UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
(no fee required)
For the transition period to
Commission File No. 0-24273
VOXCOM HOLDINGS, INC.
d/b/a/ MAX Internet Communications, Inc.
(Name of small business issuer in its charter)
Nevada 75-2715335
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8115 Preston Road, Eighth Floor East, Dallas, Texas 75225
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 691-0055
Securities registered pursuant to Section 12(b) of the Act: : None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $0.0001
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. YES X NO
--- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained herein, and none will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [x]
The registrant's revenues for its most recent fiscal year were: $397,989.
The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of August 31,
1999 was $44,946,781.
At June 30, 1999, the registrant had outstanding 15,572,823 shares of common
stock.
DOCUMENTS INCORPORATED BY REFERENCE
Part III (except Item 13) will be contained in Registrant's Definitive Proxy
Statement for the Annual Meeting of Stockholders to be heard in November 1999.
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
<PAGE>
TABLE OF CONTENTS
Page
----
PART I
Item 1. Description of Business 1
Item 2. Description of Property 3
Item 3. Legal Proceeding 3
Item 4. Submission of Matters to a Vote of Security Holders 3
PART II
Item 5. Market for Common Equity and Related Stockholder Matters 4
Item 6. Management's Discussion and Analysis or Plan of Operations 4
Item 7. Financial Statements 9
Item 8. Changes in Disagreements with Accountants on Accounting and
Financial Disclosure 10
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act 10
Item 10. Executive Compensation 10
Item 11. Security Ownership of Certain Beneficial Owners and Management 10
Item 12. Certain Relationships and Related Transactions 10
Item 13. Exhibits and Reports on Form 8K 11
<PAGE>
PART I
Item 1. DESCRIPTION OF BUSINESS
-----------------------
General
MAX Internet Communications, Inc. (the "company" or the "Registrant")
was formed in September 1996. It's history is as follows: Newcorp One, Inc. was
a corporation organized under the laws of the State of Nevada in September 1996
in accordance with the Plan of Reorganization of Weaver Arms Corporation, as
confirmed by the United States Bankruptcy Court, Central District of California
on January 20, 1994. Weaver had existed as a publicly held corporation in the
business of developing and manufacturing weapons until its filing for protection
under the bankruptcy laws. Following its reorganization, Weaver changed its name
to Madera International, Inc. and began operating as a timber harvesting and
exporting Company. A feature of Weaver's bankruptcy plan of reorganization
allowed it to create Newcorp and distribute its common stock and Class A
warrants to the shareholders and debtors of Weaver. Newcorp would then seek a
merger partner that would contribute an operating business to Newcorp.
The owners of Voxcom Systems, Inc. and AmeraPress, Inc. desired for
Voxcom Systems and AmeraPress to consolidate and become publicly traded;
however, they had been unsuccessful in negotiating a suitable underwriting
arrangement to engage in a public offering.
Therefore, in June 1997, the managements of Newcorp and Voxcom Systems
negotiated an Agreement and Plan of Reorganization pursuant to which Newcorp
acquired all of the issued and outstanding shares of common stock of Voxcom
Systems in exchange for an aggregate of 4,000,000 shares of voting common stock
of Newcorp, $.0001 par value per share, and 4,000,000 Class A Warrants,
constituting approximately 80% of the outstanding securities of Newcorp. At the
time of the acquisition of Voxcom Systems, Newcorp had no assets, business or
operations.
Voxcom Systems provided merchant accounts and credit card processing
solutions to small businesses, home based businesses, multi-level marketing
distributors, and independent distributors. In operation since January 1995,
Voxcom Systems was engaged in the transaction processing industry, providing
low-cost credit card processing to diverse merchants, including in-home
businesses, through its patented and proprietary Credit Verification Phone
system.
Concurrent with its acquisition of Voxcom Systems, Newcorp acquired all
of the issued and outstanding common stock of AmeraPress, Inc., a corporation
organized under the laws of the State of Nevada in June 1997 to engage in the
specialty printing and finishing business. AmeraPress succeeded to the business
of Voxcom Sales, L.L.C. ("Voxcom Sales"), a company organized under the laws of
the State of Delaware in November 1995. The common stock of AmeraPress was
acquired in exchange for a $10,000,000 note, payable in 24 consecutive, equal
monthly installments. The Promissory Note was collateralized by all of the
outstanding shares of AmeraPress. In December 1997, the remaining balance of the
Promissory Note was exchanged for 80,000 shares of Series A Preferred Stock
redeemable at the option of the company at the issue price of $ 100 each.
On June 18,1997, Newcorp filed Restated Articles of Incorporation with
the Secretary of State of Nevada, adding provisions regarding corporate
management and control, and changing the name of the company to Voxcom Holdings,
Inc. Voxcom Holdings, Inc. began doing business in June 1999 as MAX Internet
Communications, Inc., and it will formally change its name at the annual meeting
of stockholders in November 1999.
On July 1, 1997, the company entered into a Consulting Agreement and
Covenant Not to Compete with Kim Crowther and Brian Jensen to manage a company
(the "Lecture Company") to conduct home business seminars to promote the
company's goods and services, including the printed products of AmeraPress, and
to compensate them for their exclusive service to the Lecture Company for a
period of 60 months. Home Business Group, Inc. ("HBG") acquired certain assets
and liabilities of and continued the business of the Lecture Company, commencing
during the quarter ended December 31, 1997.
<PAGE>
On March 13, 1998 the company agreed to acquire all of the issued and
outstanding shares of MAXpc Technologies, Inc., ("MAX") in consideration for the
issuance of 210,000 shares of common stock. MAX has the exclusive manufacturing
and marketing rights to certain multimedia computer hardware and software.
Marketing of the product commenced at the end of April 1998.
On September 30, 1998, the company sold the stock of HBG to HBG's
management in exchange for the redemption of 200,000 shares of the company's
common stock previously owned by such management.
Effective January 15, 1999, the company closed AmeraPress, as it had been
unable to generate sufficient business activity to justify its ongoing overhead
following the sale of HBG described above. Registrant sold AmeraPress in June
1999.
Effective February 19, 1999, the company closed Systems, as it had been
unable to generate sufficient business activity to justify its ongoing overhead
following the sale of HBG and the closure of AmeraPress described above.
Registrant sold Systems in June 1999.
Products
In April 1998, the company acquired all of the common stock of MAX, which
has the exclusive right to manufacture and market a high performance,
multi-media add-in card providing both hardware and software for personal
computers. MAX has begun marketing its card under the trade name "MAX ic Live."
