UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.   20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2009

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number:   000-52074

4C Controls Inc.

(Exact Name of Registrant as Specified in its Charter)

Nevada		98-0446287
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

100 Wall Street, 21st Floor

New York, NY  10005

(Address of principal executive offices)

866-515-7069

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.323.405 of this chapter) during the preceding 12 months (or shorter period that the registrant was required to submit and post such files). Yes ¨ 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. (Check one):

Large Accelerated Filer	¨	Accelerated Filer	¨
Non-Accelerated Filer	¨	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 ¨ No x

As of August 19, 2009, the Issuer had 44,179,540 shares of its Common Stock outstanding. 

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION
Item 1: Financial Statements	4
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3: Quantitative and Qualitative Disclosures about Market Risk	21
Item 4: Controls and Procedures	21
PART II: OTHER INFORMATION
Item 1: Legal Proceedings	22
Item 1A: Risk Factors	22
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3: Defaults Upon Senior Securities	22
Item 4: Submission of Matters to a Vote of Security Holders	22
Item 5: Other Information	22
Item 6: Exhibits	23
SIGNATURES	24

2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Report on Form 10-Q (this “Report”) includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs and other information that is not historical information and, in particular, appear in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Report. When used in this Report, the words “estimates,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should” and variations of these words or similar expressions (or the negative versions of any these words) are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, management’s examination of historical operating trends, are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, we can give no assurance that management’s expectations, beliefs and projections will be achieved.

There are a number of risks and uncertainties that could cause our actual results to differ materially from the results referred to in the forward-looking statements contained in this Report. Important factors outside the scope of our control could cause our actual results to differ materially from the results referred to in the forward-looking statements we make in this Report. Without limiting the foregoing, if we are unable to acquire approvals or consents from third parties or governmental authorities with respect to our new business model, our plans to commence our new business may become irrevocably impaired.

All forward-looking statements included herein are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report. Except to the extent required by applicable laws and regulations, the Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this Report or to reflect the occurrence of unanticipated events.

Unless otherwise provided in this Report, references to the “Company,” the “Registrant,” the “Issuer,” “we,” “us,” and “our” refer to 4C Controls Inc. 

3

4C Controls Inc.

(A Development Stage Company)

Consolidated Balance Sheets

		June 30				December 31
		2009				2008
		(Unaudited)
ASSETS
Current Assets
Cash		$	1,399			$	104,708
Prepaid expenses and other current assets			300,015				43,097
Total Current Assets			301,414				147,805
Property & Equipment			1,022,900				14,343
Investment in and Advances to 4C Security Solutions, Ltd.			3,424,644				3,806,601
Total Assets		$	4,748,958			$	3,968,749
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities
Accrued liabilities		$	1,861,587			$	1,579,845
Loan payable - officer			29,964				-
Interest payable - related party			100,610				23,305
Loan payable - related party			2,495,875				1,539,175
Total Current Liabilities and Total Liabilities			4,488,036				3,142,325
Stockholders' Equity (Deficiency):
Common Stock, par value $.00001 per share
100,000,000 shares authorized,
44,179,540 shares issued and outstanding at June 30, 2009
and December 31, 2008			441				441
Additional paid in capital			13,543,779				13,428,602
Donated Capital			24,000				24,000
Treasury Stock, 470,450 shares at cost			(940,895	)			(940,895	)
Deficit accumulated during development stage			(9,667,853	)			(5,867,715	)
Deferred Compensation			(4,668,007	)			(5,818,009	)
Total 4c Controls Stockholders' Equity (Deficiency)			(1,708,535	)			-
Non Controlling Interest in Subsidiaries			1,969,457				-
Total Equity			260,922				826,424
Total Liabilities and Stockholders' Equity (Deficiency)		$	4,748,958			$	3,968,749

See Notes to Financial Statements

4

4C Controls Inc.

(A Development Stage Company)

(Unaudited) Consolidated Statements of Operations

																		Accumulated from
		For the Three Months Ended								For the Six Months Ended								December 28, 2004
		June 30								June 30								(Date of Inception)
		2009				2008				2009				2008				to June 30, 2009
Revenue
Interest Income		$	-				-			$	-				-			$	3,219
Expenses
Director fees and expenses			6,000				12,067				118,439				18,067				439,322
Donated Services			-				-				-				-				24,000
General & Administrative			922,096				116,752				1,903,836				151,017				4,385,631
Interest - related party			47,902				4,563				77,305				4,563				129,926
Marketing and public relations			333,489				85,685				471,085				93,825				986,514
Professional fees			347,845				286,268				859,260				413,982				3,299,292
Equity in loss of unconsolidated subsidiary			306,019				-				381,957				-				418,130
Total expenses			1,963,351				505,335				3,811,882				681,454				9,682,815
Net Loss		$	(1,963,351	)		$	(505,335	)		$	(3,811,882	)		$	(681,454	)		$	(9,679,596	)
Net Loss attributable to noncontrolling interest		$	11,743			$	-			$	11,743			$	-			$	11,743
Net Loss attributable to 4C Controls		$	(1,951,608	)		$	(505,335	)		$	(3,800,139	)		$	(681,454	)		$	(9,667,853	)
Net Loss Per Share			(0	)			(0	)			(0	)			(0	)
Weighted Average Shares Outstanding			44,179,540				45,524,000				44,179,540				42,353,397

See Notes to Financial Statements

5

4C Controls Inc.

