SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 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 Number: 0-22965
E-Rex, Inc
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(Exact Name of registrant as specified in its charter)
Nevada
--------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
8890 Coral Way, Suite 220
Miami, FL 33165
----------------------------------------
(Address of principal executive offices)
(Zip Code)
305-554-9903
--------------------------------------------------
Registrants telephone number, including area code)
--------------------
(Former name, former address and former fiscal year, if changed since
last report)
2101 West SR 434, Suite 221
Longwood, FL 32779
Indicate by check mark whether the registrant has (1) 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 such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing for the past 90
days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of June 30, 2000: 27,051,832. Treasury shares - 6,977,616.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
E-REX, INC.
BALANCE SHEET
As of June 30, 2000 and December 31, 1999
ASSETS
June 30 December 31
CURRENT ASSETS 2000 1999
---------- ----------
Cash $ 65,837 $ 22,006
Prepaid expense 11,667 -
Receivable - related party 2,680 -
---------- ----------
Total Current Assets 80,184 22,006
OTHER ASSETS
Furniture and equipment 5,511 4,937
Less: accumulated depreciation - (2,896)
---------- ----------
Total Other Assets 5,511 2,041
---------- ----------
TOTAL ASSETS $ 85,695 $ 24,047
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 76,629 $ 82,075
Accrued expense 44,028 -
Loan payable 95,000 -
Demand note payable 6,450 6,450
---------- ----------
Total current liabilities 222,107 88,525
---------- ----------
TOTAL LIABILITIES 222,107 88,525
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.001 par value, 100,000,000 authorized
and 27,051,832 (Held In Treasury - 6,977,616)
shares issued and outstanding 27,052 15,539
Additional paid in capital 8,592,049 708,962
Allowance for prepaid stock compensation (4,623,342) -
Accumulated deficit (3,982,171) (788,979)
Less treasury stock (150,000) -
---------- ----------
Total stockholders' equity (136,412) (64,478)
---------- ----------
TOTAL LIABILITIES AND EQUITY (DEFICIT) $ 85,695 $ 24,047
========== ==========
See accompanying notes to the financial statements
<PAGE>
E-REX, INC.
STATEMENT OF OPERATIONS
For the Six Months ending June 30, 2000 and 1999,
The Twelve Months Ending December 31,1999 and
From Inception (August 26, 1986) to March 31, 2000
<TABLE>
<CAPTION>
June 30 June 30 December 31 From
2000 1999 1999 Inception
----------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
REVENUE $ - $ - $ - $ -
EXPENSES
General and administrative 3,187,584 304,338 464,436 3,652,020
LOSS FROM OPERATIONS (3,187,584) (304,338) (464,436) (3,652,020)
----------- ---------- ---------- ------------
OTHER INCOME (EXPENSE)
Interest income 1,439
Interest expense (5,608) (5,608)
Recovery from lawsuit 120,726
----------- ---------- ---------- ------------
INCOME (LOSS) BEFORE INCOME TAXES (3,193,192) (304,338) (464,436) (3,535,463)
Income Taxes - - - -
----------- ---------- ---------- ------------
NET INCOME (LOSS)
$(3,193,192) $ (304,338) $ (464,436) $ (3,535,463)
=========== ========== ========== ============
Weighted average
Number of shares 17,973,048 13,422,729 13,439,674
Basic and diluted
earnings per share $ (0.18) $ (0.02) $ (0.04)
</TABLE>
See accompanying notes to the financial statements
<PAGE>
E-REX, INC.
