                                      
                                                      
                                                      (55,033
                                                      )
                                                      
                                                      
                                                      (2,305
                                                      )Interest
      expense - intrinsic value of convertible debt, amortization of debt
      offering costs and amortization of debt discount
                                                      
                                                      
                                                      (741,855
                                                      )
                                                      
                                                      
                                                      (669,070
                                                      )
                                                      
                                                      
                                                      (2,354,786
                                                      )
                                                      
                                                      
                                                      (1,247,565
                                                      )Interest
      expense
                                                      
                                                      
                                                      (349,940
                                                      )
                                                      
                                                      
                                                      (512,414
                                                      )
                                                      
                                                      
                                                      (1,189,665
                                                      )
                                                      
                                                      
                                                      (886,396
                                                      )Total
      other income (expense), net
                                                      
                                                      
                                                      (1,041,157
                                                      )
                                                      
                                                      
                                                      (1,081,957
                                                      )
                                                      
                                                      
                                                      (3,612,576
                                                      )
                                                      
                                                      
                                                      763,107Income
      (loss) before extraordinary items
                                                      
                                                      
                                                      (1,311,264
                                                      )
                                                      
                                                      
                                                      (316,802
                                                      )
                                                      
                                                      
                                                      (14,714,221
                                                      )
                                                      
                                                      
                                                      452,475Extraordinary
      itemsGain
      on debt extinguishments
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      11,834,055
                                                      
                                                      
                                                      
                                                      -Consolidated
      Net profit (loss)
                                                      
                                                      
                                                      (1,311,264
                                                      )
                                                      
                                                      
                                                      (316,802
                                                      )
                                                      
                                                      
                                                      (2,880,166
                                                      )
                                                      
                                                      
                                                      452,475Less: Net
      profit (loss) - noncontrolling interest
                                                      
                                                      
                                                      3,463
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      3,463
                                                      
                                                      
                                                      
                                                      -Net
      profit (loss) - attributable to Waytronx Inc.
                                                      
                                                      
                                                      (1,314,727
                                                      )
                                                      
                                                      
                                                      (316,802
                                                      )
                                                      
                                                      
                                                      (2,883,629
                                                      )
                                                      
                                                      
                                                      452,475Less: Preferred
      stock dividends
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -Net
      profit (loss) allocable to common  stockholders
                                                      
                                                      $
                                                      (1,314,727
                                                      )
                                                      
                                                      $
                                                      (316,802
                                                      )
                                                      
                                                      $
                                                      (2,883,629
                                                      )
                                                      
                                                      $
                                                      452,475Other
      comprehensive profit (loss)Foreign
      currency translation adjustment
                                                      
                                                      $
                                                      (24,001
                                                      )
                                                      
                                                      $
                                                      -
                                                      
                                                      
                                                      $
                                                      (24,001
                                                      )
                                                      
                                                      $
                                                      -Comprehensive
      profit (loss)
                                                      
                                                      $
                                                      (1,338,728
                                                      )
                                                      
                                                      $
                                                      (316,802
                                                      )
                                                      
                                                      $
                                                      (2,907,630
                                                      )
                                                      
                                                      $
                                                      452,475Basic
      and diluted profit (loss) per common share
                                                      
                                                      $
                                                      (0.01
                                                      )
                                                      
                                                      $
                                                      -
                                                      
                                                      
                                                      $
                                                      (0.02
                                                      )
                                                      
                                                      $
                                                      -Diluted
      profit (loss) per common share
                                                      
                                                      $
                                                      (0.01
                                                      )
                                                      
                                                      $
                                                      -
                                                      
                                                      
                                                      $
                                                      (0.02
                                                      )
                                                      
                                                      $
                                                      -Basic
      and diluted weighted average common and common equivalents shares
      outstanding
                                                      
                                                      
                                                      168,088,471
                                                      
                                                      
                                                      
                                                      161,994,037
                                                      
                                                      
                                                      
                                                      167,217,609
                                                      
                                                      
                                                      
                                                      160,109,943





See
accompanying notes to financial statements


4


Waytronx,
Inc.


Condensed
Consolidated Statements of Cash Flows


(unaudited)




For
      the nine months ended September 30,2009
                                    
                                    
                                    2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      profit (loss)
                                    
                                    $
                                    (2,880,166
                                    )
                                    
                                    $
                                    452,475Adjustments
      to reconcile net profit (loss) to net cash used in operating
      activities:Stock,
      warrants, options and notes issued for compensation and
      services
                                    
                                    
                                    431,913
                                    
                                    
                                    
                                    669,634Change
      in fair value of warrant liability
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (2,831,688
                                    )Non-cash
      interest expense, including amortization of beneficial conversion value,
      warrant related debt discounts and intrinsic value of convertible debt and
      amortization of debt discount and amortization of debt offering
      costs
                                    
                                    
                                    2,354,786
                                    
                                    
                                    
                                    1,058,770Non-cash
      loss on securities available for sale
                                    
                                    
                                    55,033
                                    
                                    
                                    
                                    2,305Bad
      debt expense
                                    
                                    
                                    84,143
                                    
                                    
                                    
                                    120,686Amortization
      of technology rights
                                    
                                    
                                    178,884
                                    
                                    
                                    
                                    178,885Amortization
      of patent costs
                                    
                                    
                                    14,089
                                    
                                    
                                    
                                    17,155Amortization
      of website development
                                    
                                    
                                    10,733
                                    
                                    
                                    
                                    10,733Loss
      on disposal of assets
                                    
                                    
                                    -
                                    
                                    
                                    
                                    4,165Impairment
      of goodwill
                                    
                                    
                                    10,698,169
                                    
                                    
                                    
                                    -Impairment
      of patents
                                    
                                    
                                    136,811
                                    
                                    
                                    
                                    -Extraordinary
      gain on extinguishment of debt
                                    
                                    
                                    (11,834,055
                                    )
                                    
                                    
                                    -Depreciation
                                    
                                    
                                    300,794
                                    
                                    
                                    
                                    144,719Amortization
      of intangible assets
                                    
                                    
                                    578
                                    
                                    
                                    
                                    1,346(Increase)
      decrease in assets:Trade
      accounts receivable
                                    
                                    
                                    (375,325
                                    )
                                    
                                    
                                    (1,624,238
                                    )Other
      accounts receivable
                                    
                                    
                                    (106,559
                                    )
                                    
                                    
                                    938,591Inventory
                                    
                                    
                                    847,662
                                    
                                    
                                    
                                    (550,366
                                    )Prepaid
      expenses and other current assets
                                    
                                    
                                    (91,098
                                    )
                                    
                                    
                                    (272,071
                                    )Deposits
      and other assets
                                    
                                    
                                    (44,708
                                    )
                                    
                                    
                                    10,581Investments
      - long term
                                    
                                    
                                    (40
                                    )
                                    
                                    
                                    -Increase
      (decrease) in liabilities:Accounts
      payable
                                    
                                    
                                    274,828
                                    
                                    
                                    
                                    (901,831
                                    )Accrued
      expenses
                                    
                                    
                                    246,808
                                    
                                    
                                    
                                    1,061,996Accrued
      compensation
                                    
                                    
                                    (272,709
                                    )
                                    
                                    
                                    8,592Deferred
      revenues
                                    
                                    
                                    120,181
                                    
                                    
                                    
                                    (12,990
                                    )NET
      CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
                                    
                                    
                                    150,752
                                    
                                    
                                    
                                    (1,512,551
                                    )CASH
      FLOWS FROM INVESTING ACTIVITIES:Cash
      paid upon merger, net of cash received
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (5,816,468
                                    )Cash
      received from acquisition, net of cash paid
                                    
                                    
                                    12,563
                                    
                                    
                                    
                                    -Investment
      in technology rights and development
                                    
                                    
                                    (82,954
                                    )
                                    
                                    
                                    -Investment
      in patents
                                    
                                    
                                    (23,854
                                    )
                                    
                                    
                                    (48,943
                                    )Proceeds
      from Notes Receivable
                                    
                                    
                                    40,435
                                    
                                    
                                    
                                    -Payments
      from Notes Receivable
                                    
                                    
                                    (323,361
                                    )
                                    
                                    
                                    -Purchase
      of property and equipment
                                    
                                    
                                    (212,009
                                    )
                                    
                                    
                                    (48,175
                                    )NET
      CASH USED IN INVESTING ACTIVITIES
                                    
                                    
                                    (589,180
                                    )
                                    
                                    
                                    (5,913,586
                                    )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from demand notes payable
                                    
                                    
                                    628,554
                                    
                                    
                                    
                                    1,044,628Proceeds
      from notes and loans payable
                                    
                                    
                                    319,526
                                    
                                    
                                    
                                    6,600,000Proceeds
      from notes and loans payable, related party
                                    
                                    
                                    -
                                    
                                    
                                    
                                    100,000Payments
      on notes and loans payable
                                    
                                    
                                    (616,123
                                    )
                                    
                                    
                                    (447,789
                                    )Payments
      on notes and loans payable, related party
                                    
                                    
                                    (246,055
                                    )
                                    
                                    
                                    (215,530
                                    )Proceeds
      from sales of common stock and exercise of warrants and options, net of
      offering costs
                                    
                                    
                                    5,305
                                    
                                    
                                    
                                    599,160NET
      CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
                                    
                                    
                                    91,207
                                    
                                    
                                    
                                    7,680,469EFFECT
      OF EXCHANGE RATE CHANGES ON CASH
                                    
                                    
                                    (24,001
                                    )
                                    
                                    
                                    -NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                                    
                                    
                                    (371,222
                                    )
                                    
                                    
                                    254,332Cash
      and cash equivalents at beginning of year
                                    
                                    
                                    599,200
                                    
                                    
                                    
                                    42,639Cash
      and cash equivalents at end of period
                                    
                                    $
                                    227,978
                                    
                                    
                                    $
                                    296,971





(continued)


5


Waytronx,
Inc.


