**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549

 

**FORM 10-QSB/A**

**Amendment No. 1**

 

(MARK ONE)

xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2007

 

oTRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from ______ to _______

 

Commission file number 0-52396

 

**CX2 TECHNOLOGIES, INC.**

(Exact name of small business issuer as specified in its charter)

                                                                                                                                                              

| **Nevada**                                                | **20-2889663**                       |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |

 

**3700 Airport Road, Suite 410B, Boca Raton, Florida 33431**

(Address of principal executive offices)

 

**(561) 347-9235**

Issuer’s telephone number

 

_________________________________________

(Former name, former address and former fiscal year, if changed since last report)

 

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 o Nox

 

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.

Yes o Nox

 

As of September 12, 2008 there were 23,547,210 shares of the Registrant’s common stock outstanding.

 

Transitional Small Business Disclosure Format (Check one): Yes o** **Nox

 

----

**EXPLANATORY NOTE**

 

We are filing this amended quarterly report on Form 10-QSB to add certain additional disclosures and revise existing disclosures contained in the Quarterly Report filed with the SEC on December 14, 2007 for the quarterly period ended June 30, 2007. While some language in the financial statement footnotes has been revised, no changes have been made to the financial statements contained in the original        filing.

 

This Form 10-QSB/A (Amendment No. 1) is limited in scope to the items identified above and should be read in conjunction with the Form 10-KSB for the fiscal year ended March 31, 2008 and our other filings with the SEC.

 

This Form 10-QSB/A (Amendment No. 1) does not reflect events occurring after the initial filing of the Form 10-QSB or modify or update those disclosures affected by subsequent events. Consequently, all other information is unchanged and reflects the disclosures made at the time of the filing of the original Form 10-QSB.

 

2

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**CX2 TECHNOLOGIES, INC.**

**INDEX**

 

PART I FINANCIAL INFORMATION

 

| Item 1. | Financial Statements |
|---------|----------------------|

 

| Condensed Balance Sheets at June 30, 2007 (unaudited) and March 31, 2007                         | 4      |
|--------------------------------------------------------------------------------------------------|--------|
|                                                                                             |   |
| Condensed Statements of Operations for the three months ended June 30, 2007 and 2006 (unaudited) | 4      |
|                                                                                             |   |
| Condensed Statements of Cash Flows for the three months ended June 30, 2007 and 2006 (unaudited) | 6      |
|                                                                                             |   |
| Notes to Condensed Financial Statements                                                          | 7-12   |
|                                                                                             |   |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations    | 13     |
|                                                                                             |   |
| Item 3. Controls and Procedures                                                                  | 18     |
|                                                                                             |   |
| PART II OTHER INFORMATION                                                                        |   |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                              | 19     |
|                                                                                             |   |
| Item 6.Exhibits                                                                                  | 19     |

 

3

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**CX2 TECHNOLOGIES, INC.        CONDENSED BALANCE SHEETS        (For the Three Months Ended June 30, 2007 and the Year Ended March 31, 2007**

|                                                                                                                                 |   |              |       |               |   |       |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|------------|--------------------|--------|------------|--------|
|                                                                                                                                      |        |                   |            |                    |        |            |        |
|                                                                                                                                 |   |              |       |               |   |       |   |
|                                                                                                                                 |   | **June 30, 2007** |       | **March 31, 2007** |   |
|                                                                                                                                 |   |                   |       |                    |   |
|                                                                                                                                 |   | **(Unaudited)**   |       |               |   |       |
| **ASSETS**                                                                                                                           |
| **Current assets**                                                                                                                   |   |              |       |               |   |       |   |
| Cash and cash equivalents                                                                                                            |   | $                 | —    |               | $      | 13,714     |   |
| Inventories, net                                                                                                                     |   |              | 232,500    |               |   | 232,500    |   |
| Prepaid expenses                                                                                                                     |   |              | —    |               |   | 9,000      |   |
|                                                                                                                                 |   |                   |            |               |        |            |   |
| Total current assets                                                                                                                 |   |              | 232,500    |               |   | 255,214    |   |
|                                                                                                                                 |   |                   |            |               |        |            |   |
|                                                                                                                                 |   |              |       |               |   |       |   |
| **Property and equipment, net**                                                                                                      |   |              | 232,758    |               |   | 245,832    |   |
|                                                                                                                                 |   |              |       |               |   |       |   |
| **Other assets**                                                                                                                     |   |              |       |               |   |       |   |
| Deposits                                                                                                                             |   |              | 5,448      |               |   | 5,448      |   |
|                                                                                                                                 |   |                   |            |               |        |            |   |
| Total other assets                                                                                                                   |   |              | 5,448      |               |   | 5,448      |   |
|                                                                                                                                 |   |                   |            |               |        |            |   |
|                                                                                                                                 |   |              |       |               |   |       |   |
| **Total Assets**                                                                                                                     |   | $                 | 470,706    |               | $      | 506,494    |   |
|                                                                                                                                 |   |                   |            |               |        |            |   |
|                                                                                                                                 |   |              |       |               |   |       |   |
| **LIABILITIES AND STOCKHOLDERS’ DEFICIENCY**                                                                                   |
|                                                                                                                                 |   |              |       |               |   |       |   |
| **Current liabilities:**                                                                                                             |   |              |       |               |   |       |   |
| Accounts payable                                                                                                                     |   | $                 | 500        |               | $      | 9,250      |   |
| Accrued expenses                                                                                                                     |   |              | 132,352    |               |   | 78,076     |   |
| Accrued payroll                                                                                                                      |   |              | —    |               |   | 46,789     |   |
| Deferred revenue                                                                                                                     |   |              | —    |               |   | 39,000     |   |
| Notes payable - related parties                                                                                                      |   |              | 537,652    |               |   | 324,128    |   |
|                                                                                                                                 |   |                   |            |               |        |            |   |
| Total current liabilities                                                                                                            |   |              | 670,504    |               |   | 497,243    |   |
|                                                                                                                                 |   |              |       |               |   |       |   |
| **Long-term liabilities**                                                                                                            |   |              |       |               |   |       |   |
| Notes payable - related parties                                                                                                      |   |              | 118,311    |               |   | 181,793    |   |
|                                                                                                                                 |   |                   |            |               |        |            |   |
|                                                                                                                                 |   |              |       |               |   |       |   |
| Total liabilities                                                                                                                    |   |              | 788,815    |               |   | 679,036    |   |
|                                                                                                                                 |   |                   |            |               |        |            |   |
|                                                                                                                                 |   |              |       |               |   |       |   |
| **Commitments and contingencies**                                                                                                    |   |              | —    |               |   | —    |   |
|                                                                                                                                 |   |              |       |               |   |       |   |
| **Stockholders’ deficiency**                                                                                                   |   |              |       |               |   |       |   |
| Preferred stock, $0.001 par value; 5,000,000 shares authorized, none issued and outstanding                                          |   |              | —    |               |   | —    |   |
| Common stock, $0.001 par value; 200,000,000 shares authorized, 17,777,210 and 17,747,180 shares issued and outstanding, respectively |   |              | 17,777     |               |   | 17,747     |   |
| Additional paid-in-capital                                                                                                           |   |              | 7,759,402  |               |   | 7,729,432  |   |
| Accumulated deficit                                                                                                                  |   |              | (8,095,288 | )                  |   | (7,919,721 | )      |
|                                                                                                                                 |   |              |       |               |   |       |   |
|                                                                                                                                 |   |                   |            |               |        |            |   |
| **Total Stockholders’ deficiency**                                                                                             |   |              | (318,109   | )                  |   | (172,542   | )      |
|                                                                                                                                 |   |                   |            |               |        |            |   |
|                                                                                                                                 |   |              |       |               |   |       |   |
| **Total liabilities and stockholders’ deficiency**                                                                             |   | $                 | 470,706    |               | $      | 506,494    |   |
|                                                                                                                                 |   |                   |            |               |        |            |   |