STATEMENT OF OPERATIONS
For the Three Months ending June 30, 2000 and 1999
June 30 June 30
2000 1999
------------ ----------
REVENUE $ - $ -
EXPENSES
General and administrative 1,024,222 75,967
------------ ----------
LOSS FROM OPERATIONS (1,024,222) (75,967)
OTHER INCOME
None
------------ ----------
INCOME (LOSS) BEFORE INCOME TAXES (1,024,222) (75,967)
Income Taxes - -
------------ ----------
NET INCOME (LOSS)
$ (1,024,222) $ (75,967)
============ ==========
See accompanying notes to the financial statements
<PAGE>
E-REX, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from Inception (August 26, 1986) to June 30, 2000
<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID-IN INCOME
SHARES AMOUNT CAPITAL (LOSS) TOTAL
------- ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Issuance of shares of
common stock on Aug. 26,
1986, for $.044 per share 250,000 $ 250 $ 10,750 $ - $ 11,000
Net (loss) from inception
on Aug. 26, 1986, through
Dec. 31, 1986 (15,354) (15,354)
------- ----------- ------------ ---------- ------------
Balance, December 31, 1986 250,000 250 10,750 (15,354) (4,354)
Issuance of shares of
common stock to the public
for $1.00 per share 93,215 93 93,122 93,215
Deferred offering cost
offset against additional
paid-in capital (7,663) (7,663)
Net (loss) for the year
ended Dec. 31, 1987 (80,103) (80,103)
------- ----------- ------------ ---------- ------------
Balance, December 31, 1987 343,215 343 96,209 (95,457) 1,095
Net (loss) for the four
year period ended
Dec. 31, 1991 (4,072) (4,072)
------- ----------- ------------ ---------- ------------
Balance, December 31, 1991 343,215 343 96,209 (99,529) (2,977)
Issuance of shares of
stock on Feb. 4, 1992, for
$1.00 per share 166,716 167 166,549 166,716
Deferred offering cost
offset against additional
paid-in capital (26,125) (26,125)
Common stock issued
on Feb. 4, 1992 for services 136,785 137 27,220 27,357
Net (loss) for the year
ended Dec. 31, 1992 (179,027) (179,027)
------- ----------- ------------ ---------- ------------
Balance, December 31, 1992 646,716 647 263,853 (278,556) (14,056)
</TABLE>
See accompanying notes to the financial statements
<PAGE>
E-REX, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from Inception (August 26, 1986) to June 30, 2000
<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID-IN INCOME
SHARES AMOUNT CAPITAL (LOSS) TOTAL
------- ------ ---------- -------- -------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1992 646,716 647 263,853 (278,556) (14,056)
Issuance of shares of
common stock to the public
on Feb. 3, 1993 for $4.00
per share 32,000 32 127,968 128,000
Deferred offering cost
offset against additional
paid-in capital (74,239) (74,239)
Common stock issued for
legal services on April
29, 1993 110,000 110 21,890 22,000
Net (loss) for the year
ended Dec. 31, 1993 (39,703) (39,703)
------- --- ------- -------- -------
Balance, December 31, 1993 788,716 789 339,472 (318,259) 22,002
Net (loss) for the year
ended Dec. 31, 1994 (8,357) (8,357)
------- --- ------- -------- -------
Balance, December 31, 1994 788,716 789 339,472 (326,616) 13,645
Net (loss) for the year
ended Dec. 31, 1995 (19,185) (19,185)
------- --- ------- -------- -------
Balance, December 31, 1995 788,716 789 339,472 (345,801) (5,540)
Net (loss) for the year
ended Dec. 31, 1996 (4,500) (4,500)
------- --- ------- -------- -------
Balance, December 31, 1996 788,716 789 339,472 (350,301) (10,040)
Common stock issued for
services Sep., 1997 30,000 30 30
Net income for the year
ended Dec. 31, 1997 52,251 52,251
------- --- ------- -------- -------
Balance, December 31, 1997 818,716 819 339,472 (298,050) 42,241
</TABLE>
See accompanying notes to the financial statements
<PAGE>
E-REX, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from Inception (August 26, 1986) to June 30, 2000
<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID-IN INCOME
SHARES AMOUNT CAPITAL (LOSS) TOTAL
---------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 818,716 819 339,472 (298,050) 42,241
Common stock issued for
services Sep., 1998 1,682,000 1,682 1,000 2,682
Common shares issued
