UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
(Mark one)
XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
---- OF 1934
For the quarterly period ended April 30, 2000
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
----
For the transition period from ______________ to _____________
Commission File Number: 000-19708
Phoenix Resources Technologies, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 84-1034982
(State of incorporation) (IRS Employer ID Number)
15945 Quality Trail North, Scandia MN 55073
-------------------------------------------
(Address of principal executive offices)
(888) 709-3975
--------------
(Issuer's telephone number)
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 registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES X NO
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: May 26, 2000: 9,665,100
Transitional Small Business Disclosure Format (check one): YES NO X
--- ---
<PAGE>
Phoenix Resources Technologies, Inc.
Form 10-QSB for the Quarter ended April 30, 2000
Table of Contents
Page
Part I - Financial Information
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 16
Part II - Other Information
Item 1 Legal Proceedings 19
Item 2 Changes in Securities 19
Item 3 Defaults Upon Senior Securities 22
Item 4 Submission of Matters to a Vote of Security Holders 22
Item 5 Other Information 22
Item 6 Exhibits and Reports on Form 8-K 22
Signatures 22
2
<PAGE>
S. W. HATFIELD, CPA
certified public accountants
Member: American Institute of Certified Public Accountants
SEC Practice Section
Information Technology Section
Texas Society of Certified Public Accountants
Item 1 - Part 1 - Financial Statements
Accountant's Review Report
Board of Directors and Shareholder
Phoenix Resources Technologies, Inc.
We have reviewed the accompanying balance sheets of Phoenix Resources
Technologies, Inc. (a Nevada corporation) as of April 30, 2000 and 1999 and the
accompanying statements of operations and comprehensive income for the six and
three months ended April 30, 2000 and 1999 and statements of cash flows for the
six months ended April 30, 2000 and 1999. These financial statements are
prepared in accordance with the instructions for Form 10-QSB, as issued by the
U. S. Securities and Exchange Commission, and are the sole responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression on an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be 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 A to the
financial statements, the Company has no viable operations or significant assets
and is dependent upon significant shareholders to provide sufficient working
capital to maintain the integrity of the corporate entity. These circumstances
create substantial doubt about the Company's ability to continue as a going
concern and are discussed in Note A. The financial statements do not contain any
adjustments that might result from the outcome of these uncertainties.
S. W. HATFIELD, CPA
Dallas, Texas
May 26, 2000
Use our past to assist your future sm
P. O. Box 820395 9002 Green Oaks Circle, 2nd Floor
Dallas, Texas 75382-0395 Dallas, Texas 75243-7212
214-342-9635 (voice) (fax) 214-342-9601
800-244-0639 [email protected]
3
<PAGE>
<TABLE>
<CAPTION>
Phoenix Resources Technologies, Inc.
Balance Sheets
April 30, 2000 and 1999
(Unaudited)
April 30, April 30,
2000 1999
------------ ------------
<S> <C> <C>
ASSETS
------
Current Assets
Cash on hand and in bank $ 15,922 $ -
------------ ------------
Other Assets
Option to acquire an unrelated entity 264,871 -
------------ ------------
Total Assets $ 280,793 $ -
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable to related party $ 10,097 $ -
Judgment payable - 306,621
------------ ------------
Total current liabilities 10,097 306,621
------------ ------------
Commitments and Contingencies
Shareholders' Equity Preferred stock - $0.001 par value.
50,000,000 shares authorized.
Series A - 5.0% annual dividend, non-
cumulative. Convertible into 1,000,000
shares of common stock after March 29,
2000. -0- and 200,000 shares issued and
outstanding, respectively - 200
Common stock - $0.001 par value.
100,000,000 shares authorized.
9,665,100and 272,400 shares issued
and outstanding, respectively 9,665 272
Additional paid-in capital 17,483,322 13,338,940
Accumulated deficit (16,418,291) (12,672,633)
------------ ------------
1,074,696 666,779
Stock subscription receivable (70,600) (240,000)
Treasury stock - at cost (560,000 shares) (733,400) (733,400)
------------ ------------
Total shareholders' equity 270,696 (306,621)
------------ ------------
Total Liabilities and Shareholders' Equity $ 280,793 $ -
============ ============
</TABLE>
See Accountant's Review Report.
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
Phoenix Resources Technologies, Inc.
Statements of Operations and Comprehensive Income
Six and Three months ended April 30, 2000 and 1999
(Unaudited)
Six months Six months Three months Three months
ended ended ended ended
April 30, April 30, April 30, April 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $ - $ - $ - $ -
---------- ---------- ---------- ----------
Expenses
Consulting, legal and
professional fees 2,154,185 - 2,139,252 -
Management fees to
related party 210,000 - 105,000 -
Other general and
administrative fees 53,031 - 48,900 -
Compensation expense for
issuances of common
stock at less than
"fair value" 1,320,075 - 1,177,325 -
---------- ---------- ---------- ----------
Total expenses 3,737,291 - 3,470,477 -
---------- ---------- ---------- ----------
Loss from continuing operations
before income taxes and other
income (expenses) (3,737,291) - (3,470,477) -
Other income (expenses)
Interest income and other 12 - 12 -
Interest on judgment payable - (13,310) - (6,555)
---------- ---------- ---------- ----------
Loss before income taxes (3,737,279) (13,310) (3,470,465) (6,655)
Income tax expense - - - -
---------- ---------- ---------- ----------
Net Loss (3,737,279) (13,310) (3,470,465) (6,655)
Other comprehensive income - - - -
---------- ---------- ---------- ----------
Comprehensive Loss $(3,737,279) $(13,310) $(3,470,465) $ (6,555)
========= ========== =========== ==========
Loss per share of common stock
outstanding, computed on net loss
- basic and fully diluted $(0.40) $(0.01) $(0.37) $(0.02)
==== ==== ==== ====
Weighted-average number of
shares outstanding 9,301,281 272,400 9,466,156 272,400
========= ========== =========== ==========
</TABLE>
See Accountant's Review Report.
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
Phoenix Resources Technologies, Inc.
