<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE NINE MONTHS ENDED COMMISSION FILE NUMBER
SEPTEMBER 30, 1997 0-23328
DEOTEXIS, INC.
(Exact Name of Registrant as Specified in its Charter)
NEVADA 13-3666344
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification #)
885 THIRD AVENUE, SUITE 2900
NEW YORK, NEW YORK 10022-4834
(Address of Principal Executive Office Including Zip Code)
(212) 230-2323
(Registrant's Telephone Number Including Area Code)
ZERON ACQUISITIONS II, INC.
370 LEXINGTON AVENUE, 18TH FLOOR
NEW YORK, NEW YORK 10017
(Former Name and Former Address of Registrant,
if Changed Since Last Report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirement for
the past 90 days.
YES X NO
-- --
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under
a plan confirmed by a court. Yes ______ No ______
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON STOCK, $.001 PAR VALUE 278,750
(Title of Class) (Shares Outstanding at September 30, 1997)
<PAGE>
DEOTEXIS, INC.
(FORMERLY KNOWN AS
ZERON ACQUISITIONS, II, INC.)
(A DEVELOPMENT STAGE COMPANY)
INDEX
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Part 1. Financial Information
Item 1.--Financial Statements
Balance Sheet as of September 30, 1997
(unaudited) and December 31, 1996.................................................................. 3
Statement of Operations for the Nine Months
Ended September 30, 1997 and 1996 (unaudited)...................................................... 4
Statement of Stockholders' Equity (unaudited)....................................................... 5
Statement of Cash Flows for the Nine Months Ended September 30,
1997 and 1996 (unaudited).......................................................................... 6
Notes to Financial Statements....................................................................... 7-9
Item 2.--Management's discussion and analysis of results of operations.................................. 10-12
Signatures.............................................................................................. 13
</TABLE>
<PAGE>
DEOTEXIS, INC.
(FORMERLY KNOWN AS
ZERON ACQUISITIONS, II, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
SEPTEMBER 30, DECEMBER 31,
1997 1996
(UNAUDITED)
------------- ------------
<S> <C> <C>
Current assets:
Cash and equivalents (Note 1).... $ 1,281 $ 530,337
Loan receivable.................. 2,331 2,331
Prepaid taxes.................... 1,561 0
Escrow........................... 50,000 0
------------- ------------
Total current assets....... 55,173 532,668
Other assets:
Organization costs--net of
amortization (Note 1)............ 0 17
------------- ------------
Total assets............... $ 55,173 $ 532,685
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses (Note 4)................ $ 27,500 $ 15,300
------------- ------------
Commitments and other matters
(Note 3).........................
Stockholders' equity (Note 2)
Common stock, par value $.001;
authorized 75,000,000 shares,
issued and outstanding 278,750
shares in 1997 and 1996.......... 279 279
Preferred stock, par value $.001;
authorized 15,000,000 shares,
none issued and outstanding...... 0 0
Additional paid-in-capital....... 149,110 624,860
Deficit accumulated during
development stage................ (121,716) (107,754)
------------- ------------
Total stockholders'
equity..................... 27,673 517,385
------------- ------------
Total liabilities and
stockholders' equity....... $ 55,173 $ 532,685
------------- ------------
------------- ------------
</TABLE>
The accompanying notes are an integral part of this financial statement.
-3-
<PAGE>
DEOTEXIS, INC.