(A Development Stage Company)

(Unaudited) Consolidated Statement of Stockholders' Equity

For the Period from December 28, 2004 (Date of Inception) to June 30, 2009

																														Deficit Accumulated
		Common Stock																												During the
						Par				Additional				Treasury Stock								Donated				Deferred				Development
		Shares				Value				Paid-in Capital				Shares				Value				Capital				Compensation				Stage				Total
Common stock issued for cash at
$0.00001 per share			35,000,000			$	350			$	(300	)						$	-			$	-			$	-			$	-			$	50
Net loss for the period			-				-				-												-								(6,520	)			(6,520	)
Balance - December 31, 2004			35,000,000			$	350			$	(300	)						$	-			$	-			$	-			$	(6,520	)		$	(6,470	)
Common stock issued for cash at
$0.10 per share			7,053,550				70				100,695																								100,765
Shares issuance costs											(1,548	)																							(1,548	)
Donated services																							12,000												12,000
Net loss for the year																															(48,442	)			(48,442	)
Balance - December 31, 2005			42,053,550			$	420			$	98,847							$	-			$	12,000			$	-			$	(54,962	)		$	56,305
Donated services																							12,000												12,000
Net loss for the year																															(42,707	)			(42,707	)
Balance - December 31, 2006			42,053,550			$	420			$	98,847							$	-			$	24,000			$	-			$	(97,669	)		$	25,598
Net loss for the year																															(93,677	)			(93,677	)
Balance - December 31, 2007			42,053,550			$	420			$	98,847							$	-			$	24,000			$	-			$	(191,346	)		$	(68,079	)
Issuance of Common Stock			1,596,440				16				4,806,810																								4,806,826
Non cash compensation											100,791																								100,791
Shareholder profits from sale of securities											1,522,164																								1,522,164
Stock grant			1,000,000				10				6,899,990																(6,900,000	)							-
Amortization of deferred compensation																											1,081,991								1,081,991
Treasury stock acquired			(470,450	)			(5	)							470,450				(940,895	)															(940,900	)
Net loss for the year																															(5,676,369	)			(5,676,369	)
Balance - December 31, 2008			44,179,540			$	441			$	13,428,602			$	470,450			$	(940,895	)		$	24,000			$	(5,818,009	)		$	(5,867,715	)		$	826,424
Non cash compensation											59,596																								59,596
Amortization of deferred compensation																											575,001								575,001
Net loss for the period																															(1,848,530	)			(1,848,530	)
Balance - March 31, 2009			44,179,540				441				13,488,198				470,450				(940,895	)			24,000				(5,243,008	)			(7,716,245	)			(387,509	)
Non cash compensation											55,581																								55,581
Amortization of deferred compensation																											575,001								575,001
Net loss for the period																															(1,951,608	)			(1,951,608	)
Balance - June 30, 2009			44,179,540				441				13,543,779				470,450				(940,895	)			24,000				(4,668,007	)			(9,667,853	)			(1,708,535	)

See Notes to Financial Statements

6

4C Controls Inc.

(A Development Stage Company)

(Unaudited) Consolidated Statement of Cash Flows

										Accumulated from
		For the Six Months Ended								December 28, 2004
		June 30								(Date of Inception)
		2009				2008				to June 30, 2009
Operating Activities
Net loss		$	(3,800,139	)		$	(681,454	)		$	(9,667,853	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization of deferred compensation			1,150,002				-				(4,668,007	)
Interest payable			77,305				4,563				100,610
Depreciation			-				-
Issuance of stock options			115,177				3,862				215,968
Donated Services							-				24,000
Impairment							-				5,000
Equity in loss of unconsolidated subsidiary			381,957				-				418,130
Minority interest in subsidiary losses			(11,743	)							(11,743	)
Change in operating assets and liabilities			-				-				-
Accrued expenses			395,582				151,894				1,861,587
Prepaid expenses and other current assets			(256,918	)			(37,818	)			(300,015	)
Net Cash Used in Operating Activities			(1,948,777	)			(558,953	)			(12,022,323	)
Investing Activities
Investments in 4C Security Solutions, Ltd.			-				(1,602,268	)			(3,690,808	)
Advances to 4C Security Solutions, Ltd.			-				-				(151,966	)
Acquisition of Property and Equipment			(1,022,900	)			-				(1,022,900	)
Website development costs							-				(5,000	)
Net Cash Used in Investing Activities			(1,022,900	)			(1,602,268	)			(4,870,674	)
Financing Activities
Proceeds of Loan from related party			986,664				1,163,709				2,525,839
Deposit for subscription of common stock							280,000
Net proceeds from issuance of common shares			-				940,900				12,387,357
Proceeds from Minority Interest			1,981,200				-				1,981,200
Net Cash Provided by (used in) Financing Activities			2,967,864				2,384,609				16,894,396
Increase (Decrease) in Cash			(3,813	)			223,388				1,399
Cash- Beginning of Period			5,212				6,313				-
Cash - End of Period		$	1,399			$	229,701			$	1,399
See Notes to Financial Statements
Supplemental disclosure of cash flow information
Common Stock issued for deferred compensation			-				-				6,900,000
Profits from shareholder sales of stock capitalized to loan receivable			-				-				1,522,164
Treasury stock acquired through offset of loan to related party			-				-				940,895

7

4C CONTROLS INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

June 30, 2009

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X relating to smaller reporting companies.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles (“GAAP”) for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the six month period ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ended December 31, 2009.

The balance sheet at December 31, 2008 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2008.

NOTE 2 – ORGANIZATION AND BUSINESS DESCRIPTION

4C Controls Inc. (the “Company”) was incorporated in the State of Nevada on December 28, 2004 and is a development stage company as defined by Statement of Financial Accounting Standard No. 7, “Development Stage Companies”.  On January 10, 2008, a change of control of the Company occurred and Rudana Investment Group AG (“Rudana”) a corporation formed under the laws of Switzerland, became the new majority shareholder of the Company, controlling approximately 66% of the issued and outstanding shares of the Company’s common stock.  On February 12, 2008, the Company changed its name from Amecs Inc. to 4C Controls Inc.  The Company’s business plan focuses on offering cutting edge earth observation solutions, including Synthetic Aperture Radar (SAR) and high resolution optical satellite images, and integrated high technology security, surveillance and access control solutions.  During the quarter-ended March 31, 2009, the Company has been refining its business plan, recruiting its management team, and establishing strategic alliances.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  The actual results experienced by the Company may differ materially and adversely from the Company’s estimates.  To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

8

Cash and cash equivalents

The Company considers all highly liquid debt investments with original maturities of three months or less when purchased to be cash equivalents.  The carrying amounts approximate fair market value because of the short maturity.

The Company maintains cash balances at various financial institutions.  Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000.  The Company's accounts at these institutions may, at times, exceed the Federally insured limits.  The Company has not experienced any losses in such accounts.

