UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
DC 20549








FORM
10-Q





x Quarterly Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
quarterly period ended June 30,
2009




Commission
file number: 000-52490




Beyond
Commerce, Inc.


(Exact
name of registrant as specified in its charter)




Nevada
                98-0512515(State
      of incorporation or organization)
                (I.R.S.
      Employer Identification
No.)





9029
South Pecos


Suite
2800


Henderson,
Nevada 89074


(Address
of principal executive offices, including zip code)





(702)
463-7000


(Registrant’s
telephone number, including area code)





SECURITIES
REGISTERED PURSUANT TO SECTION 12 (B) OF THE ACT


Title
of each class





NONE


SECURITIES
REGISTERED PURSUANT TO SECTION 12 (G) OF THE ACT:


COMMON
STOCK $0.001 PAR VALUE





Indicate
by check mark whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No  ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).       Yes  ̈ No  ̈.





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




Large
      accelerated filer  ̈
              
              Accelerated
      filer  ̈Non-accelerated
      filer  ̈
              (Do
      not check if a smaller reporting company)
              Smaller
      reporting company x




Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).Yes  ̈ No x




As of
August 13, 2009, there were outstanding 46,289,941 shares of the registrant’s
common stock.







BEYOND
COMMERCE, INC.


FORM
10-Q FOR THE QUARTER ENDED


June
30, 2009





Table of
Contents




PagePART
      I. FINANCIAL INFORMATIONItem
      1.   Financial StatementsCondensed
      Consolidated Balance Sheet at June 30, 2009  (Unaudited) and
      December 31, 2008
                
                3Condensed
      Consolidated Statements of Operations for the Three and Six month period
      ended June 30, 2009   & 2008
    (Unaudited)
                
                4-5Condensed
      Consolidated Statements of Cash Flows for the Six month period ended June
      30, 2009 & 2008 (Unaudited)
                
                6Notes
      to the Condensed Consolidated Financial Statements
    (Unaudited)
                
                7-
      22Item
      2. Management's Discussion and Analysis of Financial Condition and Results
      of Operations
                
                22-26Item
      3.Quantitative and
      Qualitative Information About Market Risk
                
                26Item4T.
      Controls and Procedures
                
                26PART
      II. OTHER INFORMATIONItem
      1.   Legal Proceedings
                
                27Item
      1A. Risk Factors
                
                27Item
      2.   Unregistered Sales of Equity Securities and Use of
      Proceeds
                
                27Item
      3.    Defaults upon Senior Securities
                
                27-28Item
      4.   Submission of Matters to Vote of Security
      Holders
                
                29Item
      5.   Other Information
                
                29Item
      6. Exhibits
                
                29SIGNATURES
                
                30


- 2
-




PART
I - FINANCIAL INFORMATION





Item
1.   Financial Statements





BEYOND
COMMERCE


CONDENSED
CONSOLIDATED BALANCE SHEET




Unaudited
                            June 30,
                            2009
                          
                          
                          December 31,
                            2008
                            as adjusted,
                            (Note 16)ASSETSCurrent
      assets :Cash
                          
                          $
                          185,172
                          
                          
                          $
                          100,086Accounts
      receivable
                          
                          
                          20,202
                          
                          
                          
                          226,091Prepaid
      loan cost
                          
                          
                          1,392,838
                          
                          
                          
                          562,665Prepaid
      commissions
                          
                          
                          1,300,553
                          
                          
                          
                          260,055Other
      current assets
                          
                          
                          1,244,798
                          
                          
                          
                          46,230Total
      current assets
                          
                          $
                          4,143,563
                          
                          
                          $
                          1,195,127Property,
      Web site and computer equipment
                          
                          
                          992,108
                          
                          
                          
                          871,180Less:
      Accumulated depreciation and amortization
                          
                          
                          (427,140
                          )
                          
                          
                          (320,366
                          )Property,
      Web site and computer equipment – net
                          
                          $
                          564,968
                          
                          
                          $
                          550,814Other
      Assets
                          
                          
                          131,931
                          
                          
                          
                          60,067Total
      assets
                          
                          $
                          4,840,462
                          
                          
                          $
                          1,806,008LIABILITIES AND STOCKHOLDERS’
      DEFICITCurrent
      liabilities:Short
      term borrowings, net of discount
                          
                          $
                          4,215,363
                          
                          
                          $
                          2,400,555Short
      term borrowings, net of discount – related party
                          
                          
                          1,135,028
                          
                          
                          
                          -Accounts
      payable
                          
                          
                          2,475,662
                          
                          
                          
                          1,490,590Accounts
      payable - related party
                          
                          
                          30,338
                          
                          
                          
                          19,552Checks
      Written In Excess of Cash
                          
                          
                          402,864
                          
                          
                          
                          -Note
      derivative liability
                          
                          
                          207,047
                          
                          
                          
                          3,396,935Other
      current liabilities
                          
                          
                          2,109,503
                          
                          
                          
                          1,374,534Deferred
      Revenue
                          
                          
                          3,010,849
                          
                          
                          
                          609,987Total
      current liabilities
                          
                          $
                          13,586,654
                          
                          
                          $
                          9,292,153Stockholders’
      Deficit :Common
      stock, $0.001 par value, 200,000,000 and 75,000,000 shares authorized as
      of  June 30, 2009  and December 31, 2008,
      respectively, and 45,186,179and 40,936,143
      issued and outstanding at June 30, 2009  and December 31, 2008,
      respectively
                          
                          $
                          45,186
                          
                          
                          $
                          40,936Additional
      paid in capital
                          
                          
                          18,411,868
                          
                          
                          
                          11,096,604Accumulated
      deficit
                          
                          
                          (27,203,246
                          )
                          
                          
                          (18,623,685
                          )Total
      stockholders' deficit
                          
                          $
                          (8,746,192
                          )
                          
                          $
                          (7,486,145
                          )Total
      Liabilities and Stockholders' Deficit
                          
                          $
                          4,840,462
                          
                          
                          $
                          1,806,008





See
accompanying notes of these unaudited condensed financial
statements.


- 3
-





BEYOND COMMERCE,
INC.


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


For
the three month period ended June 30,


Unaudited




2009
                    
                    
                    2008RevenuesAdvertising
      Revenue
                    
                    $
                    4,614,658
                    
                    
                    $
                    -Merchandising
      Revenue
                    
                    
                    (2,624)
                    
                    
                    
                    59,264Total
      Revenue
                    
                    
                    4,612,034
                    
                    
                    
                    59,264Operating
      expensesCost
      of advertising
                    
                    $
                    4,910,353
                    
                    
                    $
                    -Cost
      of merchandising
                    
                    
                    5,970
                    
                    
                    
                    63,665Selling
      general & administrative
                    
                    
                    3,537,308
                    
                    
                    
                    1,195,913Selling
      general & administrative - related party
                    
                    
                    6,930
                    
                    
                    
                    42,265Professional
      fees
                    
                    
                    1,065,225
                    
                    
                    
                    426,436Professional
      fees - related party
                    
                    
                    77,740
                    
                    
                    
                    53,450Depreciation
      and amortization
                    
                    
                    55,003
                    
                    
                    
                    44,673Total
      costs and operating expenses
                    
                    $
                    9,658,529
                    
                    
                    $
                    1,826,402Loss
      from operations
                    
                    
                    (5,046,495
                    )
                    
                    
                    (1,767,138
                    )Non-operating
      income (expense)Interest
      expense
                    
                    
                    (3,070,171
                    )
                    
                    
                    (629,442
                    )Interest
      expense – related party
                    
                    
                    (32,000
                    )
                    
                    
                    -Change
      in derivative liability
                    
                    
                    2,231,694
                    
                    
                    
                    -Total
      non-operating expense
                    
                    $
                    (870,477
                    )
                    
                    $
                    (629,442
                    )Loss
      from operations before income taxes
                    
                    
                    (5,916,972
                    )
                    
                    
                    (2,396,580
                    )Provision
      for income tax
                    
                    
                    -
                    
                    
                    
                    -Net
      loss
                    
                    $
                    (5,916,972
                    )
                    
                    $
                    (2,396,580
                    )Net
      loss available to common stockholders
                    
                    $
                    (5,916,972
                    )
                    
                    $
                    (2,396,580
                    )Basic
      and diluted net loss per common share
                    
                    $
                    (0.13
                    )
                    
                    $
                    (0.06
                    )Weighted
      average shares of capital outstanding - basic
                    
                    
                    43,837,041
                    
                    
                    
                    37,241,183





See
accompanying notes of these unaudited condensed financial
statements.


- 4
-




BEYOND COMMERCE,
INC.


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


For
the six month period ended June 30,


Unaudited




2009
                      
                      
                      2008RevenuesAdvertising
      Revenue
                      
                      $
                      10,631,839
                      
                      
                      $
                      -Merchandising
      Revenue
                      
                      
                      24,364
                      
                      
                      
                      820,213Total
      Revenue
                      
                      
                      10,656,203
                      
                      
                      
                      820,213Operating
      expensesCost
      of advertising
                      
                      $
                      10,022,889
                      
                      
                      $
                      -Cost
      of merchandising
                      
                      
                      20,495
                      
                      
                      
                      884,483Selling
      general & administrative
                      
                      
                      6,464,014
                      
                      
                      
                      2,842,360Selling
      general & administrative - related party
                      
                      
                      30,338
                      
                      
                      
                      101,257Professional
      fees
                      
                      
                      1,913,181
                      
                      
                      
                      672,659Professional
      fees - related party
                      
                      
                      155,640
                      
                      
                      
                      76,650Depreciation
      and amortization
                      
                      
                      106,774
                      
                      
                      
                      86,581Total
      costs and operating expenses
                      
                      $
                      18,713,331
                      
                      
                      $
                      4,663,990Loss
      from operations
                      
                      
                      (8,057,128
                      )
                      
                      
                      (3,843,777
                      )Non-operating
      income (expense)Interest
      expense
                      
                      
                      (4,488,467
                      )
                      
                      
                      (1,111,471
                      )Interest
      expense – related party
                      
                      
                      (32,000
                      )
                      
                      
                      -Change
      in derivative liability
                      
                      
                      3,998,034
                      
                      
                      
                      -Total
      non-operating expense
                      
                      $
                      (522,433)
                      
                      
                      $
                      (1,111,471
                      )Loss
      from operations before income taxes
                      
                      
                      (8,579,561
                      )
                      
                      
                      (4,955,248
                      )Provision
      for income tax
                      
                      
                      -
                      
                      
                      
                      -Net
      loss
                      
                      $
                      (8,579,561
                      )
                      
                      $
                      (4,955,248
                      )Net
      loss available to common stockholders
                      
                      $
                      (8,579,561
                      )
                      
                      $
                      (4,955,248
                      )Basic
      and diluted net loss per common share
                      
                      $
                      (0.20
                      )
                      
                      $
                      (0.13
                      )Weighted
      average shares of capital outstanding - basic
                      
                      
                      42,522,800
                      
                      
                      
                      36,958,016




See
accompanying notes of these unaudited condensed financial
statements.


- 5
-





BEYOND
COMMERCE, INC.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


For
the six month period ended June 30,


Unaudited




2009
                  
                  
                  2008Net
      cash used in operating activities
                  
                  $
                  (3,403,485
                  )
                  
                  $
                  (3,603,201
                  )Cash
      flows from investing activities:Cash
      paid to purchase property and equipment
                  
                  
                  (120,929
                  )
                  
                  
                  (78,223
                  )Net
      cash used in investing activities
                  
                  $
                  (120,929
                  )
                  
                  $
                  (78,223
                  )Cash
      flows from financing activities:Issuance
      of stock - net of offering costs
                  
                  
                  20,000
                  
                  
                  
                  93,533Cash
      received from short term borrowings
                  
                  
                  4,788,000
                  
                  
                  
                  3,538,232Cash
      Paid for debt financing fees
                  
                  
                  (430,000)
                  
                  
                  
                  -Payment
      on short term borrowings - related party
                  
                  
                  -
                  
                  
                  
                  (25,000)Payment
      on short term borrowings
                  
                  
                  (768,500
                  )
                  
                  
                  -Net
      cash provided by financing activities
                  
                  $
                  3,609,500
                  
                  
                  $
                  3,606,765Net
      increase (decrease) in cash & cash equivalents
                  
                  
                  85,086
                  
                  
                  
                  (74,659
                  )Cash
      & cash equivalents, beginning balance
                  
                  
                  100,086
                  
                  
                  
                  111,247Cash
      & cash equivalents, ending balance
                  
                  $
                  185,172
                  
                  
                  $
                  36,588




See
accompanying notes of these unaudited condensed financial
statements.


- 6
-




BEYOND
COMMERCE, INC.


