SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended September 30, 1998 Commission File No. 0-25022
CERX VENTURE CORPORATION
(Exact name of Registrant as specified in its charter)
NEVADA 72-1148906
(State or other jurisdiction of (I.R.S. Empl. Ident. No.)
incorporation or organization)
90 Madison Street, Suite 707
Denver, Colorado 80206
(Address of Principal Executive Offices) (Zip Code)
(303) 355-3350
(Registrant's Telephone Number, including Area Code)
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 such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
at least the past 90 days.
Yes X No
The number of shares outstanding of each of the Registrant's classes of common
equity, as of September 30, 1998 are as follows:
Class of Securities Shares Outstanding
Common Stock, $.001 par value 5,002,838
<PAGE>
INDEX
Page of
Report
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets:
As of September 30, 1998 (Unaudited) and December 31, 1997 ......... 3
Statements of Operations (Unaudited):
For the nine months ended September 30, 1998 and 1997
and cumulative from inception (April 4, 1989)
through September 30, 1998 ......................................... 4
Comparison of quarter ended September 30, 1998
with quarter ended September 30, 1997 .............................. 5
Statements of Cash Flows (Unaudited):
For the nine months ended September 30, 1998 and 1997
and cumulative from inception (April 4, 1989)
through September 30, 1998 ......................................... 6
Notes to Financial Statements (Unaudited) .......................... 7
Item 2. Management's Discussion and Analysis or Plan of Operation ....... 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ................................ 10
Signatures ......................................................... 10
2
<PAGE>
CERX VENTURE CORPORATION
(A Development Stage Company)
Balance Sheets
(Unaudited)
September 30, Dec. 31,
1998 1997
---- ----
ASSETS
------
CURRENT ASSETS
Cash 634 4,609
-------- --------
634 4,609
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
- -------------------------------------
CURRENT LIABILITIES
Accounts payable 3,455 139
Advances 44,590 74,590
Accrued interest 14,055 8,217
Promissory notes to an officer/stockholder 127,872 97,522
-------- --------
Total Liabilities 189,972 180,468
-------- --------
STOCKHOLDERS' DEFICIT
Preferred stock, $.001 par value; Series A, 6.75%
non-voting convertible preferred; authorized -
4,000,000 shares; issued - none -- --
Preferred stock; $.001 par value; authorized -
11,000,000 shares; issued - none -- --
Common stock, $.001 par value; authorized -
50,000,000 shares; issued and outstanding -
5,002,838 shares 5,003 5,003
Additional paid-in capital 220,992 220,992
Deficit accumulated during the
development stage (415,333) (401,854)
-------- --------
Total Stockholders' Deficit (189,338) (175,859)
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT 634 4,609
======== ========
See accompanying notes to financial statements.
3
<PAGE>
CERX VENTURE CORPORATION
(A Development Stage Company)
Statements of Operations
(Unaudited)
April 4, 1989
For The Nine Months Ended (inception) to
Sept. 30, Sept. 30, Sept. 30,
--------- --------- ---------
1998 1997 1998
---- ---- ----
Costs and Expenses:
Costs of business acquisitions -- 13,090 192,020
General and administrative 7,641 110,813 142,794
Interest 5,838 5,709 14,055
Offering costs -- -- 66,464
---------- ---------- ----------
Total expenses 13,479 129,612 415,333
---------- ---------- ----------
Net loss (13,479) (129,612) (415,333)
========== ========== ==========
Net loss per common share ($ 0.003) ($ 0.026)
========== ==========
Weighted average common shares
outstanding 5,002,838 4,977,838
========== ==========
See accompanying notes to financial statements.
