# U.S. Securities and
Exchange Commission

# Washington, D.C. 
20549

# Form 10-QSB

# (Mark One)

# [X]Quarterly
report pursuant to Section 13 or 15(d) of the Securities Exchange Act                of
1934 For the quarterly period ended June 30, 2004

# [   ]      Transition
report under Section 13 or 15(d) of the Securities Exchange Act of 1934For the
transition period from    to    .

# Commission file number
002-41703

# THE X-CHANGE
CORPORATION (Exact name of small
business issuer asspecified in its charter)

| | NEVADA                                                           | 90-0156146                        
| | ---------------------------------------------------------------- | ----------------------------------
| | (STATE OR OTHER JURISDICTION  
OF INCORPORATION OR ORGANIZATION) | (IRS EMPLOYER
 IDENTIFICATION NO.)

# 100 Allentown Parkway,
Suite 110, Allen, TX 75002 (Address of principal
executive offices)

# (972) 747-0051Issuers
telephone number

# APPLICABLE ONLY TO
CORPORATE ISSUERS

State
the number of shares outstanding of each of the issuers classes of common equity, as
of the latest practical date:June 30, 2004 17,102,000

Transitional
Small Business Disclosure Format (Check One).    Yes      ;  No X

---



PART I

# Item 1. Financial
Statements

THE X-CHANGE CORPORATION (A Development Stage
Company)  CONSOLIDATED BALANCE
SHEETS

|                               | (Unaudited)
June 30,
2004 | December 31,
2003
|------------------------------ | ------------------------- | -----------------
|ASSETS                         |                           |                  
|Current Assets:                |                           |                  
|Cash                           |                           |                  
|Deposits                       |                           |                  
|Employee Advances              |                           |                  
|                               |                           |                  
|Total Current Assets           |                           |                  
|                               |                           |                  
|Fixed Assets:                  |                           |                  
|Office Equipment               |                           |                  
|Furniture and Fixtures         |                           |                  
|Less: Accumulated Depreciation |                           |                  
|                               |                           |                  
|Net Fixed Assets               |                           |                  
|                               |                           |                  
|TOTAL ASSETS                   |                           |                  
|                               |                           |                  

F-2

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THE X-CHANGE
CORPORATION (A Development Stage
Company)  CONSOLIDATED BALANCE SHEETS (Continued)

|                                                    | (Unaudited)
June 30,
2004 | December 31,
2003
|--------------------------------------------------- | ------------------------- | -----------------
|LIABILITIES                                         |                           |                  
|Current Liabilities:                                |                           |                  
|Accounts Payable                                    |                           |                  
|                                                    |                           |                  
|Total Current Liabilities                           |                           |                  
|                                                    |                           |                  
|Non-Current Liabilities:                            |                           |                  
|Shareholder Loans                                   |                           |                  
|                                                    |                           |                  
|Total Non-Current Liabilities                       |                           |                  
|                                                    |                           |                  
|TOTAL LIABILITIES                                   |                           |                  
|                                                    |                           |                  
|STOCKHOLDERS' EQUITY (DEFICIT)                      |                           |                  
|Preferred Stock, Par Value $.001,                   |                           |                  
|Series A Convertible - 5,000,000 Shares Authorized, |                           |                  
|0 Issued at June 30, 2004 and December 31, 2003     |                           |                  
|Common Stock, Par value $.001, Authorized           |                           |                  
|100,000,000 Shares, Issued 17,102,000 and           |                           |                  
|13,002,000 at June 30, 2004 and December 31, 2003   |                           |                  
|Common Stock to be Issued, 15,000 and 0             |                           |                  
|Paid-In Capital                                     |                           |                  
|Retained Deficit                                    |                           |                  
|Deficit Accumulated During Development Stage        |                           |                  
|                                                    |                           |                  
|TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                |                           |                  
|                                                    |                           |                  
|TOTAL LIABILITIES AND STOCKHOLDERS'                 |                           |                  
|EQUITY (DEFICIT)                                    |                           |                  
|                                                    |                           |                  

See accompanying notes

F-3

---



THE X-CHANGE
CORPORATION (A Development Stage
Company)  CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited)

|                         | For the Three Months Ended
June 30, | For the Six Months Ended
June 30, | Cumulative
Since
October 4,
2000
Inception of
Development
|------------------------ | ----------------------------------- | --------------------------------- | ---------------------------------------------------------
|
|Revenues                 |                                     |                                   | $                                                        
|Expenses                 |                                     |                                  
|General & Administrative |                                     |                                   |                                                          
|                         |                                     |                                   |                                                          
|Operating Loss           |                                     |                                   |                                                          
|                         |                                     |                                   |                                                          
|Other Income (Expense):  |                                     |                                  
|Interest                 |                                     |                                   |                                                          
|                         |                                     |                                   |                                                          
|Net Loss                 |                                     |                                   | $                                                        
|                         |                                     |                                   |                                                          
|Loss per Share, Basic &  |                                     |                                  
|Diluted                  |                                     |                                   | $                                                        
|                         |                                     |                                   |                                                          
|Weighted Average Shares  |                                     |                                  
|Outstanding              |                                     |                                   |                                                          
|                         |                                     |                                   |                                                          