NOTES
TO CONDENSED FINANCIAL STATEMENTS


(Unaudited)




NOTE
      1
            DESCRIPTION OF BUSINESS AND BASIS
      OF PRESENTATION





Beyond
Commerce, Inc., formerly known as BOOMj, Inc. (the “Company”), is an Internet
company that has three interrelated business models aimed at generating revenues
primarily from Web site advertising and E-commerce transactions.  Our
initial business wasBOOMj.com,
Inc., www.BOOMj.com,
a niche portal and social networking site for Baby Boomers and Generation
Jones.  Our BOOMj.com Web site provides social, political, financial,
and lifestyle content to the Baby Boomer/Generation Jones target audience as a
platform for our advertising and E-commerce businesses. Our LocalAdLink subsidiary
operates a Web site, www.LocalAdLink.com,
and a local search directory and advertising network that brings local
advertising to geo-targeted consumers.  We recently relaunched i-SUPPLY, www.i-SUPPLY.com,
an online storefront that offers easy to use, fully customizable E-commerce
services, and revenue solutions for any third party Web site large or small, and
hosts local ads, providing extensive reach for our proprietary advertising
partner network platform.




The
condensed consolidated financial statements and the notes thereto for the
periods ended June 30, 2009 and 2008 included herein have been prepared by
management and are unaudited. Such condensed financial statements reflect, in
the opinion of management, all adjustments necessary to present fairly the
financial position and results of operations as of and for the periods indicated
and in order to make the financial statements not misleading. All such
adjustments are of a normal recurring nature except for those described in Note
16 and related to the derivatives in Note 7. These interim results are not
necessarily indicative of the results for any subsequent period or for the
fiscal year ending December 31, 2009.





Certain
information and footnote disclosures normally included in the condensed
financial statements prepared in accordance with accounting principles generally
accepted in the United States have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange
Commission.  These consolidated financial statements should be read in
conjunction with the audited financial statements and the notes thereto for the
fiscal year ended December 31, 2008 in the Form 10-K, filed with the SEC on
April 3, 2009.




History
of the Company




The
Company, formerly known as Reel Estate Services, Inc. (“RES”), was incorporated
in Nevada on January 12, 2006.


As of
December 28, 2007, RES was a public shell company, defined by the Securities and
Exchange Commission as an inactive, publicly quoted company with nominal assets
and liabilities.




In
December 2008, the Company changed its name from BOOMj, Inc. to Beyond Commerce,
Inc. to more accurately reflect the new structure of the Company consisting of
two operating divisions: BOOMj.com dba i-SUPPLY and LocalAdLink,
Inc.




The
Company currently maintains its corporate office in Henderson,
Nevada.





NOTE 2 - SELECTED ACCOUNTING
POLICIES




Reclassifications





Certain
comparative amounts from prior periods have been reclassified to conform to the
current year's presentation. These changes did not affect previously reported
net loss.





Employee
Benefits





The
Company currently offers employees vacation benefits and during the second
quarter began offering a healthcare plan. During 2008, the Company implemented
the 2008 Equity Incentive Plan.


- 7
-





Accounting
Pronouncements





On
January 1, 2009, the Company adopted SFAS No. 157,Fair Value Measurements
(“SFAS 157”), for financial assets and financial liabilities. SFAS 157 defines
fair value, establishes a framework for measuring fair value under GAAP, and
expands disclosures about fair value measurements.




NOTE
3 – GOING CONCERN





The
Company's financial statements are prepared using generally accepted accounting
principles, which contemplate the realization of assets and liquidation of
liabilities in the normal course of business. However, even though the Company
has some degree of sales, it reflected a loss of $8,579,561 for the six months
ended June 30, 2009 and it will need to accelerate its business model
implementation otherwise there is a need to raise additional capital and or
obtain financing to continue operations in 2009. The failure to realize the
improvement in the business model presents conditions that raise substantial
doubt about the Company’s ability to continue as a going concern. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or amounts and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern.





Management
has taken steps to improve the business operations along with raising additional
funds to address its operating and financial cash requirements to continue
operations in the next twelve months (see Notes 8 and 15). Management has
devoted a significant amount of time in the raising of capital from additional
debt and equity financing. However, the Company’s ability to continue as a going
concern is dependent upon raising additional funds through debt and equity
financing and generating revenue. There are no assurances the Company will
receive the necessary funding or generate revenue necessary to fund
operations.





NOTE
4 - PROPERTY, WEB SITE AND COMPUTER EQUIPMENT





Property
and equipment at June 30, 2009 and December 31, 2008 consisted of the
following:




2009
                    
                    
                    2008Office
      and computer equipment
                    
                    $
                    307,542
                    
                    
                    $
                    186,614Web
      site
                    
                    
                    684,566
                    
                    
                    
                    684,566Total
      property, Web site and computer equipment
                    
                    
                    992,108
                    
                    
                    
                    871,180Less:
      accumulated depreciation
                    
                    
                    (427,140
                    )
                    
                    
                    (320,366
                    )$
                    564,968
                    
                    
                    $
                    550,814




Depreciation
and amortization expense for the three months and six months ended June 30, 2009
were $48,750 and $96,568, compared to $44,673 and $86,581 for the same periods
in 2008.




NOTE
5 – OTHER CURRENT ASSETS


Other
current assets consist of the following at June 30, 2009 and December 31,
2008





2009
                      
                      
                      2008Credit
      Card processor retention
                      
                      $
                      1,045,082
                      
                      
                      $
                      1,362Prepaid
      Insurance, rent and advertising
                      
                      
                      159,193
                      
                      
                      
                      -Other
                      
                      
                      40,523
                      
                      
                      
                      44,868TOTAL
                      
                      $
                      1,244,798
                      
                      
                      $
                      46,230





OTHER
ASSETS


Other
assets consist of the following at June 30, 2009 and December 31,
2008




2009
                      
                      
                      2008Rent
      Deposits
                      
                      $
                      37,988
                      
                      
                      $
                      20,828Credit
      Card Reserve
                      
                      
                      33,387
                      
                      
                      
                      33,387Vendor
      Deposit
                      
                      
                      60,556
                      
                      
                      
                      5,852TOTAL
                      
                      $
                      131,931
                      
                      
                      $
                      60,067


- 8
-




NOTE
6 - ACCRUED EXPENSES





Accrued
expenses consist of the following at June 30, 2009 and December 31,
2008:





2009
                              
                              
                              2008Accrued
      interest
                              
                              
                              447,672
                              
                              
                              
                              388,783Accrued
      commission
                              
                              
                              206,835
                              
                              
                              
                              220,869Accrued
      payroll and related expenses
                              
                              
                              1,120,089
                              
                              
                              
                              625,997Other
                              
                              
                              334,907
                              
                              
                              
                              138,885$
                              2,109,503
                              
                              
                              $
                              1,374,534









NOTE
7 – DERIVATIVE INSTRUMENTS





Several
of the notes contain provisions which if triggered would reset the conversion
price of the Notes including; (1) In the event the Company failed to timely
convert or deliver the conversion shares, the Notes went into default as defined
under the agreement or a change of control event; (2) a
reset provision in the conversion and exercise prices, should the Company
subsequently issue any common stock or instruments convertible or exchangeable
into common stock of the Company at a per share price lower than the
then-in-effect conversion price which, would automatically reset the conversion
price of the Notes to that lower price.  Because of these provisions,the Company determined that the conversion feature was not clearly and
closely related to the Note host contract and under the guidance of Emerging
Issues Task Force (“EITF”) 05-2 “The Meaning of Conventional Convertible Debt
Instrument Under EITF 00-19” and SFAS 133 “Accounting for Derivative Instruments
and Hedging Activities” (“SFAS 133”) it has bifurcated the conversion
feature.  Because the conversion feature is not considered to be
conventional convertible and note holders have the ability to demand cash
settlement of the conversion feature, the amount recorded has been shown as a
liability at June 30, of $207,047.  This liability was $1,523,651 at
December 31, 2008.  Under the requirements of SFAS 133, the Company
has remeasured the fair value of the conversion feature at each reporting period
after inception, with those changes in fair value being recorded in
the statement of operations.




NOTE
8 – SHORT TERM BORROWINGS





6/30/2009
                
                
                12/31/2008Note
      payable to Carole Harder bearing an annual interest rate of 12%,
      unsecured, due 10/6/2009
                
                $
                140,000
                
                
                $
                140,000Convertible
      Promissory Notes, bearing an annual interest rate of 12%, secured, due
      1/31/10
                
                
                2,380,000
                
                
                
                4,280,000Convertible
      Promissory Notes, bearing an annual interest rate of 18%, secured, due
      11/16/09
                
                
                1,600,000
                
                
                
                -Convertible
      Promissory Notes due 8/1/2009 (original issue discount of
      $75,000)
                
                
                575,000
                
                
                
                -Convertible
      Promissory Notes due 9/17/2009 (original note discount of $214,286 and
      penalty of $71,428)
                
                
                785,714
                
                
                
                -Convertible
      Promissory Notes due 6/26/2010 (original note discount of
      $83,330)
                
                
                583,330
                
                
                
                -Sundry Bridge Notes, bearing an annual
      interest rate 12%, unsecured, due between
      9/1/09-10/6/09
                
                
                1,280,000
                
                
                
                508,500Total
      principal
                
                $
                7,344,044
                
                
                $
                4,928,500Less
      debt discount
                
                
                1,993,653
                
                
                
                2,527,945Net
      balance
                
                $
                5,350,391
                
                
                $
                2,400,555


- 9
-





On
January 7, 2009 and February 10, 2009 the Company raised $100,000 and $60,000
respectively in a private offering from accredited investors. The securities
sold by the Company consisted of its 12% secured convertible promissory notes
and warrants to purchase 100,000 and 60,000 shares of the Company’s common
stock, respectively at an exercise price of $1.00. The warrants were valued
using the Black–Scholes method. This resulted in a total value of $117,885
assuming a fair value per share of $1.00, risk-free interest rates ranging of
1.50% to 1.74% respectively, based on the note issuance and 100% volatility
index.  Under EITF 00-27 and APB No. 14, we allocated the proceeds
from issuance of these notes and warrants based on the proportional fair value
for each item.  Consequently, we recorded a discount of $131,894 which
is being amortized over the term of these notes using an effective periodic
interest rate of 54.46%.  A beneficial conversion discount was
recorded on these convertible notes since these notes were convertible into
shares of common stock at an effective conversion price lower than the fair
value of the common stock.  The beneficial conversion amount was
limited to the portion of the cash proceeds allocated to those convertible
notes.





On
January 30 and February 25 and March 9, 2009, three of our 12% convertible note
holders converted their notes of $50,000, $105,000 and $50,000 respectively,
into shares of common stock at a conversion rate of $0.70.  This
resulted in an issuance of 71,429, 150,000 and 71,429 shares of common stock,
respectively.  In addition the three note holders also converted their
accumulated interest on their respective notes into shares of the Company’s
common stock at a conversion rate of $0.70.  The total interest
converted was $6,283, $13,727 and $3,617 respectively and converted into 8,976,
19,609 and 5,167 of the Company’s common shares, respectively.





During
March 2009, the holders of $2,025,000 of our secured convertible promissory
notes that were scheduled to mature on March 31, 2009 agreed to extend the
maturity date to July 31, 2009.  As consideration for their agreement
to extend the maturity date, we issued three-year warrants to the note holders
granting them the right to purchase an aggregate of 600,000 shares of our common
stock, at an exercise price of $1.00 per share. The Company recorded these
warrants at a value of $149,675 which is being amortized over the term of the
loan extensions.  During July 2009, the note holders, who had not yet
converted their notes into common shares, along with our July and August
noteholders  having this same July 31st
maturity date agreed to extend the maturity date to January 31, 2010. Theses
holders  have an aggregate of $2,380,000 of our secured convertible
promissory notes. We issued three-year warrants to the note holders granting
them the right to purchase an aggregate of 440,000 shares of our common stock,
at an exercise price of $1.00 per share. The Company recorded these warrants at
a value of $149,675 which is being amortized over the term of the loan
extensions.





On April
9, 2009,  the Company entered into the first tranche of a $1,000,000
financing (the “Financing”), with OmniReliant Holdings, Inc. (“Omni”) pursuant
to a purchase agreement whereby it sold to Omni a convertible original issue
discount promissory note in the principal amount of $550,000 (the “First Note”),
with the Company receiving proceeds of $500,000.  The First Note is
convertible at any time at the option of Omni at a conversion price of $1.00 and
is due on May 9, 2009.  Omni also received warrants to purchase up to
500,000 shares of the Company’s Common Stock with an exercise price of $1.00.
There was a reset provision associated with the note in regards subsequent
equity sales affecting the note, warrants and brokerage fees.  Based
on subsequent financing transactions, the exercise price of the warrants and the
conversion price of the debt was reset to $0.70.  In accordance with
EITF 07-5, “Determining Whether an Instrument (or Embedded Feature) is Indexed
to an Entity’s Own Stock”, related to the valuation of convertible notes and
warrants with conversion features and/or exercise features that can reset the
conversion and/or exercise price based on future equity transactions, the
Company valued the warrants and conversion feature of this note and bifurcated
them from the host contract as a derivative under SFAS 133 “Accounting for
Derivative Instruments and Hedging Activities” by recognizing an additional
liability for the fair value assigned to those derivative features of
approximately  $92,000.  At June 30, 2009 the value of the
derivative was approximately $10,000.  The change in the derivative
was reported in the statement of operations for the period ended June 30,
2009.  The company recorded a discount on this note of approximately
$216,000 related to the value of the warrants to be amortized over the term of
the note.  Since this note was paid off on May 7, 2009, this discount
was expensed and the derivative related to the note was removed during the
quarter ended June 30, 2009.





