UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For Quarter Ended: June 30, 2002
--------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from: ______________ to ______________
Commission File Number: 000-27825
Hydro Environmental Resources, Inc.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 73-1552304
------------------------------ -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2903 NE 109th Avenue, Suite D, Vancouver, WA 98682-7273
-------------------------------------- --------
(Address of principal executive offices) (Zip code)
(360) 883-5949
--------------------------------------------------
(Registrant's telephone number, including area code)
5725 S. Valley View, Suite 3, Las Vegas, NV 89118
--------------------------------------------------
(Former name, former address and ormer fiscal year,
if changed since last report.)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Common 40,788,124
------ ----------
Class Number of shares outstanding at August 14, 2002
INDEX
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements
Condensed balance sheet - June 30, 2002 (Unaudited)................. F-1
Condensed statements of operations - Three and six months
ended June 30, 2002 (Unaudited) and 2001 (Unaudited),
and November 10, 1998 (inception) through June 30,
2002 (Unaudited)................................................ F-2
Condensed statements of cash flows - Six months ended June 30, 2002
(Unaudited) and 2001 (Unaudited), and November 10, 1998
(inception) through June 30, 2002 (Unaudited)................... F-3
Notes to condensed financial statements (Unaudited)................. F-4
Item 2. Plan of operation............................................... 2
PART II - OTHER INFORMATION
Item 1. Legal Proceedings....................................... 3
Item 2. Changes In Securities................................... 3
Item 3. Defaults Upon Senior Securities......................... 4
Item 4. Submission of Matters To A Vote of Security Holders..... 4
Item 5. Other Information....................................... 4
Item 6. Exhibits and Reports on Form 8-K........................ 5
Signatures.......................................................... 6
i
HYDRO ENVIRONMENTAL RESOURCES, INC.
(A Development Stage Company)
Condensed Balance Sheet
June 30, 2002
(Unaudited)
Assets
Cash................................................................................... $ 32,373
Computer equipment, net................................................................ 2,528
Intangible assets, net (Note 3)........................................................ 6,000
---------
$ 40,901
=========
Liabilities and Shareholders' Deficit
Liabilities:
Accounts payable and accrued expenses............................................. $ 185,378
Due to officer (Note 2)........................................................... 220,909
Due to shareholders (Note 2)...................................................... 164,507
Notes payable, convertible into common stock (Note 4)............................ 25,000
Accrued interest, notes payable (Note 4).......................................... 2,750
Notes payable to shareholders, convertible into common stock (Note 2)............ 150,000
---------
Total liabilities ................... 748,544
=========
Shareholders' deficit (Note 5):
Preferred stock ................................................................. --
Common stock..................................................................... 40,208
Additional paid-in capital....................................................... 2,285,740
Deficit accumulated during development stage..................................... (3,033,591)
---------
Total shareholders' deficit.......... (707,643)
---------
$ 40,901
=========
The accompanying notes are an integral part
of the condensed financial statements
F-1
HYDRO ENVIRONMENTAL RESOURCES, INC.
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
November 10,
1998
For the Three Months Ended For the Six Months Ended (Inception)
June 30, June 30, through
---------------------------- ---------------------------- June 30,
2002 2001 2002 2001 2002
------------ ------------ ------------ ------------ ------------
Operating expenses:
Research and development ................ $ -- $ -- $ -- $ -- $ 114,196
General and administrative:
Stock-based compensation (Note 5): ... 191,700 369,948 455,950 421,948 1,874,263
Related parties (Note 2) ............. 1,500 3,000 3,000 6,000 40,000
Payroll .............................. 7,300 56,040 7,300 64,480 136,652
Professional fees .................... 5,115 56,542 42,456 155,090 382,309
Depreciation and amortization ........ 1,144 1,144 2,288 2,124 11,199
Other ................................ 4,786 69,319 22,342 177,256 453,000
------------ ------------ ------------ ------------ ------------
Total operating expenses 211,545 555,993 533,336 826,898 3,011,619
------------ ------------ ------------ ------------ ------------
Operating loss (211,545) (555,993) (533,336) (826,898) (3,011,619)
Non-operating income:
Gain on extinguishment of debt (Note 7) -- -- 43,363 -- 43,363
Rental income .......................... -- -- 300 -- 1,300
Interest expense:
Related party (Note 2) ................. (2,982) (2,573) (5,830) (5,362) (26,572)
Amortization of debt issue costs ....... -- -- -- -- (26,250)
Other .................................. (500) (1,938) (1,000) (2,188) (13,813)
------------ ------------ ------------ ------------ ------------
Loss before income taxes (215,027) (560,504) (496,503) (834,448) (3,033,591)
Income taxes (Note 6) ....................... -- -- -- -- --
Net loss $ (215,027) $ (560,504) $ (496,503) $ (834,448) $ (3,033,591)
============ ============ ============ ============ ============
Basic and diluted loss per share ............ $ (0.01) $ (0.08) $ (0.02) $ (0.13)
============ ============ ============ ============
Basic and diluted weighted average
number of common shares
outstanding ............................ 26,750,207 6,644,033 20,129,177 6,555,350
============ ============ ============ ============
The accompanying notes are an integral part
of the condensed financial statements
F-2
HYDRO ENVIRONMENTAL RESOURCES, INC.
