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 March 31, 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
(State or other jurisdiction of 87-0284871
incorporation or organization) (I.R.S. Employer Identification No.)
130 S. El Camino Drive, Beverly Hills, CA 90212
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: 301-205-6206
AREA INVESTMENT AND DEVELOPMENT COMPANY
-------------------------------------------------------------------------------
(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 [_]
No [X]
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: 14,591,397 shares of common
stock as of March 31, 2000.
Transitional Small Business Disclosure Format (check one); Yes [_] No [X]
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. BALANCE SHEET AS OF MARCH 31, 2000....................................2
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000.............................3
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000.............................4
STATEMENT OF STOCKHOLDERS' EQUITY FOR
THE THREE MONTHS ENDED MARCH 31, 2000.................................5
NOTES TO FINANCIAL STATEMENTS....................................6 to 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION..................................................9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS....................................................10
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS............................10
ITEM 3. DEFAULTS UPON SENIOR SECURITIES......................................10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................10
ITEM 5. OTHER INFORMATION....................................................11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.....................................11
SIGNATURES....................................................................12
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited Financial Statements for the period ended March 31,
2000, have been prepared by the Company.
1
<PAGE>
AREA INVESTMENT AND DEVELOPMENT COMPANY
BALANCE SHEET
MARCH 31, 2000
(UNAUDITED)
ASSETS
Current Assets:
Cash $ 233,400
Accounts Receivable 27,966
Due From Stockholders 94,628
Compact Disc and Video Production Costs 622,795
Concert Pre-Production Costs 610,510
Other Current Assets 13,664
----------
Total Current Assets 1,602,963
COMPUTER EQUIPMENT AND LEASEHOLD
IMPROVEMENTS , Net of $20,102 Accumulated
Depreciation and Amortization 17,918
BOOK RIGHTS,Net of $2,353 Accumulated Amortization 562,262
ORGANIZATION COSTS, Net of $ 988
Accumulated Amortization 58,272
GOODWILL, Net of $2,063 Accumulated Amortization 1,854,428
----------
TOTAL ASSETS $4,095,843
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Expenses $ 290,858
Loan Payable 500,000
----------
Total Current Liabilities 790,858
----------
Stockholders' Equity:
Common Stock, $0.01 Par Value, 50,000,000 Authorized,
16,061,666 Shares Issued and Outstanding 160,617
Additional Paid-in Capital 3,885,916
Accumulated Deficit -741,548
----------
Total Stockholders' Equity 3,304,985
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,095,843
==========
The accompanying notes are an integral part of these financial statements.
2
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AREA INVESTMENT AND DEVELOPMENT COMPANY
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
INCOME
Interest Income $ 280
----------
GROSS INCOME 280
----------
EXPENSES
General and Administrative 555,135
----------
Total Expenses 555,135
----------
LOSS FROM OPERATIONS -554,855
----------
NET LOSS -$554,855
==========
BASIC LOSS PER SHARE -$0.05
==========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 10,580,827
==========
3
<PAGE>
AREA INVESTMENT AND DEVELOPMENT COMPANY
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss -$554,855
Adjustments to Reconcile Net Loss to Net Cash
Used by Operating Activities:
Depreciation and Amortization 5,404
Decrease in Accounts Receivable 431
Increase in Compact Disc and Video Production Costs -138,631
Decrease in Concert Pre-Production Costs 26,890
Increase in Accounts Payable and Accrued Expenses 262,632
--------
Net Cash Used by Operating Activities -398,129
--------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Computer Equipment -971
Cash Paid for Book Rights -165
Cash Paid for Organization Costs -58,587
--------
Net Cash Used by Investing Activities -59,723
--------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Received in Connection with Stock Acquisition 170,763
Cash Received for Loan Payable 500,000
--------
Net Cash Provided by Financing Activities 670,763
--------
NET INCREASE IN CASH AND CASH EQUIVALENTS 212,911
CASH AND CASH EQUIVALENTS, Beginning 20,489
--------
CASH AND CASH EQUIVALENTS, Ending $233,400
========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Period for:
Interest $ 0
Income Taxes $ 0
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
AREA INVESTMENT AND DEVELOPMENT COMPANY
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid-in Accumulated Stockholders'
Shares Amount Capital (Deficit) Equity
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 2000 9,048,178 $ 90,482 $ 116,700 -$186,693 $ 20,489
Net Loss for the Three Months Ended
March 31, 2000 -554,855 -554,855
Issuance of Common Stock
for Cash and Purchase of Assets
and Subsidiary 7,013,488 70,135 3,769,216 0 3,839,351
------------------------------------------------------------------------------
Balance, March 31, 2000 16,061,666 $ 160,617 $3,885,916 -$741,548 $3,304,985
==============================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
AREA INVESTMENT AND DEVELOPMENT COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE 1- SIGNIFICANT ACCOUNTING POLICIES, ORGANIZATION AND BUSINESS
The financial statements presented are those of Area Investment and
Development Company (the "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. No liabilities or
other encumbrances were acquired from Maxx in the asset acquisition. A
fair market valuation is being performed.
Also in connection with the acquisition, Ken Kurtz and Carrie Kurtz
resigned as officers and directors of the Company and Ms. Gehring
resigned as secretary/treasurer and stayed on as a director. Michael
Solomon was appointed as director and chairman of the board of the
Company and Rick Garson was appointed as director, president,
secretary and treasurer.