During
April 2009, eight of our note holders converted the principal and interest of
their convertible promissory notes into shares of the Company common stock at a
conversion rate of $0.70 per share.  Total principal converted was
$665,000, which was converted into 950,000 of the Company common
shares.  Total accrued interest of $77,137 was converted into 110,580
of the Company common shares.





On May 1,
2009, the Company issued a 120 day promissory note at 12% interest to an
accredited investor for $800,000.  As a condition of the note, the
company issued the lender 400,000 warrants to purchase the company common shares
at a price of $1.00 per share. The warrants were valued using the Black–Scholes
method. This resulted in a total value of $363,965, assuming a fair value per
share of $1.00, risk-free interest rate of 1.98% and, based on the note issuance
and 100% volatility index.  Under EITF 00-27 and APB No. 14, we
allocated the proceeds from issuance of this note and warrants based on the
proportional fair value for each item.  The relative fair value of the
warrant was $250,160.  A beneficial conversion discount was recorded
on the convertible note since the note is convertible into shares of common
stock at an effective conversion price lower than the fair value of the common
stock. Consequently, we recorded a total discount of $772,160 which is being
amortized over the term of this notes using an effective periodic interest rate
of 436%.  Note was extended on July 15, 2009 with a forced convertible
feature in return for monthly cash interest payments with the maturity date
being moved to January 28, 2010. The broker received a cash fee of
$80,000


- 10
-





On May 7,
2009 one of our note holders converted the principal and interest of their
convertible promissory note into shares of the Company common stock at a
conversion rate of $1.00 per share. Total principal converted was $100,000,
which was converted into 100,000 shares of the Company common
stock.  Total accrued interest converted was $4,000 into 4,000 of the
Company common shares.





On May
20, 2009, the Company executed a convertible promissory note (the “Note”) in the
principal amount of $1,600,000 payable to Linlithgow Holdings, LLC
(“Linlithgow”).  Pursuant to the Note, the Company promises to pay to
Linlithgow $1,600,000 in cash on November 20, 2009. The Note is convertible at
any time at a conversion price of $1.00 per share which was reset to $0.70 due
to a subsequent offering.  The Note bears an initial interest rate of
1.5% for the first month and increases by 1.5% per month until maturity. After
the maturity date, the default rate of interest becomes 18% per month or the
highest rate allowed by law, whichever is lower, until the date the Note amount
is actually paid. Further, as part of the consideration provided to the
Holder for the Note, the Holder also received a warrant for the purchase of up
to 1,782,000 shares of the Company’s common stock at an exercise price of $0.90
per share. The warrants are exercisable, in whole or in part, any time from and
after the date of issuance of the warrant. Due to a
subsequent  ratchet adjustment based on the issuance of warrants at a
lower per share price, the exercise price of these warrants has been adjusted to
$0.70. In accordance with EITF 07-5, “Determining Whether an Instrument (or
Embedded Feature) is Indexed to an Entity’s Own Stock”, related to the valuation
of convertible notes and warrants with conversion features and/or exercise
features that can reset the conversion and/or exercise price based on future
equity transactions, the Company valued the warrants and conversion feature of
this note and bifurcated them from the host contract as a derivative under SFAS
133 “Accounting for Derivative Instruments and Hedging Activities” by
recognizing an additional liability for the fair value assigned to those
derivative features of  approximately $618,000 at inception of the
agreement.  At June 30, 2009 the value of the derivative was
approximately $67,000.  The change in the derivative was reported in
the statement of operations for the period ended June 30, 2009.  The
company recorded the discount on this note of approximately $465,000 related to
the value of the warrants to be amortized over the term of the note at an
effective rate 12%.  Additionally, the warrants issued as costs of
this financing were valued at approximately $1,125,000 and are being amortized
over the term of the note.  The broker also received a cash fee
of $120,000 from the proceeds of this note.





During
May 2009, seven of our note holders converted the principal and interest of
their convertible promissory notes into shares of the Company common stock at a
conversion rate of $.70 per share.  Total principal converted was
$920,000, which was converted into 1,314,285 of the Company common
shares.  Total accrued interest of $105,340 was converted into 150,487
of the Company common shares.





On June
4, 2009 the Company sold a Convertible Original Issue Discounted (OID)
promissory note for $526,316 to an accredited investor which is due
1/15/2010.  The
Company paid the broker a cash fee of $50,000.  However, on
June 19, 2009, the average trading volume of the common stock of the Company was
under $80,000 for the ten prior consecutive trading days, which constituted a
technical “Event of Default” under the Company’s Series 2009 Secured Convertible
Original Issue Discount Note Due January 15, 2010, dated June 4, 2009 (the
“Note”), made by the Company, in favor of St. George Investments, LLC (St.
George). As a result of the Event of Default, the principal amount of the Note,
equal to $714,286, plus a penalty of $71,428.60 (equal to 10% of the principal
amount), became immediately due and payable. At any time following either the
Maturity Date or occurrence of an Event of Default, the note may be convertible
into shares of the Common Stock of the Company valued at the Market Price which
is hundred percent (100%) of the lower of (a) the closing bid price on the
trading day on which the Share Conversion Request is made or (b) the average of
the volume weighted average prices as reported by Bloomberg, L.P. during the ten
(10) trading days in the primary trading market for Common Shares prior to and
including the trading day on which the Share Conversion Request is
made.





The St.
George Note is secured by an aggregate of 4,020,000 shares of the Company’s
common stock pledged by affiliates of the Company, pursuant to stock pledge
agreements entered into by the affiliates in favor of St. George, including
2,020,000 shares pledged by Mark Noffke, the Company’s chief financial officer.
Pursuant to the pledge agreement entered into by Mr. Noffke, shares pledged by
Mr. Noffke may be transferred to St. George and sold in full satisfaction of the
Company’s obligations under the Note.


- 11
-





Subsequently,
the Company and St. George Investments, LLC, entered into an agreement dated
July 30, 2009 (the “Agreement”) pursuant to which the Company will satisfy the
remaining outstanding balance of $420,593.40 on its Series 2009 Secured
Convertible Original Issue Discount Note, due June 15, 2010, issued to St.
George (the “Note”).  Pursuant to the Agreement, the Company will make
the following payments (the “Scheduled Payments”) on the Note:  (i)
$100,000 paid on July 30, 2009, (ii) $50,000 shall be paid by August 6, 2009,
(iii) 50,000 shall be paid by August 13, 2009, (iv) $50,000 shall be paid by
August 20, 2009, (v) $50,000 shall be paid by August 27, 2009, (vi) $50,000
shall be paid on or before September  3, 2009, (vii) $50,000 shall be
paid on or before September 10, 2009 and (viii) $20,995.40 shall be paid on or
before September 17, 2009.  The
Company has settled the first two payments of the Agreement.  In
addition, when the note was deemed in default, St. George took collateral and
monetized it towards payment of the note.  Provided the Scheduled
Payments continue to be made in accordance with the Agreement, the Note shall be
deemed paid in full and St. George shall return 3,015,424 shares of the
Company’s common stock which had been pledged as security for repayment of the
Note, and will not hold any other shares pledged in connection with the
Note.




On June
16, 2009, the Company entered into another financing with Omni pursuant to a
second purchase agreement whereby it sold Omni a convertible original issue
discount promissory note (the “Second Note”) in the principal amount of
$575,000, with the Company receiving proceeds of $500,000, with aggregate
Financing proceeds totaling $1,000,000.  Pursuant to the terms of the
Second Note, the Company must pay to the Holder $575,000 in cash on August 1,
2009. The Second Note is convertible at any time at a conversion price of $0.70
per share. In addition, the Company gave the lender 700,000 and the broker
56,000 warrants to purchase the Company stock at a price of $0.70. In accordance
with EITF 07-5, “Determining Whether an Instrument (or Embedded Feature) is
Indexed to an Entity’s Own Stock”, related to the valuation of convertible notes
and warrants with conversion features and/or exercise features that can reset
the conversion and/or exercise price based on future equity transactions, the
Company valued the warrants and conversion feature of this note and bifurcated
them from the host contract as a derivative under SFAS 133 “Accounting for
Derivative Instruments and Hedging Activities” by recognizing an additional
liability for the fair value assigned to those derivative features
of  approximately $24,000 at inception of the agreement.  At
June 30, 2009 the value of the derivative was approximately
$12,000.  The change in the derivative was reported in the statement
of operations for the period ended June 30, 2009.  The company
recorded a discount on this note of approximately $175,000 related to the value
of the warrants to be amortized over the term of the note at an effective rate
of 24%.  Additionally, the warrants issued as costs of this financing
were valued at approximately $25,000 and are being amortized over the term of
the note. The Broker received a cash payment of $40,000 from the proceeds of the
note. The note was paid in full on July 20, 2009.





On June
29, 2009, the Company entered into Securities Purchase Agreement (the
“Securities Purchase Agreement”) with Omni. Additionally, on July 2, 2009, the
Company and Omni entered into an amended and restated Securities Purchase
Agreement (the Purchase Agreement as amended and restated is referred to herein
as the “Securities Purchase Agreement”).  Pursuant to the Securities
Purchase Agreement, Omni agreed to purchase up to $3,500,000 in principal amount
of the Company’s Original Issue Discount Secured Convertible Debentures (the
“Debentures”) for a purchase price of up to $3,000,000.  As part of
this Agreement 5,000,000 shares of the Company’s Common Stock held by Linlithgow
Holdings, LLC was pledged as collateral.





Pursuant
to the Securities Purchase Agreement, the Company has sold Omni an aggregate of
$1,166,660 of Debentures and received gross proceeds of $1,000,000 and Omni
agreed to purchase an additional Debenture with a face value of up to $2,333,340
on or before July 30, 2009.  Omni was also issued warrants to purchase
4,999,972 shares of the Company’s Common Stock with an exercise price of $0.70
per share subject to a reset provision. The warrants are exercisable, for five
years from the date of issuance.  The Debentures are convertible into
shares of the Company’s Common Stock at any time at the option of the Holder at
a conversion price of $0.70 per share, subject to adjustment (the “Conversion
Price”).  Interest on the Debenture is 10% per annum.  The
first Debenture was issued on June 29, 2009 and the second Debenture to be
issued on July 2, 2009.  The principal amount of each of the
Debentures is $583,350 and each has a maturity date of twelve months from the
date of issuance.  The Debentures cannot be converted to common stock
to the extent such conversion would cause the holder of the Debenture, together
with such holder’s affiliates, to beneficially own in excess of 4.99% (or a
maximum 9.99% in certain cases) of the Company’s outstanding common stock
immediately following such conversion.  As part of the Agreement,
2,499,986 five year warrants to purchase the Company stock at $0.70 were issued
to Omni at a value of $270,000.





Beginning
six months from the original issue date of the  Debentures, on the 1stof each month (the
“Monthly Redemption Date”) the Company must redeem the Monthly Redemption Amount
($97,221.66 for each $583,330 Debenture, plus accrued but unpaid interest,
liquidated damages and any other amounts then owing to the Holder under the
Debenture). The Monthly Redemption Amount payable on each Monthly Redemption
Date shall be paid in cash at a rate of 110% of the Monthly Redemption Amount or
upon 30 trading days’ notice the Company may in lieu of cash pay all or part of
the Monthly Redemption Amount in conversion shares.


- 12
-





Payment
of the Debentures issued to Omni is secured pursuant to a security interest and
pledge agreement (the “Security Interest and Pledge Agreement”) whereby, on June
29, 2009, Linlithgow Holdings LLC pledged 2,500,000 shares of BYOC common
stock.  On July 2, 2009, the Company and Omni amended the Security
Interest and Pledge Agreement so that additional pledgors could pledge their
respective unpledged shares of BYOC Common Stock (the Security Interest and
Pledge Agreement, as amended and restated, is referred to herein as the
“Security Interest and Pledge Agreement”).  Pursuant to the terms of
the Security Interest and Pledge Agreement, Linlithgow Holdings, LLC pledged an
additional 3,982,000 shares of BYOC Common Stock, Wendy Borow-Johnson, the
President of Brand Management pledged 480,000 shares BYOC Common Stock, and
Robert McNulty, the Chief Executive Officer of the Company, pledged 505,000
shares of BYOC Common Stock.





