XERION ECOSOLUTIONS GROUP INC.
Filing Type: 10QSB
Description: Quarterly Report
Filing Date: November 16, 2004
Period End: September 30, 2004
Primary Exchange: Over the Counter Bulletin Board
Ticker: XECO
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark one)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ------- ACT OF 1934
(Fee required)
For the quarterly period ended September 30, 2004
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
- -------
For the transition period from ______________ to _____________
Commission File Number: 0-26760
XERION ECOSOLUTIONS GROUP INC.
Colorado 84-1286065
- ------------------------ ------------------------
(State of incorporation) (IRS Employer ID Number)
Suite 905, 102-4369 Main Street
Whistler, BC Canada V0N 1B4
----------------------------------------
(Address of principal executive offices)
(604) 902 0178
(Issuer's telephone number)
------------------------
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
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: September 30, 2004 2,841,523 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
TABLE OF CONTENTS
ITEM NUMBER PAGE
PART 1 - FINANCIAL INFORMATION
1. Financial Statements 1
2. Management's Discussion and Analysis or Plan of Operation 9
3. Controls and Procedures 10
PART 11 - OTHER INFORMATION
1. Legal Proceedings 10
2. Changes In Securities 11
3. Defaults Upon Senior Securities 11
4. Submission of Matters to a Vote of Security 11
5. Other Information 11
6. Exhibits and Reports on Form 8-K 11
Signatures 11
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
Xerion EcoSolutions Group Inc.
(A Development Stage Company)
Balance Sheets
(expressed in U.S. Dollars)
As at As at
September 30, December 31,
2004 2003
$ $
(unaudited) (audited)
ASSETS
Current Assets
Cash 1,913 33,685
Prepaid expenses -- 2,636
- -----------------------------------------------------------------------------------
Total Current Assets 1,913 36,321
Property and Equipment (Note 3) 5,458 24,771
- -----------------------------------------------------------------------------------
Total Assets 7,371 61,092
===================================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable (Note 5(a)) 124,521 92,754
Accrued liabilities 1,500 5,000
Loans from a related party (Note 5(b)) -- 1,014
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Total Liabilities 126,021 98,768
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Commitments and Contingencies (Notes 1 and 6)
Stockholders' Deficit
Preferred stock, 50,000,000 shares authorized,
no par value; none issued -- --
Common Stock, 300,000,000 shares authorized,
$0.001 par value 2,841,523 and 5,341,523 shares
issued and outstanding respectively (Note 4) 2,842 5,342
Additional Paid-in Capital 8,138,241 8,135,742
Stock based compensation 1,876,171 1,876,171
Donated Capital (Note 5(b)) 126,000 126,000
Deficit Accumulated During the Development Stage (10,261,904) (10,180,931)
- -----------------------------------------------------------------------------------
Total Stockholders' Deficit (118,650) (37,676)
- -----------------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficit 7,371 61,092
===================================================================================
(The accompanying notes are an integral part of the financial statements)
1
Xerion EcoSolutions Group Inc.