As a result of this asset acquisition, neither Ken Kurtz nor any other
party owns or controls over 50% of the outstanding stock of the
Company.
On March 27, 2000 the Company closed on a stock purchase agreement
with Pure Vision Internet, Inc. The Company acquired all of Pure
Vision's shares in exchange for 3,513,488 shares of the Company's
Common Stock, par value $.01 per share and various options
excercisable at various times. A fair market valuation is being
performed.
On April 17, 2000 the Company legally changed its name to Maxx
International Inc.
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.
6
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AREA INVESTMENT AND DEVELOPMENT COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
Doubtful Accounts
Accounts receivable have been adjusted for all known uncollectable
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.
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 the 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. A fair
market valuation of these rights is being prepared. The rights are
stated at original cost to the Company. Any adjustments upon attaining
the valuation will be made prospectively. 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. A
fair market valuation of this stock is being prepared. The stock is
presently being recorded at $.50 per share. Any adjustments upon
attaining the valuation will be made prospectively. Goodwill is being
amortized over a 10 year life using the straight line method.
7
<PAGE>
AREA INVESTMENT AND DEVELOPMENT COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE 2 - DUE FROM STOCKHOLDERS
Due from stockholders represents short-term non-interest bearing loan
balances.
NOTE 3 - LOAN PAYABLE
Loan payable represents a non-interest bearing demand note which is
intended to be converted to equity.
8
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis should be read in conjunction with
the 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. Additionally, 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.
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 as 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.
9
<PAGE>
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.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On February 19, 2000, the Company closed an Asset Acquisition Agreement
("Agreement") with privately-held Maxx International, Inc., a Nevada corporation
("Maxx"). Pursuant to the Agreement, the Company acquired 100% of the assets of
Maxx, including the worldwide distribution rights to the private prayer books of
His Holiness, Pope John Paul II, in exchange for 3,500,000 shares of the
Company's common stock (the "Acquisition").
Additionally, in March of 2000, the Company acquired 100% of the
outstanding shares of common stock of Pure Vision Internet, Inc., a California
corporation ("Pure Vision") in exchange for the issuance by the Company of an
aggregate of 2,043,226 shares of the Company's common stock, options to purchase
an additional 525,000 shares of the Company's common stock and satisfaction of a
Pure Vision debt. Pure Vision 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.
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
A special meeting of the stockholders of the Company was held on April 17,
2000, at the principal executive offices of the Company, 130 S. El Camino Drive,
Beverly Hills, CA 90212, to vote upon an amendment to the Company's Articles of
Incorporation to change the name of the Company to "MAXX INTERNATIONAL, INC."
and to allow the Company to take advantage of the provisions of the Utah Revised
Business Corporation Act respecting the taking of action by written consent of
stockholders in lieu of a meeting where the consenting holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize or
10
<PAGE>
take the action at a meeting at which all shares entitled to vote thereof were
present and voted had consented in writing to the action. Approximately
fifty-nine percent (59%) of the outstanding voting securities of the Company
voted to adopt the resolutions to amend the Articles of Incorporation to change
the name of the Company and to allow action to be taken by consent of the
majority stockholders in lieu of a meeting.
Additional information required by this Item is incorporated by reference
from the Company's definitive information statement filed with the Commission on
March 27, 2000, for a special meeting of stockholders, held on April 17, 2000,
and the Company's information statement which was filed with the Commission on
February 9, 2000, in connection with a change in the majority of the board of
directors of the Company.
ITEM 5. OTHER INFORMATION
This Item is not applicable to the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K
A Form 8-K dated February 22, 2000, was filed reporting the acquisition of
100% of the assets of privately-held Maxx International, Inc., a Nevada
corporation, in exchange for 3,500,000 shares of the Company's Common Stock, as
well as the appointment of Michael Solomon as a director and chairman of the
board and Rick Garson as a director and the president/secretary and the
simultaneous resignation of Ken Kurtz and Carrie Kurtz from all of their
positions as directors and officers of the Company.
A Form 8-K dated April 11, 2000, was filed reporting the acquisition of
100% of the outstanding shares of common stock of Pure Vision Internet, Inc., a
California corporation ("Pure Vision"), from Ms. Catherine McGee, the holder of
100% of the outstanding shares of common stock of Pure Vision, in exchange for:
(i) the issuance by the Company of an aggregate of 2,043,226 shares of the
Company's common stock to Ms. McGee and her respective designees; (ii) options
granted to Ms. McGee and her designees to purchase a total of 525,000 shares of
the Company's common stock (the "Options"); (iii) $100,000 for the sole purpose
of paying debt owed by Pure Vision; and, (iv) $100,000, monthly for a period of
one year, to be used by Pure Vision for operating expenses and salaries of Pure
Vision employees.
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: May 18, 2000 By: /s/ Rick Garson
-----------------------
Rick Garson, President
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 233,400
<SECURITIES> 0
<RECEIVABLES> 1,369,563
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,602,963
<PP&E> 2,498,284
<DEPRECIATION> (5,404)
<TOTAL-ASSETS> 4,095,843
<CURRENT-LIABILITIES> 790,858
<BONDS> 0
0
0
<COMMON> 160,617
<OTHER-SE> 3,144,368
<TOTAL-LIABILITY-AND-EQUITY> 4,095,843
<SALES> 0
<TOTAL-REVENUES> 280
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 555,135
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (554,855)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
