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 March 31, 1999 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 March 31, 1999 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 March 31, 1999 (Unaudited) and December 31, 1998 .......... 3
Statements of Operations (Unaudited):
For the three months ended March 31, 1999 and 1998
and cumulative from inception (April 4, 1989)
through March 31, 1999 .......................................... 4
Comparison of three months ended March 31, 1999
with quarter ended March 31, 1998 ............................... 5
Statements of Cash Flows (Unaudited):
For the three months ended March 31, 1999 and 1998
and cumulative from inception (April 4, 1989)
through March 31, 1999 .......................................... 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
<PAGE>
CERX VENTURE CORPORATION
(A Development Stage Company)
Balance Sheets
March 31, Dec. 31,
1999 1998
---- ----
(Unaudited) (Audited)
ASSETS
------
CURRENT ASSETS
Cash $ 309 $ 1,014
--------- ---------
TOTAL ASSETS $ 309 $ 1,014
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
- -------------------------------------
CURRENT LIABILITIES
Accounts payable $ 2,580 $ 2,580
Advances 15,590 14,590
Accrued interest 21,928 18,741
Promissory notes to an officer/stockholder 159,372 159,372
--------- ---------
Total Liabilities 199,470 195,280
--------- ---------
STOCKHOLDERS' DEFICIT
Preferred stock; $.001 par value; authorized -
15,000,000 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 (425,156) (420,264)
--------- ---------
Total Stockholders' Deficit (199,161) (194,269)
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 309 $ 1,014
========= =========
See accompanying notes to financial statements.
3
<PAGE>
CERX VENTURE CORPORATION
(A Development Stage Company)
Statements of Operations
(Unaudited)
April 4, 1989
For The Three Months Ended (inception) to
March 31, March 31, March 31,
-------------------------- ------------
1999 1998 1999
---- ---- ----
Costs and Expenses:
Costs of business acquisitions $ 0 $ 0 $ 192,020
General and administrative 1,705 3,907 144,743
Interest 3,187 1,960 21,929
Offering costs 0 -- 66,464
----------- ----------- -----------
Total expenses 4,892 5,867 425,156
----------- ----------- -----------
Net loss (4,892) (5,867) (425,156)
=========== =========== ===========
Net loss per common share (nil) (nil)
=========== ===========
Weighted average common shares
outstanding 5,002,838 5,002,838
=========== ===========
See accompanying notes to financial statements.
4
<PAGE>
CERX VENTURE CORPORATION
(A Development Stage Company)
Statements of Operations
Comparison of Quarter Ended March 31, 1999
with Quarter Ended March 31, 1998
(Unaudited)
For the 1st Quarter Ended
March 31,
-------------------------
1999 1998 Difference
---- ---- ----------
Revenue -0- -0- -0-
Cost, Expenses:
Cost of acquisition -- -- --
General and administrative 1,705 3,907 2,202
Interest 3,187 1,960 (1,227)
------ ------ ------
Total Expenses 4,892 5,867 995
------ ------ ------
Net Loss (4,892) (5,867) 995
====== ====== ======
See accompanying notes to financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
CERX VENTURE CORPORATION
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
For the Three
Months Ended April 4, 1989
March 31, (inception) to
1999 1998 March 31, 1999
---- ---- --------------
Cash flows from operating activities
<S> <C> <C> <C>
Net loss (4,892) (5,867) (425,156)
Adjustments to reconcile net loss to net
cash used by operating activities:
Capital contribution by an
officer/stockholder -- -- 53,343
Common stock issued for costs
advanced and services -- -- 151,112
Changes in assets and
liabilities:
Accounts payable -- 3,183 2,580
Accrued interest 3,187 1,960 21,928
-------- -------- --------
Net cash used in operating activities (1,705) (724) (196,193)
-------- -------- --------
Cash flows from financing activities:
Proceeds from promissory notes -- 30,000 159,372
Short term loan 1,000 (30,000) 15,590
Proceeds from sale of common stock -- -- 21,540
-------- -------- --------
Net cash provided by financing activities 1,000 -- 196,502
-------- -------- --------
Net increase (decrease) in cash and
cash equivalents (705) (724) 309
Cash and cash equivalents at beg. period 1,014 4,609 --
-------- -------- --------
Cash and cash equivalents at end of period 309 3,885 309
======== ======== ========
See accompanying notes to financial statements.
