U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OF 15(D) OF THE
EXCHANGE ACT
For the transition period from ______________ to _______________
Commission file number 000-17454
NOXSO CORPORATION
(Exact name of small business issuer as specified in its charter)
VIRGINIA 54-1118334
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
19 MAPLE LANE, RHINEBECK, NEW YORK 12572
(Address of principal executive offices)
(845) 266-4858
(Issuer's telephone number)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the last practicable date:
1,000,000 SHARES OF COMMON STOCK, $0.01 PAR VALUE, AS OF SEPTEMBER 30, 2000
Transitional Small Business Disclosure Format (check one); Yes____ No __X__
Exhibit index on page 13 Page 1 of 15 pages
<PAGE>
NOXSO CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
2000
(Unaudited) June 30, 2000
<S> <C> <C>
Cash $ 1,958 $ 1,958
Recoverable Preference Payments - 20,258
Funds Held By Attorney In Escrow 111,787 98,152
--------------------------------------
Current Assets 113,745 120,368
--------------------------------------
Total Assets $ 113,745 $ 120,368
======================================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities Not Subject To Compromise $ 81,152 $ 81,152
--------------------------------------
81,152 81,152
--------------------------------------
Amounts Due To Shareholders 6,791 -
Common Stock, $.01 Par Value, 20,000,000 10,000 10,000
Shares Authorized, 1,000,000 Shares
Outstanding
Paid In Capital 29,216 29,216
Treasury Stock - -
Retained Deficit (13,414) -
--------------------------------------
Total Stockholders' Equity (Deficit) 32,593 39,216
--------------------------------------
Total Liabilities and Shareholders' Equity $ 113,745 $ 120,368
======================================
</TABLE>
See Notes To Unaudited Consolidated Financial Statements
2
<PAGE>
NOXSO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
September 30, September 30,
2000 1999
<S> <C> <C>
Revenue $ - $ -
-------------------------------------
Legal and Accounting 7,489 -
Corporate Expenses 6,790 28
-------------------------------------
14,279 28
-------------------------------------
Reimbursement for Amounts Previously Disbursed 865 -
Interest Income - 143
-------------------------------------
865 143
-------------------------------------
Net (Loss) / Income $ (13,414) $ 115
=====================================
Loss Per Common Share $ (0.01) $ 0.00
=====================================
Average Shares Outstanding 1,000,000 15,383,468
=====================================
</TABLE>
See Notes To Unaudited Consolidated Financial Statements
3
<PAGE>
NOXSO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
September 30, September 30,
2000 1999
<S> <C> <C>
Cash Flows From Operating Activities:
Net Loss $ (13,414) $ 115
Adjustments to reconcile net loss to net cash used - -
by operating activities:
Change in Current Assets 6,623 -
Change in Amounts Due Shareholders 6,791 -
-----------------------------------
- 115
-----------------------------------
Cash Flows From Investing Activities: - -
-----------------------------------
Cash Flows From Financing Activities: - -
-----------------------------------
Net Change in Cash - 115
Cash at Beginning of Period 1,958 2,162
-----------------------------------
Cash at End of Period $ 1,958 $ 2,277
-----------------------------------
Cash Payments For Interest - -
===================================
Cash Payments For Taxes - -
===================================
</TABLE>
See Notes To Unaudited Consolidated Financial Statements
4
<PAGE>
NOXSO CORPORATION
FORM 10-QSB - SEPTEMBER 30, 2000
NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited, condensed, consolidated financial statements
for the three month periods ended September 30, 2000 and 1999 have been
prepared in accordance with the instructions for SEC Form 10-QSB and,
accordingly, do not include all disclosures required by generally accepted
accounting principles for complete financial statements. In the opinion of
management of NOXSO Corporation ("Company"), all adjustments, consisting of
normal recurring accruals considered necessary for a fair presentation,
have been included.
Interim unaudited financial results should be read in conjunction with the
audited financial statements included in the Company's Annual Report on
Form 10-KSB for the fiscal year ended June 30, 2000.
The results of operations for the three months ended September 30, 2000 are
not necessarily indicative of the operating results to be expected for the
full fiscal year ending on June 30, 2001.