Condensed
Consolidated Statements of Cash Flows (continued)


(unaudited)





For
      the nine months ended September 30,2009
                                          
                                          
                                          2008SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Income
      taxes paid
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -Interest
      paid
                                          
                                          $
                                          731,117
                                          
                                          
                                          $
                                          259,488SUPPLEMENTAL
      DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:Common
      stock issued for conversion of Series A preferred stock and
      dividends
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          25Discount
      on debt for intrinsic value of convertible notes payable
                                          
                                          $
                                          1,843,625
                                          
                                          
                                          $
                                          1,192,400Notes
      Payable issued for purchase of CUI, Inc.
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          31,500,000Issuance
      of warrants for patents
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          91,190Amortization
      of debt offering costs
                                          
                                          $
                                          511,161
                                          
                                          
                                          $
                                          -Conversion
      of debt to common stock
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          50,000Common
      stock issuable for consulting services and compensation and accrued
      liabilities payable in common stock
                                          
                                          $
                                          285,000
                                          
                                          
                                          $
                                          395,338Reclassification
      of Derivative liability to Equity
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          10,841,928





See
accompanying notes to financial statements


6


Waytronx,
Inc.


Notes to
the Condensed Consolidated Financial Statements


(Unaudited)


1.BASIS OF
PRESENTATION AND GOING CONCERN





Waytronx,
Inc. (formerly known as OnScreen Technologies, Inc.) has pioneered and is
commercializing innovative thermal management solutions capable of
revolutionizing the semiconductor, solar and electronic packaging industries,
among others.  This advanced technology involves the use of fluid
displacement to move heat away from the source instead of traditional passive
heat transference through solid materials.  Utilizing its patented
WayCool hybrid mesh architecture, Waytronx can enhance system performance and
remove thermal barriers caused by "microwarming" in today's advanced computing
devices.  The Company's proprietary cooling solutions for central and
graphics processors, solar energy devices and power supplies provide more cost
effective and efficient thermal management to the electronics
industry.





In May
2008, Waytronx formed a wholly owned subsidiary that acquired the assets of CUI,
Inc., a provider of electromechanical components and industrial controls for OEM
manufacturing.  Since its inception in 1989, CUI has been delivering
quality products, extensive application solutions and superior personal
service.  CUI's solid customer commitment and honest corporate message
are a hallmark in the industry.





Effective
July 1, 2009, Waytronx acquired CUI Japan (formerly Comex Instruments Ltd.) and
49% of Comex Electronics Ltd. that includes an associated distribution network,
both companies are Japanese based providers of electronic
components.  The Comex acquisition provides a manufacturing component
which will allow Waytronx to manufacture some of its own products in
Japan.





The
accompanying financial statements have been prepared on the assumption that
Waytronx will continue as a going concern.  As reflected in these
financial statements, we had a net loss allocable to common stockholders of
$2,883,629 for the nine months ended September 30, 2009, and an accumulated
deficit of $53,428,252 at September 30, 2009.  These factors raise
substantial doubt about our ability to continue as a going concern which is
dependent upon the ability to bring the WayCool products to market, generate
increased sales, obtain positive cash flow from operations and raise additional
capital as well as grow CUI, CUI Japan and Comex Electronics
sales.  The financial statements do not include any adjustments that
may result from the outcome of this uncertainty.





If
necessary, we will continue to raise additional capital to provide sufficient
cash to meet the funding required to commercialize our technology product
lines.  As we continue to expand and develop technology and product
lines, additional funding may be required.  There have been negative
cash flows from operations and recurring net losses in the past and there can be
no assurance as to the availability or terms upon which additional financing and
capital might be available if needed.





The
accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
and the rules and regulations of the United States Securities and Exchange
Commission for interim financial information which includes condensed financial
statements.  Accordingly, they do not include all the information and
footnotes necessary for a comprehensive presentation of financial position and
results of operations and should be read in conjunction with the Annual Report,
Form 10-K for the year ended December 31, 2008 as well as filings made related
to the acquisition of CUI, Inc.





It is
management's opinion that all material adjustments (consisting of normal
recurring adjustments) have been made which are necessary for a fair financial
statement presentation.  The results for the interim period are not
necessarily indicative of the results to be expected for the
year.


7





2.ACCOUNTING
POLICIES





Use of
Estimates


The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, 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.  Significant estimates in 2009 and 2008 include estimates
used to review the Company’s long-lived assets for impairment, allowance for
doubtful accounts, inventory valuation, valuations of non-cash capital stock
issuances, valuations of derivatives and the valuation allowance on deferred tax
assets.





Principles of
Consolidation


The
consolidated financial statements include the accounts of Waytronx, Inc., its
wholly owned subsidiary CUI, Inc. (for the period May 16, 2008 to September 30,
2009) and CUI Japan and its 49% owned subsidiary Comex Electronics (for the
period July 1, 2009 to September 30, 2009) hereafter referred to as the
“Company”.  Significant intercompany accounts and transactions have
been eliminated in consolidation.





Fair Value of Financial
Instruments


The
carrying amounts of the Company’s cash and cash equivalents, accounts
receivable, prepaid expense and other assets, accounts payable, accrued
liabilities, notes payable and deferred compensation approximate their fair
value due as of September 30, 2009.





Cash


Cash
includes deposits at financial institutions with maturities of three months or
less.  The Company at times has cash in banks in excess of FDIC
insurance limits and places its temporary cash investments with high credit
quality financial institutions.  At September 30, 2009, the Company
had no cash balances at financial institutions which were in excess of the FDIC
insured limits.  However, the Company maintained balances of $116,203
in foreign financial institutions.





Accounts
Receivable


The
Company grants credit to its customers, with standard terms of Net 30
days.  Other credit terms are available based upon a review of the
customers financial strength.  The Company routinely assesses the
financial strength of its customers and, therefore, believes that its accounts
receivable credit risk exposure is limited.





Inventory


Inventories
consist of finished products and are stated at the lower of cost or market;
using the first-in, first-out (FIFO) method as a cost flow
convention.  Inventory consists of finished goods.





Furniture, Equipment and
Software


Furniture,
equipment and software are recorded at cost and include major expenditures,
which increase productivity or substantially increase useful lives.





Maintenance,
repairs and minor replacements are charged to expenses when
incurred.  When furniture and equipment is sold or otherwise disposed
of, the asset and related accumulated depreciation are removed from this
account, and any gain or loss is included in the statement of
operations.





The cost
of furniture, equipment and software is depreciated over the estimated useful
lives of the related assets. Depreciation is computed using the straight-line
method for financial reporting purposes. The estimated useful lives and
accumulated depreciation for furniture, equipment and software are as
follows:


8





Estimated
                  Useful
      LifeFurniture
      and equipment
                
                5
      to 7 yearsSoftware
                
                3
      to 5 years





Identifiable Intangible
Assets


Intangible
assets are stated at cost net of accumulated amortization and
impairment.  Intangible assets other than goodwill, technology rights
and patents are amortized over an estimated useful life of 15
years.  Technology rights are amortized over a twenty year life and
are reviewed for impairment annually.  Patent costs are amortized over
the life of the patent.  Any patents not approved will be expensed at
that time.  During the nine months ended September 30, 2009 the
company recorded impairment charges of $10,698,169 related to goodwill and
$136,811 related to patents.





Intangible
assets consist of the following as of September 30, 2009:





Technology
      Rights
                            
                            $
                            5,061,198Accumulated
      amortization
                            
                            
                            (988,647
                            )Net
                            
                            $
                            4,072,551Patent
      costs
                            
                            $
                            462,850Accumulated
      amortization
                            
                            
                            (31,627
                            )Net
                            
                            $
                            431,223Debt
      offering costs
                            
                            $
                            2,044,646Accumulated
      amortization
                            
                            
                            (937,129
                            )Net
                            
                            $
                            1,107,517Goodwill
                            
                            $
                            21,851,923Net
                            
                            $
                            21,851,923Other
      intangible assets
                            
                            $
                            72,933Accumulated
      amortization
                            
                            
                            (57,289
                            )Net
                            
                            $
                            15,644





Investment in
Affiliate


Through
the acquisition of CUI, Inc. the Company obtained 352,589 common shares
representing a 10.47% interest in Test Products International, Inc., hereafter
referred to as TPI.  TPI is a provider of handheld test and
measurement equipment.  The Company also has a demand receivable from
TPI of $184,110 as of September 30, 2009.  The Company enjoys a close
association with this affiliate through common Board of Director membership and
participation, that allows for a significant amount of influence over affiliate
business decisions.  Accordingly, for financial statement purposes,
the Company accounts for its investment in this affiliated entity under the
equity method.





A summary
of the unaudited financial statements of the affiliate as of September 30, 2009
is as follows:





Current
      assets
                      
                      $
                      5,739,298Non-current
      assets
                      
                      
                      896,124Total
      Assets
                      
                      $
                      6,635,422Current
      liabilities
                      
                      $
                      4,303,412Non-current
      liabilities
                      
                      
                      1,666,253Stockholders'
      equity
                      
                      
                      665,757Total
      Liabilities and Stockholders' Equity
                      
                      $
                      6,635,422Revenues
                      
                      $
                      5,963,478Operating
      Loss
                      
                      
                      (484,112
                      )Net
      Loss
                      
                      
                      (525,625
                      )Company
      share of Net Loss at 10.47%
                      
                      
                      (55,033
                      )Equity
      investment in affiliate
                      
                      $
                      65,466


9





Asset
Impairment


The
Company reviews its long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of the asset exceeds its fair
value and may not be recoverable.  In performing the review for
recoverability, the future cash flows expected to result from the use of the
asset and its eventual disposition are estimated.  If the sum of the
expected future cash flows (undiscounted and without interest charges) is less
than the carrying amount of the asset, an impairment loss is recognized as the
excess of the carrying amount over the fair value.  Otherwise, an
impairment loss is not recognized.  Management estimates the fair
value and the estimated future cash flows expected.  Any changes in
these estimates could impact whether there was impairment and the amount of the
impairment.  During the nine months ended September 30, 2009 the
company recorded impairment charges of $10,698,169 related to goodwill and
$136,811 related to patents.





