UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    Form 10-Q

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

    For the quarterly period ended June 30, 2012

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

    For the transition period from ______________ to _____________

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                        Commission File Number: 002-41703


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

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

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

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

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Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period 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 Web site, if any, every  Interactive  Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter)  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. (Check one):

Large accelerated filer  [ ]                       Accelerated filer [ ]
Non-accelerated filer  [ ]                         Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act): YES [X] NO [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: August 15, 2012: 46,108,791

Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]
<PAGE>
                            THE X-CHANGE CORPORATION

                  Form 10-Q for the Quarter ended June 30, 2012

                                Table of Contents


                                                                            Page
                                                                            ----
PART I - FINANCIAL INFORMATION

Item 1 -  Financial Statements                                                 3

Item 2 -  Management's Discussion and Analysis of Financial Condition and
          Results of Operations                                               18

Item 3 -  Quantitative and Qualitative Disclosures About Market Risk          21

Item 4 -  Controls and Procedures                                             21

PART II - OTHER INFORMATION

Item 1 -  Legal Proceedings                                                   22

Item 1A - Risk Factors                                                        22

Item 2 -  Unregistered Sales of Equity Securities and Use of Proceeds         22

Item 3 -  Defaults Upon Senior Securities                                     22

Item 4 -  Mine Safety Disclosures                                             22

Item 5 -  Other Information                                                   22

Item 6 -  Exhibits                                                            22

SIGNATURES                                                                    23

                                       2
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                    The X-Change Corporation and Subsidiaries
                           Consolidated Balance Sheets
                       June 30, 2012 and December 31, 2011

<TABLE>
<CAPTION>
                                                                        June 30,             December 31,
                                                                          2012                   2011
                                                                      ------------           ------------
                                                                       (Unaudited)             (Audited)
<S>                                                                   <C>                    <C>
                                     ASSETS

CURRENT ASSETS
  Cash on hand and in bank                                            $         --           $         --
  Note receivable                                                               --                     --
  Interest receivable                                                           --                     --
                                                                      ------------           ------------
      TOTAL CURRENT ASSETS                                                      --                     --
                                                                      ------------           ------------

      TOTAL ASSETS                                                    $         --           $         --
                                                                      ============           ============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
  Convertible debenture payable, net of unamortized discount          $    285,225           $    285,225
  Notes payable to shareholder                                             829,401                829,598
  Accounts payable - trade                                                  21,263                 13,704
  Accrued interest payable                                                 156,178                106,632
                                                                      ------------           ------------
      TOTAL CURRENT LIABILITIES                                          1,292,067              1,235,159
                                                                      ------------           ------------
      TOTAL LIABILITIES                                                  1,292,067              1,235,159
                                                                      ------------           ------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
  Preferred stock - $0.001 par value
    3,750,000 shares authorized
    none issued and outstanding                                                 --                     --
  Common stock - $0.001 par value
    37,500,000 shares authorized
    32,816,291 and 24,068,427 shares issued and outstanding                 32,816                 24,068
  Additional paid-in capital                                            26,230,189             24,924,147
  Accumulated deficit                                                  (27,555,072)           (26,183,374)
                                                                      ------------           ------------
      TOTAL STOCKHOLDERS' DEFICIT                                       (1,292,067)            (1,235,159)
                                                                      ------------           ------------

      TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                     $         --           $         --
                                                                      ============           ============
</TABLE>


   The financial information presented herein has been prepared by management
           without audit by independent certified public accountants.
                 The accompanying notes are an integral part of
                          these financial statements.

                                       3
<PAGE>
                    The X-Change Corporation and Subsidiaries
          Consolidated Statements of Operations and Comprehensive Loss
                Six and Three months ended June 30, 2012 and 2011
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                Six months        Six months       Three months      Three months
                                                  ended             ended             ended             ended
                                                 June 30,          June 30,          June 30,          June 30,
                                                   2012              2011              2012              2011
                                               ------------      ------------      ------------      ------------
<S>                                            <C>               <C>               <C>               <C>
REVENUES - net of returns and allowances       $         --      $         --      $         --      $         --
COST OF SALES                                            --                --                --                --
                                               ------------      ------------      ------------      ------------
GROSS PROFIT                                             --                --                --                --
                                               ------------      ------------      ------------      ------------
OPERATING EXPENSES
  General and administrative expenses                21,578            75,376            25,034            37,816
                                               ------------      ------------      ------------      ------------
TOTAL OPERATING EXPENSES                             21,578            75,376            25,034            37,816
                                               ------------      ------------      ------------      ------------
LOSS FROM OPERATIONS                                (21,578)          (75,376)          (25,034)          (37,816)

