SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
<P>
----------------------
<P>
AMENDMENT NO. 1 TO
FORM 8-K
<P>
----------------------
<P>
CURRENT REPORT
<P>
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
<P>
Date of Report (Date of earliest event reported):
September 27, 2000
<P>
THE AUXER GROUP, INC.
<P>
(Exact Name of Registrant as Specified in Its Charter)
<P>
Delaware
<P>
(State or Other Jurisdiction of Incorporation)
<TABLE>
<S> <C> <C>
0-30440 22-3537927
--------- ----------
(Commission File Number) (IRS Employer Identification No.)
<P>
12 Andrews Drive, West Paterson, New Jersey 07424
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
<P>
(973) 890-4925
(Registrant's Telephone Number, Including Area Code)
<P>
(Former Name or Former Address,
if Changed Since Last Report)
<P>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
<P>
Pursuant to an asset Purchase Agreement (the "Agreement")
effective September 27, 2000, Clifton Telecard, Inc. a
wholly owned subsidiary of The Auxer Group, Inc., a Delaware
corporation (the "Company") purchased all of the assets as
listed on Schedule A of the Agreement and all of the
liabilities as listed on Schedule B of the Agreement of
Clifton Telecard Alliance, Inc. a New Jersey corporation
("Clifton"). (the "Acquisition"). The total purchase price
paid for the assets was $700,000 payable as follows:
$500,000 upon the execution of the Agreement and payment of
the balance of $200,000 within one hundred and eighty (180)
days of closing. In addition, the Company issued 2,000,000
($0.0001 par value per share) shares of its restricted
common stock to the shareholders of Clifton. The Company
also provided Mustafa Qattous, the principal shareholder and
President of Clifton, an employment agreement with Clifton
Telecard, Inc. for a three year term at the same salary base
that he had with Clifton.
<P>
The primary purpose for the Agreement is for the purchase of
the running of the time by the Company which will go through
the Company's switches located in California and both
parties will undertake all steps to ensure that this part of
the transaction is undertaken immediately after the Closing
Date of this Agreement.
<P>
The Acquisition was approved by the unanimous consent of the
Board of Directors of the Company and Clifton on September
27, 2000.
<P>
ITEM 7. FINANCIAL STATEMENTS
<P>
The pro forma combined balance sheets as of June 30, 2000
and pro forma consolidated statements of operations for the
periods ending June 30, 2000 and December 31, 1999 are filed
herewith. In addition, the audited consolidated financial
statements as of June 30, 2000 and December 31, 2000 are
filed herewith.
<P>
INTRODUCTION TO UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS
<P>
The following unaudited pro forma consolidated statements of
operations reflect adjustments to Auxer's historical
consolidated statements of operations for the year ended
December 31, 1999 and the six months ended June 30, 2000, to
give effect to the acquisition of Clifton Telecard and
equipment by the newly formed subsidiary Auxer Telecom as if
it had occurred on January 1, 1999.
<P>
The unaudited pro forma consolidated statements of
operations are not necessarily indicative of what the actual
results of operations of Auxer would have been assuming the
transactions had been completed as set forth above, nor do
they purport to represent Auxer's results of operations for
future periods.
<P>
The following unaudited pro forma combined balance sheet
reflects adjustments to Auxer's historical consolidated
balance sheet at June 30, 2000 to give effect to this
purchase.
<P>
The unaudited pro forma consolidated financial statements
should be read in conjunction with the historical financial
statements and related notes to Auxer.
<P>
THE AUXER GROUP, INC.
<P>
UNAUDITED PROFORMA CONSOLIDATED
FINANCIAL STATEMENTS
<P>
Index
<P>
Financial Statements:
<P>
Unaudited Proforma Combined Balance Sheets - 6/30/00
<P>
Unaudited Proforma Consolidated Statements
of Operations - 06/30/2000
<P>
Unaudited Proforma Consolidated Statements
of Operations - 12/31/1999
<P>
Notes to Unaudited Proforma Consolidated Financial
Statements
<P>
<TABLE>
THE AUXER GROUP, INC.
