10Q Sept 30-00
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 September 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
------------------------------------------------------
(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 September 30, 2000: 22,400,883.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
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
recessionary 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.
The Company received proceeds from the issuance of Common Stock of $913,334 for
the three months ended September 30, 2000 resulting in net cash provided by
financing activities of $1,135,203.
In an exchange of stock and services agreement with Ultimate Franchise Systems,
Inc., the Company acquired securities valued at $400,000 for the three months
ended September 30, 2000.
The Company purchased fixed assets of $18,404 for the three months ended
September 30, 2000.
Results of Operations.
During the third quarter of this year, the company purchased the ISP assets and
software of Webulate, LLC. With this acquisition, the company initiated
activities in the E-Tech design division of the company. This division provides
commercial web site design and consulting services to small business. For the
three months ending September 30, 2000, the company had gross revenues of
$7,524. For the three months ended September 30, 2000, the company had a net
loss of $2,219,832. The Company had a depreciation expense of $207 and issued
common stock valued at $913,334 for services for the three month period ended
September 30, 2000. The Company had an increase in loan payable to private
company of $52,232, an increase in accounts payable of $94,318, and an increase
in management fees payable of $30,000.
General and administrative expenses were $2,227,356 and consisted primarily of
accounting and legal of $50,275, rent of $1,737, wages of $55,426, management
fees of $1,984,800, travel expenses of $7,729,office supplies of $383,for the
three months ended September 30, 2000.
Plan of Operation.
The Company intends to pursue its business plan and meet its reporting
requirements utilizing cash made available from the private and future public
sale of its securities as well as income for the E-Tech Design division of the
company. The Company's management is aggressively pursuing relationships/markets
for the E-Tech Design division and is of the opinion that revenues from the
sales of its securities will be sufficient to pay its expenses until its
business operations create positive cash flow. The Company continues its efforts
to raise capital. 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.
On a long-term basis, the Company's liquidity is dependent on 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 pursue it's 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.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
<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 September 30, 2000, the Company issued in a
series of private placements approximately 2,326,667 shares of restricted common
stock at a average price of $.392 per share, for gross proceeds of approximately
$912,523.
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
<PAGE>
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: November 3, 2000 By: /s/ Carl Dilley
-----------------------------
Carl Dilley,
Chief Executive Officer
<PAGE>
E-REX, INC.
BALANCE SHEET
As of September 30, 2000 and June 30, 2000
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
<S> <C> <C>
ASSETS
CURRENT ASSETS
--------------
Cash $ 2,051 $ 22,006
A/R 7,524 --
Receivables-related parties -- --
----------- -----------
Total Current Assets $ 9,575 22,006
OTHER ASSETS
------------
Furniture and Equipment 23,915 4,937
Software 65,000 0
Less: Accumulated Depreciation (207) (2,896
Investment in Ultimate Franchise Inc. 400,000 0
Investment in DiveDepot.Com 150,000 0
----------- -----------
Total Other Assets 638,708 2,041
----------- -----------
TOTAL ASSETS $ 648,283 $ 24,047
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
-------------------
Accounts payable $ 140,184 $ 82,075
Accrued management fee 60,000 --
Accrued wages & salaries payable 13,465
Loan Payable 6,450
Other accrued liabilities 500 0
----------- -----------
Total current liabilities 214,149 88,525
----------- -----------
LONG-TERM LIABILITIES
---------------------
Long Term Debt 220,000 0
Other long-term liabilities 147,232 0
Demand Note Payable 5,781 0
----------- -----------
Total Long-term liabilities 373,013 0
----------- -----------
TOTAL LIABILITIES $ 587,162 $ 88,525
=========== ===========
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY (DEFICIT)
------------------------------
Common stock, $.001 par value, $ 22,401 $ 15,539
100,000,000 authorized, 15,539,164(December 31)
and 22,400,883 (September 30) shares
issued and outstanding
Additional paid in capital 9,502,245 708,962
Retained earnings (6,320,183) (788,979)
Prepaid Professional Service Fees (3,143,342)
Total Stockholders' Equity 61,121 (64,478)
----------- -----------
TOTAL LIABILITIES AND EQUITY (DEFICIT) $ 648,283 $ 24,047
=========== ===========
</TABLE>
See accompanying notes to the financial statement
<PAGE>
E-REX, INC.
