UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF
1934
For Quarter Ended September 30, 2000
Commission File Number 0-27825
Hydro Environmental Resources, Inc.
________________________________________________________________________________
(Exact name of registrant as specified in its charter)
Oklahoma 73-1533326
________________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2006 Oak Creek Place, Hayward, California 94541
________________________________________________________________________________
(Address of principal executive offices) (Zip code)
(510) 582-2720
________________________________________________________________________________
(Registrant's telephone number, including area code)
________________________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report.)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Common 31,300,000
________________________________________________________________________________
Class Number of shares outstanding at November 10, 2000
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
This document is comprised of 9 pages.
<PAGE>
FORM 10-QSB
3RD QUARTER
INDEX
PART I - FINANCIAL INFORMATION
Page
_____
Item 1. Financial Statements*
Condensed balance sheet - September 30, 2000 (Unaudited)................... 3
Condensed statements of operations - Three and nine months ended
September 30, 2000 (Unaudited) and 1999 (Unaudited), and
November 10, 1998 (inception) through September 30, 2000 (Unaudited).... 4
Condensed statements of cash flows - Nine months ended
September 30, 2000 (Unaudited) and 1999 (Unaudited), and
November 10, 1998 (inception) through September 30, 2000 (Unaudited).... 5
Notes to condensed financial statements (Unaudited)........................ 6
Item 2. Plan of operation................................................. 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings................................................. 8
Item 2. Changes in Securities............................................. 8
Item 3. Defaults Upon Senior Securities................................... 8
Item 4. Submission of Matters To A Vote of Security Holders............... 8
Item 5. Other Information................................................. 8
Item 6. Exhibits and Reports on Form 8-K.................................. 8
Signatures................................................................. 9
* The accompanying financial statements are not covered by an Independent
Certified Public Accountant's report.
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<PAGE>
HYDRO ENVIRONMENTAL RESOURCES, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEET
September 30, 2000
(Unaudited)
Assets
Cash.......................................................$ 4,356
Other current assets....................................... 8,800
Intangible assets, net (Note 3)............................ 11,250
--------------
$ 24,406
==============
Liabilities and Shareholders' Deficit
Accrued interest payable to officer (Note 2)...............$ 7,189
Due to officer (Note 2).................................... 146,539
--------------
Total liabilities 153,728
--------------
Shareholders' deficit:
Preferred stock............................................ -
Common stock............................................... 31,300
Additional paid-in capital................................. 24,985
Retained deficit........................................... (185,607)
--------------
Total shareholders' deficit (129,322)
--------------
$ 24,406
==============
The accompanying notes are an integral part of the
condensed financial statements.
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<PAGE>
HYDRO ENVIRONMENTAL RESOURCES, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
November 10,
1998
For the Three Months Ended For the Nine Months Ended (Inception)
September 30, September 30, through
-------------------------- ------------------------- September 30,
2000 1999 2000 1999 2000
------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Operating expenses:
Research and development.............................. $ 2,700 $ 25,000 $ 34,894 $ 25,400 $ 78,294
General and administrative:
Stock based compensation.......................... - - - - 750
Related parties (Note 3).......................... 3,000 1,500 9,000 4,500 22,000
Other............................................. 12,999 7,197 55,891 18,869 77,298
------------ ------------ ----------- ---------- ------------
Total operating expenses 18,699 33,697 99,785 48,769 178,342
------------ ------------ ----------- ---------- ------------
Operating loss (18,699) (33,697) (99,785) (48,769) (178,342)
Interest expense........................................ 3,107 - 6,295 - 7,265
------------ ------------ ----------- ---------- ------------
Loss before income taxes (21,806) (33,697) (106,080) (48,769) (185,607)
Income taxes (Note 4)................................... - - - - -
------------ ------------ ----------- ---------- ------------
Net loss $ (21,806) $ (33,697) $ (106,080) $ (48,769) $ (185,607)
============ ============ ============ ========== ============
Basic and diluted loss per share........................ * * * *
============ ============ ============ ==========
Basic and diluted weighted average
number of common shares
outstanding........................................... 31,300,000 31,175,000 31,300,000 19,000,000
============ ============ ============ ==========
</TABLE>
* Less than $.01
The accompanying notes are an integral part of the
condensed financial statements.
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<PAGE>
HYDRO ENVIRONMENTAL RESOURCES, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
November 10,
1998
(Inception)
For the Nine Months Ended through
September 30 September 30,
-------------------------- ------------
2000 1999 2000
------------ ------------ ------------
<S> <C> <C> <C>
Net cash used in operating activities........... $ (103,348) $ (34,596) $ (160,718)
------------ ------------ ------------
Cash flows from financing activities:
Capital contributions................................ - 4,910 4,910
Proceeds from officer loans (Note 2)................. 105,133 23,500 158,733
Retirement of officer loans (Note 2)................. (7,094) - (12,194)
Proceeds from the sale of common stock,
net of offering costs............................. - 13,625 13,625
------------ ------------ ------------
Net cash provided financing activities.......... 98,039 42,035 165,074
------------ ------------ ------------
Net change in cash (5,309) 7,439 4,356
Cash at beginning of period............................. 9,665 90 -
------------ ------------ ------------
Cash at end of period $ 4,356 $ 7,529 $ 4,356
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest........................................ $ - $ - $ -
============ ============ ============
Income taxes.................................... $ - $ - $ -
============ ============ ============
Noncash investing and financing activities:
Common stock issued for patent rights........... $ - $ 15,000 $ 15,000
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the
condensed financial statements.