(FORMERLY KNOWN AS
ZERON ACQUISITIONS, II, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE PERIODS
<TABLE>
<CAPTION>
MARCH 6, 1992
JANUARY 1, JANUARY 1, (INCEPTION)
TO TO THROUGH
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 SEPTEMBER 30, 1997
------------------ ------------------ ------------------
<S> <C> <C> <C>
Interest and other income..... $ 16,230 $ 17,081 $ 68,875
-------- -------- ----------
Expenses:
Consulting (Note 3)......... 7,500 11,250 51,875
Rent (Note 3)............... 7,500 11,250 51,875
Corporation franchise
taxes...................... 300 346 7,536
Filing fees................. 2,642 3,289 13,761
Amortization................ 17 75 500
Bank charges................ 268 397 2,203
Office...................... 12 0 1,852
Professional fees........... 11,953 18,410 60,989
-------- -------- ----------
Total expenses.............. 30,192 45,017 190,591
-------- -------- ----------
Net income (loss)............. $(13,962) $(27,936) $(121,716)
-------- -------- ----------
-------- -------- ----------
Net income (loss) per common
share....................... $ (.05) $ (.10)
-------- --------
-------- --------
Weighted average number of
shares outstanding.......... 278,750 278,750
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of this financial statement.
-4-
<PAGE>
DEOTEXIS, INC.
(FORMERLY KNOWN AS
ZERON ACQUISITIONS, II, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL
ADDITIONAL ACCUMULATED STOCKHOLDERS
COMMON STOCK PAID-IN CAPITAL (DEFICIT) EQUITY
------------ --------------- ----------- ------------
<S> <C> <C> <C> <C>
Issuance of 160,000 Common Shares
on June 4, 1992 at par value
($.001 per share) for cash....... $160 $ 1,440 $ 1,600
Sale of 18,750 shares for cash in
July 1992........................ 19 29,981 30,000
Net loss--inception to December 31,
1992............................. $ (62) (62)
Net loss--December 31, 1993........ (1,766) (1,766)
Sale of 100,000 shares--January 13,
1994............................. 100 624,900 625,000
Deferred offering costs charged to
paid-in capital.................. (31,461) (31,461)
Net loss--December 31, 1994........ (27,184) (27,184)
----- --------------- ----------- ------------
Balance--December 31, 1994......... 279 624,860 (29,012) 596,127
Net loss........................... (35,005) (35,005)
----- --------------- ----------- ------------
Balance--December 31, 1995......... 279 624,860 (64,017) 561,122
Net loss........................... (43,737) (43,737)
----- --------------- ----------- ------------
Balance--December 31, 1996......... 279 624,860 (107,754) 517,385
Distributions...................... (475,750) (475,750)
Net loss........................... (13,962) (13,962)
----- --------------- ----------- ------------
Balance--September 30, 1997........ $279 $ 149,110 $(121,716) $ 27,673
----- --------------- ----------- ------------
----- --------------- ----------- ------------
</TABLE>
The accompanying notes are an integral part of this financial statement.
-5-
<PAGE>
DEOTEXIS, INC.
(FORMERLY KNOWN AS
ZERON ACQUISITIONS, II, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(UNAUDITED)
FOR THE PERIODS
<TABLE>
<CAPTION>
MARCH 6, 1992
JANUARY 1, JANUARY 1, (INCEPTION)
TO TO THROUGH
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 SEPTEMBER 30, 1997
------------------ ------------------ ------------------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss)................ $(13,962) $(27,936) $(121,716)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Amortization..................... 17 75 500
Changes in assets and
liabilities:
Escrow......................... (50,000) (269,777) (50,000)
Loan receivable................ 0 0 (2,331)
Other assets................... (1,561) (3,252) (2,061)
Accounts payable and accrued
expenses..................... 12,200 (2,100) 27,500
-------- -------- ----------
Cash provided (used in)
operations....................... (53,306) (302,990) (148,108)
Cash flows from financing
activities:
Issuance of common stock--Net of
costs............................ 0 0 625,139
Distributions...................... (475,750) 0 (475,750)
-------- -------- ----------
Net increase (decrease) in cash and
equivalents...................... (529,056) (302,990) 1,281
Cash and equivalents--beginning of
period........................... 530,337 568,105 0
-------- -------- ----------
Cash and equivalents--end of
period........................... $ 1,281 $265,115 $ 1,281
-------- -------- ----------
-------- -------- ----------
</TABLE>
The accompanying notes are an integral part of this financial statement.