Patent
Costs


The
Company estimates the patents it has filed have a future beneficial value;
therefore it capitalizes the costs associated with filing for its
patents.  At the time the patent is approved, the patent costs
associated with the patent are amortized over the useful life of the
patent.  If the patent is not approved, at that time the costs will be
expensed.  A change in the estimate of the patent having a future
beneficial value will impact the other assets and expense accounts.





Derivative
Liabilities


The
Company accounts for its embedded conversion features and freestanding warrants
pursuant to FASB Accounting Standards Codification No. 815 (“FASB ASC 815”),
“Derivatives and Hedging ”, which requires a periodic valuation of the fair
value of derivative instruments and a corresponding recognition of liabilities
associated with such derivatives.  The recognition of derivative
liabilities related to the issuance of shares of common stock is applied first
to the proceeds of such issuance, at the date of issuance, and the excess of
derivative liabilities over the proceeds is recognized as other expense in the
accompanying consolidated financial statements.  The recognition of
derivative liabilities related to the issuance of convertible debt is applied
first to the proceeds of such issuance as a debt discount, at the date of
issuance, and the excess of derivative liabilities over the proceeds is
recognized as other expense in the accompanying consolidated financial
statements.  Any subsequent increase or decrease in the fair value of
the derivative liabilities is recognized as other expense or other income,
respectively.  The reclassification of a contract is reassessed at
each balance sheet date.  If a contract is reclassified from permanent
equity to an asset or a liability, the change in the fair value of the contract
during the period the contract was classified as equity is accounted for as an
adjustment to equity.  If a contract is reclassified from an asset or
liability to equity, gains or losses recorded to account for the contract at
fair value during the period that contract was classified as an asset or a
liability are not reversed but instead are accounted for as an adjustment to
equity.





Revenue
Recognition


The
recognition of revenues requires judgment, including whether a sale includes
multiple elements, and if so, whether vendor-specific objective evidence (VSOE)
of fair value exists for those elements.  Customers receive certain
elements of Waytronx products over a period of time.  These elements
include licensing rights to manufacture and sell our proprietary patent
protected products.  The ability to identify VSOE for those elements
and the fair value of the respective elements could materially impact the amount
of earned and unearned revenue.  Waytronx does not have any history as
to the costs expected to be incurred in granting licensing rights relating to
its products.  Therefore, revenues may be recorded that are not in
proportion to the costs expected to be incurred in performing these
services.





Revenues
in connection with electronic devices and component sales by CUI, Inc. are
recognized at the time the product is shipped to the customer.





Revenues
in connection with product sales by CUI Japan and Comex Electronics are
recognized at the time the product is shipped to the customer.  VSOE
sales also exist for CUI Japan and Comex Electronics related to the development
of product for specific customers.  The ability to identify VSOE for
those elements and the fair value of the respective elements could materially
impact the amount of earned and unearned revenue.  VSOE sales are
invoiced according to the related sales agreements.


10





Shipping and Handling
Costs


Amounts
billed to customers in sales transactions related to shipping and handling
represent revenues earned for the goods provided and are included in
sales.  Costs of shipping and handling are included in cost of
revenues.





Stock issued for services to
other than Employees


Common
stock, stock options and common stock warrants issued to other than employees or
directors are recorded on the basis of their fair value, as required by FASB ASC
505, which is measured as of the date required by FASB ASC 505, “Equity – Based
Payments to Non-Employees”. In accordance with FASB ASC 505, the stock options
or common stock warrants are valued using the Black-Scholes option pricing model
on the basis of the market price of the underlying common stock on the
“valuation date,” which for options and warrants related to contracts that have
substantial disincentives to non-performance is the date of the contract, and
for all other contracts is the vesting date. Expense related to the options and
warrants is recognized on a straight-line basis over the shorter of the period
over which services are to be received or the vesting period. Where expense must
be recognized prior to a valuation date, the expense is computed under the
Black-Scholes option pricing model on the basis of the market price of the
underlying common stock at the end of the period, and any subsequent changes in
the market price of the underlying common stock up through the valuation date is
reflected in the expense recorded in the subsequent period in which that change
occurs.





Foreign Currency
Translation


The
financial statements of the Company's foreign offices have been translated into
U.S. dollars in accordance with FASB ASC 830, “Foreign Currency Matters” (FASB
ASC 830). All balance sheet accounts have been translated using the exchange
rate in effect at the balance sheet date. Income statement amounts have been
translated using an appropriately weighted average exchange rate for the year.
The translation gains and losses resulting from the changes in exchange rates
during 2009 have been reported in accumulated other comprehensive income, except
for gains and losses resulting from the translation of intercompany receivables
and payables, which are included in earnings for the period.





Segment
Reporting


Upon the
acquisition of CUI, Inc., CUI Japan and Comex Electronics, Waytronx now has
operating segments to report.  The Company has identified five
operating segments based on the products offered.  The five segments
are External Power, Internal Power, Industrial Controls, Comex/CUI Japan and
Other.  The External Power segment is focused primarily on sales of
external power supplies and related components.  The Internal Power
segment is focused primarily on sales of internal power supplies and related
components.  The Industrial Controls segment is focused primarily on
sales of encoding devices and related components.  The Comex/CUI Japan
segment is focused on the sales of Comex and CUI Japan products.  The
Other category represents activity of segments that do not meet the threshold
for segment reporting and are combined.





The
following information is presented for the nine months ended September 30, 2009
for operating segment activity:


11





External
                    Power
                  
                  
                  Internal
                    Power
                  
                  
                  Industrial
                    Controls
                  
                  
                  Comex
      /
                    CUI
      Japan
                  
                  
                  Other
                  
                  
                  TotalsRevenues
      from external customers
                  
                  $
                  11,126,205
                  
                  
                  $
                  4,923,076
                  
                  
                  $
                  2,119,030
                  
                  
                  $
                  1,028,172
                  
                  
                  $
                  921,057
                  
                  
                  $
                  20,117,540Intersegment
      revenues
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Derivative
      income
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Interest
      revenues
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  7
                  
                  
                  $
                  13,918
                  
                  
                  $
                  13,925Equity
      in losses of unconsolidated affiliate
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  (55,033
                  )
                  
                  $
                  (55,033
                  )Interest
      expense - intrinsic value of convertible
                    debt
      and amortization of debt discount
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  2,354,786
                  
                  
                  $
                  2,354,786Interest
      expense
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  15,258
                  
                  
                  $
                  1,174,407
                  
                  
                  $
                  1,189,665Depreciation
      and amortization
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  8,777
                  
                  
                  $
                  496,301
                  
                  
                  $
                  505,078Segment
      profit (loss)
                  
                  $
                  2,687,725
                  
                  
                  $
                  707,323
                  
                  
                  $
                  123,697
                  
                  
                  $
                  (2,368
                  )
                  
                  $
                  (6,396,543
                  )
                  
                  $
                  (2,880,166
                  )Other
      significant non-cash items:Stock,
      warrants and notes issued for
                    compensation
      and services
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  431,913
                  
                  
                  $
                  431,913Impairment
      of goodwill
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  10,698,169
                  
                  
                  $
                  10,698,169Impairment
      of patents
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  136,811
                  
                  
                  $
                  136,811Gain
      on debt extinguishments
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  11,834,055
                  
                  
                  $
                  11,834,055Segment
      assets
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  3,270,484
                  
                  
                  $
                  35,471,271
                  
                  
                  $
                  38,741,755Foreign
      currency translation adjustments
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  (24,001
                  )
                  
                  $
                  -
                  
                  
                  $
                  (24,001
                  )Acquisition
      of Comex Electronics and CUI Japan
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  103,589
                  
                  
                  $
                  103,589Expenditures
      for segment assets
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  513
                  
                  
                  $
                  318,304
                  
                  
                  $
                  318,817





The
following information is presented for the nine months ended September 30, 2008
for operating segment activity (the Comex/CUI Japan segment did not exist in
2008 and as such is excluded from the following schedule):





External
                      Power
                    
                    
                    Internal
                      Power
                    
                    
                    Industrial
                      Controls
                    
                    
                    Other
                    
                    
                    TotalsRevenues
      from external customers
                    
                    $
                    8,006,663
                    
                    
                    $
                    2,992,706
                    
                    
                    $
                    1,419,739
                    
                    
                    $
                    581,838
                    
                    
                    $
                    13,000,946Intersegment
      revenues
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Derivative
      income
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    2,831,688
                    
                    
                    $
                    2,831,688Interest
      revenues
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    17,127
                    
                    
                    $
                    17,127Equity
      in losses of unconsolidated affiliate
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    (2,305
                    )
                    
                    $
                    (2,305
                    )Interest
      expense - intrinsic value ofconvertible
      debt and amortization ofdebt
      discount
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    1,247,565
                    
                    
                    $
                    1,247,565Interest
      expense
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    886,396
                    
                    
                    $
                    886,396Depreciation
      and amortization
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    352,820
                    
                    
                    $
                    352,820Segment
      profit (loss)
                    
                    $
                    2,192,263
                    
                    
                    $
                    430,295
                    
                    
                    $
                    124,563
                    
                    
                    $
                    (2,294,646
                    )
                    
                    $
                    452,475Other
      significant non-cash items:Stock,
      warrants and notes issued forcompensation
      and services
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    669,634
                    
                    
                    $
                    669,634Segment
      assets
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    47,141,653
                    
                    
                    $
                    47,141,653Acquisition
      of CUI, Inc.
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    37,500,000Expenditures
      for segment assets
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    97,118
                    
                    
                    $
                    97,118





Only the
Comex/CUI Japan and Other operating segments hold assets
individually.  The External Power, Internal Power and Industrial
Controls operating segments do not hold assets individually as segment assets as
they utilize the Company assets held in the Other segment.





