UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------- --------
Commission File No. 0-27195
EWRX Internet Systems, Inc.
(Exact name of Registrant as specified in its charter)
State of Nevada 98-0117139
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
#440-755 Burrard Street
Vancouver, BC Canada V6Z 1X6
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (604) 669-6079
#301-543 Granville Street
Vancouver, BC Canada V6C 1X8
(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 and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
--- ---
The number of shares outstanding of the Registrant's common stock as of May 12,
2000 was 14,847,080 shares.
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EWRX INTERNET SYSTEMS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
Number
------
PART I - FINANCIAL INFORMATION
------------------------------
Item 1 - Financial Statements
- -----------------------------
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Report of Independent Public Accountants..................................................................... 3
Consolidated Balance Sheets at March 31, 2000 (Unaudited) and December 31, 1999.............................. 4
Consolidated Statements of Operations for the Three Months Ended
March 31, 2000 and 1999 (Unaudited)...................................................................... 5
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2000 and 1999 (Unaudited)...................................................................... 6
Notes to Consolidated Financial Statements................................................................... 7
Item 2 - Management's Discussion and Analysis or Plan of Operations............................................... 10
PART II - OTHER INFORMATION
---------------------------
Item 1 - Legal Proceedings........................................................................................ 15
Item 2 - Changes in Securities.................................................................................... 15
Item 3 - Default Upon Senior Securities........................................................................... 15
Item 4 - Submission of Matters to Vote of Security Holders........................................................ 15
Item 5 - Other Information........................................................................................ 15
Item 6 - Exhibits and Reports on Form 8-K......................................................................... 15
Signatures........................................................................................................ 16
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2
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Item 1. Financial Statements
- -----------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
EWRX Internet Systems Inc. and Subsidiaries
We have reviewed the accompanying balance sheets of EWRX Internet Systems Inc.
and Subsidiaries as of March 31, 2000 and the related statements of operations
and cash flows for the period then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of analytical procedures applied to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of EWRX Internet Systems Inc. and Subsidiaries as
of December 31, 1999 and the related statements of earnings and cash flows for
the year then ended (not presented separately herein), and in our report dated
March 27, 2000 we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
balance sheet as of March 31, 2000 is fairly stated, in all material respects,
in relation to the balance sheet from which it has been derived.
/s/ Jackson & Rhodes, P.C.
Jackson & Rhodes P.C.
Dallas, Texas
May 10, 2000
3
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EWRX INTERNET SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
2000 1999
------------- -------------
(Unaudited) (Audited)
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Current assets:
Cash $ 295,974 $ 5,214
Receivables 25,671 37,422
Prepaids and other 5,461 2,636
----------- -----------
Total current assets 327,106 45,272
----------- -----------
Furniture and equipment:
Furniture and equipment 176,011 74,374
Accumulated depreciation (35,108) (29,395)
----------- -----------
Net furniture and equipment 140,903 44,979
----------- -----------
Other assets:
Goodwill, net of amortization of $336,210 1,660,135 1,759,953
Website development costs 293,144 254,855
----------- -----------
Total other assets 1,953,279 2,014,808
----------- -----------
$ 2,421,288 $ 2,105,059
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 233,699 $ 342,286
Due to related parties 174,976 138,700
----------- -----------
Total current liabilities 408,675 480,986
----------- -----------
Commitments and contingencies - -
Stockholders' equity (deficit):
Preferred stock, $.01 par value, 500,000 shares authorized,
none issued and outstanding - -
Common stock, $.001 par value, 100,000,000 shares authorized,
14,847,080 and 13,551,980 shares issued and outstanding 14,793 13,552
Additional paid-in capital 5,730,327 4,555,614
Accumulated Deficit (3,718,947) (2,927,875)
Accumulated other comprehensive income (loss) (14,847) (17,218)
----------- -----------
Total stockholders' equity 2,012,613 1,624,073
----------- -----------
$ 2,421,288 $ 2,105,059
=========== ===========
See accompanying notes to consolidated financial statements.