"Cash" and "Funds Held By Attorney In Escrow" for fiscal year 1999 have
been reclassified for comparative purposes. This reclassification affects
amounts previously presented in the Company's fiscal year 1999 Statements
Of Operations and Cash Flows.
2. OTHER MATTERS
As described in Note 3 to the consolidated financial statements
accompanying the Company's annual report on Form 10-KSB, in 1997 a
bankruptcy proceeding was commenced against the Company. In December 1999,
the Bankruptcy Court issued an order (the "Order") confirming the Company's
plan of reorganization under Chapter 11 of the Bankruptcy Code. The Company
was authorized to transfer the corporate entity and to separately transfer
its assets.
The proceeds from these transfers were used for the distributions made
pursuant to the Second Amended Plan for reorganization, which were in full
and final satisfaction, settlement, release and discharge as against the
Company, of any and all Claims and Interests of any nature whatsoever that
arose before December 2, 1999. In connection with such distributions,
Equity Interests based upon ownership of Existing Securities or rights to
acquire Existing Securities, including without limitation vested and
non-vested warrants, options, preemption rights or other rights, were
cancelled on the Consummation Date (May 25, 2000), and the Equity Interests
received nothing on account of those interests.
Funds Held By Attorney In Escrow together with Recoverable Preference
Payments, net of Liabilities Not Subject to Compromise amount to $30,635.
Expenses yet to be incurred by the Company for legal and administrative
work stemming from the pre-consummation phase of the Bankruptcy would be
paid from such escrow balance. A motion for a final decree in the
Bankruptcy case is anticipated to
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<PAGE>
NOXSO CORPORATION
FORM 10-QSB - SEPTEMBER 30, 2000
NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
be filed near the end of calendar year 2000. Following a final decree, the
escrow balance, if any, may be distributed to the creditors.
The consummation date of the Order was effective May 25, 2000, whereupon
the Company, as a corporate entity, recorded the transactions on its books
to give effect to the terms of the Order. These transactions comprised the
elimination of fixed assets (which had been fully reserved), recording the
expected recovery of preference payments, recording of liabilities not
subject to compromise, the liquidation of prepetition liabilities and net
shareholder's equity, and the recapitalization of the Company pursuant to
the Order.
Following the consummation date of May 25, 2000, the Company, through the
corporate entity, continues to exist as a reorganized entity.
As discussed in Note 4 to the consolidated financial statements
accompanying the Company's annual report on Form 10-KSB, continuation of
any business of the reorganized entity is dependent on the Company's
ability to achieve successful future operations.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
NOXSO Corporation (the "Company") was incorporated in Virginia on August 28,
1979. Until June 1997, the Company was principally engaged in developing,
testing, and marketing a process of dry post-combustion emission control
technology which used a regenerable sorbent to remove a high percentage of the
pollutants which cause "acid rain" and ground level ozone from flue gas
generated by burning fossil fuel.
On February 6, 1997, Olin Corporation ("Olin"), FRU-CON Construction Company
("FRU- CON") and Industrial Rubber & Safety Products, Inc. ("Industrial Rubber")
filed an involuntary petition in bankruptcy against the Company in the United
States Bankruptcy Court in the Eastern District of Tennessee (the "Bankruptcy
Court"). On June 4, 1997, the Company (i) consented to the jurisdiction of the
Court and was adjudicated bankrupt and (ii) converted the bankruptcy to a
proceeding under Chapter 11 of the Bankruptcy Code (case no. 97- 19709). The
Company operated as a debtor-in-possession in the bankruptcy proceeding, until
the corporate entity was sold to an investor group on May 25, 2000.
Pursuant to the provisions of the Bankruptcy Code, the Company had the right to
file a plan of reorganization. An order approving the interim
debtor-in-possession financing was entered in August of 1997. The Company
subsequently applied to the Bankruptcy Court for approval of additional
debtor-in-possession financing in an amount of up to $600,000. On August 18,
1997, the Bankruptcy Court entered a final order authorizing the Company to
obtain such financing from a group of lenders (the "DIP Lenders"). Pursuant to
such arrangement, the Company was authorized to grant and had granted to the DIP
Lenders a first priority lien in certain of the Company's patents and laboratory
equipment and was authorized to issue 300,000 shares of its common stock in the
aggregate to the DIP Lenders.
