UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB-A1
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: June 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ------ to ---------------
Commission File Number 33-3358-NY
CENTRAXX, INC.
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(Name of small business issuer in its charter)
Nevada 88-0224219
------------------------ ------------------
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2700 Argentia Road, Suite #1000
Mississauga, Ontario Canada L5N 5V4
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (905) 826-9988
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes [x] No [ ] (2) Yes [x] No [ ]
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Check whether the issuer has 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 No
--- ---
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of outstanding shares of each of the Issuer's classes of
common equity, as of the latest practicable date:
June 30, 2000
common - 17,946,481 shares
Transitional Small Business Disclosure Format (Check One) : Yes [x] No [ ]
Item 1. Financial Statements
The consolidated financial statements of the Company required to be filed
with this Form 10-QSB Quarterly Report were prepared by management and
reviewed by the Company's Independent Auditor and commence on the following
page, together with related Notes. In the opinion of management, these
Consolidated Financial Statements fairly present the financial condition of
the Company.
<TABLE>
CENTRAXX, INC.
(A DEVELOPMENT STAGE COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. Dollars)
(Unaudited)
<CAPTION>
June 30, December 31,
2000 1999
<S> <C> <C>
Assets
Current
Cash 36,808 234
Prepaid expenses 12,662 42,231
49,470 42,465
Capital assets 255,577 191,413
Other assets 19,056 16,671
324,103 250,549
LIABILITIES
Current
Accounts payable and accrued
liabilities 1,192,119 508,724
Short Term Loan 299,244
Long Term Convertible Debenture 2,000,000 906,319
3,491,363 1,415,043
SHAREHOLDERS' DEFICIENCY
Capital Stock 17,946 17,946
Contributed Surplus 2,498,958 2,498,958
Accumulated other comprehensive income
(loss) 2,731 (3,903)
Deficit (5,686,895) (3,677,495)
(3,167,260) (1,164,494)
324,103 250,549
</TABLE>
<TABLE>
CENTRAXX, INC
(A Development Stage Company
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. Dollars)
(Unaudited)
<CAPTION>
Three Months Ending June 30 2000 1999
<S> <C> <C>
Sales $ - $ -
Cost of sales - -
Gross margin - -
Expenses
Marketing and public relations 44,296 42,280
Management fees 60,130 45,583
Professional fees 190,098 463
Salaries and other administration 228,366 161,610
Research and development costs 752,239 175,643
Depreciation and amortization 19,688 16,927
Interest on convertible debentures 41,571 -
Foreign exchange loss 8,495 -
1,344,883 442,506
Net loss $ 1,344,883 $ 442,506
Net loss per share, basic and
diluted (Note 1) $ (0.07) $ (0.02)
Weighted average shares, basic
and diluted 17,946,481 17,907,081
See accompanying notes to the condensed consolidated finanical statements.
</TABLE>
<TABLE>
CENTRAXX, INC
(A Development Stage Company
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. Dollars)
(Unaudited)
<CAPTION>
Aug.8, 1997 to
June 30, 2000
Six Months Ending June 30 2000 1999 Cumulative
<S> <C> <C> <C>
Sales $ - $ - $ -
Cost of sales - - -
Gross margin - - -
Expenses
Marketing and public relations 100,155 67,328 529,386
Management fees 121,774 89,964 416,959
Professional fees 205,843 31,727 477,163
Salaries and other administration 391,291 303,294 1,396,820
Research and development costs 1,072,397 356,194 2,577,494
Depreciation and amortization 39,967 33,628 195,664
Interest on convertible debentures 69,347 - 78,151
Foreign exchange loss 8,625 - 15,258
2,009,399 882,135 5,686,895
Net loss $ 2,009,399 $ 882,135 $5,686,895
Net loss per share, basic and
diluted (Note 1) $ (0.11) $ (0.05)
Weighted average shares, basic
and diluted 17,946,481 17,907,081
See accompanying notes to the condensed consolidated finanical statements.