Reclassification


Certain
amounts from prior period have been reclassified to conform to the current
period presentation.


12





Recent Accounting
Pronouncements


In May
2009, the FASB issued FASB Accounting Standards Codification No. 855 “Subsequent
Events” (“FASB ASC 855”). FASB ASC 855 establishes general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued. FASB
ASC 855 sets forth (1) The period after the balance sheet date during which
management of a reporting entity should evaluate events or transactions that may
occur for potential recognition or disclosure in the financial statements, (2)
The circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements and (3) The
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. FASB ASC 855 is effective for interim or
annual financial periods ending after June 15, 2009. The adoption of this
statement did not have a material effect on the Company’s financial
statements.





In June
2009, the FASB issued FASB Accounting Standards Codification No. 860 “Transfers
and Servicing” (“FASB ASC 860”). FASB ASC 860 improves the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial statements about a transfer of
financial assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferor’s continuing involvement, if any,
in transferred financial assets. FASB ASC 860 is effective as of the beginning
of each reporting entity’s first annual reporting period that begins after
November 15, 2009, for interim periods within that first annual reporting period
and for interim and annual reporting periods thereafter. The Company is
evaluating the impact the adoption of FASB ASC 860 will have on its financial
statements.





In June
2009, the FASB issued FASB Accounting Standards Codification No. 810
“Consolidation” (“FASB ASC 810”). FASB ASC 810 improves financial reporting by
enterprises involved with variable interest entities.  FASB ASC 810 is
effective as of the beginning of each reporting entity’s first annual reporting
period that begins after November 15, 2009, for interim periods within that
first annual reporting period, and for interim and annual reporting periods
thereafter. The Company is evaluating the impact the adoption of FASB ASC 810
will have on its financial statements.





In June
2009, the FASB issued FASB Accounting Standards Codification No. 105 “Generally
Accepted Accounting Principless” (“FASB ASC 105”). The FASB Accounting Standards
Codification (“Codification”) will be the single source of authoritative
nongovernmental U.S. generally accepted accounting principles. Rules and
interpretive releases of the SEC under authority of federal securities laws are
also sources of authoritative GAAP for SEC registrants. FASB ASC 105 is
effective for interim and annual periods ending after September 15, 2009. All
existing accounting standards are superseded as described in FASB ASC 105. All
other accounting literature not included in the Codification is
nonauthoritative. The adoption of FASB ASC 105 did not impact the financial
statements.





3.ACQUISITION





Effective
May 16, 2008, Waytronx formed a wholly owned subsidiary that acquired CUI,
Inc.  The funding for this acquisition was provided by a $6,000,000
bank note, a $14,000,000 seller’s note, and a $17,500,000 convertible seller’s
note.





In May
2009, Waytronx and the debt holder of the $17,500,000 convertible seller’s note,
IED, Inc., agreed to amend the $17,500,000 convertible seller’s note related to
the acquisition of CUI, Inc. by reducing the conversion rate from $0.25 to $0.07
per share to reflect the stock price for the ten day trailing average preceding
April 24, 2009, the date of the agreement.  The agreement specifically
retains the total maximum convertible shares at 70,000,000 as stated in the
original Note.  This amendment effectively reduces the Note principal from
$17,500,000 to $4,900,000. As a result, the Company recognized an
extraordinary gain on the extinguishment of this debt of $11,808,513 and a
reduction in the related discount of debt of $791,487.


13





The table
below summarizes the unaudited pro forma information of the results of
operations for CUI, Inc. for the nine months ended September 30, 2008 as though
the acquisition had been completed as of January 1, 2008:





2008Gross
      revenue
                        
                        $
                        22,714,998Total
      expenses
                        
                        
                        21,716,853Net
      profit (loss) before taxes
                        
                        $
                        998,145Earnings
      per share
                        
                        $
                        0.01








On July
1, 2009, Waytronx acquired Comex Instruments, Ltd. and 49% of Comex Electronics,
Ltd., for approximately $260,000.  Comex Instruments, Ltd. shall
become CUI Japan, Ltd.  The acquisition was secured by an initial
payment of approximately $103,589 to acquire Comex Instruments and 49% of Comex
Electronics.  The terms of the acquisition call for three equal annual
payments over the next three years to acquire the remaining 51% of Comex
Electronics.  In accordance with the Company’s charter, Waytronx
maintains two of the three Comex Electronics board positions and therefore has
effective control.





The table
below summarizes the unaudited pro forma information of the results of
operations for Comex Electronics and CUI Japan for the nine months ended
September 30, 2009 as though the acquisition had been completed as of January 1,
2009:





2009Gross
      revenue
                            
                            $
                            21,620,386Total
      expenses
                            
                            
                            25,070,931Net
      profit (loss) before taxes
                            
                            $
                            (3,450,545
                            )Less:  Net
      profit (loss) - noncontrolling interest
                            
                            $
                            (273,375
                            )Net
      profit (loss) - attributable to Waytronx Inc. before taxes
                            
                            $
                            (3,177,170
                            )Earnings
      per share
                            
                            $
                            (0.02
                            )





4.INCOME (LOSS)PER COMMON
SHARE





Common
stock equivalents in the three and nine months ended September 30, 2009 and
2008 were anti-dilutive, thus the diluted weighted average common shares
outstanding for this period are the same as the basic weighted average common
shares outstanding.





At
September 30, 2009 and 2008, respectively, 96,121,146 and 102,183,373 potential
common stock shares are issuable upon the exercise of warrants and options and
conversion of debt to common stock.  These are excluded from computing
the diluted net income (loss) per share for the three and nine months ended
September 30, 2009 as the effect of such shares would be
anti-dilutive.





The
following table sets forth the computation of basic earnings per
share:


14





Three months
                              ended
                              September 30,
                              2009
                            
                            
                            Three months
                              ended
                              September 30,
                              2008
                            
                            
                            Nine months
                              ended
                              September 30,
                              2009
                            
                            
                            Nine months
                              ended
                              September 30,
                              2008Net
      income (loss) for the period
                            
                            $
                            (1,314,727
                            )
                            
                            $
                            (316,802
                            )
                            
                            $
                            (2,883,629
                            )
                            
                            $
                            452,475Weighted
      average number of shares outstanding
                            
                            
                            168,088,471
                            
                            
                            
                            161,994,037
                            
                            
                            
                            167,217,609
                            
                            
                            
                            160,109,943Weighted
      average number of common and common equivalent shares
                            
                            
                            168,088,471
                            
                            
                            
                            161,994,037
                            
                            
                            
                            167,217,609
                            
                            
                            
                            160,109,943Basic
      earnings (loss) per share
                            
                            $
                            (0.01
                            )
                            
                            $
                            (0.00
                            )
                            
                            $
                            (0.02
                            )
                            
                            $
                            0.00





Three
      months
                                  ended
                                  September
      30,
                                  2009
                                
                                
                                Three
      months
                                  ended
                                  September
      30,
                                  2008
                                
                                
                                Nine
      months
                                  ended
                                  September
      30,
                                  2009
                                
                                
                                Nine
      months
                                  ended
                                  September
      30,
                                  2008Net
      income (loss) for the period
                                
                                $
                                (1,314,727
                                )
                                
                                $
                                (316,802
                                )
                                
                                $
                                (2,883,629
                                )
                                
                                $
                                452,475Add:  
      Adjustment for interest and discount amortization on 4% convertible
      notes (previously computed)
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -12%
      convertible notes and discount amortization
                                
                                
                                
                                
                                
                                
                                -
                                
                                
                                
                                
                                
                                
                                
                                -Adjusted
      net income (loss)
                                
                                $
                                (1,314,727
                                )
                                
                                $
                                (316,802
                                )
                                
                                $
                                (2,883,629
                                )
                                
                                $
                                452,475Weighted
      average number of shares outstanding
                                
                                
                                168,088,471
                                
                                
                                
                                161,994,037
                                
                                
                                
                                167,217,609
                                
                                
                                
                                160,109,943Add:  
      Weighted average shares assumed to be Issued upon conversion of 4%
      convertible notes as of the date of issuance
      (previously computed)
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Warrants
      and options as of beginning of period
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Warrants
      and options as of date of issue
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -12%
      convertible notes as of beginning of period
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -12%
      convertible notes as of date of issue
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Weighted
      average number of common and common equivalent shares
                                
                                
                                168,088,471
                                
                                
                                
                                161,994,037
                                
                                
                                
                                167,217,609
                                
                                
                                
                                160,109,943Diluted
      earnings (loss) per share
                                
                                $
                                (0.01
                                )
                                
                                $
                                (0.00
                                )
                                
                                $
                                (0.02
                                )
                                
                                $
                                0.00





5.INCOME
TAXES





An income
tax benefit has not been recognized for operating losses generated in prior
periods based on uncertainties concerning the ability to generate taxable income
in future periods.  The tax benefit as of the nine months ended
September 30, 2009 and 2008 is offset by a valuation allowance established
against deferred tax assets arising from operating losses and other temporary
differences, the realization of which could not be considered more likely than
not.  In future periods, tax benefits and related deferred tax assets
will be recognized when management considers realization of such amounts to be
more likely than not.





6.WORKING CAPITAL
LINE OF CREDIT





At
September 30, 2009, the Company had a $3,000,000 working capital line of credit
with Key Bank, interest payable monthly at the bank’s prime lending rate less
0.25 percentage points (3.00% at September 30, 2009).  At September
30, 2009, the balance outstanding on the line of credit was
$2,002,547.  At September 30, 2009, the Company is out of compliance
with a debt covenant related to this loan.  The Company is actively
working to resolve this situation.  In October 2009, the working
capital line of credit was extended to February 1, 2010 at the bank’s prime
lending rate plus 1.50 percentage points.


