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NYXIO TECHNOLOGIES CORP - 10-K/A - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
[January 04, 2013]

NYXIO TECHNOLOGIES CORP - 10-K/A - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

(Edgar Glimpses Via Acquire Media NewsEdge) This discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of the Company and its subsidiaries for the year ended December 31, 2011 and for the period of July 8, 2010 (inception) to December 31, 2010. The discussion and analysis that follows should be read together with our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Except for historical information, the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company's control. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report.

OVERVIEW On July 5, 2011, we closed our Share Exchange Agreement with Nyxio Technologies, Inc. ("Nyxio") through the issuance of 22,500,000 shares of our common stock for 100% of the outstanding shares of Nyxio. As a result of the Share Exchange Transaction, Nyxio became our wholly-owned subsidiary.

Through our wholly-owned subsidiary, we 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.


Since July 8, 2010, the inception date of Nyxio, through December 31, 2011, we have generated revenue of $21,388 and have incurred a net loss of $5,095,876. Our greatest challenges which have prohibited us from executing our business plan are as follows: · Lack of adequate funding to obtain a small inventory, establish a healthy PR campaign, recruit a world class management team, and fund future development to enhance current product features and new products to stay ahead of the technology curve.

· Manufacturing in Asia - Too far away to monitor quality and suppliers without costly travel.

· Lack of adequate funding to retain skilled sales team .

26 -------------------------------------------------------------------------------- Our current and future operations are focused on continuing to carry out our business plan through the marketing and continued development of our current products, including the VioSphere, Omega Classic tablet PC, Venture MMV technology and Ascend keyboards, and our future products, continued development efforts, and the continued evaluation of potential strategic acquisitions and/or partnerships.

Our operations to date have consisted primarily of the following: · Enhancing product features and esthetics · Negotiations to reduce product cost and enhance quality · Building a reliable Bill of Material for all products and sourcing from established suppliers · Work with technology partners such as Avnet, Intel, and AMD, with whom we have collaboration agreements, to develop new CPU list of options and board options. To date we have not entered into any Purchase Orders with these partners.

· Develop new products with alternate revenue streams, such a gaming and cloud commerce · Develop clear and concise marketing, sales, and specification literature and tools Our efforts are directed at generating revenue through the sales of our current products, which are available for purchase at the following locations: Amazon.com., OrderBorder, Rapid Buyer, Focus, University Book Stores, and at our proprietary web-site.

Key factors affecting our results of operations include revenues, cost of revenues, operating expenses and income and taxation.

Critical Accounting Policies and Estimates Principles of Consolidation The financial statements as of December 31, 2011 and for the year then ended include Nyxio Technologies Corporation ("NTC") and its wholly owned subsidiary, Nyxio Technologies, Inc. ("NTI"). The financial statements for the period of July 8, 2010 (inception) to December 31, 2010 are that of Nyxio Technologies, Inc. ("NTI"). On July 5, 2011, the Company completed its reverse acquisition with LED Power Group whereby Nyxio Technologies, Inc. was the accounting acquirer and surviving entity. All significant inter-company transactions and balances have been eliminated. NTC and its subsidiary are collectively referred to herein as the "Company".

Basis of presentation The Company is in the development stage in accordance with Accounting Standards Codification ("ASC") Topic No. 915.

Inventory Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method.

Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value.

Revenue recognition The Company recognizes revenue in accordance with ASC subtopic 605-10 (formerly SEC Staff Accounting Bulletin No. 104 and 13A, "Revenue Recognition") net of expected cancellations and allowances. As of December 31, 2011 and 2010, the Company evaluated evidence of cancellation in order to make a reliable estimate and determined there were no material cancellations during the years and therefore no allowances has been made.

The Company's revenues, which do not require any significant production, modification or customization for the Company's targeted customers and do not have multiple elements, are recognized when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the Company's fee is fixed and determinable; and (iv) collectability is probable.

27 -------------------------------------------------------------------------------- Substantially all of the Company's revenues are derived from the sales of Smart TV and Tablet PC technology and products. The Company's clients are charged for these products on a per transaction basis. Pricing varies depending on the product sold. Revenue is recognized in the period in which the products are sold.

Results of Operations - For the year ended December 31, 2011 On July 5, 2011 we consummated our merger with Nyxio. Pursuant to the agreement, the transaction was accounted for as a reverse merger whereby Nyxio was deemed the accounting acquirer and Nyxio Corp., the legal acquirer accordingly, the financial statements of the Company reflect the historical operating activities of Nyxio and the historical equity of Nyxio Corp. Nyxio was incorporated on July 8, 2010 (inception) and therefore does not have two complete twelve-month periods available for meaningful comparison.

Revenue and Cost of Goods During the year ending December 31, 2011, we achieved gross revenue of $11,283 which is derived from the sale of our proprietary products including the Omega Classic tablet PC, Venture MMV (mobile media viewer) technology and Ascend keyboard PC products. The corresponding cost of goods sold, comprised primarily of assembly and transportation costs, totaled $7,603 or 67% realizing a gross profit of $3,680 or 33%. As a development stage enterprise, we had limited capital resources available to fund product production nor were we able to fully execute our sales and marketing plan. We believe that our merger activities have provide new opportunities to obtain the necessary capital to fully execute our business plan and further, anticipate monthly revenue growth in 2012 as a result.