See accompanying notes

F-4

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THE X-CHANGE CORPORATION (A Development Stage
Company)  CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)

|                                              | For the Six Months Ended
June 30, | Cumulative
Since
October 4,
2000
Inception of
Development
|--------------------------------------------- | --------------------------------- | ---------------------------------------------------------
|
|CASH FLOWS FROM OPERATING ACTIVITIES:         |                                   |                                                          
|Net Loss                                      |                                   |                                                          
|Adjustments to reconcile net loss to net cash |                                   |                                                          
|Provided by operating activities:             |                                   |                                                          
|Depreciation                                  |                                   |                                                          
|Stock Issued for Services                     |                                   |                                                          
|Change in Operating Assets and Liabilities:   |                                   |                                                          
|(Increase) Decrease in Deposits               |                                   |                                                          
|(Increase) Decrease in Employee Advances      |                                   |                                                          
|Increase (Decrease) in Accounts Payable       |                                   |                                                          
|Increase (Decrease) in Accrued Interest       |                                   |                                                          
|                                              |                                   |                                                          
|Net Cash Used in Operating Activities         |                                   |                                                          
|                                              |                                   |                                                          
|CASH FLOWS FROM INVESTING ACTIVITIES:         |                                   |                                                          
|Purchase of Office Equipment                  |                                   |                                                          
|Sale of Office Equipment                      |                                   |                                                          
|Purchase of Furniture and Fixtures            |                                   |                                                          
|                                              |                                   |                                                          
|Net Cash Provided by Investing Activities     |                                   |                                                          
|                                              |                                   |                                                          
|CASH FLOWS FROM FINANCING ACTIVITIES:         |                                   |                                                          
|Proceeds from Shareholder Loan                |                                   |                                                          
|Capital Contributed                           |                                   |                                                          
|                                              |                                   |                                                          
|Net Cash Provided by Financing Activities     |                                   |                                                          
|                                              |                                   |                                                          
|Net (Decrease) Increase in Cash               |                                   |                                                          
|Cash at Beginning of Period                   |                                   |                                                          
|                                              |                                   |                                                          
|Cash at End of Period                         |                                   |                                                          
|                                              |                                   |                                                          

F-5

---



THE X-CHANGE CORPORATION (A Development Stage
Company)CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)(Continued)

|                                                  | For the Six Months Ended
June 30, | Cumulative
Since
October 4,
2000
Inception of
Development
|------------------------------------------------- | --------------------------------- | ---------------------------------------------------------
|
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |                                   |                                                          
|Cash paid during the year for:                    |                                   |                                                          
|Interest                                          |                                   |                                                          
|Franchise and income taxes                        |                                   |                                                          

SUPPLEMENTAL DISCLOSURE OF
NON-CASH INVESTING AND FINANCING ACTIVITIES:

On March 15, 2004, the Company
acquired furniture and fixtures totaling $9,000 for 15,000 shares of common stock.

See accompanying notes

F-6

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THE X-CHANGE
CORPORATION (A Development Stage
Company)  NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1 
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This
summary of accounting policies for The X-Change Corporation (A Development Stage Company)
is presented to assist in understanding the Companys financial statements. The
accounting policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.

Nature of Operations and
Going Concern

The
accompanying financial statements have been prepared on the basis of accounting principles
applicable to a going concern, which assume that the Company will continue in
operation for at least one year and will be able to realize its assets and discharge its
liabilities in the normal course of operations.

Several
conditions and events cast doubt about the Companys ability to continue as a
going concern. The Company has incurred net losses of approximately $212,000
for the period from October 4, 2000 (inception of development stage) to June 30, 2004, has
a liquidity problem, and requires additional financing in order to finance its business
activities on an ongoing basis. The Company is actively pursuing alternative financing and
has had discussions with various third parties, although no firm commitments have been
obtained. In the interim, shareholders of the Company have committed to meeting its
minimal operating expenses.

The
Companys future capital requirements will depend on numerous factors including, but
not limited to its development, acquisition and marketing of leading-edge wireless
internet/networking technologies, principally RFID (radio frequency
identification).

These
financial statements do not reflect adjustments that would be necessary if the Company
were unable to continue as a going concern. While management believes that the
actions already taken or planned, will mitigate the adverse conditions and events which
raise doubt about the validity of the going concern assumption used in
preparing these financial statements, there can be no assurance that these actions will be
successful.

If
the Company were unable to continue as a going concern, then substantial
adjustments would be necessary to the carrying values of assets, the reported amounts of
its liabilities, the reported expenses, and the balance sheet classifications used.

