UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 333-42975
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RMX REIT, INC.
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(Exact name of registrant as specified in its charter)
WASHINGTON 91-1869110
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(State or other jurisdiction of incorporation or organization)(I.R.S. Employer
Identification No.)
4720 200th St SW, Suite 200, Lynnwood, WA 98036
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(Address of principal executive offices) (Zip Code)
(425) 744-0386
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(Registrant's telephone number, including area code)
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(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
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such filing requirements for the past 90 days. /X/Yes / /No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKREPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan
confirmed by a court. / /Yes / /No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
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RMX REIT, INC.
Quarterly Report on Form 10-Q
For the period ended September 30, 2000
TABLE OF CONTENTS
PAGE
PART I
Item 1: Financial Statements
4
Item 2: Management Discussion & Analysis of Financial
Condition & Result of Operation 9
PART II
Item 1: Legal Proceedings 10
Item 2: Changes in Securities 10
Item 3: Defaults Upon Senior Securities 10
Item 4: Submission of Matters to a Vote of Security Holders
10
Item 5: Other Information 10
Item 6: Exhibits & Reports on Form 8-K 10
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RMX REIT, INC.
BALANCE SHEET
September 30, 2000 and December 31, 1999
<TABLE>
<S> <C> <C>
ASSETS 2000 1999
---- ----
Cash $ 54,991 $ -
Accrued interest receivable 1,046 -
Notes receivable 543,300 -
Deferred Costs of raising Capital 68,603 49,223
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Total Assets $ 667,940 $49,223
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LIABILITIES AND STOCKHOLDERS' EQUITY
Due to CLS $ 2,374 $49,223
STOCKHOLDERS' EQUITY
Common Stock, $5 par value, 2,400,000 shares
authorized, 130,909 shares issued and
outstanding 654,546
- Retained earnings
11,020 -
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Total Stockholders' Equity 665,566 -
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Total Liabilities & Stockholders' Equity $667,940
$49,223
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</TABLE>
See Notes to Financial Statements
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RMX REIT, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Nine Mos Ended 9/30 Quarter Ended 9/30
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income $37,171 $ - $11,638 $ -
Operating Expenses
Accounting 4,010 - 860 -
Licenses and permits (59) - (118) -
Postage and delivery 36 - 18 -
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3,987 - 760 -
------- ------ ------- -------
Net Income $ 33,184 $ - $10,878 $ -
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</TABLE>
See Notes to Financial Statements
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RMX REIT, INC.
STATEMENT OF CASH FLOWS
September 30, 2000 and 1999
<TABLE>
<S> <C> <C>
2000 1999
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CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 33,184 $ -
Changes in operating assets and liabilities
Increase in accrued interest receivable from PSIG (1,046) -
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Net cash flows from operating activities 32,138 -
Cash Flows from Investing Activities
Purchase of notes receivable (543,300) -
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Cash Flow Used in Investing Activities (543,300) -
Cash Flows from Financing Activities
Issuance of common stock 641,853 -
Changes in amounts due to CLS (46,849) 30,128
Costs of raising capital (19,380) (30,128)
Dividend paid to stockholders (9,471) -
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Cash Flows Provided by Financing Activities 566,153 -
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Net increase in cash 54,991
- Cash, beginning of year
0 -
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Cash, end of year $ 54,991 $
- ========
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Schedule of Noncash Financing Activities
Issuance of common stock for stockholder reinvestment
Of dividends $12,694 $ -
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</TABLE>
See Notes to Financial Statements
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RMX REIT, INC.
NOTES TO FINANCIAL STATEMENTS
September 30,2000
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
RMX REIT, INC. ("RMX") is incorporated under the laws of the State of
Washington. RMX plans to operate as a real estate investment trust ("REIT").
As of September 30, 2000, RMX has issued common stock to eleven investors.
Only
real
estate backed securities have been acquired.
Deferred Costs of Raising Capital
As of September 30, 2000, RMX has paid $68,603 in costs associated with
raising
capital and these costs will be offset against funds raised from the sale of
securities. Management believes all of these costs are costs associated with
raising capital (preparation of prospectus and related printing costs).
In 1998, the American Institute of Certified Public Accountants issue
Statement of Position 98-5 ("Reporting on the Costs of Start-Up Activities").
This statement requires costs associated with start-up activities and
organization costs be expensed as incurred. It does not require costs of
raising capital to be expensed. The statement effective December 15, 1998.