The DIP Lenders loaned $600,000 to the Company pursuant to the financing
arrangement, and the Company issued 300,000 shares of common stock to the DIP
Lenders. The loans from the DIP Lenders bore interest at the rate of 20% per
annum. Interest for a one-year period (a portion of which was refunded to the
extent not earned) and a 5% origination fee were paid from the proceeds.
The Company's initial plan of reorganization included two principal elements.
These two elements were the sale of the Tennessee Facility as well as the
location of a site and the obtaining of funding (including reinstatement of DOE
funding) to construct a commercial-size demonstration of the NOXSO Process.
In September of 1997, the Company executed an asset purchase agreement for the
Tennessee Facility between the Company and Republic Financial Corporation.
However, the Company was unable to effect the commercial demonstration of the
NOXSO process. Accordingly, the
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<PAGE>
Company filed a Second Amended Plan of Reorganization (as modified, the "Plan")
that resulted in liquidation of the Company's assets.
On December 9, 1999, the Bankruptcy Court issued an Order confirming the Plan
under Chapter 11 of the Bankruptcy Code. Pursuant to the terms of the Order, the
Company was authorized to separately transfer the corporate entity and its
assets. The proceeds from these transfers are to be used for the distributions
to be made pursuant to the Plan, which will be in full and final satisfaction,
settlement, release and discharge as against the Company, of any and all claims
and interests of any nature whatsoever that arose before December 9, 1999.
The Plan provided for conveyance of the corporate entity to an investor group
including Mr. Robert Long, an officer, director and shareholder of the Company.
Simultaneously, the Company's sale of assets to FLS MILJO a/s. free and clear of
liens was approved.
In connection with such distributions, equity interests based upon ownership of
existing securities or rights to acquire existing securities, including without
limitation vested and non- vested warrants, options, preemptive rights or other
rights, were cancelled on the consummation date (May 25, 2000).
The Company, as a corporate entity, continues to exist as a reorganized entity.
Pursuant to the Plan, on May 25, 2000, all outstanding shares of the Company
were cancelled and 900,000 shares of common stock were issued to an investor
group consisting of Robert M. Long (360,000 shares), an officer, director and
shareholder of the Company prior to the sale of the corporate entity, Robert
Platek (450,000 shares), and Spencer Levy (90,000 shares). Pursuant to the terms
of the Plan an additional 100,000 shares have been issued, pro-rata, to the
Company's unsecured creditors with allowed claims, except for the Department of
Energy, which elected not to receive shares. As of November 16, 2000, the
Company had a total of 91 shareholders of record.
Messrs. Long, Platek and Levy paid an aggregate of $50,000 cash, on a pro-rata
basis, under the terms of the Plan for the right to acquire control of the
Company and 90% of the outstanding shares of common stock.
In connection with the change of control, all of the Company's officers and
directors, with the exception of Mr. Long, were replaced on May 25, 2000. On May
25, 2000, the investor group elected Mr. Long, a director of the Company and
Secretary of the Company prior to the change of control, as a director and
President of the Company. Additionally, James Platek was
8
<PAGE>
elected as a director and Treasurer of the Company, and Spencer Levy was elected
as a director and Secretary of the Company.
Pursuant to the Company's Second Amended Plan of Reorganization, as of November
16, 2000, the Company has no material assets. As such, the Company can be
defined as a "shell" company, whose sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity. The Board of Directors
of the Company has elected to commence implementation of the Company's principal
business purpose, described below under "Plan of Operation."
The corporate entity was conveyed to the investor group without any significant
assets or liabilities, excluding the value, if any, of any tax loss
carryforwards attributed to the Company. As such, the financial statements of
the Company prior to the sale, including the financial statements included
herein, are not representative of the Company's future operations.
As of the date of this report the Company had no source of income and must rely
entirely upon loans and equity investments from affiliates to pay operating
expenses.