in Rule 504 offering
Nov. and Dec., 1998 1,539,500 1,539 152,410 153,949
Common stock issued for
services Dec., 1998 100,000 100 9,900 10,000
Net (loss) for the year
ended Dec. 31, 1998 (26,493) (26,493)
---------- ----------- ------------ ----------- ------------
Balance December 31, 1998 4,140,216 4,140 502,782 (324,543) 182,379
1/1/99 - 2/28/99 Common
shares issued for services 2,470,000 2,470 0 2,470
3/23/99 - Common shares
issued for services 58,000 58 0 58
3/24/99 - 3/31/99 Common
shares issued per merger
agreement 8,137,616 8,138 0 8,138
4/19/99 - 6/17/99 Common
shares issued for cash 94,000 94 30,906 31,000
4/12/99 - 4/19/99 Common
shares issued per merger
agreement 72,000 72 0 72
6/29/99 - Common shares
issued for services 260,000 260 64,740 65,000
7/2/99 - Common shares
issued for services 100,000 100 24,900 25,000
11/3/99 - Common shares
issued for cash 190,000 190 47,310 47,500
Common shares issued
for services 10,000 10 2,490 2,500
Shares purchased and paid
for in 1999, but certificates
not issued until 1st qtr 2000. 0 0 35,030 35,030
Net (loss) for the year ended
December 31, 1999 (464,436) (464,436)
---------- ----------- ------------ ----------- ------------
Balance, December 31, 1999 15,531,832 15,532 708,158 (788,979) (65,289)
2/11/00 - Common stock issued
for cash 120,000 120 (120)
2/11/00 - Common stock issued
as prepaid stock 30,000 30 (30)
3/14/00 - Common stock issued
for cash 20,000 20 (20)
3/31/00 - Common shares issued
for services 8,060,000 8,060 7,557,540 7,565,600
Common share purchased
as treasury stock (6,977,616) 0
Net (loss) for the period
ended March 31, 2000 (1,174,022) (1,174,022)
---------- ----------- ------------ ----------- ------------
Balance, March 31, 2000 16,784,216 23,762 8,265,528 (1,963,001) 6,326,289
Issuance of sahres of commmon
stock to the public for $.10
per share 3,290,000 3,290 325,710 329,000
Net (loss) for the period
ended June 30, 2000 (1,024,222) (1,024,222)
---------- ----------- ------------ ----------- ------------
Balance, June 30, 2000 20,074,216 $ 27,052 $ 8,591,238 $(2,987,223) $ 5,631,067
========== =========== ============ =========== ============
</TABLE>
See accompanying notes to the financial statements
<PAGE>
E-REX, INC.
STATEMENT OF CASH FLOWS
For the Six Months ending June 30, 2000 and 1999,
The Twelve Months Ending December 31,1999 and
From Inception (August 26, 1986) to June 30, 2000
<TABLE>
<CAPTION>
CASH FLOWS FROM (FOR) June 30 June 30 December 31 From
OPERATING ACTIVITIES 2000 1999 1999 Inception
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net income $(3,193,192) $ (304,338) $ (464,436) $ (3,982,171)
Adjustments to reconcile net income to
to net cash provided by (used in )
operating activities:
Receivable - related party (2,680) (2,680)
Increase in prepaid expense (11,667) (11,667)
Stock issued for services 2,942,258 2,600 128,608 3,132,934
Accounts payable & accrued expense 120,657 98,407 71,940 120,657
Other (34) (14,179) 29,014 14,588
----------- ------------ ----------- ------------
Total adjustments to net income 3,048,534 86,828 229,562 3,253,832
Net cash provided by (used in)
operating activities (144,658) (217,510) (234,874) (728,339)
CASH FLOWS FROM (FOR)
INVESTING ACTIVITIES
Purchase of furniture (5,511) (5,511)
----------- ------------ ----------- ------------
Net cash flows provided by (used in)
investing activities (5,511) - - (5,511)
CASH FLOWS FROM (FOR)
FINANCING ACTIVITIES
Purchase of treasury stock (150,000) (150,000)
Proceeds from loan 409,000 409,000
Payment on loan (314,000) (314,000)
Proceeds from issuance of stock 249,000 41,666 80,833 962,714
Offering costs (108,027)
----------- ------------ ----------- ------------
Net cash provided by (used in) financin 194,000 41,666 80,833 799,687
CASH RECONCILIATION
Net increase (decrease) in cash 43,831 (175,844) (154,041) 65,837
Cash at beginning of year 22,006 176,047 176,047 -
----------- ------------ ----------- ------------
CASH BALANCE AT END OF YEAR $ 65,837 $ 203 $ 22,006 $ 65,837
=========== ============ =========== ============
</TABLE>
See accompanying notes to the financial statements
<PAGE>
E-REX, INC.