See accompanying notes to financial statements.

4

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|                                                  |
|-------------------------------------------------------|
| **CX2 TECHNOLOGIES, INC.**                            |
| **CONDENSED STATEMENTS OF OPERATIONS**                |
| **(UNAUDITED)**                                       |
| **For the Three Months Ended June 30, 2007 and 2006** |
|                                                  |
|                                                       |

|                                                                                    |   |                                                       |       |     |   |       |   |
|-----------------------------------------------------------------------------------------|--------|------------------------------------------------------------|------------|----------|--------|------------|--------|
|                                                                                    |   | **For the Three Months Ended                    June 30,** |       |
|                                                                                    |   |                                                            |       |
|                                                                                    |   | **2007**                                                   |       | **2006** |   |
|                                                                                    |   |                                                            |       |          |   |
|                                                                                    |   |                                                       |       |     |   |       |   |
| **Revenues:**                                                                           |   | $                                                          | 39,000     |     | $      | —    |   |
| Cost of sales                                                                           |   |                                                       | 12,382     |     |   | —    |   |
|                                                                                    |   |                                                            |            |     |        |            |   |
| **Gross margin**                                                                        |   |                                                       | 26,618     |     |   | —    |   |
|                                                                                    |   |                                                            |            |     |        |            |   |
|                                                                                    |   |                                                       |       |     |   |       |   |
| **Operating expenses:**                                                                 |   |                                                       |       |     |   |       |   |
| Selling, general and administrative                                                     |   |                                                       | 183,438    |     |   | 122,529    |   |
| Depreciation and amortization                                                           |   |                                                       | 13,073     |     |   | 3,073      |   |
|                                                                                    |   |                                                            |            |     |        |            |   |
| **Total operating expenses**                                                            |   |                                                       | 196,511    |     |   | 125,602    |   |
|                                                                                    |   |                                                       |       |     |   |       |   |
| Loss from operations                                                                    |   |                                                       | (169,893   | )        |   | (125,602   | )      |
|                                                                                    |   |                                                            |            |     |        |            |   |
|                                                                                    |   |                                                       |       |     |   |       |   |
| **Other income (expense):**                                                             |   |                                                       |       |     |   |       |   |
| Interest expense                                                                        |   |                                                       | (5,674     | )        |   | (447       | )      |
|                                                                                    |   |                                                            |            |     |        |            |   |
| **Total other income (expense)**                                                        |   |                                                       | (5,674     | )        |   | (447       | )      |
|                                                                                    |   |                                                            |            |     |        |            |   |
|                                                                                    |   |                                                       |       |     |   |       |   |
| Loss before provision for income taxes                                                  |   |                                                       | (175,567   | )        |   | (126,049   | )      |
|                                                                                    |   |                                                            |            |     |        |            |   |
|                                                                                    |   |                                                       |       |     |   |       |   |
| **Provision for income taxes**                                                          |   |                                                       | —    |     |   | —    |   |
|                                                                                    |   |                                                            |            |     |        |            |   |
|                                                                                    |   |                                                       |       |     |   |       |   |
| **Net loss**                                                                            |   | $                                                          | (175,567   | )        | $      | (126,049   | )      |
|                                                                                    |   |                                                            |            |     |        |            |   |
|                                                                                    |   |                                                       |       |     |   |       |   |
| **Net loss per share - basic and diluted**                                              |   | $                                                          | (0.01      | )        | $      | (0.01      | )      |
|                                                                                    |   |                                                            |            |     |        |            |   |
|                                                                                    |   |                                                       |       |     |   |       |   |
| **Weighted average number of shares outstanding During the period - basic and diluted** |   |                                                       | 17,750,960 |     |   | 15,254,716 |   |
|                                                                                    |   |                                                            |            |     |        |            |   |

See accompanying notes to financial statements.

