UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549


___________________________________




FORM
10-Q




(Mark
One)




[X]     Quarterly
report under Section 13 or 15(d) of the Securities Exchange Act of
1934




For
the quarterly period ended September 30, 2009




OR




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




Commission
file number: 0-23391





XFORMITY TECHNOLOGIES,
INC.


(Exact
name of registrant as specified in its charter)





Colorado
            84-1434313(State
      or other jurisdiction of
              incorporation
      or organization)
            (I.R.S.
      Employer
              Identification
      No.)





4100
Spring Valley Road, Suite 800,  Dallas, Texas 75244


(Address
of principal executive offices, including zip code)


Issuer's
Telephone No., including area code: (972)
661-1200





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





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 
NoX




The
number of shares outstanding of the Issuer’s Common stock, $0.0001 par value, at
November 10, 2009 is 51,931,553.










1















PART
      I.
            FINANCIAL
      INFORMATION
            PAGEItem
      1.
            Financial
      statementsConsolidated Balance Sheets – September 30, 2009 (Unaudited)
      and June 30, 2009
            3Unaudited Consolidated Statements of Operations – Three Months
      Ended September 30, 2009and 2008
            4Unaudited Consolidated Statements of Cash Flows –
      Three Months Ended September 30, 2009and 2008
            5Notes
      to Unaudited Consolidated Financial Statements
            6-9Item
      2.
            Management's Discussion and Analysis and Results of
      Operations
            10-11Item
      3.
            Quantitative
      and Qualitative Disclosures About Market Risk
            11Item
      4.
            Controls and Procedures
            11PART
      II.
            OTHER
      INFORMATIONItem
      1.
            Legal Proceedings
            12Item
      2.
            Unregistered Sales of Securities and Use of
      Proceeds
            12Item
      3.
            Defaults
      upon Senior Securities
            12Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            12Item
      5.
            Other
      Information
            12Item
      6.
            Exhibits
      and Reports on Form 8-K
            12










2








XFormity
Technologies, Inc. and Subsidiary


Consolidated
Balance Sheets





September
      30,
            
            
            June
      30,2009
            
            
            2009(Unaudited)ASSETSCurrent
      AssetsCash
      and cash equivalents
            
            $
            13,251
            
            
            $
            14,262Accounts
      receivable
            
            
            69,500
            
            
            
            35,161Deferred
      commission expense
            
            
            36,762
            
            
            
            36,762Refundable
      security deposit
            
            
            17,413
            
            
            
            17,413Prepaid
      expenses
            
            
            28,000
            
            
            
            11,422Total
      current assets
            
            
            164,926
            
            
            
            115,020Property
      and equipment, net of accumulated depreciation
            
            
            39,139
            
            
            
            41,425Other
      assetsSecurity
      deposit – long term
            
            
            8,707
            
            
            
            8,707Deferred
      commission  - long term
            
            
            27,572
            
            
            
            36,762Total
      Assets
            
            $
            240,344
            
            
            $
            201,914LIABILITIES
      AND STOCKHOLDERS’ DEFICITCurrent
      LiabilitiesObligation
      from debt reduction agreement – current portion
            
            $
            120,000
            
            
            $
            120,000Accounts
      payable
            
            
            138,296
            
            
            
            85,749Accrued
      expenses
            
            
            155,088
            
            
            
            139,362Current
      portion - deferred revenue
            
            
            111,017
            
            
            
            119,671Current
      portion – deferred credits
            
            
            14,644
            
            
            
            14,462Convertible
      debentures
            
            
            733,635
            
            
            
            733,635Total
      Current Liabilities
            
            
            1,272,680
            
            
            
            1,212,879Obligation
      from debt reduction agreement – long-term portion
            
            
            435,000
            
            
            
            465,000Note
      payable
            
            
            118,667
            
            
            
            118,667Deferred
      revenues – net of current portion
            
            
            48,277
            
            
            
            63,445Deferred
      credits – net of current portion
            
            
            158,134
            
            
            
            161,864Total
      liabilities
            
            
            2,032,758
            
            
            
