U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from .................... to .........................
Commission file number: 000-26971
MAXX INTERNATIONAL, INC.
----------------------------------------------
(Name of small business issuer in its charter)
Utah 87-0284871
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
c/o Solomon Broadcasting International, Inc.
130 S. El Camino Drive, Beverly Hills, CA 90212
-------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: 301-205-6220
________________________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
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
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes ______ No ______
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: ___________________ shares of
common stock as of September 30, 2000.
Transitional Small Business Disclosure Format (check one); Yes [ ] No [X]
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.................................................1
CONSOLIDATED BALANCE SHEETS AS OF
SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998 (UNAUDITED) ..........2
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
AND YEARS ENDED DECEMBER 31, 1999 AND 1998 (UNAUDITED)...............3
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
AND YEARS ENDED DECEMBER 31, 1999 AND 1998 (UNAUDITED)...............4
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
AND YEARS ENDED DECEMBER 31, 1999 AND 1998 (UNAUDITED)...............5
ITEM 2 MANAGEMENT DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION ................................................10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS....................................................11
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS............................12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES......................................12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................12
ITEM 5. OTHER INFORMATION....................................................12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.....................................12
SIGNATURES....................................................................13
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
The following unaudited Financial Statements for the period ended September
30, 2000, have been prepared by the Company.
1
<PAGE>
MAXX INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
2000 1999 1998
------------- ------------ ------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash $ 21,194 $ 20,489 $ 0
Accounts Receivable 13,383
Due From Stockholder 49,974
Compact Disc and Video Production Costs 692,407
Concert Pre-Production Costs 661,898
Other Current Assets 51,840
----------- --------- --------
Total Current Assets 1,490,696 20,489 0
COMPUTER EQUIPMENT AND LEASEHOLD
IMPROVEMENTS, Net of $13,010 Accumulated
Depreciation and Amortization 50,061
BOOK RIGHTS, Net of $16,467 Accumulated Amortization 548,148
ORGANIZATION COSTS, Net of $6,411
Accumulated Amortization 40,306
GOODWILL, Net of $54,324 Accumulated Amortization 2,664,541
----------- --------- --------
TOTAL ASSETS $ 4,793,752 $ 20,489 $ 0
=========== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Expenses $ 1,127,715 $ 35,000
Loans Payable 433,681
Notes Payable 800,000
----------- --------- --------
Total Current Liabilities 2,361,396 0 35,000
----------- --------- --------
Stockholders' Equity:
Common Stock, $0.01 Par Value, 50,000,000 Authorized,
26,656,144 Shares Issued and Outstanding at September 30, 2000
and 9,048,171 Shares at December 31, 1999
and 3,048,171 Shares at December 31, 1998 266,562 90,482 30,482
Additional Paid-in Capital 6,859,986 116,700 31,700
Accumulated Deficit (4,694,192) (186,693) (97,182)
----------- --------- --------
Total Stockholders' Equity 2,432,356 20,489 (35,000)
----------- --------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,793,752 $ 20,489 $ 0
=========== ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
MAXX INTERNATIONAL, INC. AND SUBSIDIARY
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
AND YEARS ENDED DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, -------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
INCOME
Net Sales $ 63,755 $ 0 $ 0
Interest Income 919 489 0
------------ ------------ ------------
GROSS INCOME 64,674 489 0
------------ ------------ ------------
EXPENSES
General and Administrative 2,435,507 90,000 480
------------ ------------ ------------
Total Expenses 2,435,507 90,000 480
------------ ------------ ------------
LOSS FROM OPERATIONS (2,370,833) (89,511) (480)
------------ ------------ ------------
DEBT FORGIVENESS ON SETTLEMENT OF PAYABLE 0 0 51,915
EXTRAORDINARY WRITEOFF (2,136,666) 0 0
------------ ------------ ------------
NET INCOME (LOSS) $ (4,507,499) $ (89,511) $ 51,435
============ ============ ============
BASIC INCOME (LOSS) PER SHARE $ (0.17) $ (0.01) $ 0.02
============ ============ ============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 27,273,795 7,634,474 3,048,171
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
MAXX INTERNATIONAL, INC. AND SUBSIDIARY