(A Development Stage Company)
Statements of Operations
(unaudited)
(expressed in U.S. Dollars)
Accumulated from
November 1, 1985 For the Three Months For the Nine Months
(Date ofInception) Ended Ended
to September 30, September 30, September 30,
2004 2004 2003 2004 2003
$ $ $ $ $
Revenue -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Expenses
General and Administrative
Accounting and audit 59,521 1,500 5,211 7,624 11,444
Amortization 8,728 829 -- 2,447 --
Consulting 154,662 -- 109,011 157,837
Donated services 126,000 -- 60,000 -- 123,000
Financial services 56,266 -- -- -- --
Investor relations 187,148 -- 16,362 -- 16,362
Legal 1,029,269 -- 4,562 1,020 12,263
Management fees 868,000 15,000 -- 45,000 --
Director fees 12,000 -- -- -- --
Office 62,586 2,992 9,315 8,393 31,344
Salaries 236,055 1,231 214 2,177 26,214
Stock based compensation 1,876,171 -- -- -- 2,356
Transfer agent and regulatory 26,637 599 272 3,139 3,974
Travel and promotion 22,971 -- 14,429 -- 14,429
Loss on disposal of property and equipment 7,866 -- -- 7,866 --
- --------------------------------------------------------------------------------------------------------------------------------
4,733,880 22,151 219,376 77,666 399,223
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Business Development
Consulting 35,392 -- 18,659 3,259 18,659
Mining exploration 29,427 -- 5,251 48 5,251
Write-off of mining claims and technology
rights 45,000 -- -- -- --
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109,819 -- -- 3,307 23,910
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Selling and Marketing 165,924 -- 8,570 -- 46,974
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Total Expenses 5,009,623 22,151 251,856 80,973 470,107
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Loss from Continuing Operations (5,009,623) (22,151) (251,856) (80,973) (470,107)
Loss from Discontinued Operations (5,252,281) -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Net Loss For the Period (10,261,904) (22,151) (251,856) (80,973) (470,107)
================================================================================================================================
Basic and Diluted Net Loss Per Share (0.01) (0.05) (0.02) (0.11)
================================================================================================================================
Weighted Average Shares Outstanding 2,841,000 5,201,000 2,841,000 4,344,000
================================================================================================================================
(The accompanying notes are an integral part of the financial statements)
2
Xerion EcoSolutions Group Inc.
(A Development Stage Company)
Statements of Cash Flows
(unaudited)
(expressed in U.S. Dollars)
For the Nine Months
Ended
September 30,
2004 2003
$ $
Cash Flows to Operating Activities
Net loss for the period (80,973) (470,107)
Adjustments to reconcile net loss to cash:
Amortization 2,447 --
Donated services -- 123,000
Stock based compensation -- 94,258
Loss on sale of property and equipment 7,866 --
Change in operating assets and liabilities:
(Increase) in accounts receivable -- (926)
Decrease (increase) in prepaid expenses 2,636 (13,828)
Increase in accounts payable and accrued liabilities 28,266 21,547
- -------------------------------------------------------------------------------
Net Cash Used in Operating Activities (39,758) (246,056)
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Cash Flows from (to) Financing Activities
Proceeds from shares issued -- 354,450
Advances from (to) a related party (1,014) 767
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Net Cash Provided By (Used in) Financing Activities (1,014) 355,217
- -------------------------------------------------------------------------------
Cash Flows from (to) Investing Activities
Proceeds from sale of property and equipment 9,000 --
Acquisition of property and equipment -- (48,756)
Purchase of mining claims -- (20,000)
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Net Cash Provided By (Used in ) Investing Activities 9,000 (68,756)
- -------------------------------------------------------------------------------
Increase (Decrease) in Cash (31,772) 40,405
Cash - Beginning of Period 33,685 2,997
- -------------------------------------------------------------------------------
Cash - End of Period 1,913 43,402
===============================================================================
Non-Cash Financing and Investing Activities
Shares issued to consultants for services -- 91,902
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 -- --
===============================================================================
(The accompanying notes are an integral part of the financial statements)
3
Xerion EcoSolutions Group Inc.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. Dollars)
(unaudited)
1. Nature of Operations and Continuance of Business
Xerion EcoSolutions Group Inc., a Colorado incorporated company, was
incorporated on November 1, 1985. The shares of the Company currently trade
on the Over the Counter Bulletin Board under the ticker symbol "XECO".
The Company is currently working with a specialist consultant in the field
of hydrometallurgy. This work has included a research project focused on
developing a viable alternative to cyanide for the gold mining industry.
The results of this research project have identified specific chemical
conditions in the application of certain non-toxic reagents that could lead
to a significant breakthrough in the development of a replacement for
cyanide. The Company is currently evaluating its options with regard to
developing this new technology.