            2,021,855Stockholders'
      DeficitPreferred
      stock, $0.01 par value, 100,000,000 shares authorized, none issued and
      outstanding at September 30, 2009 and June 30, 2009 2008
            
            
            -
            
            
            
            -Common
      stock, $0.0001 par value, 125,000,000 shares authorized, 51,931,553 shares
      issued and outstanding at September 30 2009 and June 30,
    2009
            
            
            5,193
            
            
            
            5,193Additional
      paid-in capital
            
            
            6,933,300
            
            
            
            6,915,627Accumulated
      deficit
            
            
            (8,730,907
            )
            
            
            (8,740,761
            )Total
      Stockholders' Deficit
            
            
            (1,792,414
            )
            
            
            (1,819,941
            )Total
      Liabilities and Stockholders' Deficit
            
            $
            240,344
            
            
            $
            201,914





The
accompanying notes are an integral part of these consolidated financial
statements.














3








XFormity
Technologies, Inc. and Subsidiary


Consolidated
Statements of Operations





(Unaudited)Three
      Months Ended September 30,2009
            
            
            2008Revenue
            
            $
            501,088
            
            
            $
            567,521Cost
      of revenue
            
            
            145,935
            
            
            
            140,619Research
      and development
            
            
            129,627
            
            
            
            137,893Marketing
      and selling
            
            
            58,565
            
            
            
            71,662General
      and administrative
            
            
            129,377
            
            
            
            131,815Total
      operating expenses
            
            
            463,504
            
            
            
            481,989Income
      from operations
            
            
            37,584
            
            
            
            85,532Interest
      expense, net
            
            
            (20,813
            )
            
            
            (19,859
            )Income
      (loss) before provision for income taxes
            
            
            16,771
            
            
            
            65,673Provision
      for income taxes
            
            
            6,917
            
            
            
            -Net
      Income (loss)
            
            $
            9,854
            
            
            $
            65,673Net
      Income (loss) per share – basic and diluted
            
            $
            (0.00
            )
            
            $
            (0.00
            )Weighted
      average number of shares – basic and diluted
            
            
            51,931,553
            
            
            
            50,931,553





The
accompanying notes are an integral part of these consolidated financial
statements.








4
















.













XFormity
Technologies, Inc. and Subsidiary


Consolidated
Statements of Cash Flows





(Unaudited)Three Months Ended September
      30,2009
            
            
            2008Operating
      activities:Net
      income
            
            $
            9,854
            
            
            $
            65,673Depreciation
            
            
            4,890
            
            
            
            5,538Amortization
      of deferred commission
            
            
            9,191
            
            
            
            9,191Non-cash
      transactions for:Compensation
      from share-based payment arrangements
            
            
            17,673
            
            
            
            -Changes
      in:Accounts
      receivable
            
            
            (34,340
            )
            
            
            (159,014
            )Prepaid
      expenses
            
            
            (
      16,578
            )
            
            
            7,816Accounts
      payable
            
            
            52,548
            
            
            
            30,891Accrued
      expenses
            
            
            15,726
            
            
            
            43,423Deferred
      revenue
            
            
            (23,822
            )
            
            
            (31,829
            )Deferred
      credits
            
            
            (3,548
            )
            
            
            (3,377
            )Net
      cash provided (used) in operating activities
            
            
            31,594
            
            
            
            (31,688
            )Investing
      activities:Purchases
      of property and equipment
            
            
            (2,605
            )
            
            
            (5,674
            )Net
      cash used in investing activities
            
            
            (2,605
            )
            
            
            (5,674
            )Financing
      activities:Payments
      under debt obligation
            
            
            (30,000
            )
            
            
            -Net
      cash used in financing activities
            
            
            (30,000
            )
            
            
            -(Decrease)
      in cash and cash equivalents
            
            
            (1,011
            )
            
            
            (37,362
            )Cash
      and cash equivalents, beginning of period
            
            
            14,262
            
            
            
            87,117Cash
      and cash equivalents, end of period
            
            $
            13,251
            
            
            $
            49,755Supplemental
      disclosure of non-cash financing and investing activitiesInterest
      paid
            
            $
            16,254
            
            
            $
            -





The
accompanying notes are an integral part of these consolidated financial
statements.