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(See Independent Auditor's Report)
1. Summary of significant accounting policies:
Nature of Operations - E-Rex, Inc. (the "Company"), a Nevada corporation, was
incorporated on August 26, 1986 as P.R. Stocks, Inc. On February 26, 1992, the
Company changed its name to National Health & Safety Corporation. On November
12, 1992, the Company changed its name to Medgain International Corporation. On
June 20, 1994 the Company changed its name to E-Rex, Inc. On February 20, 1999
the Company entered into a business combination (see Note 5). To date, the
Company has had no revenues. The Company is in the development stage.
Cash Equivalents - The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash equivalents.
Earnings (Loss) Per Share - Basic earnings per share ("EPS") is computed by
dividing earnings available to common shareholders by the weighted-average
number of common shares outstanding for the period as required by the Financial
Accounting Standards Board (FASB) under Statement No. 128, `Earnings per
Shares". Diluted EPS reflects the potential dilution of securities that could
share in the earnings.
Basis of Accounting - The Company's financial statements are prepared in
accordance with generally accepted accounting principles.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Income Taxes - The Company records its income tax provision in accordance with
Statement of Financial Accounting Standard No. 109, "Accounting for Income
Taxes."
Functional Currency - All amounts in the Company's financial statements and
related footnotes are stated in US dollars. The Company had no significant gain
or losses from foreign currency conversions.
<PAGE>
E-REX, INC.
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(See Independent Auditor's Report)
Property and Equipment - Depreciation and amortization is computed by the
straight line method with the following recovery periods:
Organization costs 5 Years
Office equipment and software 3-5 Years
Furniture 5-7 Years
Maintenance and repairs, as incurred, are charged to expense; betterments and
renewals are capitalized in plant and equipment accounts. Cost and accumulated
depreciation applicable to items replaced or retired are eliminated from the
related accounts; gain or loss on the disposition thereof is included as income.
No depreciation is recorded on property and plant left idle.
2. Basis of Presentation as a 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 Company incurred a net loss
for the period from inception (August 26, 1986) to June 30, 2000. This factor,
among others, raises substantial doubt as to the Company's ability to continue
as a going concern.
The Company's management intends to raise additional operating funds through
equity and/or debt offerings. However, there can be no assurance management will
be successful in its endeavors.
3. Income Taxes:
The Company records its income tax provision in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" which
requires the use of the liability method of accounting for deferred income
taxes.
Since the Company has not generated cumulative taxable income since inception,
no provision for income taxes has been provided. At June 30, 2000, the Company
did not have any significant tax net operating loss carryforwards ( tax benefits
resulting from losses for tax purposes have been fully reserved due to the
uncertainty of a going concern). At June 30, 2000 the Company did not have any
significant deferred tax liabilities or deferred tax assets.
<PAGE>
E-REX, INC.
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(See Independent Auditor's Report)
4. Development Stage Company:
A development stage company is one for which principal operations have not
commenced or principal operations have generated an insignificant amount of
revenue. Management of a development stage company devotes most of its
activities to establishing a new business. Operating losses have been incurred
through June 30, 2000, and the company continues to use, rather than provide,
working capital in this operation. Although management believes that it is
pursuing a course of action that will provide successful future operations, the
outcome of these matters is uncertain.
5. Business Combination:
On February 20, 1999 the Company entered into a merger agreement with Plantech
Communications Systems, Inc. ("Plantech"), a privately held British Columbia,
Canada, Corporation. Plantech is a development stage enterprise in the software,
computer and internet area. From inception in 1992 to date Plantech has had no
revenues.
Under the terms of the merger agreement, Plantech shareholders received one
share of the Company's common stock for each outstanding share of Plantech
stock. The Company issued 8,137,616 shares of its common stock in exchange for
all the plantech common shares outstanding as of February 20, 1999.