4
<PAGE>
CERX VENTURE CORPORATION
(A Development Stage Company)
Statements of Operations
Comparison of Quarter Ended September 30, 1998
with Quarter Ended September 30, 1997
(Unaudited)
For the 3rd Quarter Ended
Sept. 30,
-------------------------
1998 1997
---- ----
Revenue -0- -0-
Cost, Expenses:
Cost of acquisition -- --
General and administrative 1,010 6,339
Interest 1,918 1,679
------ ------
Total Expenses 2,928 3,018
------ ------
Net Loss (2,928) (8,018)
====== ======
See accompanying notes to financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
CERX VENTURE CORPORATION
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
For the Nine Months Ended April 4, 1989
Sept. 30, (inception) to
1998 1997 Sept. 30, 1998
---- ---- --------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss (13,479) (129,612) (415,333)
Adjustments to reconcile net loss to net
cash used by operating activities:
Common stock issued for costs
advanced and services -- -- 151,112
Changes in assets and
liabilities:
Accounts payable 3,316 1,501 3,455
Accrued interest 5,838 -- 14,055
-------- -------- --------
Net cash used in operating activities (4,325) (128,111) (246,711)
-------- -------- --------
Cash flows from financing activities
Proceeds from promissory notes 30,350 58,980 127,872
Short term loan (30,000) 74,590 44,590
Proceeds from sale of common stock -- 2,500 74,883
-------- -------- --------
Net cash provided by financing activities 350 136,070 247,345
-------- -------- --------
Net increase (decrease) in cash and
cash equivalents (3,975) 7,959 634
Cash and cash equivalents at beg. period 4,609 2,309 --
-------- -------- --------
Cash and cash equivalents at end of period 634 10,268 634
======== ======== ========
See accompanying notes to financial statements.
6
</TABLE>
<PAGE>
CERX VENTURE CORPORATION
(A Development Company)
Financial Notes (Unaudited)
September 30, 1998
Note 1 Description of Business
The financial statements presented are those of Cerx Venture
Corporation, a development stage company (the Company). The Company
was incorporated on April 14, 1989 under the laws of the State of
Nevada. On March 23, 1998, the Company's name was changed from Cerx
Entertainment Corporation to Cerx Venture Corporation.
The Company's activities to date have been directed towards the
raising of capital and two attempted business acquisitions.
The audit report of the Company's independent accountants reporting on
the Company's financial statements for the year ended December 31,
1997, expressed doubt regarding the Company's ability to continue as a
going concern in light of the Company's recurring losses and current
liabilities, unless the Company obtains future profitable operations
or additional financing. The financial statements do not include any
adjustments that might be necessary should the Company be unable to
continue in existence.
Note 2 Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reporting 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 period. Actual results could differ from those
estimates.
Note 3 Fair Value of Financial Instruments
The fair value of the Company's payables, accrued interest and
promissory notes due to an officer/shareholder is not practicable to
estimate due to the related party nature of the underlying
transactions and the indefinite payment terms.
Note 4 Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income
in the year in which those temporary differences are expected to
reverse. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in the statement of operations in the
period that includes the enactment date.
Note 5 Loss Per Common Share
Loss per common share is computed by dividing the net loss by the
weighted average shares outstanding during the period.
7
<PAGE>
Note 6 Reclassifications
Certain items for 1997 have been reclassified to conform to the
current years presentation.
Note 7 Preferred Stock
On February 10, 1997, the Company's Board of Directors designated
4,000,000 shares of preferred stock as the Series A, 6.75% Non-Voting
Convertible Preferred Stock. No shares of the Series A, 6.75%
Non-Voting Convertible Preferred Stock have been issued. On March 31,
1998, the Company cancelled the designation of the Series A, 6.75%
Non-Voting Convertible Preferred Stock.
The Company has a total of 15,000,000 preferred shares, $.001 par
value, authorized. Dividends, voting rights and other terms, rights
and preferences of these preferred shares have not been designated but
may be designated by the Board of Directors from time to time.
Note 8 Unaudited Financial Statements
The accompanying unaudited financial statements of the Company have
been prepared on the accrual basis and in accordance with the
instructions to Form 10-QSB and do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. These financial
statements should be read in conjunction with the financial statements
and notes thereto included in the Company's annual report on Form
10-KSB for the year ended December 31, 1997.
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
BACKGROUND. Cerx Venture Corporation ("Cerx" or the "Company") was
incorporated in the State of Nevada on April 4, 1989, under the name Chelsea
Atwater, Inc. On March 19, 1997, the Company changed its name to Cerx
Entertainment Corporation, and on March 23, 1998, changed its name again to Cerx
Venture Corporation. Cerx has no significant assets and is in the development
stage in accordance with Financial Accounting Standards Board Standard No. 7.