5


XFormity
Technologies, Inc. and Subsidiary


Notes
to Consolidated Financial Statements


September
30, 2009


(Unaudited)





Note
1   Organization and Nature of Business.





The
reporting entity in this form 10-Q is XFormity Technologies, Inc. (a Colorado
Corporation) ("XFormity" or the "Company") and includes the operations of
XFormity, Inc. (a Texas Corporation) (“XFM”), the wholly owned subsidiary of the
Company.  XFormity provides technology and services to multi-unit
business operators.  The Company’s core products are hosted Business
Intelligence (BI), Balanced Scorecard and Benchmarking
solutions.  These solutions help customers with operational data
analysis, trend reporting, issue identification and tracking.  The
Company provides data integration and management services which feed the BI and
Scorecard solution with data from many key data sources.  The
Company’s solutions are provided to customers as a hosted
(software-as-a-service) model, which allows the Company to rapidly configure and
implement solutions for new customers in an affordable, cost-effective
manner.




The
Company provides services for franchisors and franchisees in a growing list of
customers across the United States and Canada.  XFormity is the
provider of Burger King Corporation's (BKC) operational reporting for all
company owned and operated restaurants in the US and Canada. In addition to this
deployment, the Company's success in delivering solutions on a big scale is
demonstrated by the use of its balanced scorecard and financial benchmarking
tools for all Burger King Corporate restaurants in the United States and Canada,
totalling nearly 6,500 restaurants.




Note
2    Basis of Financial Statement
Presentation.




The
accompanying unaudited consolidated financial statements have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
consolidated or omitted in accordance with such rules and regulations. The
information furnished in the interim consolidated financial statements includes
normal recurring adjustments and reflects all adjustments which, in the opinion
of management, are necessary for a fair presentation of such consolidated
financial statements.




The
Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on its results of operation,
financial position or cash flow.




Although
management believes the disclosures and information presented are adequate to
not make the information misleading, it is suggested that these interim
consolidated financial statements be read in conjunction with the Company's most
recent audited financial statements and notes thereto included in its June 30,
2009 Annual Report on Form 10-K. Operating results for the three months ended
September 30, 2009 are not necessarily indicative of the results that may be
expected for the entire year or any other period.




The
Company's financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The ability of the Company to
continue as a going concern is dependent on the Company; (1) to obtain adequate
capital from outside sources, or (2) to fund itself through profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going
concern.






6




Note
3   Going Concern




As shown
in the accompanying consolidated financial statements, the Company has incurred
an operating deficit of $8,730,907 through the fiscal quarter ended September
30, 2009. The Company is continually reviewing its operations and attempting to
improve operating results and its balance sheet.  The consolidated
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.




Note
4    Property and Equipment




Property
and equipment are stated at cost.  Depreciation of property and
equipment is computed for financial statement purposes using accelerated methods
over a five year estimated useful life of the assets. Accumulated depreciation
at September 30, 2009 was $153,200 and $148,310 at June 30,
2009.Management has evaluated the difference between the
straight line and accelerated method used and has deemed the difference
immaterial.




Note
5   Deferred Commission




In August
2007, the Company renegotiated a previous commission agreement that now provides
for monthly payments of $3,000 for four years commencing July 1, 2007 and the
issuance of 1 million shares of the Company’s common stock.  The
determination of the amount was based on the fair value of the issued common
stock at the commitment date and is amortized over the life of the
contract.  The two parties to the agreement have agreed to a deferral
of the monthly payments until April 2010 effective October 10,
2009


Three Months Ended September 30,
      2009Long
      term portion of deferred commission in other assets
            
            $
            27,572Current
      portion of deferred commission in prepaid expenses
            
            $
            36,762Amount
      of commission expensed in this period
            
            $
            9,191




7


Note
6    Deferred Credits




In
January 2006, the Board of Directors, agreed to offer then seven major
customers, (“consortium members”) the following options in exchange for any
further billing credits: (1) a right to receive $150,000 in billing credits
applied against their monthly business intelligence software billings at a rate
of 25% of the billings commencing July 1, 2006, or (2) a right to receive an
additional 833,333 shares of the Company’s common stock per consortium member.
These shares would be in addition to the shares issued to consortium members in
exchange for their original $100,000 investment in fiscal 2004.