On June 29, 2009 the Company issued
Omni the first Debenture in the amount of $583,350 and received gross proceeds
of $500,000. There is reset provision associated with the note in regards to the
payment date.  Additionally,
there is a provision in the agreement, whereby, if there is a change in control
of the Company, the holder has the right to accelerate payment which is based
off a formula which could result in a payment greater than the principal and
interest amount owing before the change of control.  In addition for
the receipt of funds, the company issued the lender 2,499,986 and the broker
199,999 warrants to purchase the company common stock at a price of $0.70. In
accordance with EITF 07-5, “Determining Whether an Instrument (or Embedded
Feature) is Indexed to an Entity’s Own Stock”, related to the valuation of
convertible notes and warrants with conversion features and/or exercise features
that can reset the conversion and/or exercise price based on future equity
transactions, the Company valued the warrants and conversion feature of this
note and bifurcated them from the host contract as a derivative under SFAS 133
“Accounting for Derivative Instruments and Hedging Activities” by recognizing an
additional liability for the fair value assigned to those derivative features
of  approximately $74,000 at inception of the agreement.  At
June 30, 2009 the value of the derivative was approximately
$54,000.  The change in the derivative was reported in the statement
of operations for the period ended June 30, 2009.  The company
recorded a discount on this note of approximately $298,000 related to the value
of the warrants to be amortized over the term of the note at an effective rate
of 20%.  Additionally, the warrants issued as costs of this financing
were valued at approximately $65,000 and are being amortized over the term of
the note.The
Company also paid the broker a $40,000 cash fee




During
June 2009, two of our note holders converted the principal and interest of their
convertible promissory notes into shares of the Company common stock at a
conversion rate of $.70 per share.  Total principal converted was
$110,000, which was converted into 157,143 of the Company common
shares.  Total accrued interest of $12,940 was converted into 18,485
of the Company common shares.





The
Company recorded $4,520,467 and $1,111,471 as interest expense on the above
notes for six month period ended June 30, 2009 and 2008, respectively. Also,
included in interest expense is the amortization of $3,759,367 and $892,584 of
loan origination fees and discount associated with these notes for the six
months ended June 30, 2009 and 2008 respectively.




NOTE 9 - COMMON STOCK, WARRANTS AND
PAID IN CAPITAL




Common
Stock




On
January 5, 2009, we issued 1,000 shares of common stock to an individual for
services rendered with setting up our debit card program used for paying our
sales representatives valued at $1.00 per share





On
January 12, 2009 we issued 25,000 shares of common stock for cash at $0.80 per
share to an accredited investor.





On
January 30, February 25 and March 9, 2009, three of our 12% convertible note
holders converted their notes of $50,000, $105,000 and $50.000 respectively,
into shares of common stock at a conversion rate of $0.70.  This
resulted in an issuance of 71,429, 150,000 and 71,429 shares of common stock,
respectively.  In addition these three note holders also converted
their accumulated interest on their respective notes into shares of the
Company’s common stock at a conversion rate of $0.70.  The total
interest converted was $6,283, $13,727 and $3,617 respectively and converted
into 8,976, 19,609 and 5,167 of the Company’s common shares,
respectively.





In
January 2009, we issued 10,000 shares of our common stock for services provided
as a commission for assisting the Company with fund raising. The shares were
valued at $1.00.





On
February 11, 2009, we issued 52,000 shares of our common stock for services
rendered in connection with our convertible bridge loans procured during the
fourth quarter 2008. This amount had been accrued for at $1.00 per share when
the service was provided in 2008.





On
February 18, 2009, we issued 5,000 shares of stock as compensation to an
employee with a value of $1.00 per share.





On April
6, 2009 three individual warrant holders exercised the cashless option and
converted their warrants into 189,086; 47,276 and 48,504 of Company common
stock.





On April
14 and April 24, 2009 two individual warrant holders exercised the cashless
option and converted their warrants into 36,160 and 39,920 shares of Company
common stock, respectively.


- 13
-





On April
15, 2090, the Company issued 25,000 shares of common stock at $1.44 per share
value for professional services received.





On April
30, 2009, the Company issued 126,988 unrestricted shares of common stock in lieu
of $198,101 in commissions earned to 16 different independent sales
representatives.





On May 1,
2009, the Company issued 70,000 unrestricted shares of common stock in lieu of
$101,100for professional services received.





On May
21, 2009, the Company issued 2,500 shares of common stock valued at $1.00 as
compensation to an employee.





On May
22, 2009, the Company issued 14,514 unrestricted shares of common stock in lieu
of $14,514 in commissions earned to 16 different independent sales
representatives.





On June
1, 2009, the Company issued 15,000 unrestricted shares of common stock and
40,000 shares of restricted common stock in lieu of $55,000 in commissions
earned to 4 different independent sales representatives.





On June
2, 2009, the Company issued 200,000 shares of unrestricted common stock for
professional services received with a value of $202,000.





On June
9, 2009, the Company issued 15,000 unrestricted shares of common stock and
35,000 shares of restricted common stock in lieu of $61,000 in commissions
earned to 2 different independent sales representatives.





On
June25, 2009, the Company issued 2,000 unrestricted shares of common stock and
7,500 shares of restricted common stock in lieu of $9,500 in commissions earned
to 2 different independent sales representatives.





On June
25, 2009, the Company issued 100,000 unrestricted common stock valued at $84,000
for professional services received.





During
the three months ended June 30, 2009, the Company had 17 of our 12% convertible
notes converted into shares of our common stock by 16 individual note holders as
follows:




Conversion
                      Date
                    
                    Principal
                      Converted
                    
                    
                    Principal
                      Shares Issued
                    
                    
                    Interest
                      Converted
                    
                    
                    Interest Shares
                      Issued
                    
                    
                    Conversion
                      Rate4/6/2009
                    
                    $
                    75,000
                    
                    
                    
                    107,143
                    
                    
                    $
                    6,775
                    
                    
                    
                    9,679
                    
                    
                    
                    0.704/6/2009
                    
                    $
                    200,000
                    
                    
                    
                    285,714
                    
                    
                    $
                    17,533
                    
                    
                    
                    25,048
                    
                    
                    
                    0.704/6/2009
                    
                    $
                    100,000
                    
                    
                    
                    142,857
                    
                    
                    $
                    8,833
                    
                    
                    
                    12,619
                    
                    
                    
                    0.704/20/2009
                    
                    $
                    50,000
                    
                    
                    
                    71,429
                    
                    
                    $
                    7,983
                    
                    
                    
                    11,405
                    
                    
                    
                    0.704/27/2009
                    
                    $
                    50,000
                    
                    
                    
                    71,429
                    
                    
                    $
                    7,366
                    
                    
                    
                    10,905
                    
                    
                    
                    0.704/27/2009
                    
                    $
                    100,000
                    
                    
                    
                    142,857
                    
                    
                    $
                    15,267
                    
                    
                    
                    21,810
                    
                    
                    
                    0.704/6/2009
                    
                    $
                    5,000
                    
                    
                    
                    7,143
                    
                    
                    $
                    728
                    
                    
                    
                    1,040
                    
                    
                    
                    0.704/17/2009
                    
                    $
                    5,000
                    
                    
                    
                    7,143
                    
                    
                    $
                    747
                    
                    
                    
                    1,067
                    
                    
                    
                    0.704/22/2009
                    
                    $
                    5,000
                    
                    
                    
                    7,143
                    
                    
                    $
                    755
                    
                    
                    
                    1,079
                    
                    
                    
                    0.704/6/2009
                    
                    $
                    25,000
                    
                    
                    
                    35,714
                    
                    
                    $
                    3,642
                    
                    
                    
                    5,202
                    
                    
                    
                    0.704/17/2009
                    
                    $
                    25,000
                    
                    
                    
                    35,714
                    
                    
                    $
                    3,733
                    
                    
                    
                    5,333
                    
                    
                    
                    0.704/22/2009
                    
                    $
                    25,000
                    
                    
                    
                    35,714
                    
                    
                    $
                    3,775
                    
                    
                    
                    5,393
                    
                    
                    
                    0.705/6/2009
                    
                    $
                    10,000
                    
                    
                    
                    14,286
                    
                    
                    $
                    1,557
                    
                    
                    
                    2,224
                    
                    
                    
                    0.705/6/2009
                    
                    $
                    50,000
                    
                    
                    
                    71,429
                    
                    
                    $
                    7,783
                    
                    
                    
                    11,119
                    
                    
                    
                    0.705/1/2009
                    
                    $
                    300,000
                    
                    
                    
                    428,571
                    
                    
                    $
                    29,600
                    
                    
                    
                    42,286
                    
                    
                    
                    0.705/6/2009
                    
                    $
                    200,000
                    
                    
                    
                    285,714
                    
                    
                    $
                    20,200
                    
                    
                    
                    28,857
                    
                    
                    
                    0.705/6/2009
                    
                    $
                    200,000
                    
                    
                    
                    285,714
                    
                    
                    $
                    31,133
                    
                    
                    
                    44,476
                    
                    
                    
                    0.705/7/2009
                    
                    $
                    30,000
                    
                    
                    
                    42,857
                    
                    
                    $
                    2,750
                    
                    
                    
                    3,929
                    
                    
                    
                    0.705/7/2009
                    
                    $
                    30,000
                    
                    
                    
                    42,857
                    
                    
                    $
                    2,750
                    
                    
                    
                    3,929
                    
                    
                    
                    0.705/7/2009
                    
                    $
                    100,000
                    
                    
                    
                    100,000
                    
                    
                    $
                    4,000
                    
                    
                    
                    4,000
                    
                    
                    
                    1.005/19/2009
                    
                    $
                    100,000
                    
                    
                    
                    142,857
                    
                    
                    $
                    9,567
                    
                    
                    
                    13,667
                    
                    
                    
                    0.706/10/2009
                    
                    $
                    10,000
                    
                    
                    
                    14,286
                    
                    
                    $
                    1,673
                    
                    
                    
                    2,390
                    
                    
                    
                    0.706/12/2009
                    
                    $
                    100,000
                    
                    
                    
                    142,857
                    
                    
                    $
                    11,267
                    
                    
                    
                    16,095
                    
                    
                    
                    0.702nd
      Quarter Total
                    
                    $
                    1,795,000
                    
                    
                    $
                    2,521,428
                    
                    
                    $
                    199,417
                    
                    
                    
                    283,552


- 14
-





Warrants





The
following is a summary of the Company’s outstanding common stock purchase
warrants:





Outstanding
                    
                    
                    Issued 6 months
                    
                    
                    
                    
                    
                    OutstandingExercise Price
                    
                    
                    December 31, 2008
                    
                    
                    Ended June 30, 2009
                    
                    
                    Exercised
                    
                    
                    June30, 2009$
                    0.01
                    
                    
                    
                    153,920
                    (1)
                    
                    
                    -
                    
                    
                    
                    (40,400
                    )
                    
                    
                    113,520
                    (1)$
                    0.30
                    
                    
                    
                    30,300
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    30,300$
                    0.50
                    
                    
                    
                    101,000
                    (1)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    101,000
                    (1)$
                    0.70
                    
                    
                    
                    5,087,484
                    
                    
                    
                    5,777,985
                    
                    
                    
                    -
                    
                    
                    
                    10,865,469$
                    0.93
                    
                    
                    
                    4,026,646
                    
                    
                    
                    -
                    
                    
                    
                    (898,786
                    )
                    
                    
                    3,127,860$
                    1.00
                    
                    
                    
                    503,247
                    
                    
                    
                    1,240,000
                    
                    
                    
                    -
                    
                    
                    
                    1,743,247$
                    2.40
                    
                    
                    
                    132,310
                    (1)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    132,310
                    (1)10,034,907
                    
                    
                    
                    7,017,985
                    
                    
                    
                    939,186
                    
                    
                    
                    16,113,706




(1)
            The outstanding warrants as of
      December 31, 2008,  include an additional 260,442 warrants
      issued to replace the warrants previously issued by BOOMj.com, Inc., which
      new warrants were issued at a rate of 2.02 shares of the Company common
      stock for each warrant share of BOOMj.com. The Company has reserved a
      sufficient number of shares of authorized common stock for issuance upon
      exercise of the outstanding
warrants.




2008
Stock Option Plan





In
September 2008, the Company's Board of Directors approved the 2008 Equity
Incentive Plan of Beyond
Commerce (the "Plan"). On June 12, 2009, the Company’s Board of Directors
amended and approved increasing the plan from 3,500,000 available options to
7,000,000.  This amendment was approved by the shareholders on July
24, 2009 at the Company’s annual shareholder meeting.





Stock Options
Granted





On
September 11, 2008, the Board of Directors approved the issuance of stock
options as described below in accordance with the 2008 Equity Incentive
Plan. The employee options have a cliff vesting schedule over a three year
period that vest one third after one year of service and then 4.2% per month
over the remaining twenty-four months. Options issued to non-employees for
meeting performance-based goals vest immediately.