5

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**CX2 TECHNOLOGIES, INC.        CONDENSED STATEMENTS OF CASH FLOWS        (UNAUDITED)        For the Three Months Ended June 30, 2007 and 2006**

|                                                                        |   |                                                                               |     |                                                                               |   |      |   |
|-----------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|----------|------------------------------------------------------------------------------------|--------|-----------|--------|
|                                                                        |   | **For The Three                    Months Ended                    June 30, 2007** |     | **For The Three                    Months Ended                    June 30, 2006** |   |
|                                                                        |   |                                                                                    |     |                                                                                    |   |
| **Cash Flows from operating activities:**                                   |   |                                                                               |     |                                                                               |   |      |   |
| Net loss                                                                    |   | $                                                                                  | (175,567 | )                                                                                  | $      | (126, 049 | )      |
| Adjustments to reconcile net loss to net cash used in operating activities  |   |                                                                               |     |                                                                               |   |      |   |
| Depreciation and amotization                                                |   |                                                                               | 13,073   |                                                                               |   | 3, 073    |   |
| Common stock issued in exchange for services                                |   |                                                                               | 25,000   |                                                                               |   | —   |   |
| Changes in assets and liabilities                                           |   |                                                                               |     |                                                                               |   |      |   |
| (Increase) decrease in inventories                                          |   |                                                                               | —  |                                                                               |   | (232, 500 | )      |
| (Increase) decrease in prepaid expenses                                     |   |                                                                               | 9,000    |                                                                               |   | —   |   |
| Increase (Decrease) in accounts payable and accrued liabilities             |   |                                                                               | 47,656   |                                                                               |   | 4, 661    |   |
| Increase (Decrease) in accrued payroll                                      |   |                                                                               | (46,789  | )                                                                                  |   | 12, 557   |   |
| Increase (Decrease) in deferred revenue                                     |   |                                                                               | (39,000  | )                                                                                  |   | —   |   |
|                                                                        |   |                                                                                    |          |                                                                               |        |           |   |
|                                                                        |   |                                                                               |     |                                                                               |   |      |   |
| **Net cash used in operating activities**                                   |   |                                                                               | (166,627 | )                                                                                  |   | (338, 258 | )      |
|                                                                        |   |                                                                                    |          |                                                                               |        |           |   |
|                                                                        |   |                                                                               |     |                                                                               |   |      |   |
| **Cash flows from investing activities:**                                   |   |                                                                               |     |                                                                               |   |      |   |
| Deposits                                                                    |   |                                                                               | —  |                                                                               |   | (5, 448   | )      |
| Acquisition of equipment                                                    |   |                                                                               | —  |                                                                               |   | (400      | )      |
|                                                                        |   |                                                                                    |          |                                                                               |        |           |   |
| **Net cash provided by (used in) investing activities**                     |   |                                                                               | —  |                                                                               |   | (5, 848   | )      |
|                                                                        |   |                                                                               |     |                                                                               |   |      |   |
| **Cash flows from financing activities:**                                   |   |                                                                               |     |                                                                               |   |      |   |
| Proceeds from notes payable - related parties                               |   |                                                                               | 237,284  |                                                                               |   | 76, 600   |   |
| Repayment of notes payable - related parties                                |   |                                                                               | (89,371  | )                                                                                  |   | —   |   |
| Proceeds from issuance of common stock                                      |   |                                                                               | 5,000    |                                                                               |   | 258, 430  |   |
|                                                                        |   |                                                                                    |          |                                                                               |        |           |   |
| **Net cash provided by financing activities**                               |   |                                                                               | 152,913  |                                                                               |   | 335, 030  |   |
|                                                                        |   |                                                                                    |          |                                                                               |        |           |   |
|                                                                        |   |                                                                               |     |                                                                               |   |      |   |
|                                                                        |   |                                                                               |     |                                                                               |   |      |   |
| **Net increase (decrease) in cash**                                         |   |                                                                               | (13,714  | )                                                                                  |   | (9, 076   | )      |
|                                                                        |   |                                                                               |     |                                                                               |   |      |   |
| **Cash, beginning of period**                                               |   |                                                                               | 13,714   |                                                                               |   | 10, 267   |   |
|                                                                        |   |                                                                                    |          |                                                                               |        |           |   |
|                                                                        |   |                                                                               |     |                                                                               |   |      |   |
| **Cash, end of period**                                                     |   | $                                                                                  | —  |                                                                               | $      | 1, 191    |   |
|                                                                        |   |                                                                                    |          |                                                                               |        |           |   |
|                                                                        |   |                                                                               |     |                                                                               |   |      |   |
| **Supplemental disclosure of non-cash investing and financing activities:** |   |                                                                               |     |                                                                               |   |      |   |
| Stock issued under terms of airtime agreement                               |   | $                                                                                  | 25,000   |                                                                               | $      | —   |   |
|                                                                        |   |                                                                                    |          |                                                                               |        |           |   |

See accompanying notes to financial statements.

6

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**CX2 TECHNOLOGIES, INC.**

**NOTES TO CONDENSED FINANCIAL STATEMENTS**

**(UNAUDITED)**

**AS OF JUNE 30, 2007**

 

 

 

NOTE 1 – BASIS OF PRESENTATION

 

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information necessary for a comprehensive presentation of financial        position and results of operations.

 

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

 

*NOTE 2– NATURE OF BUSINESS*

 

CX2 Technologies, Inc. (hereinafter "T~~he~~“Company") was incorporated on May 21, 2002 as Brookview Institute, Inc., under the laws of the State of Nevada. On November 16, 2005 the Company changed its name to CX2 Technology, Inc. On December 6, 2005, the Company filed articles of correction to change the name to CX2        Technologies, Inc. On May 10, 2006, the Company domesticated to the State of Florida. Its fiscal year end is March 31.

 

The Company is engaged in the development, operation and management of 220 MHz digital wireless data communications services. In September 2006 the Company entered into a ten year Airtime Agreement for the exclusive use of minutes on 220 MHz Federal Communications Commission (“FCC”) licenses and the related equipment with a third party. This will allow the Company to        operate throughout the entire United States and initially in the geographical areas of Florida, Illinois, Michigan and Texas.The Company may also seek to acquire the 220 MHz licenses and related equipment owned by such third party or from one or more other third parties.

 

NOTE 3– SUMMARY OF ACCOUNTING POLICIES

 

***(A) Cash and Cash Equivalents***

 

Cash and cash equivalents include highly liquid investments purchased with an original maturity of three months or less. At June 30, 2007, Company had no cash equivalents.

 

***(B) Property and Equipment***

 

Property and equipment, consisting of computer equipment, office furniture and equipment, is recorded at acquisition cost and depreciated using the straight-line method over the estimated useful lives of the assets, which is presently five years.