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4
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<CAPTION>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 2000 and 1999
(Unaudited)
2000 1999
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Revenue $ 28,147 $ -
---------- ----------
Expenses:
Salaries and benefits 312,295 5,348
Consulting, management and professional fees 111,376 49,437
Marketing and promotion 87,974 28,734
Depreciation and amortization 105,531 710
General and administrative 202,043 35,364
---------- ----------
Total expenses 819,219 119,593
---------- ----------
Net loss $ (791,072) $ (119,593)
========== ==========
Basic net loss per share $ (0.05) $ (0.01)
========== ==========
Weighted average common shares outstanding 14,421,213 13,019,334
========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
5
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<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2000 and 1999
(Unaudited)
2000 1999
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<S> <C> <C>
Net loss $(791,072) $(119,593)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 105,531 710
Stock issued for domain name 17,500 -
Changes in assets and liabilities:
Receivables 11,751 (1,877)
Prepaid expenses (2,825) (2,459)
Accounts payable (108,587) (9,517)
--------- ---------
Net cash used in operating activities (767,703) (132,736)
--------- ---------
Cash flows from investing activities:
Purchase of furniture and equipment (101,637) -
Website development costs (38,289) -
--------- ---------
Net cash used in investing activities (139,926) -
--------- ---------
Cash flows from financing activities:
Bank overdraft - (2,661)
Advances from shareholders 36,276 14,119
Common stock sold for cash 1,158,508 321,250
--------- ---------
Net cash provided by financing activities 1,194,784 332,708
--------- ---------
Effect of exchange rate changes on cash 3,604 (3,710)
--------- ---------
Net increase (decrease) in cash 290,760 196,262
Cash at beginning of period 5,214 0
--------- ---------
Cash at end of period $ 295,974 $ 196,262
========= =========
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Noncash activities:
During the period ended March 31, 1999, the Company converted $199,202
of debt into 664,010 shares of common stock.
During the period ended March 31, 1999, the Company reacquired a total
of 3,600,000 shares of common stock and returned them to authorized
and unissued common stock.
During the period ended March 31, 2000, the Company issued 17,500
shares of common stock to purchase an internet domain name
See accompanying notes to consolidated financial statements.
6
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EWRX INTERNET SYSTEMS INC. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements
1. ORGANIZATION
DESCRIPTION OF BUSINESS
The Company was incorporated on June 25, 1997 in the State of Nevada. The
consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, EWRX Internet Systems (Canada), Inc., a
company incorporated in British Columbia, Classic Car Source,
Incorporated ("CCS") and North Fork Publishing Group, Inc. ("NFPG") (Note
3). Until its acquisition of CCS and NFPG in June 1999, the Company was
in the development stage of its existence, devoting its efforts primarily
to raising capital, developing an industrial mineral project in Ukraine,
exploring investment opportunities, and administrative functions. CCS was
established to create a source of on-line publishing of information and
entertainment for classic vehicle collectors. NFPG was established to
provide Internet marketing, design and internet database services on a
contract basis to selected clients.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying unaudited interim financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB of
Regulation S-B. They do not include all information and footnotes
required by generally accepted accounting principles for complete
financial statements. However, except as disclosed herein, there has been
no material change in the information disclosed in the notes to the
financial statements for the year ended December 31, 1999 included in the
Company's Annual Report on Form 10-KSB filed with the Securities and
Exchange Commission. The interim unaudited financial statements should be
read in conjunction with those financial statements included in the Form
10-KSB. In the opinion of Management, all adjustments considered
necessary for a fair presentation, consisting solely of normal recurring
adjustments, have been made. Operating results for the three months ended
March 31, 2000 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2000.
GOING CONCERN
The Company's financial statements have been presented on the basis that
it is a going concern, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. The
financial statements do not include any adjustments that might result
from the outcome of this uncertainty. The Company has reported cumulative
net losses since inception of $3,718,947 as of March 31, 2000.