This card offers various different media functions consisting of the following:
- H324 Video Phone over standard phone line with superior audio & video
quality
- PCI Video Capture (full motion 30fps with Real-time MPEG-I compression)
& stereo audio capture
- Video Editing with 3-D Titling, wipe effects & fully synchronized audio
soundtrack editing
- Output captured video to VGA screen, VCR Tape, NTSC Television, Disk,
or CD-Recordable
- PCI DVD Video playback, smooth Ul-screen DVD-video on a Pentium 133 or
faster
- MPEG-I Video playback, full motion 30fps; full screen or windowed
- Output PC-VGA desktop screen to NTSC Television, 640x480 or hi-res
virtual
- Output DVD or MPEG videos to NTSC Television for PC Home Theater
- Display Live-Video (from Camera, VCR, or int. TV-tuner) full motion;
full screen or windowed
- PCI 2D accelerated Graphics VGA, up to 1280x1024 non-interlaced in high
color
- PCI 3D accelerated Graphics Rendering with Z-buffering, Gourad Shading,
and more
- PCI DSVD Modem v.34bis (230k data/33.6k band) with full TAPI support
- Hands-free Speakerphone, full-Duplex with acoustic echo cancellation
- Voicemail Answer machine with Caller ID and Forwarding function
- Fax V.17 (14.4k) Class 1, 2, and 2.0 with send and receive capability
- Distinctive Ring call routing for all telephony functions
- PCI Sound Card, compatible with industry standards
- Full Wave Table synthesis with 32 simultaneous voices (4meg)
- Multiple *WAV channel playback/record capability (*multi-Duplex)
- Dolby Digital AC-3 Audio Output (5+1 channels) for DVD Playback
- SRS 3D Audio enhancement for surround sound from just 2 speakers
- Industry Standard Joystick with MIDI port
Such card enhances the performance of computers, either as an add-in at
time of manufacture or installed into existing units. The card, with its own
inbuilt processor, has the ability to perform multi-media software functions
simultaneously if need be, without detracting from the central processor of the
computer. Additional software can be added to the card as developed.
The card was developed by Chromatic Research of California, and,
subsequent to its acquisition by the company, MAX purchased the exclusive right
to manufacture and market the card by the acquisition of Chromatic's inventory
of partially completed units and components for a cost of approximately
$550,000. In March 1999, MAX acquired for $200,000 the source code (human
readable) and object code (machine readable) to the software and can now support
the product and sell such products free of any further royalty. Target markets
are original equipment manufacturers, dealers and sellers in the industry, plus
large end users. Evaluation cards have been offered to companies in these
industry groups, and a national marketing campaign is currently being developed.
2
<PAGE>
The company continues to look for additional software applications which
may be integrated into the card, and it is believed some of these will give rise
to the availability of patent protection. The company will continue limited
research and development in this regard.
Competition in the industry is extremely high, and new developments and
products are offered regularly. Many of MAX's competitors have greater
experience in the industry and more financial resources available to them.
Competition in multi-media products comes from companies such as ATI
Technologies, Inc., Creative Technology, Ltd. and Sigma Designs, Inc. While
these competitors obviously have more financial strength, the company believes
it can successfully compete because it believes the MAX board fulfills functions
that no other single board can achieve.
Environmental Impact
None of the company's activities utilize any hazardous materials or
results in any discharge of pollutants into the environment. The company
believes it complies fully with all environmental laws and regulations.
Employees
The company employs a total of 22 Full-time persons. The company also
relies on the sales efforts of outside sales organizations and commission-only
representatives. None of such persons is represented by a union, and the company
believes its relations with its employees is very good.
Regulation
There are no regulatory issues affecting the company not common to all
businesses.
Item 2. DESCRIPTION OF PROPERTY
-----------------------
Offices and Warehouse Facility
The company's principal executive offices are located at 8115 Preston
Road, Suite 800, Dallas, Texas 75225. The premises, which are leased from an
unaffiliated party, consist of 11,010 square feet. The executive office facility
contains management offices, work stations, computer equipment, and related
software. Monthly rent is $22,020 through the remainder of a sixty-four month
Lease Term, which expires on May 31, 2003. The company has a renewal option to
extend the Lease Term for one additional period of five years, at a rental rate
equal to the prevailing market for such premises at that time.
The company's warehouse facility is located at 12917 Valley Branch
Lane, Farmers Branch, Texas. The premises, which are leased from an unaffiliated
party, consist of approximately 4,500 square feet. Monthly base rent is $2,437
through July 2000, $2,625 through July 2001, and $2,812 through July 2002, the
end of the lease term.
All of the company's properties are covered by property and casualty
insurance the company believes to be adequate.
Item 3. LEGAL PROCEEDINGS
-----------------
The company is engaged from time to time in routine legal proceedings,
none of which was material to the company's operations on the date of the
Prospectus.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
3
<PAGE>
PART II
Item 5. MARKET FOR EQUITY AND RELATED STOCKHOLDER MATTERS
-------------------------------------------------
Market Information
The company's common stock is traded in the over-the-counter market on
the Nasdaq OTC Bulletin Board under the symbol MXIP. The following table
shows the price range of the company's common stock since it was
initially quoted in November 1997 until June 30, 1999.
BID ASK
Quarter Ended High Low High Low
------------- ---- --- ---- ---
12-31-97 6-1/8 2 6-5/8 2-7/8
3-31-97 5-3/4 1-5/8 6-1/4 1-7/8
6-30-98 6 2-1/8 6-1/4 2-3/8
9-30-98 2-13/16 7/8 3 1
12-31-98 1-3/4 9/16 1-7/8 19/32
3-31-99 5-19/32 5/8 5-3/4 25/32
6-30-99 6-9/16 2-7/16 6-1/2 2-5/8
Holders
As of June 30, 1999, there were 208 record holders of the company's
common stock and 3 holders of the company's Series A Preferred Stock.
Dividends
The company does not anticipate any stock or cash dividends on its
common stock in the foreseeable future.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
----------------------------------------------------------
General
The company, through its wholly-owned subsidiary, manufactures, through
contractors, and markets a high performance, multi-media add-in card providing
both hardware and software, for inclusion in both new and existing computers.
This business was acquired on April 13, 1998. Therefore, revenues and
expenses include the operations of this business from the date of acquisition
for the year ended June 30, 1998, and for the year ended June 30, 1999.
The company previously operated businesses which sold and distributed
merchant credit card authorization and payment systems; Marketed home-based
businesses through seminars; and produced customized printing for distribution
by home-based businesses.
4
<PAGE>
Each of these businesses was sold in the year ended June 30, 1999, and
the financial statements for all periods presented reflect them as discontinued
operations.
SELECTED FINANCIAL INFORMATION
Year Ended June 30,
-------------------
1999 1998 1997
---- ---- ----
Statement of Operations Data:
Net sales $ $ 397,989 $ 7,736 $ -
Gross profit 212,754 5,634 -
Operating loss (3,865,170) (1,402,020) (561,149)
Loss from continuing operations (3,865,677) (1,541,722) (605,396)
Net earnings (loss) (5,360,655) (1,098,907) 2,923,519
Loss per share from
continuing operations (.44) (.28) (.12)
Net earnings (loss) per share (.60) (.20) .58
June 30, 1999 June 30, 1998
------------- -------------
Balance Sheet Data:
Total assets $10,665,647 $3,583,002
Working capital 8,734,663 1,875,819
Total liabilities 902,153 827,713
Stockholders' equity 9,763,494 2,755,289
Results of Operations
Year ended June 30, 1999 compared to year ended June 30, 1998
Net Sales
Net sales increased to $397,989 for the year ended June 30, 1999 from $7,736
for the year ended June 30, 1998. MAXpc was acquired in April 1998, and for the
period from the date of acquisition to June 30, 1998, MAXpc had no significant
sales as it was in the early stages of designing its sales and marketing plan.