Prior to this the Company was in the business of mine reclamation and
environmental remediation, which had focused on serving the mining and
coal-fired power plant industries. On March 17, 2003, and subsequently
amended on September 4, 2003, 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 having a fair
value of $0.01 per share. These shares were issued on March 21, 2003. 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 $1. The Company exercised this option and
issued 2,000,000 common shares of the Company to the three original
arms-length owners of the Technologies. The 2,000,000 shares issued were
fair valued at $0.01 per share or $20,000 in total. These shares were
issued on March 21, 2003. In compliance with the purchase agreements, the
vendors were obligated to deliver exploration and metallurgical data to
support the representations made about the processing technologies and
claims. The Vendors neglected to deliver this documentation. On February 2,
2004 the Company cancelled the purchase agreements and is currently
evaluating its legal options in claiming damages based on
misrepresentation. The cancellation of the purchase agreement resulted in a
reimbursement of 2.5 million shares to the Company which were cancelled.
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. The Company's ability
to continue as a going concern is dependent upon raising new capital
through issuing debt and/or equity securities and then to secure a business
opportunity and then to generate revenues and profits. Until these funding
sources materialize the controlling shareholders intend to continue funding
necessary expenses to sustain operations for the next twelve months.
2. Significant Accounting Policies
Basis of Accounting
These financial statements are prepared in conformity with accounting
principles generally accepted in the United States and are presented in
U.S. dollars. The Company's fiscal year end is December 31.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three
months or less at the time of issuance to be cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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.
4
Xerion EcoSolutions Group Inc.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. Dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
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.
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.
Property and Equipment
Property and equipment consists of laboratory and computer equipment
recorded at cost and amortized on a straight-line basis over a three-year
period.
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. The Company operates in
Canada which results in 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 September 30, 2004, the Company has no items
that represent comprehensive loss and, therefore, has not included a
schedule of comprehensive loss in the financial statements.
Long-Lived Assets
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" establishes a single accounting model for long-lived assets to be
disposed of by sale including discontinued operations. SFAS 144 requires
that these long-lived assets be measured at the lower of the carrying
amount or fair value less cost to sell, whether reported in continuing
operations or discontinued operations.
Foreign Currency Transactions/Balances
The Company's functional currency is the United States dollar. Occasional
transactions occur in Canadian dollars which are translated in accordance
with SFAS No. 52, "Foreign Currency Translation". Monetary assets and
liabilities denominated in foreign currencies are translated into United
States dollars at rates of exchange in effect at the balance sheet date.
Non-monetary assets, liabilities and items recorded in income arising from
transactions denominated in foreign currencies are translated at rates of
exchange in effect at the date of the transaction.
Concentration of Risk
The Company maintains its cash account in primarily one commercial bank in
Vancouver, British Columbia, Canada. The Company's cash accounts are two
uninsured business checking accounts maintained in U.S. and Canadian
dollars, which totalled $1,913 on September 30, 2004. At September 30, 2004
the Company has not engaged in any transactions that would be considered
derivative instruments on hedging activities.
5
Xerion EcoSolutions Group Inc.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. Dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
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.
Recent Accounting Pronouncements
In December 2003, the United States Securities and Exchange Commission
issued Staff Accounting Bulletin No. 104, "Revenue Recognition" (SAB 104),
which supersedes SAB 101, "Revenue Recognition in Financial Statements."
The primary purpose of SAB 104 is to rescind accounting guidance contained
in SAB 101 related to multiple element revenue arrangements, which was
superseded as a result of the issuance of EITF 00-21, "Accounting for
Revenue Arrangements with Multiple Deliverables." While the wording of SAB
104 has changed to reflect the issuance of EITF 00-21, the revenue
recognition principles of SAB 101 remain largely unchanged by the issuance
of SAB 104. The adoption of SAB 104 did not have a material impact on the
Company's financial statements.
