XERION ECOSOLUTIONS GROUP INC.
(Formerly IMMULABS CORP)
Filing Type: 10QSB
Description: Annual Report
Filing Date: May 15, 2003
Period End: March 31, 2003
Primary Exchange: Over the Counter Bulletin Board
Ticker: XECO
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark one)
XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ------- ACT OF 1934 (Fee required)
For the quarterly period ended March 31, 2003
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
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For the transition period from ______________ to _____________
Commission File Number: 0-26760
XERION ECOSOLUTIONS GROUP INC.
(Formerly IMMULABS CORPORATION)
Colorado 84-1286065
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(State of incorporation) (IRS Employer ID Number)
Suite 132-3495 Cambie Street
Vancouver, BC Canada V5Z 4R3
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(Address of principal executive offices)
(604)696-0073
(Issuer's telephone number)
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Check whether the issuer (1) filed all reports required to be filed by Section
13 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 X NO
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State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: April 15, 2003 5,042,133 common stock.
The SEC maintains an Internet site that contains reports, proxy and information
statements, and other information regarding filings of the Company at
http://www.sec.gov .
Transitional Small Business Disclosure Format (check one): YES NO X
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1
TABLE OF CONTENTS
ITEM NUMBER PAGE
- ----------- ----
PART 1
1. Financial Statements 3
2. Management's Discussion and Analysis or Plan of Operation 12
PART 11
1. Legal Proceedings 13
2. Changes In Securities 13
3. Defaults Upon Senior Securities 13
4. Submission of Matters to a Vote of Security Holders 13
5. Other Information 14
6. Exhibits and Reports on Form 8-K 14
Signatures 15
Exhibit 23.1 - Consent of Independent Certified Public Accountants
PART 1
Item 1 - Financial Statements
Xerion EcoSolutions Group Inc.
(A Development Stage Company)
March 31, 2003
Index
Balance Sheets..............................................................F-1
Statements of Operations....................................................F-2
Statements of Cash Flows....................................................F-3
Notes to the Financial Statements...........................................F-4
2
Xerion EcoSolutions Group Inc.
(A Development Stage Company)
Balance Sheets
As at As at
March 31, December 31,
2003 2002
$ $
(unaudited) (audited)
ASSETS
Current Assets
Cash 25,736 2,997
Prepaid expenses 16,000 --
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Total Current Assets 41,736 2,997
Mining Claims (Note 3) 25,000 --
Technology Rights (Note 4) 20,000 --
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Total Assets 86,736 2,997
========================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable 22,579 41,487
Accrued liabilities 3,750 3,000
Loans from a related party (Note 5) 1,867 1,100
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Total Liabilities 28,196 45,587
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Commitments and Contingencies (Notes 1,5,7 and 8)
Subsequent Event (Note 9)
Stockholders' Equity (Deficit)
Preferred stock, 50,000,000 shares authorized, no par value;
none issued -- --
Common Stock, 300,000,000 shares authorized, $0.001 par value
5,042,133 shares issued and outstanding (December 31, 2002 - 392,133 shares) 5,042 392
(Note 6(a))
Additional Paid-in Capital 7,743,112 7,594,262
Stock based compensation 1,876,171 1,873,815
Donated Capital (Note 5(b)) 6,000 3,000
Deficit Accumulated During the Development Stage (9,571,785) (9,514,059)
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Total Stockholders' Equity (Deficit) 58,540 (42,590)
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Total Liabilities and Stockholders' Deficit 86,736 2,997
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F-1
(The accompanying notes are an integral part of the financial statements)
Xerion EcoSolutions Group Inc.
(A Development Stage Company)
Statements of Operations
Accumulated from
November 1, 1985 For the Three Months
(Date of Inception) Ended
to March 31, March 31
2003 2003 2002
$ $ $
(unaudited) (unaudited) (unaudited)
Revenue -- -- --
- ---------------------------------------------------------------------------------------------------------------
Expenses
General and Administrative
Accounting and audit 33,600 2,925 500
Amortization 2,833 -- --
Donated services 6,000 3,000 --
Financial services 56,266 -- --
Investor relations 170,786 -- --
Legal 1,019,355 6,348 --
Management fees 763,000 -- 90,000
Office 3,689 213 372
Salaries 229,730 26,000 33,000
Stock based compensation 1,876,171 2,356 --
Transfer agent and regulatory 17,225 884 500
Travel and promotion 7,111 -- --
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4,185,766 41,726 124,372
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Selling and Marketing
Advertising 89,238 -- --
Marketing 29,500 16,000 --
Option agreement written-off 15,000 -- --
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133,738 16,000 --
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Total Expenses 4,319,504 57,726 124,372
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Income (Loss) from Continuing Operations (4,319,504) (57,726) (124,372)
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Income (Loss) from Discontinued Operations (5,252,281) -- --
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Net Income (Loss) For the Period (9,571,785) (57,726) (124,372)
===============================================================================================================
Net Income (Loss) Per Share - Basic (0.02) (0.32)
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Weighted Average Shares Outstanding 2,605,000 391,000
===============================================================================================================
F-2
(Diluted loss per share has not been presented as the result is anti-dilutive)
Xerion EcoSolutions Group Inc.