Statements of Cash Flows
Six months ended April 30, 2000 and 1999
(Unaudited)
Six months Six months
ended ended
April 30, April 30,
2000 1999
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities
Net loss $(3,737,279) $ (13,310)
Adjustments to reconcile net income to net cash
provided by operating activities
Compensation expense for issuances of
common stock at less than "fair value" 1,320,075 -
Common stock issued for consulting expenses 2,090,175 -
Increase (decrease) in
Accounts payable to a related party 10,097 -
Judgment payable - 13,310
----------- -----------
Net cash provided by operating activities (316,932) -
----------- -----------
Cash Flows from Investing Activities
Cash advanced for option to acquire
an unrelated entity (261,646) -
----------- -----------
Cash Flows from Financing Activities
Payment of judgments payable (300,000) -
Cash received on stock subscription receivable 300,000 -
Cash received on sales of common stock and
exercise of stock options 911,000 -
Cash paid to facilitate sale of common stock (16,500) -
----------- -----------
Net cash provided by financing activities 594,500 -
----------- -----------
Increase in Cash and Cash Equivalents 15,922 -
Cash and cash equivalents at beginning of period - -
----------- -----------
Cash and cash equivalents at end of period $ 15,922 $ -
=========== ===========
Supplemental Disclosures of Interest and Income Taxes Paid
Interest paid during the period $ - $ -
=========== ===========
Income taxes paid (refunded) $ - $ -
=========== ===========
Supplemental Disclosure of Non-Cash Investing
and Financing Activities
Common stock issued for option to acquire
an unrelated entity $ 3,225 $ -
=========== ===========
</TABLE>
See Accountant's Review Report.
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
Phoenix Resources Technologies, Inc.
Notes to Financial Statements
Note 1 - Basis of Presentation
Phoenix Resources Technologies, Inc. (Company) was originally incorporated in
1986 as Firma, Inc. under the laws of the State of Colorado as a corporation
organized to take advantage of unspecified business opportunities.
Pursuant to a plan of merger and reorganization, the Company, as a Colorado
corporation, merged into Hughes Resources, Inc., a Nevada corporation, on June
27, 1995. The purpose of this merger was to redomicile the Company from Colorado
to Nevada. The Nevada corporation had been formed solely for this reorganization
purpose and had no assets, liabilities or operations prior to the merger. The
Articles of Incorporation of the surviving Nevada corporation were amended to
increase the authorized number of common shares to 100,000,000 with a par value
of $0.001 each and to increase the authorized number of preferred shares to
50,000,000 with a par value of $0.001 per share.
The Company has had no operations since the year ended October 31, 1996 and no
operating assets since the year ended October 31, 1997. Accordingly, the Company
became solely dependent upon management and/or significant shareholders to
provide sufficient working capital to preserve the integrity of the corporate
entity at this time. If feasible, it is the intent of management and significant
shareholders to provide sufficient working capital, if needed, necessary to
support the working capital needs of the Company until adequate financing is in
place.
On November 3, 1999, the Company acquired an option to purchase up to 100% of
HHPN Development Corporation (HHPN), an unrelated company located in San Diego,
California. HHPN has developed a software program that is used to develop
database applications on the Internet. On February 10, 2000, the Company
exercised its option to purchase 50.0% of HHPN and has options to purchase the
remaining 50.0% through February 10, 2002.
During interim periods, the Company follows the accounting policies set forth in
its Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act
of 1934 on Form 10-KSB filed with the U. S. Securities and Exchange Commission.
The information presented herein does not include all disclosures required by
generally accepted accounting principles and the users of financial information
provided for interim periods should refer to the annual financial information
and footnotes contained in its Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934 on Form 10-KSB when reviewing the interim
financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the instructions for Form 10-QSB, are unaudited and
contain all material adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial condition, results of
operations and cash flows of the Company for the respective interim periods
presented. The current period results of operations are not necessarily
indicative of results which ultimately will be reported for the full fiscal year
ending October 31, 2000.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
7
<PAGE>
Phoenix Resources Technologies, Inc.
Notes to Financial Statements - Continued
Note 2 - Summary of Significant Accounting Policies
1. Cash and cash equivalents
-------------------------
The Company considers all cash on hand and in banks, including accounts in
book overdraft positions, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be
cash and cash equivalents.
Cash overdraft positions may occur from time to time due to the timing of
making bank deposits and releasing checks, in accordance with the Company's
cash management policies.
2. Income taxes
------------
The Company utilizes the asset and liability method of accounting for
income taxes. At April 30, 2000 and 1999, the deferred tax asset and
deferred tax liability accounts, as recorded when material, are entirely
the result of temporary differences. Temporary differences represent
differences in the recognition of assets and liabilities for tax and
financial reporting purposes, primarily the allowance for doubtful
accounts, accumulated depreciation and certain liability items. A 100%
valuation allowance was provided against deferred tax assets, where
applicable.
3. Earnings (loss) per share
-------------------------
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted_average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later. As of April 30, 2000 and 1999, the Company's
outstanding warrants and/or options are deemed to be anti_dilutive due to
the Company's net operating loss position.
Note 3 - Option to Acquire an Unrelated Entity
On November 3, 1999, the Company acquired an option to purchase up to 100% of
HHPN Development Corporation (HHPN), an unrelated company located in San Diego,
California. HHPN has developed a software program that is used to develop
database applications on the Internet. On February 10, 2000, the Company
exercised its option to purchase 50% of HHPN for $2,500,000. The Company also
has options to purchase an additional 25% interest in HHPN for $50,000,000 and
the remaining 25% interest for $125,000,000. These options expire on February
10, 2002.
The Company is also required to make minimum payments of $17,000.00 per month,
up to a maximum of $200,000.00 per month pursuant to a budget acceptable to the
board of HHPN and the Company. The Company can at any time, and at its sole
discretion, elect to increase its monthly payments and/or pay HHPN in full. As
of April 30, 2000, the Company has paid a total of approximately $265,000
towards its obligations under this acquisition agreement.
8
<PAGE>
Phoenix Resources Technologies, Inc.
Notes to Financial Statements - Continued
Note 4 - Loan payable
In November 1999, the Company executed a $150,000 US$ revolving demand note
payable to it's President and Chief Executive Officer. The note bears interest
at 6.5%. At April 30, 2000, there is no outstanding balance on this note
payable.