3. Property and Equipment
September 30, December 31,
2004 2003
Net Book Net Book
Accumulated Value Value
Cost Amortization $ $
$ $ (unaudited) (audited)
Computer equipment 9,207 3,749 5,458 7,905
Laboratory equipment -- -- -- 16,866
-----------------------------------------------------------------------------------
9,207 3,749 5,458 24,171
===================================================================================
4. Stockholders' Equity
(a) Common Stock
On February 2, 2004, the Company cancelled the agreements to acquire
mining claims and technology rights and is currently evaluating its
legal options in claiming damages based on misrepresentation. The
2,500,000 shares issued to the vendors have been returned to treasury
and cancelled.
(b) Warrants
(i) Pursuant to private placements the Company received cash of
$179,250 and issued 125,100 common shares during April, May and
July 2003. One Gold Warrant per share was attached to each common
share. This allows each investor the right to purchase 0.03215
oz. of gold for each share purchased from the Company at a 25%
discount to the New York spot price calculated on the day the
warrant is exercised. The warrant is non-transferable and is a
conditional warrant in that the Company must first produce gold
in "sufficient" quantities before it can be exercised. The Gold
Warrant shall expire sixty months from the date of acceptance of
the agreement. "Sufficient" quantities is defined in each
contract as the economic recovery of at least 250,000 ounces of
gold which belong solely to the Company, and gold which has been
recovered using the Xerion Reaction System and that such exercise
of the Gold Warrants will not endanger the ability of the Company
to finance or support its immediate operational plan.
(ii) Pursuant to a private placement the Company received cash of
$85,200 and issued 17,040 common shares in August 2003. One Gold
Warrant was attached to each common share under the same
contractual agreement as above. However, the Gold Warrant allows
each investor the right to purchase 0.0643 oz. of gold for each
share purchased.
6
Xerion EcoSolutions Group Inc.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. Dollars)
(unaudited)
4. Stockholders' Equity (continued)
(b) Warrants (continued)
(iii)Pursuant to a private placement the Company received cash of
$49,000 and issued 98,000 common shares in December 2003. One
Gold Warrant was attached to each common share under the same
contractual agreement as above. However, the Gold Warrant allows
each investor the right to purchase 0.0643 oz. of gold for each
share purchased, and need not have mined the gold using the
Xerion Reaction System.
(c) 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, consultant
or advisor and 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. As of September 30, 2004, there are no outstanding stock
options.
5. Related Party Transactions and Balances
(a) Included in accounts payable at September 30, 2004 is a balance of
$72,928 ($46,470 - December 31, 2003) payable to the President of the
Company. On March 20, 2003, the Company entered into a five-year
contract to retain the current President of the Company at $20,000 per
month. Until October 1, 2003, the President has been donating his
services to the Company, at which point the Company agreed to
remunerate the President at $20,000 per month. As of January 1, 2004,
the President agreed to reduce the fee to $5,000 per month.
(b) The $1,014 owing to the President of the Company at December 31, 2003
was repaid during the period ended September 30, 2004.
6. 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 have 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.
7
Item 2 - Management's Discussion and Analysis or Plan of Operation
- ------------------------------------------------------------------
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.
General Business Overview
- -------------------------
Xerion EcoSolutions Group Inc. was originally incorporated in Colorado in 1985
as Gemini Ventures, Inc. The name was changed in 1989 to Solomon Trading
Company, Ltd., in 1994 to the Voyageur First, Inc., in 1995 to North American
Resorts, Inc., in 2000 to Immulabs Corp. Effective March 28, 2003, as filed with
the State of Colorado, the Company changed its name to Xerion EcoSolutions Group
Inc. and is currently in the business of developing gold extraction technology
for the mining industry.