Property and Equipment

Property and equipment consisting of office furniture and equipment, is stated at cost and are depreciated over their estimated useful life (seven years), using the straight line method. Maintenance and repairs are expensed as incurred.

Income taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109 (“SFAS 109”) which requires that deferred tax assets and liabilities be recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  In addition, SFAS 109 requires recognition of future tax benefits, such as carry forwards, to the extent that realization of such benefits is more likely than not and that a valuation allowance be provided when it is more likely than not that some portion of the deferred tax asset will not be realized.

Long-lived assets

In accordance with the Financial Accounting Standards Board (“FASB”) SFAS No. 144, “Accounting for the Impairment of Disposal of Long-Lived Assets”, the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment.  The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset.  Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.

Financial instruments

The fair values of cash, prepaid expense, accrued liabilities and amounts due to a related party was estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments.

Basic and diluted net income (loss) per share

The Company computes net income (loss) per share in accordance with SFAS No. 128, “Earnings Per Share” (“SFAS 128”).  SFAS 128 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement.  Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.  Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method.  In computed Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.  Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

9

Stock based compensation

Common stock, stock options and warrants issued to other than employees or directors in exchange for services are recorded on the basis of their fair value, as required by SFAS No. 123R, which is measured as of the date required by EITF Issue 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services ”.  In accordance with EITF 96-18, the non-employee stock options or warrants are measured at their fair value by using the Black-Scholes option pricing model as of the earlier of the date at which a commitment for performance to earn the equity instruments is reached (“performance commitment date”) or the date at which performance is complete (“performance completion date”).  The stock-based compensation expenses are recognized on a straight-line basis over the shorter of the period over which services are to be received or the vesting period.  Accounting for non-employee stock options or warrants which involve only performance conditions when no performance commitment date or performance completion date has occurred as of reporting date requires measurement at the equity instruments then-current fair value.  Any subsequent changes in the market value of the underlying common stock are reflected in the expense recorded in the subsequent period in which that change occurs.

Other comprehensive income

 SFAS No. 130, “Reporting Comprehensive Income/(Loss)”, establishes standards for the reporting and display of comprehensive income or loss and its components in the financial statements.  As of June 30, 2009 and December 31, 2008, the Company has no items that represent other comprehensive income.

Recent accounting pronouncements

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations, a replacement of FASB Statement No. 141 (SFAS No. 141(R)), which significantly changes the principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree.  The statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.  This statement became effective prospectively, except for certain retrospective adjustments to deferred tax balances, January 1, 2009.  The Company will assess the impact of this statement upon any future business combinations.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (SFAS No. 160).  This statement establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.  The accounting and reporting for minority interests will be recharacterized as noncontrolling interests and classified as a component of equity separate from the parent’s equity.  In addition, SFAS No. 160 establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners.  This statement became effective prospectively, except for certain retrospective disclosure requirements, January 1, 2009.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (“SFAS 161”).  SFAS 161 is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity’s derivative instruments and hedging activities.  This statement requires additional disclosures about the objectives of derivative instruments and hedging activities, the method of accounting for such instruments under SFAS No. 133 and its related interpretations, and a tabular disclosure of the effects of such instruments and related hedged items on the Company’s financial position, financial performance, and cash flows.  SFAS 161 was adopted by the Company January 1, 2009.  The adoption of SFAS 161 did not have a material effect on the Company’s consolidated financial statements.

10

In May 2009, the FASB issued SFAS No.165 “Subsequent Events” (“SAFS 165”). This statement sets forth the period after the balance sheet date during which management or a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. It requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, whether that date represents the date the financial statements were issued or were available to be issued. SFAS 165 is effective for interim and annual periods ending after June 15, 2009. Our adoption of SFAS 165 on June 30, 2009 did not have a material impact on our consolidated condensed financial statements. See Note 12 – Subsequent Events for additional information.

In June 2009, the FASB issued SFAS 167 “Amendment to FASB Interpretation No. 46 (R)”. This Statement amends FIN46R to replace the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a VIE with a primarily qualitative approach focused on identifying which enterprise has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance. It also requires ongoing assessments of whether an enterprise is the primary beneficiary or a VIE and requires additional disclosures about an enterprise’s involvement in VIEs. SFAS 167 is effective as of the beginning of the reporting entity’s first annual reporting period that begins after November 15, 2009 and earlier adoption is not permitted. We are currently evaluating the potential impact, if any, of the adoption of SFAS 167 on our consolidated condensed financial statements.

In June 2009, the FASB issued SFAS 168 “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162” (“SFAS 168”). This Statement states that the FASB Accounting Standards Codification (“Codification”) will become the source of authoritative U.S. GAAAP recognized by the FASB to be applied by nongovernmental entities. Once effective, the Codification’s content will carry the same level of authority and effectively supersede SFAS 162. Thus, the U.S. GAAP hierarchy will be modified to include only two levels of U.S. GAAP: authoritative and non-authoritative. SFAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. We are currently evaluating the potential impact, if any, of the adoption of SFAS 168 on our consolidated condensed financial statements.

NOTE 4 - GOING CONCERN

The Company is in the development stage during which management has devoted most of its activities to the development of a business plan for the Company.  As of June 30, 2009, the Company has an accumulated deficit of $9,667,853, has a working capital deficiency of $4,186,622 and has not generated any revenue since its inception.  The ability of the Company to continue as a going concern and to emerge from the development stage is dependent upon its successful execution of its plan of operations and ability to raise additional financing.  There is no guarantee that the Company will be able to raise additional capital or sell any of its products and services at a profit.  These factors, among others, raise substantial doubt regarding the Company’s ability to continue as a going concern.  The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 5 - STOCKHOLDERS’ EQUITY

On December 18, 2007, the Board of Directors declared the payment of a stock dividend to the stockholders of record of the Company as of January 2, 2008.  The stock dividend was paid on January 4, 2008.  Each stockholder received six additional shares of the Company’s common stock for each one share of the Company’s common stock which they held on the record date.  Following the payment of the stock dividend, the issued and outstanding share ownership of the Company increased from 6,007,650 shares of Company common stock to 42,053,550 shares of common stock.  The Company retained the current par value of $0.00001 per share for all common shares. The statement of Stockholders’ Equity and per share amounts have been retroactively adjusted to reflect the historical impact of the stock dividend.  We have entered into financing arrangements which may result in the issuance of warrants to the financing company.  See Note 10.