(A Development Stage Company)
Statements of Cash Flows
For the Three Months
Ended
March 31,
2003 2002
$ $
(unaudited) (unaudited)
Cash Flows to Operating Activities
Net loss for the period (57,726) (124,372)
Adjustment to reconcile net loss to cash:
Donated services 3,000 --
Stock based compensation 2,356 --
Change in non-cash working capital items:
Increase in prepaid expenses (16,000) --
Increase in accounts payable and accrued liabilities 342 124,026
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Net Cash Used in Operating Activities (68,028) (346)
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Cash Flows from Financing Activities
Proceeds from subscriptions receivable 20,000 --
Proceeds from shares issued 90,000 --
Advances from a related party 767 --
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Net Cash From Financing Activities 110,767 --
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Cash Flows to Investing Activities
Purchase of mining claims (20,000) --
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Net Cash Used in Investing Activities (20,000) --
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Decrease in Cash 22,739 (346)
Cash - Beginning of Period 2,997 2,276
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Cash - End of Period 25,736 1,930
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Non-Cash Financing Activities
Forgiveness of debt to related party 18,500
Shares issued for acquisition of mining claims 5,000 --
Shares issued for acquisition of technology rights 20,000 --
================================================================================
Supplemental Disclosures
Interest paid -- --
Income tax paid -- --
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F-3
(The accompanying notes are an integral part of the financial statements)
1. Nature of Operations and Continuance of Business
Xerion EcoSolutions Group Inc., formerly Immulabs Corporation (the
"Company"), was initially incorporated as Gemini Ventures, Inc. on November
1, 1985 under the laws of the State of Colorado. The Company changed its
name to Solomon Trading Company, Limited in July 1989; The Voyageur, Inc.
in November 1994; The Voyageur First, Inc. in December 1994; North American
Resorts, Inc. in March 1995; and Immulabs Corporation in September 2000.
Effective March 28, 2003, the Company changed its name to Xerion
EcoSolutions Group Inc. The shares of the Company currently trade on the
Over the Counter Bulletin Board under the ticker symbol "XECO".
From 1995 through 1998, the Company was in the business of selling
vacations in Florida and the sale of time share memberships to the Ocean
Landings and Cypress Island Preserve facilities in Florida which were then
controlled by the Company and the operation of Cypress Island Preserve as a
tourist destination. During the fourth quarter of 1998, the Company
liquidated its holdings in these ventures and discontinued all operations.
With the disposition of all operations, the Company became fully dependent
upon the support of its controlling shareholders for the maintenance of its
corporate status and to provide all working capital.
On December 6, 2002, the Company's Board of Directors affected a 1 new for
100 old reverse split of the issued and outstanding shares. The effect of
this split is reflected in the financial statements as of the first day of
the first period presented.
With the acquisition of sixty-seven mineral claims in California and the
rights to certain ore and waste processing technologies, the Company has
entered the business of mine reclamation and environmental remediation with
a focus on serving the mining and coal fired power plant industries. Refer
to Notes 3 and 4.
These financial statements are prepared using generally accepted accounting
principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course
of business. However, the Company does not have significant cash or other
material assets, nor does it have an established source of revenues needed
to cover its operating costs and to allow it to continue as a going
concern. The Company has ongoing overhead expenses and will require
significant capital to complete its business acquisition and then execute
upon its business plan. The Company's ability to meet those obligations and
continue as a going concern is dependent upon raising new capital through
issuing debt and/or equity securities and then to generate revenues and
profits. Until these funding sources materialize the controlling
shareholders intend to continue the funding of necessary expenses to
sustain operations. In April the Company completed a private placement
offering consisting of 89,000 shares of common stock at a price of $1.00
per share for a total cash consideration of $89,000.
2. Summary of Significant Accounting Policies
Year End
The Company's fiscal year end is December 31.
Cash and Equivalents
For the purpose of the statements of cash flows, all highly liquid
investments with the maturity of three months or less are considered to be
cash equivalents.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported 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 periods. Actual results could differ from those estimates.
Basic and Diluted Net Income (Loss) per Share
The Company computes net income (loss) per share in accordance with SFAS
No. 128, "Earnings per Share" (SFAS 128). SFAS 128 requires presentation of
both basic and diluted earnings per share (EPS) on the face of the income
statement. Basic EPS is computed by dividing net income (loss) available to
common shareholders (numerator) by the weighted average number of common
shares outstanding (denominator) during the period. Diluted EPS gives
effect to all dilutive potential common shares outstanding during the
period including stock options, using the treasury stock method, and
convertible preferred stock, using the if-converted method. In computing
Diluted EPS, the average stock price for the period is used in determining
the number of shares assumed to be purchased from the exercise of stock
options or warrants. Diluted EPS excludes all dilutive potential shares if
their effect is anti dilutive. Loss per share information does not include
the effect of any potential common shares, as their effect would be
anti-dilutive.