Two
consortium members elected option (1), one commencing January 1, 2006, and the
other commencing July 1, 2006.  The five remaining consortium members
elected option (2) and in May 2006, the Company issued 4,166,665 shares under
this agreement. The deferred credits at September 30, 2009 in the respective
amounts of $88,417 and $84,360, net of amortization, are expected to be utilized
over a 12 to 13 year period based on their current billing rates using a 5%
discount rate that approximated the risk-free rate in effect during the offered
option period.




Note
7    Debt Reduction Obligation




In
October 2008, the Company signed an agreement with its patent counsel to issue
1,000,000 shares of XFMY’s common stock issued on October 24, 2008 at the
closing price of $0.14 per share for a total value of $140,000, to pay cash
payments of $10,000 that extend over 48 months for a total of $480,000 and three
additional debt reduction payments of $65,000 each contingent upon the Company
achieving certain revenue targets for a total of $195,000. This represents a
maximum payout value of $815,000 in full settlement of the Company’s obligation
of $1,578,769 that resulted in a gain of $763,769 in fiscal year ending June 30,
2009.  As of September 30, 2009, the Company has paid $120,000,
reflected the remaining $555,000 on its balance sheet and with the concurrence
of its patent counsel have agreed to defer further payments until
2010.




Note
8   Accounts Payable





Accounts
payable represents balances due to trade creditors and fees for professional
services incurred for legal, and audit services.




Note
9   Accrued Expenses





September 30,
            
            
            June 30,2009
            
            
            2009401
      (K) obligation
            
            $
            31,180
            
            
            $
            24,813Accrued
      interest on convertible debentures and note payable
            
            
            62,308
            
            
            
            59,843Other
            
            
            61,600
            
            
            
            54,706Totals
            
            $
            155,088
            
            
            $
            139,362




8


Note
10   Convertible Debentures





As of
September 30, 2009 and June 30, 2009, the Company has outstanding an aggregate
of $733,635 of the 9% convertible debentures that mature between January 31 and
October 31, 2010. Of that amount, $573,544 is held by stockholders who are also
customers of the Company and employees of the Company. Accrued interest on the
debentures was $60,231.  The Company has no assurance as to how much
in additional subscriptions will be received in the private
offering.




Note
11   Stock Option Grant




On August
12, 2009, the Company approved the grant and issuance of options exercisable to
purchase an aggregate of 250,000 shares of common stock and recorded a charge
of. $17,673 calculated using the Black-Sholes formula. The options are
exercisable until August 12, 2016 (the “Expiration Date”) at an exercise price
equal to $0.08 per share (the “Exercise Price”), which was equal to 100% of the
closing market price of the Company’s common stock on the grant
date.  All of the options vest immediately as of the date of the
grant.  The options were granted and issued under the Company’s 1999
Equity Incentive Plan and are subject to the terms and conditions of the
plan.




Note
12    Earnings per Share





Basic
earnings per share are calculated based on the weighted-average number of
outstanding common shares.  As of September 30, 2009, the Company had
51,931,553shares
outstanding, with no shares payable outstanding.  The Company uses the
treasury stock method to determine whether any convertible debentures,
outstanding options or warrants are to be included in the diluted earnings per
share calculation.  As of September 30, 2009, the Company had convertible
debentures of 733,635 convertible at a conversion price of the lesser of (i) 70%
of the price per share of common stock or common stock equivalent paid by
investors in the Company’s next round of equity or debt financing consisting of
at least $1,000,000 in cumulative gross proceeds, or (ii) $0.12, warrants
outstanding of 4,802,642 consisting of 2,401,321 with an exercise price of $0.14
and 2,401,321 with an exercise price of $0.18, and options outstanding of
7,025,000.