OTHER INCOME (EXPENSE)
  Interest expense, including amortization
   of financing fees and note discounts          (1,344,230)          (62,724)          (24,758)          (26,299)
  Impairment of non-operating assets
   acquired in note foreclosure                          --           (41,260)               --                --
                                               ------------      ------------      ------------      ------------
TOTAL OTHER INCOME (EXPENSE)                     (1,344,230)         (103,894)          (24,758)          (26,299)
                                               ------------      ------------      ------------      ------------
Loss From Continuing Operations
 Before Provision for Income Taxes               (1,371,698)         (179,360)          (49,792)          (64,115)
Provision for Income Taxes                               --                --                --                --
                                               ------------      ------------      ------------      ------------
Net Loss                                         (1,371,698)         (179,360)          (49,792)          (64,115)
Other Comprehensive Income                               --                --                --                --
                                               ------------      ------------      ------------      ------------

COMPREHENSIVE LOSS                             $ (1,371,698)     $   (179,360)     $    (49,792)     $    (64,115)
                                               ============      ============      ============      ============
Net loss per weighted-average share
 of common stock outstanding, calculated
 on Net Loss - basic and fully diluted         $      (0.05)     $      (0.01)     $      (0.00)     $      (0.00)
                                               ============      ============      ============      ============
Weighted-average number of shares
 of common stock outstanding                     29,019,141        15,787,435        32,816,291        16,154,478
                                               ============      ============      ============      ============
</TABLE>


   The financial information presented herein has been prepared by management
           without audit by independent certified public accountants.
                 The accompanying notes are an integral part of
                          these financial statements.

                                       4
<PAGE>
                    The X-Change Corporation and Subsidiaries
                      Consolidated Statements of Cash Flows
                     Six months ended June 30, 2012 and 2011
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                 Six months             Six months
                                                                                   ended                  ended
                                                                                  June 30,               June 30,
                                                                                    2012                   2011
                                                                                ------------           ------------
<S>                                                                             <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss for the period                                                       $ (1,371,698)          $   (179,360)
  Adjustments to reconcile net loss to net cash provided
   by operating activities
     Depreciation and amortization                                                        --                     --
     Impairment of non-operating assets acquired in note foreclosure                      --                 41,260
     Effect of issuance of common stock at less than "fair value"                  1,294,684                 10,962
  Interest expense paid with common stock                                                 --                     --
     Increase (Decrease) in
     Accounts payable and other                                                        7,559                 13,769
     Accrued interest payable                                                         49,546                 47,691
                                                                                ------------           ------------
           NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                       (19,909)               (65,678)
                                                                                ------------           ------------

CASH FLOWS FROM INVESTING ACTIVITIES                                                      --                     --
                                                                                ------------           ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Cash received from exercise of warrants                                                 --                 10,000
  Cash contributed to support operations                                               2,610
  Cash received on related party line of credit                                       17,299                 55,678
                                                                                ------------           ------------
           NET CASH USED IN FINANCING ACTIVITIES                                      19,909                 65,678
                                                                                ------------           ------------
DECREASE IN CASH                                                                          --                     --
Cash at beginning of period                                                               --                     --
                                                                                ------------           ------------

CASH AT END OF PERIOD                                                           $         --           $         --
                                                                                ============           ============
SUPPLEMENTAL DISCLOSURE OF INTEREST AND INCOME TAXES PAID
  Interest paid for the period                                                  $         --           $         --
                                                                                ============           ============
  Income taxes paid for the period                                              $         --           $         --
                                                                                ============           ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
  Common Stock issued for license agreement                                     $         --           $   (530,000)
                                                                                ============           ============
  Conversion of Debenture Payable into Common Stock                             $         --           $      1,000
                                                                                ============           ============
</TABLE>


   The financial information presented herein has been prepared by management
           without audit by independent certified public accountants.
                 The accompanying notes are an integral part of
                          these financial statements.

                                       5
<PAGE>
                    The X-Change Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
                       June 30, 2012 and December 31, 2011


NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS

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

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

Between March 2010 and August 2011, the Company  announced and abandoned several
proposed acquisition transactions.