F-7

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THE X-CHANGE
CORPORATION (A Development Stage
Company)  NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Unaudited)

NOTE 1 
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Interim Reporting

The
unaudited financial statements as of June 30, 2004 and for the three and six month period
then ended, reflect, in the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to fairly state the financial position and results
of operations for the three and six months. Operating results for interim periods are not
necessarily indicative of the results which can be expected for full years.

Organization and Basis of
Presentation

The
Company was incorporated under the laws of the State of Delaware on February 5, 1969 as
Diversified Technologies Group, Inc., the Company reincorporated and changed its domicile
to the State of Nevada on October 4, 2000. The Company on December 1, 1999, entered into
an agreement (Reorganization Agreement) to acquire all of the outstanding capital stock of
S&J (Chatteris) Holdings Limited, a United Kingdom corporation (S&J Holdings).
Pursuant to the Reorganization Agreement, the Company agreed to acquire all of the
outstanding capital stock of S&J in exchange for shares of Common Stock. The
Reorganization Agreement required S&J Holdings to perform certain conditions,
including the delivery of audited financial statements. These conditions had not been
fulfilled by February 14, 2000; therefore, the agreement was rescinded and deemed to have
been void and of no effect from the beginning as if the acquisition had not occurred. All
shares issued in the acquisition were returned to treasury. The Company also attempted two
acquisitions in 2000, neither of which were able to deliver the required financial
statements. The first was rescinded and the second was not consummated. In June 2001, the
Company entered into a reorganization agreement that was later rescinded for failure to
provide adequate compliance with the representations, warranties and covenants of the
agreement. In July 2001, the Company changed its name to The X-Change Corporation.

On
January 15, 2002, the Company merged with WEBiX, Inc. This merger resulted in the Company
acquiring the business and operations of WEBiX, in exchange for the issuance by the
Company of a controlling interest in its shares to the former shareholders of WEBiX. On
March 13, 2003, the Company rescinded in agreement with WEBiX and reentered the
development stage.

On
February 9, 2004, the Company formed a wholly owned subsidiary, AirGate Technologies, Inc.

In June
2004, the Company formed two wholly owned subsidiaries, Innovative Telecommunication
Technologies, Inc. (ITT) and OIL ID Systems, Inc.

F-8

---



THE X-CHANGE
CORPORATION (A Development Stage
Company)  NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Unaudited)

NOTE 1 
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Nature of Business

On
February 9, 2004, the Company formed a wholly owned subsidiary, AirGate Technologies,
Inc., for the purpose of engaging in the development and acquisition of leading-edge
wireless internet/networking technologies, principally RFID (radio frequency
identification). In June 2004, the Company formed two wholly owned subsidiaries,
Innovative Telecommunication Technologies, Inc. (ITT) and OIL ID Systems, Inc. The VoIP
telephone systems being offered by the Companys ITT subsidiary allow traditional
carriers and new voice entrants to build large distributed VoIP networks without central
office equipment investment and architecture. The system is virtually a
plug-in installation working with either LAN-based VoIP phones or PC-based
softphones. Demand for radio frequency identification solutions by energy producers and
oil field service companies led the Company to create OIL ID Systems as a compliment to
its wholly owned subsidiary, AirGate Technologies, Inc. The level of demand for RFID
systems in producing oil fields around the world is on the rise, and OIL ID Systems will
assist AirGate Technologies in developing applications and aggressively capturing market
share within this growing RFID market niche.

Principals of
Consolidation

The
consolidated financial statements include the accounts for The X-Change Corporation and
its wholly owned subsidiary AirGate Technologies, Inc. As of June 30, 2004, there was no
activity in the two new subsidiaries, Innovative Telecommunication Technologies, Inc.
(ITT) and OIL ID Systems, Inc. The results of subsidiaries acquired during the year are
consolidated from their effective dates of acquisition. All significant intercompany
accounts and transactions have been eliminated.

Cash and Cash Equivalents

For
the purpose of reporting cash flows, the Company considers all highly liquid debt
instruments purchased with maturity of three months or less to be cash equivalents to the
extent the funds are not being held for investment purposes.

F-9

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THE X-CHANGE
CORPORATION (A Development Stage
Company)  NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Unaudited)

NOTE 1 
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Depreciation

Fixed
assets are stated at cost. Depreciation is calculated on a straight-line basis over the
estimated useful lives of the assets as follows:

|Asset                  | Rate
|---------------------- | ----
|Office equipment       |     
|Furniture and Fixtures |     

Maintenance and repairs are charged
to operations; betterments are capitalized. The cost of property sold or otherwise
disposed of and the accumulated depreciation thereon are eliminated from the property and
related accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.

Concentrations of Credit
Risk

The
Company has no significant off-balance-sheet concentrations of credit risk such as foreign
exchange contracts, options contracts or other foreign hedging arrangements.

Pervasiveness of Estimates

The
preparation of financial statements in conformity with generally accepted accounting
principles required 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.

Stock Compensation for
Non-Employees

The
Company accounts for the fair value of its stock compensation grants for non-employees in
accordance with FASB Statement 123. The fair value of each grant is equal to the market
price of the Companys stock on the date of grant if an active market exists or at a
value determined in an arms length negotiation between the Company and the non-employee.