<P>
UNAUDITED PROFORMA COMBINED BALANCE SHEET
<P>
JUNE 30, 2000
<S> <C> <C> <C> <C>
Auxer Auxer Clifton Pro Forma
Assets Group Telecom Telecard Adjustments
-----------------------------------------------------------------------------------------
Current Assets
Cash $ 9,420 $ $ 406,835 $
Accounts receivable, net 362,696 429,624
Inventory 639,386 404,578
Receivable from Auxer Telecom 10,000 - (10,000)
-----------------------------------------------------------
Total Current Assets 1,021,502 0 1,241,037 (10,000)
<P>
Investment in Clifton
Telecard 117,000 - (117,000)
Property and equipment, net 79,949 415,468 21,504
Other assets 45,396 9,596
Goodwill 521,500 -
-----------------------------------------------------------
Total Assets $ 1,785,347 $ 415,468 $ 1,272,137 $ (127,000)
===========================================================
<P>
LIABILITIES AND CAPITAL
Current Liabilities
Accounts payable and
accrued expenses $ 350,948 $ 91,680 $ 1,097,109
Credit line 64,203
Payable to Auxer group - 10,000 (10,000)
Notes payable 784,278 509,334
Notes payable-shareholders 85,368
-----------------------------------------------------------
Total Current Liabilities 1,284,797 611,014 1,097,109 (10,000)
<P>
Long term debt, less
current maturities 3,702
<P>
Stockholders' Equity
Common stock, 150,000,000
shares authorized at
$.001 par value 80,912 117,000 (117,000)
Preferred stock 25,000,000
shares authorized at
$.001 par value, 2,750,000
outstanding in 1999 2,750
Additional paid in capital 6,043,416
(Deficit) (5,630,230) (195,546) 58,028
-------------------------------------------------------------
Stockholders' (Deficit) 496,848 (195,546) 175,026 (117,000)
-------------------------------------------------------------
Total Liabilities and
Capital $ 1,785,347 $ 415,468 $ 1,272,137 $ (127,000)
=============================================================
<P>
Notes to Unaudited Combined Balance Sheet
<P>
Note 1- Proforma adjustments represent intercompany eliminations.
<P>
F1
<P>
</TABLE>
<TABLE>
THE AUXER GROUP, INC.
<P>
UNAUDITED PROFORMA COMBINED BALANCE SHEET CONTINUED
<P>
JUNE 30, 2000
<S> <C>
Pro Forma
Assets Combined
-----------------------------------------------------------------------------------------
Current Assets
Cash $ 416,255
Accounts receivable, net 792,320
Inventory 1,043,964
Receivable from Auxer Telecom 0
-----------------------------------------------------------
Total Current Assets 2,252,539
<P>
Investment in Clifton Telecard 0
Property and equipment, net 516,921
Other assets 54,992
Goodwill 521,500
-----------------------------------------------------------
Total Assets $ 3,345,952
===========================================================
<P>
LIABILITIES AND CAPITAL
Current Liabilities
Accounts payable and
accrued expenses 1,539,737
Credit line 64,203
Payable to Auxer group 0
Notes payable 1,293,612
Notes payable-shareholders 85,368
-----------------------------------------------------------
Total Current Liabilities 2,982,920
<P>
Long term debt, less
current maturities 3,702
<P>
Stockholders' Equity
Common stock, 150,000,000
shares authorized at
$.001 par value 80,912
Preferred stock 25,000,000
shares authorized at
$.001 par value, 2,750,000
outstanding in 1999 2,750
Additional paid in capital 6,043,416
(Deficit) (5,767,748)
-------------------------------------------------------------
Stockholders' (Deficit) 359,330
-------------------------------------------------------------
Total Liabilities and
Capital $ 3,345,952
=============================================================
<P>
Notes to Unaudited Combined Balance Sheet
<P>
Note 1- Proforma adjustments represent intercompany eliminations.
<P>
</TABLE>
<TABLE>
THE AUXER GROUP, INC.