The above business combination was accounted for under the purchase method.
There was no significant difference between the purchase cost and the fair value
of net assets/liabilities acquired, thus no goodwill was recorded. Plantech's
results of operations are included in the Company's statement of operations from
the date of merger, February 20, 1999, forward. The following table sets forth
certain results of operations for the periods presented as if the Plantech
business combination had been consumated on the same terms at the Plantech
inception in 1992.
Inception
Jan. 1, 1999 (8/26/86)
to Feb. 20, to Dec. 31,
1999 1998
------------- -------------
Revenues $ - $ -
Net (Loss) $ (230,954) $ (616,086)
<PAGE>
E-REX, INC.
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(See Independent Auditor's Report)
6. Litigation:
In January, 2000 the Board of Directors resolved to settle a British Columbia
Supreme Court action brought against the Company for an unpaid vendor bill for
$25,000. The Company also accepted from the same vendor a return of 50,000
shares of the Company stock that the vendor held.
In 1993 the Company initiated legal action against a former merger candidate,
and several of its principals, primarily to the Company when the merger was not
consummated.
In October, 1997 a settlement agreement relating to the above action was entered
into. In November, 1997 the Company received, net of attorney's fees, $120,726
to settle this matter.
7. Related Party Transactions:
The Company assumed a promissory note payable to Valcom Ltd, a West Vancouver,
British Columbia company, dated March 15, 1997 in the amount of $6,450 with no
interest stated. This note was assumed by the Company from the merger as
described in footnote 5. The Company has also entered into an agreement for
design and integration work with Valcom Ltd, an entity controlled by a
shareholder of the Company that was a director of the Company at the time the
agreement was entered into.
The Company entered into an agreement on January 21, 2000 with International
Investment Banking, Inc. ("IIBI") whereby IIBI will serve as senior management
of the Company for an initial term of two years unless further extended by
mutual agreement of the parties. The Chief Executive Officer, Donald A.
Mitchell, of the Company also controls IIBI. Pursuant to the agreement, IIBI
receives $10,000 per month and reimbursement of normal business expenses that it
incurs on behalf of the Company and certain expenses of individual consultants
that IIBI assigns to carry out the duties and responsibilities of IIBI.
Thereafter the annual compensation shall increase at a rate of 20% per year.
<PAGE>
E-REX, INC.
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(See Independent Auditor's Report)
Note 7, continued:
In addition to monthly compensation, IIBI or Mr. Mitchell may be entitled to
receive an annual bonus as determined by the Company's Board of Directors
payable in common stock or cash. Mr. Mitchell was granted 2,000,000 shares of
common stock representing 1,000,000 common shares for each year of IIBI's
engagement. As an addendum of this agreement, IIBI was directed on the Company's
behalf the following: Purchase 8,237,616 shares of stock from two of the
Company's former directors for $250,000; and issue 6,000,000 shares of stock to
Stockholder Presentations, Inc. per an investor relations contract.
The Company also was loaned $409,000 from IIBI in the form of a promissory note
to cover the Company's short-term cash flow needs. The Company expects to fund
this note with an issuance of stock within the near future.
8. Stockholders' Equity:
During the quarter ending June 30, 2000, the Company issued 3,290,000 shares of
common stock for cash in the amount of $329,000. Also during the quarter the
Company issued stock in accordance with its compensation and management
agreements as noted in footnote 7. As these shares represent a long-term
contract, the prepaid stock compensation balance has been set up as a
contra-equity balance. The amount of prepaid stock compensation will be
recognized as an expense during the life of the contracts over time.
During the period ending March 31, 2000 the Company had a change in ownership
whereby the former directors of the Company sold 6,977,616 shares back to the
Company as treasury stock for an amount of $150,000. During the same period,
8,060,000 additional shares were then issued for services to the new directors
of the Company and the Company's attorney. The shares issued were valued at the
fair market value as traded on the date that the shares were declared for
issuance.