11

NOTE 6 - INVESTMENT IN 4C SECURITY SOLUTIONS LTD.

As of December 31, 2008, the Company had made a cumulative investment of $3,690,808 (AUD $4,000,000) into 4C Security Solutions Limited (“FCS”), an Australian company, formerly known as BQT Solutions Limited, in consideration for 12,800,000 ordinary shares of FCS representing approximately 19.8% of the issued and outstanding shares of FCS.  The Company was also granted 9,500,000 options with a strike price of AUD $0.10 and an expiration date of December 31, 2013.  FCS is an Australian public company specializing in access control systems, biometric and smart card readers, CCTV, cameras and customized developments for selected clients. FCS’s strategy is to diversify and expand its activities in the security and surveillance technology sector. FCS intends to focus on commercializing its SMAX access control system and support sales of existing company technologies of biometrics, smart card readers, CCTV cameras and customized solutions for selected key clients. The SMAX Access Control Management System is a sophisticated, intelligent and cost effective security application that provides movement and access controls within a facility. In addition, the Company advanced $151,966 to a subsidiary 4C Security Solutions, which amount is included in investments and advances to 4C Security Solutions on the accompanying Balance Sheets.

NOTE 7 - RELATED PARTY TRANSACTIONS

As of June 30, 2009, Rudana the Company’s majority shareholder and companies controlled by Rudana has advanced several loans to the Company with a cumulative balance of $2,495,875. The funds were used by the Company for general corporate purposes and for financing its strategic alliance investment obligations in FCS.  These loans bear interest at 7.5% per annum and are due thirty (30) days after demand. Interest expense related to these loans aggregated $77,305 and $47,902 the six and three months ended June 30, 2009.

The Company has a management service agreement with Prime Asset Finance Ltd., a UK company which is a wholly owned subsidiary of Rudana, to assist the Company in advising and developing  its strategic plans. The agreement provides for an initial service fee of $250,000, which is being amortized over the three year life of the agreement, and (a) a monthly management fee of $25,000, (b) a fee equal to 5% of the total value of each transaction involving mergers, acquisitions, and divestitures by the Company or any of its subsidiaries, and (c) a fee equal to 8% of the total value of each customer sales contracts, contractor and sub-contractor agreements with the Company.  The Company has recorded an expense of $191,667 relating to this agreement during the six months ended June 30,, 2009, which is included in professional fees on the Statement of Operations for the six months ended June 30,, 2009, and is included in Accrued Liabilities on the accompanying Balance Sheet at June 30,, 2009.  The Company has recorded total expenses of $319,445 from inception through June 30,, 2009 relating to this Agreement.  As of the date of his Report the Company has not yet paid any amounts due in respect of the management service agreement and all such amounts have only been accrued.

NOTE 8 – COUNTERPARTY RISKS

The Company is exposed to counterparty risks in respect of financing the Company’s business plan, and risks related to prospective service partners and clients of the Company and its operating subsidiaries. The Company has entered into agreement with e-GEOS, a joint venture between Italian Space Agency (ASI) and Telespazio, to sell satellite images from the COSMO-SkyMed satellite constellation in exclusive Company markets.  The Company is exposed to risks that it may not be able to pay the minimum payments due as required under the e-GEOS agreement as well as risks that e-GEOS may not be able to perform in regard to delivery of the satellite images for Company customers in accordance with the agreement.  The Company previously commissioned a business plan and business case study by an outside consultant with respect to satellite construction and sales (the “Consultant Plan”).  The Company is preparing to execute and implement the Consultant Plan.  The Company equity capitalization amounts to be raised by Synergy are tied to the Consultant Plan.  The Company has commenced marketing efforts to sell and/or lease capacity on its proprietary Synthetic Aperture Radar (“SAR”) satellites.  The Company has been in negotiations with Thales Alenia Space (Italy) with respect to negotiating the prime contractor agreement for construction of the satellites.  The Company believes that the negotiations with Thales Alenia Space are nearing completion.  Synergy must introduce the Company to sufficient capital resources in order for the Company to implement the Consultant Plan and to engage Thales Alenia Space as prime contractor.  Prior to closing any investments resulting from introductions, the Company will be exposed to counterparty risk with respect to investment commitments introduced to the Company through Synergy.  The Company will also be exposed to counterparty risk with respect to any agreement with Thales Alenia Space (and indirectly, to the subcontractors of Thales Alenia Space).

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Additional risks are detailed in the Company’s Form 10-K for the fiscal year ended December 31, 2008.

NOTE 9 – INCOME TAXES

The Company has available approximately $9,700,000 of net operating loss carryforwards available to offset future taxable income, if any.  These carryforwards expire in the year 2024.

The Company has a deferred tax asset of approximately $3,400,000 relating to available net operating loss carryforwards for which a full valuation allowance has been provided.  Utilization of the net operating loss carry forwards may be limited due to the change in control referred to in Note 2. The Company has provided a full valuation allowance of the referred tax asset since it is more likely than not that the net operating losses will be utilized.

