-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G2fTv7PLhMfItGxpKNmmEoXg278Q90nVAKD3Nf8XmTQvrQKDNK1gFgpHtUzKuqp1 e7tmeFuNxZjWhbo2bkVy4Q== 0000932127-97-000003.txt : 19971106 0000932127-97-000003.hdr.sgml : 19971106 ACCESSION NUMBER: 0000932127-97-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971105 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CERX ENTERTAINMENT CORP CENTRAL INDEX KEY: 0000932127 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 721148906 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-25022 FILM NUMBER: 97708149 BUSINESS ADDRESS: STREET 1: 90 MADISON STREET STREET 2: SUITE 707 CITY: DENVER STATE: CO ZIP: 80206 BUSINESS PHONE: 3033553000 MAIL ADDRESS: STREET 1: 90 MADISON ST. STE. 707 STREET 2: SUITE 707 CITY: DENVER STATE: CO ZIP: 80206 FORMER COMPANY: FORMER CONFORMED NAME: CHELSEA ATWATER INC /NV/ DATE OF NAME CHANGE: 19941031 10QSB 1 ============================================================================= 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, 1997 Commission File No. 0-25022 CERX ENTERTAINMENT 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 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, 1997 are as follows: Class of Securities Shares Outstanding ------------------- ------------------ Common Stock, $.001 par value 5,002,838 INDEX Page of Report PART I. FINANCIAL INFORMATION Item 1. Financial Statements. Balance Sheets: As of September 30, 1997 (Unaudited) and December 31, 1996..... 3 Statement of Operations (Unaudited): For the nine months ended September 30, 1997 and 1996 and Cumulative from inception (April 4, 1989) through September 30, 1997........................................................... 4 Statements of Cash Flows (Unaudited): For the nine months ended September 30, 1997 and 1996 and Cumulative from inception (April 4, 1989) through September 30, 1997........................................................... 5 Notes to Financial Statements (Unaudited)...................... 6 Item 2. Management's Discussion and Analysis or Plan of Operation...... 8 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K.............................. 11 Signatures.................................................... 11 CERX ENTERTAINMENT CORPORATION (A Development Stage Company) Balance Sheets (Unaudited) Sept. 30, Dec. 31, 1997 1996 --------- -------- ASSETS ------ CURRENT ASSETS Cash 10,268 2,309 Note receivable - - --------- -------- Total Current Assets 10,268 2,309 --------- -------- Total Assets 10,268 2,309 ========= ======== LIABILITIES AND STOCKHOLDERS' DEFICIT ------------------------------------- CURRENT LIABILITIES Accounts payable 1,501 - Due to officer 61,117 16,637 Promissory notes to officer 97,522 83,022 Short term loan 74,590 - --------- --------- Total Current Liabilities 234,730 99,659 --------- --------- STOCKHOLDERS' DEFICIT Preferred stock, $.001 par value; 15,000,000 shares authorized; 5,000,000 shares designated as Series A, 6.75% Non-Voting Convertible Preferred Stock; none issued - - Common stock, $.001 par value; 50,000,000 shares authorized, 5,002,838 shares issued and outstanding 5,003 4,953 Additional paid-in capital 167,649 165,199 Deficit accumulated during the development stage (397,114) (267,502) --------- --------- Total Stockholders' Deficit (224,462) (97,350) TOTAL LIABILITIES AND --------- --------- STOCKHOLDERS' DEFICIT 10,268 2,309 ========= ========= See accompanying notes to financial statements. CERX ENTERTAINMENT CORPORATION (A Development Stage Company) Statement of Operations (Unaudited) Cumulative from For The Nine Months Ended, inception to Sept. 30, Sept. 30, Sept. 30, 1997 1996 1997 ------------ ------------- -------------- Revenues: Interest 74 - 74 ------------ ------------- -------------- Total revenues 74 - 74 Costs and Expenses: Costs related to attempted business acquisition 13,090 - 167,517 General and administrative 110,813 10,695 205,381 Interest 5,783 - 6,256 Offering costs - - 18,034 ------------ ------------- -------------- Total cost and expenses 129,686 10,695 397,188 ------------ ------------- -------------- Net loss (129,612) (10,695) (397,114) ============ ============= ============== Net loss per common share (0.03) (Nil) ============ ============= Weighted average shares outstanding 4,986,171 3,113,245 ============ ============= See accompanying notes to financial statements. CERX ENTERTAINMENT CORPORATION (A Development Stage Company) Statements of Cash Flows (Unaudited) For the Nine Months Ended, Cumulative from Sept. 30, inception to 1997 1996 Sept. 30, 1997 ---------- ---------- -------------- Cash flows from operating activities: Net loss (129,612) (10,695) (397,114) Adjustments to reconcile net loss to net cash used by operating activities: Note receivable - - - Accounts payable 1,501 - 1,501 Common stock issued for costs advanced and services - 7,395 151,112 Increase in amounts due to officer 44,480 3,300 61,117 ---------- ---------- ------------- Net cash used in operating activities (83,631) - (183,384) Cash flows from financing activities: Proceeds from promissory notes 14,500 - 97,522 Short term loan 74,590 - 74,590 Proceeds from sale of common