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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 March 31, 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
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 March 31, 2000
TABLE OF CONTENTS
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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 11
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RMX REIT, INC.
BALANCE SHEET
March 31, 2000
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ASSETS
Cash $ 20,000
Accrued interest receivable from PSIG 7,479
Due from PSIG 575,000
Deferred Costs of raising Capital 51,591
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Total Assets $654,070
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LIABILITIES AND STOCKHOLDERS' EQUITY
Due to CLS $ 40,591
STOCKHOLDERS' EQUITY
Common Stock, $5 par value, 2,400,000 shares
authorized, 121,200 shares issued and outstanding 606,000
Retained earnings 7,479
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Total Stockholders' Equity 613,479
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Total Liabilities & Stockholders' Equity $654,070
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See Notes to Financial Statements
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RMX REIT, INC.
STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2000
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Interest income and net income $ 7,479
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See Notes to Financial Statements
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RMX REIT, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Three Months Ended March 31, 2000
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Common Retained
Stock Earnings Total
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Balance, January 1, 2000 $ - $ - $ -
Issuance of common stock 606,000 606,000
Net income 7,479 7,479
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Balance, March 31, 2000 $606,000 $ 7,479 $613,479
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See Notes to Financial Statements
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RMX REIT, INC.
STATEMENT OF CASH FLOWS
March 31, 2000
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CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 7,479
Changes in operating assets and liabilities
Increase in accrued interest receivable from PSIG (7,479)
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Net cash flows from operating activities -
Cash Flows from Financing Activities
Issuance of common stock 31,000
Payments on amounts due to CLS (11,000)
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Net increase in cash and cash balance at March 31, 2000 $ 20,000
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See Notes to Financial Statements
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RMX REIT, INC.
NOTES TO FINANCIAL STATEMENTS
March 31,2000
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 March 31, 2000, RMX has issued common stock to eight investors. No real
estate investments have been acquired.
Deferred Costs of Raising Capital
As of March 31, 2000, RMX has paid $51,591 in costs associated with raising
capital and these costs will be offset against funds raised from the eventual
release of the prospectus. 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. It became 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 at no charge. In addition, as of March 31,
2000, CLS has advanced RMX $40,591. This advance has no set repayment terms.
PSIG collects and holds capital contributions received from investors on
behalf of RMX. At March 31, 2000, PSIG owed RMX $575,000 under this
agreement. This advance is due on demand, bears interest at 12%, and is
unsecured.
Income Taxes
When RMX starts REIT operations, it will be allowed to pass earnings through
to shareholders without the earnings being taxes at the REIT level. Income
taxes are
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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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 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 March 31, 2000, the company had just begun operations. Income for the
quarter ended March 31, 2000, was comprised entirely of interest accrued on a
receivable from a related company, Puget Sound Investment Services, Inc.
("PSIG"). Therefore, results of operations and financial conditions will be
reported in subsequent filings to the Securities and Exchange Commission.
RETURN ON ASSETS, EQUITY, AND EQUITY TO ASSETS RATIO
As of March 31,2000, 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
Investment in the shares of the Company is subject to certain risks,
including, but not limited to, the fact the company has just begun operations
and has no operating results. There is no assurance that the company can
purchase suitable income producing property to meet the investment guidelines.
Market interest rates may rise and fall inconsistent with the company's
investment policy and objectives. The result of the company operations will
depend on the availability of income producing real property and mortgage
backed securities to purchase. There is no assurance that company will be
able to purchase an adequate number of qualified real estate secured loans.
The gross income will depend upon the nature, terms and conditions in
the rental and financial markets, which is impacted by the fiscal and monetary
policies of the United States Government and the Federal Reserve Board,
competition, regulation and other factors, none of which can be predicted with
any certainty.
Part 2
ITEM 1 LEGAL PROCEEDINGS
The company is not presently involved, nor does it expect to be involved, in
any legal proceedings, except eviction and collection action. Since the
company will be involved in renting property and purchasing loans secured by
real property, it will, by its very nature, always be involved in activities
to enforce collection against tenants who fail to pay the rent and borrowers
who fail to make payments when due. Counsel for the company is of the opinion
that collection actions against tenants who are in default and on delinquent
loan accounts does not constitute pending or threatening litigation under
Financial Accounting Standards Board Opinion Number 5 (FASB 5) and is properly
categorized as routine litigation incidental to its business.
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
None
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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.
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
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
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