<SUBMISSION>
<ACCESSION-NUMBER>0000950134-02-013245
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>2
<PERIOD>20021022
<ITEMS>2
<ITEMS>7
<FILING-DATE>20021101
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ENTRX CORP
<CIK>0000013547
<ASSIGNED-SIC>1700
<IRS-NUMBER>952368719
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>000-02000
<FILM-NUMBER>02807121
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>800 NICOLLET MALL
<STREET2>SUITE 2690
<CITY>MINNEAPOLIS
<STATE>MN
<ZIP>55402
<PHONE>612 333-0614
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>800 NICOLLET MALL
<STREET2>SUITE 2690
<CITY>MINNEAPOLIS
<STATE>MN
<ZIP>55402
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>PHOENIX GEMS INC
<DATE-CHANGED>19730617
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>BOWER INDUSTRIES INC
<DATE-CHANGED>19870618
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>METALCLAD CORP
<DATE-CHANGED>19920703
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>c72546e8vk.htm
<DESCRIPTION>FORM 8-K
<TEXT>
<HTML>
<HEAD>
<TITLE>Entrx Corporation</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
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<TR valign="top">
        <TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
        <TD nowrap width="15%"><FONT size="2">OMB APPROVAL<BR>
OMB Number: 3235-0060<BR>
Expires: March&nbsp;31, 2003<BR>
Estimated average burden<BR>hours per response: 1.25</FONT></TD>
</TR>
</TABLE>




<P align="center"><FONT size="2"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, DC 20549</B>
</FONT>




<P align="center"><FONT size="2"><B>FORM 8-K</B>
</FONT>




<P align="center"><FONT size="2"><B>CURRENT REPORT</B>
</FONT>




<P align="center"><FONT size="2"><B>Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934</B>
</FONT>





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      <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
      <TD width="90%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
      <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
      <TD width="90%"><FONT size="2">Date of Report (date of earliest event reported): October&nbsp;22, 2002</FONT></TD>
</TR>
</TABLE>





<P align="center"><FONT size="2"><B><U>Entrx Corporation</U></B><BR>
(Exact Name of registrant as specified in its chapter)
</FONT>




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        <TD width="29%">&nbsp;</TD>
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<TR valign="bottom">
        <TD align="center" valign="top"><FONT size="2"><B>Delaware</B></FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">
<B>0-2000</B>
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2"><B>95-2368719</B></FONT></TD>
</TR>
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        <TD><FONT size="2">&nbsp;</FONT></TD>
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        <TD align="center" valign="top"><FONT size="2">(State or other jurisdiction<BR>
of Incorporation)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">
(Commission File Number)
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">(IRS employer Identification No.)</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2"><B><U>800 Nicollet Mall, Suite&nbsp;2690, Minneapolis, Minnesota 55402</U></B><BR>
(Address of principal executive offices &#038; Zip Code)
</FONT>




<P align="center"><FONT size="2"><B>(612)&nbsp;333-0614</B><BR><HR size="1" align="center" width="50%" noshade>
<center>Registrant&#146;s telephone number, including area code</center>
</FONT>




<P align="center"><FONT size="2"><HR size="1" align="center" width="50%" noshade>
<center>(Former name or former address, if changed since last report)</center></FONT>




<P align="center"><FONT size="2">&nbsp;</FONT>

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<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

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<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
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	<TD width="76%"></TD>
</TR>
<TR><TD></TD><TD colspan="8"><A HREF="#000">Item&nbsp;2. Acquisition or Disposition of Assets.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#001">Item&nbsp;7. Financial Statements and Exhibits.</A></TD></TR>
<TR><TD colspan="9"><A HREF="c72546exv99wxcy.htm">EX-99.(C) Information Statement dated 10/22/2002</A></TD></TR>
</TABLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>