Note 5 - Preferred Stock Transactions
On October 4, 1999, a former officer of the Company and controlling party of an
entity owning approximately 200,000 shares of Class A Preferred Stock tendered
100% of the issued and outstanding shares of Class A Preferred Stock to the
Company for cancellation with no further consideration being due to the
tendering party. The par value of these issued and outstanding shares was
credited to additional paid-in capital upon their cancellation.
Note 6 - Common Stock Transactions
On October 15, 1999, at a Special Meeting of the Shareholders, a 100 for 1
reverse split of the issued and outstanding common stock was approved. The
effects of this action are reflected in the accompanying financial statements as
of the first day of the first period presented.
In September 1997, the Company, in an effort to seek and obtain a suitable
merger or acquisition agreement with an on-going privately owned business,
issued 15,000,000 pre-split shares (150,000 post reverse split shares) of
unregistered, restricted common stock into the escrow account of the Company's
then corporate attorney under a subscription agreement. The attorney was
responsible for reviewing the Company's books and records, reviewing and
updating the Company's corporate status, procuring the services of a qualified
independent certified accounting firm to audit the Company's financial
statements, facilitating the filing of all delinquent reports with the U.S.
Securities and Exchange Commission and evaluating potential private companies
for either merger or acquisition. The Company's common stock had an estimated
market trading price of approximately $0.04 per share on the date of the
issuance of these shares. Due to the restricted nature of the shares issued into
escrow, the Stock Subscription Agreement was valued at approximately $0.016 per
share, or approximately $240,000 in total, as the "fair value" of this
transaction. The Stock Subscription Agreement was settled upon the successful
merger with or acquisition of a suitable private company.
In September 1999, in anticipation of a transaction involving a change in
control of the Company, the Company's Board of Directors and the Company's
former corporate attorney agreed to reprice this stock subscription agreement to
$0.001 per share, which equals the stated par value of the common stock, as
there had been a deterioration in the quoted price of the Company's common stock
and approximately two (2) years of no operations in the Company. The final
settlement of the stock subscription agreement was a charge of approximately
$15,000 to operations for the various services performed by the Company's former
corporate attorney.
9
<PAGE>
Phoenix Resources Technologies, Inc.
Notes to Financial Statements - Continued
Note 6 - Common Stock Transactions - continued
On October 27, 1999, the Company entered into a Stock Acquisition Agreement with
Ben Traub, a related third party for the purchase of 9,000,000 post-reverse
split shares of restricted, unregistered common stock for total proceeds of
$300,000. The proceeds, when received, were allocated to settle the outstanding
judgment against the Company for $200,000 and to pay $100,000 to retire the
Forbearance Agreement with the Agricultural Production Credit Association
(AgPCA), which was triggered by the execution of the Stock Acquisition
Agreement. As of April 30, 2000, all amounts due under this Agreement have been
received by the Company and the related obligations have been satisfied.
On February 10, 2000, the Company sold 80,000 shares at a price of $2.50 per
share for total gross proceeds of $200,000. As part of the placement, 6,000
warrants were issued and fees of $16,500 were paid. The holder of the warrant is
entitled to purchase the common stock of the Company at a price of $3.00 subject
to adjustment, through February 10, 2001.
Note 7 - Stock Options
On December 17, 1999, the Company filed a Form S-8 Registration Statement under
The Securities Act of 1933 with the U. S. Securities and Exchange Commission to
register 900,000 post-reverse split shares of common stock pursuant to the
Company's 1999 Nonqualifying Stock Option Plan (1999 Plan). As stated in the
1999 Plan document, "This [1999 Plan is] for persons employed or associated with
the Company, including without limitation any employee, director, general
partner, officer, attorney, accountant, consultant or advisor, is intended to
advance the best interest of the Company by providing additional incentive to
those persons who have a substantial responsibility for its management, affairs,
and growth by increasing their proprietary interest in the success of the
Company, thereby encouraging them to maintain their relationships with the
Company."
On December 17, 1999, the Company granted options to purchase 200,000 shares of
the Company's common stock at an exercise price of $3.00 per share under the
1999 Nonqualifying Stock Option Plan to its President. The options were granted
in consideration of the value the President and his Board brought to the Company
since their takeover on October 30, 1999. Additionally, the Company granted
options to purchase 100,000 shares each to board members, Judee Fayle and Robert
Seitz, at an exercise price of $3.00 per share. The decision of where to set the
exercise price was based on the pre-determined plan (prior to takeover) to grant
options to the board as close as possible to the going rate for the Company's
stock prior to takeover. The average closing price of the Company's stock for
the ten month period prior to takeover was $2.27, after taking the reverse stock
split into consideration. On April 28, 2000, Ben Traub, Robert Seitz, and Judee
Fayle, all officers and directors of the Company, rescinded an aggregate total
of 298,000 of these unexercised options.
On January 5, 2000, options to purchase 2,000 common shares were exercised by
Ben Traub, an officer and a director of the Company, and the shares issued for
total proceeds of $6,000 to the Company. The quoted market price of the
Company's stock at the date of exercise was approximately $8.625. The difference
between the exercise price and the market price of the Company's stock was
charged to operations on the exercise date for the above exercise of stock
options.
10
<PAGE>
Phoenix Resources Technologies, Inc.
Notes to Financial Statements - Continued
Note 7 - Stock Options - continued
On January 24, 2000, options to purchase 5,000 common shares were exercised by
Rob Seitz, an officer and a director of the Company, and the shares were issued
for total proceeds of $15,000 to the Company. The quoted market price of the
Company's stock at the date of exercise was approximately $11.00. The difference
between the exercise price and the market price of the Company's stock was
charged to operations on the exercise date for the above exercise of stock
options. On January 24, 2000, options to purchase 5,000 common shares were
exercised by Judee Fayle, an officer and a director of the Company. The shares
were issued for total proceeds of $15,000 to the Company. The quoted market
price of the Company's stock at the date of exercise was approximately $11.00.
The difference between the exercise price and the market price of the Company's
stock was charged to operations on the exercise date for the above exercise of
stock options.
