UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 2000 Commission File Number 0-27825
Hydro Environmental Resources, Inc.
________________________________________________________________________________
(Exact name of registrant as specified in its charter)
Oklahoma 73-1533326
________________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2006 Oak Creek Place, Hayward, California 94541
________________________________________________________________________________
(Address of principal executive offices) (Zip code)
(510) 582-2720
________________________________________________________________________________
(Registrant's telephone number, including area code)
________________________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or 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.
X
______Yes _______No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common 31,300,000
________________________________________________________________________________
Class Number of shares outstanding at August 9, 2000
This document is comprised of 9 pages.
FORM 10-QSB
2ND QUARTER
INDEX
PART I - FINANCIAL INFORMATION
Page
____________
Item 1. Financial Statements*
Condensed balance sheet - June 30, 2000 (Unaudited).................. 3
Condensed statements of operations - Three months ended
June 30, 2000 and 1999, six months ended June 30, 2000
and 1999,and November 10, 1998 (inception)
through June 30, 2000 (Unaudited)............................... 4
Condensed statements of cash flows - Six months ended
June 30, 2000 and 1999, and November 10, 1998 (inception)
through June 30, 2000 (Unaudited)............................... 5
Notes to condensed financial statements (Unaudited).................. 6
Item 2. Plan of operation........................................... 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings........................................... 8
Item 2. Changes in Securities....................................... 8
Item 3. Defaults Upon Senior Securities............................. 8
Item 4. Submission of Matters To A Vote of Security Holders......... 8
Item 5. Other Information........................................... 8
Item 6. Exhibits and Reports on Form 8-K............................ 8
Signatures........................................................... 9
* The accompanying financial statements are not covered by an Independent
Certified Public Accountant's report.
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HYDRO ENVIRONMENTAL RESOURCES, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEET
June 30, 2000
(Unaudited)
Assets
Cash.......................................................$ 132
Other current assets....................................... 8,000
Intangible assets, net (Note 3)............................ 12,000
--------------
$ 20,132
==============
Liabilities and Shareholders' Deficit
Accrued interest payable to officer (Note 2)...............$ 4,081
Due to officer (Note 2).................................... 126,567
--------------
130,648
--------------
Shareholders' deficit:
Preferred stock............................................ -
Common stock............................................... 31,300
Additional paid-in capital................................. 21,985
Retained deficit........................................... (163,801)
--------------
Total shareholders' deficit.......................... (110,516)
--------------
$ 20,132
==============
The accompanying notes are an integral part of the
condensed financial statements.
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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,
2000 1999 2000 1999 2000
------------ ------------ ----------- ---------- ------------
Operating expenses:
Research and development.............................. $ 2,930 $ 400 $ 32,194 $ 400 $ 75,594
General and administrative............................ 27,420 9,347 42,892 11,672 64,299
General and administrative-stock based compensation... - - - - 750
General and administrative, related parties (Note 3).. 3,000 2,000 6,000 3,000 19,000
------------ ------------ ----------- ---------- ------------
Total operating expenses........................... 33,350 11,747 81,086 15,072 152,643
------------ ------------ ----------- ---------- ------------
Loss before interest and provision for income tax.. (33,350) (11,747) (81,086) (15,072) (159,643)
Interest expense........................................ 2,236 - 3,188 - 4,158
------------ ------------ ----------- ---------- ------------
Loss before provision for income taxes........... (35,586) (11,747) (84,274) (15,072) (163,801)
Provision for income taxes (benefit) (Note 4)........... - - - - -
------------ ------------ ----------- ---------- ------------
Net loss......................................... $ (35,586) $ (11,747) $ (84,274) $ (15,072) $ (163,801)
============ ============ ============ ========== ============
Basic and diluted loss per share........................ * * * *
============ ============ ============ ==========
Weighted average number of shares of common
stock outstanding..................................... 31,300,000 18,050,000 31,300,000 11,616,667
============ ============ ============ ==========
* Less than $.01
The accompanying notes are an integral part of the
condensed financial statements.