<!-- link2 "Item&nbsp;2. Acquisition or Disposition of Assets." -->
<DIV align="left"><A NAME="000"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;2. Acquisition or Disposition of Assets.</B>
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the close of business on October&nbsp;22, 2002, Entrx Corporation was
the owner of 3,982,142 shares of the $0.01 par value common stock of Surg II,
Inc., a Minnesota corporation. The common stock of Surg II, Inc. is traded on
the Over the Counter Bulletin Board under the symbol &#147;SURG.&#148;

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;22,
2002, Entrx Corporation distributed 3,791,576 shares of
Surg II, Inc. common stock as a dividend to its shareholders of record as of
the close of business on October&nbsp;11, 2002. The dividend was equal to one share
of Surg II, Inc. common stock for each two shares of Entrx Corporation common
stock owned.

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Entrx Corporation
retains 190,566 shares of Surg II, Inc. common stock, or
approximately 4.3% of the outstanding shares of Surg II, Inc., and
intends to reserve 75,000 of those shares of Surg II, Inc. common stock for
options to be granted to members of its Board of Directors.
</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of September&nbsp;30, 2002, the value of Surg II, Inc. on the balance sheet
of Entrx Corporation was approximately $3,250,000, or approximately 22% of
Entrx Corporation&#146;s assets, and approximately 34% of its stockholders equity.

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An Information Statement, filed as part of this Form&nbsp;8-K as an exhibit,
has been, or will be through street name record holders, delivered to each of
the shareholders of Entrx Corporation entitled to the dividend.

</FONT>


<P align="center"><FONT size="2">&nbsp;</FONT>

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<!-- link2 "Item&nbsp;7. Financial Statements and Exhibits." -->
<DIV align="left"><A NAME="001"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;7. Financial Statements and Exhibits.</B>
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="90%"><FONT size="2"><B>(b)&nbsp;Proforma financial
information</B><BR>
The required proforma financial information is currently unavailable
and will be filed within 60 days of the date of the filing of this
Form 8K.</FONT></TD>
</TR>
<tr><td>&nbsp;</td></tr>
<TR valign="top">
        <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="90%"><FONT size="2"><B>(c)&nbsp;Exhibits</B><BR>
Information Statement dated October&nbsp;22, 2002</FONT></TD>
</TR>
</TABLE>




<CENTER>
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<TR valign="bottom">
        <TD width="21%">&nbsp;</TD>
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        <TD width="39%">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><FONT size="2"><B>Dated:&nbsp;&nbsp;November&nbsp;1, 2002</B></FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
<B>&nbsp;</B>
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2"><B>ENTRX CORPORATION</B></FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>

<TD align="left" valign="top"><FONT size="2">By:&nbsp;&nbsp;/s/ Wayne
W. Mills</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2"><HR size="1" width="60%" noshade>
</FONT></TD>
</TR>


<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Wayne W. Mills<BR>
Its President and Chief Executive Officer</FONT></TD>
</TR>
</TABLE>
</CENTER>


<P align="center"><FONT size="2">&nbsp;</FONT>

</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(C)
<SEQUENCE>3
<FILENAME>c72546exv99wxcy.htm
<DESCRIPTION>EX-99.(C) INFORMATION STATEMENT DATED 10/22/2002
<TEXT>
<HTML>
<HEAD>
<TITLE>Entrx Corporation</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "INFORMATION STATEMENT" -->

<P align="left">
<B><FONT size="4">INFORMATION STATEMENT</FONT></B>

<P align="center">
<B><FONT size="4">DISTRIBUTION OF</FONT></B>

<DIV align="center">
<B><FONT size="4">SHARES OF THE $0.01 PAR VALUE</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="4">COMMON STOCK OF SURG&nbsp;II, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="4">through distribution by</FONT></B>