 

***(C) Inventory***

 

Inventory consists of communication devices which are valued at the lower of cost or market with cost being determined on a first-in, first-out basis. The inventory consisted exclusively of finished units purchased from a related party from whom the Company acquired its FCC sub-licenses.

 

***(D) Intangible Assets***

 

The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 142 "Goodwill and Other Intangible Assets" as of April 1, 2005. Intangible assets are recorded at acquisition cost, which is considered to be fairvalue per SFAS No. 142. Certain of the Company's intangible assets which were acquired in        March~~,~~2006 are licensing agreements that will be amortized over the term of the ten year agreements. The method of amortization shall reflect the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up. If that pattern cannot be reliably determined, a straight-line amortization method shall be used. The Company reviews these intangible assets periodically to assess whether the carrying        amount will be fully recovered through estimated future operating cash flows. An impairment loss is recorded if the carrying amount exceeds the present value of the estimated future cash flows. As of March 31, 2007 the Company recognized an impairment loss of $6,788,286.

 

7

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**CX2 TECHNOLOGIES, INC.**

**NOTES TO CONDENSED FINANCIAL STATEMENTS**

**(UNAUDITED)**

**AS OF JUNE 30, 2007**

 

 

 

***(E) Revenue Recognition***

 

Revenue from users for network services is recognized at the time that the services are provided. Revenue from sales of radios and other related equipment is recognized at date of delivery to the customer and collection is reasonably assured. Revenue from consulting services is recognized at the time that the services are provided.

 

***(F) Estimates***

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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.

 

***(G) Fair Value of Financial Instruments***

 

Statement of Financial Accounting Standards No. 107, disclosures about fair value of financial instruments, defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying values of the Company’s financial instruments, which consists of current        liabilities,approximate fair values due to the short-term maturities of such instruments.

 

***(H) Net Loss Per Share***

 

The Company follows the provisions of SFAS No. 128, "Earnings per Share," which requires companies with complex capital structures or common stock equivalents to present both basic and diluted earnings per share ("EPS") on the face of the income statement. Basic EPS is calculated as income available to common stockholders divided by the weighted average number of common shares        outstanding during the period. Diluted EPS is calculated using the "if converted" method for common stock equivalents. As of June 30, 2007 and 2006, there were no common stock equivalents outstanding.

 

***(I) Income Taxes***

 

The Company accounts for income taxes under the Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“Statement 109”). Under Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and        liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

***(J) Stock-Based Compensation***

 

In December 2004 the FASB issued a revised Statement 123 “Accounting for Stock-Based Compensation” (“SFAS 123R”), which replaces SFAS No. 123, "Accounting for Stock-Based Compensation" and supersedes AccountingPrinciples Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees." SFAS No.123(R) requires all share-based        payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values, beginning with the first annual fiscal period after June 15, 2005. The pro forma disclosures previously permitted under SFAS No. 123 will no longer be an alternative to financial statement recognition. Common stock, stock options and common stock warrants issued to other than employees or directors are recorded on the basis of their fair value, as        required by SFAS No. 123(R), which is measured as of the dat e required by EITF Issue 96-18,*“Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services*.”

 

8

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**CX2 TECHNOLOGIES, INC.**

**NOTES TO CONDENSED FINANCIAL STATEMENTS**

**(UNAUDITED)**

**AS OF JUNE 30, 2007**

 

 

 

In accordance with EITF 96-18, the stock options or common stock warrants are valued using the Black-Scholes option pricing model on the basis of the market price of the underlying common stock on the “valuation date,” which for options and warrants related to contracts that have substantial disincentives to non-performance is the date of the contract, and for all other        contracts is the vesting date. Expense related to the options and warrants is recognized on a straight-line basis over the shorter of the period over which services are to be received or the vesting period. Where expense must be recognized prior to a valuation date, the expense is computed under the Black-Scholes option pricing model on the basis of the market price of the underlying common stock at the end of the period, and any subsequent changes in the market price of the underlying        common stock up through the valuation date is reflected in the expense recorded in the subsequent period in which that change occurs. The Company has not issued any stock options as of June 30, 2007.

 

***(K) Reclassifications***

 

Certain amounts in the fiscal year 2007 financial statements have been reclassified to conform to the 2008 fiscal year presentation.

 

*NOTE 4- PROPERTY AND EQUIPMENT*

 

Property and equipment at June 30, 2007 consisted of the following:

 

| Communications equipment      |   | $      | 200,000 |   |
|-------------------------------|--------|--------|---------|--------|
| Office and computer equipment |   |   | 61,456  |   |
| Less accumulated depreciation |   |   | (28,698 | )      |
|                          |   |   |    |   |
|                          |   | $      | 232,758 |   |

 

Depreciation expense for the three months ended June 30, 2007 was $13,073.

 

*NOTE 5 - USE OF 220 MHz LICENSES AND EQUIPMENT*

 

On March 5, 2006, the Company agreed to purchase certain 220 MHz FCC licenses and related hardware and software for the initial planned operation of such licenses in certain geographical areas of Florida, Illinois, Michigan and Texas from a third party owner of such assets, Bizcom U.S.A., Inc. ("Bizcom"). As part of this transaction the Company issued 5,000,000 shares of Common Stock        with a fair value of $5,000,000 (based on a recent cash offering price) to Bizcom. Due to certain security covenants placed on the sale of these licenses, Bizcom was unable to conclude the sale to the Company.

 

On March 6, 2006, the Company executed a ten year 200-220 MHz Airtime Agreement, which was subsequently amended effective March 19, 2007 (as amended, the "Air Time Agreement"), for the non-exclusive use of five hundred million minutes on all of the Bizcom FCC licenses. The Air Time Agreement required payment by CX2 of a monthly user fee of $4,000, which was subsequently eliminated        when the Air Time Agreement was amended in March2007, and also provided for the retention of the 5 million previously issued shares by Bizcom.