NOTE 10 – FINANCING ACTIVITIES

We have entered into an agreement with Synergy Investments & Finance Holding Limited (“Synergy”) formerly known as Arimathea Limited, to assist us to raise capital.  In consideration for assisting us to raise equity and debt capital, we issued a warrant to Synergy. On May 29, 2008, the Company amended the warrant (the “First Amended Warrant”).  The Company and Synergy subsequently agreed to amend the Warrant again (the “Second Amended Warrant”).  The Second Amended Warrant has an exercise term of 3 years and will become exercisable only for the purchase of a number of shares equal to the following: (i) 5% of the amount of capital raised by the Company from introductions made by Synergy, divided by (ii) the original exercise price of $3.45 per share, which was the closing publicly traded market price of the Company’s common stock on March 25, 2008, the date immediately preceding the date of grant of the original warrant.  Under the formulation, the maximum number of shares that may be purchased under the Second Amended Warrant is approximately one million shares of Company restricted common stock at a purchase price of $3.45 per share (the exercise price of the original warrant), assuming the Company raises $70 million attributable to introductions made by Synergy. Under the terms of its warrant, Synergy will not be permitted to exercise and own more than 4.9% of the Company’s Common Stock at any given time. The Synergy Warrant does not contain any call provisions and there is no obligation on the part of Synergy to exercise its warrant at any time. As a result of the contingent nature of the vesting of the Synergy warrant, no expense has been recognized.  Synergy has not yet raised any funds for the Company and we cannot guarantee that Synergy will be successful in assisting us to raise capital for our operations.  As of the date of this Report, no warrants have been issued to Synergy. No firm commitments regarding performance have been made by Synergy.  All other terms and conditions of the original warrant remain the same.  The Company’s Agreement with Synergy is nominally for a period of three years, however, the Agreement may be terminated prior to that period so long as the Company compensates Synergy for any introductions of capital which are attributable to Synergy.  The parties have agreed that neither the original Warrant nor the First Amended Warrant vested and no portion of the Second Amended Warrant has yet vested. Performance in respect of the terms of the Second Amended Warrant have not been met, so there has not been an accounting event that would require valuation.

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NOTE 11 – MINORITY INTEREST

Effective March 31, 2009, ITIGROUP Corporation, an international logistics and software security group, became a 5% shareholder and strategic alliance partner of 4C SatImage Ltd., a subsidiary 4C Controls Inc.

NOTE 12 – SUBSEQUENT EVENTS

We have evaluated events after the date of the financial statements, June 30, 2009 through August 19, 2009, the date that these financial statements were available to be issued.

Effective as of August 4, 2009, Dr. Augustine Fou has resigned as a member of the Board of Directors of the Company.

*           *

*

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Report. This Report contains certain forward-looking statements and the Company's future operating results could differ materially from those discussed herein. Certain statements contained in this Report, including, without limitation, statements containing the words “believes”, “anticipates,” “expects” and the like, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, as the Company intends to issue “penny stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, the Company is ineligible to rely on these safe harbor provisions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments, except as required by the Exchange Act.

We were incorporated in the State of Nevada on December 28, 2004 as Amecs Inc.  Initially, the intention of the original founders of the Company in 2004 was to provide Internet-based business to business services.  The original founders subsequently decided that the Company should pursue another type of business.  A change of control of the Company occurred on December 18, 2007 and Rudana Investment Group AG, a Swiss investment company, became the owner of a majority of our issued and outstanding shares.  In connection with the change of control, on February 12, 2008 we changed our name from “Amecs Inc.” to “4C Controls Inc.” and our trading symbol on the over-the-counter bulletin board changed to FOUR.  On March 3, 2008, we announced a change in our business model as described above.

Our principal business address is 100 Wall Street, 21st Floor, New York, NY 10005 and our telephone number is 866-515-7069.

Our trading symbol on the over-the-counter bulletin board is FOUR.

Current Company Status

At the present time, the Company has no revenues, and has had no revenues since inception.  The Company has insufficient capital to continue its current limited operations, and without additional investment or loans, we can not continue the development of our Company.  Without additional investment or loans, the Company will not be able to take the necessary actions to commence earning revenues.  Assuming the Company is able to raise sufficient funds, there will remain a significant risk to investors that they will lose all of their investment in the Company.

Plan of Operations

The Company has developed a strategic vision to enter into the niche markets described below. During the quarter ended June 30, 2009 and through the date of this Report, we have been refining our business plan, restructuring our businesses operations, recruiting our management team, establishing strategic alliances and joint ventures, and achieving a number of important milestones.

As a result of recent restructuring of our business operations by the Company’s new Chief Executive Officer and management team subsequent to the period covered by this Report, the Company has decided to focus on the following three areas of operation and market sectors:

1. Satellite Imagery Infrastructure, Sales & Support;

2. Integrated Systems Security and Surveillance Solutions; and

3. ID Systems and Solutions.

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1. Satellite Imagery Infrastructure, Sales & Support

The Company is positioning itself to generate revenues through the sale of SAR satellite images under our Strategic Alliance and Distribution Agreement with e-GEOS, S.p.A. (a joint-venture between the Italian Space Agency (ASI) and Telespazio S.p.A, a Finmeccanica/Thales company), and through the sale of integrated security & surveillance solutions.  Under the terms of our agreement with e-GEOS, we may commence sales and distribution of SAR satellite images through the existing e-GEOS delivery infrastructure.  The Company has initiated establishing a strategic alliance network of sales offices throughout the Middle East and Africa, starting with the Gulf Cooperation Council (GCC) and North African regions, to commence our marketing and sales program to governments and commercial end-users of the SAR images.  We believe that our strategic alliance approach to marketing our products and services will facilitate access to key regional decision makers and advisers of prospective customers to create a strong foundation for generating revenues.

Strategic Alliance and Distribution Agreement with e-GEOS

On January 27, 2009, we signed our Strategic Alliance and Distribution Agreement with e-GEOS.  The Italian Space Agency has developed in cooperation with the Italian Ministry of Defense a constellation of four satellites that will serve both civil and military purposes (“Cosmo-SkyMed”).  The Strategic Alliance and Distribution Agreement grants exclusive rights to us for distribution of Cosmo Sky-Med satellite constellation images in certain countries of the Middle East and North Africa (MENA) and South East Asia.  The e-GEOS agreement also provides the Company with the right to distribute Cosmo-SkyMed products on a non-exclusive basis in substantially all other African countries.  The exclusive distribution rights include worldwide sales of substantially all satellite images taken over the exclusive territory countries as well as substantially all worldwide e-GEOS satellite images and products which are sold within the exclusive territory countries. 

Prior to the operation of our direct receiving station, we will use the existing infrastructure of e-GEOS for worldwide sales and distribution of SAR satellite images.  Our rights under the e-GEOS Agreement for sales and distribution of satellite images require substantial minimum annual payments to e-GEOS.  In addition, we must pay for the significant costs of building and maintaining the satellite direct receiving ground station.  We believe that our strategic alliance sales and marketing program, coupled with new investors, will facilitate sufficient sales of satellite images for coverage of the minimum annual payments required to e-GEOS and cover the costs of building and maintaining the direct receiving station.  We expect to commence generating revenues under our Strategic Alliance and Distribution Agreement with e-GEOS during the second half of 2009.  We will deploy our operations under the e-GEOS Agreement through 4C Satimage Ltd., a 51% majority-owned operating subsidiary.  The minority partners in 4C Satimage Ltd. are strategic alliance partners and strategic investors.