2. Summary of Significant Accounting Policies (continued)
Accounting for Stock Based Compensation
The Company has adopted SFAS No. 123 "Accounting for Stock Based
Compensation" which requires that stock awards granted to employees and
non-employees are recognized as compensation expense based on the fair
market value of the stock award or fair market value of the goods and
services received whichever is more reliably measurable. Interim Financial
Statements These interim unaudited financial statements have been prepared
on the same basis as the annual financial statements and in the opinion of
management, reflect all adjustments, which include only normal recurring
adjustments, necessary to present fairly the Company's financial position,
results of operations and cash flows for the periods shown. The results of
operations for such periods are not necessarily indicative of the results
expected for a full year or for any future period.
Income Taxes
Income taxes are provided for using the liability method of accounting in
accordance with Statements of Financial Accounting Standards No. 109
"Accounting for Income Taxes". A deferred tax asset or liability is
recorded for all temporary differences between financial and tax reporting.
Deferred tax expense (benefit) results from the net change during the year
of deferred tax assets and liabilities.
Due to the provisions of Internal Revenue Code Section 338, the Company
will have no net operating loss carryforwards available to offset financial
statement or tax return taxable income in future periods as a result of
changes in control in both 2000 and 1999, respectively, involving 50
percentage points or more of the issued and outstanding securities of the
Company.
Financial Instruments
The fair value of the Company's current assets and current liabilities were
estimated to approximate their carrying values due to the immediate
short-term maturity of these financial instruments. As the Company operates
in Canada, virtually all of its assets and liabilities are giving rise to
significant exposure to market risks from changes in foreign currency
rates. The financial risk is the risk to the Company's operations that
arise from fluctuations in foreign exchange rates and the degree of
volatility of these rates. Currently, the Company does not use derivative
instruments to reduce its exposure to foreign currency risk. Management
does not believe the Company is exposed to significant credit or interest
rate risks.
Comprehensive Loss
SFAS No. 130, "Reporting Comprehensive Income," establishes standards for
the reporting and display of comprehensive loss and its components in the
financial statements. As at January 31, 2003, the Company has no items that
represent comprehensive loss and, therefore, has not included a schedule of
comprehensive loss in the financial statements.
Recent Accounting Pronouncements
In June, 2002, FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities". The provisions of this Statement are
effective for exit or disposal activities that are initiated after December
31, 2002, with early application encouraged. This Statement addresses
financial accounting and reporting for costs associated with exit or
disposal activities and nullifies Emerging Issues Task Force (EITF) Issue
No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)". This Statement requires that a liability for a cost
associated with an exit or disposal activity be recognized when the
liability is incurred. The Company adopted SFAS No. 146 on January 1, 2003
and its impact did not have a material effect on its financial position or
results of operations.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure", which amends SFAS No. 123 to
provide alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 expands the disclosure requirements
of SFAS No. 123 to require more prominent disclosures in both annual and
interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported
results. The transition provisions of SFAS No. 148 are effective for fiscal
years ended after December 15, 2002. The disclosure provisions of SFAS No.
148 are effective for financial statements for interim periods beginning
after December 15, 2002. The Company adopted SFAS No. 148 on January 1,
2003 and its impact did not have a material effect on its financial
position or results of operations.
2. Summary of Significant Accounting Policies (continued)
FASB has also issued SFAS No. 145 and 147 but they will not have any
relationship to the operations of the Company therefore a description of
each and their respective impact on the Company's operations have not been
disclosed.
Interim Financial Statements
These interim unaudited financial statements have been prepared on the same
basis as the annual financial statements and in the opinion of management,
reflect all adjustments, which include only normal recurring adjustments,
necessary to present fairly the Company's financial position, results of
operations and cash flows for the periods shown. The results of operations
for such periods are not necessarily indicative of the results expected for
a full year or for any future period.
3. Mining Claims
The Company entered into an agreement to acquire 67 mining claims located
in California from an arms-length vendor. Consideration was $20,000 and
500,000 shares of the Company valued at $0.01 per share. These shares were
issued on March 21, 2003. The Vendor may cancel this transaction if the
Company does not raise $1,000,000 by September 17, 2003. The Company may
cancel this transaction for any sound business reason. In the event of
cancellation the shares will be returned to treasury and cancelled.
4. Technology Rights
The Company entered into an agreement to acquire an option-to-purchase
certain ore and waste processing technologies (the "Technologies") from the
President of the Company for one (1) dollar. The Company subsequently
exercised that option-to-purchase and issued 2,000,000 common shares of the
Company in total consideration to the three original arms-length owners of
the Technologies. The 2,000,000 shares issued by the Company have been
valued at $0.01 per share or $20,000 in total. These shares were issued on
March 21, 2003. The technologies are protected by patent and is to be used
to extract valuable and/or hazardous elements from the soil or water. The
vendors may cancel this transaction if the Company does not raise
$1,000,000 by September 17, 2003. The Company may cancel this transaction
if it is proven that the vendors misrepresented the potential of the
Technologies. In the event of cancellation the shares will be returned to
treasury and cancelled.
5. Related Party Transactions/Balances
a) On March 20, 2003, the Company entered into a five-year contract to
retain the current President of the Company.
b) The Company recognized $3,000 as donated services to the President of
the Company for services rendered during the three months ended March
31, 2003.
c) The Company received notification from the President of the Company
that all amounts owing to him are forgiven as of March 13, 2003.