During the year ended June 30, 1999 the company was still in the early stages of
marketing its new product, which included sending the MAX i.c. Live card to
potential customers on a evaluation basis. Sales in the fourth quarter of fiscal
1999 amounted to approximately $263,000, which represents 66% of total net sales
for the year.
5
<PAGE>
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 190% to $4,077,924
for the ended June 30, 1999 from $1,407,654 for the year ended June 30, 1998.
This increase is due to advertising, marketing and selling expenses related to
the MAXpc product, amortization of payments made for noncompetition agreements,
purchased technology and consulting agreements, and the overhead structure which
have been put into place in anticipation of future increases in net sales.
Interest Expense
Interest expense of $76,971 for the year ended June 30, 1999 was incurred
primarily on the convertible debentures. This debt has been converted to common
stock, and no further interest is payable. The interest expense of $139,702 for
the year ended June 30, 1998 was incurred on debt to the company's shareholders
that sold AmeraPress to the company. This debt has been converted to Series A
Preferred Stock, and no further interest is payable.
Income Taxes
No income taxes have been accrued due to operating losses of the company.
Discontinued Operations
On September 30, 1998, the company sold the stock of a wholly owned
subsidiary, HBG, to HBG's management in exchange for the redemption of 200,000
shares of the company's common stock previously owned by such management.
Effective January 15, 1999, the company closed AmeraPress, as it had been
unable to generate sufficient business activity to justify its ongoing overhead
following the sale of HBG described above. AmeraPress was sold on June 30, 1999.
Effective February 19, 1999, the company closed Systems, as it had been
unable to generate sufficient business activity to justify its ongoing overhead
following the sale of HBG and the closure of AmeraPress described above. Systems
was sold on June 30, 1999.
The accompanying financial statements reflect the results of operations and
net liabilities of Systems, AmeraPress and HBG as discontinued operations.
Fiscal year ended June 30, 1998 compared to year ended June 30, 1997
Net Sales
Net sales from continuing operations of $7,736 for the year ended June 30,
1998 were generated from MAX during the short period since its acquisition. For
the year ended June 30, 1997, no sales were generated as there were no operating
companies that have not since been discontinued, and MAXpc had not yet been
acquired.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 15 1% to $1,407,654
for the year ended June 30, 1998 from $561,149 for the year ended June 30, 1997.
This increase is due to advertising, marketing and selling expenses related to
the MAX ic Live product, amortization of payments made for noncompetition
agreements, purchased technology and consulting agreements, and the overhead
structure which was in place prior to discontinuing Systems, HBG and AmeraPress.
6
<PAGE>
Interest Expense
The interest expense of $139,702 and $44,247 for the years ended June 30,
1998 and 1997, respectively, was incurred on debt to the company's shareholders
that sold AmeraPress to the company. This debt has been converted to Series A
Preferred Stock, and no further interest is payable.
Income Taxes
No income taxes have been accrued due to operating losses of the company.
Liquidity
Cash and cash equivalents increased $6,362,494 in the year ended June 30,
1999. Net cash used in operating activities for the period was approximately
$5,287,000, of which $1,059,000 was used in discontinued operations. Net cash
used in operating activities primarily consisted of the cash operating loss for
the period, plus increases in accounts receivable, inventories and other assets,
offset by an increase in accounts payable and accrued expenses.
Cash used in investing activities consisted of approximately $120,000
in purchases of property and equipment.
Financing activities generated approximately $11,769,000, consisting
primarily of $15,605,000 from sales of common stock, offset by the redemption of
the Series B preferred stock in the approximate amount of $3,800,000.
As a result of the above, working capital at June 30, 1999 increased
approximately 366%, to $8,734,663, from $1,875,819 at June 30, 1998. Management
believes this working capital will be sufficient to meet ongoing overhead
expenses, plus pursue an aggressive advertising and marketing campaign for the
MAXpc product. Future cash resources available to the company are expected to
come from profitable operations. Should the need arise for further funding for
increases in inventories or receivables or for capital equipment, the company
would address the possibility of lines of credit from lending authorities and
new issues of capital stock. There is no assurance these resources will be
available to the company.
Year 2000
The company, like most companies, is faced with the Year 2000 ("Y2K")
issue, which is a result of the use of computer systems designed to process two
digits rather than four when designating the year. The company began an internal
assessment of its year 2000 preparedness in the early months of 1998, through a
review of all equipment and software. For purposes of the review, the equipment
and software were divided into critical and non-critical categories. The
critical category included accounting software, customer databases, the actual
computer systems themselves and our vendors' individual preparedness. The
non-critical category included the telephone systems, general administrative
software and network operating systems.
In the critical category, the accounting software, customer databases, and
computer systems issues have been addressed through software and hardware
updates provided to our company by the software and/or hardware vendors. These
updates were provided at minimal cost. It should also be noted that these
applications are relatively simple programs.
7
<PAGE>
The company has contacted its major component suppliers and its contract
manufacturer. To date, none has indicated that it anticipates material internal
risks. The company is continuing this process to determine the readiness of all
significant suppliers and will assess, and where practicable, attempt to
mitigate its risks with respect to any failure of these entities to be Y2K
compliant. The company is in the process of identifying additional contract
manufacturers, and one of the key contract requirements is for the manufacturer
to make their systems Y2K compliant.
These critical areas have been monitored for an unforeseen issues since
June 1998, and procedures are in place to ensure that a hard copy of all
critical transactions is maintained.
With regard to the company's non-critical category, such as telephone
systems, general administrative software and network operating systems, these
areas have also been addressed. Any minor infractions found were resolved
through software updates and upgrades.
Although the company cannot quantify the potential effect of Y2K issues on
its financial condition, business or results of operations, it is reasonably
certain that any such future costs will not be significant.
Forward Looking Information
This report contains certain forward-looking statements and information
relating to the company that are based on the beliefs of the company's
management as well as assumptions made by and information currently available to
the company's management. When used in this report, words such as "anticipate,"
"believe," "estimate," "expect," "intend," "should," and similar expressions, as
they relate to the company or its management, identify forward-looking
statements. Such statements reflect the current views of the company with
respect to future events and are subject to certain risks, uncertainties and
assumptions relating to the operations, results of operations, liquidity and
growth strategy of the company, including competitive factors and pricing
pressures, changes in legal and regulatory requirements, interest rate
fluctuations, and general economic conditions, as well as other factors
described in this report. Should one or more of the risks materialize, or should
underlying assumptions prove incorrect, actual results or outcomes may vary
materially from those described herein as anticipated, believed, estimated,
expected or intended.