Operating Expenses The Company's operating expenses for the year ended December 31, 2011 totaled $4,156,865 and consists primarily of a $3,967,500 consulting expense incurred in connection with the fair value of a warrant grant to our CEO, pursuant to our July 2011 Share Exchange Agreement. Additionally, we recognized $190,835 in professional expense which includes our legal and accounting fees. In large, these costs are non-recurring since they specifically related to our July merger activities. Therefore, in 2012, we anticipate seeing a decline in both consulting and professional expenses.

Net (Loss) Income Net (loss) for the year ended December 31, 2011 was $4,992,038 The Net Loss is primarily the result of the consulting fees described above as well as minimal initial revenues generated during the first full operational and transitional year.

Period from inception, July 8, 2010, to December 31, 2011 Since July 8, 2010 (inception) through December 31, 2011, our revenue has totaled $21,388 and we have incurred a net losses of $5,095,876, primarily due to consulting fees paid during 2011. We expect to continue to have negative cash flows as our business plan is implemented, however we expect to see swift results from the implementation of our sales and marketing plan and expect to see significant improvement during 2012 and beyond.

Liquidity and Capital Resources Overview As of December 31, 2011, we had cash and equivalents on hand of $1,341, and a working capital (deficit) of $314,265. We determined that our cash on hand and working capital were not sufficient to meet our current anticipated cash requirements. As such, we evaluated several options to obtain short term financing and entered into a Securities Purchase Agreement with ICG USA, LLC as discussed below. While we hope to see a significant increase in revenue towards the latter part of the second quarter of 2012, we will continue to rely on funds obtained through the issuance of debt and equity securities throughout 2012. We may enter into further debt and equity agreements to fund operations and inventory requirements if management feels it is required, and we expect to see sharp increases in revenues to fund future operating expenses. Our operations to date have been primarily funded through the issuance of debt and equity securities 28 -------------------------------------------------------------------------------- Specifically, 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 and is due on demand. 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. During the year ended December 31, 2011, we sold 1,555,000 shares of our common stock to certain accredited investors in exchange for cash totaling $777,500 in accordance with our form of Securities Purchase Agreement requiring payment equal to $0.50 per share. In the fourth quarter of 2011 we sold an additional 2,100,000 shares of our common stock in exchange for cash totaling $210,000 in accordance with our form of Securities Purchase Agreement requiring payment equal to $0.10 per share.

Subsequent to our fiscal year ended December 31, 2011, on February 16, 2012, we entered into a Securities Purchase Agreement with and issued a Convertible Promissory Note in the amount of $200,000, at 6% interest per annum, to ICG USA, LLC (the "ICG Note"). The ICG Note is convertible into shares of our common stock beginning six months after the date of issuance of the ICG Note at the discretion of ICG USA, LLC. The ICG Note is due February 16, 2013.

Additionally, on February 21, 2012, we entered into a securities purchase agreement (the "Purchase Agreement") with Socius CG II, Ltd., a Bermuda exempted company ("Socius"). Under the terms and subject to the conditions of the Purchase Agreement, we have the right, in our sole discretion, over a term of two years from the closing of the Purchase Agreement, to demand through separate tranche notices that Socius purchase up to a total of $5 million of redeemable Series A Preferred Stock. In order to effectuate a future issuance of Series A Preferred Stock, on March 22, 2012, after receiving approval of a majority of our outstanding common stock, we filed an amendment to our Articles of Incorporation to designate 1,500 shares of blank check preferred stock, and on March 26, 2012, we filed a Certificate of Designations of Preferences, Rights and Limitations to authorize the issuance of 1,100 shares of Series A Preferred Stock. In our sole discretion, we have the right to issue to Socius, subject to the terms and conditions of the Purchase Agreement, one or more tranche notices to purchase a certain dollar amount of such Series A Preferred Stock. As of the date of this Annual Report, we have not provided Socius with a tranche notice and no Series A Preferred Stock has been issued.

To meet our future objectives, we will need to meet our revenue objectives and/or sell additional equity and debt securities, which could result in dilution to current shareholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.

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.

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 29 -------------------------------------------------------------------------------- We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to its shares and classified as shareholder's equity or that are not reflected in its consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to it or engages in leasing, hedging or research and development services with it.

Contractual Obligations The following table outlines payments due under our significant contractual obligations over the periods shown, exclusive of interest: Payments due by Period Contractual Obligations At December 31, Less than One to 2011 One Year Three Years Three to Five Years More than Five Years Total Operating Lease Obligations $ 25,048 25,799 $ 50,847 Debt Obligations 305,137 305,137 Capital Expenditure Obligations Purchase Obligations Other Long-Term Liabilities The above table outlines our obligations as of December 31, 2011 and does not reflect any changes in our obligations that have occurred after that date.

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