On January 28, 2000, options to purchase 5,000 common shares were exercised by
Rob Seitz, an officer and a director of the Company, and the shares were issued
for total proceeds of $15,000 to the Company. The quoted market price of the
Company's stock at the date of exercise was approximately $11.75. The difference
between the exercise price and the market price of the Company's stock was
charged to operations on the exercise date for the above exercise of stock
options. On January 28, 2000, options to purchase 5,000 common shares were
exercised by Judee Fayle, an officer and a director of the Company. The shares
were issued for total proceeds of $15,000 to the Company. The quoted market
price of the Company's stock at the date of exercise was approximately $11.75.
The difference between the exercise price and the market price of the Company's
stock was charged to operations on the exercise date for the above exercise of
stock options.
On February 2, 2000, options to purchase 40,000 common shares were exercised by
Ben Traub, an officer and a director of the Company; and the shares issued for
total proceeds of $120,000 to the Company. The quoted market price of the
Company's stock at the date of exercise was approximately $13.125. The
difference between the exercise price and the market price of the Company's
stock was charged to operations on the exercise date for the above exercise of
stock options.
On February 3, 2000, the Company granted options to purchase 25,000 shares of
the Company's common stock at an exercise price of $7.00 per share under the
1999 Nonqualifying Stock Option Plan to employee, Peter Somogyi.
On February 7, 2000, options to purchase 10,000 common shares were exercised by
Ben Traub, an officer and a director of the Company; and the shares issued for
total proceeds of $30,000 to the Company. The quoted market price of the
Company's stock at the date of exercise was approximately $12.00. The difference
between the exercise price and the market price of the Company's stock was
charged to operations on the exercise date for the above exercise of stock
options.
On February 11, 2000, options to purchase 30,000 common shares were exercised by
Ben Traub, an officer and a director of the Company; and the shares issued for
total proceeds of $90,000 to the Company. The quoted market price of the
Company's stock at the date of exercise was approximately $15.00. The difference
between the exercise price and the market price of the Company's stock was
charged to operations on the exercise date for the above exercise of stock
options.
11
<PAGE>
Phoenix Resources Technologies, Inc.
Notes to Financial Statements - Continued
Note 7 - Stock Options - continued
On February 16, 2000, the Company granted options to purchase 5,000 shares of
the Company's common stock at an exercise price of $0.01 per share under the
1999 Nonqualifying Stock Option Plan to the law firm, Duane Morris & Heckscher
for continued legal guidance.
On February 17, 2000, options to purchase 5,000 common shares were exercised by
Duane Morris Heckscher; and the shares issued for total proceeds of $50 to the
Company. The quoted market price of the Company's stock at the date of exercise
was approximately $16.25. The difference between the exercise price and the
market price of the Company's stock was charged to operations on the exercise
date for the above exercise of stock options.
On March 6, 2000, options to purchase 1,500 common shares were exercised by
Peter Somogyi; and the shares issued for total proceeds of $ 10,500 to the
Company. The quoted market price of the Company's stock at the date of exercise
was approximately $19.75. The difference between the exercise price and the
market price of the Company's stock was charged to operations on the exercise
date for the above exercise of stock options.
On March 20, 2000, options to purchase 10,000 common shares were exercised by
Peter Somogyi; and the shares issued for total proceeds of $ 70,000 to the
Company. The quoted market price of the Company's stock at the date of exercise
was approximately $17.125. The difference between the exercise price and the
market price of the Company's stock was charged to operations on the exercise
date for the above exercise of stock options
On March 29, 2000, options to purchase 3,500 common shares were exercised by
Peter Somogyi; and the shares issued for total proceeds of $ 24,500 to the
Company. The quoted market price of the Company's stock at the date of exercise
was approximately $15.50. The difference between the exercise price and the
market price of the Company's stock was charged to operations on the exercise
date for the above exercise of stock options.
On April 18, 2000, the Company granted options to employee, Peter Somogyi, to
purchase an additional 50,000 shares of the Company's common stock at an
exercise price of $7.00 per share under the 1999 Nonqualifying Stock Option
Plan.
On April 18, 2000, the Company granted options to purchase 100,000 shares of the
Company's common stock at an exercise price of $7.00 per share under the 1999
Nonqualifying Stock Option Plan to employee, Jason Lee.
On April 26, 2000, options to purchase 10,000 common shares were exercised by
Peter Somogyi; and the shares issued for total proceeds of $ 70,000 to the
Company. The quoted market price of the Company's stock at the date of exercise
was approximately $12.50. The difference between the exercise price and the
market price of the Company's stock was charged to operations on the exercise
date for the above exercise of stock options.
12
<PAGE>
Phoenix Resources Technologies, Inc.
Notes to Financial Statements - Continued
Note 7 - Stock Options - continued
On April 28, 2000, the Company granted options to purchase 5,000 shares of the
Company's common stock at an exercise price of $0.01 per share under the 1999
Nonqualifying Stock Option Plan to the law firm, Duane Morris & Heckscher.
On April 28, 2000, options to purchase 160,000 common shares were granted to and
exercised by Ben Traub under the 1999 Nonqualifying Stock Option Plan. These
options were exercised for cash proceeds of $550 and the reimbursement to Mr.
Traub for the payment of consulting fees to M. D. Price, Jr., the Company's
former corporate legal counsel, paid on behalf of the Company by Mr. Traub in
the amount of $1,959,450. The quoted market price of the Company's stock at the
date of exercise was approximately $12.25. There was no difference between the
exercise price and the market price of the Company's stock on the exercise date
of the stock options; therefore no charge was made to operations.
The following table summarizes all options granted from December 31, 1999
through April 30, 2000:
Options Options Options Options Exercise price
granted exercised terminated outstanding per share
------- --------- ---------- ----------- --------------
745,000 292,000 298,000 155,000 $0.01 - $7.00
======= ======= ======= =======
The weighted average exercise price of all issued and outstanding options at
April 30, 2000 was approximately $6.77.
Note 8 - Litigation
Agricultural Protection Credit Association
The Company was a co-maker on a loan payable to Agricultural Production Credit
Association (AgPCA) along with its former subsidiaries, Hughes Wood Products,
Inc. and Houston Woodtech, Inc. On March 17, 1997, AgPCA foreclosed on the
underlying assets collateralizing the loan and was subsequently granted an
approximate $3,236,048 judgment collectively against the Company, Hughes Wood
Products, Inc. and Houston Woodtech, Inc.
