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: September 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 former 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 44,438,124
------ ----------
Class Number of shares outstanding at November 13, 2002
This document is comprised of __ pages.
INDEX
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements
Condensed balance sheet - September 30, 2002 (unaudited)..................... 3
Condensed statements of operations - Three and nine months ended
September 30, 2002 (unaudited) and 2001 (unaudited), and
November 10, 1998 (inception) through September 30, 2002 (unaudited).... 4
Condensed statements of cash flows - Nine months ended September 30, 2002
(unaudited) and 2001 (unaudited), and November 10, 1998 (inception)
through September 30, 2002 (unaudited).................................. 5
Notes to condensed financial statements (unaudited).......................... 6
Item 2. Plan of operation................................................... 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings................................................ 12
Item 2. Changes In Securities............................................ 12
Item 3. Defaults Upon Senior Securities.................................. 13
Item 4. Submission of Matters To A Vote of Security Holders.............. 14
Item 5. Other Information................................................ 14
Item 6. Exhibits and Reports on Form 8-K................................. 14
Signatures................................................................... 15
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HYDRO ENVIRONMENTAL RESOURCES, INC.
(A Development Stage Company)
Condensed Balance Sheet
September 30, 2002
(Unaudited)
Assets
Cash ....................................................................... $ 14,538
Computer equipment, net .................................................... 2,134
Intangible assets, net (Note 3) ............................................ 5,250
-----------
$ 21,922
===========
Liabilities and Shareholders' Deficit
Liabilities:
Accounts payable and accrued expenses ................................ $ 185,378
Due to former officer (Note 2) ....................................... 223,824
Due to shareholders (Note 2) ......................................... 164,507
Notes payable, convertible into common stock (Note 4) ................ 25,000
Accrued interest, notes payable (Note 4) ............................. 3,573
Notes payable to shareholders, convertible into common stock (Note 2) 150,000
-----------
Total liabilities 752,282
-----------
Shareholders' deficit (Note 5):
Preferred stock ...................................................... --
Common stock ......................................................... 42,438
Additional paid-in capital ........................................... 2,343,760
Deficit accumulated during development stage ......................... (3,116,558)
-----------
Total shareholders' deficit (730,360)
-----------
$ 21,922
===========
The accompanying notes are an integral part of the condensed financial statements.
3
HYDRO ENVIRONMENTAL RESOURCES, INC.
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
November 10,
1998
For the Three Months Ended For the Nine Months Ended (Inception)
September 30, September 30, through
---------------------------- ---------------------------- September 30,
2002 2001 2002 2001 2002
------------ ------------ ------------ ------------ ------------
Operating expenses:
Research and development ................ $ -- $ -- $ -- $ -- $ 114,196
General and administrative:
Stock-based compensation (Note 5): ... 15,000 260,000 470,950 655,698 1,889,263
Related parties ...................... -- 3,000 -- 9,000 37,000
Payroll .............................. 24,052 42,250 31,352 106,730 160,704
Professional fees .................... 18,649 50,802 61,105 205,892 400,958
Depreciation and amortization ........ 1,144 1,144 3,432 3,268 12,343
Other ................................ 23,383 41,047 45,725 218,303 476,384
------------ ------------ ------------ ------------ ------------
Total operating expenses 82,228 398,243 612,564 1,198,891 3,090,848
------------ ------------ ------------ ------------ ------------
Operating loss (82,228) (398,243) (612,564) (1,198,891) (3,090,848)
Non-operating income:
Gain on extinguishment of debt (Note 7) . -- -- 43,363 -- 43,363
Rental income ........................... -- 700 300 700 1,300
Interest expense:
Related party (Note 2) .................. (2,915) (2,699) (8,745) (8,061) (29,487)
Amortization of debt issue costs ........ -- -- -- (26,250) (26,250)
Other ................................... (823) (4,850) (1,823) (7,038) (14,636)
------------ ------------ ------------ ------------ ------------
Loss before income taxes (85,966) (405,092) (579,469) (1,239,540) (3,116,558)
Income taxes (Note 6) ....................... -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Net loss $ (85,966) $ (405,092) $ (579,469) $ (1,239,540) $ (3,116,558)
============ ============ ============ ============ ============
Basic and diluted loss per share ............ $ (0.00) $ (0.06) $ (0.03) $ (0.18)
============ ============ ============ ============
Basic and diluted weighted average
number of common shares
outstanding ............................. 41,063,124 7,345,687 22,338,791 6,817,125
============ ============ ============ ============
The accompanying notes are an integral part of the condensed financial statements.
4
HYDRO ENVIRONMENTAL RESOURCES, INC.