The Company has had preliminary discussions with third parties to raise
up to $5,000,000 using a combination of shares and warrants at the market
price at the time of any subscription. Proceeds from the proposed sale of
Common Stock will be used to
7
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1. ORGANIZATION
GOING CONCERN (Continued)
pay offering costs and to expand the brand recognition of the Company's
websites through advertising and marketing and to fund website redesign
that will in turn enhance the commercial value of Websites as previously
discussed. Proceeds will also be used for general working capital, and
general and administrative purposes.
The number of shares that are issued as part of any sale of Common Stock
is dependent upon market prices. The Company has been and remains
dependent upon its ability to raise capital by selling equity securities
to finance its operations and development activities. During the quarter
ended March 31,2000, $1,158,508 was raised by way of a private placement.
The Company's monthly general and administrative costs (e.g. salaries,
rent, corporate expenses) are approximately $200,000. The Company also
expects to spend approximately $1.3 million during the next twelve months
towards the continued development and enhancement of its Websites. The
Company anticipates, subject to adequate financing, that by mid-2002,
there will be sufficient revenue from the operations of its websites to
pay for these costs and related sales and marketing costs.
The Company is dependent upon the proceeds of its proposed offering of
Common Stock or other securities to implement its business plan and to
finance its working capital requirements. Should the Company's plans or
its assumptions change or prove to be inaccurate or offering proceeds are
insufficient to fund the Company's operations, the Company would be
required to seek additional financing sooner than anticipated. The
Company may determine, depending upon available opportunities, to seek
debt or additional equity financing to fund the cost of continuing
expansion or other acquisitions. To the extent that the Company incurs
indebtedness or issues debt securities, it will be subject to risks
associated with such indebtedness, including interest rate fluctuations,
collateral arrangements and the possibility that cash flows may prove
inadequate to repay such indebtedness. The Company has no current
arrangements with respect to, or sources of, additional financing.
There can be no assurances given that the Company will be successful in
generating sufficient revenues from its planned activities or that it can
raise sufficient capital to allow it to continue as going concern which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. These factors can affect
the ability of the Company to implement its general business plan
including specific plans to re-design websites, to develop an on-line
Specialty Automotive Aftermarket equipment catalog, to implement a banner
advertising sales program, to implement other sales programs and to
implement a premium membership for its website visitors, the principal
means of revenue generation for the Company's Internet markets.
8
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2. CAPITAL STOCK
As of February 29, 2000, the Company completed a private placement of
1,277,600 units, each unit consisting of one common share and one
non-transferable warrant exercisable at $1.00 for two years from the date
of the subscription. The Company realized cash proceeds, net of $64,400
of finders' fees, in the amount of $1,158,508 and was relieved from
$25,000 of liabilities as a result of this private placement. Of the
total units issued, 54,600 units were issued to various broker/dealers as
payment for commissions payable in connection with this capital raise.
The private placement increased the number of fully diluted common shares
by 1,277,600 shares.
9
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Item 2. Management's Discussion and Analysis or Plan of Operation
- ------------------------------------------------------------------
PLAN OF OPERATIONS
EWRX's primary business objective during the next twelve months is to develop
and operate websites that facilitate commercial transactions in the Specialty
Automotive Aftermarket. By using proprietary information management software and
by using the Internet as an e-commerce marketplace, the Company believes that it
can provide participants with enhanced selection and pricing for automotive
products and services. In return, the Company plans to charge a fee, on a
transaction-by-transaction basis for all business conducted by third parties
using the Company's websites. The Company also expects to generate additional
revenues from its websites by selling advertising to third parties. Further, the
Company expects its wholly owned subsidiary, North Fork WebWrx, to earn
increased service revenues by continuing to provide custom software and website
design services, Internet database services and custom e-commerce software
solutions to a variety of businesses that are seeking are to utilize the
Internet for commercial purposes. Reference is also made to the Company's Annual
Report on Form 10-KSB as of December 31, 1999. To achieve its primary
objectives, over the next twelve months, EWRX anticipates that it will:
1) Raise up to $5 million through the private placement sale of common
shares. Proceeds will be used for general corporate purposes and to
fund planned website development activities as outlined below. Refer
to the discussion under "Capital Resources" below.