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
AND YEARS ENDED DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS YEARS ENDED
ENDED DECEMBER 31
SEPTEMBER 30, ---------------------
2000 1999 1998
------------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $(4,507,499) $ (89,511) $ 51,435
Adjustments to Reconcile Net Income (Loss) to Net Cash
Used by Operating Activities:
Extraordinary Writeoff 2,136,666
Depreciation and Amortization 76,948 0 0
Decrease in Accounts Receivable 7,209 0 0
Increase in Other Current Assets (48,190) 0 0
Increase in Compact Disc and Video Production Costs (215,843) 0 0
Decrease in Concert Pre-Production Costs 133,102 0 0
Increase (Decrease) in Accounts Payable and Accrued Expenses 1,076,266 (32,461) (51,435)
----------- --------- --------
Net Cash Used by Operating Activities (1,341,341) (121,972) 0
----------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Computer Equipment (28,008) 0 0
Loans to Stockholder (147,450) 0 0
Repayment of Loans to Stockholder 50,043 0 0
Cash Paid for Credit Card Rights (115,000) 0 0
Cash Paid for Calling Card Rights (155,000) 0 0
Cash Paid for Organization Costs (45,166) 0 0
----------- --------- --------
Net Cash Used by Investing Activities (440,581) 0 0
----------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Received in Connection with Stock Acquisition 168,800 0 0
Cash Received for Issuance of Stock 700,146 142,461 0
Cash Paid for Purchase and Retirement of Stock (20,000)
Cash Received on Loans Payable 553,681 0 0
Repayment of Loans Payable (120,000) 0 0
Cash Received for Note Payable 500,000 0 0
----------- --------- --------
Net Cash Provided by Financing Activities 1,782,627 142,461 0
----------- --------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 705 20,489 0
CASH AND CASH EQUIVALENTS, Beginning 20,489 0 0
----------- --------- --------
CASH AND CASH EQUIVALENTS, Ending $ 21,194 $ 20,489 $ 0
=========== ========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Period for:
Interest $ 0 $ 0 $ 0
Income Taxes $ 0 $ 0 $ 0
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
MAXX INTERNATIONAL, INC. AND SUBSIDIARY
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
AND YEARS ENDED DECEMBER 31, 1999 AND 1998
(UNAUDITED)
Additional Total
Common Stock Paid-in Accumulated Stockholders'
Shares Amount Capital (Deficit) Equity
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1998 3,048,171 $ 30,482 $ 31,700 $ (148,617) $ (86,435)
Net Income for the Year Ended
December 31, 1998 51,435 51,435
------------------------------------------------------------------------------
Balance, January 1, 1999 3,048,171 30,482 31,700 (97,182) (35,000)
Net Loss for the Year Ended
December 31, 1999 (89,511) (89,511)
Issuance of Common Stock
for Cash and Debt 6,000,000 60,000 85,000 145,000
------------------------------------------------------------------------------
Balance, January 1, 2000 9,048,171 90,482 116,700 (186,693) 20,489
------------------------------------------------------------------------------
Two For One Stock Split
July 1, 2000 14,591,397 145,914 (145,914) 0
Net Loss for the Nine Months Ended
September 30, 2000 (4,507,499) (4,507,499)
Redemption and Retirement of
Stock (6,400,000) (64,000) 44,000 (20,000)
Issuance of Common Stock
for Cash and Purchase of Assets
and Subsidiary 9,416,576 94,166 6,845,200 6,939,366
------------------------------------------------------------------------------
Balance, September 30, 2000 26,656,144 $266,562 $6,859,986 $(4,694,192) $2,432,356
==============================================================================
The accompanying notes are an integral part of these financial statements.
5
</TABLE>
<PAGE>
MAXX INTERNATIONAL INC. AND SUBSIDIARY
NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1- SIGNIFICANT ACCOUNTING POLICIES, ORGANIZATION AND
BUSINESS
The financial statements presented are those of Maxx International
Inc. and Subsidiary (the "Company")formerly Area Investment and
Development Company. The Company was organized under the laws of the
State of Utah on June 10, 1970. The Company was organized for the
purpose of seeking potential business ventures.
On February 19, 2000 the Company closed on an Asset Acquisition
Agreement with Maxx International, Inc., ("Maxx") whereby the
company acquired all of Maxx's assets in exchange for 3,500,000
restricted shares of the Company's $.01 par value common stock. On
April 17, 2000 the Company legally changed its name to Maxx
International Inc. No liabilities or other encumbrances were
acquired from Maxx in the asset acquisition.
On March 27, 2000 the Company closed on a stock purchase agreement
with Pure Vision Internet Inc.(The "Subsidiary") The Company
acquired all of the Subsidiary's shares in exchange for 2,043,226
shares of the Company's common stock, par value $.01 per share and
various options exercisable at various times. A fair market
valuation is being performed.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Doubtful Accounts
Accounts receivable have been adjusted for all known uncollectible
accounts and an additional allowance for doubtful accounts has not
been provided as the amount is not considered material.