On August 21, 1998, AgPCA filed litigation titled "Petition to Enforce Final
Judgment" for collection of an unsatisfied balance of approximately $1,092,100,
as of May 6, 1998, in Texas District Court against 17 named co-defendants,
including the Company and its former officers. The litigation alleged various
actions on behalf of the Company, its former officers, including Racketeering,
Influence and Corrupt Organization (RICO) statute violations.
13
<PAGE>
Phoenix Resources Technologies, Inc.
Notes to Financial Statements - Continued
Note 8 - Litigation - continued
Agricultural Protection Credit Association - continued
On July 27, 1999, the Company entered into a Forbearance Agreement with AgPCA
whereby the Company will pay AgPCA the total sum of $100,000 cash prior to the
effective date of its merger or combination with a Private investor in full
settlement of the Company's participation in the litigation discussed above. In
the event that a merger or combination with a Private investor does not occur
within one (1) year of the execution of the Agreement, the Agreement shall
immediately and automatically terminate. The October 27, 1999 execution of the
Stock Acquisition Agreement triggered the liability to pay the $100,000 in
settlement of this Forbearance Agreement and the amount was accrued at the date
of the Forbearance Agreement. The liability under this Agreement is was paid
from the proceeds collected from the Stock Acquisition Agreement related to the
sale of 9,000,000 shares of the Company's common stock.
On March 15, 2000, AgPCA executed a "Receipt and Acknowledgment of Payment in
Full" for the $100,000 obligation. The Company has no further obligation under
this obligation.
Garnishment payable
On March 20, 1997, the Company was named as the Garnishee in the settlement of a
judgment rendered against Mr. James R. Ray, the Company's former president and
chief executive officer. The garnishment placed against the Company by the
Superior Court of the State of Arizona, Maricopa County, was in the amount of
$266,205.91, plus interest at 10.0% per annum until paid in full. The Company
accrued this garnishment as a current liability and accrued the requisite
interest on the unpaid balance through October 27, 1999. On October 27, 1999,
the garnishment was settled for by agreement with the Company to pay the
claimant $200,000 cash. The difference between the accrued amount and the
$200,000 was credited to operations as forgiveness of debt. As of April 30,
2000, the Company has paid this obligation in full and has no further liability
to the claimant.
Note 9 - Related Party Commitments
The Company has executed a management agreement with Cyclone Financing Group,
Inc. of 2nd Floor, 827 West Pender Street, Vancouver, British Columbia, Canada
V6C 3G8, an entity related through common management personnel who are also
shareholders of the Company, at the amount of $35,000 (US Dollars) per month,
effective November 1, 1999. This amount represents a management fee payable for
the management of the company's affairs including: acquisition of projects,
raising monies, administration (i.e. bookkeeping, photocopying, faxing, office
space, telephone charges, supplies, news dissemination) and other related
operational costs. Cyclone has billed the Company a total of $210,000 for the
period from November 1, 1999 through April 30, 2000 and the Company has an
outstanding balance due Cyclone of approximately $10,000 as of April 30, 2000.
14
<PAGE>
Phoenix Resources Technologies, Inc.
Notes to Financial Statements - Continued
Note 9 - Related Party Commitments
In October 1999, in connection with a Stock Acquisition Agreement, the Company
agreed to issue 300,000 post-reverse split shares of restricted, unregistered
common stock in April 2000 to the Company's Company's former corporate attorney
for services rendered in connection with the Stock Acquisition Agreement. This
obligation was satisfied on behalf of the Company by the Company's President and
Chief Executive Officer with the transfer of 300,000 restricted, unregistered
shares of the Company's common stock owned by the Company's President and Chief
Executive Officer. The Company recognized a charge to operations of
approximately $1,959,450 for the fair value of these shares, as calculated on
the discounted (50.0%) value of the quoted closing price of the Company's common
stock on the date of settlement and the Company's President and Chief Executive
Officer was given credit for this payment against the amount due from the
President on the exercise of options to purchase 160,000 shares of stock.
Note 10 - Financing Agreements
On April 12, 2000, the Company entered into a $10 million equity investment line
agreement with Eurofund Derivatives Ltd. This agreement replaces one dated
January 25, 2000 for a $4 million equity investment line. The Company issued to
Eurofund Derivatives a Class A Warrant with an aggregate warrant exercise price
of $10,000,000. The proposed maximum amount which can be exercised at any one
time is $1,000,000. Eurofund may not exercise the warrant until the Company
notifies Eurofund Derivatives to do so by issuing notice in writing. Eurofund
may then exercise the warrant but such exercise is dependent on market
conditions and therefore there is no guarantee that the warrant will ever be
exercised.
Note 11 - Subsequent Events
On May 2, 2000, the Company granted options to purchase 500 shares of the
Company's common stock at an exercise price of $0.01 per share under the 1999
Nonqualifying Stock Option Plan to consultant, Patrick McEvoy. On May 4, 2000,
options to purchase 500 common shares were exercised by Patrick McEvoy; and the
shares issued for total proceeds of $ 5 to the Company. The quoted market price
of the Company's stock at the date of exercise was approximately $13.25. The
difference between the exercise price and the market price of the Company's
stock was charged to operations on the exercise date for the above exercise of
stock options.
On May 5, 2000, the Company sold 30,000 shares at a price of $5.00 per share for
total gross proceeds of $150,000. As part of the placement, 15,000 warrants were
issued and no commissions or fees paid.
15
<PAGE>
Part I - Item 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations
(1) Caution Regarding Forward-Looking Information
This quarterly report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the Company
or management as well as assumptions made by and information currently available
to the Company or management. When used in this document, the words
"anticipate," "believe," "estimate," "expect" and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current view of
the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated, expected or
intended. In each instance, forward-looking information should be considered in
light of the accompanying meaningful cautionary statements herein.
(2) Plan of Operations
The Company has been reorganized and its operations to date have been in the
areas of setting up its organization and financing. The Company has exercised an
option to acquire a 50% interest in HHPN Development Corp. and its products.