2) Complete the re-development and re-programming of the Classicar.com
and Classictruck.com websites. This work will be accomplished in
conjunction with a contract with Xceed, Inc. who will provide the
Company with certain developmental and programming services. Both
websites will then be fully capable of conducting planned e-commerce
operating activities. Through March 2000, the Company has completed a
portion of this work and related costs have been capitalized as
Website development costs.
3) Develop other related Internet sites that are focused on specific
communities within the Specialty Automotive Aftermarket such as
racing, hot rods, etc. The Company has registered the domain names
"Speedwrx.com" and "Motorhood.com" for such purposes.
4) Develop the Company's MotorWrx.com website. MotorWrx.com provides a
single gateway on the Internet to the EWRX group of websites and
ultimately will provide links to other websites related to the
Specialty Automotive Aftermarket. EWRX intends MotorWrx.com to be an
important destination site for the Specialty Automotive Aftermarket on
the Internet and it is planned to provide a single point entry for
automotive enthusiasts. Included in this development will be creation
of the Motorhood.com and Speedwrx.com websites.
5) Development of BigBadCatalog.com, an electronic catalog for the
Specialty Automotive Aftermarket. Development of this new website will
be undertaken in part under the contract with Xceed, Inc. referred to
previously in (2) above. EWRX plans to integrate digitized standard
printed catalogs for automobile parts manufacturers and distributors
into BigBadCatalog.com. This will create a centralized point of sale
on the Internet where auto enthusiasts can purchase automotive parts
directly from participating manufacturers and distributors.
10
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6) Increase brand awareness for the Motorwrx.com, ClassicCar.com,
Classictruck.com, and related websites and brands. The Company has
initiated a program to significantly increase overall brand awareness
of the various EWRX websites through a national advertising program in
conjunction with certain co-sponsors.
7) Expand services provided to third parties by North Fork WebWrx. North
Fork Webwrx is an Internet solutions provider serving a variety of
businesses by providing high-end website design services, Internet
database programming, custom e-commerce applications and strategic
Internet marketing consulting.
With public acceptance of the Internet surging, and
business-to-business commerce changing the traditional distribution
systems, EWRX believes that North Fork WebWrx can expand its market
share in the following areas:
WEBSITE DEVELOPMENT. Design, development, and maintenance of a wide
range of business-to-business commerce sites, Intranet (internal
business communications) and large-scale consumer sites.
ONLINE ADVERTISING. Banner ad development, banner placements and other
online advertising projects for third parties.
MARKET CONSULTING. Providing market-consulting services, such as
Internet launch strategies, site development analysis and Internet
marketing plans.
WEBSITE HOSTING. North Fork WebWrx currently hosts over 70 websites
for classic car and classic truck related businesses and
organizations.
SPECIAL PROJECTS. Developing proprietary software for resale.
8) As appropriate opportunities arise and provided that sufficient
funding is available, complete additional acquisitions or form joint
ventures and/or strategic alliances with other website-related
companies servicing the Specialty Automotive Aftermarket.
Subject to availability of financing (refer to "Capital Resources" below), the
Company intends to complete the re-design of its current websites, increase
banner advertising and other sales programs, and to develop its electronic
catalog all during the first half of 2000. The on-going re-design of the
Company's websites was initiated in July 1999, and when completed, a variety of
e-commerce revenue streams will begin. These activities are expected to be the
principal sources of future revenues for the Company. The Company believes that
revenues to be earned during the next twelve months, together with planned sales
of Common Shares as described below under "Capital Resources," will provide
sufficient funding for operations during that twelve- month period. However, no
assurance can be given that the types of revenues projected by the Company or
that the financing contemplated by the Company will occur. Additional capital
will be required for significant expansion of website capabilities and other
planned Company activities such as development or acquisition of additional
websites.
In connection with its website developmental activities as set out above, and
subject to availability of financing, the Company estimates that it will incur
approximately $1.275 million for website development costs during the next
twelve months.
11
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REVENUES AND FINANCING
Through March 31, 2000, the Company has realized minimal revenues from banner
advertising and website consulting services, principally because the acquisition
of Classic Car and North Fork was completed only in late June 1999.