For the
three months ended September 30, 2009, the conversion of all of the above would
result in a possible dilution of 17,582,934 shares.  However, as the convertible debentures, options, and warrants
have a strike price in excess of the market price, $0.10 at September 30, 2009,
and are considered not “in the money”, with the exception of the 250,000 options
granted on August 12, 2009 at an exercise price of $0.08, they are excluded from
the calculation of diluted earnings per share due to their anti-dilutive effect.
If the $0.08 were included in the basic calculation, there would be no effect on
the earnings per share.





Note
13    Related Party Transactions





Seven of
our customers who are also stockholders in the Company, generated revenues
approximating $92,900in the three months ended September, 2009.  In
the same periods in the prior year, revenues approximated $84,500. A principal
in one current customer serves as a member of the Board of Directors and the
Audit Committee.




Of the
total 9% convertible debentures issued through September 30, 2009, $478,554 is
held by stockholders who are also customers of the Company and $20,000 is held
by senior management of the Company.  Interest expense accrued to
related parties was $10,919 for the three months ended September 30,
2009.




In March
2009, the Company terminated its arrangement for office space with a company
controlled by a major stockholder of the Company and moved to a new
location.  In the three months ended September 30, 2008, the Company
paid rent of $3,000 to that stockholder.




Note
14    Commitmentsand
Contingencies




The
Company entered into a 65 month net lease at its Dallas, Texas office,
commencing June 1, 2008, approximating $4,300 per month and a one year lease,
commencing March 1, 2009, for $650 per month at its Northbrook, Illinois office.
Total rent expense for the three months ended September 30, 2009 and 2008 was
$14,936 and $15,986 respectively.  The Company accounts for these
leases as operating leases.




Note
15   Subsequent Events




In
October, 2009, the Company agreed with two of its creditors to defer payments
against their obligation for a period of 3 to 6 months totaling
$13,000.  The Company has evaluated all subsequent events through the
filing date of this report.




9




ITEM 2.
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS







Safe Harbour - Forward
Looking Statements




When used
in this Quarterly Report on Form 10-Q, in documents incorporated herein and
elsewhere by us from time to time, the words "believes," "anticipates,"
"expects" and similar expressions are intended to identify forward-looking
statements concerning our business operations, economic performance and
financial condition, including in particular, our business strategy and means to
implement the strategy, our objectives, the amount of future capital
expenditures required, the likelihood of our success in developing and
introducing new products and expanding the business, and the timing of the
introduction of new and modified products or services. These forward looking
statements are based on a number of assumptions and estimates which are
inherently subject to significant risks and uncertainties, many of which are
beyond our control and reflect future business decisions which are subject to
change.




A variety
of factors could cause actual results to differ materially from those expected
in our forward-looking statements, including those set forth from time to time
in our press releases and reports and other filings made with the Securities and
Exchange Commission. We caution that such factors are not exclusive.
Consequently, all of the forward-looking statements made in this document are
qualified by these cautionary statements and readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date of this Quarterly Report on Form 10-Q. We undertake no obligation to
publicly release the results of any revisions of such forward-looking statements
that may be made to reflect events or circumstances after the date hereof, or
thereof, as the case may be, or to reflect the occurrence of unanticipated
events.




RESULTS OF
OPERATIONS





REVENUE   The
Company’s primary revenue is derived by delivering software as a service, or
hosted solutions for its clients billed on a monthly basis for each location
serviced.  For the three months ended September 30, 2009, the Company
generated $501,088 in revenues compared to $567,521 in the comparable prior
year’s period.  This decrease in revenues was attributable to a
decrease in professional service contracts for special projects but was offset
by an increase primarily attributable to the licensing of the Company’s
solutions by additional customers.  In 2008 and 2007, the Company
received payments under contracts for the development of various solutions,
subject to multi-year licensing agreements. The revenue under these contracts is
recognized over a 3 year period to coincide with the terms of the related
licensing fees. The Company recognized $21,000 in the three months ended
September 30, 2009 and 2008 for the development work and $75,000 under the
license agreements.  As of September 30, 2009, the Company included
$107,000 from the development fees in deferred revenues on its balance
sheet.