<P>
UNAUDITED PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
<P>
JUNE 30, 2000
<S> <C> <C> <C> <C>
Auxer Auxer Clifton Pro Forma
Assets Group Telecom Telecard Adjustments
-----------------------------------------------------------------------------------------
Income $ 1,050,918 $ $ 8,950,453 $
<P>
Less cost of good sold (705,453) (8,582,589)
--------------------------------------------------------------
Gross profit 345,465 0 367,864 0
<P>
Operations:
<P>
General and administrative 904,008 291,583
<P>
Amortization of goodwill 745,000 291,583
<P>
Depreciation 8,846 51,933
<P>
Interest expense 8,005 30,560
--------------------------------------------------------------
Total expense 1,665,859 82,493 583,166 0
--------------------------------------------------------------
Income (loss) from operations (1,320,394) (82,493) (215,302) 0
<P>
Other income (expense)
<P>
Loss on abandonment of leasehold
improvements (2,518)
--------------------------------------------------------------
Net income (loss) $ (1,322,912) $ (82,493) $ (215,302) 0
==============================================================
<P>
Net income (loss) per share
Weighted average shares outstanding (000's
<P>
F2
<P>
</TABLE>
<TABLE>
THE AUXER GROUP, INC.
<P>
UNAUDITED PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
<P>
CONTINUED
<P>
JUNE 30, 2000
<S> <C>
Pro Forma
Assets Combined
-----------------------------------------------------------------------------------------
Income $ 10,001,371
<P>
Less cost of good sold (9,288,042)
--------------------------------------------------------------
Gross profit 713,329
<P>
Operations:
<P>
General and administrative 1,195,591
<P>
Amortization of goodwill 1,036,583
<P>
Depreciation 60,779
<P>
Interest expense 38,565
--------------------------------------------------------------
Total expense 2,331,518
--------------------------------------------------------------
Income (loss) from operations (1,618,189)
<P>
Other income (expense)
<P>
Loss on abandonment of leasehold
improvements (2,518)
--------------------------------------------------------------
Net income (loss) $ (1,620,707)
==============================================================
<P>
Net income (loss) per share (0.01)
================
Weighted average shares
outstanding (000's) 68,737
==================
</TABLE>
<TABLE>
THE AUXER GROUP, INC.
<P>
UNAUDITED PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
<P>
DECEMBER 31, 1999
<S> <C> <C> <C> <C>
Auxer Auxer Clifton Pro Forma
Assets Group Telecom Telecard Adjustments
-----------------------------------------------------------------------------------------
Income $ 871,259 $ $ 8,289,628 $
<P>
Less cost of good sold (622,210) (8,053,678)
--------------------------------------------------------------
Gross profit 249,049 0 235,950 0
<P>
Operations:
<P>
General and administrative 1,302,418 236,047
<P>
Amortization of goodwill 149,000
<P>
Depreciation 11,626 51,933
<P>
Interest expense 10,618 61,120
--------------------------------------------------------------
Total expense 1,473,662 113,053 236,047 0
--------------------------------------------------------------
Income (loss) from operations (1,224,613) (113,053) (97) 0
<P>
Other income (expense) 706
<P>
Loss on abandonment of leasehold
improvements - - - -
--------------------------------------------------------------
Net income (loss) before
extraordinary items (1,223,907) (113,053) (97) 0
<P>
Extraordinary item, gain
on forgiveness of debt 99,780 0 0 0
--------------------------------------------------------------
Net income (loss) $ (1,124,127) $ (113,053) $ (97) 0
==============================================================
<P>
Net income (loss) per share
Weighted average shares outstanding (000's
<P>
F2
<P>
</TABLE>
<TABLE>
THE AUXER GROUP, INC.
<P>
UNAUDITED PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
<P>
CONTINUED
<P>
DECEMBER 31, 1999
<S> <C>
Pro Forma
Assets Combined
-----------------------------------------------------------------------------------------
Income $ 9,160,887
<P>
Less cost of good sold (8,675,888)
--------------------------------------------------------------
Gross profit 484,999
<P>
Operations:
<P>
General and administrative 1,538,465
<P>
Amortization of goodwill 149,000
<P>
Depreciation 63,559
<P>
Interest expense 71,738
--------------------------------------------------------------
Total expense 1,822,762
--------------------------------------------------------------
Income (loss) from operations (1,337,763)
<P>
Other income (expense) 706
<P>
Loss on abandonment of leasehold
improvements 0
--------------------------------------------------------------
<P>
Net income (loss) before
extraordinary items (1,337,057)
<P>
Extraordinary item, gain
on forgiveness of debt 99,780
--------------------------------------------------------------
Net income (loss) $ (1,237,277)
==============================================================
Net income (loss) per share (0.02)
================
Weighted average shares
outstanding (000's) 50,756
==================
<P>
F3
<P>
</TABLE>
NOTES TO THE UNAUDITED PRO FORMA
STATEMENT OF OPERATIONS
<P>
Note 1 - The Pro Forma Statements of Operations assume that
the acquisitions of the Clifton Telecard and the Telecom
switching equipment occurred on January 1, 1999. For
purpose of the Pro Forma Statements of Operations for the
year ended December 31, 1999 and the six months ended June
30, 2000, Auxer Group's historical statements of operations
for the year ended December 31, 1999 and the six months
ended June 30, 1999 were combined with the estimated results
of Clifton Telecard and Auxer Telecom.
