UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 ----------------------------------------------------------------------- or / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------- --------------------------- Commission File Number: 333-42975 ----------------------------------------------------------------------- RMX REIT, INC. ------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) WASHINGTON 91-1869110 ------------------------------------------------------------------------ (State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.) 4720 200th St SW, Suite 200, Lynnwood, WA 98036 ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (425) 744-0386 ------------------------------------------------------------------------------ (Registrant's telephone number, including area code) ------------------------------------------------------------------------------ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark 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 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKREPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. / /Yes / /No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. RMX REIT, INC. Quarterly Report on Form 10-Q For the period ended September 30, 2000 TABLE OF CONTENTS PAGE PART I Item 1: Financial Statements 4 Item 2: Management Discussion & Analysis of Financial Condition & Result of Operation 9 PART II Item 1: Legal Proceedings 10 Item 2: Changes in Securities 10 Item 3: Defaults Upon Senior Securities 10 Item 4: Submission of Matters to a Vote of Security Holders 10 Item 5: Other Information 10 Item 6: Exhibits & Reports on Form 8-K 10 RMX REIT, INC. BALANCE SHEET September 30, 2000 and December 31, 1999 ASSETS 2000 1999 ---- ---- Cash $ 54,991 $ - Accrued interest receivable 1,046 - Notes receivable 543,300 - Deferred Costs of raising Capital 68,603 49,223 ------- ------- Total Assets $ 667,940 $49,223 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Due to CLS $ 2,374 $49,223 STOCKHOLDERS' EQUITY Common Stock, $5 par value, 2,400,000 shares authorized, 130,909 shares issued and outstanding 654,546 - Retained earnings 11,020 - ------- ------- Total Stockholders' Equity 665,566 - ------- ------- Total Liabilities & Stockholders' Equity $667,940 $49,223 ======== =======

See Notes to Financial Statements RMX REIT, INC. STATEMENT OF OPERATIONS

~~Six~~Nine Mos Ended 69/30 Quarter Ended 69/30 2000 1999 2000 1999 ---- ---- ---- ---- Interest income $ 2537,~~533~~171 $ - $ 1811,~~054~~638 $ - Operating Expenses Accounting 34,~~150~~010 - ~~3,150~~860 - Licenses and permits (59) - 59(118) - Postage and delivery 1836 - 18 - ------- ------ ------- ------- 3,~~227~~987 - ~~3,227~~760 - ------- ------ ------- ------- Net Income $ 2233,~~306~~184 $ - $ 1410,~~827~~878 $ - ======= ====== ======= =======

See Notes to Financial Statements RMX REIT, INC. STATEMENT OF CASH FLOWS September 30, 2000 and 1999 2000 1999 ---- ---- CASH FLOW FROM OPERATING ACTIVITIES Net income $ 33,184 $ - Changes in operating assets and liabilities Increase in accrued interest receivable from PSIG (1,046) - -------- ------ Net cash flows from operating activities 32,138 - Cash Flows from Investing Activities Purchase of notes receivable (543,300) - -------- ------ Cash Flow Used in Investing Activities (543,300) - Cash Flows from Financing Activities Issuance of common stock 641,853 - Changes in amounts due to CLS (46,849) 30,128 Costs of raising capital (19,380) (30,128) Dividend paid to stockholders (9,471) - -------- ------ Cash Flows Provided by Financing Activities 566,153 - -------- ------ Net increase in cash 54,991 - Cash, beginning of year 0 - -------- ------ Cash, end of year $ 54,991 $ - ======== ====== Schedule of Noncash Financing Activities Issuance of common stock for stockholder reinvestment Of dividends $12,694 $ - ======== ======