Related Parties
RMX has common officers with CLS Financial Services, Inc. ("CLS") and Puget
Sound Investment Services, Inc. ("PSIG"). One of the CLS officers is a
stockholder in RMX. PSIG is also a stockholder in RMX. CLS and PSIG are
active in the real estate industry. CLS provides facilities and certain
office support functions to RMX on a cost sharing allocation. As of
September
30, 2000, CLS has advanced RMX $2,374.
Income Taxes
RMX is a Real Estate Investment Trust, and is allowed to pass earnings
through to shareholders without the earnings being taxed at the REIT level.
Income taxes are not assessed at the REIT level provided it complies with
various provisions in the Internal Revenue Code.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
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NOTE 2 - NOTES RECEIVABLE
RMX's notes receivable are concentrated in the state of Washington and are
secured by single family residential real estate. All of the notes are first
mortgage loans.
Principal payments to be recieved for the years ending September 30th are as
follows:
2001$215,000
2002 0
2003 154,000
2004 0
2005 174,300
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$543,300
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Part 1
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Plan of Operation and Liquidity
Revenue from the sale of stock, principal payments, rents and loan payoffs
will provide the company with the source of funds to invest in income
producing property and to purchase new loans. The company believes that real
estate agencies operating in the market will be able to provide the company
with sufficient income producing property to meet the company investment
objectives. In addition, the company expects that CLS will be able to provide
sufficient loans that meet the company's investment objectives now and in the
future.
The rents and interest paid on loans will provide the funds necessary to pay
the expenses and make dividend distributions to the shareholders. The company
manages its cash by not investing in property or loans toward the end of the
quarter in order to provide the necessary funds to pay the cash dividends as
authorized by the Board of Directors shortly after the end of each calendar
quarter. The company expects to continue this type of cash management
procedure for the foreseeable future.
In order to pass through income to its shareholders without being taxed at the
company level, the company will comply with the REIT provisions of the
Internal Revenue Code. The company's first year of operation will be in 2000,
and the first year that it will have to meet REIT provisions of the Internal
Revenue Code will be in tax year 2001.
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
As of September 30, 2000, the company has just begun operations. Income for
the first six months of 2000 was comprised entirely of interest accrued on a
receivable from a related company, Puget Sound Investment Services, Inc.
("PSIG"), whereas, income for the third quarter was primarily comprised of
interest on notes receivable purchased from proceeds of the payoff of PSIG's
receivable.
RETURN ON ASSETS, EQUITY, AND EQUITY TO ASSETS RATIO
As of September 30, 2000, the company had just begun operations and therefore
the ratios will be reported in subsequent filings.
PLAN OF OPERATION THROUGHOUT THE YEAR
The company is committed to offer its stock for sale to the public for the
foreseeable future. The company expects to fully invest all available funds
through the purchase of real estate and loans. At present and in the
foreseeable future, the economy in the Pacific Northwest continues to expand.
Real estate values are increasing and therefore, the value of real estate
security remains strong. The company forecasts a stable demand for services,
since the economy in the Puget Sound area remains strong.
The company expects that all of the proceeds from this offering will be
absorbed into property and loans. In the unlikely event the amount received
from investors as a result of this offering exceeds the ability of the company
to purchase loans, the Board of Directors has directed the Secretary to delay
acceptance of new investor's funds as necessary.
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The company projects that investors will purchase, on average, five hundred
thousand dollars ($500,000) monthly, and then continuing until the offering
is sold out. The company intends to initiate future offerings on a two year
cycle.
The company has limited debt and is entirely capitalized through the sale of
its stock on the basis of $5.00 per share.
UNCERTAINTIES
It is not certain whether the company will find adequate markets for the sale
of its stock. The success of the company is entirely contingent on the sale
of stock to acquire sufficient capital to operate as a REIT.
Part 2
ITEM 1 LEGAL PROCEEDINGS
The company is not presently and does not expect to become involved in any
adverse legal proceedings. The company does expect to initiate collection
actions and evictions in the future.
ITEM 2 CHANGES IN SECURITIES
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 OTHER INFORMATION
The company renewed its registration of $6,000,000 of its stock by
coordination in the State of Washington and was granted a permit, number
C-59482, to sell securities through July 18, 2001. The company expects to
continue to renew the permit on an annual basis.
The company also filed its 2nd Post Effective Amendment with the SEC on July
26, 2000 which became effective on August 30, 2000 under file number 333-42575
for $12,000,000. The company also expects to register its stock for sale by
coordination in Arizona and other states in the future.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
Exhibit Exhibit
Number
27 Financial Data Schedule
The company did not file any reports on Form 8-K in the first quarter of 2000.
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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.
RMX, REIT, INC.
Registrant
/s/
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Gerald C. Vanhook, President Date