STATEMENT OF OPERATIONS
For the Three Months ending September 30, 2000 & 1999,
The Nine Months Ending September 30,2000 & 1999
From Inception (August 26, 1986) to September 30, 2000
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDING ENDING ENDING ENDING FROM
SEPT. 30, 2000 SEPT. 30, 1999 SEPT. 30, 2000 SEPT. 30, 1999 INCEPTION
-------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C>
REVENUE
-------
Operating Revenue $ 7,524 $ 7,524 $ 7,524
Revenue Adjustments 1st Quarter 2000 $ 2
------------------------------------------------------------------------------------
TOTAL REVENUE $ 7,524 $ 7,526 $ 7,524
------------------------------------------------------------------------------------
EXPENSES
--------
General and administrative 2,227,356 122,115 4,482,876 426,453 5,349,020
Expense adjustments 1st qrt 2000 918,938 918,938
------------------------------------------------------------------------------------
TOTAL EXPENSES & ADJUSTMENTS $ 2,227,356 $ 122,115 $5401,814 $ 426,453 $ 6,312,958
LOSS FROM OPERATIONS (2,219,832) (122,115) (5,394,288) (426,453) (6,305,434)
--------------------
OTHER INCOME
------------
Interest income 1,439
Recovery from lawsuit 120,726
------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES (2,219,832) (122,115) (5,394,288) (426,453) (6,183,269)
---------------------------------
Income Taxes -- -- -- (1,463) --
------------------------------------------------------------------------------------
NET INCOME (LOSS) $ (2,219,832) $ (122,115) $ (5,394,288) $ (427,916) $ (6,183,269)
----------------- ====================================================================================
Weighted Average
Number of shares 18,607,310 15,231,832 18,607,310 15,331,832
Basic EPS $ (0.12) $ (0.01) $ (0.29) $ (0.03)
</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 September 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 September 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 September 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
2/24/99-3/31/99 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 Issues
For services 10,000 10 2,490 2,500
Shares Purchased and paid for
In 1999 but certificates not
issued Until 1st qrt 2000
NOTE(1) 0 0 35,030 35,030
Net loss for year ended
12/31/99 (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 Shares Purchased
as treasury stock (6,977,616) 0
Net loss for the period
Ended March 31, 2000 (175,084) (175,084)
----------- ----------- ----------- ----------- -----------
Balance, March 31, 2000 16,784,216 $ 23,762 $8,265,528 $ (964,063) $ 7,325,227
Issuance of Shares of Common
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 (2,999,374) (2,999,374)
----------- ----------- ----------- ----------- -----------
Balance, June 30, 2000 20,074,216 $ 27,052 $8,591,238 $(3,963,437) $ 4,654,853
8/1/00 Common Shares Issued
for services 1,000,000 1,000 399,000 400,000
8/11/00 Common Shares Issued
for services 320,000 320 108,480 108,800
9/1/00 Common Shares Issued
as part of an exchange
of shares 1,000,000 1,000 399,000 400,000
9/27/00 Common Shares Issued
for services 6,667 7 4,527 4,534
9/30/00 Retired all
Treasury Stock 0 (6,978) 0 (6,978)
Net (loss) for the period
ended September 30, 2000 (2,219,832) (2,219,832)
Balance September 30,2000 22,400,883 $22,401 $9,502,245 $(6,183,269) $(3,341,377)
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to the financial statements
<PAGE>
E-REX, INC.
STATEMENT OF CASH FLOWS
STATEMENT OF OPERATIONS
THE NINE MONTHS ENDING SEPTEMBER 30, 2000 AND 1999
FROM INCEPTION (AUGUST 26, 1986) TO SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDING ENDING FROM
SEPTEMBER 30 SEPTEMBER 30 INCEPTION
2000 1999
------------ ------------ ---------
CASH FLOWS FROM (FOR)
---------------------
OPERATING ACTIVITIES
--------------------
<S> <C> <C> <C>
Net income (loss) (5,394,288) (427,916) (6,183,270)
Adjustments to reconcile net income
To net cash provided by(used in)
Operating activities:
Receivables-related parties (2,680) (2,680)
Prepaid expenses $ 5,748 $ 5,748
Depreciation expense $ 207 $ 366 $ 207
Stock issued for service $ 127,175 $ 25,072 $ 317,851
Accounts receivable $ (7,524) $ (7,524)
Accounts payable $ 58,109 $ 65,326 $ 140,184
Loan Payable $ 6,450 0
Other long term liabilities $ 52,232 $ 52,232
Accrued wages&salaries payable $ 9,000 $ 9,000
Accrued management fee $ 10,000 $ 24,652 $ 10,000
Accrued expenses $ 29,936 $ 29,936
Other 19,821 $ (126) 32,371
Accrued payroll taxes $ 5,028 $ 5,028
Deposits with vendors $ (1,767)
Amount due to a director $ 1,423
Notes Receivable $ 16,000
Interest Receivable $ 467
--------------------------------------------------
Total adj. To net income $ 307,052 $ 137,863 $ 592,353
Net cash provided by(used in)
operating activities $(5,087,236) $ (290,053) (5,590,917)
CASH FLOWS FROM (FOR)
---------------------
INVESTING ACTIVITIES