 

9

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**CX2 TECHNOLOGIES, INC.**

**NOTES TO CONDENSED FINANCIAL STATEMENTS**

**(UNAUDITED)**

**AS OF JUNE 30, 2007**

 

 

On February 26, 2007, CX2 and Bizcom entered into a Licensing Agreement & Asset Sale (the "Licensing Agreement"), pursuant to which CX2 acquired from Bizcom a non-exclusive license to its wireless digital data intellectual property for cash payments and 1.5 million shares of common stock, which were not issued. This license granted the Company the right to use Bizcom proprietary        technologies without restriction, including rights to further develop the existing technology or new technology, which new development would be owned by CX2. In addition, CX2 bought from Bizcom all of its digital base station equipment and associated assets both deployed on the Chicago network and in inventory. The inventory included all digital base stations, RRM boards and connective cabling, combiners, racks, antennas, maintenance equipment, lab equipment, and office equipment, at        the Company’s Burr Ridge offices in Illinois, together with any such equipment in any Bizcom storage facility in Illinois.

 

| As of June 30, 2007           |   |   |        |   |
|-------------------------------|--------|--------|-------------|--------|
|                          |   |   |        |   |
| Airtime Agreement             |   | $      | 5,000,000   |   |
| Technology License            |   | $      | 2,079,784   |   |
|                          |   | $      | 7,079,784   |   |
| Less Accumulated Amortization |   |   | ($291,498   | )      |
| Impairment                    |   |   | ($6,788,286 | )      |
|                          |   | $      | —     |   |
|                          |   |   |        |   |

 

 

During the year ended March 31, 2007, the Company recognized a $6,788,286 loss on impairment.

 

*NOTE 6 - NOTES PAYABLE – RELATED PARTIES*

 

Debt as of June 30, 2007 consists of the following:

 

| Promissory note to a related party, payable in monthly installments of $25,000. Presented net of $20,216 of discount imputed interest calculated at 5% per annum. |   | $      | 485,095 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|
| Unsecured Note payable to a shareholder. The note is payable on demand with interest at 8% per annum                                                              |   |   | 170,868 |   |
| Unsecured Total                                                                                                                                                   |   |   | 655,963 |   |
|                                                                                                                                                              |   |   |    |   |
| Less: current portion of long term notes payable                                                                                                                  |   |   | 537,652 |   |
|                                                                                                                                                              |   | $      | 118,311 |   |

 

*NOTE 7 - STOCKHOLDERS’ EQUITY*

 

***(A) Common Stock***

 

All shares of common stock are identical with each other in every respect, and the holders thereof are entitled to one vote for each share of common stock upon all matters upon which the shareholders have the right to vote.

 

***(B) Preferred Stock***

 

 The Company has 5,000,000 shares of $0.001 par value preferred stock authorized with such preferences as the Board of Directors may designate.

 

***(C ) Private Placements of Common Stock***

 

The Company has offered, through its private placement memorandum dated March 6, 2006 and as amended on September 27, 2006 (the “PPM”), up to a maximum of 5,000,000 shares of its common stock par value $.001 per share, at a price of $1.00 per share for total gross offering proceeds of up to $5,000,000.

 

10

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**CX2 TECHNOLOGIES, INC.**

**NOTES TO CONDENSED FINANCIAL STATEMENTS**

**(UNAUDITED)**

**AS OF JUNE 30, 2007**

 

 

 

During the three months ended June 30, 2007, the Company issued 5,000 shares of common stock for gross proceeds of $5,000.

 

*NOTE 8 - COMMITMENTS AND CONTINGENCIES*

 

***(A) Operating Lease Obligations***

 

On April 12, 2006, the Company entered into a 60-month operating lease for office space in Boynton Beach, Florida beginning June 1, 2006 for $4,459 per month, exclusive of recurring utility expenses.

 

The Company also subleases an office location in Burr Ridge, Illinois for $ 3,000 per month. This sublease is on a month to month agreement with a vendor~~.~~.

 

***(B) Distributor Agreement***

 

On June 4, 2006 the Company entered into a distributor agreement with ESP Wireless (“ESP”) a dealer and distributor of wireless services and products in the greater Chicago metropolitan area to market the Company’s products and services. Under the six month agreement, which can be extended for a further five year period, ESP will be entitled to a commission per        subscriber signed to a minimum 1 year CX2 airtime services contract, for Automatic Vehicle Location, using the FleetTracer product.

 

For each 1,000 subscribers loaded onto our network within the term of the agreement, ESP will receive the following number of shares of common stock of the Company:

 

 

| First 1,000  |   | 15,000  |   |
|--------------|--------|---------|--------|
| Second 1,000 |   | 30,000  |   |
| Third 1,000  |   | 60,000  |   |
| Fourth 1,000 |   | 120,000 |   |
| Fifth 1,000  |   | 240,000 |   |
| Total        |   | 465,000 |   |

 

The Company will also pay ESP $5,000 per month as a consulting fee for managing the dealer network. The Company has not issued any shares or made any payments to ESP as of June 30, 2007.

 

*NOTE 9 - RELATED PARTY TRANSACTIONS*

 

Bizcom is a major shareholder of the Company. The Company has non-exclusive access to 500 million minutes of airtime in the 220 MHz frequency band as a result of their Airtime Agreement with Bizcom which was entered into in March, 2006 and required a monthly user fee of $4,000 commencing in September 2006. In addition, the Company has another non-exclusive license agreement with        Bizcom which provides for rights to use certain wireless digital data intellectual property, including rights to further develop the existing technology or new technology, which newdevelopment would be owned by the Company.

 

During the three months ended June 30, 2007, a stockholder loaned the Company $ 144,368 for working capital. The loan bears interest at 8% per annum and is payable on demand. See Note 6 for additional information on related party notes payable.

 

11

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**CX2 TECHNOLOGIES, INC.**

**NOTES TO CONDENSED FINANCIAL STATEMENTS**

**(UNAUDITED)**

**AS OF JUNE 30, 2007**

 

 

 

*NOTE 10 - GOING CONCERN*

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has an accumulated deficit of $8,095,288 since inception and a negative cash flow from operations of $ 166,627 during the three months ended June 30, 2007. These factors raise substantial doubt about the Company's ability to continue as a going concern. The        Company was in the development stage from May 2002 until January~~,~~2007, at which time operations began. The Company has incurred a loss from operations, and its present level of revenues is not sufficient to cover all the Company’s incurred expenses. Management recognizes that the Company must generate additional resources to enable it to pay its obligations as they come due, and that the Company must ultimately achieve        profitable operations. Management’s pla ns in this regard are to complete its private placement of up to $5,000,000and to further pursue its business plan relating to the development, operation and management of its 220 MHz digital wireless data communications services. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

*NOTE 11– CONCENTRATION OF CREDIT RISKS*

 

Customers

 

For the three months ended June 30, 2007, one customer accounted for all of the Company's sales. The Company purchases its radios primarily from one vendor, which accounted for all of the Company's product purchases during that period. As such, the Company believes that it has a concentration of credit risk within its receivables because of the limited customer base.