We have jointly announced with ITIGROUP Corporation, an international logistics and software security group, that ITIGROUP has become a shareholder and strategic partner of 4C SatImage Ltd., a subsidiary 4C Controls Inc.

4C Satimage has commenced its satellite images sales program in seven nations in the Middle East, three nations in Africa, and one nation in South East Asia.  Representatives of 4C Satimage have attended major industry presentation events, including the Le Bourget Paris Air Show.

On June 19, 2009 the Company announced that based on the principles established in the Strategic Alliance and Distribution Agreement, the Company and Telespazio (an affiliate of e-GEOS) are currently in discussion to enter into a joint investment in the areas of very high resolution (50 cm) optical satellite remote sensing and other strategic operational areas.

The Gulf Satellites program, which the Company will attempt to have funded and owned mostly by investors of the Gulf region, forsees the development and construction of two high resolution (1m) SAR (Synthetic Aperture Radar) satellites and a high resolution (0.5m) optical satellite.

 In particular, Telespazio and the Company are in discussion for:

· Selection by the Company of Telespazio as the prime contractor for the supply of a new very high resolution (50 cm) optical satellite, that will be part of the 4C Gulf Satellites program.

· Possible investment by Telespazio, the Company and Gulf region investors of a joint investment for two very high resolution (1 m) SAR satellites in addition to the optical satellites.

· Global distribution by Telespazio/e-GEOS of image capacity of the 4C Gulf Satellites program, except for the MENASEA region which will be covered by 4C Satimage.

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· Operation and maintainance by Telespazio and e-GEOS of the 4C SatImage Direct Receiving Station under construction in Abu Dhabi.  Telespazio/e-GEOS will also provide and manage the training and education programs at the Abu Dhabi Receiving Station to end-users in the MENASEA region.

· The setting up of a dedicated joint venture for developing applications and value-added services based on remote sensing data from different sources.

· Joint investments by Telespazio and the Company in the Gulf Satellites program and acquisition by Telespazio of a minority equity interest in the Company.

4C Gulf Earth Observation Center (4C GEOC) – Creation of the first Direct Receiving Station (DRS) in United Arab Emirates

We previously announced our plans to build a 10,000 square meter high resolution satellite space center in Abu Dhabi to be known as the 4C Gulf Earth Observation Center (4C GEOC).  We are planning for the facility to host an earth observation satellite data direct receiving station (DRS) and offer university level courses in space engineering held in cooperation with Politecnico di Torino, one of the leading scientific research institutions in Europe.  We expect to finance the 4C GEOC with investors. We expect to own approximately 50% of the equity interests in the 4C GEOC.  We have begun our efforts to raise significant capital to proceed with the development of the 4C GEOC.  We expect the strategic alliance shared costs and partnering structure to facilitate commencement of the realization of the 4C GEOC towards the end of 2009 and into 2010. We expect the 4C GEOC to serve as a significant marketing and distribution platform for sales of our satellite images in the Middle East and North Africa (MENA) region.  Our strategic alliance interests in 4C GEOC will be held through our majority-owned subsidiary 4C Satimage Ltd.

During the period covered by this Report, the Company finalized the selection of the 4C GEOC location, secured the use of this location and obtained clearance with respect to technical requirements for installing the DRS antennas and related systems.  The Company has acquired the necessary license from the United Arab Emirates’ National Telecommunication Authority.  The Company has commenced the procedures to obtain the final environmental and construction licenses with local authorities in Abu Dhabi.  If the Company is able to raise sufficient funds, we expect to commence construction of our satellite-data direct receiving station in the fourth quarter of 2009.  

4C High Resolution "GulfSatellites" Satellite Program

We plan to offer an innovative solution to improve the Earth observation applications with our "GulfSatellites" program.  GulfSatellites is an Earth Observation System (EOS) expected to consist of four high resolution SAR satellites ("GulfSAR 1, 2, 3 & 4") which will be devoted to security applications, maritime management, risk management, environmental protection, geology, cartography and planning.  The Area of Interest (AOI) has been defined as the region with latitude ranging from 43° S to 43° N. The program is expected to include two high resolution optical satellites as well as the four SAR satellites.  For purposes of capitalizing the GulfSatellites program, we expect several institutions and organizations from the Gulf Cooperation Council region (GCC) to participate as equity investors in the GulfSatellites program.  We have entered into a services agreement with the General Khalid Abdulla Mabarak Al Buainain who is the Company’s Vice President for Middle East Military and Defense Projects, which includes his assistance in respect to commercialization of the GulfSatellites program. This program is still under development and we do not have significant advancement that should be reported at the date of this report.

Strategic Alliance with 4C Security Solutions Limited and 4C Satellites Limited

Through our strategic alliance with 4C Security Solutions Limited and its subsidiary 4C Satellites Limited, we are planning to create a platform for developing our satellites program.  4C Security Solutions Limited has undertaken a major restructuring last year and expects to be on track with its plans for improvement of bottom line performance, new customers acquisition in Australia, Gulf Cooperation Council (GCC) and the United States, and completion of its access control product portfolio with its SmaX product.  We currently own 19.8% of 4C Security Solutions Limited.  Under our agreement with 4C Security Solutions, we have also been issued options under which we may purchase of 9.5 million shares of 4C Security Solutions at a purchase price of AUD$0.10 per share, which may be exercised in whole or in part at any time prior to December 31, 2013. 

In connection with our strategic alliance 4C Security Solutions, we have also agreed to acquire 40% of 4C Satellites Ltd.  We expect 4C Satellites to serve as the satellite production and sales business unit of the Company.  The 4C Satellites program is part of our strategic plan to cover the entire value chain of high resolution Earth observation satellite-based businesses, from satellite manufacturing and operation to images processing and sales to end users.  In consideration for the issuance of our 40% interest in 4C Satellites, we agreed to capitalize 4C Satellites with AUD$14 million.  Due to the effects of the international financial crisis, we have not yet been able to commence payment of our AUD $14 million equity infusion into 4C Satellites and we may not be able to close this transaction during the foreseeable future.  However, we still plan to move forward with the 4C Satellites project as soon as reasonably feasible.