Therefore $18,500 is included in Additional Paid In Capital for the
period ended March 31, 2003 representing the extinguishment of the
debt owing to the President of the Company. Due to his relationship to
the Company as principal stockholder, the forgiveness of this debt has
been treated as contributed capital in accordance with the provisions
of Staff Accounting Bulletin Topic 5T "Accounting for Expense of
Liabilities Paid by Principal Stockholders". It is treated as
contributed capital because the forgiveness of debt maintained the
value of the principal stockholder's investment in the Company.
d) The amounts due to a related party represent cash loans and are
non-interest bearing, unsecured and without specific terms of
repayment.
e) The Company received $20,000 and released 2,000,000 shares at $0.01
per share to the President of the Company pursuant to a private
placement. These shares were issued into a lawyer's trust account on
December 13, 2002 pending receipt of funds.
6. Share Capital
(a) Common Stock
On March 14, 2003, the Company received $20,000 and released 2,000,000
shares at $0.01 per share to the President of the Company pursuant to
a private placement. These shares were issued into a lawyer's trust
account on December 13, 2002 pending receipt of funds.
(b) Stock options
On March 24, 2003, the Company filed a Form S-8 Registration Statement
with the U.S. Securities and Exchange Commission to register 1,000,000
shares of common stock pursuant to the Company's 2003 Nonqualifying
Stock Option Plan ("2003 NQPlan"). This 2003 NQPlan is for persons
employed or associated with the Company, including without limitation
any employee, director, general partner, officer, attorney,
accountant, consultant or advisor, is intended to advance the best
interests of the Company by providing additional incentive to those
persons who have a substantial responsibility for its management,
affairs, and growth by increasing their proprietary interest in the
success of the Company, thereby encouraging them to maintain their
relationships with the Company. The determination of those eligible to
receive options under the 2003 NQPlan, and the amount, price, type and
timing of each Stock option and the terms and conditions shall rest at
the sole discretion of the Company's Board of Directors, subject to
the provisions of the 2003 NQPlan;
On March 24, 2003, the Company granted options to purchase 150,000
shares at an exercise price of $0.60 per share under the 2003 NQPlan
to officers and directors of the Company. These options were exercised
on March 28, 2003. On March 24, 2003, the Company granted options to
purchase 325,000 shares at an exercise price of $4.00 per share under
the 2003 NQPlan to officers and directors of the Company.
Weighted
Shares Average
Under Option Option Price
# $
Beginning of period -- --
Granted 475,000 2.93
Exercised (150,000) 0.65
----------------------------------------------------------------------
End of period 325,000 4.00
======================================================================
Additional information regarding options outstanding as at March 31,
2003 is as follows:
Outstanding Exercisable
------------------------------------------------- --------------------------------
Exercise prices Weighted
average Weighted Weighted
remaining average average
Number of contractual exercise price Number of exercise price
$ shares life(years) $ shares $
4.00 325,000 .98 4.00 325,000 4.00
------------------------------------------------ ---------------------------------
325,000 .98 4.00 325,000 4.00
================================================ =================================
Stock based compensation was calculated using the Black-Scholes Option
Pricing method with the following assumptions: expected volatility -
95%; expected life - 1.0 years; and risk-free rate - 1.18%.
7. Commitment
The Company entered into employment agreements with four officers of the
Company, in which signing bonuses of $26,000 has been paid.
8. Contingent Liability
The Company is in dispute over the purchase of a shuttle bus in 1998. The
owners of the bus lost the vehicle in bankruptcy and are looking to recoup
$97,509 due to their losses, however, the title of the bus was never
transferred to the Company and the Company is looking to recoup
approximately $15,000 in payments made towards the purchase. The Company is
now relying on former directors of the Company as well as the estate of the
Company's former attorney to cover the costs. These parties had signed a
Hold Harmless Agreement indemnifying the Company from any costs arising
from this matter. It is not possible at this time for the Company to
predict with any certainty the outcome of this claim. However, management
is of the opinion, based upon information presently available, that it is
unlikely that any liability would be material in relation to the Company's
financial position.
9. Subsequent Event
In April 2003, the Company completed a private placement offering
consisting of 89,000 shares of common stock at a price of $1.00 per share
to net the Company proceeds of $89,000.
Item 2 - Management's Discussion and Analysis or Plan of Operation
(1) Caution Regarding Forward-Looking Information
This quarterly report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the Company
or management as well as assumptions made by and information currently available
to the Company or management. When used in this document, the words
"anticipate", "believe", "estimate", "expect" and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current view of
the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated, expected or
intended. In each instance, forward-looking information should be considered in
light of the accompanying meaningful cautionary statements herein.
(2) Results of Operations, Liquidity and Capital Resources
As of the date of this filing, the Company has just over $100,000 in cash, 100%
ownership of technology for use in non-toxic processing of ore and waste,
sixty-seven mining claims and liabilities totaling just over $25,000.
Management recognizes that additional funds through additional private sales of
Company stock, capital contributions from existing significant shareholders
and/or loans from existing significant shareholders will be required in the
future. However, there can be no assurance that the Company will be able to
obtain additional funds to support the Company's liquidity requirements or, that
such funding, if available, will be obtained on terms favorable to or affordable
by the Company.