</TABLE>
<TABLE>
Centraxx, Inc.
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
(Unaudited)
Six Months Ending June 30 2000 1999
<S> <C> <C>
Cash flows from (applied to)
Operating
Net loss $(2,009,399) $(882,135)
Depreciation and amortization 39,967 33,628
(1,969,432) (848,507)
Changes in
Prepaid expenses 29,569 13,186
Accounts payable and accrued liabilities 683,395 186,354
(1,256,468) (648,967)
Financing
Issue of shares - 655,826
Issue of convertible debenture 1,093,681 -
Issue of short term loans 299,244 -
1,392,925 655,826
Investing
Purchase of capital assets (103,355) (12,470)
Additions to Other assets (2,385) (1,333)
(105,740) (13,803)
Foreign currency effect on cash 5,857 -
Net increase in cash during the year 36,574 (6,944)
Cash, beginning of period 234 142
Cash, end of period $ 36,808 $ (6,802)
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
Centraxx, Inc.
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
June 30, 2000
1. General
The unaudited condensed consolidated financial statements have been prepared
on the same basis as the audited consolidated financial statements and, in the
opinion of management, reflect all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation for each of the periods
presented. The results of operations for interim periods are not necessarily
indicative of results to be achieved for full fiscal years.
As contemplated by the Securities and Exchange Commission (SEC) under Rule
10-01 of Regulation S-X, the accompanying consolidated financial statements
and
related footnotes have been condensed and do not contain certain information
that will be included in the Company's annual consolidated financial
statements and footnotes thereto. For further information, refer to the
consolidated financial statements and related footnotes for the year ended
December 31, 1999 included in the Company's Annual Report on Form 1 O-KSB.
Basis of presentation
The condensed consolidated financial statements include the accounts of
Centraxx, Inc. and its wholly owned subsidiary, Centraxx Corp.
On May 18, 1999, Centraxx, Inc. acquired 100% of the outstanding common stock
of Centraxx Corp. from various shareholders (the Acquisition). The Acquisition
resulted in the owners and management of Centraxx Corp. having effective
control of the combined entity.
Under reverse takeover accounting, the post reverse-acquisition comparative
historical financial statements of the "legal acquirer" (Centraxx, Inc.), are
those of the "legal acquiree" (Centraxx Corp.) (i.e. the accounting acquirer).
Income taxes
Income taxes for the interim periods were computed using the effective tax
rate estimated to be applicable for the full fiscal year, which is subject to
ongoing review and evaluation by management.
Loss per share
The Company reports earnings per share in accordance with the provisions of
SFAS No. 128, Eamings Per Share. SFAS No. 128 requires presentation of basic
and diluted earnings per share in conjunction with the disclosure of the
methodology used in computing such earnings per share. Basic earnings per
share excludes dilution and is computed by dividing income available to common
shares by the weighted average common shares outstanding during the period.
Diluted earnings per share takes into account the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised and converted into common stock.
<PAGE>
Centraxx, Inc.
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
June 30, 2000
1. General (continued)
There were stock options outstanding at June 30, 2000, to purchase 3,222,500
shares of common stock which were not included in the computation of diluted
earnings per share because to do so would be antidilutive.
Basic weighted average shares outstanding for the period were 17,946,481 (1999
17,907,081).
2. Subsequent event
On July 13, 2000, the Company completed the negotiation of an $18 million
Private Placement with non-related parties. Under the terms of the agreement
the company may draw down up to $1.5 million per month during a twelve
consecutive month period, subject to specific draw down conditions. The share
issuance price for each draw down is to be based on the average trading price
of Centraxx's common stock during the applicable 22 trading day period that
precedes the closing of each draw down, discounted not less than 8% and not
more than 13% from the volume weighted average price during that period,
depending on which market Centraxx's common stock is listed or quoted.