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
November 10,
1998
For the Nine Months Ended (Inception)
June 30, through
-------------------------- June 30,
2002 2001 2002
----------- ----------- -----------
Net cash used in operating activities .................. $ (109,133) $ (501,401) $ (987,006)
----------- ----------- -----------
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 16,929 238,178
Repayment of officer advances (Note 2) ....................... -- -- (23,099)
Proceeds from shareholder advances (Note 2) .................. 68,510 275,760 493,967
Repayment of shareholder advances (Note 2) ................... (260,300) (28,250) (329,460)
Proceeds from notes and loans payable (Notes 2 and 4) ....... 150,000 208,000 358,000
Repayment of loans payable (Note 7) .......................... (150,000) -- (150,000)
Proceeds from the sale of common stock ....................... 310,650 29,500 415,700
Payment of offering costs .................................... -- -- (1,925)
----------- ----------- -----------
Net cash provided by financing activities .............. 123,360 501,939 1,006,271
----------- ----------- -----------
Net change in cash 14,227 (4,189) 14,538
Cash at beginning of period ...................................... 311 6,532 --
----------- ----------- -----------
Cash at end of period $ 14,538 $ 2,343 $ 14,538
=========== =========== ===========
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.
5
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 nine months ended September 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
Prior to 2002, shareholders of the Company loaned the Company $356,297 for
working capital. During the nine months ended September 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 September 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.
Prior to 2002, the Company's former president loaned the Company $189,837
for working capital. During the nine months ended September 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
$29,487 in related accrued interest are included in the accompanying
condensed financial statements as due to former officer.
6
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... (9,750)
--------
$ 5,250
========
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 $1,500 was
recognized in the accompanying condensed financial statements for the nine
months ended September 30, 2002. Accrued interest payable on the notes
totaled $3,250 as of September 30, 2002.
The notes were in default as of September 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 nine months ended September 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 nine months ended September 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 nine months ended September 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 nine months ended September 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 nine months ended September 30, 2002.
7
HYDRO ENVIRONMENTAL RESOURCES, INC.
Notes to Condensed Financial Statements
(Unaudited)
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 nine months ended
September 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 nine months ended September 30,
2002.
On May 24, 2002, the Company issued 1,000,000 shares of its common stock to
a consultant 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 nine months ended September 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 nine months ended September 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 nine months ended September 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 nine months ended September 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 nine months ended September 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 nine months ended
September 30, 2002.
8
HYDRO ENVIRONMENTAL RESOURCES, INC.
Notes to Condensed Financial Statements
(Unaudited)
On June 27, 2002, the Company sold 1,530,000 shares of its common stock for
$39,900 ($.03 per share).
On July 19, 2002, the Company sold 580,000 shares of its common stock for
$14,500 ($.03 per share).
On September 6, 2002, the Company sold 1,350,000 shares of its common stock
for $33,750 ($.03 per share).
On September 6, 2002, the Company issued 300,000 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
$.05 per share. Stock-based compensation expense of $15,000 was recognized
in the accompanying financial statements for the nine months ended
September 30, 2002.
Following is a statement of changes in shareholders' deficit for the nine
months ended September 30, 2002:
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 $(2,537,089) $ (932,491)
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 ....... -- -- 4,648,663 4,649 177,734 -- 182,383
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 ........ -- -- 16,780,000 16,780 293,870 -- 310,650
Common shares cancelled ..... -- -- (350,000) (350) 350 -- --
Net loss for the nine months
ended September 30, 2002 .. -- -- -- -- -- (579,469) (579,469)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance, September 30, 2002 -- $ -- 42,438,124 $ 42,438 $ 2,343,760 $(3,116,558) $ (730,360)
=========== =========== =========== =========== =========== =========== ===========
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 nine months ended September 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.
9
HYDRO ENVIRONMENTAL RESOURCES, INC.
Notes to Condensed Financial Statements
(Unaudited)
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
On October 3, 2002, the Company sold 2,000,000 shares of its common stock
for $50,000 ($.03 per share). Following the sale, the Company's issued and
outstanding common stock totaled 44,438,124.
10
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 September 30, 2002, all cash infusions from the former 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.
11
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 nine months ended September 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 nine months ended September 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 nine months ended September 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 nine months ended September 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 nine months ended September 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 nine months ended
September 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 nine months ended September 30,
2002.
12
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
a consultant 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 nine months ended September 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 nine months ended September 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 nine months ended September 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 nine months ended September 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 nine months ended September 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 nine months ended
September 30, 2002.
On June 27, 2002, the Company sold 1,530,000 shares of its common stock for
$39,900 ($.03 per share).
On July 19, 2002, the Company sold 580,000 shares of its common stock for
$14,500 ($.03 per share).
On September 6, 2002, the Company sold 1,350,000 shares of its common stock
for $33,750 ($.03 per share).
On September 6, 2002, the Company issued 300,000 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
$.05 per share. Stock-based compensation expense of $15,000 was recognized
in the accompanying financial statements for the nine months ended
September 30, 2002.
The Company issued these securities in transactions intended to be exempt
from the registration requirements of the Securities Act of 1933 by virtue
of Section 4(2) thereunder.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
No response required.
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PART II - OTHER INFORMATION, Continued
HYDRO ENVIRONMENTAL RESOURCES, INC.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No response required.
ITEM 5 - OTHER INFORMATION
No response required.
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.
14
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 nine months ended September 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: November 8, 2002 BY: /s/ David Rosenberg
- ---------------------- -----------------------
David Rosenberg, President
15