stock 2,500 - 21,540 ----------- ----------- ------------- Net cash provided by financing activities 91,590 - 193,652 ------------ ------------ ------------- Net increase in cash 7,959 - 10,268 ------------ ------------ ------------- Cash at beg. of period 2,309 - - ------------ ------------ ------------- Cash at end of period 10,268 - 10,268 ============ ============ ============= See accompanying notes to financial statements. CERX ENTERTAINMENT CORPORATION (A Development Stage Company) Notes to Financial Statements (Unaudited) Note 1. Cerx Entertainment Corporation ("Company") was incorporated in the State of Nevada on April 4, 1989, under the name Chelsea Atwater, Inc. The Company's name was changed in January 1997 to Cerex Entertainment Corporation and changed again due to potential name conflicts in February 1997 to Cerx Entertainment Corporation. The common stock of the Company is quoted on the OTC Electronic Bulletin Board under symbol CERX but has not been actively traded. The Company's former business was to find and acquire an unidentified existing company or business in order to become operational and increase shareholder value. The audit report of the Company's independent accountants reporting on the Company's financial statements for the year ended December 31, 1996, 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. 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 principle 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, 1996. Note 3. At the end of the third quarter, the Company owed $97,522 in principal and $6,526 in interest to John D. Brasher Jr., the Company's principal shareholder and Chairman, President and Chief Executive Officer, for cash loaned, evidenced by demand promissory notes bearing simple interest at 8% per annum. The Company also owed to its legal counsel, Brasher & Company, which is owned by Mr. Brasher, $61,117 for corporate expenses advanced and legal fees. Note 4. The Company is attempting to raise cash through the sale of its preferred stock and hopes to raise not less than $3 million in the fourth quarter of 1997. The offering of shares is anticipated to be made outside the United States of America in reliance upon Regulation S under the Securities Act of 1933, as amended. During the first quarter of 1997, the Company received from a firm intending to act as distributor of shares approximately US$75,000 as an advance against this anticipated offering to assist the Company in ramping up to conduct the offering. Although no loan documents have been executed, the Company has elected to treat the advance as a loan. Should the offering be successful, the advance will either be repaid or converted to the Company preferred stock on the same terms as the preferred stock offering, as the distributor elects. The Company has not yet executed a formal agreement with the distributor, and the distributor is not under any legal or other obli- gation to sell any shares of preferred stock. Thus there can be no assurance that any such stock can be sold. The Company's failure to raise such funds would mean its inability to launch its business plan. CERX ENTERTAINMENT CORPORATION (A Development Stage Company) Notes to Financial Statements (Unaudited) Note 5. The Board of Directors, pursuant to statutory authority set forth in the Nevada General Corporation Law and pursuant to authority contained in the Company's articles of incorporation as amended to date, by resolution established and designated a series of preferred stock consisting of 4,000,000 shares, designated as the SERIES A, 6.75% NON-VOTING CONVERTIBLE PREFERRED STOCK. No shares of such series have been issued. Note 6. Loss per common share is based on the weighted average number of common shares outstanding during the period. Note 7. During the year ended December 31, 1996, the Company incurred a net loss of $233,902 and as of that date had accumulated a deficit of $267,502. During the third quarter covered by these statements, the Company realized no revenues and incurred a loss for the quarter of $8,299. The Company's operations during the quarter consisted primarily of activities related to its attempt to raise capital for operations and preliminary activities looking toward launch ofits operations once funding is received. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. Background Information Cerx Entertainment Corporation, a Nevada corporation ("Cerx" or the "Company"), is in the development stage in accordance with Financial Accounting Standards Board Standard No. 7. Cerx's efforts at this time are concentrated upon raising capital to execute its business plan to become the premier operator of entertainment networks on the Internet, potentially including networks for kids, news, sports, gaming and general entertainment. See "Plan of Operation" below. Cerx's principal executive offices are located at 90 Madison Street, Suite 707, Denver, Colorado 80206. Its telephone number there is (303) 355-3350, and its facsimile number is (303) 355-3063. Forward-Looking Information This report contains certain forward-looking statements and information relating to Cerx 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 