In November 2000, Immulabs acquired the exclusive rights to purchase
technologies developed by Quest Research Group, Inc. ("Quest") of Boston,
Massachusetts, and to buy up to 100% of that company. Quest's biotech research
had resulted in the development of two technologies of interest to the Company,
which the Company hoped to commercialize. With the exclusive rights to acquire
secured, the Company had been performing its due diligence pursuant to its
option contract with Quest in order to evaluate the technology and develop its
commercialization strategy. The parties entered into a dispute and the Company
contacted Quest to seek mediation or arbitration as provided for in the option
agreement. The Company subsequently learned that Quest had insufficient assets
to warrant litigation and decided at this time not to pursue further legal
action.
In October 2002, the Company retained Ben Traub as President of the company. Mr.
Traub was to identify new business opportunities on behalf of the Company.
On March 17, 2003 the Company purchased 67 mining claims and certain ore and
waste processing technologies. In compliance with the purchase agreements, the
vendors were obligated to deliver exploration and metallurgical data to support
the representations made about the processing technologies and claims. The
Vendors neglected to deliver this documentation. Subsequent to December 31, 2003
the Company has canceled the purchase agreements and is currently evaluating its
legal options in claiming damages based on misrepresentation. The cancellation
of the purchase agreements results in a reimbursement of 2.5 million shares to
the company, which substantially reduced the issued and outstanding shares of
the Company.
Over the past four months the Company has been working with Dr. David Dreisinger
(1), a specialist consultant in the field of hydrometallurgy. This work has
included a research project focused of developing a viable alternative to
cyanide for the gold mining industry.
As a result of this research project, Dr. Dreisinger has identified certain
chemical conditions in the application of certain non-toxic reagents that he
believes could lead to a significant breakthrough in the development of a
replacement for cyanide.
Cyanide is currently used to extract in excess of 80% of the world's gold
production. Cyanide is widely known to be toxic and dangerous to work with (2).
Due to many accidental spills of cyanide into lakes, streams and drinking water,
the use of cyanide has come under close scrutiny by environmental regulators.
Public awareness of the perceived dangers has led to the use of cyanide being
banned or severely restricted in some areas of the world, thus providing a
commercial opportunity for alternative gold extraction systems. For example,
Canyon Resources has a 10.9 million ounce gold deposit that is currently impeded
from development by the anti-mining initiative, I-137, which bans development of
new gold and silver mines which use open-pit mining and cyanide in the treatment
and recovery process in the State of Montana (3).
To date, no alternative gold extraction system has found broad commercial
success due to associated problems with chemistry and/or economics (4).
It is Xerion's goal to develop a less toxic alternative to cyanide for the gold
mining industry. There is currently little market for cyanide alternatives due
to the wide use of cyanide and its strong market dominance. However, due to the
current regulatory climate, it is possible that substantial proof of concept by
a less toxic alternative could result in adoption by the mining industry.
Dr. Dreisinger has identified and proposed certain chemical conditions under
which selected non-toxic reagents could potentially operate economically, at the
same time avoid known handicaps previously associated with such chemistry. A
substantial review of related literature and existing patents has not revealed
any other work that has utilized these proposed chemical conditions.
8
The Company is currently in discussions with Dr. Dreisinger and the University
of British Columbia (5) regarding the necessary bench scale lab work to prove
out Dr. Dreisinger's hypothesis.
(1) www.mmat.ubc.ca/units/bioh/people/dreisinger/dreisinger.html
(2) www.cyanidecode.org/library/cn_facts_health.html
(3) www.canyonresources.com/projects/mcdon.html
(4) http://technology.infomine.com/enviromine/publicat/cyanide.pdf
(5) www.mmat.ubc.ca/research/groups/hydromet.htm
Results of Operations for the Nine Months Ended September 30, 2004
- ------------------------------------------------------------------
Revenues. The Company currently has no revenues from operations, and the Company
does not anticipate that it will generate any revenues until it can either
successfully validate its technology to the industry or put its prospective
projects into production. Management continues to be actively involved in
negotiations to secure sufficient equity financing to fund the Company's
business plan and to ensure the generation of future revenues.