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

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

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

On April 12 and May 14, 2012,  respectively,  the Company through a concurrently
formed  wholly  owned  subsidiary,  Cress Oil and Natural  Gas Company  (Cress),
entered into Purchase and Sale  Agreements with Granite Group Energy (a Delaware
Limited  Liability  Company  hereafter  referred  to  as  "Granite")  and  Wexco
Resources,  LLC (a Colorado Limited Liability  Company hereafter  referred to as
"Wexco").  As part of the  Granite  Agreement,  the  Company is  acquiring  from
Granite  approximately  21,111 net acres of mineral  interests in return for the
payment  of  approximately  $15,000,000.  As part of the  Wexco  Agreement,  the
Company  is  acquiring  from  Wexco  approximately  50,000  net acres of mineral
interests in Teton County,  Montana in return for the payment of approximately $
7,500,000. As of the date of this filing, neither Agreement has been consummated
through the payment of the required consideration.

On May 10, 2012,  the Company,  through  Cress,  entered into an Agreement  (the
"Agreement") with Diverse Energy  Investments,  LLC ("Diverse").  As part of the
Agreement, the Company is acquiring from Diverse approximately 15,000 next acres
of mineral  interests in Roosevelt and Daniels  Counties,  Montana in return for
the payment of  approximately  $8,812,500.  As of the date of this filing,  this
Agreement   has  been   consummated   through  the   payment  of  the   required
consideration.

                                       6
<PAGE>
                    The X-Change Corporation and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                       June 30, 2012 and December 31, 2011


NOTE B - PREPARATION OF FINANCIAL STATEMENTS

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

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

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

During interim periods, the Company follows the accounting policies set forth in
its annual  audited  financial  statements  filed with the U. S.  Securities and
Exchange  Commission on its Annual Report on Form 10-K  containing the Company's
financial  statements  for the year ended  December  31, 2011.  The  information
presented  within  these  interim  financial  statements  may  not  include  all
disclosures  required by generally accepted accounting  principles and the users
of financial information provided for interim periods should refer to the annual
financial information and footnotes when reviewing the interim financial results
presented herein.

In the opinion of management,  the accompanying  interim  financial  statements,
prepared in  accordance  with the U. S.  Securities  and  Exchange  Commission's
instructions for Form 10-Q, are unaudited and contain all material  adjustments,
consisting only of normal recurring  adjustments necessary to present fairly the
financial condition, results of operations and cash flows of the Company for the
respective interim periods  presented.  The current period results of operations
are not necessarily  indicative of results which ultimately will be reported for
the full fiscal year ending December 31, 2012.

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

These  financial  statements  reflect the books and records of the Company as of
June 30, 2012 and  December  31,  2011 and for each of the six and three  months
ended June 30, 2012 and 2011, respectively.

NOTE C - GOING CONCERN UNCERTAINTY

As of June 30, 2012 and  December  31,  2011,  respectively,  the Company has no
operations,  no cash on hand, and  significant  debt related to the financing of
the operations of its former subsidiary,  AirGATE. Because of these factors, the
Company's  auditors  have  issued  an  audit  opinion  on the  Company's  annual
financial  statements  which  includes a statement  describing our going concern
status.  This  means,  in the  auditor's  opinion,  substantial  doubt about our
ability to continue as a going concern exists at the date of their opinion.

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

                                       7
<PAGE>
                    The X-Change Corporation and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                       June 30, 2012 and December 31, 2011


NOTE C - GOING CONCERN UNCERTAINTY - CONTINUED

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

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

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

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

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

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

NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Cash and cash equivalents

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

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

2. Convertible Debt Instruments

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

                                       8
<PAGE>
                    The X-Change Corporation and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                       June 30, 2012 and December 31, 2011


NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

3. Accounting for Stock Options

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

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

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

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

4. Income taxes

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

The Company uses the asset and liability  method of accounting for income taxes.
At June 30, 2012 and December 31, 2011, respectively, the deferred tax asset and
deferred tax  liability  accounts,  as recorded  when  material to the financial
statements,  are  entirely  the  result  of  temporary  differences.   Temporary
differences  generally  represent  differences in the  recognition of assets and
liabilities  for tax and financial  reporting  purposes,  primarily  accumulated
depreciation  and  amortization,  allowance  for doubtful  accounts and vacation
accruals.

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

5. Income (Loss) per share

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

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

                                       9
<PAGE>
                    The X-Change Corporation and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                       June 30, 2012 and December 31, 2011


NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

5. Income (Loss) per share - continued

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

As of June 30, 2012 and 2011,  respectively,  the  Company's  outstanding  stock
options, warrants, and convertible debentures are considered to be anti-dilutive
due to the Company's net operating loss.