During the recent quarter the Company modified its business purpose to enter
into the `non-toxic" ore processing, mine reclamation and environmental
remediation business with a focus on serving the mining and coal-fired power
plant industries.
The Company is in discussions with several parties for ore processing and/or
mine reclamation contracts. Negotiations have been positive thus far and
management believes that it will sign one or more contracts in the very near
future that could result in significant revenues.
On March 17, 2003 the Company acquired ownership of sixty-seven mining claims in
the Randsburg Mining District of California as well as certain ore and waste
processing technologies for use in ore processing, mine reclamation and
environmental remediation.
The Company's primary objective over the next year is to lay a foundation for
significant expansion. It is anticipated that this will include: creating
significant streams of positive cash flow, developing internal systems and
infrastructure, recruiting senior executives and support staff, creating
credibility with the mainstream mining and coal-fired power plant industries,
generating sufficient financing systems and market capitalization to support the
Company's aggressive internal growth and acquisition plans.
CORE TECHNOLOGY
The Company owns a proprietary ore processing and waste management technology
known as the `Xerion Reaction System' or `XRS'. The XRS has the ability to
release and recover any targeted element from the earth including: gold, silver,
platinum, palladium, rare earth elements such as neodymium and scandium,
strategic metals such as tungsten, and other valuable elements. XRS can also
neutralize or remove elements that are harmful to the environment, including
zinc, lead, mercury, arsenic, germanium, cyanide and other deleterious elements.
GENERAL BUSINESS OVERVIEW
Xerion offers Mine Reclamation and Environmental Remediation services to the
Mining and Coal-Fired Power Plant Industries. Tailings and waste dumps from
these industries scatter the world. They can be hazardous to the environment and
there are few economic solutions for their remediation. It is a little known
fact that traditional recovery methods often leave these dumps with a
considerable percentage of their original elements, such as gold and platinum,
still intact. In some cases the Company may provide remediation services at
little or even no cost to government or industry - since costs can be partially
or entirely met through the recovery of valuable elements. A patent application
for the XRS has recently been filed and Xerion is in the start-up phase of its
business cycle. The Company is in the process of building the infrastructure
necessary to perform its first reclamation project.
The company intends to acquire contracts for the reclamation of toxic mining
sites. In addition to mining, there are numerous applications of XRS technology
including remediation of toxic waste produced by the Coal Fired Power Plant
industry.
OUTLOOK ON USE OF CYANIDE BY THE MINING INDUSTRY
The mining industry is facing many regulatory pressures regarding the use of
cyanide, which is an industry standard method to economically recover gold from
ore. Cyanide has resulted in a number of environmental disasters in recent
history. There is growing concern about the use of cyanide in mining operations.
Already some States have outlawed the use of cyanide altogether and other States
could soon be following in their footsteps. The Xerion Reaction System offers an
environmentally friendly alternative to cyanide. Several tests were carried out
under the auspices of the Arizona Department of Environmental Quality for a
placer mine operation, using an earlier process developed by Xerion's Chief
Scientific Officer. (The XRS is more efficient and just as non-toxic as this
earlier process). Due to its non-toxic nature, the government granted the
technology a negative declaration, `no permit required' for the State of
Arizona. This type of `negative declaration' could shorten the
time-to-production for any mine using the XRS in Arizona. The Company intends to
apply for similar `Negative Declarations' in all States. Aside from the dangers
of environmental impact, cyanide is only effective in leaching gold from certain
types of ores. Sulphides, in particular, are not amenable to economic cyanide
leaching. It is well known in the industry that cyanide recovers less than half
of the gold from Sulphides. XRS, however, is effective in leaching very high
percentages of gold and other elements from sulphides. The future of cyanide is
questionable and the industry is being forced to consider other alternatives.
The potential for XRS to become an industry standard replacement for cyanide is
very real.
ENVIRONMENTAL REMEDIATION -
COAL-FIRED POWER PLANT INDUSTRY
There are over one thousand coal-fired power plants in the United States. These
power plants generate approximately half of all electricity consumed in the
United States and produce a growing supply of toxic and semi-toxic waste. An
independent laboratory has conducted tests on this waste and determined that it
contains an extraordinarily high content of valuable elements. Analyses done on
fly ash were carried out at the Argonne National Laboratory in Illinois by the
United States Geological Survey, using a DC Arc Atomic Emission Spectrograph,
indicates gross value of all elements exceeds $700.00 per ton of waste. (This
value was based on the element prices as readily available off the Internet and
values are expected to fluctuate with market prices of recoverable elements). In
addition to significant existing stockpiles, coal-fired power plants in the
United States produce over one hundred and fifteen million (115,000,000) new
tons of waste every year. Due to the apparent lack of technology capable of
recovering the inherent values, the power plants currently sell a portion of
their waste to the cement industry as an inexpensive ingredient, and disposes
of, or stockpiles the rest.
COAL-FIRED POWER PLANT INDUSTRY OUTLOOK
There is growing concern among environmental groups and government agencies
regarding the problem of toxic waste produced by this industry. Although they
have made Herculean efforts and have spent billions of dollars on controls to
reduce particulates, sulfur dioxide and carbon dioxide emissions, the industry
has yet to adequately address the problems associated with its solid waste.