 

Vendors

 

The Company relies on one license agreement for 100% of its network access.

 

*NOTE 12 - SUBSEQUENT EVENTS*

 

A shareholder has advanced the Company $ 192,200 since June 30, 2007.

 

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**ITEM 2.****MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

The following is a discussion and analysis of our financial condition and results of operations for the three months ended June 30, 2007 and significant factors that could affect our prospective financial condition and results of operations. You should read this discussion in conjunction with our financial statements and notes contained in our Form 10-KSB for our fiscal year ended March 31, 2007.        Historical results may not be indicative of future performance.

 

***Caution Regarding Forward-Looking Information***

 

*All statements contained in this Form 10-QSB, other than statements of historical facts, that address future activities, events or developments are forward-looking statements, including, but not limited to, statements containing the words "believe," "expect," "anticipate," "intends," "estimate," "forecast," "project," and similar expressions. All statements other than statements of historical fact are        statements that could be deemed forward-looking statements, including any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. These statements are based on certain assumptions and analyses made by us in light of our experience and our        assessment of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. However, whether actual results will conform to the expectations and predictions of management is subject to a number of risks and uncertainties described under “Risk Factors” below and in the “Risk Factors” section of our Form 10-KSB for the fiscal year ended March 31, 2007 that may cause actual results        to differ materially.*

 

*Consequently, all of the forward-looking statements made in this Form 10-QSB are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations. Readers are cautioned not to place undue reliance on such        forward-looking statements as they speak only of the Company's views as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.*

 

**Overview**

 

CX2 Technologies, Inc. is engaged in the~~,~~operation and management of 220 MHz digital wireless data communications services. In September 2006 the Company entered into a ten year Airtime Agreement with Bizcom for the exclusive use of minutes on 220 MHz FCC licenses and the related equipment, including a nationwide 10 channel        license~~,~~. This will allow the Company to operate throughout the entire United States and initially the Company plans to operate in the geographical areas of Florida, Illinois, Michigan, Texas and Nevada.The Agreement provides for the exclusive use of 500 million minutes over the term of the Agreement. The Agreement was effected with the third-party for an aggregate purchase price valued at $5,000,000, consisting of 5,000,000        shares of the Company’s restricted Common Stock. The Company may also seek to acquire the 220 MHz licenses and related equipment owned by Bizcom or from one or more third parties.

 

The expectation of commencing operations initially in Michigan and Texas is based on perceived opportunities in the oil/gas sector of which there are no contracts under negotiation and no assurances can be made that contracts will ever be obtained. Opportunities in Illinois center on creating a subscriber base on the Company’s network in the greater Chicago area. No assurances can be made that the        Company will be successful in its attempts to increase its network’s subscriber base through its relationship with ESP Wireless. Opportunities in Florida are based on the Company’s ability to identify and partner with suitable distribution channel(s) serving such geographic location. Discussions are currently underway with a third party candidate, but no assurances can be made that such discussions will lead to a successful conclusion, or that if such discussions are        successfully concluded, the third party will be successful in deploying and populating a new southeast Florida data network with subscribers. A similar network plan is being developed for the greater Las Vegas, Nevada geographic region. Discussions are in very early stages and the Company can make no assurances relative to the likelihood of successful conclusion.

 

The Company markets CX2 branded data technology and services for use by various commercial/industrial applications, the oil/gas industry, and the homeland security/public safety sector. We believe that due to advances in 220 MHz technology and equipment and the lower costs generally associated with lower frequency band usage in comparison to cellular telephoneand other wireless        communications services, a broad spectrum of potential commercial and public safety/ emergency disaster relief end-users may find the Company's services advantageous and desirable, which could result in fee-based subscribership and/or high margin technology sales. The Company cannot assure, however, that it is correct in such a belief or that it will be successful in any of such efforts.

 

13

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We intend to grow primarily by (i) marketing to and obtaining subscribers in the commercial and public safety/emergency disaster relief sector**s**to utilize the data communication services offered and intended to be offered on our initial network, and expected or planned network deployments, thereby realizing fee-based subscriber revenues; and (ii)        establishing and then expanding our service or coverage area and thereby our subscriber base by purchasing select assets from other 220 MHz network owners, including 220 MHz licenses and related equipment or by building network infrastructure in targeted markets. Development involves substantial risks, further enumerated herein, including the risk: (a) that we will not be able to fully utilize the licenses underlying the Airtime Agreement necessary to develop any meaningful operations;        (b) that development costs will exceed budgeted or contracted amounts; (c) that our marketing efforts to obtain subscribers to our data networks will not proceed as rapidly as anticipated or otherwise be successful; (d) that our data networks will not achieve desired revenue or profitability levels; (e) that substantial additional financing beyond the proceeds sought under our existing private placement, which will be necessary, might not be available or if available, might not be on        favorable terms; (f) of changes in applicable laws, rules, regulations and interpretations which may adversely effect our business and operations; (g) that we may not be able to purchase desired select assets to expand our coverage area due to competition, financial or other considerations or otherwise successfully manage or integrate such asset purchases with our then operations; (h) of competition from other 220 MHz network operators as well as other providers of wireless        communication services, many of the latter of whom have substantially greater financial and other resources than the Company; (i) the Company may not for whatever reason(s) be successful in its marketing efforts to the homeland security/public safety sector; and (j) of technology changes within the wireless communication industry and our potential inability to adopt such changes to our product and service offerings if so desired by prospective or then current subscribers either due to        technology constraints which may be inherent to 220 MHz band services, financial constraints, or otherwise. There can be no assurances that we will be successful in executing our business plan.