F-10

---



THE X-CHANGE
CORPORATION (A Development Stage
Company)  NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Unaudited)

NOTE 1 
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings (Loss) per Share

Basic
loss per share has been computed by dividing the loss for the year applicable to the
common stockholders by the weighted average number of common shares outstanding during the
years. The effects of common stock equivalents are anti-dilutive and thus are not
considered.

NOTE 2  INCOME TAXES

As
of December 31, 2003, the Company had a net operating loss carryforward for income tax
reporting purposes of approximately $594,123 that may be offset against future taxable
income through 2021. Current tax laws limit the amount of loss available to be offset
against future taxable income when a substantial change in ownership occurs. Therefore,
the amount available to offset future taxable income may be limited. No tax benefit has
been reported in the financial statements, because the Company believes there is a 50% or
greater chance the carryforwards will expire unused. Accordingly, the potential tax
benefits of the loss carryforwards are offset by a valuation allowance of the same amount.

NOTE 3  DEVELOPMENT
STAGE COMPANY/ GOING CONCERN

As
is common with a development stage company, the Company has had recurring losses during
its development stage. Continuation of the Company as a going concern is dependent upon
obtaining the additional working capital necessary to be successful in its planned
activity, and the management of the Company has developed a strategy, which it believes
will accomplish this objective through additional equity funding and long term financing,
which will enable the Company to operate for the coming year.

NOTE 4  COMMITMENTS

On
March 2, 2004, the Company entered into a lease for office space. The rental charges are
approximately $2,500 per month commencing March 1, 2004. The lease expires August 31,
2004.

F-11

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THE X-CHANGE
CORPORATION (A Development Stage
Company)  NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Unaudited)

NOTE 5  PREFERRED
STOCK

The
Company has authorized a total of 10,000,000 shares of Preferred Stock. Series A
Convertible Preferred Stock is the initial series of Preferred Stock. This series shall
consist of 5,000,000 shares with a par value of $.001.

The
Corporation 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 Corporation, 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, 2004, there are no preferred shares issued.

NOTE 6  STOCK
TRANSACTIONS

On
December 31, 2003, certain shareholders contributed back to capital.

On March
15, 2004, the Company acquired furniture and fixtures totaling $9,000 for 15,000 shares of
common stock. As of June 30, 2004, the Company has not issued these shares.

On
April 2, 2004, the Company issued 100,000 shares of common stock for consulting services.
The shares were valued at $0.53 per share.

On
April 26, 2004, the Companys president surrendered his stock options contract for
12,000,000 common shares in exchange for the issuance of 4,000,000 shares of restricted
common stock. The shares are restricted for 2 years. In connection with issuance of the
shares, $15,000 was recorded as consulting expense.

NOTE 7  STOCK
OPTIONS

On
January 6, 2004, the Company granted its President Michael Sheriff, an option to purchase
up to 12,000,000 shares of Common Stock at the purchase price of $0.05 per share. The
options are exercisable beginning after March 1, 2004 and on or before March 31, 2009. No
compensation recorded because the exercise price was equal to the market price on the day
of the grant. On April 26, 2004, the Companys president surrendered his stock
options contract for 12,000,000 common shares in exchange for the issuance of 4,000,000
shares of restricted common stock.

F-12

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THE X-CHANGE
CORPORATION (A Development Stage
Company)  NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Unaudited)

NOTE 8 
MERGER/ACQUISITION

On
January 15, 2002, the Company and its newly created wholly owned subsidiary X-Change
Technologies Corp, merged with WEBiX, Inc. (a Florida Corporation). As a result, the
Company acquired the business and operations of WEBiX, in exchange for the issuance of a
controlling interest in The X-Change Corporations shares to the former shareholders
of WEBiX. Under the Plan of Merger, 24,000,000 shares of Common Stock, 4,000,000 shares of
Series A Convertible Preferred Stock (convertible into 40,000,000 shares of Common Stock)
and 40,000,000 warrants were issued. In addition, certain existing shareholders of the
Company surrendered approximately 9,500,000 shares of Common Stock to treasury. In
connection with this merger, the par value of the Series A Convertible Preferred Stock
changed from $.01 to $.001.

On
March 13, 2003, the Company rescinded its agreement with X-Change Technologies. The
rescission, essentially, resulted in the return of all X-Change Corporations assets
in exchange for the surrender of all securities held by the former X-Change Technologies
shareholders in the Company and the assumption by X-Change Technologies Corp. of all the
Companys debt immediately prior to closing. The rescission effected a change in
control over the business, policies and affairs of the Company from the X-Change
shareholders to those shareholders holding securities in the Company prior to January 15,
2002. As a result, 15,062,000 shares of common stock and 5,000,000 shares of preferred
stock were returned to treasury and the Company now has 22,540,000 shares of common stock,
which was the amount outstanding immediately prior to closing of the X-Change Technologies
Corp. acquisition on January 15, 2002. All lock-up agreements pertaining to these shares
were released effective with the closing.