15





7.OPTIONS AND
WARRANTS





On
January 5, 2009 the Company Board of Directors received and approved a written
report and recommendations of the Compensation Committee which included a
detailed executive equity compensation report and market analysis and the
recommendations of Compensia, Inc., a management consulting firm that provides
executive compensation advisory services to compensation committees and senior
management of knowledge-based companies.  The Compensation Committee
used the report and analysis as a basis for its formal written recommendation to
the board.  Pursuant to a January 8, 2009 board resolution the 2009
Equity Incentive Plan (Executive), a Non-Qualified Stock Option Plan, was
created and funded with 4,200,000 shares of $0.001 par value common
stock.  The Compensation Committee was appointed as the Plan
Administrator to manage the plan.





The 2009
Equity Incentive Plan (Executive) provides for the issuance of stock options to
attract, retain and motivate executive and management employees and directors
and to encourage these individuals to acquire an equity interest in the Company,
to make monetary payments to certain management employees and directors based
upon the value of the Company’s stock and to provide these individuals with an
incentive to maximize the success of the Company and further the interest of the
shareholders.  The 2009 Plan provides for the issuance of Incentive
Non Statutory Options.  The Administrator of the plan is authorized to
determine the exercise price per share at the time the option is granted, but
the exercise price shall not be less than the fair market value on the date the
option is granted.  Stock options granted under the 2009 Plan have a
maximum duration of 10 years.





On May
15, 2008, the Board of Directors approved the Waytronx, Inc. 2008 Equity
Incentive Plan (“2008 Plan”) for 1,500,000 shares of the Company’s common
stock.  The 2008 Plan provides for the issuance of stock options to
attract, retain and motivate employees, to encourage employees, directors and
independent contractors to acquire an equity interest in the Company, to make
monetary payments to certain employees based upon the value of the Company’s
stock, and provide employees, directors and independent contractors with an
incentive to maximize the success of the Company and further the interest of the
shareholders.  The 2008 Plan provides for the issuance of Incentive
Stock Options and Non Statutory Options.  The Administrator of the
plan shall determine the exercise price per share at the time the option is
granted, but the exercise price shall not be less than the fair market value on
the date the option is granted.  Stock options granted under the 2008
Plan have a maximum duration of 10 years.




On August
25, 2005, the Board of Directors approved the 2005 Equity Incentive Plan (“2005
Plan”) for 2,000,000 shares of the Company’s common stock.  The 2005
Plan provides for the issuance of stock options to attract, retain and motivate
employees, to encourage employees, directors and independent contractors to
acquire an equity interest in the Company, to make monetary payments to certain
employees based upon the value of the Company’s stock, and provide employees,
directors and independent contractors with an incentive to maximize the success
of the Company and further the interest of the shareholders.  The 2005
Plan provides for the issuance of Incentive Stock Options and Non Statutory
Options.  The Administrator of the plan shall determine the exercise
price per share at the time the option is granted, but the exercise price shall
not be less than the fair market value on the date the option is
granted.  Stock options granted under the 2005 Plan have a maximum
duration of 10 years.




On June
26, 2000, the Company’s Board of Directors adopted the OnScreen Technologies,
Inc. 2000 Stock Option Plan (the “Plan”).  The Plan provides for the
issuance of incentive stock options (ISO’s) to any individual who has been
employed by the Company for a continuous period of at least six
months.  The Plan also provides for the issuance of Non Statutory
Options (NSO’s) to any employee who has been employed by the Company for a
continuous period of at least six months, and any director or consultant to the
Company.  The Company may also issue reload options as defined in the
plan.  The total number of common shares of common stock authorized
and reserved for issuance under the Plan is 600,000 shares.  The Board
shall determine the exercise price per share in the case of an ISO at the time
an option is granted and such price shall be not less than the fair market value
or 110% of fair market value in the case of a ten percent or greater
stockholder.  In the case of a NSO, the exercise price shall not be
less than the fair market value of one share of stock on the date the option is
granted.  Unless otherwise determined by the Board, ISO’s and NSO’s
granted under the Plan have a maximum duration of 10 years.


16





There
were no non-vested stock options at December 31, 2008.  The fair value
of each stock option is estimated on the date of grant using a Black Scholes
Pricing Model.  During the nine months ended September 30, 2009, the
Company granted 365,000 stock options to employees under the 2008 Plan with the
following assumptions; exercise price of $0.19, volatilities of 99% - 135%, risk
free interest rates of 0.73% - 0.93% and a term of 2 years.  During
the nine months ended September 30, 2009, the Company granted 2,550,273 stock
options to employees and officers under the 2009 Equity Incentive Plan
(Executive) with the following assumptions; exercise price of $0.25, volatility
of 99%, risk free interest rate of 0.76% and a term of 2
years.  Additionally, the Company granted 1,458,000 un-vested stock
options to directors under the 2009 Equity Incentive Plan (Executive) with the
following assumptions; exercise price of $0.25, volatility of 99%, risk free
interest rate of 0.75% and a term of 2 years.





The
following information is presented for the stock option activity for the nine
months ended September 30, 2009:





Numberof
                      Warrantsand
                      Options
                    
                    
                    WeightedAverage
                      ExercisePrice
                    
                    Weighted
                      Average
                      Remaining
                      ContractLifeOutstanding
      at December 31, 2008
                    
                    
                    5,270,000
                    
                    
                    $
                    0.13
                    
                    6.55
      yearsExercised
                    
                    
                    -
                    
                    
                    $
                    -Expired
                    
                    
                    (200,000
                    )
                    
                    $
                    0.20Forfeited
                    
                    
                    (80,000
                    )
                    
                    $
                    0.19Granted
                    
                    
                    4,373,273
                    
                    
                    $
                    0.24Outstanding
      at September 30, 2009
                    
                    
                    9,363,273
                    
                    
                    $
                    0.18
                    
                    8.27
      yearsOutstanding
      exercisable at September 30, 2009
                    
                    
                    7,905,273
                    
                    
                    $
                    0.17
                    
                    7.95
      years





The
weighted average fair value of options granted during the periods are as
follows:





2009
                  
                  
                  2008Exercise
      price lower than the market price
                  
                  $
                  -
                  
                  
                  
                  N/AExercise
      price equaled the market price
                  
                  $
                  -
                  
                  
                  
                  0.19Exercise
      price exceeded the market price
                  
                  $
                  0.19
                  
                  
                  
                  0.19Exercise
      price exceeded the market price
                  
                  $
                  0.25
                  
                  
                  
                  N/A





The
following information is presented for the warrant activity for the nine months
ended September 30, 2009:





Number of
                        Warrants
                      
                      
                      WeightedAverage
                        Exercise Price
                      
                      Weighted Average
                        Remaining
                        Contract LifeOutstanding
      at December 31, 2008
                      
                      
                      20,823,373
                      
                      
                      $
                      0.13Exercised
                      
                      
                      (530,523
                      )
                      
                      $
                      0.01Expired
                      
                      
                      (576,977
                      )
                      
                      $
                      0.18Forfeited
                      
                      
                      -
                      
                      
                      $
                      -Granted
                      
                      
                      -
                      
                      
                      $
                      -Outstanding
      at September 30, 2009
                      
                      
                      19,715,873
                      
                      
                      $
                      0.13
                      
                      1.14
      YearsOutstanding
      exercisable at September 30, 2009
                      
                      
                      18,215,873
                      
                      
                      $
                      0.15
                      
                      1.10
      Years





During
the nine months ended September 30, 2009, 530,523 shares of common stock were
issued in relation to the exercise of warrants with proceeds of
$5,305.


17





8.           NOTES PAYABLE





At
December 31, 2007 eighteen-month secured convertible promissory notes totaling
$1,650,000 were outstanding and in default.  In August 2008, the
Company obtained extensions of twelve months on all notes in
default.  In September 2009, the Company obtained an extension to
November 2011 on the balance remaining.  At September 30, 2009,
$1,000,000 was included in Long term convertible notes payable.





At
December 31, 2007, twenty-four month secured promissory notes totaling
$1,100,000 were outstanding. $1,000,000 of these promissory notes were from an
entity controlled by a related party.  During the nine months ended
September 30, 2009 the related party portion of $125,000 was
extinguished.  The Company paid the related party $100,000 and
recognized a gain on the extinguishment of $25,542 related to the remaining
principal and accrued interest.  During the nine months ended
September 30, 2009 the Company paid $250,000 in principal.  The
$625,000 remaining outstanding at September 30, 2009, was included in Notes
payable, current portion due.  Interest accrues at 12% per annum,
payable monthly, until the maturity of these notes at which time principal is
due.  In September 2009, the Company obtained an extension to December 31,
2009 on the balance remaining.





During
the nine months ended September 30, 2008, 24-month unsecured convertible
promissory notes totaling $700,000 were entered into that had bonus shares
attached totaling 700,000 shares of common stock.  These shares had a
fair value of $125,653 using a Black Scholes Pricing Model.  Interest
accrues at 12% per annum, payable monthly, until the maturity of these notes at
which time the principal is due. The note holders have the right to convert the
note to common stock at $0.25 per share at any time during the term of the note,
and we recognized $188,795 in Additional Paid-in Capital related to the
beneficial conversion feature of these notes due to their immediate
vesting.  During the year ended December 31, 2008, $300,000 was paid
back and $50,000 was converted to equity.  During the three months
ended September 30, 2009, the Company paid $50,000 in principal.  The
$300,000 outstanding at September 30, 2009, was included in Convertible notes
payable, current portion due.





Additionally,
the Company utilized three separate notes to fund the acquisition of CUI,
Inc.  A $6,000,000 cash loan from Commerce Bank of Oregon, with a term
of 3 years, paying interest only at the prime rate less 0.50% (4.50% at
September 30, 2009), and is secured by personal Letters of Credit from related
parties.  At September 30, 2009, the Company is out of compliance with
a debt covenant related to this loan.  As a result of the default, the
Company has recorded this debt under current liabilities.  The Company
is actively working to resolve this situation.





