10QSB 1 xerion10qsb093004.txt 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 ----------------------------------------------------------------------------------- Total Liabilities 126,021 98,768 ----------------------------------------------------------------------------------- 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 -------------------------------------------------------------------------------------------------------------------------------- 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 -- -- -- -- -------------------------------------------------------------------------------------------------------------------------------- 109,819 -- -- 3,307 23,910 -------------------------------------------------------------------------------------------------------------------------------- Selling and Marketing 165,924 -- 8,570 -- 46,974 -------------------------------------------------------------------------------------------------------------------------------- Total Expenses 5,009,623 22,151 251,856 80,973 470,107 -------------------------------------------------------------------------------------------------------------------------------- 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) ------------------------------------------------------------------------------- Cash Flows from (to) Financing Activities Proceeds from shares issued -- 354,450 Advances from (to) a related party (1,014) 767 ------------------------------------------------------------------------------- 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) ------------------------------------------------------------------------------- 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 --------------------------- Item 1 - Legal Proceedings -------------------------- 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 9 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 10 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 11