Further environmental restrictions may be imposed on this industry unless it is
able to solve its waste remediation problem. Test results indicate the Xerion
Reaction System may provide an economical method of remediating this industry's
waste, with the added financial benefit of being able to recover valuable
elements currently left behind. The Company anticipates performing recovery and
remediation tests for the industry in the very near future.
RANDSBURG MINING CLAIMS
Xerion owns sixty-seven mining claims covering an area of 16.75 square miles in
the Randsburg Mining District of California. The Company plans to implement a
full-scale, environmentally friendly mining operation at these claims to
demonstrate the efficiency of using the XRS from start of production, right
through to reclamation. Many assays have been completed, indicating several
mining targets with production potential. The initial production target on the
claims is a residual placer deposit known as the Floyd Mine. The Floyd is a
pluton area that has a quartz-weathered zone 7,000 feet long by 3,000 feet wide.
Twenty-five trenches, each 16-feet deep, have been bulk-tested every 4-feet of
depth. Sample results by certified labs show gold mineralization over the entire
zone (XRAL, ACTIVATION LABS, JACOBS ASSAY OFFICE, SKYLINE, AND ACT LABS). A
feasibility study is required and is the next step before proceeding into
production.
RISK FACTORS AND FORWARD LOOKING STATEMENTS
Certain statements herein, including those regarding production, joint venture
contracts, patents, industry outlooks and realized metals prices constitute
"forward looking statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995. Such forward looking statements
involve known and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of the Company to be materially
different from future results, performance or achievements expressed or implied
by those forward looking statements. These risks, uncertainties and other
factors include, but are not limited to, difficulties in successfully raising
capital (given the Company's lack of operating history, lack of profitable
operations and limitations on the market for the Company's securities), in
developing and commercializing its products and mining claims (including the
ability to overcome technical hurdles that may arise), in meeting applicable
existing or new regulatory standards, in receiving required regulatory
approvals, in obtaining necessary patents and licenses, in defending against
third party infringement of patents and licenses, in protecting itself from
costly, unforeseen legal disputes, in producing gold and other elements in
commercial quantities at reasonable costs, in competing successfully against
other companies and in marketing itself successfully and in successfully
addressing the concerns and/or obtaining the support of lobbies in various
States. There can be no assurance that the Company will be successful in its
efforts to develop and commercialize XRS or its mining claims. Most importantly
at this stage, the Company's success and each step required to achieve such
success depends on its ability to raise significant further financing on an
ongoing basis and there is no guarantee it will be able to do so. The company is
still in the development stage and has no revenues. Additionally, funds may be
raised through the issuance of equity shares and such securities might have
rights, preferences or privileges senior to its common stock and will likely
result in dilution to existing shareholders. The Company is therefore subject to
a number of known and unknown risks and uncertainties that could cause actual
operations or results to differ materially from those that are anticipated.
The entire executive management team has agreed to work for the company on
substantially reduced salaries, or in most cases, no salary whatsoever. There is
no guarantee that they will continue to work for the company under such
favorable conditions.
The recent mining claim and technology acquisitions require the Company to raise
one million dollars within six months to avoid notice of cancellation from
Sellers. Part of Seller's motivation in selling the XRS technology to Company
was to avoid significant dilution in their ownership. There is no guarantee that
the Company will be able to raise this capital and if the Company fails to raise
this capital the Sellers are expected to sell the technology to another party.
If the Company loses its technology and mining claims, it will have no
significant assets on which to base its current business plan and will fail.
To be successful in implementing its business plan the Company will require the
services of numerous other executives with varied technical and professional
backgrounds in environmental engineering, ore processing and financial
management and the company's ability to recruit such executives is entirely
dependant upon its access to working capital and there is no guarantee that such
capital will be available.
The Registrant is highly dependent upon management and/or significant
shareholders to provide sufficient working capital to preserve the integrity of
the corporate entity during this phase of early development and there is no
assurance that the Registrant will be able to finance its planned operations.
There is no guarantee that contracts for ore processing, mine reclamation or
environmental remediation will be forthcoming and the economic success of such
contracts are subject to many known and unknown risks including; availability of
adequate capital, availability of qualified staff, successful negotiations with
mining and power plant companies, protection of the proprietary qualities of XRS
technology, successful economic implementation of XRS, availability of raw
materials or specialized equipment.
There is no guarantee that the Company will be able to put its mining claims
into production and the economic success of such production is subject to many
known and unknown risks including; availability of adequate capital,
availability of qualified staff, successful negotiations with regulatory bodies
for necessary permitting, access to ore with sufficient grades as to make
production economical, results of feasibility studies, satisfactory weather
conditions and availability of subcontractors, water, power and equipment.
The Company may, from time to time, make oral forward-looking statements. The
Company strongly advises investors to carefully read the above paragraph and the
risk factors described in its Annual Reports and other documents filed with the
United States Securities and Exchange Commission for a description of certain
factors that could cause the actual results of the Company to materially differ
from those in the oral or written forward-looking statements. The Company
disclaims any intention or obligation to update or revise any oral or written
forward-looking statements whether as a result of new information, future events
or otherwise.
During the quarter ended March 31, 2003, the Company added the following
executives to its management team.