A
$14,000,000 promissory note to International Electronic Device, Inc. (formerly
CUI, Inc.), payable monthly over three years at $30,000 per month including 1.7%
annual simple interest with a balloon payment at the thirty sixth monthly
payment (May 15, 2011), with no prepayment penalty, an annual success fee of
2.3%, and the right of first refusal to the note payee, International Electronic
Device, Inc., relating to any private capital raising transactions of Waytronx
during the term of the note.  There is a discount on debt related to
this note of $436,701.  The current portion of this note is
$138,554.  The net long term balance of this note is
$13,136,737.





A
$17,500,000 convertible promissory note with 1.7% annual simple interest and a
2.3% annual success fee, permitting payee to convert any unpaid principal,
interest and success fee to Waytronx common stock at a per share price of $0.25
and at the end of the three year term (May 15, 2011) giving to Waytronx the
singular, discretionary right to convert any unpaid principal, interest and
success fee to Waytronx common stock at a per share price of
$0.25.  This note also provides a right of first refusal to the note
payee, International Electronic Device, Inc., relating to any private capital
raising transactions of Waytronx during the term of the note.  In May
2009, Waytronx and the debt holder of the $17,500,000 convertible promissory
note, IED, Inc., agreed to amend the $17,500,000 convertible promissory note
related to the acquisition of CUI, Inc. by reducing the conversion rate from
$0.25 to $0.07 per share to reflect the stock price for the ten day trailing
average preceding April 24, 2009, the date of the agreement.  The agreement
specifically retains the total maximum convertible shares at 70,000,000 as
stated in the original Note.  This amendment effectively reduces the Note
principal from $17,500,000 to $4,900,000. As a result, the Company
recognized an extraordinary gain on the extinguishment of this debt of
$11,808,513 and a reduction in the related discount of debt of
$791,487.  There is a discount on debt related to this note of
$3,277,838.  The net long term balance of this note is
$1,622,162.


18





Through
the acquisition of CUI, Inc., the Company has a capital lease note payable of
$108,396 as of September 30, 2009.  The current portion of the capital
lease note is $52,118 as of September 30, 2009.  The capital lease
note is related to office equipment and furniture and is secured by the same
office equipment and furniture.  The capital lease expires September
1, 2011.





Through
the acquisition of Comex Electronics and CUI Japan, the Company has current
notes payable of $398,511 and long term notes payable of
$1,778,780.  These notes have interest rates as of September 30, 2009
ranging from 2.00% to 3.50% and term dates from November 2009 to March
2019.





9.           OTHER EQUITY TRANSACTIONS





During
the nine months ended September 30, 2009, 366,990 shares of common stock were
issued to an employee.  These shares were valued at
$40,000.





During
the nine months ended September 30, 2009, 530,523 shares of common stock were
issued in relation to the exercise of warrants with proceeds of
$5,305.





For the
nine months ended September 30, 2009, 1,500,000 shares of common stock are
issuable for services performed by consultants.  $285,000 of
consulting expense was recorded in relation to this transaction based on the
fair market value of the stock on the date of grant.





10.       SUBSEQUENT
EVENTS





In
October 2009, the $3,000,000 working capital line of credit with Key Bank was
renewed.  The working capital line of credit has interest payable
monthly at the bank’s prime lending rate plus 1.50 percentage points and matures
February 1, 2010.





In
October 2009, 450,246 shares of common stock were issued in relation to the
exercise of warrants with proceeds of $4,502.





The
Company evaluated subsequent events through November 13, 2009, the date the
condensed financial statements were issued and concluded there were no
additional material subsequent events other then those
disclosed.


19





Item 2.  Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.





General





Management’s
discussion and analysis contains various “forward looking
statements.”  Such statements consist of any statement other than a
recitation of historical fact and can be identified by the use of
forward-looking terminology such as “may,” “expect,” “anticipate,” “estimate,”
or “continue” or use of negative or other variations or comparable
terminology.





Waytronx
cautions that these forward-looking statements are further qualified by
important factors that could cause actual results to differ materially, are
necessarily speculative, and there are certain risks and uncertainties that
could cause actual events or results to differ materially from those referred to
in such forward-looking statements.





Overview





Waytronx,
Inc. has pioneered and is commercializing innovative thermal management
solutions capable of revolutionizing the semiconductor, solar and electronic
packaging industries, among others.  This advanced technology involves
the use of fluid displacement to move heat away from the source instead of
traditional passive heat transference through solid
materials.  Utilizing its patented WayCool hybrid mesh architecture,
Waytronx can enhance system performance and remove thermal barriers caused by
"microwarming" in today's advanced computing devices.  The Company's
proprietary cooling solutions for central and graphics processors, solar energy
devices and power supplies provide more cost effective and efficient thermal
management to the electronics industry.





In May
2008, Waytronx formed a wholly owned subsidiary that acquired the assets of CUI,
Inc., a provider of electromechanical components and industrial controls for OEM
manufacturing.  Since its inception in 1989, CUI has been delivering
quality products, extensive application solutions, and superior personal
service.  CUI's solid customer commitment and honest corporate message
are a hallmark in the industry.





During
the nine months ended September 30, 2009, Waytronx continued to incur losses
from operations.  A net loss of $2,883,629 was incurred for the nine
months ended September 30, 2009.  The net loss is primarily the result
of interest expenses (both cash and non-cash) associated with debt, the
impairment of goodwill and patents offset by the extraordinary gain on the
extinguishments of debt.





The
Company is in default of a debt covenant on its $3,000,000 working capital line
of credit with Key Bank.  The Company has received temporary
forbearance of this default and management is actively working to resolve this
default.





The
Company is in default of its debt service coverage ratio debt covenant related
to the $6,000,000 Commerce Bank of Oregon cash loan.  The Company is
actively working to resolve this situation.  As of this date, the Bank
has not called the loan.





Management
has continued to raise the capital needed to fund the development and marketing
of its products as well as the acquisition of CUI during 2008 and the first nine
months of 2009.  During the nine months ended September 30, 2009,
proceeds of $5,305 were raised from the exercise of warrants.  These
funds have assisted in the continuing development of products, in funding
operations during development of the WayCoolTM products and the efforts to
license the manufacture and sales of these products, as well as funding the
acquisition and operations of CUI, Inc.  The Company has also utilized
the bank line of credit to fund operations.  It is anticipated that
Waytronx, CUI, CUI Japan and Comex Electronics will continue to develop and
expand the technology and product lines which may require additional
funding.


20





Intellectual
Property





The
Company relies on various intellectual property laws and contractual
restrictions to protect its proprietary rights in products, logos and services.
These include confidentiality, invention assignment, and nondisclosure
agreements with employees, contractors, suppliers and strategic partners. The
confidentiality and nondisclosure agreements with employees, contractors and
suppliers are in perpetuity or for a sufficient length of time so as to not
threaten exposure of proprietary information.





Waytronx
continues to file and protect its intellectual property rights, trademarks and
products through filings with the US Patent and Trademark Office and, as
applicable, internationally.





Liquidity
and Capital Resources




General


Cash and
cash equivalents at September 30, 2009 are $227,978, and there is net working
capital deficit of $5,032,772.  Operations and investments in patents
and equipment as well as the acquisition of Comex Electronics and CUI Japan have
been funded through cash from operations, the bank line of credit and proceeds
from the exercise of warrants during the nine month period.





Cash used in
operations


Operating
requirements generated a positive cash flow from operations of $150,752 for the
nine months ended September 30, 2009, versus a negative cash flow from
operations of $1,512,551 for the same period last year.  The
increasein cash
provided by operations is primarily the result of a decrease in stock, warrants,
options and notes issued for compensation and services, zero change in the fair
value of warrant liability in 2009, increased non-cash interest expense,
increase in the loss on securities available for sale, a decrease in bad debt
expense, increase in depreciation, goodwill impairment, patents impairment, an
increase in trade accounts receivable, increase in other accounts receivable, a
decrease in inventory levels, increased prepaid expenses, increase in deposits
and other current assets, increases in accounts payable, increases in accrued
expenses, a decrease in accrued compensation and an increase in deferred
revenues.





During
the first nine months of 2009 stock options have been used as a form of payment
to certain consultants, note holders, employees and directors.  For
the first nine months of 2009 and 2008, a total of $431,913 and $669,634,
respectively, was recorded for compensation and services expense including
amortization of deferred compensation related to equity given, or to be given,
to employees, directors and consultants for services provided.





As
Waytronx continues to focus on the commercialization of its innovative thermal
cooling technology during 2009 and the expansion of CUI product lines, it will
continue to fund research and development related to the WayCoolTM products and
CUI products as well as sales and marketing efforts.





Capital Expenditures and
Investments


The
Company invested $82,954 in technology rights during the first nine months of
2009 as compared to $0 for the same period last year.





During
the first nine months of 2009 and 2008, there was $212,009 and $48,175
investment in property and equipment, respectively.





Waytronx
invested $23,854 in patent costs during the first nine months of 2009 as
compared to $48,943 for the same period last year.  It is expected
that investment in patent costs will continue throughout 2009 as patents are
pursued in order to protect the rights to use its product
developments.


21





Effective
July 1, 2009, Waytronx acquired CUI Japan (formerly Comex Instruments) and 49%
of Comex Electronics for approximately $260,000.  The acquisition was
secured by an initial payment of approximately $103,589 to acquire Comex
Instruments and 49% of Comex Electronics.  The terms of the
acquisition call for three equal annual payments over the next three years to
acquire the remaining 51% of Comex Electronics.





Financing
activities


During
the first nine months of 2009, the Company received proceeds of $628,554 from
the bank working line of credit, $319,526 from notes and loans payable and the
Company issued payments of $616,123 of payments were made against notes and
loans payable, $246,055 of payments were made against notes and loans payable,
related party and $5,305 was received from the exercise of
warrants.  The Company recognized an extraordinary gain on the
extinguishments of debt of $11,834,055 during the nine months ended September
30, 2009.  Waytronx plans on raising the capital needed to fund the
further development and marketing of its products as well as payment of its debt
obligations.





