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NYXIO TECHNOLOGIES CORP - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations.(Edgar Glimpses Via Acquire Media NewsEdge) The following discussion should be read in conjunction with our financial statements and notes thereto included elsewhere in this quarterly report. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclaim any obligation to update forward-looking statements. Background and Prior Operations Nyxio Technologies Corporation ("we", "us", "our" or the "Company") was organized under the laws of the State of Nevada on June 8, 2006 under the name "Drayton Harbor Resources, Inc." We were originally engaged in the exploration of certain mineral interests located in British Columbia, Canada. We relinquished our rights to our mineral interests and changed our focus towards the end of 2008 to the research, development, manufacturing and sales of light-emitting diode (LED) products. In furtherance of our business objectives, on January 12, 2009, we entered into a definitive Agreement and Plan of Merger with LED Power Group, Inc. f.k.a. LED Power, Inc., a Nevada corporation ("LPI") and Drayton Acquisition Sub, Inc., our wholly-owned subsidiary, whereby Drayton Acquisition Sub, Inc. merged with and into LPI, with LPI remaining as the surviving entity and becoming our wholly-owned subsidiary. Under the terms of the Agreement and Plan of Merger, we issued 9,000,000 pre-split shares of our common stock to Trussnet Capital Partners (Cayman) Ltd. ("Trussnet") for all of the issued and outstanding shares of LPI. We were involved in a dispute with Trussnet an entered into a settlement agreement on August 16, 2010, whereby Trussnet agreed to surrender for cancellation and relinquish any and all ownership interests in 225,000 shares of our common stock. On January 16, 2009, we effected a 2.5-for-1 forward stock split of all of our issued and outstanding shares of common stock. Additionally, on February 2, 2009, we changed our name to "LED Power Group, Inc." Effective August 10, 2009, we effected a 1-for-100 reverse split of all our issued and outstanding shares of common stock to better position the company for growth for the rest of 2009 and to facilitate investment, and to ultimately enhance overall shareholder value, resulting in a decrease of the outstanding shares of common stock from 72,500,000 to 725,001 and a decrease of our authorized capital to 6,000,000. On September 24, 2009, we issued an aggregate of 1,000,000 shares of our common stock for a purchase price of $10,000 to John J. Lennon, our former President, resulting in a change of control and Mr. Lennon owning 57.14% of our issued and outstanding shares. Effective November 2, 2009, we amended our articles of incorporation to increase our authorized capital to 200,000,000 shares of common stock. Although our Board of Directors' preference would be to obtain funding and license new technology to develop LED products, our Board believes that it must consider all viable strategic alternatives that are in the best interests of our shareholders. Such strategic alternatives include a merger, acquisition, asset purchase, or similar transaction to either develop our LED product business or enter new markets. As such, on April 14, 2011, we entered into an Assignment and Assumption Agreement (the "Assumption Agreement") with American Petro-Hunter Inc., a Nevada corporation ("American Petro"), pursuant to which we acquired from American Petro for $30,000, all of its rights pursuant to a Participation Agreement (the "Participation Agreement") with Archer Exploration, Inc. ("Archer") to participate in the drilling for natural gas on a prospect located in Stanislaus County, California. Pursuant to the Participation Agreement, American Petro paid to Archer $200,000 for all costs in connection with the acquisition and operation of the prospect until completion of an initial test well in exchange for a 25% working interest in the prospect. The assignment of the 25% interest to us will only be made upon the successful completion of the initial test well. We will also be responsible for 25% of all expenditures in connection with the development and operation of the prospect for drilling. We may elect not to participate in additional expenditures in connection with the prospect at which time we will forfeit any interests we have in the prospect. American Petro conducted a seismic shoot on August 10, 2009. The results of the seismic indicate the need to reprocess the data and potentially add additional seismic lines to identify the test well locations. 11 --------------------------------------------------------------------------------Upon completion of a preliminary assessment of the prospect, the Company opted to not participate in the drilling and the agreement was rescinded. Subsequent Event and Current Operations On May 26, 2011, our board of directors decided it would be in the best interest of our shareholders to shift business focus from the LED and oil and gas businesses. In furtherance of that, we entered into a binding letter of intent with Nyxio Technologies Inc., an Oregon corporation ("Nyxio-OR") (the "LOI"), in connection with a proposed reverse acquisition transaction by and between the Company and Nyxio-OR whereby we were to acquire all of the shares of outstanding capital stock of Nyxio-OR in exchange for the issuance of a certain ownership interest in the Company to the shareholders of Nyxio-OR (the "Share Exchange"). In connection with the anticipated closing of the Share Exchange, effective June 14, 2011, we effected a 1-for-1.65 reverse stock split together with a corresponding reduction (from 200,000,000 to 121,212,122) in the number of authorized shares of the our common stock. In addition, also effective June 14, 2011, we amended our Articles of Incorporation to change our name from "LED Power Group, Inc." to "Nyxio Technologies Corporation." On July 5, 2011 (the "Closing Date"), we closed the Share Exchange pursuant to a Share Exchange Agreement (the "Exchange Agreement") by and among the Company, Nyxio-OR and the selling shareholders of Nyxio-OR ("Share Exchange Transaction"). As a result of the Share Exchange Transaction, (i) Mr. Giorgio Johnson received a warrant to purchase up to a maximum of 37,500,000 shares of our common stock at $0.01 per share (the "Warrant") and (ii) the selling shareholders of Nyxio-OR received an aggregate of 22,500,000 shares of our common stock, in exchange for 100% of the issued and outstanding capital stock of Nyxio-OR, representing approximately 60% of our then issued 38,378,295 issued and outstanding shares of common stock. From and after the Closing Date, our operations consist of the business and operations of Nyxio-OR, and Nyxio-OR became our wholly-owned subsidiary. Nyxio-OR is an electronics company with certain intellectual property rights related to hardware and software, including VioSphere, an integrated flat screen television and full personal computer, LCD and LED televisions, games and other accessories. Though our wholly-owned subsidiary, Nyxio-OR, we now develop and provide innovative technology for the consumer electronics market at a reasonable cost with an integrated solutions platform. We are determined to become a leading-edge driver and developer of technology across a wide range of vertical markets that include retail, education, and distribution. We strive to reduce the overall environmental footprint of end users by consolidating key hardware into more efficient devices such as the VioSphere, our flagship product, which management believes is the world's first TV with a built-in PC. We are dedicated to bringing the very best innovation to market across a wide range of products that include Tablet PC's, All in One PC's, Smart TV's, and groundbreaking concepts like the Venture Mobile Media Viewers. Our development process is identifying technological deficiencies within the consumer electronics market and offering products that provide creative solutions. To date, we have not generated any revenue from our business operations. Results of Operations The following discussion of the financial condition, results of operations, cash flows, and changes in our financial position should be read in conjunction with our audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed on April 15, 2011. 12 --------------------------------------------------------------------------------Comparison of the three-month periods ended June 30, 2011 and June 30, 2010 During the three-month periods ended June 30, 2011 and 2010, we incurred total expenses of $62,155 and $50,575, respectively. These expenses were related mainly to maintaining a public listing, such as legal and accounting fees, investor relations and marketing, as well as filing and registration fees and interest expense. Comparison of the six-month periods ended June 30, 2011 and June 30, 2010 During the six-month periods ended June 30, 2011 and 2010, we incurred total expenses of $81,814 and $117,449, respectively. These expenses were related mainly to maintaining a public listing, such as legal and accounting fees, investor relations and marketing, as well as filing and registration fees and interest expense. Liquidity and Capital Resources As of June 30, 2011, we had cash of $60 and working capital deficiency of $131,420. During the six-month period ended June 30, 2011, we funded our operations from $125,000 in proceeds from notes payable. On June 30, 2011, we entered into a promissory note with Coach Capital LLC in the amount of $111,000 (the "Coach Note"). The Coach Note is unsecured, bears interest at 10% per annum calculated annually, and is due on demand. Default in payment shall, at the option of the holder, render the entire balance payable. The holder of the Coach Note may elect to convert all or part of the indebtedness owing under the Coach Note into our securities at such rate as that being offered to investors at the time of conversion. We are currently seeking further financing, and we believe that will provide sufficient working capital to fund our operations for at least the next six months. Changes in our operating plans, increased expenses, acquisitions, or other events, may cause us to seek additional equity or debt financing in the future. For the six-month period ended June 30, 2011, we had net cash provided by financing activities of $125,000 and used $125,219 in operating activities. Our current cash requirements are significant due to planned development and marketing of our current products, and we anticipate generating losses. In order to execute on our business strategy, we will require additional working capital, commensurate with the operational needs of our planned marketing, development and production efforts. Our management believes that we should be able to raise sufficient amounts of working capital through debt or equity offerings, as may be required to meet our short-term obligations. However, changes in our operating plans, increased expenses, acquisitions, or other events, may cause us to seek additional equity or debt financing in the future. We anticipate continued and additional marketing, development and production expenses. Accordingly, we expect to continue to use debt and equity financing to fund operations for the next twelve months, as we look to expand our asset base and fund marketing, development and production of our products. Such working capital will most likely be obtained through equity or debt financings until such time as we reach the production stage. There are no assurances that we will be able to raise the required working capital on terms favorable, or that such working capital will be available on any terms when needed. Any failure to secure additional financing may force us to modify our business plan. In addition, we cannot be assured of profitability in the future. Off-Balance Sheet Arrangements There are no off-balance sheet arrangements. Critical Accounting Policies The preparation of financial statements in conformity with United States generally accepted accounting principles ("U.S. GAAP") requires management of our Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. 13 --------------------------------------------------------------------------------Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. As the number of variables and assumptions affecting the probable future resolution of the uncertainties increase, these judgments become even more subjective and complex. Our significant accounting policies are discussed in Notes 3, 4, 5 and 6 to our financial statements for the fiscal year ended December 31, 2010 included in our Annual Report on Form 10-K. |