--------------------
Investments $ (550,000) $ 0 $ (550,000)
Purchase of fixed assets $ (83,404) $ (2,403) $ (83,404)
--------------------------------------------------
Net cash provided by (used in)
investing activities $ (633,404) $ (2,403) $ (633,404)
CASH FLOWS FROM (FOR)
---------------------
FINANCING ACTIVITIES
--------------------
Treasury stock $ 0 $ 0
Proceeds from loan $ 409,000 $ 409,000
Payment on loan $ (94,669) $ (94,669)
Proceeds from issuance
of stock $ (4,488) $ 121,666 $ 629,226
Offering costs $ (108,027)
Other 1st qrt adjustments $ 6,107 $ 6,107
Add'l paid in capital $ 1,235,743 $ 1,235,743
Retained earnings $ (143,022) $ (143,022)
Loans to shareholders $ 2,680 $ 2,680
Prepaid Professional Services 4,289,335 4,289,335
--------------------------------------------------
Net cash provided by (used in)
Financing activities $ 5,700,686 $ 121,666 $ 6,226,373
CASH RECONCILIATION
-------------------
Net increase (decrease)
in cash $ (19,954) $ (170,790) 2,052
Beginning cash balance $ 22,006 $ 176,047 $ 0
CASH BALANCE AT
---------------
END OF PERIOD $ 2,052 $ 5,257 2,052
-------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the financial statements
<PAGE>
E-REX, INC.
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(See Independent Accountant'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, 2999
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>
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 September 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 September 30, 2000, the
Company did not have significant tax net operating loss carry forwards (tax
benefits resulting from losses for tax purposes have been fully reserved due to
the uncertainty of a going concern). At September 30, 2000 the Company did not
have any significant deferred tax liabilities or deferred tax assets.
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 September 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, 2999, forward. The following table sets forth
certain results of operations for the periods presented as if the Plantech
business combination had been consummated on the same terms at the Plantech
inception in 1992.
Inception
Jan. 1, 1999 (8/26/86)
To Feb. 20, To Dec. 31,
1999 1999
------------- -------------
Revenues $ -- $ --
Net (Loss) $ (230,954) $ (616,086)
<PAGE>
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.
On August 4, 2000, Crusader Capital Group, Inc. filed a complaint against the
company in civil action number CV-N-411-DWH-RAM in the United States District
Court for the district of Nevada. The company was served with this complaint on
or about August 10, 2000. This complaint alleges undetermined damages for
misrepresentations, omissions, breach of contract and unjust enrichment related
to Crusaders purchase of restricted stock in the company during the first
quarter of 2000.
The company believes the claims made in the complaint are without merit and
intends to defend itself vigorously in 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>
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; issue 6,000,000 shares of stock to
Stockholder Presentations, Inc. per an investor relations contract; and issue
IIBI 1,000,000 shares of restricted common stock.
8. Stockholders' Equity during the period ending 9/30/00
Stock options have been granted by E-Rex to Ultimate Franchise Systems Inc., to
purchase 3,000,000 shares of E-Rex common stock at an exercise price equal to
the average of the closing ask price plus $.01, as quoted on the NASD over-the
counter bulletin board for the five trading days immediately preceding the
closing.
700,000 options were issued to Corporate Service Providers Inc. for the purpose
of providing investment banking services to the company. Terms as per corporate
resolution dated 8/1/00 as follows:
Exercisable at $1.00 during the 1st 12 months from date of issue.
Exercisable at $1.50 during the 2nd 12 months from date of issue.
Options are callable with a 21 day notification by the company if the
stock trades for 20 consecutive business days at a 50% premium to the exercise
price.
E-Rex has also offered $1,000,000 in units of the company's securities pursuant
to its Memorandum of terms dated June 21, 2000. The units consist of either a
Series A 10% Convertible Debenture or a Series B 10% Convertible Debenture
together with an attached warrant to purchase common stock. The transaction is
not a public offering as defined in section 4(2) of the Securities Act of 1933,
and accordingly, the units will not be registered under the Act or laws of any
state but are being offered pursuant to exemptions from registration.
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.
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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27 Financial Data Schedule