8
<PAGE>
Item 7. FINANCIAL STATEMENTS
--------------------
INDEX TO FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants F-1
Consolidated Balance Sheets as of June 30, 1998 and 1999 F-2
Consolidated Statements of Operations for the years ended
June 30, 1998 and 1999 F-3
Consolidated Statement of Stockholders' Equity (Deficit)
for the years ended June 30, 1998 and 1999 F-4
Consolidated Statements of Cash Flows for the years ended
June 30, 1998 and 1999 F-6
Notes to Consolidated Financial Statements F-8
9
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors and Stockholders
Voxcom Holdings, Inc.
We have audited the accompanying consolidated balance sheets of Voxcom Holdings,
Inc. and Subsidiary (d/b/a Max Internet Communications, Inc.) as of June 30,
1999 and 1998, and the related consolidated statements of operations,
stockholders' equity (deficit), and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly, in
all material respects, the consolidated financial position of Voxcom Holdings,
Inc., and Subsidiary as of June 30, 1999 and 1998, and the consolidated results
of their operations and their consolidated cash flows for the years then ended,
in conformity with generally accepted accounting principles.
/s/ Grant Thornton LLP
- -----------------------
GRANT THORNTON LLP
Dallas, Texas
August 13, 1999
F-1
<PAGE>
<TABLE>
<CAPTION>
Voxcom Holdings, Inc. and Subsidiary
d/b/a Max Internet Communications, Inc.
CONSOLIDATED BALANCE SHEETS
June 30, 1999 and 1998
ASSETS 1999 1998
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 8,136,585 $ 1,774,091
Accounts receivable, net of allowance for doubtful
accounts of $30,000 at June 30, 1999 169,217 3,066
Inventories 1,286,539 423,250
Prepaid expenses 44,475 103,125
------------ ------------
Total current assets 9,636,816 2,303,532
PROPERTY AND EQUIPMENT, AT COST
Machinery and equipment 87,830 16,669
Furnishings 67,634 18,848
------------ ------------
155,464 35,517
Less accumulated depreciation 27,969 3,100
------------ ------------
127,495 32,417
OTHER ASSETS 901,336 1,247,053
------------ ------------
$ 10,665,647 $ 3,583,002
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 113,356 $ 250,173
Accrued expenses 788,797 123,949
Net liabilities of discounted operations -- 53,591
------------ ------------
Total current liabilities 902,153 427,713
LONG-TERM DEBT -- 400,000
STOCKHOLDERS' EQUITY
Preferred stock, $.0001 par value; Series A, authorized, 100,000
shares; issued and outstanding, 80,000 shares 8,000,000 8,000,000
Preferred stock, $.0001 par value; Series B convertible, authorized,
350,000 shares; issued and outstanding, none at June 30, 1999
and 350,000 shares at June 30, 1998 -- 3,500,000
Common stock, $.0001 par value; authorized, 25,000,000 shares;
issued, 15,772,823 at June 30, 1999 and 6,085,772 shares
at June 30, 1998 1,577 609
Additional paid-in capital 17,693,743 1,479,691
Accumulated deficit (15,719,326) (10,225,011)
------------ ------------
9,975,994 2,755,289
Less 200,000 shares of common stock in treasury - at cost (212,500) --
------------ ------------
9,763,494 2,755,289
------------ ------------
$ 10,665,647 $ 3,583,002
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-2
<PAGE>
Voxcom Holdings, Inc. and Subsidiary
d/b/a Max Internet Communications, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended June 30, 1999 and 1998
1999 1998
----------- -----------
Net sales $ 397,989 $ 7,736
Cost of sales 185,235 2,102
----------- -----------
Gross profit 212,754 5,634
Selling, general and administrative expenses 4,077,924 1,407,654
----------- -----------
Operating loss (3,865,170) (1,402,020)
Interest income (76,464) --
Interest expense 76,971 139,702
----------- -----------
Loss from continuing operations (3,865,677) (1,541,722)
Discontinued operations
Earnings (loss) from operations (2,475,217) 442,815
Gain on disposal 980,239 --
----------- -----------
(1,494,978) 442,815
----------- -----------
Net loss $(5,360,655) $(1,098,907)
=========== ===========
Earnings (loss) per share - basic and diluted
Continuing operations $ (.44) $ (.28)
Discontinued operations (.16) .08
----------- -----------
Net loss $ (.60) $ (.20)
=========== ===========
Weighted average shares outstanding 9,099,295 5,516,228
=========== ===========
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
Voxcom Holdings, Inc. and Subsidiary
d/b/a Max Internet Communications, Inc.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Years ended June 30, 1999 and 1998
Series A Series B
Common stock Preferred stock Preferred stock
--------------------------- --------------------------- ----------------------------
Shares Amount Shares Amount Shares Amount
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balances at July 1, 1997 4,999,937 $ 500 -- $ -- -- $ --
Issuance of common stock 925,000 93 -- -- -- --
Sale of preferred stock -- -- -- -- 350,000 3,500,000
Exercise of warrants 160,835 16 -- -- -- --
Conversion of debt -- -- 80,000 8,000,000 -- --
Net loss for the year -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Balances at June 30, 1998 6,085,772 609 80,000 8,000,000 350,000 3,500,000
Sales of common stock 7,644,000 764 -- -- -- --
Conversion of debentures,
including interest 364,427 37 -- -- -- --
Dividends on Series B
preferred stock
Paid in common stock 113,697 11 -- -- -- --
Paid in cash -- -- -- -- -- --
Conversion of preferred stock 547,201 55 -- -- (34,000) (340,000)
Redemption of preferred stock -- -- -- -- (316,000) (3,160,000)
Additional
paid-in Accumulated Treasury
capital deficit stock Total
------------ ------------ --- ------------
<C> <C> <C> <C>
Balances at July 1, 1997 $ -- $ (9,126,104) $- $ (9,125,604)
Issuance of common stock 1,449,907 -- -- 1,450,000
Sale of preferred stock (613,540) -- -- 2,886,460
Exercise of warrants 643,324 -- -- 643,340
Conversion of debt -- -- -- 8,000,000
Net loss for the year -- (1,098,907) -- (1,098,907)
------------ ------------ --- ------------
Balances at June 30, 1998 1,479,691 (10,225,011) -- 2,755,289
Sales of common stock 12,800,936 -- -- 12,801,700
Conversion of debentures,
including interest 403,095 -- -- 403,132
Dividends on Series B
preferred stock
Paid in common stock 91,695 (91,706) -- --
Paid in cash -- (41,954) -- (41,954)
Conversion of preferred stock 339,945 -- -- --
Redemption of preferred stock (632,000) -- -- (3,792,000)
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
Voxcom Holdings, Inc. and Subsidiary
d/b/a Max Internet Communications, Inc.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) - CONTINUED
Years ended June 30, 1999 and 1998
Series A Series B
Common stock Preferred stock Preferred stock
--------------------------- --------------------------- ------------------------
Shares Amount Shares Amount Shares Amount
------------ ------------ ------------ ------------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Acquisition of 200,000 shares of
common stock for the treasury -- $ -- -- $ -- -- $ --
Exercise of Class A Warrants 412,226 41 -- -- -- --
Redemption of Class B Warrants -- -- -- -- -- --
Exercise of stock options 455,500 45 -- -- -- --
Shares and stock options issued
in exchange for services 150,000 15 -- -- -- --