-6-
<PAGE>
DEOTEXIS, INC.
(FORMERLY KNOWN AS
ZERON ACQUISITIONS, II, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
BACKGROUND
Deotexis, Inc. (formerly known as Zeron Acquisitions, II, Inc.) (the
Company) was organized under the laws of the State of Nevada on March 6, 1992.
Its purpose is to provide a vehicle to acquire or merge with another entity.
Since the Company has not yet begun operations, it is considered a development
stage company.
BASIS OF PRESENTATION
The unaudited financial statements included herein have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. These financial statements reflect, in the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position and results of operations as of and for
the periods indicated. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes the disclosures which are made, when
read in conjunction with the audited fiscal 1996 financial statements, are
adequate to make the information presented not misleading.
CASH AND EQUIVALENTS
Cash and equivalents are stated at cost plus accrued interest. The Company
considers all highly liquid investments with a maturity date of three months or
less to be cash equivalents.
CONCENTRATION OF CREDIT RISK
At September 30, 1997 and December 31, 1996, the Company maintained all its
cash in one commercial bank.
ORGANIZATION COSTS
Organization costs are being amortized on the straight line method over a
period of five years.
LOSS PER SHARE OF COMMON STOCK
Net loss per share of common stock is based on the weighted average number
of shares outstanding during each period.
-7-
<PAGE>
DEOTEXIS, INC.
(FORMERLY KNOWN AS
ZERON ACQUISITIONS, II, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(CONTINUED)
NOTE 2--STOCKHOLDERS' EQUITY:
The Company is authorized to issue 75,000,000 common shares with a par value
of $.001 and 15,000,000 blank check preferred shares with a par value of $.001.
On June 4, 1992, the Company issued a total of 160,000 shares of its common
stock to its officers for a total consideration of $1,600 ($.01 per share).
On June 4, 1992, the Board of Directors authorized the sale, through a self
underwriting, of a minimum of 100,000 common shares and a maximum of 200,000
common shares at $6.25 per share.
During the period of July 1, 1992 through July 15, 1992, the Company issued
a total of 18,750 shares of its common stock ($.001 par value) to various
individuals for a total consideration of $30,000 ($1.60 per share).
On January 14, 1994, the Company closed on the minimum of 100,000 shares at
an aggregate price of $625,000.
NOTE 3--COMMITMENTS AND OTHER MATTERS:
a. Prior to the closing of the Stock Purchase Agreement referred to
in Note 4 hereof, the Company utilized the office of its President.
Pursuant to an oral agreement, these facilities were provided on an annual
basis for $15,000 per year commencing January 14, 1994, the closing of the
Company's public offering.
Following the closing of the Stock Purchase Agreement referred to
in Note 4 hereof, the Company has moved to temporary offices, at an annual
cost to the Company of $5,100.
b. The Company entered into a consulting agreement with the Zeron
Group, Inc., a New York corporation. The Company's Chairman of the Board of
Directors has been chairman of the Zeron Group, Inc. since May 1989. The
annual fee pursuant to the agreement was $15,000 commencing January 14,
1994, the closing of the Company's public offering.
The consulting agreement between the Company and the Zeron Group,
Inc. was terminated upon the closing of the Stock Purchase Agreement
referred to in Note 4 hereof.
c. Prior to the closing of the Stock Purchase Agreement referred to in
Note 4 hereof, certain conflicts of interest had existed between the
previous management of the Company, their affiliates and the Company.
Management had other interests including business interests to which they
devoted their primary attention. Following the closing of the Stock Purchase
Agreement referred to in Note 4 hereof, the management of the Company
consists solely of Gerold Tebbe, who is President, Secretary and Treasurer.
No such conflicts are now thought to exist.
-8-
<PAGE>
DEOTEXIS, INC.