6. New and Pending Accounting Pronouncements

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

NOTE E - FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

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

NOTE F - CONCENTRATIONS OF CREDIT RISK

When applicable,  the Company maintains cash in domestic financial  institutions
subject  to  insurance   coverage  issued  by  the  Federal  Deposit   Insurance
Corporation  (FDIC).  Under FDIC rules,  the  Company is  entitled to  aggregate
coverage as defined by Federal  regulation  per account type per separate  legal
entity per financial institution.  During the six months ended June 30, 2012 and
the year ended December 31, 2011, respectively,  the Company has not had any had
deposits in a financial  institution  with  credit risk  exposures  in excess of
statutory FDIC  coverage.  The Company has incurred no losses as a result of any
unsecured credit risk exposures.

NOTE G - DEBT FINANCING ARRANGEMENTS

Melissa Note

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

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

                                       10
<PAGE>
                    The X-Change Corporation and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                       June 30, 2012 and December 31, 2011


NOTE G - DEBT FINANCING ARRANGEMENTS

Melissa Note - continued

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

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

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

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

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

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

As of June 30, 2012 and December 31, 2011, respectively, the outstanding balance
on the  Melissa  Note is  approximately  $626,524  and  $615,025,  inclusive  of
capitalized accrued interest. Interest continues to accrue at 10% per annum.

South Beach Live, Ltd. Note

During  Calendar  2009,  the  Company  executed a $100,000  Line of Credit  Note
Payable  with South  Beach Live,  Ltd.  (South  Beach),  a  significant  Company
stockholder,  to provide  funds  necessary to support the  corporate  entity and
comply with the periodic reporting  requirements of the Securities  Exchange Act
of 1934, as amended.  This note bears  interest at 10.0% and matures in Calendar
2011. Through June 30, 2012 and December 31, 2011, respectively, an aggregate of
approximately $242,367 and $236,359 has been advanced against this note.

                                       11
<PAGE>
                    The X-Change Corporation and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                       June 30, 2012 and December 31, 2011


NOTE G - DEBT FINANCING ARRANGEMENTS - CONTINUED

LCII Debentures

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

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

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

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

On June 13, 2012, the Company  entered into a Settlement  Agreement and Addendum
to Securities  Repurchase  Agreement with LJII . On December 8, 2011,  LJII sued
the  Company in regards to a claimed  breach of a  convertible  debenture  dated
August 29 and October 9, 2007. The Company filed its answer and cross  complaint
in the lawsuit.  In June 2012, both parties determined that it would be in their
best interest to settle the suit and cross complaint.  As part of the settlement
LJII agreed to extend the Maturity  Date of the  Debentures to December 31, 2013
and to exercise  approximately  2,800,000  Common  Stock  Warrants at One Dollar
($1.00) per Share as the Debentures are converted. This Settlement Agreement and
Addendum  effectively  cancelled the initial warrant(s)  (approximately  145,613
warrants  exercisable  at $20.00 as effected by the Company's 2010 reverse stock
split) and issued 2,912,260 new warrants reflecting the restructured warrant(s),
pricing  and  expiration   date.  The  Company   recognized  no  effect  in  the
accompanying financial statements as a result of this transaction;  however, the
Company will  experience a "cheap  stock" charge  equivalent  to the  difference
between  the "fair  value" of the  shares  issued  and the  contractual  blended
conversion/exercise price on the date of each future conversion transaction.

At June 30, 2012 and December 30, 2011, respectively,  the outstanding principal
amount of convertible debentures totaled approximately $285,225.

                                       12
<PAGE>
                    The X-Change Corporation and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                       June 30, 2012 and December 31, 2011


NOTE H - INCOME TAXES

The components of income tax (benefit)  expense for each of the six months ended
June 30, 2012 and 2011, respectively, are as follows:

                                                   Six months       Six months
                                                     ended            ended
                                                    June 30,         June 30,
                                                      2012             2011
                                                    --------         --------
Federal:
  Current                                           $     --         $     --
  Deferred                                                --               --
                                                    --------         --------
                                                          --               --
                                                    --------         --------
State:
  Current                                                 --               --
  Deferred                                                --               --
                                                    --------         --------
                                                          --               --
                                                    --------         --------

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

As  of  June  30,  2012,  the  Company  has  a  cumulative  net  operating  loss
carryforward  of  approximately  $4,059,600  to offset  future  taxable  income.
Subject to current regulations,  components of this cumulative carryforward will
begin to expire at the end of each fiscal year starting in 2023.  The amount and
availability  of  the  net  operating  loss  carryforwards  may  be  subject  to
limitations set forth by the Internal  Revenue Code.  Factors such as the number
of shares ultimately issued within a three year look-back period;  whether there
is a deemed more than 50 percent change in control; the applicable long-term tax
exempt bond rate;  continuity of historical  business;  and subsequent income of
the  Company  all  enter  into  the  annual   computation  of  allowable  annual
utilization of the carryforwards.