COST OF
REVENUE   The cost of revenue for the three months ended
September 30, 2009, consist primarily of personnel, related payroll costs and
support service costs in the amount of $145,935. Other costs include travel,
data hosting services, telecommunication costs and depreciation of computer
equipment used in the maintenance and processing of customers'
data.  The three months ended September 30, 2009 included higher costs
for new personnel and increased time allocated to operations of $26,743,
increased license fees due to increased revenues of $2,148, offset by a decrease
in data hosting and telecommunications services of $16,611 and a decrease in
other operating costs of $7,283.  The costs for the three month period
in the comparable period of the prior year were $140,619.




RESEARCH AND
DEVELOPMENT   Research and development costs are charged
to operations as incurred and consist primarily of personnel, related benefit
costs and outside contracted services. The costs for the three months ended
September 30, 2009 were $129,627. In the current year’s period, although the
Company increased salaries, they re-allocated personnel time from development to
operations, thus total payroll and related costs decreased $202. The Company
also was able to reduce the use of outside contractors by $6,598 and reduced
travel and other costs by $1,795. The costs for the three month period in the
comparative period of the prior year were $137,893. The Company’s research and
development is part of its strategic plan to provide enhancements and
integration into new and existing franchise operations in the retail
market.




MARKETING AND
SELLING   The costs for the three months ended September
20, 2009 were $58,565 compared to $71,662 in the comparable period of the prior
year. The Company’s marketing and selling expenses in the current period
decreased due to re-allocated personnel time from marketing and sales to
operations and administration by $5,091, and reduced costs for advertising,
travel and trade shows in the amount of $8,006. For the current fiscal year, the
Company continues to expand its customer base through direct sales, trade shows
and referrals from its relationship with existing clients.




GENERAL AND
ADMINISTRATIVE   The Company’s general and administrative
costs consist primarily of executive salaries and related benefits, professional
fees for attorneys, our independent auditor, rent, expenses related to being a
public company and other operating costs.    The costs for
the three months period ended September 30, 2009 were $129,377 compared to
$131,815 in the comparable period of the prior year. On August 12, 2009, the
Company authorized the issuance of 250,000 stock option grants to its latest
Board of Directors member and recorded non-cash compensation expense of $17,673
resulting from that option grant.  The options to purchase the
Company’s shares were granted at the closing price on the date of the grant at
$0.08, using the Black Sholes method for calculating the charge and vested
immediately upon the grant. In the current quarter, The Company effected
reductions in professional fees of $4,800, insurance costs of $2,864, expenses
related to being a public company of $3,677 and other operating costs of
$6,609.







INTEREST
EXPENSE   Interest expense consists of the
following:




Interest
      expense
            
            
            
            
            Three
      Months Ended
              September 30,2009
            2008Accrued
      interest on convertible debentures
            
            
            $               
      16,642
            $          
      16,416Accrued
      interest on loan payable
            
            
            2,076
            1,750Interest
      incurred from the deferred credits issued to consortium
      members
            
            
            
            
            
            2,328
            2,374Interest
      income earned on cash and cash equivalents
            
            
            
            
            
            (233)
            (681)Net
      interest expense
            
            
            
            
            
            $                20,813
            $          
      19,859







NET INCOME
(LOSS)The net income for the three months ended
September 30, 2009 was $9,854 compared to $65,673 for the comparable period in
2008.  The decrease in the net income was primarily the result of
decreased revenue from professional service fees offset by an increase of the
licensing of the Company’s solutions to additional customers.  In this
current quarter, although the Company added additional personnel and increased
staff salaries, they effected significant reductions in most other categories as
noted above. The Company also incurred a non-cash compensation expense of
$17,673 resulting from an option grant to the newest member of its Board of
Directors.




The net
income per share for the three months ended September 30, 2009 and 2008 was
$0.00 per share on 51,931,553 weighted average common shares outstanding and
$0.00 per share, on 50,931,553 weighted average common shares outstanding,
respectively.