(FORMERLY KNOWN AS
ZERON ACQUISITIONS, II, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(CONTINUED)
NOTE 4--SUBSEQUENT EVENTS:
(a) On October 10, 1997, the Stock Purchase Agreement dated September
30, 1997 with Overton Holdings Limited, a corporation formed under the laws
of the Turks & Caicos Islands, British West Indies ("OHL"), Gary Takata,
Shigeru Masuda and Gerold Tebbe, closed. Pursuant to the terms of the Stock
Purchase Agreement, the Company issued 4,183,125 newly-issued and non-
registered shares of Common Stock, $.001 par value (the "New Shares") to
OHL, in return for a cash payment to the Company of $4 million from OHL,
and the transfer to the Company for nominal consideration, plus future
royalties tied to the revenues recognized by the Company from the
commercial exploitation thereof, of certain patents, patent applications
and related intellectual property owned by Gerold Tebbe or entities owned
and controlled by him. OHL is 100% beneficially owned by Gerold Tebbe. The
New Shares account for 92% of the issued and outstanding common stock of the
Company and therefore give OHL control over the Company. Prior to the
closing of the Stock Purchase Agreement, Gary Takata, then President,
Secretary and a Director of the Company, and Shigeru Masuda, then Chairman
of the Board of Directors of the Company, together beneficially owned 55.2%
of the common stock of the Company and controlled the Company. Upon the
closing of the Stock Purchase Agreement and in accordance with the
provisions thereof, Mr. Masuda resigned as a Director of the Company, and
Mr. Takata resigned his officerships and directorship with the Company,
and appointed Gerold Tebbe sole director. Following the closing, Mr. Tebbe,
as sole Director, appointed himself President, Treasurer and Secretary of
the Company.
In connection with the above, the agreements regarding rent and
consulting services rendered to the Company, discussed in Note 3(a) and (b)
hereto, have been terminated and all outstanding amounts payable for rent
and consulting fees have been cancelled.
(b) On October 13, 1997, by action by written consent without a meeting,
OHL, as majority stockholder of the Company, acted to amend the Company's
Articles of Incorporation to change the Company's corporate name to
"Deotexis, Inc." An amendment to the Company's Articles of Incorporation was
prepared and filed with the Secretary of State of Nevada on October 15,
1997. On October 22, 1997, all of the non-consenting stockholders of the
Company were sent written notification of the action taken by the majority
stockholder to change the Company's name.
-9-
<PAGE>
DEOTEXIS, INC.
(FORMERLY KNOWN AS
ZERON ACQUISITIONS, II, INC.)
(A DEVELOPMENT STAGE COMPANY)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS
SEPTEMBER 30, 1997
At September 30, 1997, the Company's current assets amounted to $55,173
while current liabilities amounted to $27,500.
PART II OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS--NONE
ITEM 2 CHANGES IN SECURITIES--
On October 10, 1997, the Stock Purchase Agreement dated September 30, 1997
with Overton Holdings Limited, a corporation formed under the laws of the Turks
& Caicos Islands, British West Indies ("OHL"), Gary Takata, Shigeru Masuda and
Gerold Tebbe, closed. Pursuant to the terms of the Stock Purchase Agreement,
the Company issued 4,183,125 newly-issued and non-registered shares of Common
Stock, $.001 par value (the "New Shares") to OHL, in return for a cash payment
to the Company of $4 million from OHL, and the transfer to the Company for
nominal consideration, plus future royalties tied to the revenues recognized by
the Company from the commercial exploitation thereof, of certain patents, patent
applications and related intellectual property owned by Gerold Tebbe or entities
owned and controlled by him. OHL is 100% beneficially owned by Gerold Tebbe. The
New Shares account for 92% of the issued and outstanding common stock of the
Company and therefore give OHL control over the Company. Prior to the closing of
the Stock Purchase Agreement, Gary Takata, then President, Secretary and a
Director of the Company, and Shigeru Masuda, then Chairman of the Board of
Directors of the Company, together beneficially owned 55.2% of the common stock
of the Company and controlled the Company. Upon the closing of the Stock
Purchase Agreement and in accordance with the provisions thereof, Mr. Masuda
resigned as a Director of the Company, and Mr. Takata resigned his officerships
and directorship with the Company, and appointed Gerold Tebbe sole director.