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<PAGE>
HYDRO ENVIRONMENTAL RESOURCES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Basis of presentation
The financial statements presented herein have been prepared by the
Company in accordance with the accounting policies in its annual 10-KSB
report dated December 31, 1999 and should be read in conjunction with
the notes thereto. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) which are necessary
to provide a fair presentation of operating results for the interim
period presented have been made. The results of operations for the
periods presented are not necessarily indicative of the results to be
expected for the year.
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The
Company is in the development stage in accordance with Statement of
Financial Accounting Standard ("SFAS") No. 7. As shown in the
accompanying financial statements, the Company has no revenues, a
limited history of operations, and a loss of $185,607 for the period
from November 10, 1998 (inception) through September 30, 2000. This
factor, among others, may indicate that the Company will be unable to
continue as a going concern for reasonable period of time.
The financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern.
The Company's continuation as a going concern is dependent upon its
ability to generate sufficient cash flow to meet its obligations on a
timely basis and ultimately to attain profitability. The Company's
management intends to seek additional funding through equity offerings
and debt financings to help fund the Company's operation.
Inherent in the Company's business are various risks and uncertainties,
including its limited operating history, historical operating losses,
and the success of its recent merger. The Company's future success will
be dependent upon its ability to create and provide effective and
competitive services on a timely and cost-effective basis.
The Company's year-end is December 31.
Interim financial data presented herein are unaudited.
Note 2: Related party transactions
The President of the Company provided office space to the Company at no
charge for the nine months ended September 30, 2000 and 1999.The office
space was valued at $500 per month and such charges are recognized in
the accompanying unaudited, condensed financial statements as rent
expense with a corresponding credit to additional paid-in capital.
During the nine months ended September 30, 2000 and 1999, the President
of the Company contributed services and the use of office equipment to
the Company. The services and use of equipment was valued at $500 per
month and such charges are recognized in the accompanying financial
statements as office expense with a corresponding credit to additional
paid-in capital.
During the nine months ended September 30, 2000, the President of the
Company paid $32,306 in expenses on behalf of the Company. These
transactions are accounted for as loans and are included in the
accompanying financial statements as additional due officer.
The President of the Company loaned the Company $72,633 for working
capital, during the same period, of which $6,900 was repaid as of
September 30, 2000. The loans bear interest at from six to eight
percent and are due on demand. The $146,539 in outstanding loans and
$7,189 in related accrued interest is included in the accompanying
financial statements as due to officer.
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<PAGE>
HYDRO ENVIRONMENTAL RESOURCES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 3: Intangible assets
Intangible assets consist of patent rights acquired from a related
party. The rights are being amortized at the rate of $250 per month
(60 months):
Patent Rights........................................$ 15,000
Accumulated amortization............................. (3,750)
------------
$ 11,250
============
Note 4: Income taxes
The Company records its income taxes in accordance with Statement of
Financial Accounting Standard No. 109, "Accounting for Income Taxes".
The Company incurred net operating losses during the nine months ended
September 30, 2000 resulting in a deferred tax asset, which was fully
allowed for, therefore the net benefit and expense result in $-0-
income taxes.
PART 1. FINANCIAL INFORMATION
ITEM 2. PLAN OF OPERATION
We plan to satisfy our cash requirements, over the next twelve months,
through cash infusions from our principal shareholder, in exchange for
restricted stock. However, we will need to raise additional capital in
the next twelve months. Our management is considering the following
options:
(a) a private offering and sale of our common stock;
(b) a public offering and sale of our common stock; or
(c) a combination of private and public sale of our common stock.
As of September 30, 2000, all cash infusions from the principal
shareholder have been classified as a liability and are disclosed in
the accompanying condensed balance sheet as due to officer.
A summary of our product research and development for the term of the
plan is as follows:
We are performing on going research on the recovery and reconstruction
of compounds used by the ElectroChem Hydrogen Fuel Reactor (ECHFR) to
produce hydrogen. It is estimated that over 40 percent of these
patented-formula compounds can be reused, possibly lowering the cost
of production by as much as 25 percent. In addition, there are several
potentially profitable by-products created by ECHFR that we could
market worldwide, such as:
(a) An on-site power plant could be designed for particular needs
where electricity and/or gas are necessary to process cooking oil;
and
(b) In the treatment of wastewater at abandoned mine sites and other
wastewater dumps or quarries, the ECHFR could operate the process
by creating power from the actual wastewater to be treated
We expect to lease larger laboratory and to purchase lab equipment over
the next twelve months.
Subject to the implementation and success of one or more of the
financing options discussed in the first paragraph, we plan to hire
four employees; an engineer; a laboratory technician, a computer
specialist, and a chief operating officer. Once in place and subject to
the implementation and success of one or more of the financing options
discussed in the first paragraph, we plan to hire two to three
additional technical personnel.
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<PAGE>
HYDRO ENVIRONMENTAL RESOURCES, INC.
PART II - OTHER INFORMATION
ITEM 1 - No response required.
ITEM 2 - No response required.
ITEM 3 - No response required.
ITEM 4 - No response required.
ITEM 5 - No response required.
ITEM 6 - Exhibits and reports on Form 8-K:
(a) Exhibits:
27* Financial Data Schedule.
(b) Reports on Form 8-K were filed on:
None
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<PAGE>
HYDRO ENVIRONMENTAL RESOURCES, INC.
SIGNATURES
The financial information furnished herein has not been audited by an
independent accountant; however, in the opinion of management, all adjustments
(only consisting of normal recurring accruals) necessary for a fair presentation
of the results of operations for the three and nine months ended September 30,
2000 have been included.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Hydro Environmental Resources, Inc.
(Registrant)
DATE: November 13, 2000 BY: /s/ JACK WYNN
________________________________ ___________________________________
Jack Wynn, President
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