10


LIQUIDITY
AND CAPITAL RESOURCES




The Company continued to achieve another profitable quarter since it
commenced operations.  The Company had incurred operating losses and
negative cash flows from operations in each quarter since it commenced
operations through June 30, 2008.  As of September 30, 2009, there was
an accumulated deficit of $8,730,907 and the Company’s cash position is
$13,251.  While there can be no assurances that the Company will
continue to increase its customer base and related revenues necessary to cover
its operating costs; the Company’s management believes the opportunities
identified in its pipeline are achievable to continue generating operating
profitability and positive cash flow in the near future.




The
Company may need additional financing and there is no assurance that such
financing will be available, if at all, at terms acceptable to the
Company.  If additional funds are raised by the issuance of equity
securities, existing stockholders may experience dilution of their ownership
interests and these securities may have rights senior to those of holders of the
common stock.  If adequate funds are not available or not available on
acceptable terms, it could have a material adverse effect on the Company's
financial condition and results of operations.




Item
3.    Quantitative and Qualitative Disclosures about Market
Risk




Not
applicable




Item
4.    Controls and Procedures




Evaluation of Disclosure
Controls and Procedures




Our
management has evaluated, under the supervision and with the participation of
our chief
executive  officer  and  chief  financial  officer,  the
effectiveness  of  our  disclosure
controls  and  procedures  (as
defined  in  Rules  13a-15(e) and 15d-15(e) of
the  Exchange  Act).   Based  upon
that evaluation,  our  principal executive officer and
principal financial officer concluded that,
as  of  the  end  of  the  period
covered  in  this  report,  our
disclosure controls and procedures were ineffective to ensure  that
information required to be disclosed in reports
filed  under  the Securities Exchange Act of 1934, as
amended (the "Exchange  Act")
is  recorded,  processed,  summarized  and  reported  within  the
required time periods and is accumulated and communicated to  our
management,   including  our  principal  executive  officer   and
principal  financial  officer,
as  appropriate  to  allow  timely
decisions regarding required disclosure.




Our
management, including our principal executive officer and principal financial
officer, does not expect that our disclosure controls and procedures or our
internal controls will prevent all error or 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.   Further, the design of a control system must reflect the
fact that there are resource constraints and the benefits of controls must be
considered relative to their costs.  Due to 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, have been detected.
Accordingly, management believes that the financial statements included in this
report fairly present in all material respects our financial condition, results
of operations and cash flows for the periods presented.




Changes
in Internal Control over Financial Reporting




In
addition, our management with the participation of our Principal Executive
Officer and Principal Financial Officer have determined that no change in our
internal control over financial reporting occurred during or subsequent to the
quarter ended September 30, 2009 that has materially affected, or is (as that
term is defined in Rules 13(a)-15(f) and 15(d)-15(f) of the Securities Exchange
Act of 1934) reasonably likely to materially affect, our internal control over
financial reporting.






11




PART
II - OTHER INFORMATION






Item
1       Legal
Proceedings




As of the
date of this report, there are no pending legal proceedings in which the Company
or any of its officers, directors or affiliates is a party, and the Company is
not aware of any threatened legal proceedings.




Item
2      Unregistered Sales of
Securities and Use of Proceeds




None,
except as previously reported.




ITEM
3    Defaults upon Senior Securities




None,
except as previously reported.




ITEM
4   Submissions of Matters to a Vote of Security
Holders




The
Company did not submit any matters to a vote of security holders during the
three months ended September 30, 2009




ITEM
5     Other information




None




ITEM
6      Exhibits and Reports on Form
8-K




Exhibits31.
            Certification32.
            Certification
      pursuant to USC Section 1350Reports on 8-K1
            Current
      Report on Form 8-K, Item 3.02 dated August 12, 2009, as filed with the
      Commission on October 29, 2009














SIGNATURES




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




XFormity
      Technologies, Inc.Date:November 16, 2009
            /s/ Christopher
      Ball
              Christopher
      Ball
              Chief
      Executive OfficerDate:November 16, 2009
            /s/ Jack
      Rabin
              Jack
      Rabin
              Chief
      Financial Officer












12