 

We have a severe working capital shortage, and must continue to seek and secure significant capital from outside funding sources as our cash flow from operations is insufficient to sustain our operations. No assurances can be given that we will be successful in obtaining such needed capital. Our inability to promptly secure needed capital will materially adversely affect the Company and its operations, as        we believe our current cash position and anticipated receipt of revenues will enable us to sustain current operations for less than one month from the date of this filing.

 

We have no financing sources in place other than our private placement. If we receive little or no proceeds from our private placement, the Company will only be able to continue its current operations for approximately one (1) to three (3) months from the date of this Report, absent our receipt of funding from other sources. We have no other current financing sources in place and no assurances are given        as to the availability of any financing, or if available, the terms thereof. In the event we were to receive all of the capital being raised in our private offering ($5,000,000), the Company believes, although no assurances are given, that such cash proceeds, together with funds anticipated from operations, will provide us with sufficient funds to meet our cash requirements for approximately twelve (12) months following the assumed receipt thereof, provided we do not seek to further        accelerate our operational plans. In such event, such time period may also be significantly reduced and we will require additional capital, the failure of which to obtain could materially adversely affect the Company and its business.

 

We anticipate that even in the event we receive all of the capital being raised in our private placement, such proceeds will not necessarily assure our success or profitability in view of, among other factors, our limited operating history in this business, the uncertainties associated with marketing emerging technologies, and the capital intensive nature of the wireless data and voice industry. We        anticipate that profits, if any, will be derived from our success in obtaining subscribers to the network we have and may later develop, of which no assurances are given. We are subject to all the substantial risks inherent in the development of a business enterprise within a sector of the wireless data and voice industry that has itself generated only limited revenues to date industrywide. Accordingly, no assurances can be given that our business will ever be successful or that we will        ever be or remain profitable.

 

14

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**Results of Operations**

 

Financial Presentation

 

The following sets forth a discussion and analysis of the Company’s financial condition and results of operations for the three months ended June 30, 2007 and 2006. This discussion and analysis should be read in conjunction with our consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-QSB. The following discussion contains forward-looking statements. Our actual        results may differ significantly from the results discussed in such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in “Risk Factors” of this Quarterly Report on Form 10-QSB.

 

**Three Months Ended June 30, 2007 Compared to the Three Months Ended June 30, 2006**

 

Revenues were $39,000 and $0 for the three months ended June 30 2007 and 2006, respectively. The Company continues to develop its network and anticipates adding subscribers in the second quarter of fiscal year 2008.

 

Cost of sales was $382 and $0 for the three months ended June 30, 2007 and 2006, respectively.

 

Depreciation and amortization expense was $13,073 for the three months ended June 30, 2007, compared to $3,073 for the three months ended June 30, 2006.

 

Selling, general and administration expenses were $183,438, for the three months ended June 30, 2007 compared to $122,529 for the three months ended June 30, 2006. Office salaries were $49,078, accounting fees totaled $22,582 and consulting expenses were $39,949 for the three months ended June 30, 2007. For the three months ended June 30, 2006, expenses related solely to corporate and filing        fees.

 

**Liquidity and Capital Resources**

 

Our financial statements appearing elsewhere in this Report have been prepared on a going concern basis that contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. Management realizes that we must generate capital and revenue resources to enable us to achieve profitable operations. To the extent that we are unable to obtain additional        working capital from operations and/or other sources as required or otherwise desired, our financial condition will be materially affected and we may be forced to curtail our operations.

 

We were in a working capital shortage at the quarter ended June 30, 2007, and currently cash flow from operations is insufficient to sustain our operations. No assurances are given that we will be successful in obtaining needed additional capital. Our inability to secure such additional capital will materially adversely affect the Company and its operations. We believe our current cash position after        funding and anticipated receipt of revenues will not enable us to sustain current operations for the next twelve months**f**rom the date of this Report.

 

At June 30, 2007, we had stockholder’s deficiency of $318,109, total assets of $470,706 and total current liabilities of $670,504. Since our inception, we have incurred losses of $8,095,288 and during the three months~~,~~ended June 30, 2007, we used cash in operations of $166,627. Our operations and acquisitions have been funded by the sale        of equity in private equity financing from accredited investors and by loans from our management. These funds have been used for working capital and general corporate purposes and acquisition and licensing costs in furtherance of our business plan. There are no current arrangements with purchasers for any of our securities other than our private placement.

 

Total assets at June 30, 2007 decreased by $35,788 from $506,494 at March 31, 2007 as a result of a decrease in prepaid expenses, property and equipment and cash. The increase in total liabilities at June 30, 2007 of $109,779 was largely due to accrued expenses of $54,276 and notes payable – related parties of $150,042.

 

In the event we were to receive little or no additional proceeds from our private placement, it will significantly restrict and possibly cause us to cease our operations which would have a substantial adverse effect on the Company and shareholders**.**

 

We do not currently anticipate any material capital expenditures for our existing operations. We do not currently anticipate purchasing, leasing or selling any plant or significant equipment during approximately the next twelve (12) months. To the extent that we engage in such acquisitions, we plan to utilize shares of the Company’s common stock for such purposes if possible, and may assume certain        obligations and debt in such transactions. Such common stock issuance, as well as any common stock issuance for cash to the extent affected, will have the effect of creating further shareholder dilution.

 

15

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We do not believe that inflation has had a material effect on our results of operations. However, there can be no assurances that our business will not be affected by inflation in the future.

 

We have no off balance sheet arrangements.

 

**Critical Accounting Policies and Estimates**

 

Note~~2~~3 of the Notes to the Financial Statements~~,~~includes a summary of the significant accounting policies and methods used in the preparation of our financial statements. We consider the following accounting policies and methods to be the most important to our financial position and        results of operations, either because of the significance of the financial statement item or because they require the exercise of significant judgment or the use of estimates. In addition, Financial Reporting Release No. 61 requires all companies to include a discussion to address, among other things, liquidity, off-balance sheet arrangements, contractual obligations and commercial commitments.

 

***(A) Inventory***

 

Inventory consists of communication devices which are valued at the lower of cost or market with cost being determined on a first-in, first-out basis. The inventory consisted exclusively of finished units purchased from a related party from whom the Company acquired its FCC sub-licenses.