F-13

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# Item 2.
Managements Discussion and Analysis or Plan of Operation

This discussion should be read in
conjunction with Managements Discussion and Analysis of Financial Condition and
Results of Operations in the Companys annual report on Form 10-KSB for the year
ended December 31, 2003.

# Plan of Operation

The X-Change Corporations
business model consists of several key differentiators that, management feels, will set it
apart from its competition. The Companys focus is to create long-term shareholder
value by: (1) Pursuing intelligent, opportunistic acquisitions of other technology
opportunities whose business plans and operations are complementary; (2) consolidating
redundant functions, such as network operations, billing and accounting and customer
support; (3) Partnering with other technology solution providers, both hardware and
software, that can provide leverage for the Companys activities; (4) Joining with
industry organizations, highlighting the Companys technology solutions; and (5)
Building a recognizable brand identity for its operating subsidiaries.

# Management

# Michael Sheriff

Michael Sheriff has over thirty-five
years of experience in the computer and Telecommunications industry. In 1998 Mr. Sheriff
founded Net Access Exchange, Inc., dba YPAY. YPAY was a new Internet media network that
provided advertisers with a unique and compelling value proposition to reach consumers via
the Internet through use of broadband-like rich media over dial-up connections  the
first broadband over narrowband advertising and entertainment network. YPAY utilized a
patented message delivery system that supports true 1:1 targeting and allows local
businesses, not just large multinational advertisers, to harness the power of the Internet
with multi-media and market-targeting capabilities not available in any other advertising
medium. YPAY was able to eliminate the problems associated with traditional web site,
browser-based advertising.

In 1995, Mr. Sheriff founded
CyberQuest  a full-service Internet development company  focusing its efforts
on Internet commerce in the business-to-consumer and business-to-business marketplaces.
The company also developed, implemented and maintained creative business Web sites,
Intranets and databases for client companies. Under Mr. Sheriffs leadership, the
companys e-commerce flagship, bid4it, as well as its other e-commerce sites, were
developed to bring shopping directly into customers homes and offices, utilizing a
revolutionary new bid-and-ask matching technology. Mr. Sheriff sold CyberQuest
in October 1998 to a NASD OTC:BB listed company. He then served as CEO of the public
company, CBQ, Inc., as well as being Chairman of the companys Board of Directors.

In 1994, Mr. Sheriff founded and
developed Good Stuff Cheap (GSC), a first to market Internet-based retail site. The
company was the first to use intelligent shopping agents and was featured in

F-14

---



Wired Magazine
in December  1994.  GSC was also featured on the Discovery Channel in December 1996.

Mr. Sheriff is also the former founder, President and CEO of ActionFax
          International, Inc. Action Fax operates one of the largest public fax/Internet
          Kiosk networks in the world with locations in most world airports.

Prior to ActionFax, Mr. Sheriff was
the founder and President of First National Computer Corporation, which pioneered the
rental of personal computers. Under his direction, First National Computer became one of
the largest PC rental firms in the United States.

Mr. Sheriff has held senior sales, marketing and management positions with National
          Semiconductor, Northern Telecom, SYCOR, Inc. and SINGER.

# Frank Kwong

Originally from Hong Kong, Frank
Kwong immigrated to the U.S as a teenager. Mr. Kwong has had a life-long interest in
computers, system design and program development, both as a user and hobbyist. He achieved
U.S. citizenship and was educated as an engineer at the University of Minnesota. In 1976
he began his career with the Donaldson Corporation as an industrial engineer.

The Econotherm Corporation recruited
Mr. Kwong in 1977. He was design engineer for the companys heat exchanger program.
His responsibility included management of the FORTRAN-based computer design programs in an
online time-share environment.

Mr.
          Kwong joined the Cabot Corporation in the alloy products fabrication department
          as design engineer in 1978. His primary responsibility was ASME coded design. He
          obtained his Professional Engineer license in 1979 and was promoted to
          Engineering Manager.

In 1982, Mr. Kwong was employed by
General Motors Delco division as project leader in semiconductor equipment design.
He was the system manager for APPLICON CAD, a leading edge cad/cam development system.
During this time, Mr. Kwong formed Computer Accessory Technology, which sold various
TRS-80 products. The company was formed and operated with the permission of General
Motors. Mr. Kwong served as a staff engineer for GM in Detroit, MI. in 1984, where he
began development of cutting-edge computer applications in image processing. Based upon
needs he saw at GM, Mr. Kwong began development of ASP-db and took early retirement from
GM in 1997. He formed FK & Associates and USIntertech, Inc. to market ASP-db, which
was launched in February 1998. USIntertech is a technology service company maintaining a
faculty of experienced information technology professionals who deliver results through
technology integration services. The Company is a provider of efficient database
solutions. With an extensive technology background involving a number of Fortune 100
telecommunications and manufacturing companies, USIntertech offers unrivaled and
deliverable solutions. Its newest product, Tornado, a .Net compatible software
environment, is installed in over 1,200 companies.