Fair Value of Financial Instruments
Unless otherwise indicated, the fair values of all reported assets
and liabilities which represent financial instruments (none of which
are held for trading purposes) approximate the carrying values of
such amounts.
6
<PAGE>
MAXX INTERNATIONAL INC. AND SUBSIDIARY
NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
Fair Value of Financial Instruments
Unless otherwise indicated, the fair values of all reported assets
and liabilities which represent financial instruments (none of which
are held for trading purposes) approximate the carrying values of
such amounts.
Property, Equipment and Depreciation
Property and equipment are stated at original cost to the Company.
The property and equipment are primarily being depreciated over
lives established by the Modified Accelerated Cost Recovery System
(MARCS), which approximates depreciation under generally accepted
accounting principles, as follows: five to seven years for
equipment, and ten to 39 years (straight-line) for the property.
Book Rights
The Company acquired the rights to publish various books. The rights
are stated at original cost to the Company. The rights are being
amortized over a 20 year life using the straight line method.
Organization Costs
Organization Costs are being amortized under the straight line
method over a period of 60 months.
Goodwill
The Company acquired all of the stock of Pure Vision Internet Inc.
The stock is presently being recorded at $.50 per share. Goodwill is
being amortized over a 10 year life using the straight line method.
NOTE 2 - DUE FROM STOCKHOLDERS
Due from stockholders represents short-term non-interest bearing
loan balances.
7
<PAGE>
MAXX INTERNATIONAL INC. AND SUBSIDIARY
NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 3 - CREDIT CARD AND CALLING CARD RIGHTS
These costs are being written off in connection with the potential
termination of a licensing arrangement.
NOTE 4 - LOANS PAYABLE
Loans payable represents short-term non-interest bearing loans.
NOTE 5 - NOTE PAYABLE AND SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Note payable of $500,000 represents a non-interest bearing demand
note which is intended to be converted to equity.
The Company borrowed $300,000 from Itex Corporation. The note bears
interest at 18% per annum and is due October 2, 2000. The note is
currently in default and the Company is seeking an extension of time
for repayment. The proceeds of the note were paid directly to the
licensor of the credit and calling card rights.
NOTE 6 - SUBSEQUENT EVENTS
The former president and majority stockholder of the Company has
filed suit against the Company in U.S. District Court for the
Southern District of New York, claiming entitlement to certain
shares of the Company and reimbursement of expenses and salary. The
Company believes it has meritorious defenses to the action and has
counterclaimed for damages against Mr. Garson.
Maxx is party to a Sub-License Agreement with Second Renaissance,
L.L.C. granting the right to manufacture and sell credit and debit
cards imported with images from the Vatican Library Collection. The
contract is subject to the approval of the Office of Sales of
Publications and Reproductions of the Vatican Museums of the
Sovereign State of Vatican City.
The only economic obligation of the contract is the payment of a
royalty based on receipts from the sale of products produced under
the sub-license. There is a fixed schedule of minimum royalties
subject to achieving the minimum performance standards, the term of
the agreement is 15 years.
The Company retired 6,400,000 shares effective September 30, 2000.
Maxx International Inc.
Form 10-QSB Filing Date
Type: EX-27
8
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
The following discussion and analysis should be read in conjunction with
the Consolidated Financial Statements and Notes thereto appearing elsewhere in
this Form 10-QSB and the previously filed Form 10-KSB for the period ending
December 31, 1999.
PLAN OF OPERATION
The mission of Maxx International, Inc. (the "Company") is to own and
manage Web content and media assets which are packaged and converged across
multiple distribution platforms to provide multifaceted revenue streams and
increase stockholder equity.
The Company is presently seeking to form a strategic alliance with another
entity and or investor to help satisfy its current cash flow needs for the next
twelve months. The Company is in the unique position of owning the exclusive
worldwide licensing rights to the seven private prayer books written by His
Holiness Pope John Paul II. Although there can be no assurance, a significant
publishing advance of $5,000,000 to $8,000,000 is anticipated once the approved
translations are received from the Vatican. The Company's marketing program
includes the distribution of a collection of music compact discs with unique
characteristics. This will involve famous national and international
entertainment idols, actors and sports stars reading various prayers contained
within the Pope's Prayer Books, combined with music.