See Notes to Financial Statements RMX REIT, INC. NOTES TO FINANCIAL STATEMENTS September 30,2000 NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES RMX REIT, INC. ("RMX") is incorporated under the laws of the State of Washington. RMX plans to operate as a real estate investment trust ("REIT"). As of September 30, 2000, RMX has issued common stock to eleven investors. Only real estate backed securities have been acquired. Deferred Costs of Raising Capital As of September 30, 2000, RMX has paid $68,603 in costs associated with raising capital and these costs will be offset against funds raised from the sale of securities. Management believes all of these costs are costs associated with raising capital (preparation of prospectus and related printing costs). In 1998, the American Institute of Certified Public Accountants issue Statement of Position 98-5 ("Reporting on the Costs of Start-Up Activities"). This statement requires costs associated with start-up activities and organization costs be expensed as incurred. It does not require costs of raising capital to be expensed. The statement effective December 15, 1998. Related Parties RMX has common officers with CLS Financial Services, Inc. ("CLS") and Puget Sound Investment Services, Inc. ("PSIG"). One of the CLS officers is a stockholder in RMX. PSIG is also a stockholder in RMX. CLS and PSIG are active in the real estate industry. CLS provides facilities and certain office support functions to RMX on a cost sharing allocation. As of September 30, 2000, CLS has advanced RMX $2,374. Income Taxes RMX is a Real Estate Investment Trust, and is allowed to pass earnings through to shareholders without the earnings being taxed at the REIT level. Income taxes are not assessed at the REIT level provided it complies with various provisions in the Internal Revenue Code. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NOTE 2 - NOTES RECEIVABLE RMX's notes receivable are concentrated in the state of Washington and are secured by single family residential real estate. All of the notes are first mortgage loans. Principal payments to be recieved for the years ending September 30th are as follows: 2001$215,000 2002 0 2003 154,000 2004 0 2005 174,300 -------- $543,300 ======== Part 1 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Plan of Operation and Liquidity Revenue from the sale of stock, principal payments, rents and loan payoffs will provide the company with the source of funds to invest in income producing property and to purchase new loans. The company believes that real estate agencies operating in the market will be able to provide the company with sufficient income producing property to meet the company investment objectives. In addition, the company expects that CLS will be able to provide sufficient loans that meet the company's investment objectives now and in the future. The rents and interest paid on loans will provide the funds necessary to pay the expenses and make dividend distributions to the shareholders. The company manages its cash by not investing in property or loans toward the end of the quarter in order to provide the necessary funds to pay the cash dividends as authorized by the Board of Directors shortly after the end of each calendar quarter. The company expects to continue this type of cash management procedure for the foreseeable future. In order to pass through income to its shareholders without being taxed at the company level, the company will comply with the REIT provisions of the Internal Revenue Code. The company's first year of operation will be in 2000, and the first year that it will have to meet REIT provisions of the Internal Revenue Code will be in tax year 2001. RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of September 30, 2000, the company has just begun operations. Income for the first six months of 2000 was comprised entirely of interest accrued on a receivable from a related company, Puget Sound Investment Services, Inc. ("PSIG"), whereas, income for the third quarter was primarily comprised of interest on notes receivable purchased from proceeds of the payoff of PSIG's receivable. RETURN ON ASSETS, EQUITY, AND EQUITY TO ASSETS RATIO As of September 30, 2000, the company had just begun operations and therefore the ratios will be reported in subsequent filings. PLAN OF OPERATION THROUGHOUT THE YEAR The company is committed to offer its stock for sale to the public for the foreseeable future. The company expects to fully invest all available funds through the purchase of real estate and loans. At present and in the foreseeable future, the economy in the Pacific Northwest continues to expand. Real estate values are increasing and therefore, the value of real estate security remains strong. The company forecasts a stable demand for services, since the economy in the Puget Sound area remains strong. The company expects that all of the proceeds from this offering will be absorbed into property and loans. In the unlikely event the amount received from investors as a result of this offering exceeds the ability of the company to purchase loans, the Board of Directors has directed the Secretary to delay acceptance of new investor's funds as necessary. The company projects that investors will purchase, on average, five hundred thousand dollars ($500,000) monthly, and then continuing until the offering is sold out. The company intends to initiate future offerings on a two year cycle. The company has limited debt and is entirely capitalized through the sale of its stock on the basis of $5.00 per share. UNCERTAINTIES It is not certain whether the company will find adequate markets for the sale of its stock. The success of the company is entirely contingent on the sale of stock to acquire sufficient capital to operate as a REIT. Part 2 ITEM 1 LEGAL PROCEEDINGS The company is not presently and does not expect to become involved in any adverse legal proceedings. The company does expect to initiate collection actions and evictions in the future. 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 The company renewed its registration of $6,000,000 of its stock by coordination in the State of Washington and was granted a permit, number C-59482, to sell securities through July 18, 2001. The company expects to continue to renew the permit on an annual basis. The company also filed its 2nd Post Effective Amendment with the SEC on July 26, 2000 which became effective on August 30, 2000 under file number 333-42575 for $12,000,000. The company also expects to register its stock for sale by coordination in Arizona and other states in the future. ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K Exhibit Exhibit Number 27 Financial Data Schedule The company did not file any reports on Form 8-K in the first quarter of 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RMX, REIT, INC. Registrant /s/ --------------------------------- --------------------------- Gerald C. Vanhook, President Date

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