F-15

---



Frank Kwong received his BSc in
Mechanical Engineering in 1974, and his MSc in 1976 from the University of Minnesota. He
resides with his family in Plano, Texas.

# Ivan Chow

Ivan Chow has developed and
implemented cutting edge software systems since 1990. In 1996, Mr. Chow founded a company,
which was called IP Communications, and developed Voice IP gateway over the Internet. As
the companys chief technical officer, he directed the company to develop and file
two patents on two technical procedures. Besides technical details, Mr. Chow also managed
the venture in business and technical process integration. In 1998, IP Communications was
sold to a then privately-held company called Ramp Networks, a Delaware corporation. The
acquisition increased Ramp Networks asset value. After months of integration of IP
Communications VoIP technology, Ramp Networks developed several VoIP related
products, including Voice over ISDN and Voice over DSL. Ramp Networks went on to an IPO in
1999 and was acquired by Nokia in 2000.

Before IP Communications, Mr. Chow
worked for Sprint beginning in 1994 and developed a middleware system called Distributed
Computing Architecture(DCA). This middleware system, DCA, is still being used today within
Sprints IT back-office, connecting Sprints PCS and Sprints Long Distance
Divisions ordering systems. DCA shields the enterprise from different standards and
systems. It allows distributed transactions to go across heterogeneous systems  MVS,
AIX, HP-UX, Solaris and Windows-based systems.

After earning his MS degree in
physics, Mr. Chow started working in 1990 in a world-class organization called
SuperConducting Super Collider. In 1993, he developed a Yahoo!-like search engine within
the organization only few months after he was introduced to the WWW protocol in a seminar
at Fermi Labs by its creator, Tim Berners-Lee. Together with other physicists, Mr. Chow
developed a real-time data collection system, processing data of petabyte range.

The team has a mix of financial,
technical, network, and wireless backgrounds as well as a strong emphasis on operations
and marketing with such companies as Northern Telecom, CyberQuest, Sprint, MCI, ActionFax
International,Inc., and Genuity. All are seasoned entrepreneurs.

| |             |                                                                                                                                                                                  
| | ----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | o
o
o
o
o
o | Seasoned Management Team
Experienced Development Credentials
Wireless & Telecom Background
Hardware & Software Implementation
Internet Pedigrees from 1993
Start-up Entrepreneurs

F-16

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# Subsidiaries

AirGate Technologies is a development
stage company specializing in wireless technologies. The company designs and develops
applications utilized in RFID (radio frequency identification)deployments.
AirGate delivers RFID solutions in selected vertical markets built around a data
management and integration strategy. This strategy is designed to ensure rapid market
penetration and maximum return on investment.

Because of current RFID mandates from
diverse sources, such as retailer Wal-Mart, the Department of Defense, and the expected
surge of RFID deployments, a process to ingest huge amounts of data, understand the data,
present the data and detect non-compliance is required in the real-time. It is
AirGates intent to create a core network appliance, a matrix analytic
engine, that can be customized for the unique requirements of various vertical
industries, retail, manufacturing, health, etc. AirGate will rely upon its extensive
database and telecommunication competencies, plus its offshore capability, to provide
unparalleled services and capabilities to analyze interpret and manage complex data, such
as found in RFID.

Tornado, a core component of the
Matrix Analytics Engine, is .Net enabled and, in production, is faster and offers more
functionality than comparable products. It provides a real-time Web interface and
publishing engine for RFID generated data. Tornado is currently installed in over 1,200
accounts worldwide. The Company believes that its Matrix Analytic Engine addresses the
complexities of reader interface and data management in an environment with unsettled
standards and evolving technology. The Company holds a license to Tornado for use in its
Matrix Analytic Engine.

AirGate has assembled a quality team
to execute its business plan. Formerly, an IBM Business Partner focused on the IBM 4400
Thermal Printer, our principals have designed, sold and installed thermal printer bar code
solutions, which has direct application for RFID.

In order to mitigate the possible
slow roll-out of RFID solutions for the supply chain, AirGate continues to investigate
unique, closed-loop applications for RFID technology, in order to leverage its growing
experience. In May 2004, AirGate began a pilot study for a major automotive re-
manufacturer for RFID tagging of air conditioning compressors for inventory control,
quality control and to insure accurate shipping to customers. This involves tag selection,
reader/antenna design and integration into existing legacy systems. In July 2004, AirGate
Technologies initiated development of a RFID prototype application for use with automotive
child safety seats. The AirGate Smart Buckle will employ RFID to transmit a
low-powered radio signal that will trigger an audible warning to the driver when it
detects that a child is riding in a safety seat whose straps are not buckled, or if the
safety seat buckle is not disengaged and child removed from the seat after the car is
parked and the ignition is turned off. A patent application has been filed.