<P align="center">
<B><FONT size="5">ENTRX CORPORATION</FONT></B>

<P align="center">
<B><FONT size="4">to</FONT></B>

<P align="center">
<B><FONT size="4">The Holders of Its Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We (Entrx Corporation) are sending you this Information
Statement in connection with the distribution of approximately
3,791,670 shares of the $0.01&nbsp;par value common stock of
Surg&nbsp;II, Inc., which is a majority owned subsidiary of
Entrx Corporation, to our shareholders as a dividend. The
distribution is being made effective October&nbsp;22, 2002 to
our shareholders of record as of the close of business on
October&nbsp;11, 2002. Each such shareholder is receiving one
share of Surg&nbsp;II, Inc. common stock for every two shares of
Entrx Corporation common stock held.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The distribution is being effected as part of a plan to provide
our shareholders with value outside of Entrx Corporation.
Surg&nbsp;II, Inc. is seeking and negotiating to obtain or enter
into a new business. Following the distribution, the
shareholders of Entrx Corporation will own approximately 90% of
the outstanding shares of the common stock of Surg&nbsp;II, Inc.
The Surg&nbsp;II, Inc. common stock is currently traded on the
Over the Counter Bulletin Board under the symbol
&#147;SURG.&#148;

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
No vote of our shareholders is required in connection with this
distribution. You will not be required to pay cash or provide
any other consideration, or to surrender or exchange any shares
of Entrx Corporation common stock, in order to receive the
distribution of Surg&nbsp;II, Inc. common stock. Therefore, you
are not required to take any action.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Neither the U.S.&nbsp;Securities and Exchange Commission nor
any state securities commission has approved or disapproved of
the Surg&nbsp;II, Inc. common stock to be issued to you pursuant
to this distribution, or determined if this Information
Statement is truthful or complete. Any representation to the
contrary is a criminal offense.</B>

<P align="center">
The date of this Information Statement is October&nbsp;22, 2002.

<DIV>&nbsp;</DIV>
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<P align="left">
<B>Background of Distribution</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Until January&nbsp;22, 2002, Surg&nbsp;II, Inc. was engaged in
the business of designing, developing, manufacturing and
marketing specialty medical and surgical wound drainage products
under the name Surgidyne, Inc. On June&nbsp;22, 2002,
Surg&nbsp;II, Inc. sold all of its assets to Sterion
Incorporated and changed its name from Surgidyne, Inc. to its
current name. The proceeds of that sale allowed Surg&nbsp;II,
Inc. to pay nearly all of its liabilities. Accordingly,
following the sale, Surg&nbsp;II, Inc. had minimal assets, and
liabilities of less than $100,000.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On May&nbsp;29, 2002, we acquired 145,000,000&nbsp;shares of no
par value common stock from Surg&nbsp;II, Inc. for $3,000,000.
The 145,000,000&nbsp;shares of no par value common stock became
3,625,000&nbsp;shares of $0.01&nbsp;par value common stock as of
the close of business on October&nbsp;4, 2002, as the result of
a one&nbsp;for&nbsp;40 reverse stock split (see
&#147;Capitalization of Surg&nbsp;II, Inc.&#148; later in this
Information Statement). All further reference to the number of
shares of common stock of Surg&nbsp;II, Inc. will take this
reverse stock split into consideration.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;25, 2002, we acquired an additional
357,142&nbsp;shares of the $0.01&nbsp;par value common stock
from Surg&nbsp;II, Inc. for $300,000, making the total number of
shares we owned equal to 3,982,142. As a result, prior to the
distribution, we owned approximately 91% of the
4,348,720&nbsp;shares of the Surg&nbsp;II, Inc. $0.01&nbsp;par
value common stock outstanding.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our acquisition of the Surg&nbsp;II, Inc. common stock was in
furtherance of our plan to provide our shareholders with
enhanced value outside of Entrx Corporation. We acquired the
Surg&nbsp;II, Inc. common stock with the intention of finding,
and causing Surg&nbsp;II, Inc. to acquire, a business which we
would expect to have potential for growth, and to distribute our
ownership of Surg&nbsp;II, Inc. and that business to our
shareholders. We have been seeking such businesses, and have
been negotiating with various parties for such an acquisition,
Inc. Surg&nbsp;II, Inc. will continue to engage in such
negotiations, and will publicly announce any definitive
agreement entered into for the acquisition of any new business
shortly after reaching such an agreement.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our initial plan was to distribute our shares of Surg&nbsp;II,
Inc. to our shareholders as a dividend once negotiations for the
acquisition of a business by Surg&nbsp;II, Inc. had been
completed. We have since determined that it is in our best
interests, and those of our shareholders, to distribute our
shares of Surg&nbsp;II, Inc. as a dividend prior to the
completion of any negotiations for the acquisition of a new
business for Surg&nbsp;II, Inc.