<P>
Note 2 - Goodwill represents the excess acquisition costs
oiver the fair vlaue of net assets of Clifton Telecard. The
Goodwill of $745,000 is being amortized on a straight line
basis over five years.
<P>
Note 3 - The estimated proforma depreciation for Auxer
Telecom is based upon the equipment fair value and the
equipment is being depreciated over its estimated useful
life of five years. Company policy is to take one half
year's depreciation in the year of acquisition.
<P>
Note 4 - Interest expense reflects imputed interest at a
rate of 12% on the loan payable for the equipment.
<P>
CLIFTON TELECARD ALLIANCE, INC.
<P>
INDEX
<TABLE>
<S> <C>
INDEPENDENT AUDITOR'S REPORT 1
<P>
BALANCE SHEETS 2
<P>
STATEMENT OF OPERATIONS 3
<P>
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY 4
<P>
STATEMENTS OF CASH FLOWS 5
<P>
NOTES TO FINANCIAL STATEMENTS 6-9
</TABLE>
<P>
KEMPISTY & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS, P. C
IS MAIDEN LANE - SUITE 1003 - NEW YORK NY 10038- TEL (212)
406-7272 -FAX (212) 513-1930
<P>
INDEPENDENT AUDITORS' REPORT
<P>
The Board of Directors and Stockholders
Clifton Telecard Alliance, Inc.
<P>
We have audited the balance sheets of Clifton Telecard
Alliance, Inc. as of June 30, 2000 and December 31, 1999,
and the related statements of operations, stockholders'
equity and cash flows for the six months ended June 30, 2000
and the period March 18, 1999 (date of inception) to
December 31, 1999. These financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
<P>
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
<P>
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Clifton Telecard Alliance, Inc. as of June 30,
2000 and December 31, 1999, and the results of its
operations and its cash flows for the periods ended June 30,
2000 and December 31, 1999 in conformity with generally
accepted accounting principles.
<P>
September 22, 2000
Kempisty & Company
Certified Public Accountants PC
New York, New York
<P>
<TABLE>
<CAPITAL>
CLIFTON TELECARD ALLIANCE, INC.
BALANCE SHEETS
<S> <C> <C>
June 30, December 31,
2000 2000
-------- ------------
<P>
ASSETS
--------
Current Assets
Cash and equivalents $ 406,835 $ 46,282
Accounts receivable $ 429,624 $ 361,344
Inventory (Note 2) $ 404,578 $ 362,915
---------- ------------
Total current Assets $1,241,037 $ 770,541
<P>
Fixed assets-net (Note 3) $ 21,504 $ 26,880
<P>
Other assets
Organization expense-net (Note 4) $ 293 $ 333
Security deposit $ 9,303 $ 9,303
----------- ------------
Total Other Assets $ 9,596 $ 9,636
----------- ------------
TOTAL ASSETS $1,272,137 $ 807,057
<P>
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
Liabilities
Account payable and accrued expenses $ 839,348 $ 599,835
Income taxes payable $ 18,156 $ -
------------ ------------
Total Current Liabilities $ 857,504 $ 599,835
<P>
Commitments and contingencies (Note 6) $ - $ -
<P>
Stockholders' Equity
Common stock no par value, 1,000 shares $ 150,000 $ 150,000
authorized, issued and outstanding
Additional paid in capital $ 206,605 $ 57,319
Retained earnings $ 58,028 $ (97)
------------ ------------
Total Stockholders' Equity $ 414,633 $ 207,222
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,272,137 $ 807,057
------------ ------------
<P>
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPITAL>
CLIFTON TELECARD ALLIANCE, INC.