The  Company's  income tax expense  (benefit)  for the six months ended June 30,
2012 and 2011,  respectively,  differed  from the  statutory  federal rate of 34
percent as follows:

                                                 Six months        Six months
                                                   ended             ended
                                                  June 30,          June 30,
                                                    2012              2011
                                                 ----------        ----------
Statutory rate applied to loss before
 income taxes                                    $ (466,000)       $  (61,000)
Increase (decrease) in income taxes
 resulting from:
   State income taxes                                    --                --
   Nondeductible charge for stock issued
    at less than "fair value"                       440,000             3,700
  Nondeductible charge for non-operating
    asset impairment                                     --            14,000
  Other, including use of net operating
   loss carryforward and reserve for
   deferred tax asset                                26,000            43,300
                                                 ----------        ----------

Income tax expense                               $       --        $       --
                                                 ==========        ==========

Temporary differences due to statutory requirements in the recognition of assets
and liabilities for tax and financial  reporting  purposes,  generally including
such items as organizational costs,  accumulated  depreciation and amortization,
allowance for doubtful accounts,  organizational and start-up costs and vacation
accruals.  These  differences  give  rise to the  financial  statement  carrying
amounts and tax bases of assets and  liabilities  causing  either  deferred  tax
assets or liabilities,  as necessary, as of June 30, 2012 and December 31, 2011,
respectively:

                                                June 30,           December 31,
                                                  2012                2011
                                              ------------        ------------
Deferred tax assets
  Net operating loss carryforwards            $  1,380,000        $  1,354,000
  Stock based compensation                              --                  --
  Debt discount amortization                       657,000             657,000
  Other                                                 --                  --
                                              ------------        ------------
                                                 2,037,000           2,011,000
Less valuation allowance                        (2,037,000)         (2,011,000)
                                              ------------        ------------

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

                                       13
<PAGE>
                    The X-Change Corporation and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                       June 30, 2012 and December 31, 2011


NOTE H - INCOME TAXES - CONTINUED

During the six months ended June 30, 2012 and the year ended  December 31, 2011,
respectively,  the  valuation  allowance  for the deferred  tax asset  increased
(decreased) by approximately $26,000 and $(6,000), respectively.

NOTE I - PREFERRED STOCK

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

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

As of June 30, 2012 and December 31, 2011, respectively, there were no shares of
preferred stock issued and outstanding.

NOTE J - COMMON STOCK TRANSACTIONS

Amendment to the Articles of Incorporation

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

Reverse Stock split

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

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

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

                (Remainder of this page left blank intentionally)

                                       14
<PAGE>
                    The X-Change Corporation and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                       June 30, 2012 and December 31, 2011


NOTE J - COMMON STOCK TRANSACTIONS - CONTINUED

Stock issuances

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

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

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

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

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

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

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

                                       15
<PAGE>
                    The X-Change Corporation and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                       June 30, 2012 and December 31, 2011


NOTE K - COMMON STOCK WARRANTS

In conjunction with, and as a component of, certain debt issuances,  the Company
has issued an aggregate  607,016  warrants to purchase an  equivalent  number of
shares of common stock at prices between $0.70 and $20.00 per share, as adjusted
by the  Company's  2010  reverse  stock  split  and  the  June  2012  litigation
settlement with LJII.

                                                   Number of         Weighted
                                                    Warrant          Average
                                                    Shares            Price
                                                    ------            -----
Balance at January 1, 2011                           607,016        $     5.72
                                                  ==========        ==========

  Issued                                                  --                --
  Exercised                                          (10,000)       $     1.00
  Expired                                                 --                --
                                                  ----------        ----------

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

  Issued                                           2,912,260        $     1.00
  Cancelled                                         (145,613)       $    20.00
  Exercised                                               --                --
  Expired                                            (73,438)       $     1.74
                                                  ----------        ----------

Balance at June 30, 2012                           3,290,225        $     0.99
                                                  ==========        ==========

As of June 30, 2012, the warrants break down as follows:

                                                  # warrants      exercise price
                                                  ----------      --------------

                                                     305,840        $     0.70
                                                   2,912,260        $     1.00
                                                      58,825        $     1.40
                                                      13,300        $     4.00
                                                  ----------        ----------