Centraxx may commence the draw downs once it has filed an S-1 registration
statement with the Securities and Exchange Commission and it has been declared
effective.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan or Operation.
Plan of Operation
-----------------
Centraxx is a company that is developing two-way wireless data communications,
with a specialization in location technologies. The Company is the first in
the industry to have developed a low cost, tracking, locating and monitoring
system utilizing revolutionary UNI-POINT (TM) technology with numerous
network-based and stand-alone applications. The UNI-POINT technology is
proprietary and patents are pending. There can be no assurances that any
patents will issue or that, if issued, the Company will have sufficient
resources to protect its intellectual property rights.
The Centraxx System utilizes radio frequency in a unique configuration of data
and radar communication to track, locate, contain or monitor vehicles, cargo,
and equipment. The hardware consists of a receiver or Base Station and an
Electronic Location Tag ("Tag"). The object to be secured is tagged and the
Base Station monitors the relative position of the Tag. A network of Base
Stations enables the Centraxx System to monitor the location of the tagged
object over the network coverage area. This process occurs on a real-time
basis utilizing UNI-POINT tracking. UNI-POINT or single-point tracking
represents a breakthrough in the industry, as it is more reliable and
substantially more cost effective than alternative conventional triangulation
systems such as Global Positioning Satellite Systems. Market research
indicates that the Centraxx product is significantly less expensive than its
nearest competitor in the industry while offering a more reliable and accurate
system.
The Centraxx product is able to track and locate a tagged vehicle to within 10
meters. The system is self-arming so that a theft is detected while still in
progress and will automatically prompt action by a monitoring center and
relevant authorities. The Centraxx product will be offered with an optional
PLUS service in order to further differentiate the Centraxx product from its
competitors. Market research indicates that this combination of vehicle
tracking and Roadside/Emergency Notification will provide product acceptance
by a security conscious consumer market.
Although management believes that there may be numerous potential applications
for Centraxx's technology, Centraxx intends initially to focus its efforts on
the stolen vehicle tracking and recovery industry by introducing a more
accurate, reliable and affordable product utilizing the UNI-POINT technology.
The Company has entered into a sales and market agreement with major
insurance companies and is currently in advanced negotiations with other major
insurance companies, auto clubs, and automobile distributors to form for this
market. The Company has entered into some geographic joint ventures and is
negotiating with other joint venture partners to form alliances to quickly
penetrate global market. There can be no assurances that any agreements will
be obtained or that if will provide material financial benefit to the company.
In future, the Company plans to leverage its technology advantages and network
capacity to become a highly diversified wireless communications company by
introducing new products and services such as LifeLink, fleet management,
personal security and asset tracking, all of which take advantage of the
Centraxx flexible platform technology.
The Company's focus is on research and development of its UNI-POINT
technology, the engineering sample of which was successfully demonstrated on
December 9, 1999. The enhancement, miniaturization to commercialize the
technology is under development. A regional network rollout consisting of
multiple base stations will be commencing within the next nine months at that
time revenue is expected to commence. The technology can be deployed to
provide effective solutions for safety, security, and two-way wireless data
communication and location information. The Company has not yet generated any
revenues except some deposits from potential joint venture partners.
Results of Operations
---------------------
For three months ended June 30, 2000 compared to June 30, 1999
--------------------------------------------------------------
The Company generated a gross loss of $1,344,883 during the second quarter
compared to the corresponding 1999 second quarter loss of $442,506.
Total general and administrative expenses were $522,890 for the three month
period ending June 30, 2000, which represented an increase of $272,954 over
the same period last year. Principal reasons for this increase included higher
payroll/benefit costs resulting from headcount growth and increases in fees
incurred for professional services.
The Company's research and product development costs were $752,239 for the
second quarter of fiscal year 2000 compared to $175,643 during the same
period in 1999. This $576,596 increase was primarily related to planned
manpower growth and higher R&D consulting charges. The Company is modifying
both product design and hardware configurations, in order to meet production
cost targets and to enhance future applications of the UNI-POINT technology.