Stock options issued in connection
with sale of subsidiary -- -- -- -- -- --
Net loss for the year -- -- -- -- -- --
------------ ------------ ------------ ------------ ----- -----
Balances at June 30, 1999 15,772,823 $ 1,577 80,000 $ 8,000,000 -- $ --
============ ============ ============ ============ ===== =====
Additional
paid-in Accumulated Treasury
capital deficit stock Total
------------ ------------ ------------ ------------
Acquisition of 200,000 shares of $ -- $ -- $ (212,500) $ (212,500)
common stock for the treasury
1,648,863 -- -- 1,648,904
Exercise of Class A Warrants
(1,608) -- -- (1,608)
Redemption of Class B Warrants
1,154,391 -- -- 1,154,436
Exercise of stock options
Shares and stock options issued 168,735 -- -- 168,750
in exchange for services
Stock options issued in connection 240,000 -- -- 240,000
with sale of subsidiary
-- (5,360,655) -- (5,360,655)
Net loss for the year ------------ ------------ ------------ ------------
$ 17,693,743 $(15,719,326) $ (212,500) $ 9,763,494
Balances at June 30, 1999 ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
Voxcom Holdings, Inc. and Subsidiary
d/b/a Max Internet Communications, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 30, 1999 and 1998
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (5,360,655) $ (1,098,907)
Loss (gain) from discontinued operations 1,494,978 (442,815)
Adjustments to reconcile net loss to net cash
used by continuing operations
Depreciation and amortization 613,156 195,087
Common stock and stock options issued for services 168,750 25,000
Change in operating assets and liabilities
Prepaid expenses (41,350) --
Accounts receivable (166,151) (2,566)
Inventories (863,289) (423,250)
Other assets (326,000) (117,165)
Accounts payable and accrued expenses 252,263 329,875
------------ ------------
Net cash used in continuing operations (4,228,298) (1,534,741)
Net cash used by discontinued operations (1,058,739) (1,054,549)
------------ ------------
Net cash used in operating activities (5,287,037) (480,192)
Cash flows from investing activities
Purchase of property and equipment (119,947) (35,517)
Cash flows from financing activities
Borrowings -- 400,000
Sales of common stock 15,605,040 --
Redemption of preferred stock (3,792,000) --
Sale of preferred stock -- 2,886,460
Warrants exercised -- 643,340
Payments on notes payable to stockholders -- (1,640,000)
Redemption of class B warrants (1,608) --
Dividends paid - preferred stock (41,954) --
------------ ------------
Net cash provided by financing activities 11,769,478 2,289,800
Net increase in cash and cash equivalents 6,362,494 1,774,091
Cash and cash equivalents at beginning of year 1,774,091 --
------------ ------------
Cash and cash equivalents at end of year $ 8,136,585 $ 1,774,091
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
Voxcom Holdings, Inc. and Subsidiary
d/b/a Max Internet Communications, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Years ended June 30, 1999 and 1998
1999 1998
---------- ----------
<S> <C> <C>
Noncash financing and investing activities:
Conversion of notes payable to stockholders into 80,000
shares of Series A preferred stock $ -- $8,000,000
Issuance of common stock for services and
noncompetition agreements 168,750 925,000
Issuance of common stock for technology -- 525,000
Issuance of common stock for dividends 91,706 --
Conversion of debentures and accrued interest
into common stock 403,132 --
Conversion of Series B preferred stock into
common stock 340,000 --
Acquisition of business
Fair value of assets acquired -- 1,193,556
Liabilities assumed -- 1,193,556
Cash payments for:
Interest 506 69,273
Income taxes -- --
</TABLE>
The accompanying notes are an integral part of these statements.
F-7
<PAGE>
Voxcom Holdings, Inc. and Subsidiary
d/b/a Max Internet Communications, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 1999 and 1998
NOTE A - BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Voxcom
Holdings, Inc. (Holdings) and its subsidiary, MAXpc Technologies, Inc.,
(MAXpc), collectively, the "Company." MAXpc was acquired on April 13, 1998.
Voxcom Systems, Inc., AmeraPress, Inc., and Home Business Group, Inc.,
former subsidiaries, were sold during fiscal 1999. See Note C.
NOTE B - BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Business
--------
The Company assembles, through contractors, and markets a high performance,
multi-media add-in card providing both hardware and software for inclusion
in either new or existing computers.
Advertising Costs
-----------------
The Company charges advertising costs to expense when incurred. Advertising
costs for the years ended June 30, 1999 and 1998 were approximately $365,000
and $7,000, respectively.
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents include cash in banks and all highly liquid
investments with maturities of three months or less when purchased.
Inventories
-----------
Inventories consist principally of finished goods and are stated at the
lower of cost or market; cost is determined using the first-in, first-out
method.
Property and Equipment
----------------------
Property and equipment are stated at cost. Depreciation is computed on a
straight-line basis over the estimated lives of the individual assets,
ranging from three to five years.
Intangible Assets
-----------------
Purchased technology and licenses are being amortized over seven years.
Revenue Recognition
-------------------
Sales are recorded when products are shipped.
F-8
<PAGE>
NOTE B - BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - Continued
Earnings (Loss) Per Share
-------------------------
The Company computes basic earnings or loss per share based on net earnings
or loss, adjusted for preferred stock dividends, divided by the weighted
average number of common shares outstanding. Diluted earnings per share is
computed based on the weighted average number of common shares outstanding
plus the number of additional common shares that would have been outstanding
if dilutive potential common shares, consisting of stock options, stock
purchase warrants, and convertible debt and preferred stock, had been issued
or converted. For all periods presented, there was no dilutive effect from
these securities.
Stock-based Compensation
------------------------
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("Statement No. 123") is effective for the year
ended June 30, 1999. Statement No. 123 establishes a fair value based method
of accounting for employee stock options, but permits continued application
of the accounting method prescribed by Accounting Principles Board Opinion
No. 25 ("Opinion 25"), "Accounting for Stock Issued to Employees." Entities
that continue to apply the provisions of Opinion 25 are required to make pro
forma disclosures of net income and earnings per share as if the fair value
based method of accounting had been applied. Refer to Note K.
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
disclosure 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.
NOTE C - ACQUISITION, DISPOSITION AND DISCONTINUANCE OF BUSINESSES
Effective October 1, 1997, the Company formed Home Business Group, Inc.