Cerx or its management, are intended to identify forward-looking statements. These statements reflect management's current view of Cerx 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. Cerx's realization of its business aims could be materially and adversely affected by any technical or other problems in, or difficulties with, planned fundings and technologies, third party technologies which render Cerx's technologies obsolete, the unavailability of required third party technology licenses on commercially reasonable terms, the loss of key research and development personnel, the inability or failure to recruit and retain qualified research and development personnel, or the adoption of technology standards which are different from technologies around which Cerx's business ultimately is built. Cerx does not intend to update these forward-looking statements. Liquidity and Capital Resources Cerx has funded its operations to date exclusively through cash loans and cash advances provided by shareholders. Cerx did not realize any cash from equity financing activities in 1996 and has no line of credit or similar credit facility available to it. However, Cerx 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. Assets and cash available to Cerx from its management and current shareholders are not sufficient for Cerx to carry out its business plan described in this report without additional funding. As of September 30, 1997, Cerx had accumulated a deficit (net loss) of $397,114 since inception and had $10,268 in cash on hand but no other significant assets. Cerx was indebted to John D. Brasher Jr., at September 30, 1997, for cash loans amounting to $97,522 in principal and $6,256 in interest. In addition, at September 30, 1997, Cerx owed Mr. Brasher's law firm, Brasher & Company, $61,117 for Cerx expenses advanced and legal fees. Cerx has no long-term liabilities. The most likely source of capital available to Cerx is through an offering of its securities for cash. Cerx is taking steps to initiate the raising of capital through the sale of its preferred stock and hopes to raise not less than $3 million in the fourth quarter of 1997. The offering is anticipated to be made outside the United States of America in reliance upon Regulation S under the Securities Act of 1933, as amended. During the first quarter of 1997, Cerx received, from a group intending to act as distributor of Cerx shares, approximately US$75,000 as an advance against this offering to assist Cerx with expenses of ramping up to conduct the offering. Although no formal loan documents have been executed, Cerx has elected to treat the advance as a loan. Should the offering be successful, the advance will either be repaid or converted to Cerx preferred stock on the same terms as the preferred stock offering, as the distributor elects. Cerx has not yet executed a formal agreement with the distributor, and the distributor is not under any legal or other obligation to sell any shares of preferred stock, and there can be no assurance that such sums can be raised. Cerx's failure to raise such funds from another source would mean its inability to launch its business plan described in this report. If the required capital is not raised, Cerx will pursue a different busi- ness plan and probably will seek an existing business to acquire for the benefit of its shareholders. In such event, Cerx believes that existing cash and cash equivalents and cash advances available from shareholders will be sufficient to cover its expenses for the remainder of 1997. Results of Operations - Third Quarter 1997 During the quarter ended September 30, 1997, the third quarter of the year, Cerx incurred a net loss of $8,299. Expenses in the quarter related primarily to miscellaneous operating costs and professional fees and interest on promissory notes. Cerx paid no rent or salaries during the quarter. Results of Operations - Third Quarter 1996 During the quarter ended September 30, 1996, Cerx had no revenues and incurred a net loss of $10,695. Expenses in the third quarter of 1996 related primarily to miscellaneous operating costs and professional fees. Operating costs primarily related to filing of reports with the Securities and Exchange Commission and investigating business opportunities. Cerx paid no salaries or rent during the third quarter of 1996 and incurred only insignificant administrative or overhead costs. Operations for the quarter consisted primarily of investigating potential acquisitions of other businesses. Item 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. NONE. (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 3, 1997 CERX ENTERTAINMENT CORPORATION /s/ John D. Brasher Jr. By........................................................... John D. Brasher Jr., Chairman, Chief Exec. Officer, President, Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 10-QSB FOR THE PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB. 1 3-MOS DEC-31-1997 SEP-30-1997 10,268 0 0 0 0 10,268 0 0 10,268 234,730 0 0 0 5,003 0 10,268 0 74 0 0 123,903 0 5,783 0 0 (129,612) 0 0 0 (129,612) (.03) (.03)
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