HHPN Development Corp., has created a suite of Web development tools, also known
as a web application server, code named DBPanacea, which are designed to
increase the flexibility while lowering the cost of developing Web sites that
require database functionality, e.g. Internet based business applications and
Web sites used for e-commerce transactions. The Company's goals are to develop
HHPN or DBPanacea, retain a senior management team for The Company and
ultimately acquire 100% of HHPN. As a result, the Company's personnel and
related costs are anticipated to increase in future periods.
The Company needs to raise capital to continue its operations. In the six months
of fiscal year to date, the Company has continued substantial operating losses
which utilize most of its available cash reserves. The Company anticipates that
it will continue to incur net losses for the foreseeable future. The Company had
no operating revenue in the last two years. The Company has incurred aggregate
general and administrative expenses of approximately $2,417,216. Further, the
Company has charged operations approximately $1,320,000 for the difference
between the "fair value" of its common stock at the date of the exercise of
granted stock options and the actual cash proceeds received. Total loss per
share for the six months ended April 30, 2000 was $(0.40).
On November 3, 1999, Cyclone Financing Group, Inc. transferred its rights in an
Assignment Agreement to the Company. Cyclone transferred all of its rights in
the HHPN Option Agreement, to purchase 100% of HHPN Development Corporation.
This Option Agreement may be executed in three stages. On February 10, 2000, The
Company exercised Option 1 of the Option Agreement. The Company has agreed to
pay HHPN $2,500,000 for a 50% interest in HHPN.. As of May 19, 2000, the Company
had paid approximately $265,000 either directly to HHPN or on behalf of HHPN.
The Company is required to make minimum payments to HHPN of $17,000.00 per
month, up to a maximum of $200,000 per month. The Company also has the option to
acquire a further 25% of HHPN for $50 million and the remaining 25% of HHPN for
a further investment of $125 million.
Mr. Ben Traub is an officer of both Cyclone Financing Group Inc. and the
Company. Mr. Traub agreed to transfer the HHPN Option Agreement to the Company
for $10.00. Cyclone formerly had the right to either cancel the Assignment
Agreement to The Company or claim from the Company restricted shares to make up
for the difference in value enjoyed by Mr. Traub that would have resulted if
certain deficiencies in the Company had not existed. Cyclone may only have
exercised these rights if certain deficiencies resulted in the reduction of
value of Mr. Traub's ownership in the Company Deficiencies were defined in the
Agreement as material deficiencies in information supplied to Mr. Traub by the
former board of the Company. These rights were to expire once the $2.5 million
had been paid in full to HHPN. During the second quarter of Fiscal 2000, Mr.
Traub waived these rights and the Company's option to purchase HHPN is now
irrevocable by Mr. Traub under any circumstances.
In February and March 2000, the Company received favorable independent
evaluations of HHPN's principal product and believes that positive market
acceptance of HHPN's internet web application software product could generate
revenues for the Company.
16
<PAGE>
The Company believes that websites developed with the HHPN software product will
be able to operate on WindowsNT, UNIX, LINUX or MAC without recoding, using SQL,
Sybase, Oracle and most other database engines. Further, the software is
anticipated to run on any webserver including Apache, Netscape Server or any
other server that supports servlets. The software is in its first edition and
although early testing has provided positive feedback, the Company acknowledges
that it will have to invest heavily in ongoing development to continue maintain
and create ongoing technological advantages and there is no guarantee that it
will be able to do so. Most of the Company's existing competitors have more
resources, which will make it difficult for the Company to compete.
(3) Liquidity and Capital Resources
The reports of our independent certified public accountants on the accompanying
interim financial statements and our annual year end financial statements, as of
October 31, 1999, contain an explanatory paragraph indicating factors which
create substantial doubt about our ability to continue as a going concern. These
factors include recurring net losses for fiscal year 1999 and uncertainty
surrounding future equity financing through anticipated offerings. As of the
date of each respective report, the Company was without viable operations or
significant assets and was dependent upon certain significant shareholders to
provide sufficient working capital.
The Company's ability to implement its business plan is dependent upon obtaining
adequate financial resources. The Company has been engaged in various
exploratory discussions with prospective investors. While no specific terms have
been negotiated, a due diligence process has begun on behalf of some investors
who are considering a equity investment in the company. No assurance can be made
that a private placement or public offering of Company's equity will be
successful. In such an instance the Company intends to rely upon certain
shareholders to meet future financing needs for the remainder fiscal year 2000
while the Company pursues other financing alternatives.
At April 30, 2000, the Company had cash and cash equivalents of approximately
$16,000 compared to $-0- at April 30, 1999. Working capital, defined as current
assets less current liabilities, was approximately $6,000 at April 30, 2000 as
compared to $-0- at April 30, 1999. The Company had current assets of
approximately $16,000 and cumulative stockholders' equity of $270,696 at April
30, 2000 compared to current assets of $-0- and cumulative stockholders' deficit
of $(306,621) at April 30, 1999.
The Company had no capital expenditures for the six months ended April 30, 2000.
However, t he Company anticipates that it will need to purchase equipment in the
near future to implement the launch of its products.
Net cash flow provided by financing activities increased from $-0- at April 30,
1999 to $594,500 for the period ended April 30, 2000. The increase is primarily
due to the proceeds from exercised stock options and a private placement of
restricted stock. Initial working capital during Fiscal 2000 was provided by a
loan from the Company's President and Chief Executive Officer, which was
subsequently repaid during the first six months of Fiscal 2000. The Company has
not paid dividends in prior periods and does not intend to pay cash dividends in
the foreseeable future.
On February 10, 2000, as part of a private placement, the company issued 80,000
shares at a price of $2.50 per share for total gross proceeds of $200,000. As
part of the placement, 6,000 warrants were issued with a strike price of $3 and
a term of one year, and fees of $16,500 were paid.
On May 5, 2000, as part of a private placement, the company issued 30,000 shares
at a price of $5.00 per share for total gross proceeds of $150,000. As part of
the placement, 15,000 warrants were issued with a strike price of $10 and a term
of two years. No fees were paid.