- 15
-




Outstanding
                  
                  
                  Issued 6 months
                  
                  
                  Cancelled or
                  
                  
                  OutstandingOption Group
                  
                  
                  December 31, 2008
                  
                  
                  Ended June 30, 2009
                  
                  
                  Exercised
                  
                  
                  June 30, 2009$
                  0.50-0.69
                  
                  
                  
                  -
                  
                  
                  
                  1,091,658
                  
                  
                  
                  -
                  
                  
                  
                  1,091,658$
                  0.70-0.89
                  
                  
                  
                  470,000
                  
                  
                  
                  705,547
                  
                  
                  
                  11,700
                  
                  
                  
                  1,163,847$
                  0.90-0.99
                  
                  
                  
                  451,049
                  
                  
                  
                  512,441
                  
                  
                  
                  -
                  
                  
                  
                  963,490$
                  1.00-1.25
                  
                  
                  
                  73,271
                  
                  
                  
                  1,207,500
                  
                  
                  
                  -
                  
                  
                  
                  1,280,771$
                  1.25-1.70
                  
                  
                  
                  120,000
                  
                  
                  
                  290,170
                  
                  
                  
                  -
                  
                  
                  
                  410,1701,114,320
                  
                  
                  
                  3,807,316
                  
                  
                  
                  11,700
                  
                  
                  
                  4,909,936




The
estimated fair value of the aforementioned options was calculated using the
Black-Scholes model.  Consequently, the Company recorded a share-based
compensation expense of $685,661 and $1,504,476 for the three and six months
ended June 30, 2009, respectively. Total compensation costs to be recognized
over the next three years will be $1,514,812 for all non-vested options as of
June 30, 2009. Expense will equal or exceed the vested amount of the
options.





Dividends





The
Company has never issued dividends.





NOTE
10 – COMMITMENTS AND CONTINGENCIES





Operating
Lease





The
Company leases certain office space, under operating leases which generally
require the Company to pay taxes, insurance and maintenance expenses related to
the leased property.  The leases for office space have lease extension
renewal options for an added two to three years at fair market rent values. The
Company believes that in the normal course of business, leases will be renewed
or replaced by other leases.  In December 2007 the Company entered
into a four year lease for 4,560 square feet in Henderson, Nevada which houses
its corporate office.  The Company also leases a fully furnished three
bedroom apartment in the Henderson, Nevada area effective June 11, 2009 through
July 30, 2009.  The monthly rent expense is $4,250 plus
utilities.  The Company rented the apartment for executives and
consultants to alleviate hotel expenses for these individuals that work in our
Henderson but are not residents of the area. The Company closed its Irvine, CA
office on May 31, 2009.





Total
rent expense incurred by the Company, which includes the leases above and sundry
month to month rental expenditures was $52,326 and $58,683 for the six month
period ended June 30th  2009
and 2008, respectively. The Company signed an amendment to its lease in
Henderson, Nevada in February 2009, effective March 16, 2009 for an additional
5,634 square feet of office space adjacent to the current
office.  This amendment ties to the expiration of the present lease
and will expire January 31, 2012.  The Company has future minimum
lease obligations as follows:





Twelve months ending
                      June 30,
                    
                    20092010
                    
                    $
                    428,3922011
                    
                    
                    294,3752012
                    
                    
                    161,501Total
                    
                    $
                    884,268




Convertible
Promissory Notes





The
Company currently has outstanding $2,380,000 of short-term convertible
promissory notes that are secured by a lien on all of the Company’s
assets.


- 16
-




NOTE
11 – SEGMENT REPORTING





Beyond
Commerce, Inc manages its operations through two business segments:
BOOMj.com  dba i-Supply and LocalAdLink. Each unit owns and operates
the segments under the respective names.





The
Company evaluates performance based on net operating profit. Administrative
functions such as finance, treasury, and information systems are centralized and
although they are not considered operating segments are presented below for
informative purposes. However, where applicable, portions of the administrative
function expenses are allocated between the operating segments. The operating
segments do share facilities in Henderson NV. In the event any supplies and/or
services are provided to one operating segment by the other, the transaction is
valued according to the company’s transfer policy, which approximates market
price. The costs of operating the segments are captured discretely within each
segment. The Company’s leasehold improvements, property, computer equipment,
inventory, and results of operations are captured and reported discretely within
each operating segment.





Summary
financial information for the two reportable segments as of the six months ended June 30 is as
follows:





2009
                    
                    
                    2008Operations:
      BOOMj.com dba i-SupplyNet
      sales
                    
                    $
                    168,972
                    
                    
                    $
                    820,213Gross
      Margin
                    
                    
                    148,477
                    
                    
                    
                    (64,270
                    )Depreciation
                    
                    
                    (96,568
                    )
                    
                    
                    (86,581
                    )Assets
                    
                    
                    621,180
                    
                    
                    
                    1,047,231Capital
      Expenditures
                    
                    
                    3,691
                    
                    
                    
                    75,360Operations:
      LocalAdLinkNet
      sales
                    
                    $
                    10,487,230
                    
                    
                    
                    -Gross
      Margin
                    
                    
                    464,342
                    
                    
                    
                    -Depreciation
                    
                    
                    (10,206
                    )
                    
                    
                    -Assets
                    
                    
                    2,536,902
                    
                    
                    
                    -Capital
      Expenditures
                    
                    
                    109,596
                    
                    
                    
                    -Consolidated
      Operations:Net
      sales
                    
                    $
                    10,656,203
                    
                    
                    
                    820,213Gross
      Margin
                    
                    
                    612,819
                    
                    
                    
                    (64,270
                    )Other
      operating expenses
                    
                    
                    (8,563,173
                    )
                    
                    
                    (3,692,926
                    )Depreciation
                    
                    
                    (106,774
                    )
                    
                    
                    (86,581
                    )Non-operating
      income (expense)
                    
                    
                    (522,433
                    )
                    
                    
                    (1,111,471
                    )Loss
      from operations before income taxes
                    
                    
                    (8,579,561
                    )
                    
                    
                    (4,955,248
                    )Assets
                    
                    
                    4,840,462
                    
                    
                    
                    1,047,231Capital
      Expenditures
                    
                    
                    120,929
                    
                    
                    
                    75,360





Summary financial
information for the two reportable segments as of the three months ended June 30 is
as follows:





2009
                  
                  
                  2008Operations:
      BOOMj.com dba i-SupplyNet
      sales
                  
                  $
                  141,985
                  
                  
                  $
                  59,264Gross
      Margin
                  
                  
                  136,015
                  
                  
                  
                  (4,401
                  )Depreciation
                  
                  
                  (48,570
                  )
                  
                  
                  (44,673
                  )Assets
                  
                  
                  621,180
                  
                  
                  
                  1,047,231Capital
      Expenditures
                  
                  
                  3,691
                  
                  
                  
                  3,705Operations:
      LocalAdLinkNet
      sales
                  
                  $
                  4,470,049
                  
                  
                  
                  -Gross
      Margin
                  
                  
                  (304,289
                  )
                  
                  
                  -Depreciation
                  
                  
                  (6,433
                  )
                  
                  
                  -Assets
                  
                  
                  2,536,902
                  
                  
                  
                  -Capital
      Expenditures
                  
                  
                  29,416
                  
                  
                  
                  -Consolidated
      Operations:Net
      sales
                  
                  $
                  4,612,034
                  
                  
                  
                  59,264Gross
      Margin
                  
                  
                  (304,289
                  )
                  
                  
                  (4,401
                  )Other
      operating expenses
                  
                  
                  (4,687,303
                  )
                  
                  
                  (1,718,064
                  )Depreciation
                  
                  
                  (55,003
                  )
                  
                  
                  (44,673
                  )Non-operating
      income (expense)
                  
                  
                  (870,477
                  )
                  
                  
                  (629,442
                  )Loss
      from operations before income taxes
                  
                  
                  (5,916,972
                  )
                  
                  
                  (2,396,580
                  )Assets
                  
                  
                  4,840,462
                  
                  
                  
                  1,047,231Capital
      Expenditures
                  
                  
                  33,107
                  
                  
                  
                  3,705


- 17
-





NOTE
12 – NET LOSS PER SHARE OF COMMON STOCK





The
Company has adopted Financial Accounting Standards Board ("FASB") Statement
Number 128, "Earnings per Share," which requires presentation of basic and
diluted EPS on the face of the income statement for all entities with complex
capital structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation. In the accompanying financial statements, basic loss
per share of common stock is computed by dividing net loss by the weighted
average number of shares of common stock outstanding during the
year.  Basic net loss per common share is based upon the weighted
average number of common shares outstanding during the period. Dilution is
computed by applying the treasury stock method. Under this method, options and
warrants are assumed to be exercised at the beginning of the period (or at the
time of issuance, if later), and as if funds obtained thereby were used to
purchase common stock at the average market price during the period. However,
shares associated with convertible debt, stock options and stock warrants
are not included because the inclusion would be anti-dilutive (i.e. reduce the
net loss per common share).  The total number of such stock option
warrant shares and potential shares to be issued upon conversion of debt
excluded from the diluted net loss per common share presentation was 30,906,562
and 10,847,053 at June 30, 2009 and 2008, respectively.





The above
amounts are not included in the computation of diluted earnings per share
because the effect of these instruments would be anti-dilutive (i.e., reduce the
loss per share) for the three and six months ended June 30, 2009. The following
is a reconciliation of the numerator and denominator of the basic and diluted
earnings per share computations for the period ended June 30, 2009 and
2008:





Numerator





Basic and
diluted net loss per share for the six months ended June 30:




Unaudited
                    
                    
                    Unaudited2009
                    
                    
                    2008Net
      loss available to common stockholders
                    
                    $
                    (8,579,561
                    )
                    
                    $
                    (4,955,248
                    )DenominatorBasic
      and diluted weighted average number of shares outstanding
                    
                    
                    42,522,800
                    
                    
                    
                    37,596,188Basic
      and diluted net loss per share
                    
                    $
                    (0.
      19
                    )
                    
                    $
                    (0.13
                    )





NOTE 13 - SUPPLEMENTAL
DISCLOSURES OF CASH FLOWS (not described elsewhere)




The
Company prepares its statements of cash flows using the indirect method as
defined under the Financial Accounting Standard No. 95. The Company paid $25,276
and $34,194 for the three months and six months ended June 30, 2009 and $13,937
and $34,454 for the three months and six months ended June 30 2008, respectively
for interest. The Company did not make any payments for income tax during the
three months or six months ended June 30, 2009 or 2008. For the six month
period ending June 30, 2009, the Company incurred approximately $1,480,000 and
$124.000 of debt related fees, which were paid by issuing common stock and/or
warrants.





During
the quarter ended June 30, 2009, approximately $4,165,103of expense was recorded
which was paid for by issuing stock, options and warrants.


- 18
-




NOTE 14 - RELATED
PARTIES





The
Company paid Linlithgow Holdings, LLC. (an affiliate shareholder) $255,640
and $77,740   in commissions and consulting fees for the six months
ended June 30, 2009 and the three months ended June 30, 2009 respectively, as
compared to $76,650 and $53,450 for the same periods in 2008, respectively. The
Company also accrued interest due Linlithgow Holdings, LLC. in the amount of
$32,000 for  the six months ended June 30, 2009.  We also
have related party transactions with FA Corp in which the principal shareholder
is a member of our board of directors, Murray Williams.  We incurred
expenses for FA Corp of $30,338 and $6,930 for services rendered for the six
months ended June 30, 2009 and the three months ended June 30, 2009,
respectively compared to $101,257 and $42,265 for the six months ended June 30,
2008 and the three months ended June 30, 2008, respectively.




The
Credit Card merchant accounts are personally guaranteed by an officer of the
Company.




NOTE 15 - SUBSEQUENT
EVENTS





The
Company issued on July 6, July 8 and July 9, 60,000; 350,000 and 5,000 shares of
common stock respectively to three different independent contractors for
services rendered which were valued at $21,000, $154,000 and $5,000
respectively




On July
2, 2009 the Company secured an Original Issue Discounted Promissory note of
$583,330 for the receipt of $500,000 that matures on June 29,
2010.  There is a reset provision associated with the note in regards
to payment date. In addition for the receipt of funds, the company gave the
lender 2,499,986 and the broker 199,999 warrants to purchase the company common
stock at a price of $0.70. The warrants  have a reset provision.
Interest is payable commencing six months from the date of the note (monthly
redemption date) upon conversion, and upon maturity commencing six months from
the date of the note(monthly redemption date.




On July
6, 2009 the Company issued a total of 320,000 common stock purchase warrants to
six of our bridge loan note holders.  These warrants were issued due
to a provision in their original warrants that required the Company to hit
certain targets which were not met by June 30, 2009.  The conversion
price on these warrants is $1.00.