 

***(B) Intangible Assets***

 

The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 142 "Goodwill and Other Intangible Assets" as of April 1, 2005. Intangible assets are recorded at acquisition cost, which is considered to be fair value per SFAS No. 142. Certain of the Company's intangible assets which were acquired in March~~,~~2006 are licensing        agreements that will be amortized over the term of the ten year agreements. The method of amortization shall reflect the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up. If that pattern cannot be reliably determined, a straight-line amortization method shall be used. The Company reviews these intangible assets periodically to assess whether the carrying amount will be fully recovered through estimated future operating cash flows. An        impairment loss is recorded if the carrying amount exceeds the present value of the estimated future cash flows. The Company recorded an impairment loss of approximately $6.7 million at March 31, 2007. Management reviews the value of our intangible assets quarterly~~,~~.

 

***(C) Revenue Recognition***

 

Revenue from users for network services is recognized at the time that the services are provided. Revenue from sales of radios and other related equipment is recognized at date of delivery to the customer. The Company does not believe that this concentration of revenues and related licenses under which it will operate have significant risk inasmuch as the services will be utilized by many unrelated        businesses.

 

**Risk Factors**

 

You should consider the following discussion of risks as well as other information regarding our operations. The risks and uncertainties described below are not the only ones. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. For a more detailed discussion of the risks facing us, you should review the "Risk Factors"        sections contained in our Form 10-KSB for the fiscal year ended March 31, 2007.

 

|   | **•** | The Company has historically lost money and expects its losses will continue in the future |
|--------|------------|--------------------------------------------------------------------------------------------|

|   | **•** | The Company’s auditors have expressed doubt about the Company’s ability to continue as a going concern |
|--------|------------|--------------------------------------------------------------------------------------------------------------------|

|   | **•** | The Company does not have sufficient capital for operations, and a failure to obtain additional financing will preclude its ability to stay in business and become profitable |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | Uncertain demand for the Company’s services may cause revenues to fall short of expectations and expenses to be higher than forecast if the Company needs to incur more marketing costs |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | The Company may acquire other companies, which will reduce its income in the event the Company is not able to integrate them into its existing operations |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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|   | **•** | New and existing competition may gain market share and limit the Company’s potential growth |
|--------|------------|---------------------------------------------------------------------------------------------------|

|   | **•** | The Company’s ability to achieve profitable operations is directly tied to the Company’s ability to attract and retain customers |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | The Company has limited operating experience within the 220 MHz wireless industries |
|--------|------------|-------------------------------------------------------------------------------------|

|   | **•** | We cannot assure our success in our planned business operations |
|--------|------------|-----------------------------------------------------------------|

|   | **•** | The Company could fail to attract or retain key personnel, which could hamper its ability to generate income |
|--------|------------|--------------------------------------------------------------------------------------------------------------|

|   | **•** | The Company may enter into option agreements to acquire select assets of other 220 MHz system owners/operators, which may include 220 MHz licenses |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | The Company relies exclusively on a single party to provide the Company with the ten-year airtime minutes required for its product |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | We are subject to a number of risks associated with our development plans |
|--------|------------|---------------------------------------------------------------------------|

|   | **•** | Broad based market acceptance of our products is uncertain as there is limited operating history for our industry |
|--------|------------|-------------------------------------------------------------------------------------------------------------------|

|   | **•** | We are subject to FCC regulations |
|--------|------------|-----------------------------------|

|   | **•** | We are subject to substantial competition |
|--------|------------|-------------------------------------------|

|   | **•** | The Company’s common stock is a "penny stock," which may make it more difficult for investors to sell their shares due to suitability requirements |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | The Company does not intend to pay any dividends |
|--------|------------|--------------------------------------------------|

 

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**ITEM 3. CONTROLS AND PROCEDURES**

 

The Company's principal executive and financial officer evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined under Rules 13a-14(c) and 15d-14(c) promulgated under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on the evaluation and subject to the limitations noted below,        such person concluded that the Company’s disclosure controls and procedures as of the end of the period covered by this Report, were effective to provide reasonable assurance that the information required to be disclosed by the Company in periodic reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The design of any system of controls is based in        part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. However, management believes that our system of disclosure controls and procedures is designed to provide a reasonable level of assurance that the objectives of the system will be met.

 

There have been no changes in our internal controls over financial reporting during the quarter ending June 30, 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II OTHER INFORMATION

 

**ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds**

 

During the fiscal quarter ending June 30, 2007, we issued 30,030 shares of our common stock for an aggregate of $30,030 to accredited investors in reliance on the exemption from registration provided by Rule 506 promulgated under the Securities Act of 1933, as amended. On March 6, 2006 the Company commenced a private placement offering to sell 5,000,000 shares of common stock at an offer price of $1.00        per share for total maximum gross offering proceeds of $5,000,000. The minimum subscription is $7,500 (7,500 shares), although the Company reserves the right, in its sole discretion, to accept subscriptions for a lesser amount. Each of the certificates representing shares of common stock issued pursuant to the private placement bear a restrictive legend restricting transferability under the Securities Act of 1933.

 

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

 

|  (a) | Exhibits: |
|-----------|-----------|

 

|   | 31 | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive and Principal Financial Officer |
|--------|----|-----------------------------------------------------------------------------------------------|

 

|   | 32 | Section 1350 Certifications |
|--------|----|-----------------------------|

 

| (b) | Reports on Form 8-K: |
|-----|----------------------|

 

On April 5, 2007, the Company filed a Current Report on Form 8-K announcing the resignation of Allan Finkelman from his positions as Vice President, Secretary and a director of the Company.

 

On June 5, 2007, the Company filed a Current Report on Form 8-K announcing the resignation of Sam Hitner from his position as sole director of the Company and the appointment of Adam Reiser as President, CEO and a director of the Company.

 

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.

 

| Date: October 29, 2008 | CX2 Technologies, Inc.                                      |
|------------------------|-------------------------------------------------------------|
|                   | (Registrant)                                                |
|                   |                                                        |
|                   | By:                                                         | /s/ Michael Rand |
|                   | Michael Rand, Chief Executive Officer, Principal Executive, |
|                   | Financial and Accounting Officer                            |

 

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