On April 12, 2000, the Company entered into a $10 million equity investment line
agreement with Eurofund Derivatives Ltd.,
17
<PAGE>
which replaced a January 25, 2000 agreement for a $4 million equity investment
line. The Company issued to Eurofund Derivatives a Class A Warrant with an
aggregate warrant exercise price of $10,000,000. The proposed maximum amount
which can be exercised at any one time is $1,000,000. Eurofund may not exercise
the warrant until the Company notifies Eurofund Derivatives to do so by issuing
notice in writing. Eurofund may then exercise the warrant but such exercise is
dependant on market conditions and therefore there is no guarantee that the
warrant will ever be exercised.
On April 19, 2000, the Company was granted a listing by the Deutsche Boerse AG
to begin trading on the Third Market Segment of the Frankfurt Stock Exchange.
The trading symbol is "PHU" and the German securities code is 898 258. The
Company's trades are facilitated by Berliner Freiverkehr AG, a major German
investment banking and brokerage firm. The Geneva Group Inc. facilitated the
Frankfurt listing and, in conjunction with Teamwork Kommunikations Gmbh., will
act as a consultant to the Company concerning investor relations, introductions
to strategic partners and corporate financing activities in Europe.
(4) Year 2000 Considerations
The Year 2000 (Y2K) date change was believed to affect virtually all computers
and organizations. The Company undertook a comprehensive review of its
information systems, including personal computers, software and peripheral
devices, and its general communications systems during 1999 and made all
necessary modifications, upgrades or replacements that it believed were
necessary to address its potential internal Y2K exposures.
The Company also held discussions with its significant suppliers, shippers,
customers and other external business partners related to their readiness for
the Y2K date change.
The costs associated with the Y2K date change compliance did not have a material
effect on the Company's financial position or its results of operations. The
Company has experienced no negative impact from any potential Y2K issues through
March 31, 2000. However, there can be no continued assurance that all of the
Company's systems and the systems of its suppliers, shippers, customers or other
external business partners will continue function adequately.
(Remainder of this page left blank intentionally)
18
<PAGE>
Part II - Other Information
Item 1 - Legal Proceedings
See Notes to the Financial Statements
Item 2 - Changes in Securities
On October 4, 1999, a former officer of the Company and controlling party
of an entity owning approximately 200,000 shares of Class A Preferred Stock
tendered 100% of the issued and outstanding shares of Class A Preferred
Stock to the Company for cancellation with no further consideration being
due to the tendering party. The par value of these issued and outstanding
shares was credited to additional paid-in capital upon their cancellation.
On October 15, 1999, at a Special Meeting of the Shareholders, a 100 for 1
reverse split of the issued and outstanding common stock was approved. The
effects of this action are reflected in the accompanying financial
statements as of the first day of the first period presented.
On December 17, 1999, the Company filed a Form S-8 Registration Statement
under The Securities Act of 1933 with the U. S. Securities and Exchange
Commission to register 900,000 post-reverse split shares of common stock
pursuant to the Company's 1999 Nonqualifying Stock Option Plan (1999 Plan).
As stated in the 1999 Plan document, "This [1999 Plan is] for persons
employed or associated with the Company, including without limitation any
employee, director, general partner, officer, attorney, accountant,
consultant or advisor, is intended to advance the best interest of the
Company by providing additional incentive to those persons who have a
substantial responsibility for its management, affairs, and growth by
increasing their proprietary interest in the success of the Company,
thereby encouraging them to maintain their relationships with the Company."
On December 17, 1999, the Company granted options to purchase 200,000
shares of the Company's common stock at an exercise price of $3.00 per
share under the 1999 Nonqualifying Stock Option Plan to its President. The
options were granted in consideration of the value the President and his
Board brought to the Company since their takeover on October 30, 1999.
Additionally, the Company granted options to purchase 100,000 shares each
to board members, Judee Fayle and Robert Seitz, at an exercise price of
$3.00 per share. The decision of where to set the exercise price was based
on the pre-determined plan (prior to takeover) to grant options to the
board as close as possible to the going rate for the Company's stock prior
to takeover. The average closing price of the Company's stock for the ten
month period prior to takeover was $2.27, after taking the reverse stock
split into consideration. On April 28, 2000, Ben Traub, Robert Seitz, and
Judee Fayle, all officers and directors of the Company, rescinded an
aggregate total of 298,000 of these unexercised options.
On January 5, 2000, options to purchase 2,000 common shares were exercised
by Ben Traub, an officer and a director of the Company, and the shares
issued for total proceeds of $6,000 to the Company. The quoted market price
of the Company's stock at the date of exercise was approximately $8.625.
The difference between the exercise price and the market price of the
Company's stock was charged to operations on the exercise date for the
above exercise of stock options.
On January 24, 2000, options to purchase 5,000 common shares were exercised
by Rob Seitz, an officer and a director of the Company, and the shares were
issued for total proceeds of $15,000 to the Company. The quoted market
price of the Company's stock at the date of exercise was approximately
$11.00. The difference between the exercise price and the market price of
the Company's stock was charged to operations on the exercise date for the
above exercise of stock options. On January 24, 2000, options to purchase
5,000 common shares were exercised by Judee Fayle, an officer and a
director of the Company. The shares were issued for total proceeds of
$15,000 to the Company. The quoted market price of the Company's stock at
the date of exercise was approximately $11.00. The difference between the
exercise price and the market price of the Company's stock was charged to
operations on the exercise date for the above exercise of stock options.
19
<PAGE>
On January 28, 2000, options to purchase 5,000 common shares were exercised
by Rob Seitz, an officer and a director of the Company, and the shares were
issued for total proceeds of $15,000 to the Company. The quoted market
price of the Company's stock at the date of exercise was approximately
$11.75. The difference between the exercise price and the market price of
the Company's stock was charged to operations on the exercise date for the
above exercise of stock options. On January 28, 2000, options to purchase
5,000 common shares were exercised by Judee Fayle, an officer and a
director of the Company. The shares were issued for total proceeds of
$15,000 to the Company. The quoted market price of the Company's stock at
the date of exercise was approximately $11.75. The difference between the
exercise price and the market price of the Company's stock was charged to
operations on the exercise date for the above exercise of stock options.