(HBG), to acquire certain assets and assume the liabilities of a company
engaged in the business of home-based business seminars for no
consideration. A major stockholder and officer of the acquired business is a
stockholder and officer of the Company. The acquisition was accounted for as
a purchase.
In September 1998, the Company sold the common stock of HBG to HBG's
management in exchange for the redemption of 200,000 shares of the Company's
common stock previously owned by such management.
Effective January 15, 1999, the Company closed AmeraPress, Inc.
(AmeraPress), as it had been unable to generate sufficient business activity
to justify its ongoing overhead following the sale of HBG described above.
AmeraPress was sold on June 30, 1999.
F-9
<PAGE>
Voxcom Holdings, Inc. and Subsidiary
d/b/a Max Internet Communications, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 1999 and 1998
NOTE C - ACQUISITION, DISPOSITION AND DISCONTINUANCE OF BUSINESSES - Continued
Effective February 19, 1999, the Company closed Voxcom Systems, Inc.
(Systems), as it had been unable to generate sufficient business activity to
justify its ongoing overhead following the sale of HBG and the closure of
AmeraPress described above. Systems was sold on June 30, 1999.
The accompanying financial statements have been reclassified to present the
results of operations of HBG, AmeraPress and Systems as discontinued
operations.
Summary operating data of discontinued operations is presented below.
Year ended June 30,
------------------------------
1999 1998
Revenues $ 4,456,000 $ 21,247,000
Cost and expenses (6,931,217) (20,856,443)
Income tax benefit -- 52,258
Net earnings (loss) $(2,475,217) $ 442,815
========== ===========
On April 13, 1998, the Company acquired all of the issued and outstanding
shares of MAXpc Technologies, Inc. The acquisition was accounted for as a
purchase and the financial statements include the operations of MAXpc since
the date of acquisition. MAXpc had no operations, assets, or liabilities
prior to its acquisition by the Company.
NOTE D - OTHER ASSETS
Other assets consist of the following:
June 30, June 30,
1999 1998
-------- ----------
Deposits $ 37,341 $ 21,395
Noncompetition agreements -- 362,180
Purchased technology 695,241 517,702
Consulting agreement 114,587 252,083
Licensees 43,750 --
Other 10,417 93,693
-------- ----------
$901,336 $1,247,053
======== ==========
Purchased technology arose primarily from the acquisition of MAXpc.
F-10
<PAGE>
NOTE E - LONG-TERM DEBT
Long-term debt at June 30, 1998, consists of $400,000 of 5% convertible
debentures due May 31, 2000. The debentures are convertible into common
shares of Holdings at a conversion price equal to the lower of (1) $3.24375
per share or (2) 80% of the closing bid price for the five days preceding
conversion. All outstanding convertible debentures were converted in fiscal
1999.
NOTE F - FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of cash and cash equivalents, and convertible debentures
approximate carrying values.
NOTE G - LEASE COMMITMENTS
The Company leases office and warehouse space and equipment under various
noncancellable lease agreements. Total rent expense was $303,506 and
$466,179 for the years ended June 30, 1999 and 1998, respectively. As of
June 30, 1999, the future minimum rental payments are as follows:
Year ending
June 30,
2000 $ 279,138
2001 276,780
2002 270,528
2003 267,384
---------
$1,093,830
==========
F-11
<PAGE>
<TABLE>
<CAPTION>
NOTE H - INCOME TAXES
The deferred tax assets and liabilities consist of the following:
June 30,
--------------------------
1999 1998
----------- -----------
Deferred tax assets (liabilities)
<S> <C> <C>
Goodwill $ -- $ 3,453,334
Accrued expenses 244,614 45,861
Property and equipment (17,760) --
Noncompetition agreement -- 39,814
Net operating loss carryover 2,356,396 525,000
----------- -----------
Total deferred tax assets 2,583,250 4,064,009
Valuation allowance (2,583,250) (4,064,009)
----------- -----------
Net deferred tax assets $ -- $ --
=========== ===========
The Company has provided a valuation allowance against deferred tax assets
because their recovery is uncertain. Following is a reconciliation of income
taxes at the federal statutory rate to income tax expense:
June 30,
--------------------------
1999 1998
----------- -----------
Tax benefit at statutory rate - continuing operations $1,314,330 $ 524,185
Losses for which a benefit was not recorded (1,314,330) (524,185)
----------- -----------
Income tax benefit - continuing operations $ -- $ --
=========== ===========
</TABLE>
At June 30, 1999, the Company had net operating loss carryovers of approximately
$6,400,000.
F-12
<PAGE>
NOTE I - STOCKHOLDERS' EQUITY
The Series A preferred stock, which is held by officers of the Company, does
not pay dividends.
The Series B preferred stock is convertible into common stock at the lesser
of $3.24375 per share or 80% of the average closing bid price of the common
stock for the five days preceding notice of conversion, and is redeemable by
the Company at 120% of the issue price. Dividends accrue at 5%.
On March 31, 1999, the Company acquired for $3,792,000, 3,000,000 shares of
its common stock which had been issued upon conversion of 316,000 shares of
Series B preferred stock. The 3,000,000 shares, along with 4,000,000
newly-issued common shares were sold on March 31, 1999, for $12,660,000 less
placement costs of $663,300. At June 30, 1999, all Series B preferred shares
had been converted.
NOTE J - STOCK PURCHASE WARRANTS
All stockholders of Holdings were given one Class A warrant for each common
share acquired by them in June, 1997. Each warrant entitles the holder to
purchase one share of common stock for $4.00. If not exercised, warrants
expire in June 2000. If exercised, the holder will receive one Class B
warrant for each Class A warrant. Each Class B warrant entitles the holder
to purchase one share of common stock for $20.00 and expires in June 2000.
At June 30, 1998, there were 4,839,101 and 160,835 Class A and Class B
warrants outstanding, respectively. The class B warrants were redeemed in
May 1999 for $1,608. At June 30, 1999, 4,426,587 Class A warrants remained
outstanding.
NOTE K - STOCK OPTIONS
The Company has issued 1,507,500 stock options to employees, pursuant to the
1999 Stock Option Plan. Prior to adoption of the Plan, 1,050,000 stock
options were issued to employees. Options are granted at no less than fair
value at date of grant. All options granted have vested immediately.
Following is a summary of employee option transactions for fiscal 1998 and
1999:
Weighted
average
Shares exercise price
--------- --------------
Outstanding at July 1, 1997 and 1998 -- $ --
Granted 2,557,500 4.20
Exercised - --
Expired or canceled -- --
--------- ----
Outstanding at June 30, 1999 2,557,500 $4.20
========= ====
Weighted-average fair value of options granted during the year ended June
30, 1999 was $2.95 per share.