On July 10, 2009, Omni
purchased from the Company a Debenture with a face amount of $583,330, with the
Company receiving gross proceeds of $500,000. There is a reset provision
associated with the note in regards to payment date.  The broker
received commission of a $40,000 cash payment.




Omni
was also issued warrants to purchase 2,499,986 shares of the Company’s Common
Stock with an exercise price of $0.70 per share subject to a reset provision.
The warrants are exercisable, for five years from the date of
issuance.  The Debentures are convertible into shares of the Company’s
Common Stock at any time at the option of the Holder at a conversion price of
$0.70 per share, subject to adjustment (the “Conversion
Price”).  Interest on the Debenture is 10% per annum and it has a
Maturity Date of July 10, 2010.  The Debentures cannot be converted to
common stock to the extent such conversion would cause the holder of the
Debenture, together with such holder’s affiliates, to beneficially own in excess
of 4.99% (or a maximum 9.99% in certain cases) of the Company’s outstanding
common stock immediately following such conversion.





Beginning
six months from the original issue date of the  Debentures, on the 1st of each
month (the “Monthly Redemption Date”) the Company must redeem the Monthly
Redemption Amount ($97,221.66 for each $583,330 Debenture, plus accrued but
unpaid interest, liquidated damages and any other amounts then owing to the
Holder under the Debenture). The Monthly Redemption Amount payable on each
Monthly Redemption Date shall be paid in cash at a rate of 110% of the Monthly
Redemption Amount or upon 30 trading days’ notice the Company may in lieu of
cash pay all or part of the Monthly Redemption Amount in conversion
shares.





On July
21, 2009, Omni purchased from the Company, a secured original issue discount
convertible debenture (the “Debenture”) and a warrant to purchase 7,500,042
shares of the Company’s common stock for an aggregate purchase price of one
million five hundred thousand dollars ($1,500,000).  The Debenture has
a face value of $1,750,010 and will become due and payable on July 21,
2010.  The Debenture may be converted at any time at the option of the
Investor and has there is a reset provision associated with the note in regards
to payment date.  The Warrant may be exercised at any time for a
period of five years from the date of issuance and has an exercise price of
$0.70, subject to reset provisions.  The Warrant may be exercised on a
cashless basis if there is no effective registration statement registering the
shares underlying the Warrant.





As of
July 21, 2009, the Company has sold to Omni an aggregate of $3,500,000 of
Debentures and has received gross proceeds of $3,000,000.





In
connection with the sale of the Debenture, Midtown Partners & Co, LLC
received a warrant to purchase 600,003 shares of the Company’s Common Stock (the
“Midtown Warrant”) pursuant to the terms of its placement agent agreement with
the Company.  The Midtown Warrant may be exercised at any time for a
period of five years from the date of issuance and has an exercise price of
$0.70, subject to reset provisions.  The Warrant may be exercised on a
cashless basis if there is no effective registration statement registering the
shares underlying the Warrant.


- 19
-





On July
21, 2009, the Company paid Omni  in full an OID promissory note dated
June16, 2009 in the amount of $575,000.





On July
24, Paul Morrison was nominated to the Company Board of
Directors.  Mr. Morrison is Chief Executive Officer and President of
Omni Reliant Holdings, Inc.  The Company has outstanding promissory
notes to OmniReliant as of Aug 4, 2009 with a face value of
$4,148,145.





On July 30, 2009, the
Company entered into Securities Purchase Agreement (the “Securities Purchase
Agreement”) with OmniReliant Holdings, Inc. (“Omni” or the “Holder”), pursuant
to which Omni  agreed to purchase a series of original issue discount
secured convertible debentures in such amounts and with such frequency as agreed
by the Company and Omni (the “Debentures”).  On July 30, 2009, the
Company sold Omni the first of the Debentures (the “First Debenture”) in the
principal amount of $641,663 and received gross proceeds of
$550,000.   The Debentures are due one year from when they are
issued and are convertible into shares of the Company’s Common Stock at any time
at the option of the Holder at a conversion price of $0.70 per share, subject to
adjustment (the “Conversion Price”).  There is a reset provision
associated with the note in regards to payment date.  Interest on the
Debentures is 10% per annum, payable in cash or common stock, at the option of
the Company, provided that, interest may only be paid in common stock if the
Equity Conditions (as defined in the Debenture) are met or waived by
Omni.  Interest is payable commencing six months from the date of the
note (monthly redemption date) upon conversion, and upon maturity. Commencing
on the redemption date, the Company will make six months payments of principal
and interest totaling $108,024. Omni also
was issued warrants to purchase up to 2,750,000 shares of the Company’s Common
Stock with an exercise price of $0.70 per share, subject to reset provisions.
 The warrants are exercisable, for five years from the date of issuance. A
Debenture cannot be converted to common stock to the extent such conversion
would cause the holder of the Debenture, together with such holder’s affiliates,
to beneficially own in excess of 4.99% (or a maximum 9.99% in certain cases) of
the Company’s outstanding common stock immediately following such
conversion.





In
connection with the Securities Purchase Agreement, the Company and Omni entered
into a Security Interest and Pledge Agreement (the “Pledge Agreement”). Pursuant
to the Pledge Agreement, the Company’s obligations under the Securities Purchase
Agreement are secured by a pledge of 10,802,416 shares of the Company common
stock as security to Omni.




In
connection with the sale of the Debenture, Midtown Partners & Co, LLC
received a warrant to purchase 220,000 shares of the Company’s Common Stock (the
“Midtown Warrant”) pursuant to the terms of its placement agent agreement with
the Company.  The Midtown Warrant may be exercised at any time for a
period of five years from the date of issuance and has an exercise price of
$0.70, subject to reset provisions.  The Warrant may be exercised on a
cashless basis if there is no effective registration statement registering the
shares underlying the Warrant.





In
addition for the receipt of funds, the company gave the lender 2,750,000 and the
broker 220,000 warrants to purchase the company common stock at a price of
$0.70.





On May
26, 2009 the Company registered to commence operations as LocalAdLink, Ltd Pty.
in Australia, during July 2009, the Company has officially began
operations.





During
July 2009, the Company obtained a majority of their promissory note holders to
agree to extend their notes to January 31, 2010.  Because of a
provision in the promissory notes, the acceptance of the extension of the notes
forced all secured promissory note holders to accept the extended
date.  This resulted in the extension of the maturity of $2,380,000 of
secured promissory notes, plus the extension of certain
provisions.  For the extension, we granted the note holders a total of
680,000 three year warrants to purchase common shares of Company stock at
$1.00.





During
July 2009, the Company agreed with 10 individual bridge loan note holders to
extend $590,000 in notes from July to October 6, 2009.  The Company
paid these note holders a total of $17,803 in interest payments on these
notes.





On August
4, 2009, one of our 12% convertible note holders converted their note of
$100,000 into shares of common stock at a conversion rate of
$0.35.  This resulted in an issuance of 285,714 shares of common
stock.  In addition this note holder also converted their accumulated
interest into shares of the Company’s common stock at a conversion rate of
$0.35.  The total interest converted was $18,567 and converted into
53,048 of the Company’s common shares.





On August
7, 2009, the Company issued 100,000 shares of stock valued at $34,000 for
professional services received.


- 20
-





NOTE
16 – CHANGE IN METHOD OF ACCOUNTING FOR CERTAIN CONVERSION AND EXERCISE
FEATURES





On
January 1, 2009, the Company adopted EITF 07-5, “Determining Whether an
Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock” and
changed its accounting, as required, for valuation of convertible notes and
warrants with conversion features and/or exercise features in which either the
conversion or exercise price or the number of warrant shares issuable was
determined by formula with inputs based on the operations of the
Company.  This change required the Company to bifurcate the features
from the host contracts as derivatives under SFAS 133 “Accounting for Derivative
Instruments and Hedging Activities” by recognizing an additional liability for
the fair value assigned to those derivate features, whereas in the prior year
those convertible notes and warrants were accounted for using Emerging Issues
Task Force No. 01-6 “The Meaning of ‘Indexed to a Company's Own
Stock’".   The new method of accounting for convertible notes and
warrants with these features requires that the Company revalue the instruments
at inception and each reporting date and to record the cumulative effect of the
changes in retained earnings into the opening period in which the standard is
adopted.





We
previously accounted for our convertible notes and warrants with these features
under EITF 01-6 which treated these features as if they were indexed to the
Company’s own stock and thus did not require separate accounting treatment or
bifurcation as derivatives.





Upon
implementing EITF 07-5 for all periods presented the Company recalculated and
replaced the original accounting by recognizing an additional liability for the
value of the bifurcated features.   In addition, because these
instruments are now accounted for as derivatives under SFAS 133, the Company no
longer treats the warrants issued in conjunction with the 12% Secured
Convertible Promissory Notes as Temporary Equity and instead the values assigned
are now included in Note derivative liability.





The
following financial statement line items as of December 31, 2008 were affected
by the change in accounting (no proforma has been presented for the income
statement or cash flows as none of these instruments were outstanding during the
six months ended June 30, 2008):





CONSOLIDATED
BALANCE SHEET


AS OF
DECEMBER 31, 2008





As ComputedAs Originally
                        
                        
                        Under
                        
                        
                        Effect ofReported
                        
                        
                        & EITF 07-5
                        
                        
                        ChangeTotal
      Assets
                        
                        $
                        1,806,008
                        
                        
                        $
                        1,806,008
                        
                        
                        $
                        -Current
      LiabilitiesShort-term
      borrowings
                        
                        
                        2,400,555
                        
                        
                        
                        2,400,555
                        
                        
                        
                        -Accounts
      payable
                        
                        
                        1,490,590
                        
                        
                        
                        1,490,590
                        
                        
                        
                        -Accounts
      payable – related party
                        
                        
                        19,552
                        
                        
                        
                        19,552
                        
                        
                        
                        -Note
      derivative liability
                        
                        
                        1,523,651
                        
                        
                        
                        3,396,935
                        
                        
                        
                        1,873,284Other
      current liabilities
                        
                        
                        1,374,534
                        
                        
                        
                        1,374,534
                        
                        
                        
                        -Deferred
      revenue
                        
                        
                        609,987
                        
                        
                        
                        609,987
                        
                        
                        
                        -Total
      Current Liabilities
                        
                        
                        7,418,869
                        
                        
                        
                        9,292,153
                        
                        
                        
                        1,873,284Commitments
      and Contingencies
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Temporary
      Equity
                        
                        
                        1,135,980
                        
                        
                        
                        -
                        
                        
                        
                        (1,135,980
                        )Stockholders’
      Deficit:Common
      stock, $0.001 par value, 200,000,000 and 75,000,000 shares authorized as
      of December 31, 2008 and 2007, respectively, and 40,936,143and 36,108,067
      issued and outstanding at December 31, 2008 and 2007,
      respectively
                        
                        
                        40,936
                        
                        
                        
                        40,936
                        
                        
                        
                        -Preferred
      stock,$.001 par value of 50,000,000 shares authorized and no shares
      issued
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Additional
      paid-in capital
                        
                        
                        11,096,604
                        
                        
                        
                        11,096,604
                        
                        
                        
                        -Accumulated
      deficit
                        
                        
                        (17,886,381
                        )
                        
                        
                        (18,623,685
                        )
                        
                        
                        (737,304
                        )Total
      Stockholders’ Deficit
                        
                        
                        (6,748,841
                        )
                        
                        
                        (7,486,145
                        )
                        
                        
                        (737,304
                        )Total
      Liabilities and Stockholders' Deficit
                        
                        $
                        1,806,008
                        
                        
                        $
                        1,806,008
                        
                        
                        $
                        -


- 21
-





As a
result of the accounting change, accumulated deficit as of January 1, 2009,
increased from $17,886,381, as originally reported, to $18,623,685 computed
under EITF 07-5.





Item
2.  Management's Discussion and Analysis of Financial
Condition





Throughout
this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” and “our
company” refer to Beyond Commerce, Inc., a Nevada corporation formerly known as
BOOMj, Inc. and Reel Estate Services, Inc. respectively and, unless otherwise
specified, also includes our two wholly-owned subsidiaries, BOOMj.com, Inc., a
Nevada corporation and LocalAdLink, Inc., a Nevada corporation.




Cautionary
Statement Regarding Forward-Looking Statements




This
Quarterly Report contains forward-looking statements, which reflect the views of
our management with respect to future events and financial performance. These
forward-looking statements are subject to a number of uncertainties and other
factors that could cause actual results to differ materially from such
statements. Forward-looking statements are identified by words such as
“anticipates,” “believes,” “estimates,” “expects,” “plans,” “projects,”
“targets” and similar expressions. Readers are cautioned not to place undue
reliance on these forward-looking statements, which are based on the information
available to management at this time and which speak only as of this date. We
undertake no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. For a
discussion of some of the factors that may cause actual results to differ
materially from those suggested by the forward-looking statements, please read
carefully the information in the “Risk Factors” section in our Form 10-K for the
year ended December 31, 2008 and the “Risk Factors” section set forth in Item 1A
of Part II of this Report. The identification in this Quarterly Report of
factors that may affect future performance and the accuracy of forward-looking
statements is meant to be illustrative and by no means exhaustive. All
forward-looking statements should be evaluated with the understanding of their
inherent uncertainty.