General and Administrative Expense. For the nine month period ended September
30, 2004, we reported general and administrative expenses of $80,973, a decrease
of $318,250, or 37% from $399,223 reported in the equivalent period for 2003.
The decrease primarily resulted from reduced legal fees, consulting and salaries
as business development strategies are currently being delayed until further
research and development takes place. Management fees of $45,000 are a new
expenditure incurred during this period compared to the period of September
2003. This represents management fees at $5,000 per month as opposed to the
donated services of $60,000 reported in 2003.
Selling and Marketing Expense. There was a 100% decrease in advertising expenses
for the nine-month period ended September, 2004, compared to the equivalent
quarter in 2003. This resulted from management's primary focus being diverted to
research and development as opposed to the previous business development
strategies.
Business Development Expenditure. $3,307 has been spent on business development
for the nine months ended September 30, 2004, compared to 23,910 in the
equivalent period for 2003. Business development strategies are currently being
delayed until further research and development takes place.
Liquidity and Capital Resources. The primary source of the Company's cash has
been through the sale of equity. Our cash decreased to $1,913 at September 30,
2004 from $33,685 at December 31,2003. Cash of $9,000 was collected from the
sale of laboratory equipment and cash of $40,000 was used to fund the operating
activities. Future expenses will be either be financed by additional sale of
equity to the President of the Company or in the form of private placements
The Company believes its current available cash position is sufficient to meet
its cash needs on a short-term basis. The Company's ability to continue as a
going concern is dependent upon the Company's ability in the near future to (i)
raise additional funds through equity financings, and (ii) develop marketable
technology in the mining industry.
Item 3 - Controls and Procedures
- --------------------------------
(a) Evaluation of disclosure controls and procedures. Based on the evaluation
of the Company's disclosure controls and procedures (as defined in Rules
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934) as of a
date within 90 days of the filing date of this Quarterly Report on Form
10-QSB, our chief executive officer and chief financial officer have
concluded that our disclosure controls and procedures are designed to
ensure that the information we are required to disclose in the reports we
file or submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC's rules and forms
and are operating in an effective manner.
(b) Changes in internal controls. There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their most recent evaluation.
PART 11 - OTHER INFORMATION
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Item 1 - Legal Proceedings
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To the best 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 Management learned in late 2002 that the Company is in dispute over
its 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
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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 dba
North American Resorts Inc. as well as the estate of the Company's former
attorney to cover the costs. These parties have signed a Hold Harmless Agreement
indemnifying the Company from any costs arising from previously undisclosed
liabilities. 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 that 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 has made no payments and no formal
demand for payment has been received by the Company and in the event that this
occurs the Company will be pursuing former Directors for payment in this matter.
If this situation escalates and the Company cannot collect from its
indemnifiers, the company may have to pay any money that becomes due.
On March 17, 2003 the Company purchased 67 mining claims and certain ore and
waste processing technologies. In compliance with the purchase agreements, the
vendors were obligated to deliver exploration and metallurgical data to support
the representations made about the processing technologies and claims. The
Vendors neglected to deliver this documentation. As of February 4, 2004 the
Company has cancelled the purchase agreements and is currently evaluating its
legal options in claiming damages based on misrepresentation.
Item 2 - Changes in Securities
- ------------------------------
None
Item 3 - Defaults Upon Senior Securities
- ----------------------------------------
None
Item 4 - Submission Of Matters To A Vote Of Security Holders
- ------------------------------------------------------------
None
Item 5 - Other Information
- --------------------------
None
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
None
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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 Ben Traub /s/
- ------------------------
Ben Traub, President
Dated: Nov 15, 2004
By Robert Skanes /s/
- ------------------------
Robert Skanes, Secretary
Dated: Nov 15, 2004
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