In March 2000, the Company acquired 100% of the outstanding stock of Pure
Vision Internet Inc. ("Pure Vision") which manages 35,000 digital video and
audio files daily. Pure Vision is well established in the areas of web site
template development, video streaming, webcasting, web conferencing, hosting
sites, automatic e-commerce store generator, domain name provider and ISP/DSL
reseller. The main focus of Pure Vision for the last three years has been their
Web site www.thegospel.com. The Gospel.com is a Christian Web Community that
links the churches and ministries of today with the furthest points of the
world. As the Company develops, additional personnel will be required to staff
the various business centers.
The costs related to credit and calling card rights are being written off
in connection with the potential termination of a licensing arrangement.
The Company's operation to date consumed substantial amounts of cash. The
negative cash flow from operations is expected to continue and may accelerate in
the foreseeable future. The rate at which the Company expends its resources is
variable and may accelerate, depending on many factors, many of which are
outside the control of the Company. The Company anticipates that it will require
additional financing to fund its operations. Future financing may result in
additional issuance of debt, preferred stock and/or common stock securities, in
dilution to the holders of the common stock. Any such financing, if required,
may not be available on satisfactory terms or at all. There can be no assurance
that additional investments or financing will be available as needed to support
the development of the Company's products. Failure to obtain such capital on a
timely basis could result in lost business opportunities, or the financial
failure of the company.
9
<PAGE>
The former president and majority stockholder of the Company has filed suit
against the Company in U.S. District Court for the Southern District of New
York, claiming entitlement to certain shares of the Company and reimbursement of
expenses and salary. The Company believes it has meritorious defenses to the
action and has counterclaimed for damages against Mr. Garson.
Maxx is party to a Sub-License Agreement with Second Renaissance, L.L.C.
granting the right to manufacture and sell credit and debit cards imported with
images from the Vatican Library Collection. The contract is subject to the
approval of the Office of Sales of Publications and Reproductions of the Vatican
Museums of the Sovereign State of Vatican City.
The only economic obligation of the contract is the payment of a royalty
based on receipts from the sale of products produced under the sub-license.
There is a fixed schedule of minimum royalties subject to achieving the minimum
performance standards, the term of the agreement is 15 years.
The Company retired 6,400,000 shares effective September 30, 2000.
These financial statements have not been reviewed by outside auditors. The
Company is presently in the process of retaining an outside accounting firm.
FORWARD LOOKING STATEMENTS
Certain statements in this Quarterly Report that are not historical facts
constitute "forward-looking statements" within the meaning of the Federal
securities laws. Discussions containing such forward-looking statements may be
found in this sections entitled, "Management's Discussion and Analysis or Plan
of Operations", as well in this Quarterly Report generally. In addition, when
used in this Quarterly Report the words "anticipates," "intends," "seeks,"
"believes," "plan," "estimates," and "expects" and similar expressions as they
relate to us or our management are intended to identify such forward-looking
statements. Such statements are subject to a number of risks and uncertainties.
Our actual results, performance or achievements could differ materially from the
results expressed in, or implied by, these forward-looking statements. We
undertake no obligation to revise these forward-looking statements to reflect
any future events or circumstances.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are presently no other material pending legal proceedings to which
the Company or any of its subsidiaries is a party or to which any of its
property is subject and, to the best of its knowledge, no such actions against
the Company are contemplated or threatened.
10
<PAGE>
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
This Item is not applicable to the Company.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
This Item is not applicable to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
This Item is not applicable to the Company.
ITEM 5. OTHER INFORMATION
This Item is not applicable to the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
1) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
2) Reports on Form 8-K
A Form 8-K dated July 5, 2000, was filed reporting that on June 21, 2000,
the Company announced that its Board of Directors had declared a two-for-one
stock split in the form of a 100% stock dividend. The record date for the stock
split was set for June 30, 2000. One additional share of the Company's common
stock was distributed for each outstanding share on or about July 6, 2000.
Additionally, the Form 8-K dated July 5, 2000, reported that: (i) on June
5, 2000, the Board of Directors of the Company accepted the resignation of Rick
Garson as an officer and director of the Company; (ii) effective June 5, 2000,
the remaining directors elected Joseph Congiusti as a director of the Company;
and, (iii) on June 27, 2000, the Company entered into a Consulting Agreement
with Doyle Capital Management, Inc., a Nevada corporation.
11
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MAXX INTERNATIONAL, INC.
Date: December 26, 2000 By: /S/ ADLEY SAMSON
-------------------------- -------------------------------
Adley Samson, C.F.O.
12