Richard F. Hewlett, Chief Scientific Officer.
Mr. Hewlett has previously put four mines into production, including a mercury
mine in partnership with Placer Dome. Mr. Hewlett is a graduate in Chemical
Engineering from Iowa State University with a Masters degree in Mining
Engineering from the University of Arizona. He completed his course work and
Dissertation in Geological Engineering under a Doctoral Fellowship sponsored b
the U.S. Bureau of Mines while on the teaching faculty of the University of
Arizona. An alumnus from the teaching faculty at the Colorado School of Mines,
Mr. Hewlett has 45 years experience working with and consulting to the world's
major mining companies including Place Development (Dome), Noranda, Texas Gulf
Sulphur, Kennecott Copper Corp., American Metal Climax, Occidental Petroleum
(Minerals) and ASARCO Transvaal Consolidated Goldfields. Mr. Hewlett was
inducted into the Metallurgical and Mining Society of the AIME and has presented
many technical papers at annual meetings of the Society of Mining,
Metallurgical, and Petroleum Engineers. He was also elected into Sigma Xi, an
honorary research fraternity. Mr. Hewlett is the inventor of the Xerion Reaction
System (XRS) and has recently sold this technology to the Company. He has joined
the executive team to facilitate its implementation into the market place.
Bryon Knelson, Vice President, Corporate Development
Mr. Knelson is recognized worldwide as being a foremost authority on the
recovery of freegold. He is the holder of multiple patents and is the inventor
of the Knelson Concentrator, with over four thousand installations at mining
sites worldwide, including Placer Dome's Porgera Dome (Papua New Guinea),
Musselwhite, and Campbell Red Lake as well as Barrick Gold's Est-Malarctic,
Eskay Creek and Bulyhanhulu (Mali).
Byron built his company, Knelson Concentrators, into a growing company of
$15,000,000.00 in annual sales before handing over the responsibilities of
day-to-day management to others. He has been nominated twice in the National
Entrepreneur of the Year Awards and is the holder of the Canadian Citizens
Award, bestowed upon him by the Prime Minister of Canada. Mr. Knelson was
presented with the Export Development Award by the Federal Government and
continues to serve on the Board of Knelson Concentrators.
David Thomas, Senior Strategic Coordinator
Mr. Thomas formerly served as President of a venture capital company, incubating
start-up public companies. Prior to that he was Executive Vice President of a
mining company, Vice President Finance of a development stage pharmaceutical
company and Senior Vice President and Fund Manager of a futures based Mutual
Fund Management Company. He has successfully worked with Xerion's President on
several important projects over the past nine years, including the launch of an
internet startup which achieved market capitalization of $240,000,000.00.. He
has a strong background in corporate finance, regulatory compliance, strategic
planning and general management.
Ryan Jones, Vice President, Operations
Mr. Jones is a mining technologist with many years experience in mining
exploration across North America and West Africa. He has also operated his own
mining operations in BC and the Yukon. As a consultant, Mr. Jones has installed
and commissioned mining equipment for such notable operations as the famous
Sixteen to One Mine in Alleghany, CA, Cal Sierra's Dredge 21 on the Yuba River,
Marysville, CA and the Golconda Mine underground alluvial operation near
Quartzsite, AZ. For the past 12 years Mr. Jones has worked closely with Xerion's
VP Byron Knelson in the development and marketing of the Knelson concentrator.
Mr. Jones brings with him an in-depth knowledge of mining operations and is
capable of calculating ore reserves, producing feasibility studies and
overseeing production of Xerion's own mining claims.
Part II - Other Information
Item 1 - Legal Proceedings
To the best of knowledge of the Officers and Directors of the Company,
neither the Company nor any of its Officers and Directors are parties to any
legal proceeding or litigation other than as described below. Further, the
Officers and Directors know of no threatened or contemplated legal proceedings
or litigation other than as described below
The current company management learned in late 2002 that the Company is in
dispute over the purchase of a shuttle bus in 1998. The owners of the bus
lost the vehicle in bankruptcy and are looking to recoup $97,508.58 plus
associated costs due to their losses, however, the title of the bus was
never transferred to the Company and the Company was looking to recoup some
$15,000 in payments made towards the purchase. The Company is now relying
on former directors of the Company as well as the estate of the Company's
former attorney to cover any costs which arise. These parties have signed a
Hold Harmless Agreement indemnifying the Company from any costs arising
from this matter. An attorney representing a former Director of the Company
has informed the Company that they have worked out a potential alternative
settlement with the Claimants which would absolve the Company of any
liability. That attorney is waiting for his legal fees to be paid to
complete these transactions and has advised the Company that a payment of
$10,000 will clear the matter within thirty days. The Company will be
pursuing former Directors for payment in this matter.