Description
of Business




Beyond
Commerce, Inc. operates a Web site that targets persons in the demographic group
commonly referred to as Baby Boomers and Generation Jones. On the Company’s Web
site, www.BOOMj.com, users/members can create their very own personal profile
for use on the Company’s state-of-the-art social network platform. Our BOOMj.com
Web site provides social, political, financial and lifestyle content to the Baby
Boomer/Generation Jones target audience as a platform for our advertising and
E-commerce businesses. These users/members can upload, watch and share their
videos and other interesting information with like-minded Boomers and Generation
Jones. The Web site provides entertainment news ranging from the latest movie
reviews, fashions and diets to show times and ticket sales. The Web site also
offers a variety of e-commerce product offerings, allowing users/members of the
Web site can buy leading brand name merchandise ranging from books and CD’s
to electronics, featuring computers and flat panel screen TV’s. The Company’s
product line typically consists of approximately 2.0 million SKUs. Baby Boomers
and Generation Jones are able to shop online through the online store.
Additionally, through BOOMj.com health network Boomers and Generation Jones have
access to a collection of BOOMj.com owned and operated Web sites and multi-media
affiliates providing timely and in-depth health, fitness nutrition information,
personalized tools and resources to make the right health choices. BOOMj.com
health network connects to a vast community of leading experts and people
seeking to manage and improve their health and wellness. In September 2008, the
Company commenced the operations of a new the web site known as LocalAdLink,
which Web site the Company operates as a newly formed division of Beyond
Commerce, Inc. LocalAdLink is a local search and advertising platform that
networks high volume Web sites to allow local advertisers to increase revenues
and brand identity.




CORPORATE
HISTORY AND PLAN OF OPERATIONS





Plan
of Operations





This
company, formerly known as Reel Estate Services Inc., was incorporated in Nevada
as a development stage company on January 12, 2006 to create a web-based service
that lists properties across the globe that are available for rental and/or use
by film and television companies as filming locations. We never earned any
revenue from our former Reel Estate Services internet site, and in September
2007 prior management terminated those operations.





On
December 28, 2007 Reel Estate Services, Inc. acquired BOOMj.com, Inc. through a
reorganization (the “Reorganization”) in which it issued 34,458,067 shares of
common stock to the former shareholders of BOOMj.com, Inc. As a result of this
Reorganization, the former shareholders of BOOMj.com, Inc. acquired a majority
ownership and control over Reel Estate Services, Inc.


- 22
-




BOOMj.com,
Inc. is now our wholly-owned subsidiary, although from an historical perspective
it was deemed to have been the accounting acquirer in the transaction and the
survivor of the Reorganization. Accordingly, prior to December 28, 2007 the
historical financial statements of BOOMj.com, Inc. have become our historical
financial statements. Subsequent to December 28, 2007 the consolidated
operations of both entities are included in our financial statements. BOOMj.com,
Inc. itself was incorporated on November 14, 2006.




Results
of Operations




We
reported a net loss of $8,579,561 and $5,916,972 for the six and three months
ended June 30, 2009, respectively as compared to net losses of $4,955,245and
$2,396,580 reported for the six and three months ended June 30, 2008,
respectively. While reporting a net loss the Company’s LocalAdLink division
continued to grow its sales force and gross revenues.  However, at the end
of February with the spike in the volume of weekly credit card revenues
generated, certain credit card processing companies, without notice to the
Company, put a hold on all of the cash being remitted to Beyond Commerce’s
LocalAdLink subsidiary. This hold was initiated under the rationale of
“potential business risk.” The Company had less than 0.25% percent in
charge-backs and a total of approximately $13,000 in claims over a six month
period of time prior to this risk reassessment.  With the stoppage of the
credit card processing and the processors holding back over $900,000 of funds
due to the Company, we inadvertently had 567 checks returned totaling over
$250,000 to valued employees, our commissioned sales force and
vendors.




The
reckless actions of the credit card processors negatively impacted the Company
and prevented us from achieving our projected first and second quarter revenues
and income. LocalAdLink was prevented from selling advertising to local
businesses for approximately 23 days during the month of March. The negative
impact of inadvertently returning 567 checks impacted the Company’s credibility
with its independent sales force. Due to the problems of not being able to
process credit cards, which caused 567 returned checks, during the sixty days
following the incident, the Company had to rebuild its credibility with its
independent sales representatives so they would reenergize and once again sell
ads. At the time of the incident, LocalAdLink was ramping up revenues based on
its prior month’s revenues at a rate of four and a half million per month.
Obviously the sales fell well short of our planned revenues for the month caused
by the credit card processors reckless actions.




The
Company is currently evaluating any claims it may have against the
aforementioned credit card processing companies, as we believe that the damage
to the Company from the willful negligence of the processors has caused an
undetermined financial loss to Beyond Commerce. Furthermore, the credit card
processors’ holding of revenues forced us to change processors.  This
change has resulted in increased processing fees, personal guarantees and a
mandate for the Company to reserve 10% of its revenues received daily to
mitigate potential risk to the new processor.




As more
fully explained in "Operating Expenses" below, the additional losses in 2009
were also attributable to increases in operating costs, interest from debt, the
issuance of warrants, and the delay in certain revenue generation
activities.





Revenues





Our goal
is to generate revenues from (i) the sale of various products to our Web site
users (our e-commerce operations), and (ii) both national and local advertising
fees. Revenue for the six and three month periods ended June 30, 2009, was
$10,656,203 and $4,612,034, respectively as compared to $820,213 and $59,264 for
the six and three month periods ended June 30, 2008 respectively. The increases
are due to revenue from the new LocalAdLink segment, which the Company launched
in November 2008.  LocalAdLink constituted $10,631,839 and $4,614,658
of total revenue for the six and three months ended June 30, 2009,
respectively.





Cost
of Advertising/ Merchandise Acquired





Cost
of sales for the six and three month periods ended June 30, 2009 were
$10,043,384 and $4,916,323, respectively compared to $884,483 and $63,665for the
six and three month periods ended June 30, 2008,
respectively.  LocalAdLink constituted $10,022,889 and $4,910,353 of
the total cost of sales for the six and three months ended June 30, 2009.
Included in the total cost of advertising for LocalAdLink is the non cash cost
of the issuance of stock options to the independent representatives of
$1,225,036 and $526,909 for the six and three month periods ended June 30, 2009,
respectively.


- 23
-





Operating
Expenses




Selling,
general and administrative expenses, including related party expenses,
(SG&A) for the six month and three month periods ended June 30, 2009 were
$6,494,352 and 3,544,238. This is an increase of $3,550,735 and $2,304,060 in
SG&A expenses from the $2,943,617 and $1,238,178 reported for the six month
and three month periods ended June 30, 2008, respectively. This increase is
mainly attributable to the increase in employees, programming, merchant fees,
travel, marketing and the issuance of options.  The Company had 101
employees at the end of June 2009 as compared to 42 at the end of June
2008. This accounts for an increase in payroll expenses for the six
and three months ended June 30, 2009 of $1,124,110 and $775,889 respectively
from the expense for the six and three months ended June 30,
2008.  Payroll expenses were $2,417,097 and $1,388,753 for the six and
three months ended June 30, 2009 and $1,292,987 and $612,684 for the same
periods ended June 30, 2008, respectively.





Programming
and computer expenses increased for the six and three months ended June 30,
2009, $464,956 and $245,252, respectively to $500,964 and $334,209 for the six
and three months ended June 30, 2009, respectively, from $36,008 and $88,957 for
the six and three months ended June 30, 2008, respectively.  A large
part of the increase is attributable to the programming of the LocalAdLink
software and the increase in computer related equipment for new
employees.  The issuance of options for stock-based
compensation created
an expense of $279,440 and $120,690 for the six and three month periods ended
June 30, 2009, respectively as compared to zero for the same periods of 2008.
Merchant and bank fees of $615,162 and $332,670 for the six and three months
ended June 30, 2009, respectively is an increase of $586,212 and $332,670 from
$28,950 and $13,974 for the six and three months ended June 30, 2008,
respectively.  This increase in merchant and bank fees is due to the
volume of credit card sales through LocalAdLink. Travel increased $276,813 and
$105,894 for the six and three months ended 2009, respectively to $367,500 and
$152,952 respectively compared to $90,687 and $47,058 for the six and three
months ended June 30, 2008, respectively.  Marketing and selling
expense for the six and three months ended June 30, 2009 was $1,932,140 and
$712,509, respectively.  This is an increase of $842,789 and $564,321
from the $1,089,351 and $704,411 for the six and three months ended June 30,
2008, respectively.  This increase was created from the marketing
enhancements of LocalAdLink.





Professional
fees, including related party fees, for the six and three month periods ended
June 30, 2009 were $2,068,821 and $1,142,965, respectively. This is an increase
of $1,319,512 and $663,079 in professional fees from the $749,309 and
$479,886 for the six month and three month periods ended June 30, 2008,
respectively. The largest component of the increase in professional fees
consisted of consulting and support services due to the rapid growth of activity
in the LocalAdLink division. This increase was $822,724 and $289,108 for the six
month and three month periods ended June 30, 2009, respectively. There was also
an increase in accounting fees of $224,802 and $130,102 for the six month and
three month periods ended June 30, 2009, respectively. This increase is due to
an increase in our audit and compliance expenses as a result of ramping up
operations. There
was an increase of $127,000 and $ 65,000 for the issuance of stock and cash
payments for capital raising support. Legal fees increased $266,131 and
$303,035 for the six and three months ended June 30, 2009 as compared to the
same periods for June 30, 2008, respectively.  This is due to an
increase in fees paid for financing, SEC filings and pending litigation against
credit card processors (see results of operations).  Professional fees for
marketing decreased $131,456 and $84,227 for the six and three months ended June
30, 2009 as compared to the same periods ended June 30, 2008,
respectively.  This is due to the hiring of internal marketing
professionals.




Depreciation
expense for the six month and three month periods ended June 30, 2009 was
$106,774 and $55,003, respectively. This reflects an increase of $20,193 and
$10,330 from $86,581 and $44,673 reported for the six month and three month
periods ended June 30, 2008, respectively. This increase in expense is
attributable to the amortization of the asset additions, which consist mostly of
hardware and software purchased for new employees.





Other
income (expense)





Income
related to the change in derivative liability value for the six and three month
period ended June 30, 2009 was $3,998,034 and $2,231,694,
respectively.  These derivatives related to notes issued in the third
and fourth quarters of 2008 and notes issued during the second quarter of
2009.




Interest
expense for the six month and three month periods ended June 30, 2009,
respectively was $4,488,467, and $3,070,171 compared to $1,111,471 and $629,442
for the six and three month periods ended June 30, 2008, respectively. Interest
expense includes non-cash expenses related to the value of arrants issued to
investors who invested in our convertible notes and discounts from beneficial
conversion features. Loan fees and loan discount amortization expenses of
$3,803,530 and $2,518,298 related to our promissory notes for the six and three
month periods ended June 30, 2009, respectively.  During the three
months ended June 30, 2009, we expensed $216,460 of discount amortization
expense related to warrants issued on a 30 day note secured on April 9, 2009 and
paid in full on May 7, 2009.  Consequently we expensed the full
discount amortization during the three months ended June 30,
2009.  During the six and three months ended June 30, 2009,
respectively, an additional discount amortization of $493,231 and $449,087 was
expensed due to the conversion of secured notes into Company
stock.  This additional expense was to capture the full discount
amortization scheduled to be expensed in subsequent periods.  Interest
expense on the note balances accrued for the six and three months ended June 30,
2009 was $612,908 and $466,070, respectively, as compared to $161,961 and
$52,767 for the six and three month periods ended June 30, 2008,
respectively.


- 24
-





Liquidity
and Capital Resources





Cash and
cash equivalents at June 30, 2009 were $185,172 and $100,086 at December 31,
2008. Since our business model is in the early stages of operations thus far,
the majority of our capital resources have been derived through the sale of debt
and equity securities. No assurance can be made that these operations will
continue to improve or that we will have access to capital markets in the
future, or that financing will be available on acceptable terms to satisfy our
future and on-going cash requirements that we need to implement our business
strategies. Our inability to fulfill our business plan, access the capital
markets or obtain acceptable financing could have a material adverse affect on
our results of operations and financial condition, and could severely threaten
our ability to continue as a going concern.