                                                   3,290,225        $     0.99
                                                  ----------        ----------

                                                  # warrants        expiring in
                                                  ----------        -----------

                                                     340,840              2012
                                                   2,912,260              2013
                                                      37,125              2018
                                                  ----------        ----------

                                                   3,290,225
                                                  ==========

NOTE L - LITIGATION

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

                                       16
<PAGE>
                    The X-Change Corporation and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                       June 30, 2012 and December 31, 2011


NOTE L - LITIGATION - CONTINUED

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

On June 13, 2012, the Company  entered into a Settlement  Agreement and Addendum
to Securities  Repurchase  Agreement with LJII . On December 8, 2011,  LJII sued
the  Company in regards to a claimed  breach of a  convertible  debenture  dated
August 29 and October 9, 2007. The Company filed its answer and cross  complaint
in the lawsuit.  In June 2012, both parties determined that it would be in their
best interest to settle the suit and cross complaint.  As part of the settlement
LJII agreed to extend the Maturity  Date of the  Debentures to December 31, 2013
and to exercise  approximately  2,800,000  Common  Stock  Warrants at One Dollar
($1.00) per Share as the Debentures are converted.

NOTE M - SUBSEQUENT EVENTS

In August 2012, LJII issued a Debenture Conversion Notice to the Company for the
conversion of $1,000 of the outstanding debenture balance into 187,713 shares of
the Company's  common stock.  Additionally,  LJII exercised  10,000  outstanding
warrants to obtain 10,000 shares of the Company's common stock for $10,000 cash.

Management  has  evaluated all activity of the Company  through  August 17, 2012
(the issue date of the restated  financial  statements)  and  concluded  that no
subsequent  events,  other than as disclosed  above,  have  occurred  that would
require  recognition  in the financial  statements or disclosure in the notes to
financial statements.

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<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

(1) CAUTION REGARDING FORWARD-LOOKING INFORMATION

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

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

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

(2) GENERAL

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

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

(3) PLAN OF BUSINESS

On August 18, 2011, the Company  entered into an Asset  Purchase  Agreement with
Old West  Entertainment  Corp. (Old West), a corporation formed February 3, 2011
in accordance with the Laws of the State of Nevada.  Prior to this  transaction,
Old West was not affiliated with or related to the Company or its management. As
part of the Agreement,  the Company  acquired all rights,  title and interest in
all of Old West's Operating Entertainment Business (Assets). The Assets included
a  website,  client  base,  capital  assets,  hardware,  software,  intellectual
property as well as all of Old West's artists,  properties,  patents, trademarks
and  distribution  rights  and  agreements  relating  to Old  West's  music  and
entertainment  business.  The Company  also  assumed all rights and  obligations
under a Management  Consulting Agreement between Old West and Arturo Molina, Jr.
(Molina),  also known in the music business as "Frost." In exchange, the Company
issued  1,000,000  shares of  restricted,  unregistered  shares of the Company's
common stock to Old West.

As  part  of  the  Agreement,   Molina/Frost  was  issued  5,000,000  shares  of
restricted,  unregistered shares of the Company's common stock and was appointed
President and CEO of the Company.  The Company also issued  5,000,000  shares of
restricted,  unregistered  shares of common  stock to the Bogat  Family Trust as
consideration for the management services that beneficiaries of the Trust was to
provide to the Company in operating the music and  entertainment  portion of the
business.

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

On April 12 and May 14, 2012,  respectively,  the Company through a concurrently
formed  wholly  owned  subsidiary,  Cress Oil and Natural  Gas Company  (Cress),
entered into Purchase and Sale  Agreements with Granite Group Energy (a Delaware
Limited  Liability  Company  hereafter  referred  to  as  "Granite")  and  Wexco
Resources,  LLC (a Colorado Limited Liability  Company hereafter  referred to as
"Wexco").  As part of the  Granite  Agreement,  the  Company is  acquiring  from
Granite  approximately  21,111 net acres of mineral  interests in return for the
payment  of  approximately  $15,000,000.  As part of the  Wexco  Agreement,  the

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<PAGE>
Company  is  acquiring  from  Wexco  approximately  50,000  net acres of mineral
interests in Teton County,  Montana in return for the payment of approximately $
7,500,000. As of the date of this filing, neither Agreement has been consummated
through the payment of the required consideration.