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
November 10,
1998
For the Six Months Ended (Inception)
June 30, through
---------------------- June 30,
2002 2001 2002
--------- --------- ---------
Net cash used in operating activities .......... $ (43,048) $(391,898) $(920,921)
--------- --------- ---------
Cash flows from investing activities:
Equipment purchases .................................. -- (4,727) (4,727)
--------- --------- ---------
Net cash used in investing activities .......... -- (4,727) (4,727)
--------- --------- ---------
Cash flows from financing activities:
Capital contributions ............................... -- -- 4,910
Proceeds from officer advances (Note 2) ............. 4,500 12,929 238,178
Repayment of officer advances (Note 2) .............. -- -- (23,099)
Proceeds from shareholder advances (Note 2) ......... 68,510 234,760 493,967
Repayment of shareholder advances (Note 2) .......... (260,300) (3,500) (329,460)
Proceeds from notes and loans convertible to
common stock (Notes 2 and 4) ..................... 150,000 140,000 358,000
Repayment of loans payable (Note 7) ................. (150,000) -- (150,000)
Proceeds from the sale of common stock .............. 262,400 29,500 367,450
Payment of offering costs ........................... -- -- (1,925)
--------- --------- ---------
Net cash provided by financing activities ...... 75,110 413,689 958,021
Net change in cash 32,062 17,064 32,373
Cash at beginning of period .............................. 311 6,532 --
--------- --------- ---------
Cash at end of period $ 32,373 $ 23,596 $ 32,373
========= ========= =========
Supplemental disclosure of cash flow information:
Cash paid for:
Interest .......................................... $ -- $ -- $ --
Income taxes ...................................... $ -- $ -- $ --
========= ========= =========
Noncash investing and financing activities:
Common stock issued for patent rights ............ $ -- $ -- $ 15,000
========= ========= =========
The accompanying notes are an integral part
of the condensed financial statements
F-3
HYDRO ENVIRONMENTAL RESOURCES, INC.
Notes to Condensed Financial Statements
(Unaudited)
Note 1: Basis of presentation
The financial statements presented herein have been prepared by the
Company in accordance with the accounting policies in its annual 10-KSB
report dated December 31, 2001 and should be read in conjunction with
the notes thereto.
In the opinion of management, all adjustments (consisting only of
normal recurring adjustments) which are necessary to provide a fair
presentation of operating results for the interim period presented have
been made. The results of operations for the three and six months ended
June 30, 2002 are not necessarily indicative of the results to be
expected for the year.
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The
Company is in the development stage in accordance with Statement of
Financial Accounting Standard ("SFAS") No. 7. As shown in the
accompanying financial statements, the Company has no revenues, a
limited history of operations, and significant losses since inception.
These factors, among others, may indicate that the Company will be
unable to continue as a going concern for reasonable period of time.
The financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern.
The Company's continuation as a going concern is dependent upon its
ability to generate sufficient cash flow to meet its obligations on a
timely basis and ultimately to attain profitability. The Company's
management intends to seek additional funding through future equity
offerings and debt financings to help fund the Company's operation.