Recap of liquidity and
capital resources


The
report of our independent registered public accounting firm on our financial
statements as of December 31, 2008 contains an explanatory paragraph expressing
substantial doubt with respect to our ability to continue as a going
concern.  Prior to the acquisition of CUI, Inc. by a wholly owned
subsidiary, the Company was not generating significant revenues to fund
operations.  Subsequent to the acquisition of CUI, Inc., management
believes the Company is generating sufficient revenues to fund
operations.  As of September 30, 2009 the Company had an accumulated
deficit of $53,428,252.





The
Company will seek to raise additional capital as needed for the
commercialization of its WayCool technology product lines as well as the
continued development and expansion of the CUI, CUI Japan and Comex Electronics
product lines and technology.  As needed, the Company will attempt to
raise these funds through borrowing instruments or issuing additional
equity.





As of
September 30, 2009 CUI, Inc. maintained a line of credit with Key Bank granting
borrowings of up to $3,000,000 with interest payable monthly at the bank’s prime
lending rate less 0.25 percentage points.  This line was renewed in
October 2009 at the bank’s prime lending rate plus 1.50 percentage
points.  The Company is in default of a debt covenant on this line of
credit.  The Company has received temporary forbearance of this
default and management is actively working to resolve this default.





The
Company is in default of its debt service coverage ratio debt covenant related
to the $6,000,000 Commerce Bank of Oregon cash loan.  The Company is
actively working to resolve this situation.  As of this date, the Bank
has not called the loan.





Management
continues to commercialize and otherwise develop its proprietary WayCool and
WayFast Technologies.  Negotiations are continuing with BAE Systems, the
North American Division of British Aerospace, to explore uses for the WayCool
Thermal Management in several BAE/Government projects.  While Management
does not expect immediate commercial revenue from the technology, it is expected
to generate significant research & development and non-recurring engineering
revenues to the company in the next several months.  There is no
assurance that it will generate material revenues by that date or that revenues
will be sufficient to cover all operating and other expenses.





The
Company expects the revenues from CUI, CUI Japan and Comex Electronics to help
cover operating and other expenses for the next twelve months of
operations.  If revenues are not sufficient to cover all operating and
other expenses, other funding will be required.  There is no assurance
that such additional capital will be able to be raised.


22





Results
of Operations





Revenue


During
the nine months ended September 30, 2009 and 2008, revenue was $20,117,540 and
$13,000,946, respectively.  The revenue for the nine months ended
September 30, 2009 is comprised of $18,985,247 from CUI products, $1,028,172
from CUI Japan and Comex Electronics products, $77,229 for freight, and $26,892
from RediAlertTM products.  The revenue for the nine months ended
September 30, 2008 is comprised of $12,701,196 from CUI products, $84,813 for
freight, $10,000 for a cancellation fee, $58,975 from Living WindowTM products
and related add-ons, $143,222 from RediAlertTM products and $2,740 from other
income.





During
the three months ended September 30, 2009 and 2008, revenue was $7,956,700 and
$8,543,847, respectively.  The revenue for the three months ended
September 30, 2009 is comprised of $6,907,847 from CUI products, $1,028,172 from
CUI Japan and Comex Electronics products, $390 from RediAlertTM products and
$20,291 for freight.  The revenue for the three months ended September
30, 2008 is comprised of $8,359,901 from CUI products, $47,724 for freight,
$143,222 from RediAlertTM products less a $7,000 credit for carbon related to the
WayCool products.





Cost of
revenue


The cost
of revenue for the nine months ended September 30, 2009 and 2008, was
$12,294,615 and $7,791,883, respectively.  For the three months ended
September 30, 2009 and 2008, the cost of revenue was $5,033,060 and $5,064,281,
respectively.





Selling, General and
Administrative Expenses


Selling,
General and Administrative (SG&A) expenses include such items as wages,
commissions, consulting, general office expenses, business promotion expenses
and costs of being a public company, including legal and accounting fees,
insurance, and investor relations.





For the
nine months ended September 30, 2009 compared to the same period in 2008,
SG&A expenses increased $3,240,425 with the majority of this increase
associated with the acquisition of CUI and its operations for the full nine
month period as well as the acquisitions of CUI Japan and Comex Electronics from
July 1 through September 30, 2009.





Research and
Development


The
research and development costs are related to the technology for which Waytronx
acquired the licensing rights as well as research and development expenses for
CUI products.  Research and development costs were $174,502 and
$666,875, for the nine months ended September 30, 2009 and 2008,
respectively.





Impairment
Loss


The
Company recorded a $10,698,169 impairment loss related to goodwill and a
$136,811 impairment loss related to patents during the first six months of
2009.





Bad Debt


The bad
debt expense for the nine months ended September 30, 2009 and 2008 was $84,143
and $125,489, respectively.  The bad debt expense for the nine months
ended September 30, 2009, relates to miscellaneous customers and an addition
made for the allowance for bad debts.  The bad debt expense for the
nine months ended September 30, 2008 relates to a note receivable from the
settlement gain from Mobil Magic and other miscellaneous customers as well as an
addition made for the allowance for bad debts.  Mobil Magic remains in
default on the note, and Waytronx has not received a payment on this note since
January of 2008.  The Company has reserved fully for the
note.





Other
Income


Other
income for the nine months ended September 30, 2009, consisted of $103,500 for
services billed to a related party, $13,907 for interest income from related
parties, $18,231 for foreign exchange gain, $8,280 in rental income, $6,112 in
other income and a loss on equity investment in affiliate of
$55,033.


23





Convertible debt and
amortization of debt discount and debt offering costs


The
Company recorded an expense of $741,855 and $2,354,786 for the three and nine
months ended September 30, 2009, respectively, and $669,070 and $1,247,565 for
the same periods in 2008, for the amortization of debt discount and debt
offering costs.  The increased expense in 2009 of $72,785 and
$1,107,221 for the three and nine month periods was due to the increase in debt
used to fund the acquisition of CUI, Inc.





Interest
Expense


The
interest expense of $1,189,665 and $886,396 for the nine months ended September
30, 2009 and 2008, respectively, is for interest on the secured convertible
notes payable, bank operating line of credit, and secured and unsecured
promissory notes.  The increase as compared to the prior year period
is related to the notes associated with the acquisition of CUI, Inc., debt
obtained during 2008 to fund the operations of Waytronx, and financing required
to fund operations during 2009.





Preferred Stock
Dividends


No
preferred dividend expense was recorded by the Company during the nine months
ended September 30, 2009 and 2008, as during 2006 all Series A and B Convertible
Preferred shareholders accepted the Company’s offer to receive all outstanding
dividends through March 2006 in either cash or common shares at a per share
price of $0.20.





Extraordinary
Items


During
the nine months ended September 30, 2009, Waytronx recognized an extraordinary
gain on the extinguishments of debt of $11,834,055.  This gain is the
result of the amendment of the $17,500,000 convertible seller’s note to
$4,900,000 related to the acquisition of CUI, Inc. and the related gain of
$11,808,513 as well as the extinguishment of a $125,000 note payable to a
related party that resulted in a gain of $25,542.





Critical
Accounting Policies





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




Our
significant accounting policies are summarized in Note 2 of our financial
statements. While all these significant accounting policies impact its financial
condition and results of operations, we view certain of these policies as
critical. Policies determined to be critical are those policies that have the
most significant impact on our financial statements and require management to
use a greater degree of judgment and estimates. Actual results may differ from
those estimates. Our management believes that given current facts and
circumstances, it is unlikely that applying any other reasonable judgments or
estimate methodologies would cause effect on our results of operations,
financial position or liquidity for the periods presented in this
report.





Recent
Accounting Pronouncements





In May
2009, the FASB issued FASB Accounting Standards Codification No. 855 “Subsequent
Events” (“FASB ASC 855”). FASB ASC 855 establishes general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued. FASB
ASC 855 sets forth (1) The period after the balance sheet date during which
management of a reporting entity should evaluate events or transactions that may
occur for potential recognition or disclosure in the financial statements, (2)
The circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements and (3) The
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. FASB ASC 855 is effective for interim or
annual financial periods ending after June 15, 2009. The adoption of this
statement did not have a material effect on the Company’s financial
statements.


24





In June
2009, the FASB issued FASB Accounting Standards Codification No. 860 “Transfers
and Servicing” (“FASB ASC 860”). FASB ASC 860 improves the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial statements about a transfer of
financial assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferor’s continuing involvement, if any,
in transferred financial assets. FASB ASC 860 is effective as of the beginning
of each reporting entity’s first annual reporting period that begins after
November 15, 2009, for interim periods within that first annual reporting period
and for interim and annual reporting periods thereafter. The Company is
evaluating the impact the adoption of FASB ASC 860 will have on its financial
statements.





In June
2009, the FASB issued FASB Accounting Standards Codification No. 810
“Consolidation” (“FASB ASC 810”). FASB ASC 810 improves financial reporting by
enterprises involved with variable interest entities.  FASB ASC 810 is
effective as of the beginning of each reporting entity’s first annual reporting
period that begins after November 15, 2009, for interim periods within that
first annual reporting period, and for interim and annual reporting periods
thereafter. The Company is evaluating the impact the adoption of FASB ASC 810
will have on its financial statements.





In
June 2009, the FASB issued FASB Accounting Standards Codification No. 105
“Generally Accepted Accounting Principles” (“FASB ASC 105”). The FASB Accounting
Standards Codification (“Codification”) will be the single source of
authoritative nongovernmental U.S. generally accepted accounting principles.
Rules and interpretive releases of the SEC under authority of federal securities
laws are also sources of authoritative GAAP for SEC registrants. FASB ASC 105 is
effective for interim and annual periods ending after September 15, 2009. All
existing accounting standards are superseded as described in FASB ASC 105. All
other accounting literature not included in the Codification is
nonauthoritative. The Company is evaluating the impact the adoption of FASB ASC
105 will have on its financial statements.




