UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C., 20549
FORM 10 QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934.
For the period ended September 30, 1998
OR
[ ] TRANSITION REPROT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from_______to___________
Commission File Number: 0-18049
E*twoMEDIA.com
(Formerly Nerox Holding Corporation)
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 91-1317131
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
53 West 23rd Street
New York, NY 10010
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: (212) 590-2173
Check whether the issuer (1) filed all reports required to be filed by Section13
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 [_] NO [X]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: There were 9,897,627 shares of the
Registrants Common Stock issued and outstanding as of September 30, 1998.
<PAGE>
E*twoMEDIA.com
(Formerly Nerox Holding Corporation)
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet (unaudited) at September 30, 1998 .. 2
Consolidated Statements of Operations (unaudited) for the three
months ended September 30, 1998 and 1997 ..................... 3
Consolidated Statements of Operations (unaudited) for the Nine
months ended September 30, 1998 and 1997 ...................... 4
Consolidated Statements of Cash Flows (unaudited) for the Nine
months ended September 30, 1998 and 1997 ...................... 5
Notes to Consolidated Financial Statements (unaudited) ........ 6-7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ......................................... 8
PART II. OTHER INFORMATION ............................................ 9-10
PART III. SIGNATURES ................................................... 11
<PAGE>
E*twoMEDIA.com
(Formerly Nerox Holding Corporation)
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30, 1998
<TABLE>
<CAPTION>
Current Assets:
<S> <C>
Cash ................................................................... $ --
-----------
Property and Equipment, at cost:
Alaska coalmine and related equipment .................................. 2,110,460
-----------
Proved oil and gas properties, using successful efforts
methods accounting ..................................................... 1,748,367
Less accumulated depletion ............................................. (656,372)
Less impairment allowance .............................................. (1,055,422)
-----------
36,573
-----------
2,147,033
===========
Liabilities and Stockholders' Equity
Current Liabilities
Notes Payable to:
Shareholders ......................................................... 230,000
Placer Dome .......................................................... 158,463
-----------
388,463
-----------
Accounts Payable ....................................................... 500,905
Accrued expenses ....................................................... 106,511
Settlement of Shareholder contingency .................................. 314,970
-----------
922,386
-----------
Total Current Liabilities .............................................. 1,310,849
-----------
Commitments and Contingencies
Stockholders' Equity
Preferred stock, 10% cumulative, non-voting, convertible, no par value;
shares authorized 200,000, issued and outstanding 49,282 ............ 344,974
Common stock, par value $.004167; shares authorized 12,000,000,
issued and outstanding 9,897,627 (net of 563,319 treasury shares)..... 41,243
Additional paid-in capital ............................................ 12,725,886
Accumulated deficit ................................................... (12,275,919)
-----------
Net Stockholders' equity ............................................... 836,184
-----------
$ 2,147,033
===========
</TABLE>
See accompanying notes to the financial statements.
2
<PAGE>
E*twoMEDIA.com
(Formerly Nerox Holding Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended September 30,
1998 1997
----------- -----------
Revenues
<S> <C> <C>
Oil and gas sales ........................... $ -- $ 16,124
Gain on disposition of oil and gas properties -- 85,000
----------- -----------
$ -- 101,124
----------- -----------
Cost and expenses
Oil and gas costs ........................... -- 18,623
Coal mine costs ............................. -- 54,560
General and administrative .................. -- 313,217
Interest .................................... 11,062 41,385
Depletion ................................... 8,118 15,000
----------- -----------
19,180 442,785
----------- -----------
Net Loss ..................................... $ (19,180) $ (341,661)
=========== ===========
Basic and diluted net loss per common share .. $ (0.00) $ (0.06)
=========== ===========
Basic and diluted weighted average number
of common shares outstanding ................ 8,492,675 5,761,664
=========== ===========
</TABLE>
See accompanying notes to the financial statements.
3
<PAGE>
E*twoMEDIA.com
(Formerly Nerox Holding Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine Months Ended September 30, 1998
1998 1997
----------- -----------
Revenues
<S> <C> <C>
Oil and gas sales ........................... $ 37,665 $ 72,358
Gain on disposition of oil and gas properties -- 85,000
----------- -----------
$ 37,665 157,358
----------- -----------
Cost and expenses
Oil and gas costs ........................... 12,454 48,602
Coal mine costs ............................. 17,039 129,999
General and administrative .................. 520,563 458,637
Interest .................................... 32,582 125,892
Depletion ................................... 24,354 45,000
----------- -----------
606,992 808,130
----------- -----------
Net Loss ..................................... $ (569,327) $ (650,772)
=========== ===========
Basic and diluted net loss per common share .. $ (0.07) $ (0.15)
=========== ===========
Basic and diluted weighted average number
of common shares outstanding ................ 8,492,675 4,605,449
=========== ===========
</TABLE>
See accompanying notes to the financial statements.