<P align="left">
<B>The Number of Shares We Will Distribute</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In effecting the dividend, we will distribute 3,791,670 shares
of Surg II, Inc. common stock, reduced by the number of
fractional shares which are not distributed, and increased by
the number of shares we may be required to distribute to persons
who execute warrants for the purchase of up to 575,000 shares of
Entrx Corporation common stock at $1.50 per share prior to
October&nbsp;31, 2002. Since we intend to retain 75,000 shares
of Surg II, Inc. common stock to be used for options to members
of our Board of Directors, we may be required to purchase up to
an additional 170,000 shares of Surg II, Inc. common stock for
distribution as a dividend with respect to the shares acquired
on the exercise of those warrants.

<P align="left">
<B>The Number of Shares You Will Receive</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For every two shares of Entrx Corporation common stock you own,
you will receive one share of Surg&nbsp;II, Inc. common stock.
As a result of the calculation of the dividend, shareholders who
own an odd number of shares of Entrx Corporation common stock
would end up with one half of a share

<P align="center"><FONT size="2">1
</FONT>
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<DIV align="left">
of Surg II, Inc. common stock. However, we will not distribute
any fractional shares of Surg&nbsp;II, Inc. common stock in
connection with the distribution. Instead, we are paying our
shareholders $1.00 for each one-half share. The fractional share
payment we are making should not be taken as the actual fair
market value of the Surg&nbsp;II, Inc. shares.
</DIV>

<P align="left">
<B>When and How You Will Receive Shares of Surg&nbsp;II, Inc.
Common Stock</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have released our 3,982,142&nbsp;shares of Surg&nbsp;II, Inc.
to the transfer agent for the Surg&nbsp;II, Inc. common stock,
Wells Fargo Bank Minnesota, NA, 161 North Concord Exchange,
South St. Paul, Minnesota 55075 (&#147;Wells Fargo&#148;). On
the October&nbsp;22, 2002 distribution date, Wells Fargo will
have registered all of the dividended shares of Surg&nbsp;II,
Inc. in the names of the Entrx Corporation shareholders of
record as of the close of business on October&nbsp;11, 2002, and
will be mailing those certificates along with this Information
Statement, to you.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Most of our shareholders have their shares of Entrx Corporation
held on account by a broker, bank or other nominee. In such
cases, the nominee is the registered holder, or &#147;street
name&#148; holder, for your shares of Entrx Corporation common
stock, and will be recorded as the registered holder of the
Surg&nbsp;II, Inc. shares being distributed to you as a
dividend. Your nominee should then electronically credit your
account with those shares. You should similarly receive any cash
credited to you in lieu of the issuance of a fractional share.
Shareholders holding shares in nominee form will receive this
Information Statement separate from any stock certificate.