PLAN OF OPERATION
The Company currently has no substantial capital to fund operations or on-going
expenses. The Company must rely upon loans and investments from affiliates to
pay operating expenses. There are no assurances that such affiliates will
continue to advance funds to the Company or will continue to invest in the
Company's securities. In the event the Company is unable to obtain additional
capital or funding it may be unable to identify and/or acquire a suitable
business opportunity. During the twelve months following the filing of this
report, management intends to seek to acquire assets or shares of an entity
actively engaged in a business that generates revenues, in exchange for its
securities. The Company has not identified a particular acquisition target and
has not entered into any negotiations regarding such an acquisition. Management
intends to contact investment bankers, corporate financial analysts, attorneys
and other investment industry professionals through various media. As of the
date of this report, none of the Company's officers, directors, promoters or
affiliates has engaged in any material contact or discussions with any
representative of any other company regarding the possibility of an acquisition
or merger between the Company and such other company.
Depending upon the nature of the relevant business opportunity and the
applicable state statutes governing the manner in which the transaction is
structured, the Company's Board of Directors expects that it will provide the
Company's shareholders with complete disclosure documentation concerning a
potential business opportunity and the structure of the proposed business
combination prior to consummation. Such disclosure is expected to be in the form
of a proxy, information statement, or report.
9
<PAGE>
While such disclosure may include audited financial statements of such a target
entity, there is no assurance that such audited financial statements will be
available. The Board of Directors does intend to obtain certain assurances of
value of the target entity's assets prior to consummating such a transaction,
with further assurances that audited financial statements would be provided
within sixty days after closing. Closing documents will include representations
that the value of the assets conveyed to or otherwise so transferred will not
materially differ from the representations included in such closing documents,
or the transaction will be voidable.
Due to the Company's intent to remain a shell company until a merger or
acquisition candidate is identified, it is anticipated that its cash
requirements will be minimal, and that all necessary capital, to the extent
required, will be provided by the Company's directors or officers. The Company
does not anticipate that it will have to raise capital or acquire any plant or
significant equipment in the next twelve months, unless possibly a merger or
acquisition target is identified.
LIQUIDITY
At September 30, 2000 the Company had working capital of $32,593, compared to
$39,216 at June 30, 2000. During the period, shareholders of the Company
advanced $6,791 to the Company.
The changes in the Company's available working capital relate to the payment of
expenses during the period. The attorney representing the Company in the
bankruptcy proceedings was able to recover certain preference payments, which
reduced the amount of recoverable preference payments to zero and increased the
funds held by attorney in escrow; however, during the period payments were made
from the escrow.
The Company continues to incur liabilities and operating expenses. As part of
the Company's Second Amended Plan, the corporate entity was sold to an investor
group in May 2000. The corporate entity was sold without any liabilities which
were incurred prior to the sale. However, as of September 30, 2000, some of the
Company's liabilities which existed prior to the sale of the Corporate entity
remained unpaid. These liabilities are to be paid from the proceeds of
recoverable preference payments and funds held by attorney in escrow. At
September 30, 2000, funds held by attorney in escrow, net of liabilities not
subject to compromise, amounted to $30,635. Expenses yet to be incurred by the
Company for legal and administrative work attributable to the pre-consummation
phase of the bankruptcy would be paid from this balance. A motion for a final
decree in the bankruptcy case is anticipated near the end of calendar 2000.
Following a final decree, the escrow balance, if any, may be distributed to the
creditors. As such, the Company does not expect to receive any of these funds,
and has effectively been transferred to the investor group with no material net
assets.
Mr. Long, in connection with the purchase and sale of the corporate entity,
engaged auditors and legal counsel prior to the change of control. After the
change of control, the auditors and legal
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<PAGE>
counsel engaged by Mr. Long were engaged by the Company. The Company will
reimburse Mr. Long for professional fees advanced by Mr. Long on the Company's
behalf.
Since the Company has no significant source of revenue, working capital will
continue to be depleted by operating expenses. See " Results of Operations"
below. The Company presently has no external sources of cash and is dependent
upon its management and shareholders for funding.