The Company intends to either raise funds to originate a business or,
alternatively, enter into a business combination with one or more as yet
unidentified privately held businesses.
FORWARD-LOOKING STATEMENTS. This report contains certain forward-looking
statements and information relating to the Company that are based on the beliefs
of its management as well as assumptions made by and information currently
available to its management. When used in this report, the words "anticipate",
"believe", "estimate", "expect", "intend", "plan" and similar expressions, as
they relate to the Company or its management, are intended to identify
forward-looking statements. These statements reflect management's current view
of the Company with respect to future events and are subject to certain risks,
uncertainties and assumptions. Should any of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described in this report as anticipated,
estimated or expected. The Company's realization of its business aims will
depend in the near future principally on the successful acquisition of
operations or origination of a business as discussed below.
BUSINESS OF THE COMPANY. The Company's business is to either acquire a
small to medium-size business (or its assets) actively engaged in a business
generating revenues or having immediate prospects of generating revenues, or to
originate a business. Due to its current lack of cash, the Company intends to
acquire a business by issuing shares of the Company's stock in a merger or stock
exchange. Originating a business, on the other hand, would require sufficient
cash to launch the business, and the origination of a business may involve
starting a business from scratch or may take another form such as a joint
venture, partnership or other association with other individuals or companies.
In order to avoid becoming subject to regulation under the Investment Company
Act of 1940, as amended, the Company does not intend to enter into any
transaction involving the purchase of another corporation's stock unless the
Company can acquire at least a majority interest in that corporation.
The Company has not identified any industry, segment within an industry or
type of business, nor geographic area, in which it will concentrate its efforts,
and any assets or interest acquired or business originated may be in any
industry or location, anywhere in the world. In regard to acquisitions, the
Company will give preference to profitable companies or ventures with a
significant asset base sufficient to support a listing on a national securities
exchange or quotation on the NASDAQ Small Cap Market. There is no assurance that
the Company will be successful in acquiring or originating any business. The
Company has no operations or source of revenues and has no assets other than a
nominal amount of cash.
LIQUIDITY AND CAPITAL RESOURCES. The Company has funded its operations to
date exclusively through cash loans and cash advances provided by shareholders.
The Company did not realize any cash from equity financing activities in 1997
and has no line of credit or similar credit facility available to it. However,
the Company currently pays no salaries or rent, has little in the way of general
or administrative overhead expenses, and has no material capital commitments and
will have none unless and until it is able to raise the equity capital to become
operational.
As of September 30, 1998, the Company had accumulated a deficit (net loss)
of $415,333 since inception and had $634 in cash on hand but no other
significant assets. The Company was indebted to John D. Brasher Jr., at
September 30, 1998, for $127,872 in cash loans and $14,055 in interest. The
Company has no long-term liabilities.
RESULTS OF OPERATIONS - THIRD QUARTER 1998. During the quarter ended
September 30, 1998, the third quarter of the year, the Company incurred a net
loss of $2,928. Expenses in the third quarter related primarily to accounting
fees and costs relating to the Company's SEC filings. The Company paid no rent
or salaries during the quarter.
9
<PAGE>
RESULTS OF OPERATIONS - THIRD QUARTER 1997. During the quarter ended
September 30, 1997, the Company had no revenues and incurred a net loss of
$8,018. Expenses in the third quarter of 1997 related primarily to miscellaneous
operating costs. Operating costs primarily related to filing of amendments of
the Company's articles of incorporation and taking preliminary steps in an
attempt to launch a now defunct business plan. The Company paid no salaries or
rent during the third quarter of 1997.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
Exhibit 27 - Financial Data Schedule
(b) REPORTS ON FORM 8-K.
NONE.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report on Form 10-QSB to be signed on its behalf by the undersigned,
thereunto duly authorized.
DATED: November 5, 1998
CERX VENTURE CORPORATION
By /s/ John D. Brasher Jr.
------------------------------------
John D. Brasher Jr., Chairman,
Chief Exec. Officer,
President, Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
FOR THIS PERIOD ENDED 09/30/98 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 634
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 634
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 634
<CURRENT-LIABILITIES> 189,972
<BONDS> 0
0
0
<COMMON> 5003
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 634
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,641
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,838
<INCOME-PRETAX> (13,479)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,479)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,479)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