Off-Balance
Sheet Arrangements




None.





Item
3.  Quantitative and Qualitative Disclosure about Market
Risk





A smaller
reporting company, as defined by Rule 229.10(f)(1), is not required to provide
the information required by this Item.





Item
4T.  Controls and Procedures





Within 90
days prior to the filing of this report, the Company carried out an evaluation,
under the supervision and with the participation of its management, including
the Chief Executive Officer and Chief Financial Officer, of the design and
operation of its disclosure controls and procedures.  Based on this
evaluation, the Company’s Chief Executive Officer and Chief Financial Officer
concluded that the Company’s disclosure controls and procedures are effective
for the gathering, analyzing and disclosing the information the Company is
required to disclose in the reports it files under the Securities Exchange Act
of 1934, within the time periods specified in the SEC’s rules and
forms.  There have been no significant changes in the Company’s
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of this evaluation.


25





(a) Our
management, including the principal executive officer and principal financial
officer, do not expect that our disclosure controls and procedures will prevent
all error and fraud.  A control system, no matter how well conceived
and operated, can only provide reasonable, not absolute, assurance that the
objectives of the control system are met.  Further, the design of a
control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their
costs.  Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within our Company have been
detected.  These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can occur
because of simple error or mistake.  Additionally, controls can be
circumvented by the individual acts of some persons, collusion of two or more
people, or by management override of the control.  The design of any
system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future
conditions.




(b)  Changes
in internal controls over financial reporting.





We have
not identified any significant deficiency or material weaknesses in our internal
controls, and therefore there were no corrective actions taken.





PART
II – OTHER INFORMATION





Item
1.  Legal Proceedings.





None.





Item
1A:  Risk Factors.





A smaller
reporting company is not required to provide the information required by this
Item.





Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds.





The
Company relied on Section 4(2) of the Securities Act of 1933 as the basis for an
exemption from registration for the following issuances.





Common
Stock Issued





During
the three months ended September 30, 2009, the Company issued the following
common stock:





530,523
shares of common stock were issued in relation to the exercise of warrants with
proceeds of $5,305.





The
Company issued 100,000 shares of common stock to an employee for
performance.  These shares were valued at $15,000 on the date of
issuance.





The
Company issued 266,990 shares of common stock to an employee in accordance with
his employment agreement.  These shares were valued at $25,000 using a
thirty-day average price at December 31, 2008, in accordance with the
agreement.





26




Common
Stock Issuable





During
the nine months ended September 30, 2009, the Company recorded 1,500,000 shares
of common stock issuable for services performed by
consultants.  $285,000 of consulting expense was recorded in relation
to these transactions based on the fair value of the stock on the date of
grant.





Item
3.  Defaults upon Senior Securities.





The
Company is in default of its debt service coverage ratio debt covenant related
to the $6,000,000 Commerce Bank of Oregon cash loan.  The Company is
actively working to resolve this situation.  As of this date, the Bank
has not called the loan.





Item
4.  Submission of Matters to a Vote of Security Holders.





The 2009
Annual Meeting of Shareholders was held on Tuesday, September 29, 2009 at 9:00
a.m. PDT in our corporate offices located at 20050 SW 112th Avenue, Tualatin,
Oregon 97062 for the following purposes:


1.
            The
      election of three directors to hold office for two years or until the 2011
      Annual Meeting of Shareholders or until their respective successors have
      been duly elected and qualified;


2.
            To
      amend the 2008 Equity Incentive Plan to increase by 1,500,000 the number
      of common shares issuable under the plan from 1,500,000 presently
      authorized to 3,000,000.





The vote
tabulation is as follows:


Board of
Directors, Seat #2, Thomas A. Price, (2 year term):


[109,547,656]
FOR                           [2,886,075]
WITHHOLD


Board of
Directors, Seat #4, Sean P. Rooney, (2 year term):


27


[112,057,230]FOR                               [376,501]
WITHHOLD


Board of
Directors, Seat #6, Corey Lambrecht, (2 year term):


[112,041,320]
FOR                           [392,411]
WITHHOLD





The
proposal to amend the 2008 Equity Incentive Plan to increase by 1,500,000 the
number of common shares issuable under the plan from 1,500,000 presently
authorized to 3,000,000 was adopted by the following vote
tabulation:


[21,648,318]
              [8,900,051]
              [228,016]FOR
              AGAINST
              ABSTAIN





The
current terms for three directors, Colton Melby, William Clough and Matthew
McKenzie, will expire in 2010.





Item
5.  Other Information.





Reports
on Form 8-K.





The
following document that we filed with the SEC during the second quarter of 2009
is incorporated herein by reference:


A report
on Form 8-K filed July 6, 2009 announcing acquisition of Comex Instruments Ltd.
and 49% of Comex Electronics, Ltd.





Item
6.  Exhibits





The
following exhibits are included as part of this Form 10-Q.





Exhibit
      No.
                  
                  Description3.11
                  
                  Amended
      Articles of Incorporation3.21
                  
                  Bylaws
      of the Registrant.3.32
                  
                  Articles
      of Amendment to Certificate of Incorporation - Certificate of
      Designations, Preferences, Limitations and Relative Rights of the Series A
      Preferred Stock, filed July 25, 2002.3.42
                  
                  Articles
      of Amendment to Articles of Incorporation-Terms of Series A Convertible
      Preferred Stock, filed November 13, 2003.3.52
                  
                  Restated
      Articles of Incorporation to increase the authorized common stock to
      150,000,000 shares, filed December 23, 2003.3.62
                  
                  Restated
      Articles of Incorporation - Certificate of Designations of the Series B
      Convertible Preferred Stock, filed April 1, 2004.3.73
                  
                  Restated
      Articles of Incorporation, Officers’ Certificate and Colorado Secretary of
      State Certificate filed June 30, 2004 showing corporate name change to
      OnScreen Technologies, Inc.3.84
                  
                  Restated
      Articles of Incorporation and Colorado Secretary of State Certificate
      filed January 7, 2008 showing corporate name change to Waytronx,
      Inc.3.98
                  
                  Restated
      Articles of incorporation to increase the authorized common shares to
      325,000,000 shares.10.22
                  
                  Contract
      and License Agreement between the Registrant and John Popovich, dated July
      23, 2001.10.32
                  
                  Agreement
      by and among the Registrant, John Popovich and Fusion Three, LLC, dated
      January 14, 2004.10.42
                  
                  Letter
      Agreement between the Registrant and John Popovich, dated January 15,
      2004.10.52
                  
                  Master
      Settlement and Release Agreement by and among the Registrant, Fusion
      Three, LLC, Ryan Family Partners, LLC, and Capital Management Group, Inc.,
      dated February 3, 2004.10.62
                  
                  First
      Amendment to Contract and License Agreement, dated February 3,
      2004.10.175
                  
                  Assignment,
      dated February 16, 2005, of Registrant’s technology patents ownership from
      inventor to CH Capital.10.185
                  
                  Assignment,
      dated February 16, 2005, of Registrant’s technology patents ownership from
      CH Capital to
Company.




28





10.225
                
                Promissory
      Note dated March 25, 2005 evidencing $1,500,000 unsecured short term loan
      to Registrant.10.236
                
                OnScreen
      Technologies, Inc. 2005 Equity Incentive Plan10.257
                
                Employment
      Agreement between the Registrant and William J. Clough, Esq. dated
      November 21, 2005.10.289
                
                Waytronx,
      Inc. 2008 Equity Incentive Plan.14.16
                
                Registrant’s
      Code of Ethics for Principal Executive and Financial Officers and Code of
      Ethics and Business Conduct Statement of General
Policy.15.210
                
                Letter
      re unaudited interim financial information.22.5
                
                Proxy
      Statement and Notice of 2009 Annual Shareholder Meeting filed with the
      Commission on July 28, 2009.31.110
                
                Certification
      of Chief Executive Officer pursuant to Exchange Act Rules 13a-15(e) and
      15d-15(e), as adopted pursuant to Section 203 of the Sarbanes-Oxley Act of
      2002.31.210
                
                Certification
      of Chief Financial Officer pursuant to Exchange Act Rules 13a-15(e) and
      15d-15(e), as adopted pursuant to Section 203 of the Sarbanes-Oxley Act of
      2002.32.110
                
                Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.32.210
                
                Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.





Footnotes
to Exhibits:





1
            Incorporated
      by reference to our Registration Statement on Form SB-2/A filed with the
      Commission on October 26, 2001.


2
            Incorporated
      by reference to our Report on Form 10-KSB filed with the Commission on
      April 14, 2004.


3
            Incorporated
      by reference to our Report on Form 10-KSB filed with the Commission on
      March 31, 2005.


4
            Incorporated
      by reference to our Registration Statement on Form S-8 filed with the
      Commission on March 12, 2008.


5
            Incorporated
      by reference to our Report on Form 10-KSB filed with the Commission on May
      4, 2005.


6
            Incorporated
      by reference to our Proxy Statement pursuant to Section 14(a) filed with
      the Commission on October 7, 2005.


7
            Incorporated
      by reference to our Report on Form 10-KSB filed with the Commission on
      February 24, 2006.


8
            Incorporated
      by reference to the Proxy Statement and Notice of 2008 Annual Shareholder
      Meeting filed with the Commission July 3,
2008.


9
              Incorporated
      by reference to our Registration Statement on Form S-8 filed March 12,
      200810
              Filed
      herewith.








SIGNATURES





Pursuant
to the requirements 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.





Signed
and submitted this 13th day of November 2009.





Waytronx,
      Inc.By:
                /s/ William J. CloughWilliam
      J. Clough,Chief
      Executive Officer/Presidentby:
                /s/ Daniel N. FordDaniel
      N. Ford,Chief
      Financial Officer




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