Inherent in the Company's business are various risks and uncertainties,
including its limited operating history and historical operating
losses. The Company's future success will be dependent upon its ability
to create and provide effective and competitive services on a timely
and cost-effective basis.
Interim financial data presented herein are unaudited.
Note 2: Related party transactions
During the three and six months ended June 30, 2002 and 2001, the
President of the Company contributed services and the use of office
equipment to the Company. The services and use of equipment was valued
at $500 per month and such charges are recognized in the accompanying
unaudited, condensed financial statements as office expense with a
corresponding credit to additional paid-in capital.
Prior to 2002, the president of the Company loaned the Company $189,837
for working capital. During the six months ended June 30, 2002, the
officer advanced the Company an additional $4,500. The loans bear
interest at six percent and are due on demand. The $194,337 in
outstanding loans and $26,572 in related accrued interest are included
in the accompanying condensed financial statements as due to officer.
Prior to 2002, shareholders of the Company loaned the Company $356,297
for working capital. During the six months ended June 30, 2002,
shareholders advanced the Company an additional $68,510 and the Company
repaid shareholders a total of $260,300. The advances do not carry an
interest rate and are due on demand. The $164,507 balance owed to
shareholders at June 30, 2002 is included in the accompanying condensed
financial statements as due to shareholders.
On March 11, 2002, the Company accepted a total of $150,000 from two
shareholders in exchange for two $75,000 promissory notes. The notes
are interest-free and mature on March 11, 2004. The notes may be
converted into shares of the Company's common stock at the discretion
of both parties.
F-4
HYDRO ENVIRONMENTAL RESOURCES, INC.
Notes to Condensed Financial Statements
(Unaudited)
Note 3: Intangible assets
Intangible assets consist of patent rights acquired from a related
party. The rights are being amortized at the rate of $250 per month (60
months):
Patent rights..................$ 15,000
Accumulated amortization....... (9,000)
-----------
$ 6,000
===========
Note 4: Notes payable
During the year ended December 31, 2001, the Company received $25,000
in exchange for convertible promissory notes and 125,000 shares of the
Company's $.001 par value common stock. Interest expense of $1,000 was
recognized in the accompanying condensed financial statements for the
six months ended June 30, 2002. Accrued interest payable on the notes
totaled $2,750 as of June 30, 2002.
The notes were in default as of June 30, 2002.
Note 5: Common stock
On February 21, 2002, the Company issued 500,000 shares of its common
stock to its attorney in exchange for legal services. The market value
of the common stock on the transaction date was $.05 per share.
Stock-based compensation expense of $25,000 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On February 21, 2002, the Company issued 1,478,663 shares of its common
stock to unrelated third parties in exchange for engineering, public
relations, marketing and other consulting services. The market value of
the common stock on the transaction date was $.05 per share.
Stock-based compensation expense of $73,933 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On February 21, 2002, the Company issued 1,021,337 shares of its common
stock to a shareholder in exchange for consulting services. The market
value of the common stock on the transaction date was $.05 per share.
Stock-based compensation expense of $51,067 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On March 18, 2002, the Company issued 600,000 shares of its common
stock to its attorney in exchange for legal services. The market value
of the common stock on the transaction date was $.03 per share.
Stock-based compensation expense of $18,000 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On March 18, 2002, the Company issued 3,000,000 shares of its common
stock to a shareholder in exchange for consulting services. The market
value of the common stock on the transaction date was $.03 per share.
Stock-based compensation expense of $90,000 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On March 18, 2002, the Company issued 250,000 shares of its common
stock to an unrelated third party in exchange for public relations and
marketing services. The market value of the common stock on the
transaction date was $.03 per share. Stock-based compensation expense
of $6,250 was recognized in the accompanying financial statements for
the six months ended June 30, 2002.
F-5
HYDRO ENVIRONMENTAL RESOURCES, INC.
Notes to Condensed Financial Statements
(Unaudited)
On April 23, 2002, the Company cancelled 350,000 shares of its issued
and outstanding common stock.
On May 6, 2002, the Company sold 1,300,000 shares of its common stock
for $10,000 ($.01 per share).
On May 16, 2002, the Company sold 450,000 shares of its common stock
for $6,000 ($.01 per share).