F-13
<PAGE>
<TABLE>
<CAPTION>
NOTE K - STOCK OPTIONS - Continued
The following table summarizes information about stock options at June 30,
1999:
Outstanding and Exercisable
---------------------------
Weighted
average
remaining Weighted
contractual average
life exercise
Exercise price Shares (in years) price
-------------- --------- ----------- --------
<S> <C> <C> <C> <C>
$0.80 107,500 4.59 0.80
1.25 50,000 3.50 1.25
4.00 1,400,000 4.75 4.00
5.00 1,000,000 1.75 5.00
--------- ----
2,557,500 $4.20
========= ====
The Company has adopted the disclosure provisions of Statement No. 123, as
discussed in Note B, and continues to apply Opinion 25 for stock options
granted to employees. If the Company had recognized compensation expense
based upon the fair value at the grant date for options granted to employees
the effect on net loss and loss per share for the year ended June 30, 1999
would have been as follows:
Net loss
As reported $ 5,360,655
Pro forma 12,907,000
Loss per common share
As reported .60
Pro forma 1.43
</TABLE>
The fair value of these options was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions: expected volatility of 180%; risk-free interest rate of 5.50%;
no dividend yield; and expected lives of three years.
During the years ended June 30, 1998 and 1999, the Company also granted
stock options to nonemployees, principally for fees in connection with the
sale of common and preferred stock. These grants totaled 906,000 shares at
prices ranging from $0.10 to $5.00 per share. These options expire in three
to five years and are generally exercisable at date of grant. The Company
charged $51,000 to expense during the year as a result of the grants
unrelated to the sales of common and preferred stock. Nonemployee options
covering 450,500 shares granted were outstanding at June 30, 1999.
F-14
<PAGE>
<TABLE>
<CAPTION>
NOTE L - EARNINGS PER (LOSS) SHARE
Earnings (loss) per share is calculated as follows:
Loss from
continuing Discontinued
operations operations Net loss
----------- ------------ -----------
<S> <C> <C> <C>
1999
Loss $(3,865,677) $(1,494,978) $(5,360,655)
Preferred dividends (133,660) - (133,660)
---------- ---------- ----------
Loss allocable to common stockholders $(3,999,337) $(1,494,978) $(5,494,315)
========== ========== ==========
Weighted average common shares outstanding 9,099,295 9,099,295 9,099,295
========== ========== ==========
Loss per share - basic and diluted $(.44) $(.16) $(.60)
==== ==== ====
1998
Earnings (loss) $(1,541,722) $ 442,815 $(1,098,907)
========== ======== ==========
Weighted average common shares outstanding 5,516,228 5,516,228 5,516,228
========== ========== ==========
Earnings (loss) per share $(.28) $.08 $(.20)
==== === ====
</TABLE>
NOTE M - CONTINGENCIES
At June 30, 1999, the Company was involved in litigation arising in the
normal course of business. Management believes that the ultimate resolution
will not have a material effect on financial position, results of operations
or cash flows.
F-15
<PAGE>
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
------------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
Not applicable.
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
------------------------------------------------------------------------
WITH 16(A) OF THE EXCHANGE ACT
------------------------------
The sections entitled "Directors, Director Nominees and Executive
Officers' appearing in the Registrant's Definitive Proxy Statement for
the Annual Meeting of Stockholders to be held on or about November 15,
1999, sets forth certain information with respect to the directors and
executive officers of the company.
Item 10.EXECUTIVE COMPENSATION
----------------------
The section entitled "Executive Compensation" appearing in the
Registrant's Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on or about November 15, 1999, sets forth
certain information with respect to the compensation of management of
the Registrant.
Item 11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The sections entitled "Principal Shareholders and Security Ownership
of Management" appearing in the Registrant's Definitive Proxy
Statement for the Annual Meeting of Stockholders to be held on or
about November 15, 1999, sets forth certain information with respect
to the ownership of the Registrant's Common Stock.
Item 12.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
The section entitled "Certain Transactions" appearing in the
Registrant's Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on or about November 15, 1999, sets forth
certain information with respect to these matters.
10
<PAGE>
Item 13.EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
Exhibit
Number Description of Exhibits
- ------- -----------------------
2.1 Agreement and Plan of Reorganization, dated June 9, 1997, among
Newcorp One, Inc. and the shareholders of Voxcom Systems, Inc. (filed
as Exhibit 2.01 to the company's Form 10-SB filed with the Securities
and Exchange Commission on May 15, 1998 (the "Form 10-SB"), and
incorporated herein by reference).
2.2.1 Stock Purchase Agreement, dated June 30, 1997, among Voxcom Holdings,
Inc. and the shareholders of AmeraPress, Inc. (filed as Exhibit 2.02.1
to the company's Form 10-SB, and incorporated herein by reference).
2.2.2 Promissory Note, dated June 30, 1997, in connection with Stock
Purchase Agreement between Voxcom Holdings, Inc. and the shareholders
of AmeraPress, Inc. (filed as Exhibit 2.02.2 to the company's Form
10-SB, and incorporated herein by reference).
2.2.3 Security Agreement-Pledge, dated June 30, 1997, in connection with
Promissory Note between Voxcom Holdings, Inc. and the shareholders of
AmeraPress, Inc. (filed as Exhibit 2.02.3 to the company's Form 10-SB,
and incorporated herein by reference).
2.3.1 Stock Purchase Agreement regarding MAXpc (filed as Exhibit 2.03.1 to
the company's Form 10-SB, and incorporated herein by reference).
2.3.2 Employment Agreement with Gary Raabe (filed as Exhibit 2.03.2 to the
company's Form 10-SB, and incorporated herein by reference).
*2.3.3 Employment Agreement dated August 5, 1999 with Thomas Fehr.
3.1 Restated Articles of Incorporation of Newcorp One, Inc., dated June
12, 1997 (filed as Exhibit 3.01 to the company's Form 10-SB, and
incorporated herein by reference).
3.2 By-laws of Voxcom Holdings, Inc. (filed as Exhibit 3.02 to the
company's Form 10-SB, and incorporated herein by reference).
3.3 Certificate of Decrease in Authorized and Issued Shares (filed as
Exhibit 3.03 to the company's Form 10-SB, and incorporated herein by
reference).
3.4 Certificate of Designation regarding Series A Preferred Stock (filed
as Exhibit 3.04 to the company's Form 10-SB, and incorporated herein
by reference).
3.5 Amended and Restated Certificate of Designations, Preferences and
Rights of Preferred Stock creating the Series B Preferred Stock (filed
as Exhibit 3.05 to the company's Form 10-SB, and incorporated herein
by reference).
4.1.1 Securities Purchase Agreement dated June 19, 1998 with Carmax
Investments, Inc. (filed as Exhibit 4.01.1 to the company's Form 10-SB
and incorporated herein by reference)
4.1.2 5% Convertible Debenture due May 31, 2000 dated June 19, 1998 (filed
as Exhibit 4.01.2 to the company's Form 10-SB and incorporated herein
by reference)
11
<PAGE>
4.2.1. Securities Purchase Agreement dated June 22, 1998 among the company
and Dominion Capital Fund, Ltd. and Sovereign Partners Limited
Partnership (filed as Exhibit 4.02.1 to the company's Form 10-SB and
incorporated herein reference.)