ASSETS
At September 30, 2000 the Company had total assets of $113,745 compared to total
assets of $120,368 at June 30, 2000. At September 30, 2000, the majority of the
Company's assets consisted of funds held by attorney in escrow. During the
three-months ended September 30, 2000, recoverable preference payments was
reduced to zero; however, funds held by attorney in escrow increased by $13,635
as the net result of the collection of preference payments and the payment of
expenses from the escrow.
As explained above, since the majority of the Company's assets are reserved for
the payment of pre-consummation liabilities, as of the date of this report, the
Company has essentially no assets.
RESULTS OF OPERATIONS
The Company has no current operations and has not generated any revenue from its
operations since the change of control. The Company must rely entirely upon
loans from affiliates to pay operating expenses.
During the three-months ended September 30, 2000 the Company had a net loss of
$13,414 compared to net income of $115, during the three-months ended September
30, 1999. During the three-months ended September 30, 1999, the Company was
operating as a debtor-in-possession in the bankruptcy proceeding and was
essentially dormant. During 1999, the Company incurred corporate expenses of $28
and received interest income of $143. During the three-months ended September
30, 2000, the Company incurred legal and accounting fees in connection with
preparing and filing reports with the Securities and Exchange Commission and
incurred corporate expenses (document conversion and press release) in the
amount of $6,790. These expenses were paid by shareholders of the Company and
have been accounted for as amounts due to shareholders.
Due to the sale of the corporate entity and the elimination of the Company's
assets and debts as a result of the bankruptcy proceedings, as of the date of
this report, the Company essentially has no operations and no source of revenue.
The Company continues to incur professional fees and other expenses. If the
Company does not find a suitable acquisition target or other source of revenue,
the Company will continue to incur net losses and may have to cease operations
entirely.
11
<PAGE>
As described in Note 2 of the Note to the Unaudited Condensed Consolidated
Financial Statements, near the end of fiscal year 2000, the Company liquidated
its assets pursuant to an Order of the Bankruptcy Court. The Company presently
does not have sufficient liquid assets to finance any significant level of
operations and without further financial support from shareholders or others,
may not be able to meet its obligations as they become due and, accordingly, may
not be able to develop any business operations.
The Company's ability to continue operations is dependent upon its ability to
generate sufficient cash flow to meet its obligations on a timely basis, to
identify and close an acquisition with a suitable target company, obtain
additional financing or refinancing as may be required, and ultimately to attain
profitability. There are no assurances that the Company will be able to identify
a suitable acquisition target, close such acquisition, obtain any such financing
or, if the Company is able to obtain additional financing, that such financing
will be on terms favorable to the Company. The inability to obtain additional
financing when needed will have a material adverse effect on the Company's
operating results.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
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<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
A) EXHIBITS
REGULATION S-B CONSECUTIVE
NUMBER EXHIBIT PAGE NUMBER
<S> <C> <C>
2 Debtor's Second Plan of Reorganization with
Modifications Through December 2, 1999, Order
of Judge R. Thomas Stinnett dated December 9,
1999 and Order Approving Disclosure Statement
and Confirming Second Amended Plan of
Reorganization Under Chapter 11 of the Bankruptcy
Code (3)<F3> N/A
3(i) Articles of Incorporation, as amended (1)<F1> N/A
3(ii) Amended and Restated Bylaws (1)<F1> N/A
11 Statement re computation of per share earnings (2)<F2> N/A
27 Financial Data Schedule 15
--------------------------------
<FN>
<F1>
(1) Incorporated by reference to the Company's Registration Statement on Form S-1 filed
with the Commission on January 13, 1989, file No. 33-26541.
<F2>
(2) See Part I - Financial Statements.
<F3>
(3) Incorporated by reference to the Exhibits previously filed with the
Company's Current Report on Form 8-K dated May 23, 2000.
</FN>
</TABLE>
B) REPORTS ON FORM 8-K:
None.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NOXSO CORPORATION
(Registrant)
Date: November 16, 2000 By: /s/ James Platek
------------------------- -----------------------------------
James Platek, Director, Treasurer,
Principal Financial Officer and
Principal Accounting Officer
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Exhibit 27
Financial Data Schedule
15