4
<PAGE>
E*twoMEDIA.com
(Formerly Nerox Holding Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
1998 1997
----------- -----------
Cash flows from operating activities:
<S> <C> <C>
Net Loss .......................................... $ (569,327) $ (650,772)
Adjustments to reconcile net loss to net cash
used by operating activities
Gain on disposition of oil and gas properties ..... (85,000)
Depletion ......................................... 24,354 45,000
Write off computer equipment ...................... 6,431
Issuance of common stock for services ............. 400,000 246,875
Increase (decrease) in liabilities
Accounts payable ................................. 18,860 190,607
Accrued expenses ................................. 32,582 40,576
----------- -----------
Net cash used by operating activities ............. (93,531) (206,283)
----------- -----------
Cash flows from investing activities
Proceeds from disposition of oil and gas properties -- 85,000
----------- -----------
Net cash provided (used) by investing activities .. -- 85,000
----------- -----------
Cash flows from financing activities
Proceeds from notes payable ....................... 85,000 209,391
Payments made on notes payable .................... -- (132,250)
Payment of dividends .............................. -- (10,500)
----------- -----------
Net cash provided by financing activities ......... 85,000 66,641
----------- -----------
Net increase (decrease) in cash .................... (8,531) 64,808
----------- -----------
Cash, and cash equivalents, beginning of period .... 8,531 10,166
----------- -----------
Cash, and cash equivalents, end of period .......... $ -- $ 74,974
=========== ===========
Supplemental disclosure of cash flow activities:
Cash paid for interest ............................ $ 32,582 $ 2,400
=========== ===========
Non-cash investing and financing transactions
Dividends in arrears .............................. $ 39,650 $ 35,537
=========== ===========
Debt to equity conversion ......................... $ -- $ 1,027,517
=========== ===========
Acquisition of treasury shares .................... $ -- $ 2,347
=========== ===========
</TABLE>
See accompanying notes to the financial statements.
5
<PAGE>
E*twoMEDIA.com
(Formerly Nerox Holding Corporation)
September 30, 1998
Note A - Basis of presentation
The accompanying unaudited consolidated financial statements of
E*twoMEDIA.com (Formerly Nerox Energy Corporation) and Subsidiary (the
"Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all of
the information required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation have been included. Operating results
for the Nine months ended September 30, 1998 are not necessarily
indicative of the results for any future period. These statements
should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Form 10-KSB for
the year ended December 31, 1997.
The unaudited consolidated financial statements include the accounts of
E*twoMEDIA.com (Formerly Nerox Energy Corporation) and its wholly-owned
subsidiary, Nerox Power Systems, Inc. (NPSI). All significant
intercompany balances and transactions have been eliminated.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
Going concern
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern. The company has
experienced significant losses and, as of September 30, 1998, had a
working capital deficiency of approximately $1,311,000. Additional
capital infusion is necessary to begin mining operations
These factors raise substantial doubt about the Company's ability to
continue as a going concern.
The methods employed by the Company to raise capital include the
following:
Year to Date
Amount
---------
Loans from shareholders, net .............. $ 85,000
Conversion of notes payable to common stock
Issuance of common stock for services ..... 400,000
---------
$485,000
6
<PAGE>
E*twoMEDIA.com
(Formerly Nerox Holding Corporation)
September 30, 1998
Note A - Basis of presentation (continued)
Going concern (continued)
There can be no assurance that the Company will be successful in its efforts to
obtain additional financing.
Note B - Notes payable
<TABLE>
<CAPTION>
June 30,
1998
--------
Shareholders:
<S> <C>
Unsecured note, payable on demand at 10% interest ....................... 35,000
Unsecured notes payable at 12% interest. These notes are in default .... 145,000
Unsecured note payable at 15% interest due January 7, 1999 ............. 50,000
Placer Dome:
Unsecured note payable at 10% imputed interest. This note is in default 158,463
--------
$388,463
========
</TABLE>
7
<PAGE>
E*twoMEDIA.com
(Formerly Nerox Energy Corporation)
September 30, 1998
ITEM 2 MANAGENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Management's Discussion and Analysis of Financial Condition
The Company has experienced significant losses and, as of September 30, 1998,
had a working capital deficiency of approximately $1,310,000. Additional capital
infusion is necessary. Management is seeking additional financing and a joint
venture partner.