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4C Polito Space Technologies S.p.A

We expect to work closely with the Politechnico di Torino on all of our projects.  Our satellite plan focuses on the design, construction and operation of small synthetic aperture radar satellites dedicated for Earth observation and surveillance in cooperation with the Politechnico di Torino and other scientific research institutes. The Politechnico di Torino has established 4C Polito Space S.p.A., an Italian private stock company (“4C Polito Space”) in a joint venture with 4C Satellites.  We are working in cooperation with Politechnico di Torino and 4C Polito Space through Dr. Riccardo Maggiora, our Chief Technology Officer and a director on our Board, who also serves as an officer and director of 4C Polito Space and as an Associate Professor at Politechnico di Torino.

We anticipate setting up high resolution synthetic aperture radar satellite production facilities within the Politechnico di Torino Campus in Verres, Italy.  Areas of operation are expected to include avionics (digital hardware design, radio frequency and antenna design), telecommunications systems, firmware/ software design, aerospace (mechanical and thermal design, propulsion and mission specialists) assembly, integration and acceptance tests.

Initially, anticipated sales of synthetic aperture radar satellites are expected to be a key source of our revenue.  We expect it will take a 24 to 30 month production cycle to develop, manufacture and launch each synthetic aperture radar satellite. We plan to sell each satellite at commercially competitive prices.  Out prices will take into account cost associated with mission control and variations due to custom attributes. We anticipate that the purchase price to be paid by each customer will be paid incrementally in advance installments.

We have selected Thales Alenia Space Italia S.p.A. (TASI) as the prime contractor for the in-orbit delivery of the first two satellites with related ground segment of our planned satellites constellation. We expect to equip the two satellites with very high-resolution (1 meter) synthetic aperture radar.  We expect to execute prime contractor agreements with TASI during the foreseeable future.

2. Integrated Systems Security and Surveillance Solutions

The Company has previously announced, together with a partner, the formation of a strategic alliance whose mission will be to provide infrastructure projects with a comprehensive systems approach for integrated solutions delivery.  This approach will range from traditional projects (commercial buildings) to large infrastructure projects (new cities, ports, airports, highways, and similar broad scale projects).  We are finalizing the formation of this alliance, where we expect to own approximately 50% of the equity interests.

The Company has commenced its sales efforts for Integrated Surveillance Solutions, including integrated border control and pipeline surveillance solutions in the United Arab Emirates, Egypt, and Chad.

The Company is presently engaged in negotiations with a major real estate developer in Abu Dhabi to provide complete design, engineering, procurement, installation, commissioning, delivery, operation and maintenance of certain integrated control and security systems for residential units now under development. The range of services may include the following elements: Community services command and control, security systems integration, network infrastructure for village systems (including Wi-Fi coverage), perimeter and gates surveillance, public areas surveillance and security, public transportation management, including smart bus-stops and kiosks, utility mobile resources location and communications, adaptive irrigation control, air and meteorological monitoring and complete “smart house” suite, including access control and security for every villa. The operation and maintenance contract term is planned to exceed five years, and thus is expected to provide the Company with a stable revenue flow in addition to revenues expected to be generated by project engineering and delivery. Additional projects, with a similar scope of activities in Saudi Arabia and Abu Dhabi are in the early stages of negotiations.

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3. ID Systems and Solutions

4C ID Systems Ltd.

The Company has created 4C ID Systems Limited, a joint venture with Denmead International – a company which specializes in providing identification systems and has an established track record in Africa.  4C ID Systems Limited plans to provide turnkey ID systems and solutions such as passports, national ID cards, driving license. 4C ID Systems Limited has commenced its commercial activities in Africa and Commonwealth of Independent States (CIS) regions. The Company’s team possesses substantial expertise in providing the ID systems to governments on a global basis. The Company is currently in advanced negotiations with several governments in Africa and Asia to provide national ID and driver licenses as well as passport systems. The 4C ID Systems Limited business model is to build, operate and manage the various systems to provide the Company with stable recurring revenue flows.

Specialized & Proprietary Security Products Segment

Our strategy includes developing and offering specialized and proprietary security technologies in the following fields:

· Ground High Performance Radars for Intrusion Detection;

· Electromagnetic Security Systems;

· Real Time Positioning System;

· Radio Frequency Identification; and

· Real Time Locating Systems.

We have previously entered into a License Agreement with Dr. Maggiora, our Chief Technology Officer and member of our Board of Directors, under which we have acquired exclusive rights to proprietary high technology intellectual properties invented and/or developed by Dr. Maggiora, that we expect to further develop and offer to our customers.  These proprietary solutions include Electromagnetic Security (EMSEC) systems, Real Time Positioning System (RTPS), RADAR and GUIDAR Systems and Real Time Locating Systems (RTLS). As of the date of this Report, we have not made any improvement s or developments in respect of these technologies that have resulted in patent s or commercial applications.

RESULTS OF OPERATIONS

Revenues

During the quarter ended June 30, 2009, the Company had no revenues from operations.  The Company has had no revenues to date.

Expenses

Our total expenses for the quarter ended June 30, 2009 were $1,963,351, which consisted primarily of general and administrative expenses of $922,096, professional fees of $347,845, marketing and public relations expenses of $333,489, a loss of equity in an unconsolidated subsidiary of $306,019, interest in the amount of $47,902 and director fees of $6,000.  Expenses in each of these categories except director fees have increased over the amounts for the three months ended June 30, 2008, in which total expenses were $505,335.  Since the inception of the Company, we have incurred aggregate total expenses of $9,682,815.  Total expenses for the third fiscal quarter of 2009 are expected to be comparable to those for the quarter ended June 30, 2009.  During the fourth quarter of 2009, expenses are anticipated to increase as the Company’s planned operations are expected to ramp up during that period.