The Company accrued $41,571 debenture interest to a related party during
three months ended June 30, 2000. Amortization incurred was not materially
changed between the respective periods.
For six months ended June 30, 2000 compared to June 30, 1999
------------------------------------------------------------
The current six months gross loss was $2,009,399 compared to a loss of
$882,135 for the corresponding 1999 period.
General and administrative costs increased by $326,750 over the corresponding
period in 1999 and totaled $819,063 for the six month period ending June 30,
2000. Salary/benefit related expenses and professional fees accounted for over
80% of the general and administration cost increases.
The Company's research and product development costs increased by $716,203
during the first half of fiscal year 2000, as compared to the same period in
1999. This increase can be attributed to salary expenses relating to growth in
technical and engineering head count and to growth in research and development
consulting fees. The Company's total investment in research and product
development since inception has been $2,577,494, representing approximately
47% of the companies operating cash activities.
The Company accrued $69,347 debenture interest to a related party during six
months ended June 30, 2000. Amortization incurred was not materially changed
between the respective periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company completed negotiations on an $18 million Private Placement with
non-related parties on July 18, 2000. Under the terms of the agreement the
Company may draw down up to $1.5 million per month during a 12 consecutive
month period, subject to specific draw down conditions. The share issuance
price for each draw down is to be based on the average trading price of
Centraxx's common stock during the applicable 22 trading day period that
precedes the closing of each draw down, discounted not less than 8% and not
more than 13% from the volume weighted average price during that period,
depending on which market Centraxx's common stock is listed of quoted.
Centraxx may commence the draw downs once it has filed an S-1 registration
statement with the Securities and Exchange Commission, and it has been
declared effective.
This offering will provide funds required to sustain operations for the
balance of the year and will also allow for the implementation of the
Company's UNI-POINT technology in the corporate markets of Southern Ontario,
Canada and Southern California, as well as for the Company's operating capital
requirements. Thereafter, the Company expects that it will need to seek
additional capital through one or more public or private offerings of debt or
equity. There can be no assurance that the Company will be successful in
obtaining any such funds on terms acceptable to it, if at all
The Company is in the process of searching for a President that
it expects will be hired in the next quarter of the current fiscal year. In
the interim, Mr. Michael Ivezic, the Managing Director of Frankopan & Co.,
Inc, is providing overall management of the Company.
RISKS AND UNCERTANTIES
As of the date of this Report, the Company anticipates that its technology
will not be available for sale or distribution for at least the next two
quarters. The Company has no established source of revenues and is dependent
on its ability to raise further funding. There can be no assurance that the
Company will be successful in obtaining any funding at reasonable terms.
There can be no assurance that the Company will be able to complete the
commercial development of its technology as of that time, or at any time, or
that the Company will be able to sell or distribute its UNI-POINT technology
to generate profitable operations at that time or in the foreseeable future.
There can be no assurance that the technology will be successfully released to
the market or that the Company will profit therefrom.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None, not applicable.
Item 2. Changes in Securities.
None, not applicable.
Item 3. Defaults Upon Senior Securities.
None, not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None, not applicable.
Item 5. Other Information.
None, not applicable.
Item 6. Exhibits and Other Reports on Form 8-K.
(a) Exhibits.
27 Financial Data Schedule
Annual Report on Form 10-KSB for the calendar year ended December
31, 1999, incorporated herein by reference.
(b) Reports on Form 8-K.
None, not applicable.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CENTRAXX, INC.
Date: 8/15/2000 /s/Mike Ivesic
-------------- -----------------------------
Mike Ivesic, President and Director
Pursuant to the requirements of the Securities and Exchange Act of 1934,
as amended, this Report has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated:
CENTRAXX, INC.
Date: 8/15/2000 /s/Mike Ivesic
-------------- -----------------------------
Mike Ivesic, President and Director