Subsequently, EWRX's efforts were primarily focused on development of existing
and new web sites. EWRX intends to derive its future revenues from these same
sources, from the electronic catalog, BigBadCatalog, and from other e-commerce
programs on its websites.
The Company anticipates that Internet and related e-commerce will continue to
become more accessible and that the market opportunities for the Company will
expand in North America and internationally. The Company intends to expand the
content and to improve the services on its websites, and where appropriate, to
add new websites that are compatible with its existing websites related to the
Specialty Automotive Aftermarket. Additional capital, as described in CAPITAL
RESOURCES below, will be required for significant expansion of Website
capabilities and other Company activities such as additional Websites and
related acquisitions.
During the first quarter of 2000 and throughout 1999, the Company's principal
source of funds has come from sales of Common Shares by way of private placement
and from advances made by an officer/shareholder. Over this period,
approximately $2.43 million ($1.4 million in 1999) has been raised from sales of
Common Stock. At March 31, 2000 there were net advances from Shareholders
amounting to $174,976 ($138,700 at December 31, 1999). Proceeds have primarily
been used to acquire Classic Car and North Fork, initiate work for website
re-design as discussed previously and for corporate administrative and sales
costs.
The Company is continuing to investigate and solicit funding primarily through
private placements of its securities.
CAPITAL RESOURCES
As of February 29, 2000, the Company completed a private placement of 1,277,600
units, including issuance of 54,600 units for commissions, at $1.00 per unit.
Each unit consisted of one common share and one non-transferable warrant
exercisable at $1.00 for two years from the date of the subscription. Net
proceeds of approximately $1.198 million was raised in cash and the Company was
relieved of $25,000 of liabilities. The private placement increased the number
of fully diluted common shares by 1,277,600 shares. This placement was not
subject to an underwriting agreement.
The Company has had preliminary discussions with third parties to raise up to
$20,000,000 using a combination of shares and warrants at the market price at
the time of any subscription. Proceeds from the proposed sale of Common Stock
will be used to pay offering costs and to expand the brand recognition of the
Company's websites through advertising and marketing and to fund website
redesign that will in turn enhance the commercial value of Websites as
previously discussed. Proceeds will also be used for general working capital,
and general and administrative purposes.
The Company's monthly general and administrative costs (e.g. salaries, rent,
corporate expenses) are approximately $200,000. The Company anticipates, subject
to adequate financing, that by mid-2002, there will be sufficient revenue from
the operations of its websites from providing other Internet related services to
pay for these costs and related sales and marketing costs.
12
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The Company is dependent upon the proceeds of its proposed offering of Common
Stock to implement its business plan and to finance its working capital
requirements. Should the Company's plans or its assumptions change or prove to
be inaccurate or offering proceeds are insufficient to fund the Company's
operations, the Company would be required to seek additional financing sooner
than anticipated. The Company may determine, depending upon available
opportunities, to seek debt or additional equity financing to fund the cost of
continuing expansion or other acquisitions. To the extent that the Company
incurs indebtedness or issues debt securities, it will be subject to risks
associated with such indebtedness, including interest rate fluctuations,
collateral arrangements and the possibility that cash flows may prove inadequate
to repay such indebtedness. The Company has no current arrangements with respect
to additional financing. There can be no assurances given that the Company will
be successful in generating sufficient revenues from its planned activities or
that it can raise sufficient capital to allow it to continue as going concern
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. These factors can affect the ability of the
Company to implement its general business plan including specific plans to
re-design websites, to develop an on-line Specialty Automotive Aftermarket
equipment catalog, to implement other sales programs for its website visitors,
the principal means of revenue generation for the Company's Internet markets.