On May 16, 2002, the Company issued 2,500,000 shares of its common
stock to officers and directors of the Company in exchange for
administrative, engineering, public relations, marketing and other
consulting services. The market value of the common stock on the
transaction date was $.03 per share. Stock-based compensation expense
of $62,500 was recognized in the accompanying financial statements for
the six months ended June 30, 2002.
On May 24, 2002, the Company issued 1,000,000 shares of its common
stock to an officer of the Company in exchange for administrative,
public relations, marketing and other consulting services. The market
value of the common stock on the transaction date was $.03 per share.
Stock-based compensation expense of $28,000 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On June 11, 2002, the Company sold 6,400,000 shares of its common stock
for $151,500 ($.02 per share).
On June 11, 2002, the Company issued 600,000 shares of its common stock
to unrelated third parties in exchange for engineering, public
relations, marketing and other consulting services. The market value of
the common stock on the transaction date was $.03 per share.
Stock-based compensation expense of $16,800 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On June 11, 2002, the Company issued 500,000 shares of its common stock
to its attorney in exchange for legal services. The market value of the
common stock on the transaction date was $.03 per share. Stock-based
compensation expense of $14,000 was recognized in the accompanying
financial statements for the six months ended June 30, 2002.
On June 13, 2002, the Company sold 5,170,000 shares of its common stock
for $55,000 ($.01 per share).
On June 13, 2002, the Company issued 1,800,000 shares of its common
stock to unrelated third parties in exchange for engineering, public
relations, marketing and other consulting services. The market value of
the common stock on the transaction date was $.04 per share.
Stock-based compensation expense of $63,000 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On June 17, 2002, the Company issued 60,000 shares of its common stock
to unrelated third parties in exchange for rental services. The market
value of the common stock on the transaction date was $.03 per share.
Stock-based compensation expense of $1,800 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On June 21, 2002, the Company issued 160,000 shares of its common stock
to unrelated third parties in exchange for public relations and
marketing services. The market value of the common stock on the
transaction date was $.04 per share. Stock-based compensation expense
of $5,600 was recognized in the accompanying financial statements for
the six months ended June 30, 2002.
On June 27, 2002, the Company sold 1,530,000 shares of its common stock
for $39,900 ($.03 per share).
Following is a statement of changes in shareholders' deficit for the
six months ended June 30, 2002:
F-6
HYDRO ENVIRONMENTAL RESOURCES, INC.
Notes to Condensed Financial Statements
(Unaudited)
Deficit
Accumulated
Preferred Stock Common stock Additional During the
------------------------- -------------------------- Paid-in Development
Shares Par Value Shares Par Value Capital Stage Total
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance, January 1, 2002 .... -- $ -- 12,238,124 $ 12,238 $ 1,592,360 $(2,537,088) $ (932,490)
Shares issued to attorney in
exchange for legal services -- -- 1,600,000 1,600 55,400 -- 57,000
Shares issued in exchange for
consulting services ....... -- -- 4,348,663 4,349 163,034 -- 167,383
Shares issued to shareholder
in exchange for consulting
services .................. -- -- 4,021,337 4,021 137,046 -- 141,067
Shares issued to officers and
directors in exchange for
consulting services ....... -- -- 3,500,000 3,500 87,000 -- 90,500
Sale of common stock ........ -- -- 14,850,000 14,850 247,550 -- 262,400
Common shares cancelled ..... -- -- (350,000) (350) 350 -- --
Equipment and services
contributed by officer .... -- -- -- -- 3,000 -- 3,000
Net loss for the six months
ended June 30, 2002 ....... -- -- -- -- -- (496,503) (496,503)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance, June 30, 2002 -- $ -- 40,208,124 $ 40,208 $ 2,285,740 $(3,033,591) $ (707,643)
=========== =========== =========== =========== =========== =========== ===========
Note 6: Income taxes
The Company records its income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". The Company incurred net operating
losses during the six months ended June 30, 2002, resulting in a
deferred tax asset, which was fully allowed for; therefore, the net
benefit and expense result in $-0- income taxes.
