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

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.

This Quarterly Report includes "forward-looking statements" within the meaning of Section 27A of the Exchange Act which represent the expectations or beliefs concerning future events that involve risks and uncertainties, including but not limited to the demand for Company products and services and the costs associated with such goods and services. All other statements other than statements of historical fact included in this Quarterly Report including, without limitation, the statements under "Management's Discussion and Analysis or Plan of Operations" and elsewhere in the Quarterly Report, are forward-looking statements. While the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.

The following 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.

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.

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 - Three months ended June 30, 2009 and 2008.

Revenues have not been substantial as we refocused our efforts on developing the ThinDisc technologies and developing marketing affiliates. For the three months ended June 30, 2009 and 2008, the Company had revenues of $3,990 and $3,990.

The Company incurred operating expenses of $120,389 and $249,475 for the three months ended June 30, 2009 and 2008, a decrease of $129,086 or 51.74%. The decrease in operating expenses of $129,086 for the three months ended June 30, 2009 when compared to the three month period ended June 30, 2008 is attributed to:
Increases in:

· Consulting fees of $12,090,

· Advertising of $2,350 and,

· Other expense of $185.

Decreases in:

· Depreciation and amortization expenses of $10,061,

· Payroll expenses of $54,901,

· Professional fees of $74,410,

· Occupancy expense of $1,889,

· Office expense of $547 and,

· Travel and entertainment expense of $1,903

The increase in consulting fees of $12,090 or 27.38% is attributed to the valuation of restricted common stock and warrants issued for consulting services for the three months ended June 30, 2009 and 2008.

The increase in advertising of $2,350 is attributed the purchase of demonstration ThinDisc gift cards for use by our marketing affiliates as we get prepared to bring the ThinDisc gift cards to market. We had no advertising cost in the three months ended June 30, 2008.

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The decrease in depreciation and amortization expense of ($10,061) or (97.65%) for the three months ended June 30, 2009 compared to the three months ended June 30, 2008 is attributed to the reduction in amortization expense on our license which was fully amortized in the year ended March 31, 2009.

The decrease in payroll expenses of ($54,901) or (58.04%) for the three months ended June 30, 2009 compared to the three month period ended June 30, 2008 is attributed to the following:

· Decrease in our CEO's salary and related payroll taxes of ($15,071)

· Reduction in one employee resulted in a decrease of ($5,383)

· Decrease in valuation of compensation cost of options issued to employees of
($25,375)

· Decrease in valuation of restricted common stock issued to employees as compensation of ($7,800)

· Other miscellaneous decreases of ($1,272)

The decrease in professional services of ($74,410) or (83.80%) for the three months ended June 30, 2009 compared to the three month period ended June 30, 2008 is attributed to:

· A decrease in legal fees associated with our patent fillings of ($75,785)

· Other miscellaneous increases of $1,375

Other classifications of expenses did not fluctuate substantially for the three month period ended June 30, 2009 to June 30, 2008.

During the three months ended June 30, 2009 and 2008 we incurred net losses of $120,886 and $259,462 or $(0.004) and $(0.008) per share.

Liquidity and Capital Resources.

From inception through June 30, 2009, the Company has issued 33,399,809 shares of its Common Stock to officers, directors and outside shareholders. The Company has little operating history and no material assets other than the license agreement for ClearVideo and DVDplus, the patent for EnXcase and the pending patents for ThinDisc, Disc Security Tag, a Passive Resonant Reflector and a Design Patent covering an Antenna for a Storage Disc. The Company has $7,304 in cash as of June 30, 2009.

The Company has incurred operating losses each year since its inception and has had a working capital deficit at June 30, 2009. At June 30, 2009 and March 31, 2009 the working capital deficit was $1,465,966 and $1,432,328, respectively. Current liabilities include notes payable, accrued interest on those notes and advances from the CEO and shareholders in the aggregate amount of $1,212,214 and $1,164,183, respectively. The adjusted working capital deficit without these related party liabilities for June 30, 2009 and March 31, 2009 is $253,752 and $268,145, respectively. The working capital deficit and cash balance 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 financial statements which expressed substantial doubt about the Company's ability to continue as a going concern.

Contractual Obligations.

At the present time, the Company 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.

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:

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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.

CURRENT TRADING MARKET FOR THE COMPANY'S SECURITIES.

Currently the Company's stock is traded under the symbol "EXNT" on the NASD OTC Bulletin Board, and the symbol "AOHMDW" on the Frankfurt, Berlin and Stuttgart Stock Exchanges in Germany. There can be no assurance that an active or regular trading market for the common stock will develop or that, if developed, will be sustained. Various factors, such as operating results, changes in laws, rules or regulations, general market fluctuations, changes in financial estimates by securities analysts and other factors may have a significant impact on the market of the Company securities. The market price for the securities of public companies often experience wide fluctuations that are not necessarily related to the operating performance of such public companies such as high interest rates or impact of overseas markets.