<P align="left">
<B>U.S.&nbsp;Federal Income Tax Consequences</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have been advised that:

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Tax Consequences to Entrx. </I>We will recognize a taxable
gain equal to the excess of the fair market value of the
Surg&nbsp;II, Inc. common stock distributed by us on the
distribution date (which is October&nbsp;22, 2002), over our tax
basis in that stock.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Possible Taxable Gain to Shareholders. </I>It is anticipated
that you will not recognize a taxable gain on the distribution
of the Surg&nbsp;II, Inc. common stock. You will recognize a
taxable gain only if the cost basis of your Entrx Corporation
common stock is less than the fair market value of the
Surg&nbsp;II, Inc. common stock that you receive. Any gain will
be equal to the excess of the fair market value of the
Surg&nbsp;II, Inc. common stock received by you, as of the
distribution date (which is October&nbsp;22, 2002), over the
basis you have in your shares of Entrx Corporation common stock.

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Allocation of Tax Basis</I></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The tax basis on the shares of Surg&nbsp;II, Inc. common stock
    you reserve will equal the fair market value of that stock as of
    the distribution date.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The tax basis in your shares of Entrx Corporation common stock
    will be reduced by the fair market value of the Surg&nbsp;II,
    Inc. common stock you receive as of the distribution date.</TD>
</TR>

</TABLE>

<P align="left">
As a result of these adjustments, therefore, the basis of your
shares of Entrx Corporation common stock before the distribution
will be equal to the combined basis of your Entrx Corporation
common stock and the Surg&nbsp;II, Inc. common stock you receive
after the distribution.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Fair Market Value. </I>Within a reasonable time after
completion of the distribution, we will provide you with our
determination of the fair market value of the Surg&nbsp;II, Inc.
shares of common stock as of the distribution date.

<P align="center"><FONT size="2">2
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Holding Period. </I>The holding period of the shares of
Surg&nbsp;II, Inc. common stock for income tax purposes will
commence on the date of distribution, and will not include any
time you have owned your shares of Entrx Corporation common
stock with respect to which the distribution of your
Surg&nbsp;II, Inc. shares is made.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Treatment of Fractional Shares. </I>If you receive cash in
lieu of a fractional share of Surg&nbsp;II, Inc. common stock,
the cash will be treated for U.S.&nbsp;Federal income tax
purposes as a return of capital from Entrx Corporation. The cash
payment will reduce the basis in your shares of Entrx
Corporation common stock, with respect to which the distribution
of your Surg&nbsp;II, Inc. shares is made, by the amount of the
payment. If the cash payment (which will not exceed $1.00)
exceeds the basis in your shares of Entrx common stock, you will
realize a capital gain equal to the difference between the cash
you receive and your tax basis in the shares of Entrx
Corporation common stock with respect to which the distribution
of your Surg&nbsp;II, Inc. shares is made.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Subsequent Sale of Stock. </I>If you sell your shares of
Surg&nbsp;II, Inc. common stock, you will recognize gain or loss
on the sale equal to the difference between your sales proceeds
and the tax basis allocated to the shares you sold, as described
above under &#147;Allocation of Tax Basis.&#148; The gain or
loss will be a capital gain or loss if you held the shares as a
capital asset. The capital gain or loss will be long-term if
your holding period for the stock is more than one year, as
calculated above under &#147;Holding Period.&#148; The
deductibility of capital losses is subject to limitations.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>We have not sought or obtained a letter ruling from the
Internal Revenue Service which confirms any of the income tax
consequences of the distribution.</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>You should consult your tax advisor about the tax
consequences of the distribution to you, including the
application of state, local and foreign tax laws and the
possible changes in tax law that could affect the tax
consequences described above. Neither we nor the transfer agent
can provide you with such advice.</B>

<P align="left">
<B>Market for Surg&nbsp;II, Inc. Common Stock</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Until October&nbsp;4, 2002, trading in the Surg&nbsp;II, Inc.
common stock was effected and reported on the Over the Counter
Bulletin Board under the symbol &#147;SUGR.&#148; After
October&nbsp;4, 2002, the symbol was changed to
&#147;SURG.&#148; The following table sets forth the high and
low bid prices of the Surg&nbsp;II, Inc. common stock quoted
during each quarter for the years ending December&nbsp;31, 2000
and December&nbsp;31, 2001, and for the three quarters of 2002
ended with September&nbsp;30, 2002, as obtained from information
published by NASAQ. Those quotations reflect inter-dealer
prices, without retail mark-up, markdown or commission, and may
not represent actual transactions. Those quotations are also
adjusted to reflect the one for 40 reverse stock split of
Surg&nbsp;II, Inc. common stock effected on October&nbsp;4, 2002.

