Summary of ENXNET INC - Yahoo! Finance

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following plan of operation, discussion of the results of operations and financial conditions should be read in conjunction with the financial statements and related notes appearing in this report.

Overview
EnXnet, Inc. was formed under the laws of the State of Oklahoma on March 30, 1999 as Southern Wireless, Inc. It is a business and technology development enterprise engaged in the development, marketing, and licensing of emerging technologies and innovative business strategies and practices, focusing primarily on products, solutions, and services which support and enhance multimedia management.

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The Company currently can satisfy its current cash requirements for approximately 30 days and has a plan to raise additional working capital by the sale of shares of the Company common stock to select perspective individuals and from additional borrowings. Additionally, holders of outstanding stock options have been exercising those options which have provided additional working capital for the Company. This plan should provide the additional necessary funds required to enable the Company to continue marketing and developing its products until the Company can generate enough cash flow from sales to sustain its operations.

The Company does not anticipate any significant cash requirements for the purchase of any facilities.

The Company currently has three full-time employees on the payroll. It is anticipated that the Company will not need to hire additional employees in order to expand the marketing and developing of its products. The Company currently has arrangements with marketing affiliate Duplium for our DVDplus product and with One28 Marketing Group and Interactive Affinities for our ThinDisc product. Currently our employees and other outside consultants are used for the further development of our products.

Results of Operations.

Year Ended March 31, 2009 Compared to Year Ended March 31, 2008.

Revenues.
Our revenues from operations for the years ending March 31, 2009 and 2008 were $18,698 and $17,501. Gross profits from these revenues were $12,271 and $12,201, respectively. Revenues for the year ended March 31, 2009 and 2008 consist of lease revenue on our DVDplus mold and royalty income from the production of DVDplus products.

Operating Expenses.
The Company incurred operating expenses for the years ended March 31, 2009 and 2008 of $714,339 and $726,667. The decrease in operating expenses of $12,328 (2%) is attributed to a decrease in consulting expense of $121,266; an increase in depreciation and amortization expense of $40,191; a decrease in bad debts expenses of $9,295; decease in travel expense of $6,685; a decrease in office expense of $2,404 and increases in professional services of $80,382 and occupancy expense of $6,415, other expenses increased by $272.

The consulting expenses for the year ended March 31, 2009 decreased $121,266 from the year ended March 31, 2008. The decrease in consulting expenses is due to a decrease in the valuation of the underlying common stock shares and common stock options issued for consulting services performed. The consulting expenses related to the issuance of common stock and options were $97,350 and $224,986 for the years ended March 31, 2009 and 2008, a decrease of $127,636.

The increase in depreciation and amortization expense of $40,191 relates to an additional amortization of the license for the year ended March 31, 2009 of $40,253. We determined that the license had minimal value to us as of March 31, 2009.

Professional services expenses for the year ended March 31, 2009 increased $80,382 from the year ended March 31, 2008. The increase in professional services relates to an increase of $73,887 in legal fees associated with our patent filings and an increase of $6,495 in our professional auditing fees related to our public filings with the Securities and Exchange Commission.

We incurred net losses for the years ended March 31, 2009 and 2008 of $709,460 and $766,889 or $(0.022) and $(0.025) per share.

Liquidity and Capital Resources.
The Company from inception through June 23, 2009 has issued 32,694,809 shares of its Common Stock to officers, directors and others. The Company has little operating history and no material assets other than the license agreement for ClearVideo and DVDplus, and the patent for EnXcase and the pending patents for ThinDisc and Disc Security Tag. The Company has $10,630 in cash as of March 31, 2009.

The Company has a limited source of revenue from the lease of our DVDplus mold and royalties on DVDplus products and has incurred operating losses since inception. The Company has incurred operating losses each year since its inception and has had a working capital deficit at March 31, 2009 and 2008. The working capital deficit at March 31, 2009 and 2008 was $1,432,328 and $1,303,775, respectively. Current liabilities include notes payable, accrued interest on those notes and advances from the CEO and shareholders in the aggregate amount of $1,164,183 and $1,193,890, respectively. The adjusted working capital deficit without these related party liabilities for March 31, 2009 and 2008 is $268,145 and $109,885, respectively. These factors raise substantial doubt about the Company's ability to continue as a going concern. As a result of these factors, the Company's independent certified public accountants have included an explanatory paragraph in their reports on the Company's March 31, 2009 and 2008 financial statements which expressed substantial doubt about the Company's ability to continue as a going concern.

Subsequently after March 31, 2009, the Company received advances from the President in the amount of $6,000. An entity controlled by the President also advanced the company $21,000.

In May 2009, the Company received insurance proceeds of $8,768 from the destruction of stored inventory when a tornado destroyed a warehouse used to store the inventory. The inventory had been charged to expense in prior years.

Contractual Obligations.
The Company at the present time has no material commitments for capital expenditures. If capital expenditures are required after operations commence, the Company will pay for the same through the sale of common stock; or through loans from third parties. There is no assurance, however, that such financing will be available and in the event such financing is not available, the Company may have to cease operations.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES.
Management's discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements. These statements have been prepared in accordance with generally accepted accounting principles in the United States of America.

Use of estimates in preparation of financial statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, based on historical experience, and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The following critical accounting policies rely upon assumptions, judgments and estimates and were used in the preparation of our consolidated financial statements:

Licenses
The costs associated with acquiring exclusive licensing rights to patented technology have been capitalized and are being charged to expense using the straight line method of amortization over ten years, the estimated remaining useful lives of the patents.

In accordance with the provisions of Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets", management of the Company reviews the carrying value of its intangible assets on a regular basis. Estimated undiscounted future cash flows from the intangible assets are compared with the current carrying value. Reductions to the carrying value are recorded to the extent the net book value of the property exceeds the estimate of future discounted cash flows.

Revenue Recognition
Revenue is generally recognized and earned when all of the following criteria are satisfied: a) persuasive evidence of sales arrangements exists; b) delivery has occurred; c) the sales price is fixed or determinable, and d) collectibility is reasonably assured.

Persuasive evidence of an arrangement is demonstrated via a purchase order from our customers. Delivery occurs when title and all risks of ownership are transferred to the purchaser which generally occurs when the products are shipped to the customer. No right of return exists on sales of products except for defective or damaged products. The sales price to the customer is fixed upon acceptance of purchase order. To assure that collectibility is reasonably assured we perform ongoing credit evaluations of all of our customers.

Fair Value of Financial Instruments
The carrying amounts reported in the balance sheets as of March 31, 2009 and 2008 for cash equivalents and accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments.

Contingent Liability
In accordance with Statement of Financial Accounting Standards Interpretation No. 14, we may have certain contingent liabilities with respect to material existing or potential claims, lawsuits and other proceedings. We accrue liabilities when it is probable that future cost will be incurred and such cost can be measured.

Off Balance Sheet Arrangements

We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.