On May 10, 2012,  the Company,  through  Cress,  entered into an Agreement  (the
"Agreement") with Diverse Energy  Investments,  LLC ("Diverse").  As part of the
Agreement, the Company is acquiring from Diverse approximately 15,000 next acres
of mineral  interests in Roosevelt and Daniels  Counties,  Montana in return for
the payment of  approximately  $8,812,500.  As of the date of this filing,  this
Agreement   has  been   consummated   through  the   payment  of  the   required
consideration.

(4) RESULTS OF OPERATIONS

The Company had no revenue  for either of the six or three month  periods  ended
June 30, 2012 and 2011, respectively.

General and  administrative  expenses for the six months ended June 30, 2012 and
2011 were  approximately  $21,600 and  $75,400,  respectively.  During the first
quarter of 2012, the Company was virtually dormant due to the inaction of former
management.  During the first quarter of 2011, the Company experienced  somewhat
higher expenditure levels due to various due diligence activities related to the
proposed  acquisitions  of  21-Century  and  Surrey,  as  discussed  in previous
filings.  Current management continues to focus on exploring possible candidates
for a business  combination  transaction,  including the completion of the oil &
gas lease acquisitions in eastern-Montana and western-North Dakota. Accordingly,
future expenditure levels will fluctuate depending on the Company's  acquisition
endeavors  and the stated  objective  of remaining  current  with the  Company's
periodic  reporting  requirements  of the  Securities  Exchange Act of 1934,  as
amended.

On January 28, 2011,  concurrent with the abandonment of the 21-Century  Silicon
transaction, the Company rescinded the December 2011 transaction where 1,000,000
shares of restricted,  unregistered  common stock was issued to the shareholders
of 21-Century Silicon to license the use of 21-Century  Silicon's technology and
to secure an  exclusive  right to  negotiate  to  acquire  certain  intellectual
property from 21-Century Silicon. Additionally, concurrent with this action, the
Company executed its lien on the assets of 21-Century Silicon in satisfaction of
a note receivable and accrued  interest  totaling  approximately  $41,200.  Upon
foreclosure  on said assets,  the  Company's  management  elected to take a 100%
impairment  against the foreclosed  value resulting in a charge to operations in
the first quarter of 2011 of approximately  $41,200.  Any gain, if any, upon the
ultimate  disposition  of said assets will be  recognized at the point of future
sale.

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

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

On July 25, 2011,  the Company,  its  wholly-owned  subsidiary,  LDC  Collection
Systems, Inc. and CJP Entertainment LLC, mutually agreed to execute a Repurchase
Agreement whereby the May 25, 2011 transaction to purchase a Casino Ship located
in  Freeport,  Texas.  The  original  transaction  was  valued at  approximately
$1,750,000  (which   approximated  21.9%  of  a  November  8,  2006  independent
third-party appraisal by Cruise Research and Management of the casino ship) (see
Exhibit 99.1 of the Company's  Current Report on Form 8-K filed on or about June
2, 2011) and  consideration  of 2,000,000  shares of the  Company's  restricted,
unregistered  common  stock  was  issued  to the  seller.  Concurrent  with  the
execution of the July 25, 2011 Repurchase Agreement, the 2,000,000 shares of the
Company's  common  stock held by the CJP  Entertainment  LLC was returned to the
Company and cancelled.  As the Company  retained no rights to own or operate the
cruise ship, no further action was taken by  Management,  George J. Akmon and/or
Jerry  Monday &  Associates,  LLC with regard to the June 6, 2011 LOI to operate
said casino ship and said negotiations and obligations ceased on the part of all
parties. Pursuant to the appropriate accounting literature, this transaction was
reflected in the restated  financial  statements  net of all the  aforementioned
events as of June 30, 2011, as reported on Form 10-Q/A.

On August 18, 2011, the Company  entered into an Asset  Purchase  Agreement with
Old West  Entertainment  Corp. (Old West), a corporation formed February 3, 2011
in accordance with the Laws of the State of Nevada.  Prior to this  transaction,
Old West was not affiliated with or related to the Company or its management. As

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<PAGE>
part of the Agreement,  the Company  acquired all rights,  title and interest in
all of Old West's Operating Entertainment Business (Assets). The Assets included
a  website,  client  base,  capital  assets,  hardware,  software,  intellectual
property as well as all of Old West's artists,  properties,  patents, trademarks
and  distribution  rights  and  agreements  relating  to Old  West's  music  and
entertainment  business.  The Company  also  assumed all rights and  obligations
under a Management  Consulting Agreement between Old West and Arturo Molina, Jr.
(Molina),  also known in the music business as "Frost." In exchange, the Company
issued  1,000,000  shares of  restricted,  unregistered  shares of the Company's
common stock to Old West.