STATEMENTS OF OPERATIONS
<S> <C> <C>
March 18,
1999 (Date
For the six of Inception)
months through
ended December 31,
June 30, 2000 1999
------------- -------------
<P>
Sales revenues $ 8,950,453 $ 8,289,628
<P>
Cost of sales $ 8,582,589 $ 8,053,678
------------- -------------
<P>
Gross profit $ 367,864 $ 235,950
<P>
General and administrative expenses$ 291,583 $ 236,047
------------- -------------
<P>
Gain (Loss) from operations $ 76,281 $ (97)
<P>
Provision for income taxes $ (18,156) $ -
-------------- -------------
<P>
Net income (loss) $ 58,125 $ (97)
-------------- -------------
<P>
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
CLIFTON TELECARD ALLIANCE, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the period ended June 30, 2000 and the period
March 18, 1999 (Date of inception) to December 31, 1999
<S> <C> <C> <C> <C> <C>
Common Stock Additional
No Par Value Paid in
Shares Amount Capital Deficit Total
------- ------- -------- ------- ------
Balance March 18, 1999 - $ - $ - $ - $ -
Issuance of common stock
to Founders 1,000 $ 150,000 $ - $ - $ 150,000
Additional paid in capital - $ - $ 57,319 $ - $ 57,319
Net loss of the period ended
December 31, 1999 - $ - $ - $ (97) $ (97)
------- -------- -------- -------- ----------
Balance December 31, 1999 1,000 $ 150,000 $ 57,319 $ (97) $ 207,222
Additional paid in capital - $ - $ 149,286 $ - $ 149,286
Net income for the six months
ended June 30, 2000 - $ - $ - $ 58,125 $ 58,125
------- -------- -------- -------- ----------
Balance June 30, 2000 1,000 $ 150,000 $ 206,605 $ 58,028 $ 414,633
------- -------- --------- -------- ----------
<P>
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
CLIFTON TELECARD ALLIANCE, INC.
STATEMENTS OF CASH FLOWS
<S> <C> <C>
For the six For the period
months ended
ended December 31,
June 30, 2000 1999
--------------- ---------------
<P>
Operating Activities
----------------------
Net income or (loss) $ 58,125 $ (97)
Adjustments to reconcile net income or (loss)
to net cash (used provided by
operating activities:
Depreciation and amortization $ 5,416 $ 6,787
Changes in operating assets and liabilities:
(Increase) decrease in
accounts receivable $ (68,280) $(361,334)
(Increase) decrease in inventory $ (41,663) $(362,915)
(Increase) decrease in other assets $ - $ (9,303)
Increase (decrease) in payables
and accrued expenses $ 257,669 $ 599,835
------------ --------------
Net cash (used) provided by
<P>
operating activities $ 211,267 $(127,037)
<P>
Financing Activities
---------------------
Capital contribution $ 149,286 $ 57,319
Issuance of common stock $ - $ 150,000
------------ --------------
Net cash provided by investing activities $ 149,286 $ 207,319
<P>
Investing Activities
---------------------
<P>
Purchase of fixed assets $ - $ (33,600)
Organization costs $ - $ (400)
------------ --------------
Net cash provided by investing activities $ - $ (34,000)
<P>
Increase (decrease) in cash $ 360,553 $ 46,282
Cash at beginning of period $ 46,282 $ -
------------ ---------------
Cash at end of period $ 406,835 $ 46,282
------------ ---------------
<P>
Supplemental Disclosures of Cash Flow Information:
Cash paid during year for:
Interest $ - $ -
------------ ---------------
Income taxes $ - $ -
------------ ---------------
<P>
See Notes to Financial Statements
</TABLE>
CLIFTON TELECARD ALLIANCE, INC.
<P>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 and December 31, 1999
<P>
Note 1- ORGANIZATION & OPERATIONS
<P>
Clifton Telecard Alliance, Inc. was incorporated in
the State of New Jersey on March 18, 1999.
<P>
The Company is in the business of prepaid phone card
sales.
<P>
Note 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
<P>
a. Revenue
<P>
The Company records revenue when products are
shipped to customers.
<P>
b. Property and Equipment
<P>
Property and equipment are accounted for at cost and
are depreciated over their estimated useful lives on a
straight-line basis.