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="75%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Bid Price Range</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">3
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="75%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Bid Price Range</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="10"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On October&nbsp;17, 2002, the bid price of Surg&nbsp;II,
Inc.&#146;s common stock on the OTC Bulletin Board was
$1.01&nbsp;per share.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Trading of the Surg&nbsp;II, Inc. common stock has been
sporadic. During the last quarter of 2002, transactions were
reported for only seven days. The spread on the bid and asked
prices on October&nbsp;17, 2002, was $1.01 bid, $5.00 asked,
indicating that a stable and reliable market for Surg&nbsp;II,
Inc. does not exist.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of October&nbsp;11, 2002, Surg&nbsp;II, Inc. had
approximately 435&nbsp;shareholders of record. With the
distribution of the dividend of Surg&nbsp;II, Inc. common stock,
Surg&nbsp;II, Inc. will have approximately
1,580&nbsp;shareholders of record. At least
3,500&nbsp;shareholders will own shares of Surg&nbsp;II, Inc. in
street name after the distribution.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Generally, the shares of Surg&nbsp;II, Inc. that you receive in
the distribution will be freely tradable by you. However, if you
hold &#147;restricted&#148; (as that term is defined under the
Securities Act of 1933) shares of Entrx Corporation common
stock, the shares of Surg&nbsp;II, Inc. common stock you receive
will be similarly restricted. In addition, an affiliate of
Surg&nbsp;II, Inc. is subject to certain restrictions on the
sale of his or her shares, and in the event of such a sale, will
be required to comply with, among other laws and regulations,
Rule&nbsp;144 under the Securities Act of 1933.

<P align="left">
<B>Assets of Surg&nbsp;II, Inc.</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of September&nbsp;30, 2002, Surg II, Inc. had cash or cash
equivalents of approximately $3,200,000, and liabilities of less
than $50,000.

<P align="left">
<B>Capitalization of Surg&nbsp;II, Inc.</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;24, 2002, the Board of Directors of
Surg&nbsp;II, Inc. announced a one for 40 reverse stock split,
for shareholders of record at the close of business on
October&nbsp;4, 2002. This recapitalization was effected through
an amendment to the Articles of Incorporation of Surg&nbsp;II,
Inc. whereby the authorized capital stock of Surg&nbsp;II, Inc.
was reduced from 200,000,000&nbsp;shares of no par value capital
stock to 5,000,000&nbsp;shares of $0.01&nbsp;par value capital
stock, and 40&nbsp;shares of the previously authorized no par
value common stock became one share of the newly authorized
$0.01&nbsp;par value common stock. As was the case prior to the
recapitalization, all issued shares of Surg&nbsp;II, Inc.
capital stock are common stock, unless the Board of Directors,
when authorizing the issuance of shares of capital stock,
designate the shares to be of one or more different classes or
series of shares, and designate the relative rights and
preferences of such shares. Previously designated preferred
stock has been cancelled, and only common stock is currently
outstanding.