Note 7: Stock purchase agreement
During June of 2001, the Company signed a stock purchase agreement with
PowerTek. PowerTek agreed to purchase shares of the Company's common
stock equal to the number of shares issued and outstanding, on a fully
diluted basis, on the date of closing for $500,000. Also, PowerTek
agreed to expend not less than $2 million on research and development
in the field of hydrogen powered fuel cell technology. The agreement
was terminated on September 1, 2001.
A settlement of the debt was reached among the companies on March 13,
2002. As of March 13, 2002, the Company owed PowerTek $183,000 for
loans advanced during 2001, and $10,363 of accrued interest related to
the loans. In accordance with the settlement agreement, the Company
paid PowerTek $150,000 against the debt and interest and PowerTek
forgave the remaining balance of $43,363.
Note 8: Subsequent events
Common stock
On July 19, 2002, the Company sold 580,000 shares of its common stock
for $14,500 ($.03 per share).
F-7
PART 1. FINANCIAL INFORMATION
ITEM 2. PLAN OF OPERATION
HYDRO ENVIRONMENTAL RESOURCES, INC.
Special note regarding forward-looking statements
This report contains forward-looking statements within the meaning of
federal securities laws. These statements plan for or anticipate the
future. Forward-looking statements include statements about our future
business plans and strategies, statements about our need for working
capital, future revenues, results of operations and most other
statements that are not historical in nature. In this Report,
forward-looking statements are generally identified by the words
"intend", "plan", "believe", "expect", "estimate", "could", "may",
"will" and the like. Investors are cautioned not to put undue reliance
on forward-looking statements. Except as otherwise required by
applicable securities statues or regulations, the Company disclaims any
intent or obligation to update publicly these forward-looking
statements, whether as a result of new information, future events or
otherwise. Because forward-looking statements involve future risks and
uncertainties, these are factors that could cause actual results to
differ materially from those expressed or implied.
We plan to satisfy our cash requirements, over the next twelve months,
through cash infusions from our president and principal shareholders,
in exchange for restricted stock. However, we will need to raise
additional capital in the next twelve months. Our management is
considering the following options:
(a) a private offering and sale of our common stock;
(b) a public offering and sale of our common stock;
(c) a combination of private and public sale of our common stock;
(d) debt financings from officers, shareholders and unrelated
third parties.
As of June 30, 2002, all cash infusions from the president and
principal shareholders have been classified as liabilities and are
disclosed in the accompanying condensed balance sheet as due to officer
and due to shareholders, respectively.
A summary of our product research and development for the term of the
plan is as follows:
We have performed research on the recovery and reconstruction of
compounds used by the ECHFR to produce hydrogen. It is estimated that
over 40 percent of these patented-formula compounds can be reused,
possibly lowering the cost of production by as much as 25 percent. In
addition, there are several potentially profitable by-products created
by the ECHFR that we could market worldwide, such as:
(a) An on-site power plant could possibly be designed for
particular needs where electricity and/or gas are necessary to
process cooking oil; and
(b) In the treatment of wastewater at abandoned mine sites and
other wastewater dumps or quarries, the ECHFR could possibly
operate the process by creating power from the actual
wastewater to be treated
Subject to the implementation and success of one or more of the
financing options discussed above, we plan to expand our capabilities
to include commencing production during 2002. Once we have commenced
production, we plan to hire two to three additional technical
personnel.
2
PART II - OTHER INFORMATION
HYDRO ENVIRONMENTAL RESOURCES, INC.
ITEM 1 - LEGAL PROCEEDINGS
No response required.
ITEM 2 - CHANGES IN SECURITIES
On February 21, 2002, the Company issued 500,000 shares of its common
stock to its attorney in exchange for legal services. The market value
of the common stock on the transaction date was $.05 per share.
Stock-based compensation expense of $25,000 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On February 21, 2002, the Company issued 1,478,663 shares of its common
stock to unrelated third parties in exchange for engineering, public
relations, marketing and other consulting services. The market value of
the common stock on the transaction date was $.05 per share.
Stock-based compensation expense of $73,933 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On February 21, 2002, the Company issued 1,021,337 shares of its common
stock to a shareholder in exchange for consulting services. The market
value of the common stock on the transaction date was $.05 per share.
Stock-based compensation expense of $51,067 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On March 18, 2002, the Company issued 600,000 shares of its common
stock to its attorney in exchange for legal services. The market value
of the common stock on the transaction date was $.03 per share.