AirGate Technologies engineers
were previously employed directly in telecom and wireless or as outside
consultant/contractors, and have interacted on a number of development projects. Their

F-17

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experience includes network
integration and control systems, VoIP, database development and major application
development in Windows and Unix environments. Our engineers have developed and deployed
large-scale network management systems involving complex hardware, distributed nodes and
simultaneous real-time events emanating from various devices, user interactions and
alarms. Since the late 90s, our principal engineers have been providing services and
solutions to companies such as Lucent, Nortel, WorldCom and Alcatel.

In April 2004, AirGate announced
opening an office in Shanghai, China. China represents a significant RFID opportunity,
both internally within Chinese supply chains and logistic operations, but also as initial
RFID tagging points for products destined for U.S. companies. David Ho has been named
Managing Director for AirGate Technologies Chinese Operations. He will manage the
Shanghai office and oversee all marketing and operational activities for AirGate
Technologies in China. In July 2004, AirGate Technologies was approved by the
Peoples Republic of China for membership in the Technology and Service League 
China EPC Working Group (Electronic Product Code). The China EPC Working Group of China
Association for Standardization, established in March 2003 and consisting of industries
and individuals engaged in RFID, is a not-for-profit organization initiated by China
Association for Standardization (CAS). At present, the Working Groups objectives
include monitoring the EPC RFID technology and standard developments, informing and
educating Chinese companies about EPC RFID, demonstrating key EPC RFID products in
selected sectors, and providing technical and consulting services in EPC RFID arena.

In May 2004, AirGate recruited
Michael J. Becker as General Manager and Director of Sales. Mr. Becker is the former
Director of Sales for Clarisay, Inc., Sales Director for Ericsson, and major account
manager for Nortel Networks. In addition, he has held product management positions with
VMX, Inc. and Texas Instruments. Mr. Becker is a graduate of the University of Wisconsin
with a Master of Science in Industrial Management.

# Agents

AirGate Technologies has signed the
following agents to represent it for RFID projects:

First
Choice Corporation  Europe

R.F.I.D.       
          Associates  U.S.

Ky
Lan L.L.C.  VietNam

TM Trading
Company, Inc.  Pacific Rim

# Partnerships

AirGate Technologies has established
VAR and RFID integrator agreements with the following

F-18

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RFID manufacturers:

| | Printronix
 Printronix, known for turning printers into business solutions, has developed an
RFID product offering that will help users create and deploy RFID technology applications
within their own environments. www.printronix.com
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | IPico,
Inc.  iPico creates, develops and commercialises intellectual property for the
identification and authentication markets providing RFID solutions to optimise the
management of goods and people within the logistic supply chain. iPicos products
solve authentication and identification problems where conventional technologies, like
barcodes, are inappropriate, but it remains important to have effective traceability.
iPicos technology is especially relevant where re-usability or compliance
requirements exist in areas like border control, health and safety and bio-security.
www.ipico.co.za.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

AirGate Technologies is a member of
AimGlobal. Aim Inc. is the global trade association for the Automatic Identification and
Data Capture (AIDC) industry.

Management believes that AirGate
Technologies has positioned itself well in the RFID space for revenue generation. It has
spent its time building a solid foundation of experience and contacts. AirGate has
developed working relationships with other integrators and OEMs, as well as its integrator
agreements with Printronix and iPico.

# Innovative
Telecommunication Technologies, Inc. (ITT)

On June 23, 2004, the Company formed
a new subsidiary, Innovative Telecommunication Technologies, Inc. (ITT). ITT is a
development company specializing in Voice Over Internet Protocol (VoIP) technology and
bundled service distribution. ITT was created to capture the untouched market space for
low-cost full-function telephone systems and enhanced service features used by small and
medium sized businesses. ITT distributes a series of enterprise class VoIP iPBX telephone
systems from Advanced IP Communications, Inc. which offer all the functionality of larger
PBX telephone systems at a fraction of the price. These systems enable users to place
phone calls over traditional analog lines, or leverage the power of the Internet for
reliable local, regional and free long distance telephone service. The system is virtually
a plug-in installation working with either LAN-based VoIP phones or PC-based
softphones.

Advanced IP Communications, Inc.,
(AIP) specializes in Internet Protocol (IP) Packet Switching technology, enabling data and
voice to be transferred reliably and affordably over broadband networks. In 2001, Computer
Service Technology Inc., and Telenexus, Inc., two prominent engineering companies in
computer memory testing devises and radio frequency ID (RFID) technology development,
created AIP Communications to bring low cost Voice over Internet Protocol (VoIP)
telecommunication products to the market through innovation and technology. AIP pioneered
the first low-cost enterprise class VoIP PBX telephone systems with IP Packet Switching
technology for Small and Medium Business users.

F-19

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ITT has recruited Robert Stevenson to
be General Manager of its Innovative Telecommunications Technologies subsidiary. Mr.
Stevenson is a business development executive with 27 years experience in sales,
management and operations. He previously served as General Manager, Communications
Division, VCP International, Inc., National Sales Manager, ProNet Tracking Systems, Inc.
(RF tracking systems) and U.S. Director of Sales, American Messaging Service, Inc.