On July 15, 1999, the Company entered into an agreement with Harmonic Research,
Inc. (Harmonic), an investment fund management company, to sell by way of
private placement units consisting of common shares and warrants on behalf of
the Company. The initial term of the agreement was for 90 days and is extended
in 90-day increments. To date, Harmonic has placed securities on behalf of the
Company outside of the terms of this agreement. The Company did not extend the
agreement in October 1999. Under the initial agreement terms, Harmonic provided
financial advisory services and was paid $15,000. Upon signing the initial
agreement, the Company also granted Harmonic a warrant to purchase 150,000
shares of the Company's common stock at $1.00 per share for three years. In
addition, Harmonic is also entitled to receive certain fees should the Company
enter into a merger, consolidation, reorganization, and business combination or
acquire another company where Harmonic is the finder. No such transaction is
under consideration by the Company at this time.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Until recently, the Company was a development stage enterprise. Its principal
assets today are its investments in Classic Car and North Fork. From inception
to date, the Company has incurred significant operating losses resulting in its
working capital deficit. From its formation in 1997 through the first half of
1999, the Company did not generate any significant operating revenues. Beginning
in the third quarter of 1999 and upon completion of the purchase of Classic Car
and North Fork discussed previously, the Company has entered the e-commerce
marketplace. Revenues in 2000 were derived primarily from banner advertising on
Company websites.
Salaries and benefits increased in 2000 when compared to 1999 primarily as a
result of increases in personnel in the second half of 1999 in connection with
commencing e-commerce operating activities as a result of the acquisition of
Classic Car Source and North Fork completed in June 1999.
Consulting, management and professional fees are primarily accounting and legal
expenses. Increases in these expenses in 2000 when compared to 1999 are a result
of costs incurred relating to the acquisition of Classic Car Source and North
Fork and completion of the Company's registration of securities under the
Securities Exchange Act of 1934.
13
<PAGE>
Marketing and promotion cost in 2000 pertain to creating broad awareness within
the Internet community of the Company's websites and its related products and
services. All such costs were incurred subsequent to the acquisition of Classic
Car and North Fork.
Overall during 2000, general and administrative expenses increased when compared
to 1999 as a result of commencing operating activities subsequent to the
acquisitions of Classic Car and North Fork. Higher costs resulted from increased
staff, enlarging office facilities to include two locations, and other
administrative expenses. Such increases occurred primarily in the third and
fourth quarters of 1999 and are expected to be ongoing at the rate of
approximately $200,000 per month.
Increases in depreciation and amortization in 2000 when compared to 1999 relate
primarily to amortization of goodwill recorded in connection with the
acquisition of Classic Car and North Fork. Such amortization commenced in July
1999.
Due to operating losses since inception, the Company has not incurred any
liability related to income taxes.
14
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
Date of Filing Date of Event Item Reported
-------------- ------------- -------------
February 14, 2000 February 1, 2000 Item 5 - Approval by the
National Association of
Securities Dealers, Inc.
for trading on the OTC-BB
effective January 28, 2000
March 7, 2000 February 29, 2000 Item 5 - Completion of
private placement under
Regulation D and Regulation S
of the Securities Act of 1933,
as amended
15
<PAGE>
SIGNAURES
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.
EWRX INTERNET SYSTEMS, INC.
(Registrant)
May 12, 2000 By /s/ Ronald C. Davis
-------------------------------------
Ronald C. Davis
President and Chief Executive Officer
May 12, 2000 By /s/ Richard P. Ott
-------------------------------------
Richard P. Ott
Treasurer and Chief Accounting Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-QSB FOR THE QUARTER ENDED MARCH 31, 2000 AND IS QUALIFIED
IN ITS ENTIRETY TO SUCH FORM 10-QSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 295,974
<SECURITIES> 0
<RECEIVABLES> 25,671
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 327,106
<PP&E> 176,011
<DEPRECIATION> (35,108)
<TOTAL-ASSETS> 2,421,288
<CURRENT-LIABILITIES> 408,675
<BONDS> 0
0
0
<COMMON> 5,745,174
<OTHER-SE> (3,732,561)
<TOTAL-LIABILITY-AND-EQUITY> 2,421,288
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<CGS> 0
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<OTHER-EXPENSES> 819,219
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<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (791,072)
<INCOME-TAX> 0
<INCOME-CONTINUING> (791,072)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (791,072)
<EPS-BASIC> (.05)
<EPS-DILUTED> 0.00
</TABLE>