Management's plan is to raise additional capital through existing shareholders
and, whenever possible, issue common stock for services and convert debt to
common stock. In the first quarter of 1998, the Company issued 3,200,000 shares
of common stock for services. There can be no assurance that the Company will be
successful in its efforts to obtain additional financing and begin mining
operations.
Results of Operations
Total revenues from oil and gas sales for the nine months of 1998 were $36,665 a
decrease of 49% from $72,358 for the nine months of 1997. The decrease was due
to fewer producing wells as wells have been shut in since the first quarter of
1997.
Oil and gas production costs decreased 72% from $178,601 in 1997 to $29,493 in
1998 due to well rework costs. Mining costs of $17,039 in 1998 reflect costs to
get the Jonesville coal mine ready for operation. General and administrative
expenses increased to $520,563 in 1998 from $458,637 in 1997 due to the issuance
of 3,200,000 shares of common stock for services in 1998. Of the total general
and administrative expenses $16,882 can be attributed to Nerox Power Systems,
Inc. ("NPSI") for coal mine activities, a decrease from $35,401 in 1997.
Interest costs decreased 75% from $125,892 in 1997 to $32,582 in 1998 due to
debt conversions in late 1997. Depletion decreased from $45,000 in 1997 to
$24,354 in 1998 due to a decrease in equivalent barrels produced plus a decrease
in the oil and gas property cost from the write off of the Alaska wells in the
third quarter of 1997.
The Company's largest oil and gas holdings have been shut in, and its coal mine
is not yet operational. The Company must raise capital to remain viable.
8
<PAGE>
E*twoMEDIA.com
(Formerly Nerox Holding Corporation)
September 30, 1998
PART II
OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
The Company has certain contingent liabilities resulting from litigation and
claims incident to the ordinary course of business. Management believes that the
probable resolution of such contingencies will not materially affect the
financial position or results of operations of the Company.
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
On October 30, 1998 Jack Utter resigned as Chairman of the Board, Chief
Executive Officer (CEO) and President of Nerox Energy Corporation. Nicholas E.
Ross was appointed interim Chairman of the Board, CEO and President of Nerox
Energy Corporation on the same date. On November 3, 1998 Nicholas E. Ross
resigned from his position as Chairman of the Board, CEO and President of Nerox
Energy Corporation, Michael A. Cassin was appointed Chairman of the Board, CEO
and President of Nerox Energy Corporation.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
On April 26, 1998 Nerox Energy Corporation filed an 8K changing the name of the
Company from Nerox Energy Corporation to Nerox Holding Corporation. In addition
the company authorized a reverse 10 for 1 stock split from 25,000,000 shares to
2,500,000 shares having a $.02 par value. The company amended this change on 8K
referenced below.
9
<PAGE>
E*twoMEDIA.com
(Formerly Nerox Holding Corporation)
September 30, 1998
(Item 6 Exhibits and Reports of form 8K continued)
On February 9, 1999 E*twoMEDIA filed an 8-K reporting the company filed a
Certificate of Amendment to the Certificate of Incorporation which changed the
name of the Company from Nerox Holding Corporation to E*twoMEDIA.com, Inc. In
addition the company reported the engagement of Nelson, Mayoka & Company as its
new independent accountant.
On March 22,1999 the company filed an 8k reporting the Amendment of Article 4 of
the Articles of Incorporation, which superseded the Amendment of the Articles of
Incorporation file on an 8K on April 26, 1998 increasing the shares outstanding
to 12,000,000.
10
<PAGE>
E*twoMEDIA.com
(Formerly Nerox Holding Corporation)
September 30, 1998
PART III. SIGNATURES
The information set forth herein reflects all adjustments which are, in the
opinion of management, necessary to a fair statement of the results for the
interim period.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: March 26, 1999 NEROX HOLDING CORPORATION
By:
---------------------------------
Michael Cassin, Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
Dated: March 26, 1999 By:
---------------------------------
Michael Cassin, President and Chief
Executive Officer
11