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HYDRO ENVIRONMENTAL RESOURCES, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
November 10,
1998
(Inception)
For the Six Months Ended through
June 30, June 30,
-------------------------- ------------
2000 1999 2000
------------ ------------ ------------
Net cash used in operating activities........... $ (87,600) $ (3,837) $ (144,970)
------------ ------------ ------------
Financing activities:
Capital contributions................................ - 4,910 4,910
Proceeds from officer loans (Note 2)................. 84,967 - 138,567
Retirement of officer loans (Note 2)................. (6,900) - (12,000)
Proceeds from the sale of common stock,
net of offering costs............................. - 13,625 13,625
------------ ------------ ------------
Net cash provided financing activities.......... 78,067 18,535 145,102
------------ ------------ ------------
Net change in cash...................................... (9,533) 14,698 132
Cash at beginning of period............................. 9,665 90 -
------------ ------------ ------------
Cash at end of period................................... $ 132 $ 14,788 $ 132
============ ============ ============
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 $ 15,000
============ ============ ============
The accompanying notes are an integral part of the
condensed financial statements.
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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, 1999 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 periods presented 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 a loss of $163,801 for the period
from November 10, 1998 (inception) through June 30, 2000. This factor,
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 equity offerings
and debt financings during 2000 to help fund the Company's operation
as it expands.
Inherent in the Company's business are various risks and
uncertainties, including its limited operating history, historical
operating losses, and the success of its recent merger. 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. The Company's year-end is December 31.
Interim financial data presented herein are unaudited.
Note 2: Related party transactions
The President of the Company provided office space to the Company at
no charge for the six months ended June 30, 2000 and 1999. The office
space was valued at $500 per month and is included in the accompanying
unaudited, condensed financial statements as rent expense with a
corresponding credit to additional paid-in capital.
During the six months ended June 30, 2000 and 1999, 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 is included in the accompanying financial statements as
office expense with a corresponding credit to additional paid-in
capital.
During the six months ended June 30, 2000, the President of the
Company paid $30,983 in expenses on behalf of the Company. These
transactions are accounted for as loans and are included in the
accompanying financial statements as due to officer. The President of
the Company loaned the Company $53,984 for working capital, during the
same period, of which $6,900 was repaid as of June 30, 2000. The loans
bear interest at from six to eight percent and are due on demand. The
$126,567 in outstanding loans and $4,081 in related accrued interest
is included in the accompanying financial statements as due to
officer.
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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............................. (3,000)
------------
$ 12,000
============
Note 4: Income taxes
The Company records its income taxes in accordance with Statement of
Financial Accounting Standard No. 109, "Accounting for Income Taxes".
The Company incurred net operating losses during the six months ended
June 30, 2000 resulting in a deferred tax asset, which was fully
allowed for, therefore, the net benefit and expense result in $-0-
income taxes.
PART 1. FINANCIAL INFORMATION
ITEM 2. PLAN OF OPERATION
We plan to satisfy our cash requirements, over the next twelve months,
through cash infusions from our principal shareholder, 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; or
(c) a combination of private and public sale of our common stock.
A summary of our product research and development for the term of the
plan is as follows:
We are performing on going research on the recovery and reconstruction
of compounds used by ECHFR to produce hydrogen. It is estimated that
over 40 percent of these patented-formula compounds can be reused,
lowering the cost of production by as much as 25 percent. In addition,
there are several potentially profitable by-products created by ECHFR
that we could market worldwide, such as:
(a) An on-site power plant could 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 operate the process
by creating power from the actual wastewater to be treated
We expect to lease larger laboratory and to purchase lab equipment over
the next twelve months.
Subject to the implementation and success of one or more of the
financing options discussed in the first paragraph, we plan to hire
four employees; an engineer; a laboratory technician, a computer
specialist, and a chief operating officer. Once in place and subject to
the implementation and success of one or more of the financing options
discussed in the first paragraph, we plan to hire two to three
additional technical personnel.
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HYDRO ENVIRONMENTAL RESOURCES, INC.
PART II - OTHER INFORMATION
ITEM 1 - No response required.
ITEM 2 - No response required.
ITEM 3 - No response required.
ITEM 4 - No response required.
ITEM 5 - No response required.
ITEM 6 - Exhibits and reports on Form 8-K:
(a) Exhibits:
27* Financial Data Schedule.
(b) Reports on Form 8-K were filed on:
None
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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, 2000
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 14, 2000 BY: /s/ JACK WYNN
________________________________ ______________________________
Jack Wynn, President
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