Liquidity and Capital Resources

During the three months ended June 30, 2009 and through the date of this Report, our primary source of capital has been short term cash advances from Rudana Investment Group AG, the majority shareholder of our Company.  Our operations to date have consumed substantial amounts of cash.  Our negative cash flow from operations is expected to continue and increase significantly in the foreseeable future as we will have new costs associated with the developments of our joint ventures, strategic alliances and production facilities.

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Our total current assets at June 30, 2009 were $301,414, consisting of $1,399 in cash and $300,015 in prepaid expenses and other current assets.  As of June 30, 2009, our total assets (consisting of cash, prepaid expenses, property and equipment, and investment in 4C Security Solutions) were $4,748,958 and our total liabilities were $4,488,036.

We will need to raise additional capital to implement our new business plan and continue operations. We are continuing to seek sources of financing through private placements of securities and loans in order for us to fully deploy our business plan.  We have also commenced a capital sourcing plan to accept investments of strategic equity partners directly into our operating subsidiaries.  We expect such operating level investments to provide us with necessary means to commence our business plans as well as beneficially leverage the regional marketing and sales strengths of our strategic alliance partners.  We will endeavor to maintain majority ownership of our operating subsidiaries, however, due to certain legal regional requirements; we may in some circumstances be obliged to be a minority partner in certain operating subsidiaries.  Our capital resources as of the date of this Report are dependent on shareholder loans, third party investments by strategic alliance partners and other strategic investors investing directly into our operating subsidiaries.  Although we expect some of the operating subsidiaries to generate sufficient cash for internal working capital purposes, we will be dependent on shareholder loans and third party investment capital at the subsidiary level in order to implement and sustain our overall Company business plans during the foreseeable future.  We believe the overall benefits expected to be derived from accepting investments directly into our operating subsidiaries and benefitting from the strengths of our strategic equity partners will overcome the effects of diluting our prospective revenues in our operating subsidiaries.

Recent Events

The Company has recently decided to scale down some activities and concentrate the Company’s efforts on certain projects which we expect to have accelerated rates of return on investment – sales of Satellite Images through strategic alliances, business development of integrated security systems and solutions for residential projects (through our 4C Systems Engineering Limited majority owned subsidiary) and ID systems and solutions (through our 4C ID Systems Limited majority owned subsidiary). We have also decided to take a hiatus from the development of the Specialized & Proprietary Security Products until the achievement of key milestones in the Satellite Imagery and Integrated Security Systems & Solutions.

In order to complete our prospective agreement with Thales Alenia Space Italia S.p.A. (TASI) for building our first two SAR satellites, we have started finalizing the project financing and bankable feasibility study together with selected investors and financial consultants in a joint endeavor to obtain adequate equity funds for the project.

Employees

Effective as of May 29, 2009, Mr. Mathias Kaiser resigned as the Chief Financial Officer of the Company.  Mr. Kaiser informed the Company that he resigned for personal reasons and that he has no disagreements with the Company or its management.  Mr. Kaiser agreed to provide consulting services to the Company to facilitate proper transition of the Company’s books and records to the subsequent Chief Financial Officer.

The Company has not yet appointed a successor Chief Financial Officer.  The Company’s Chief Financial Officer functions shall be performed on an interim basis by Mr. Anastasios Angeloglou.  Mr. Angeloglou will not receive additional compensation in connection with such supplemental services.

Mr. Angeloglou is serving as Group CEO of 4C Controls and all of its operating units, subsidiaries and joint ventures.  Mr. Angeloglou is serving as the Chief Executive Officer of 4C Security Solutions Limited, an Australian company which has a strategic alliance with 4C Controls.  

As of the date of this Report all of our employees serve on a part time basis.  Our Chief Executive Officer devotes approximately 80% of his time to our Company and 20% of his time to our strategic alliance partner 4C Security Solutions Ltd.   Our Chief Technology Officer, Dr. Riccardo Maggiora, devotes approximately 70% of his time to our Company and allocates the balance of his professional time as an Associate Professor at Politecnico di Torino and as CEO of 4C Polito Space.  Our other officers and employees serve the Company on a part time basis devoting between 25%-50% of their professional time to our Company.  We have no collective bargaining agreements with our employees.  

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Subsequent Events

Resignation of Dr. Augustine Fou as Director

Effective as of August 4, 2009, Dr. Augustine Fou has resigned as a member of the Board of Directors of the Company. Dr. Fou has not expressed any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 4.     CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Company carried out, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) in ensuring that information required to be disclosed by the Company in its reports is recorded, processed, summarized and reported within the required time periods. In carrying out that evaluation, management identified a material weakness (as defined in Public Company Accounting Oversight Board Standard No. 2) in our internal control over financial reporting.

The material weakness identified by Management consisted of inadequate staffing and supervision within the bookkeeping and accounting operations of the Company. The relatively small number of employees who have bookkeeping and accounting functions prevents us from segregating duties within the Company’s internal control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews. Accordingly, based on their evaluation of the Company’s disclosure controls and procedures as of June 30, 2009, the Company’s Chief Executive Officer and its Chief Financial Officer have concluded that, as of that date, the Company’s controls and procedures were not effective for the purposes described above. Subsequent to the period covered by this Report, the Company has initiated steps to remediate such procedures as soon as reasonably possible.

There was no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended June 30, 2009 that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting. Subsequent to the period covered by this Report, the Company has commenced such changes in its internal control over financial reporting. Such changes include the retention of a full-time employee to handle the Company’s bookkeeping and accounting functions.

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PART II.    OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

The Company is not, and has not been during the period covered by this Report, a party to any legal proceedings.

ITEM 1A.  RISK FACTORS

Not Applicable.

ITEM 2:     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3:     DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

ITEM 4:     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to the vote of the Company’s security holders during the period covered by this Report.

ITEM 5:     OTHER INFORMATION

Not Applicable.

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ITEM 6.     EXHIBITS

Exhibit		Description
31.1		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	4C CONTROLS INC.
	By:	/s/ Anastasios Angeloglou
		Name:	Anastasios Angeloglou
		Title:	Chief Executive Officer and
			Acting Principal Financial
			Officer and Acting Principal
			Accounting Officer

Dated: August 20, 2009

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