As  part  of  the  Agreement,   Molina/Frost  was  issued  5,000,000  shares  of
restricted,  unregistered shares of the Company's common stock and was appointed
President and CEO of the Company.  The Company also issued  5,000,000  shares of
restricted,  unregistered  shares of common  stock to the Bogat  Family Trust as
consideration for the management services that beneficiaries of the Trust was to
provide to the Company in operating the music and  entertainment  portion of the
business.

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

The Company recognized  interest  accruals,  amortization of debt financing fees
and accretion of debt discounts of  approximately  $1,344,000 and $63,000 during
the six months ended June 30, 2012 and 2011, respectively.  Included in the June
30, 2012 expenses is a non-cash charge of  approximately  $1,295,000  related to
the issuance of restricted,  unregistered common stock at less than `fair value'
for the payment of  approximately  $17,500 in principal to Melissa CR 364,  Ltd.
The Company's convertible  debenture with La Jolla Cove Investors,  Inc. matured
in August 2010.  This  debenture is discussed more fully in our Annual Report on
Form 10-K for the year ended December 31, 2010. We specifically note that all of
the  Company's  debt is in default due to the December 2008  foreclosure  action
and,  accordingly,  has been  classified as "current" on the  Company's  balance
sheet regardless of the stated maturity date(s).

Earnings per share for the  respective six month periods ended June 30, 2012 and
2011,  respectively,  were  $(0.05)  and $(0.01)  based on the  weighted-average
shares issued and outstanding at the end of each respective period.

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

(5) LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2012 and December 31, 2011, respectively,  the Company had a working
capital deficit of approximately $(1,292,000) and $(1,235,000).

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

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

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

The  Company's  Articles  of  Incorporation  authorize  the  issuance  of  up to
75,000,000 shares of preferred stock and 750,000,000 shares of common stock. The
Company's  ability to issue preferred  stock may limit the Company's  ability to
obtain  debt or equity  financing  as well as impede  potential  takeover of the
Company,  which  may be in the best  interest  of  stockholders.  The  Company's

                                       20
<PAGE>
ability to issue these  authorized but unissued  securities may also  negatively
impact our ability to raise  additional  capital through the sale of our debt or
equity securities.

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

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

(6) CRITICAL ACCOUNTING POLICIES

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

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

(7) EFFECT OF CLIMATE CHANGE LEGISLATION

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

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company  may be subject  to  certain  market  risks,  including  changes in
interest  rates and currency  exchange  rates.  At the present time, the Company
does not undertake any specific actions to limit those exposures.

ITEM 4 - CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

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

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<PAGE>
(b) Changes in Internal Controls

There were no significant  changes (including  corrective actions with regard to
significant  deficiencies or material  weaknesses) in our internal controls over
financial  reporting  that occurred  during the quarter ended June 30, 2012 that
has  materially  affected,  or is reasonably  likely to materially  affect,  our
internal control over financial reporting.

                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

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

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

On June 13, 2012, the Company  entered into a Settlement  Agreement and Addendum
to Securities  Repurchase  Agreement with LJII . On December 8, 2011,  LJII sued
the  Company in regards to a claimed  breach of a  convertible  debenture  dated
August 29 and October 9, 2007. The Company filed its answer and cross  complaint
in the lawsuit.  In June 2012, both parties determined that it would be in their
best interest to settle the suit and cross complaint.  As part of the settlement
LJII agreed to extend the Maturity  Date of the  Debentures to December 31, 2013
and to exercise  approximately  2,800,000  Common  Stock  Warrants at One Dollar
($1.00) per Share as the Debentures are converted.

ITEM 1A - RISK FACTORS

Not applicable

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

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

In August 2012, LJII issued a Debenture Conversion Notice to the Company for the
conversion of $1,000 of the outstanding debenture balance into 187,713 shares of
the Company's  common stock.  Additionally,  LJII exercised  10,000  outstanding
warrants to obtain 10,000 shares of the Company's common stock for $10,000 cash.

ITEM 3 - DEFAULTS ON SENIOR SECURITIES

None.

ITEM 4 - MINE SAFETY DISCLOSURES

None.

ITEM 5 - OTHER INFORMATION

None.

ITEM 6 - EXHIBITS

31.1     Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002

32.1     Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002

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                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                          THE X-CHANGE CORPORATION


Dated: August 20, 2012                    By: /s/ R. Wayne Duke
                                              ----------------------------------
                                              R. Wayne Duke
                                              Chairman, Chief Executive Officer,
                                              Acting Chief Financial Officer and
                                              Director

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