Item 2 - Changes in Securities
On March 25, 2003 the Company filed a Form S-8 Registration Statement with the
U.S. Securities and Exchange Commission to register 1,000,000 shares of common
stock pursuant to the Company's 2003 Nonqualifying Stock Option Plan ("2003
NQPlan"). This 2003 NQPlan is for persons employed or associated with the
Company, including without limitation any employee, director, general partner,
officer, attorney, accountant, consultant or advisor, is intended to advance the
best interests of the Company by providing additional incentive to those persons
who have a substantial responsibility for its management, affairs, and growth by
increasing their proprietary interest in the success of the Company, thereby
encouraging them to maintain their relationships with the Company. The
determination of those eligible to receive options under the 2003 NQPlan, and
the amount, price, type and timing of each Stock option and the terms and
conditions shall rest at the sole discretion of the Company's Board of
Directors, subject to the provisions of the 2003 NQPlan;
During the quarter ending March 31, 2003 the Company:
a) granted 475,000 stock options under the 2003 NQPlan to various
directors, officers and consultants of the Company at the following
prices: 150,000 shares at a price of $0.60 per share; 325,000 shares
at a price of $4.00 per share;
b) issued 150,000 shares upon the exercise of stock options at a price of
$0.60 per share to net the Company proceeds of $90,000
The Company granted 25,000 stock options to David Thomas with an exercise price
of $0.60 per share and 50,000 options with an exercise price of $4.00 per share;
50,000 stock options to Ben Traub with an exercise price of $0.60 per share and
100,000 options with an exercise price of $4.00 per share; 25,000 stock options
to Richard Hewlett with an exercise price of $0.60 per share and 50,000 options
with an exercise price of $4.00 per share; 25,000 stock options to Ryan Jones
with an exercise price of $0.60 per share and 50,000 options with an exercise
price of $4.00 per share; 25,000 stock options to Byron Knelson with an exercise
price of $0.60 per share and 50,000 options with an exercise price of $4.00 per
share; 15,000 stock options to Ellen Luthy with an exercise price of $4.00 per
share; 10,000 stock options to Warren Gacsi with an exercise price of $4.00 per
share.
SALES OF SECURITIES:
In December, 2002 the Company issued 2,000,000 shares to be held in trust, in
the name of "Race & Co.". These shares were subsequently issued to the President
of the Company pursuant to a private placement on March 17, 2003, for proceeds
in the amount of $20,000.
On March 17, 2003 the Company authorized the issuance of 500,000 restricted
shares (and $20,000 in cash) in consideration for the acquisition of 67 mining
claims. On March 17, 2003 the Company authorized the issuance of 2,000,000
restricted shares in consideration for the acquisition of ore and waste
processing technology.
Subsequent to December 31, 2002 the Company granted 475,000 stock options under
the 2003 NQPlan to various directors, officers and consultants of the Company at
the following prices: 150,000 shares at a price of $0.60 per share; 325,000
shares at a price of $4.00 per share. On March 28, 2003 the Company issued
150,000 shares upon the exercise of stock options by officers at a price of
$0.60 per share to net the Company proceeds of $90,000.
Subsequent to March 31, 2003 the Company completed a private placement for
89,000 shares at a price of $1.00 for proceeds totaling $89,000.
Item 3 - Defaults Upon Senior Securities
None
Item 4 - Submission Of Matters To A Vote Of Security Holders
None
Item 5 - Other Information
The Company is in discussions with several parties for ore processing and/or
mine reclamation contracts. Negotiations have been positive thus far and
management believes that it will sign one or more contracts in the very near
future that could result in significant revenues.
ITEM 6 - EXHIBITS AND REPORTS ON FROM 8-K
(DOCUMENTS INCORPORATED BY REFERENCE)
(a) Form S-8 Registration Statement filed with the U.S. Securities and
Exchange Commission March 24, 2003 to register 1,000,000 shares of common stock
pursuant to the Company's 2003 Nonqualifying Stock Option Plan ("2003 NQPlan").
(b) Reports on Form 8-K:
i. Filed March 31, 2003 reporting the sale of two million shares in
a private placement and the change of control of the Company by
way of issuing 500,000 and 2,000,000 shares, respectively, for
the acquisition of 67 mining claims and the acquisition of
certain non-toxic ore and waste processing technologies.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Xerion EcoSolutions Group Inc. (Formerly Immulabs Corporation)
By /s/ Ben Traub Dated: May 15, 2003
---------------------------------
Ben Traub, President
By /s/ Ellen Luthy Dated: May 15, 2003
---------------------------------
Ellen Luthy, Secretary
CERTIFICATION OF PERIODIC REPORT
We, Ben E. Traub and Ellen M. Luthy certify that:
1. We have reviewed this quarterly report on Form 10-QSB of Xerion EcoSolutions
Group Inc. (the "Registrant") for the period ended March 31, 2003.
2. Based on our knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on our knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. We are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. We have disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. We have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
Dated: May 15, 2003
By: /s/ Ben Traub
---------------
Ben Traub
Chief Executive Officer
By: /s/Ellen Luthy
-----------------
Ellen Luthy
Principal Financial Officer
CERTIFICATION OF PERIODIC REPORT
I, Ben E. Traub, Principal Executive Officer of Xerion EcoSolutions Group Inc.
(the "Company"), certify, pursuant to Section 906 of the Sarbanes-Okley Act of
2002, 18 U.S.C. Section 1350, that;
(1) the report fully complies with the requirements of Sections 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) information contained in the report fairly presents, in all material
respects, the financial condition and results of operation of the company.
Dated: May 15, 2003
/s/ Ben Traub
----------------------
Ben Traub
Principal Executive Officer