On February 2, 2000, options to purchase 40,000 common shares were
exercised by Ben Traub, an officer and a director of the Company; and the
shares issued for total proceeds of $120,000 to the Company. The quoted
market price of the Company's stock at the date of exercise was
approximately $13.125. The difference between the exercise price and the
market price of the Company's stock was charged to operations on the
exercise date for the above exercise of stock options.
On February 3, 2000, the Company granted options to purchase 25,000 shares
of the Company's common stock at an exercise price of $7.00 per share under
the 1999 Nonqualifying Stock Option Plan to employee, Peter Somogyi.
On February 7, 2000, options to purchase 10,000 common shares were
exercised by Ben Traub, an officer and a director of the Company; and the
shares issued for total proceeds of $30,000 to the Company. The quoted
market price of the Company's stock at the date of exercise was
approximately $12.00. The difference between the exercise price and the
market price of the Company's stock was charged to operations on the
exercise date for the above exercise of stock options.
On February 10, 2000, the Company sold 80,000 shares at a price of $2.50
per share for total gross proceeds of $200,000. As part of the placement,
6,000 warrants were issued and fees of $16,500 were paid. The holder of the
warrant is entitled to purchase the common stock of the Company at a price
of $3.00 subject to adjustment, through February 10, 2001.
On February 11, 2000, options to purchase 30,000 common shares were
exercised by Ben Traub, an officer and a director of the Company; and the
shares issued for total proceeds of $90,000 to the Company. The quoted
market price of the Company's stock at the date of exercise was
approximately $15.00. The difference between the exercise price and the
market price of the Company's stock was charged to operations on the
exercise date for the above exercise of stock options.
On February 16, 2000, the Company granted options to purchase 5,000 shares
of the Company's common stock at an exercise price of $0.01 per share under
the 1999 Nonqualifying Stock Option Plan to the law firm, Duane Morris &
Heckscher for continued legal guidance.
On February 17, 2000, options to purchase 5,000 common shares were
exercised by Duane Morris & Heckscher; and the shares issued for total
proceeds of $50 to the Company. The quoted market price of the Company's
stock at the date of exercise was approximately $16.25. The difference
between the exercise price and the market price of the Company's stock was
charged to operations on the exercise date for the above exercise of stock
options.
On March 6, 2000, options to purchase 1,500 common shares were exercised by
Peter Somogyi; and the shares issued for total proceeds of $ 10,500 to the
Company. The quoted market price of the Company's stock at the date of
exercise was approximately $19.75. The difference between the exercise
price and the market price of the Company's stock was charged to operations
on the exercise date for the above exercise of stock options.
On March 20, 2000, options to purchase 10,000 common shares were exercised
by Peter Somogyi; and the shares issued for total proceeds of $ 70,000 to
the Company. The quoted market price of the Company's stock at the date of
exercise was approximately $17.125. The difference between the exercise
price and the market price of the Company's stock was charged to operations
on the exercise date for the above exercise of stock options
20
<PAGE>
On March 29, 2000, options to purchase 3,500 common shares were exercised
by Peter Somogyi; and the shares issued for total proceeds of $ 24,500 to
the Company. The quoted market price of the Company's stock at the date of
exercise was approximately $15.50. The difference between the exercise
price and the market price of the Company's stock was charged to operations
on the exercise date for the above exercise of stock options.
On April 18, 2000, the Company granted options to employee, Peter Somogyi,
to purchase an additional 50,000 shares of the Company's common stock at an
exercise price of $7.00 per share under the 1999 Nonqualifying Stock Option
Plan.
On April 18, 2000, the Company granted options to purchase 100,000 shares
of the Company's common stock at an exercise price of $7.00 per share under
the 1999 Nonqualifying Stock Option Plan to employee, Jason Lee.
On April 26, 2000, options to purchase 10,000 common shares were exercised
by Peter Somogyi; and the shares issued for total proceeds of $ 70,000 to
the Company. The quoted market price of the Company's stock at the date of
exercise was approximately $12.50. The difference between the exercise
price and the market price of the Company's stock was charged to operations
on the exercise date for the above exercise of stock options.
On April 28, 2000, the Company granted options to purchase 5,000 shares of
the Company's common stock at an exercise price of $0.01 per share under
the 1999 Nonqualifying Stock Option Plan to the law firm, Duane Morris &
Heckscher.
On April 28, 2000, options to purchase 160,000 common shares were granted
to and exercised by Ben Traub under the 1999 Nonqualifying Stock Option
Plan. These options were exercised for cash proceeds of $550 and the
reimbursement to Mr. Traub for the payment of consulting fees to M. D.
Price, Jr., the Company's former corporate legal counsel, paid on behalf of
the Company by Mr. Traub in the amount of $1,959,450. The quoted market
price of the Company's stock at the date of exercise was approximately
$12.25. There was no difference between the exercise price and the market
price of the Company's stock on the exercise date of the stock options;
therefore no charge was made to operations.
On May 2, 2000, the Company granted options to purchase 500 shares of the
Company's common stock at an exercise price of $0.01 per share under the
1999 Nonqualifying Stock Option Plan to consultant, Patrick McEvoy. On May
4, 2000, options to purchase 500 common shares were exercised by Patrick
McEvoy; and the shares issued for total proceeds of $ 5 to the Company. The
quoted market price of the Company's stock at the date of exercise was
approximately $13.25. The difference between the exercise price and the
market price of the Company's stock was charged to operations on the
exercise date for the above exercise of stock options.
Item 3 - Defaults on Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
The Company has held no regularly scheduled, called or special meetings of
shareholders during the reporting period.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
10.5 Equity Line Agreement by and between Phoenix Resources Technologies,
Inc. and Eurofund Derivatives Ltd. on April 12, 2000
10.6 Investor Relations Agreement by and between Phoenix Resources
Technologies, Inc. and Teamwork Kommunikations, GmbH
10.7 Consulting Agreement by and between Phoenix Resources Technologies,
Inc. and The Geneva Group, Inc.
27.1 Financial Data Schedule
21
<PAGE>
(b) Reports on Form 8-K
None
--------------------------------------------------------------------------------
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.
PHOENIX RESOURCES TECHNOLOGIES, INC.
May 30 , 2000 /s/ Benjamin E. Traub
-------- -----------------------
Benjamin E. Traub
President and Director
22