<P>
c. Income Taxes
<P>
The Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes",
("SFAS No. 109") which requires the asset and liability
method of accounting for income taxes. Enacted
statutory tax rates are applied to temporary differences
arising from the differences in financial statement carrying
amounts and the tax basis of existing assets and
liabilities.
<P>
d. Inventories
<P>
Inventories consist of prepaid phone cards and are
stated at the lower of cost or market. Cost is computed on
the first-in, first-out basis.
<P>
e. Use of Estimates
<P>
The preparation of financial statements in
conformity with generally accepted accounting principles
requires the Company's 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 revenue and expenses during the
reporting period. Actual results could differ from those
estimates.
<P>
Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
<P>
f. Comprehensive Income
<P>
The Company has adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130"). SFAS No. 130 requires an entity to
report comprehensive income and its components and increases
financial reporting disclosures. This standard has no impact
on the Company's financial position, cash flows or results
of operations since the Company's comprehensive income is
the same as its reported net income for the periods
presented.
<P>
g. Concentrations of Credit Risk
<P>
Financial instruments that potentially subject the
Company to concentration of credit risk consist primarily of
cash, which is maintained in a high-quality financial
institution. The Company extends credit to various customers
and establishes an allowance for doubtful accounts for
specific customers that it determines to have significant
credit risk. The Company provides allowances for potential
credit losses when necessary. Due to the short operating
history of the Company, its short payment terms and its
ability to discontinue phone service on unpaid cards, the
Company has had no credit losses to reserve for.
<P>
Note 3 - FIXED ASSETS
<TABLE>
<S> <C> <C>
June 30, 2000 December 31, 1999
----------------------------------------
Furniture and equipment $33,600 $33,600
Accumulated depreciation (12,096) (6,720)
----------------------------------------
$21,504 $26,880
<P>
Note 4 - ORGANIZATION EXPENSE
<P>
June 30, 2000 December 31, 1999
-----------------------------------------
Organization expense $400 $400
Less accumulated amortization (107) (67)
-----------------------------------------
$293 $333
<P>
Note 5 - INCOME TAXES
<P>
The provision (benefit) for income taxes consisted
of the following:
<P>
Six months ended Period ended
June 30, 2000 December 31, 1999
------------------------------------------
Current:
Federal tax expenses $11,350 $ -
State tax expense 6,800 -
Deferred:
Federal tax expense - -
State tax expense - -
------------------------------------------
$18,150 -
==========================================
<P>
A reconciliation of differences between the statutory
U.S. federal income tax rate and the Company's
effective tax rate follows:
<P>
Six months ended Period ended
June 30, 2000 December 31, 1999
------------------------------------------
Statutory federal income tax 34% -
State income tax-net of federal benefit 5% -
Benefit of lower Federal tax bracket -16% -
23% -
------ ------
</TABLE>
<P>
CLIFTON TELECARD ALLIANCE, INC.
<P>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 and December 31, 1999
<P>
Note 6 - COMMITMENTS
<P>
On April 9, 1999 the Company entered into a lease agreement
for office space which expires in the year 2009. Rent
expense for the Company for the six months ended June 30,
2000 was $32,922 and for 1999 was $35,597. Remaining
commitments under the lease mature as follows:
<P>
Year Ending December 31, Amount
2000 $55,820
2001 59,541
2002 63,263
2003 66,054
2004 68,845
2005 and thereafter 330,268
----------
$643,791
==========
<P>
Note 7- OFF BALANCE SHEET RISK
<P>
The Company purchases prepaid phone cards from various
telephone companies who agree to provide long distance
phone service to the card holder after the Company activates
the phone card when it is sold. In the event the long
distance service provider does not provide the service or
goes out of business the Company would be responsible for
refunding the purchase price of the phone card.
<P>
The Company mitigates its risk by dealing with well
capitalized long distance service providers.
<P>
Index to Exhibits
<P>
2.1 Contract for the Sale of Goods. *
<P>
* Filed with initial filing of Form 8-K on September 11,
2000 (SEC File No. 000-30440)
<P>
SIGNATURES
<P>
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 hereunto duly
authorized.
<P>
The Auxer Group, Inc.,
a Delaware corporation
<P>
By:/s/ Eugene Chiaramonte
-------------------------------
Eugene Chiaramonte, Jr.
President
<P>
DATED: December 8, 2000
<P>