9. Required Cash Flow Disclosure:
The Company had no interest and income taxes paid for the year. The Company
entered into a management agreement, as noted in footnote 7, in which the
Company issued for common stock for services. The Company has issued shares of
common stock for services in prior years.
<PAGE>
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS
To the Board of Directors and Stockholders
E-Rex, Inc.
Orlando, FL
We have audited the accompanying balance sheet of E-Rex, Inc. (a development
stage company), as of June 30, 2000, and the related statement of operations,
stockholders' equity and cash flows for the six months ended June 30, 2000, and
for the period from inception (August 26, 1986) to June 30, 2000. 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.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of E-Rex, Inc. (a development
stage company) as of June 30, 2000, and the results of its operations and its
cash flows for the six months ending June 30, 2000, and inception (August 26,
1986) to June 30, 2000 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
that raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in note 2. The
Financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Varma and Associates
Certified Public Accountants
Longwood, FL
July 12, 2000
<PAGE>
Item 2. Management's Discussion And Analysis Of Financial Condition And Results
of Operations
Trends and Uncertainties. Demand for the Company's products and services will be
dependent on, among other things, market acceptance of the Company's concept,
its proposed operations and general economic conditions that are cyclical in
nature. Inasmuch as a major portion of the Company's activities will be the
receipt of revenues from the sales of its products and services, the Company's
business operations, upon commencement, may be adversely affected by the
Company's inability to obtain the necessary financing, competitors and prolonged
recesionary periods.
Capital and Source of Liquidity.
The Company requires substantial capital in order to meet its ongoing corporate
obligations and in order to continue and expand its current and strategic
business plans. Initial working capital has been primarily obtained through
advances from the Company's chief executive officer and from a limited offering
of common stock.
The Company received proceeds from the sale of Common Stock of $329,000 for the
three months ended June 30, 2000 resulting in net cash provided by financing
activities of $329,000 compared to $31,000 for the three months ended June 30,
1999 resulting in net cash provided by financing activities of $31,000.
The Company had cash paid out in the amount of $5,511through investing
activities for the three months ended June 30,2000 for the purchase of
furniture.
Results of Operations.
Since inception, the Company has not received any revenues from operations. For
the three months ended June 30, 2000, the Company had a net loss of $1,024,222.
The Company had no depreciation expense and issued common stock valued at
$1,902,800 for services for the three month period ended June 30, 2000. The
Company had no change in deposits with vendors, no change in notes receivable,
no change in interest receivable, a decrease in loan payable of $314,000, an
increase in accounts payable and accruals of $27,478.
General and administrative expenses were $1,024,222 and consisted primarily of
management fees, accounting and audit fees, rent, and miscellaneous expenses.
There were no Research and development expenses for the three months ended June
30, 2000.
For the three months ended June 30, 1999, the Company had a net loss of $75,967
consisting entirely of General and administrative expenses.
Plan of Operation.
The Company does not currently have sufficient capital to continue operations
for the next twelve months and will have to raise additional capital to meet its
business objectives as well as 1934 Act reporting requirements. The Company
intends to pursue its business plan and meet its reporting requirements
utilizing cash made available from anticipated offerings of its securities.
On a long-term basis, the Company's liquidity is dependent on commencement of
operations, revenue generation, additional infusions of capital and potential
debt financing. Company management believes that additional capital and debt
financing in the short term will allow it to commence its business plan and
thereafter result in revenue and greater liquidity in the long term. However,
there can be no assurance that the Company will be able to obtain the needed
additional equity or debt financing in the future.
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal Proceedings.
There are no legal proceedings required to be reported.
Item 2. Changes in Securities and Use of Proceeds.
During the quarter ended June 30, 2000, the Company issued in a series
of private placements 3,290,000 shares of restricted common stock. These shares
were sold by the company during the 1st quarter, 2000, and the proceeds from the
sale reported in Part II, item 2 of the 1st quarter 10Q report.
Item 3. Default upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the quarter.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits.
27 Financial Data Schedule
B. Form 8-K.
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the undersigned have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
E-REX, Inc.
Dated: July 31, 2000 By: /s/ Carl Dilly
-----------------------------
Carl Dilley,
Chief Executive Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
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27 Financial Data Schedule