# OIL ID Systems, Inc.

In June 2004, the Company formed a
new subsidiary, OIL ID Systems, Inc. OIL ID Systems, Inc. is an independent oil & gas
exploration and production company with headquarters in Dallas, Texas. The principals
involved in the company have 25 years of experience in the marketing of and exploration
for petroleum products and services.

Demand for radio frequency
identification solutions by energy producers and oil field service companies led the
Company to create OIl ID Systems as a compliment to its wholly owned subsidiary, AirGate
Technologies, Inc.

Radio Frequency Identification is a
technology that employs miniature radio transmitters in conjunction with microprocessors
that can be utilized to track oil movement and migration and will be a valuable tool
in assessing and identifying producing oil & gas formations prior to fracturing. RFID
technologies can also be employed to keep track of movement and utilization of expensive
oil field equipment. The level of demand for RFID systems in producing oil fields around
the world is on the rise, and OIL ID Systems will assist AirGate Technologies in
developing applications and aggressively capturing market share within this growing RFID
market niche.

Dean Elliott, a thirty-year veteran
of the petroleum industry, has been named President of the new subsidiary.

# Results of Operations

The
Company had $128,014 and $152,074 in general and administrative expenses for the three and
six month periods ended June 30, 2004, respectively and for the same periods in 2003 were
$5,725 and $6,350. The significant increase in general and administrative expenses is due
to the Company was dormant for most of 2003, and has just started working on a business
plan. For the three and six months ended June 30, 2004 and 2003, the Company had no
revenues. Losses on operations will continue until sufficient revenues can be achieved
from the various business units of the Company.

# Liquidity and Capital
Resources

At
June 30, 2004, the Company had total current assets of $2,971 and total assets of $24,215
as compared to $0 current assets and $0 total assets at December 31, 2003. The Company had
a net working capital (deficit) of $1,881 at June 30, 2004 and ($926) at December 31,
2003.

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Net
stockholders equity (deficit) in the Company was and ($77,885) as of June 30, 2004
and ($926) at December 31, 2003.

The
Company continues to seek strategic alternatives, including discussions with joint venture
partners and investors. On May 9, 2004, the Company signed a revolving line of credit
promissory note for $500,000 with certain shareholders. The accompanying quarterly
financial statements have been prepared assuming the Company will continue as a going
concern. The Companys ability to continue as a going concern, however, is dependent
upon the Companys ability to implement its business objectives in order to generate
cash flow.

# Item 3. Controls and
Procedures

The
Companys Chief Executive Officer and Chief Financial Officer have concluded, based
on an evaluation conducted within 90 days prior to the filing date of this Quarterly
Report on Form 10-QSB, that the Companys disclosure controls and procedures have
functioned effectively so as to provide those officers the information necessary whether:

|(i) | this Quarterly Report on Form 10-QSB contains any untrue statement of a
          material fact or omits to state a material fact necessary to make the statements
          made, in light of the circumstances under which such statements were made, not
          misleading with respect to the period covered by this Quarterly Report on Form
          10-QSB, and
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | the financial statements, and other financial information included in this
          Quarterly Report on Form 10-QSB, fairly present in all material respects the
          financial condition, results of operations and cash flows of the Company as of,
          and for, the periods presented in this Quarterly Report on Form 10-QSB.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There
have been no significant changes in the Companys internal controls or in other
factors since the date of the Chief Executive Officers and Chief Financial
Officers evaluation that could significantly affect these internal controls,
including any corrective actions with regards to significant deficiencies and material
weaknesses.

# PART II  OTHER
INFORMATION

# Item 1. Legal Proceedings

None

# Item 2. Changes in
Securities

On
April 2, 2004, the Company issued 100,000 shares of common stock for consulting services.
The shares were valued at $0.53 per share.

F-21

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On
April 26, 2004, the Companys president surrendered his stock options contract for
12,000,000 common shares in exchange for the issuance of 4,000,000 shares of restricted
common stock. The shares are restricted for 2 years. In connection with issuance of the
shares, $15,000 was recorded as consulting expense.

# Item 3. Defaults Upon
Senior Securities

None

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

None

# Item 5. Other Information

None

# Item 6. Exhibits and
Reports on Form 8-K

Exhibits

The
following exhibits are included as part of this report:

|Exhibit
Number | Title of Document                                                                                                                                
|-------------- | -------------------------------------------------------------------------------------------------------------------------------------------------
|31.1
32.1      | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Reports

No
reports were filed on Form 8-k for the quarter ending June 30, 2004.

F-22

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# SIGNATURES

Pursuant to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized this
August 9, 2004

THE X-CHANGE
CORPORATION(Registrant)

|                     |                                                                                                                                                    
|-------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|DATE: August 9, 2004 | By:/s/     Michael Sheriff
Michael Sheriff, President, Chief
Executive Officer , Treasurer and Chairman
(Principal Executive and Financial Officer)

F-23

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