As shown
in the accompanying consolidated financial statements, we incurred a loss of
$8,579,561 and $5,916,972 for the six and three month periods ended June 30,
2009, respectively as compared to $4,955,248 and $2,396,580 for the same periods
ended June 30, 2008, respectively. Our current liabilities exceeded our current
assets by $9,443,091 at June 30, 2009 and negative cash flow from operating
activities for the six months ended June 30, 2009 was
$3,403,485.  Included in current liabilities is deferred revenue of
$3,010,849 and notes payable of $5,350,391. These factors, and our inability to
meet our obligations from current operations, and the need to raise additional
capital to accomplish our objectives, create considerable doubt about our
ability to continue as a going concern.





We
currently do not have sufficient funds on hand to fund our current obligations
until we reach our projected break-even level of operations. We do not have any
bank credit lines. Accordingly, we will have to obtain additional funding in the
near future in order to continue our operations until our revenues are
sufficient to fund our operating expenses. Although we have again re-commenced
our on-line e-commerce business and our local advertising business, and now are
again generating revenues from those lines of our business, we do not anticipate
that we will generate sufficient cash from operations to fund our working
capital needs for at least another three months. Accordingly, we intend to
continue to seek additional financing from various sources, including from the
sale of debt or equity securities. We have not yet identified, and cannot be
sure that we will be able to obtain any additional funding from either of these
sources, or that the terms under which we may be able to obtain such funding
will be beneficial to us. If we do not obtain sufficient additional funds in the
near future, we will have to suspend some of our operations, further scale down
our current and proposed future operations or, if those actions are not
sufficient, terminate our operations.





All of
the convertible notes that we have issued in order to fund our working capital
needs mature within the next twelve months. Accordingly, in addition to having
to raise funds to continue to operate, we also will have to raise funds to repay
these convertible notes (to the extent that such notes are not converted in
shares of our common stock by the holders). As of June 30, 2009, the total
principal amount of our short-term borrowings was $7,344,044. Some of the
convertible notes that we issued are secured by a lien on certain of our assets
and/or the assets of our subsidiaries. During the first six months of 2009,
$2,000,000 of the secured promissory notes converted into Company common stock.
In the event that we fail to repay these remaining secured promissory notes as
they mature, we will be at risk of losing our assets through foreclosure of our
assets. Accordingly, a default under the secured convertible notes could result
in the loss of our assets and the termination of our operations.




Management
is taking steps to raise additional funds to address its operating and financial
cash requirements to continue operations in the next twelve months.
Management has devoted a significant amount of time to raising capital from
additional debt and equity financing. During July 2009, the Company entered into
an amendment to its Secured Convertible Promissory notes originally due July 31,
2009 in the principal amount of $2,380,000. Also during July 2009, 10 holders of
the Company’s bridge loan notes having an aggregate balance of $590,000 agreed
to extend the maturity date of these notes from July 6 to October 6,
2009.





Operating
Activities





Net cash
used in operating activities for the six month period ended June 30, 2009 was
$3,403,485 compared to a use of cash of $3,603,200 for the six month period
ended June 30, 2008. This change was mainly attributable to the increase in
Local Ad Link and I-Supply operations and related overhead demands compared to
the start up of operations incurred in 2008.





Investing
Activities





Net cash
used in investing activities for the six month period ended June 30, 2009 and
2008 was $120,929 and $78,223, respectively, representing cash expended for the
purchase of computers and office furniture and equipment.


- 25
-





Financing
Activities





Net cash
provided by financing activities for the six month period ended June 30, 2009
and 2008 was $3,609,500 and $3,606,765, respectively, due primarily to net cash
received from the sale of debt securities of $4,560,000 and 3,538,232,
respectively. During the six month period ended June 30, 2009 we received
$20,000 from the issuance of common stock, repaid $768,500 on a short term loan,
received short term unsecured borrowings of $228,000 and paid cash for debt
placement fees of $430,000.




As a
result of the above activities, we experienced a net increase in cash of $85,086
for the six month period ended June 30, 2009 as compared to a net decrease for
the six month period June 30, 2008 of $74,659. Our ability to continue as a
going concern is dependent on our success in obtaining additional financing from
investors through the sale of our securities and continuing our stream of
revenue through LocalAdLink. There is no assurance that we will be able to raise
any additional funds.





Other





As of
June 30, 2009, we had no long-term debt obligations, no capital  lease
obligations, no material  long-term purchase obligations or other
similar long-term liabilities. We are not a party to any off-balance sheet
arrangements, and we do not engage in trading activities involving non-exchange
traded contracts.





Inflation
and changing prices have had no effect on our net sales and revenues or on our
income from continuing operations





Item 3.
Quantitative and Qualitative Disclosures About Market Risk





Not
applicable.





Item
4T. Controls and Procedures





Evaluation of Disclosure Controls
and Procedures





Under the
supervision and with the participation of our senior management, including our
chief executive officer and chief financial officer, we conducted an evaluation
of the effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended, as of the end of the period covered by this
quarterly report (the “Evaluation Date”). Based on this evaluation, our chief
executive officer and chief financial officer concluded as of the Evaluation
Date that our disclosure controls and procedures were effective such that the
information relating to the Company, including our consolidated subsidiaries,
required to be disclosed in our SEC reports (i) is recorded, processed,
summarized and reported within the time periods specified in SEC rules and
forms, and (ii) is accumulated and communicated to our management,
including our chief executive officer and chief financial officer, as
appropriate to allow timely decisions regarding required
disclosure.




Changes in Internal Control over
Financial Reporting





During
the three months ended June 30, 2009 , there were no changes in our internal
control over financial reporting (under the Exchange Act) or in other factors
that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.





Inherent
Limitations of Internal Controls





Our
management, including our chief executive officer and chief financial officer,
does not expect that our disclosure controls and procedures or our internal
controls will prevent all error and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of a simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management override of the control. The
design of any system of controls also is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions. Over time, controls may become inadequate because of changes in
conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be
detected.


- 26
-





PART
II - OTHER INFORMATION


Item
1. Legal Proceedings





The
Company is presently involved in litigation as part of its normal business
process. Management does not have reason to believe that any of these lawsuits
will have a material adverse impact on the Company.





Item
1A.  Risk Factors




There has
been no material change in the Risk Factors set forth in the “Risk Factors”
section of the Company’s Form 10-K for the year ended December 31, 2008, other
than as set forth below:





We currently have outstanding
$2,380,000 of short-term convertible promissory notes that are secured by a lien
on all of this company’s assets. Accordingly, a default under the convertible
promissory notes, or our inability to repay them when these notes become due,
could result in the foreclosure of all of our assets and the termination of our
business.





We
currently have outstanding approximately $2,380,000 of short-term, secured notes
that mature and must be repaid in full, both principal and interest, on July 31,
2009. Failure to make any payment as required under the convertible promissory
notes could result in the acceleration of the convertible promissory notes and
the foreclosure of our assets. If we are unable to repay the notes in full upon
their maturity, or if we otherwise default under our obligations to the holders
of those notes, the holders of the convertible promissory notes will have the
right to foreclose on all of our assets, which would materially and adversely
affect our ability to continue our operations and could terminate our existence.
No assurance can be given that we will be able to make all payments as required
or that we will be able to repay the convertible promissory
notes.  The Company has successfully completed the extension
of  these note holders until January 31, 2010.





We
will need significant additional capital, which we may be unable to
obtain.





We
currently only have sufficient cash available to continue our current operations
into September 2009. Our capital requirements in connection with our expanding
commercial operations have been, and will continue to be, significant. We need
to obtain a significant amount of additional funds to fund our working capital
needs, to continue to market our Web site, to offer a broader range of products
on our e-commerce site, and to otherwise expand our business. There can be no
assurance that financing will be available in amounts or on terms acceptable to
us, if at all. If we are not able to raise additional funds in the near future,
we may have to severely reduce our operations or even terminate our
business.There can be no assurance
that we will be able to obtain additional funds.





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




On March
31, 2009 the Company sold 25,000 shares of its common stock and a warrant to
purchase an additional 12,500 shares of common stock at $.80 per share, for
$20,000 in cash. This resulted in additional non cash expense of $75,600. The
issuance of securities is exempt from the registration requirements of the
Securities Act, under Section 4(2) of the Act as transactions by an issuer not
involving any public offering.





Item
3. Defaults Upon Senior Securities





On June
19, 2009, the average trading volume of the common stock of Beyond Commerce,
Inc. (the “Company”) was under $80,000 for the ten prior consecutive trading
days, which constituted a technical “Event of Default” under the Company’s
Series 2009 Secured Convertible Original Issue Discount Note Due January 15,
2010, dated June 4, 2009 (the “Note”), made by the Company, in favor of St.
George Investments, LLC (the “Holder”). As a result of the Event of Default, the
principal amount of the Note, equal to $714,286, plus a penalty of $71,428.60
(equal to 10% of the principal amount), became immediately due and payable. Such
unpaid principal and penalty amounts due bear interest at the rate of 1.5% per
month. In addition, as a result of the Event of Default, the Note became
convertible into shares of the Company’s common stock at the lower of the
closing bid price of the stock or the average of the volume weighted average
price of the stock, provided, however, the Holder cannot convert the Note into
shares of the Company’s common stock to the extent such conversion would cause
the Holder’s beneficial ownership of the Company’s common stock to exceed 9.99%
of the Company’s issued and outstanding common stock immediately following such
conversion.





The Note
was secured by an aggregate of 4,020,000 shares of the Company’s common stock
pledged by affiliates of the Company, pursuant to stock pledge agreements
entered into by the affiliates in favor of the Holder, including 2,020,000
shares pledged by Mark Noffke, the Company’s chief financial officer. Pursuant
to the pledge agreement entered into by Mr. Noffke, shares pledged by Mr. Noffke
may be transferred to the Holder and sold in full satisfaction of the Company’s
obligations under the Note.


- 27
-





The
Company and St. George Investments, LLC, entered into an agreement dated July
30, 2009 (the “Agreement”) pursuant to which the Company will satisfy the entire
outstanding balance of $420,593.40 on its Series 2009 Secured Convertible
Original Issue Discount Note, due June 15, 2010, issued to St. George (the
“Note”).  Pursuant to the Agreement, the Company will make the
following payments (the “Scheduled Payments”) on the Note:  (i)
$100,000 paid on July 30, 2009, (ii) $50,000 shall be paid by August 6, 2009,
(iii) 50,000 shall be paid by August 13, 2009, (iv) $50,000 shall be paid by
August 20, 2009, (v) $50,000 shall be paid by August 27, 2009, (vi) $50,000
shall be paid on or before September  3, 2009, (vii) $50,000 shall be
paid on or before September 10, 2009 and (viii) $20,995.40 shall be paid on or
before September 17, 2009.   The Company has settled the first
two payments of the Agreement.  In addition, when the note was deemed
in default, St. George took collateral and monetized it towards payment of the
note. Provided the Scheduled Payments continue to be made in accordance with the
Agreement, the Note shall be deemed paid in full and St. George shall return
3,015,424 shares of the Company’s common stock which had been pledged as
security for repayment of the Note, and will not hold any other shares pledged
in connection with the Note.


- 28
-




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





On July
24, 2009, we held our Annual Meeting of Stockholders. The following are the
results of voting on the proposals:





a)
Election of directors:





Nominee
                  
                  For
                  
                  
                  WithheldRobert
      J. McNulty
                  
                  
                  42,694,116
                  
                  
                  
                  764,639Barry
      Falk
                  
                  
                  42,694,116
                  
                  
                  
                  764,639Ronald
      L. Loveless
                  
                  
                  42,694,116
                  
                  
                  
                  764,639Michael
      E. Warsinske
                  
                  
                  42,694,116
                  
                  
                  
                  764,639Murray
      Williams
                  
                  
                  42,694,116
                  
                  
                  
                  764,639





b)
Approval of the adoption of our 2008 Stock Incentive Plan:





For
                      
                      
                      
                      26,151,077Against
                      
                      
                      
                      154,833Abstain
                      
                      
                      
                      41,768





c)
Ratification of the selection of L J Soldinger Associates, LLC as our
independent auditors:





For
                    
                    
                    
                    42,827,088Against
                    
                    
                    
                    636,292Abstain
                    
                    
                    
                    0





Item
5. Other Information





None.




Item
6. Exhibits and Reports on Form 8-K




Exhibit No.
              
              Description of Document31.1
              
              Certification
      of Chief Executive Officer31.2
              
              Certification
      of Chief Financial Officer (Principal Accounting
  Officer)32.1
              
              Certification
      of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002, 18 U.S.C. Section 1350.32.2
              
              Certification
      of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002, 18 U.S.C. Section
1350.


- 29
-




SIGNATURES





Pursuant
to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on the 13th day of August
2009.





By:
              /s/ Robert J.
      McNultyRobert
      J. McNulty, Chief Executive Officer
                (Principal
      Executive Officer)




By:
              /s/ Mark V.
      NoffkeMark
      V. Noffke, Chief Financial Officer(Principal
      Financial Officer)


- 30
-