6
</TABLE>
<PAGE>
CERX VENTURE CORPORATION
(A Development Company)
Financial Notes (Unaudited)
March 31, 1999
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, 1998, 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.
Note 6 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.
7
<PAGE>
Note 7 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, 1998.
Note 8 Comprehensive Income
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard Number 130 (SFAS 130) "Reporting
Comprehensive Income", that establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. There were no items of comprehensive income as defined by
SFAS 130 for any of the periods presented.
Note 9 1994 Compensatory Stock Option Plan
The Company has adopted a compensatory stock option plan (the "CSO Plan")
which allows for the issuance of options to purchase up to 5,000,000 shares of
stock to employees, officers, directors and consultants of the Company. The CSO
Plan is not intended to qualify as an "incentive stock option plan" under
Section 422 of the Internal Revenue Code. Options will be granted under the CSO
Plan at exercise prices to be determined by the Board of Directors or other CSO
Plan administrator. The Company will incur compensation expense to the extent
that the market value of the stock at date of grant exceeds the amount the
granteee is required to pay for the options. No options have been granted under
the CSO Plan to date.
Note 10 1994 Employee Stock Compensation Plan
The Company has adopted an employee stock compensation plan (the "ESC
Plan") which allows for the issuance of up to 5,000,000 shares of stock to
employees, officers, directors and consultants of the Company. The Company will
incur compensation expense to the extent the market value of the stock at date
of grant exceeds the amount the employee is required to pay for the stock (if
any). The ESC Plan will be administered by the Board of Directors of a committee
of directors. As of December 31, 1998, the Company has awarded 2,012,853 shares
of common stock under the ESC Plan.
Note 11 Related Party Transactions
During 1998, John D. Brasher Jr., the Company's principal shareholder and
president, loaned the Company $61,850 and these funds subsequently were used to
partially repay advances of $60,000.
On March 31, 1999, the Company owed John D. Brasher Jr. an aggregate of
$159,372 in demand promissory notes and $21,928 of accrued interest (8% simple
interest per annum) for cash loans and expenses advanced on behalf of the
Company.
On December 31, 1997, Brasher & Company, a law firm owned by the Company's
President, forgave $53,343 of accrued legal fees and expenses advanced on behalf
of the Company. The Company has recorded this debt forgiveness as a capital
contribution.
The Company utilizes office space provided by Brasher & Company at no
charge.
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 1998
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 March 31, 1999, the Company had accumulated a deficit (net loss) of
$425,156 since inception and had $309 in cash on hand but no other significant
assets. The Company was indebted to John D. Brasher Jr., at March 31, 1999, for
$159,372 in cash loans and $21,928 in interest. The Company has no long-term
liabilities.
RESULTS OF OPERATIONS - FIRST QUARTER 1999. During the quarter ended March
31, 1999, the first quarter of the year, the Company incurred a net loss of
$4,892. Expenses in the first 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.
RESULTS OF OPERATIONS - FIRST QUARTER 1998. During the quarter ended March
31, 1998, the Company had no revenues and incurred a net loss of $5,867.
Expenses in the first quarter of 1998 related primarily to miscellaneous
operating costs. Operating costs primarily related to general and administrative
operating costs. The Company paid no salaries or rent during the first quarter
of 1998.
9
<PAGE>
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: May 13, 1999
CERX VENTURE CORPORATION
By /s/ John D. Brasher Jr.
--------------------------------------
John D. Brasher Jr., Chairman, Chief
Exec. Officer, President, Chief
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
FOR THIS PERIOD ENDED 03/31/99 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 309
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 309
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 309
<CURRENT-LIABILITIES> 199,470
<BONDS> 0
0
0
<COMMON> 5,003
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 309
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,705
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,187
<INCOME-PRETAX> (4,892)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,892)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,892)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