Stock-based compensation expense of $18,000 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On March 18, 2002, the Company issued 3,000,000 shares of its common
stock to a shareholder in exchange for consulting services. The market
value of the common stock on the transaction date was $.03 per share.
Stock-based compensation expense of $90,000 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On March 18, 2002, the Company issued 250,000 shares of its common
stock to an unrelated third party in exchange for public relations and
marketing services. The market value of the common stock on the
transaction date was $.03 per share. Stock-based compensation expense
of $6,250 was recognized in the accompanying financial statements for
the six months ended June 30, 2002.
On April 23, 2002, the Company cancelled 350,000 shares of its issued
and outstanding common stock.
On May 6, 2002, the Company sold 1,300,000 shares of its common stock
for $10,000 ($.01 per share).
On May 16, 2002, the Company sold 450,000 shares of its common stock
for $6,000 ($.01 per share).
On May 16, 2002, the Company issued 2,500,000 shares of its common
stock to officers and directors of the Company in exchange for
administrative, engineering, public relations, marketing and other
consulting services. The market value of the common stock on the
transaction date was $.03 per share. Stock-based compensation expense
of $62,500 was recognized in the accompanying financial statements for
the six months ended June 30, 2002.
3
PART II - OTHER INFORMATION, Continued
HYDRO ENVIRONMENTAL RESOURCES, INC.
On May 24, 2002, the Company issued 1,000,000 shares of its common
stock to an officer of the Company in exchange for administrative,
public relations, marketing and other consulting services. The market
value of the common stock on the transaction date was $.03 per share.
Stock-based compensation expense of $28,000 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On June 11, 2002, the Company sold 6,400,000 shares of its common stock
for $151,500 ($.02 per share).
On June 11, 2002, the Company issued 600,000 shares of its common stock
to unrelated third parties in exchange for engineering, public
relations, marketing and other consulting services. The market value of
the common stock on the transaction date was $.03 per share.
Stock-based compensation expense of $16,800 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On June 11, 2002, the Company issued 500,000 shares of its common stock
to its attorney in exchange for legal services. The market value of the
common stock on the transaction date was $.03 per share. Stock-based
compensation expense of $14,000 was recognized in the accompanying
financial statements for the six months ended June 30, 2002.
On June 13, 2002, the Company sold 5,170,000 shares of its common stock
for $55,000 ($.01 per share).
On June 13, 2002, the Company issued 1,800,000 shares of its common
stock to unrelated third parties in exchange for engineering, public
relations, marketing and other consulting services. The market value of
the common stock on the transaction date was $.04 per share.
Stock-based compensation expense of $63,000 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On June 17, 2002, the Company issued 60,000 shares of its common stock
to unrelated third parties in exchange for rental services. The market
value of the common stock on the transaction date was $.03 per share.
Stock-based compensation expense of $1,800 was recognized in the
accompanying financial statements for the six months ended June 30,
2002.
On June 21, 2002, the Company issued 160,000 shares of its common stock
to unrelated third parties in exchange for public relations and
marketing services. The market value of the common stock on the
transaction date was $.04 per share. Stock-based compensation expense
of $5,600 was recognized in the accompanying financial statements for
the six months ended June 30, 2002.
On June 27, 2002, the Company sold 1,530,000 shares of its common stock
for $39,900 ($.03 per share).
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
No response required.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No response required.
ITEM 5 - OTHER INFORMATION
No response required.
4
PART II - OTHER INFORMATION, Continued
HYDRO ENVIRONMENTAL RESOURCES, INC.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a). Exhibits:
1. 99.1: Certification Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 - CEO
2. 99.2: Certification Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 - CFO
(b) Reports on Form 8-K:
No response required.
5
HYDRO ENVIRONMENTAL RESOURCES, INC.
SIGNATURES
The financial information furnished herein has not been audited by an
independent accountant; however, in the opinion of management, all adjustments
(only consisting of normal recurring accruals) necessary for a fair presentation
of the results of operations for the three and six months ended June 30, 2002
have been included.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Hydro Environmental Resources, Inc.
(Registrant)
DATE: August 15, 2002 BY: /s/ Jack Wynn
-------------------------------
Jack Wynn, President
6