Following the closing, Mr. Tebbe, as sole Director, appointed himself
President, Treasurer and Secretary of the Company.
-10-
<PAGE>
DEOTEXIS, INC.
(FORMERLY KNOWN AS
ZERON ACQUISITIONS, II, INC.)
(A DEVELOPMENT STAGE COMPANY)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS
SEPTEMBER 30, 1997
The New Shares sold by the Company to OHL pursuant to the Stock Purchase
Agreement were not registered under the Securities Act of 1933, as amended (the
"Act"), in reliance upon the exemption therefrom afforded by Regulation S under
the Act. The New Shares consisted of 4,183,125 shares of the Common Stock, $.001
par value, of the Company, and the sale thereof closed on October 10, 1997. All
of the New Shares were purchased by OHL for $4 million in cash. The transaction
was not underwritten, and therefore no underwriting discounts or commissions
were paid.
The New Shares were issued by the Company without registration under the
Act in reliance on the exemption from registration afforded by Regulations S
under the Act. The Company relied upon an opinion of counsel to Gerold Tebbe
and OHL, as well as representations and warranties made by Gerold Tebbe and
OHL in the Stock Purchase Agreement, to establish the necessary factual basis
to determine that the Regulations S exemption was available. OHL is a
corporation formed under the laws of the Turks & Caicos Islands, British West
Indies. The certificates representing the New Shares were delivered to OHL
upon the closing of the Stock Purchase Agreement at OHL's offices in
Providenciales, Turks & Caicos Islands, British West Indies. Gerold Tebbe is a
German national residing in Monaco. Further, each of Gerold Tebbe and OHL
represented and warranted to the Company in the Stock Purchase Agreement that
(a) neither is a "U.S. Person," as defined in Rule 902(o) of Regulation S,
and (b) that the purchase of the New Shares by OHL would not take place
within the "United States," as defined in Rule 902(p) of Regulation S.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES--NONE
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On October 13, 1997, by action by written consent without a meeting, OHL, as
majority stockholder of the Company, acted to amend the Company's Articles of
Incorporation to change the Company's corporate name to "Deotexis, Inc." An
amendment to the Company's Articles of Incorporation was prepared and filed with
the Secretary of State of Nevada on October 15, 1997. On October 22, 1997, all
of the non-consenting stockholders of the Company were sent written notification
of the action taken by the majority stockholder to change the Company's name.
-11-
<PAGE>
DEOTEXIS, INC.
(FORMERLY KNOWN AS
ZERON ACQUISITIONS, II, INC.)
(A DEVELOPMENT STAGE COMPANY)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS
SEPTEMBER 30, 1997
ITEM 5 OTHER INFORMATION--NONE
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
--Form 8-K filed by the Company on August 4, 1997.
-12-
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
DEOTEXIS, INC.
BY: /S/ GEROLD TEBBE
-----------------------------------------
Gerold Tebbe
PRESIDENT AND DIRECTOR
Dated: November 13, 1997
-13-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Deotexis Inc. financial statements for the nine months ended September 30, 1997
and is qualified in its entirety by reference to such Financial Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,281
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 55,173
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 55,173
<CURRENT-LIABILITIES> 27,500
<BONDS> 0
0
0
<COMMON> 279
<OTHER-SE> 27,394
<TOTAL-LIABILITY-AND-EQUITY> 55,173
<SALES> 0
<TOTAL-REVENUES> 16,230
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 30,192
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (13,962)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,962)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,962)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> 0
</TABLE>