<P align="center"><FONT size="2">4
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B>Principal Shareholders of Surg&nbsp;II, Inc./ Control</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Wayne W. Mills, the President of Entrx Corporation, and a member
of the Board of Directors of Entrx Corporation, beneficially
owns 1,720,000&nbsp;shares of the common stock of Entrx
Corporation. Accordingly, as a result of the spin-off,
Mr.&nbsp;Mills will beneficially own 860,000&nbsp;shares of
Surg&nbsp;II, Inc. common stock, or approximately 20% of the
total shares of Surg&nbsp;II, Inc. common stock outstanding
following the distribution. Of the 860,000&nbsp;shares of
Surg&nbsp;II, Inc. common stock, 200,000 are owned by Blake
Capital Partners, LLC, which is wholly owned by Mr.&nbsp;Mills,
200,000&nbsp;shares are owned in Mr.&nbsp;Mills&#146; Individual
Retirement Account, and 137,500 are owned by
Mr.&nbsp;Mills&#146; spouse, to which he disclaims beneficial
ownership. Mr.&nbsp;Mills&#146; address is Suite&nbsp;2690, 800
Nicollet Mall, Minneapolis, Minnesota 55402.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To our knowledge, as a result of the dividend, Bradley Resources
Company, 1151&nbsp;S.W. 30th St., Suite&nbsp;E, PO
Box&nbsp;1938, Palm City, FL&nbsp;34991, owns 215,200 shares of
Surg&nbsp;II, Inc. common stock, or approximately 5% of the
total shares of Surg&nbsp;II, Inc. common stock outstanding.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To our knowledge, no other person owns beneficially more than 5%
of the outstanding common stock of Surg&nbsp;II, Inc. after the
distribution.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Because of the stock ownership of Surg&nbsp;II, Inc. common
stock by Mr.&nbsp;Mills, Mr.&nbsp;Mills, and we through
Mr.&nbsp;Mills, will likely have significant control over the
activities of Surg&nbsp;II, Inc., and the election of the
members of its Board of Directors.

<P align="left">
<B>Future Transactions</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As the result of Surg&nbsp;II, Inc.&#146;s capitalization, any
transaction which Surg&nbsp;II, Inc. enters into in order to
acquire any business will likely require an amendment to
Surg&nbsp;II, Inc.&#146;s Articles of Incorporation to increase
its capitalization. Any such amendment to Surg&nbsp;II,
Inc.&#146;s Articles of Incorporation, or any merger or similar
transaction between Surg&nbsp;II, Inc. and any other business
entity, will require approval of Surg&nbsp;II, Inc.&#146;s
shareholders. If, and shortly following the time when,
Surg&nbsp;II, Inc. negotiates an agreement to acquire a
business, Surg&nbsp;II, Inc. will have to call a
shareholders&#146; meeting. The proxy statement for that
shareholder&#146;s meeting will provide the Surg&nbsp;II, Inc.
shareholders with detailed information relating to any business
acquisition or combination so negotiated in order to permit
those shareholders to make an informed voting decision.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There can be no assurance that Surg&nbsp;II, Inc. will be
successful in acquiring or engaging in any new business, or
that, if acquired, the business acquired or engaged in will be
successful.

<P align="left">
<B>Additional Information</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Surg&nbsp;II, Inc. and we are each subject to the information
reporting requirements of the Securities Exchange Act of 1934,
as amended, which we refer to as the Securities Exchange Act,
and accordingly each company files annual, quarterly and special
reports, proxy statements and other information with the SEC,
including financial statements. Members of the public may read
and copy any materials Surg&nbsp;II, Inc. and we file with the
SEC from the SEC&#146;s Public Reference Room at its principal
office, 450&nbsp;Fifth Street&nbsp;NW, Washington,&nbsp;DC
20549. Information on the operation of the Public Reference Room
may be obtained by calling the SEC at 1(800)&nbsp;sec-0330. The
SEC maintains a website at <I>www.sec.gov </I>that contains
materials we and Surg&nbsp;II, Inc. each file electronically
with the SEC. If you would like a copy of any reports we filed
with the SEC in 2002, you may write us at Suite&nbsp;2690,
800&nbsp;Nicollet Mall, Minneapolis, Minnesota 55402, asking for
copies of those reports and we will mail them to you free of
charge.

<P align="center"><FONT size="2">5
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