4.2.2 Registration Rights Agreement (filed as Exhibit 4.02.2 to the
company's Form 10-SB and incorporated herein reference.)
4.3.1 Stock Purchase Agreement dated February 23, 1999 to purchase the
outstanding Series B Preferred Stock (filed as Exhibit (1) to the
company's Form 8-K dated March 31, 1999 and incorporated herein by
reference)
4.3.2 Assignment dated March 26, 1999 (filed as Exhibit (2) to the company's
Form 8-K dated March 31, 1999 and incorporated herein by reference)
4.3.3 Stock Purchase Agreement dated March 26, 1999 to purchase of 4,000,000
shares of Common Stock (filed as Exhibit (3) to the company's Form 8-K
dated March 31, 1999 and incorporated herein by reference)
4.3.4 Distribution Agreement (filed as Exhibit (4) to the company's Form 8-K
dated March 31, 1999 and incorporated herein by reference)
4.3.5 Voting Agreement (filed as Exhibit (5) to the company's Form 8-K dated
March 31, 1999 and incorporated herein by reference)
10.2 1997 Stock Bonus Plan (filed as Exhibit 10.02 to the company's Form
10-SB, and incorporated herein by reference).
10.3 1999 Stock Option Plan (filed as Exhibit 10.3 to the company's Form
SB-2, file number 333-83659 and incorporated herein by reference).
10.4 Settlement Agreement with FTC (filed as Exhibit 10.04 to the company's
Form 10-SB, and incorporated herein by reference).
10.5 Consulting Agreement with Jande International Holdings, LLC (filed as
Exhibit 10.05 to the company's Form 10-SB and incorporated herein by
reference).
10.6 Consulting Agreement with S.G. Consulting, Inc. (filed as Exhibit
10.06 to the company's Form 10-SB and incorporated herein by
reference).
10.7 Investment Banking and Consulting Agreement dated August 26, 1998
between the company and Lloyd Wade Securities (filed as Exhibit 10.6
to the company's Form SB-2, file no 333-61185, and incorporated herein
by reference).
10.8 Stock Purchase Agreement dated September 30, 1998 among the company,
Kim Crowther and Brian Jensen (filed as Exhibit 10.8 to the Company's
Form SB-2, file number 333-61185, and incorporated herein by
reference).
*21.1 Subsidiaries.
*27. Financial Data Schedule
(b) Reports on Form 8-K - None
- -----------------------------
* Filed herewith.
12
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities and Exchange
Act of 1934, the company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
VOXCOM HOLDINGS, INC.
By: /s/ Donald G. McLellan
-----------------------
Donald G. McLellan
President and Director
In accordance with the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the company and in
the capacities and on the dates indicated.
Name Office Date
---- ------ ----
/s/Lawrence R. Biggs, Jr. Chief Executive Officer September 24, 1999
- ------------------------- and Director (Principal
Lawrence R. Biggs, Jr. Executive Officer)
/s/ Donald G. McLellan Director September 24, 1999
- -------------------------
Donald G. McLellan
/s/ Lawrence A. Cahill Director September 24, 1999
- -------------------------
Lawrence A. Cahill
/s/ Ronald L. Brown Director September 24, 1999
- -------------------------
Ronald L. Brown
Director September 24, 1999
- -------------------------
Brahill Santos
/s/ Harold L. Clark Director September 24, 1999
- -------------------------
Harold L. Clark
/s/Brian K. Norman Director September 24, 1999
- -------------------------
Brian K. Norman
/s/ Leslie D. Crone Principal Financial September 24, 1999
- ------------------------- Officer, Controller and
Leslie D. Crone Principal Accounting
Officer
13
EXHIBIT 2.3.3
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of the 5th day of August,
1999, among Voxcom Holdings, Inc., doing business as MAX Internet
Communications, Inc. (hereinafter referred to as "Employer") and Thomas Fehr
(hereinafter referred to as "Employee"),
In consideration of the mutual promises hereinafter set forth, the
parties hereto agree as follows:
1. Employment. Employer agrees to employ Employee and Employee
agrees to serve Employer, upon the terms and conditions hereafter set forth.
2. Term. The employment of Employee hereunder and this Employment
Agreement shall commence effective the date hereof and shall continue in effect
for a period of 18 months, unless terminated pursuant to Section 7 hereof At the
end of the term, the parties may agree to wend this Agreement for successive one
year terms,
3. Duties. During the term of this Agreement, Employee shall be
engaged as a senior executive officer with the title of Chief Marketing Officer
of Employer. Employee's powers and duties in those capacities shall be those set
forth in Exhibit A and as set by the Board of Directors, President and Chairman
of Employer. The Employee shall report to the President, Chairman and the Board
of Employer. If Employee is elected or appointed with the Employee's consent to
an office with any of Employer's subsidiaries or affiliates during the term of
this Agreement, the Employee will serve in such capacity or capacities without
additional compensation.
4. Extent of Services. During the term of this Agreement, Employee
shall devote substantially his entire working time, attention, and energies to
the business of Employer, and shall not during the term of service be actively
engaged in any other business activities. However, this shall not be construed
as preventing Employee from investing the Employee's personal assets in such
form or manner as may require occasional or incidental services on the part of
Employee in the management, conservation and protection of such investments and
provided that such investments cannot be construed as being, competitive or in
conflict with the business of Employer. However. nothing herein shall restrict
Employee from making investments in securities of publicly traded companies not
comprising more than 5% of securities outstanding.
5. Compensation.
5.1. Base Salary. Employer wil pay Employee during the Employee's
term of service hereunder, as compensation for the Employee's services, the sum
of US$20,833 per month (sometimes hereafter referred to as the "Base Salary"),
payable in semi-monthly installments in accordance with the general practices of
the Employer. Such base salary shall be reviewed and may be increased at each
annual review by the Employer of the Employee's performance and salary.
<PAGE>
5.2. Benefits. The Employee shall be entitled to the same benefits
generally provided to other employees of Employer of comparable rank and
responsibility in accordance with the policies of the Employer from time to
time. These are to include, but not be limited to, health insurance for
Employee; three weeks paid vacation pursuant to the Employees standard policy;
relocation costs including moving expense, travel costs to search for new
housing, and 90 days temporary housing reimbursed at up to $2,500 per month; and
an Employer-provided attorney to assist Employee with a work visa.
5.3 Stock Incentive. Employer shall grant to Employee and issue
shares of its unregistered Common Stock, based upon the following formulae:
5.3.1.Employer will grant and issue Employee the following number of
shares upon the Employer's achievement of the following sales of Employer's
products up to a maximum global budgeted sales figure of US$100 million:
Aggregate sales of products
during 18 Month Period
beginning with first day of
month following commence-
ment of employment Number of Shares
--------------------------- ----------------
US$ 50 million 10,000
62.5 million 10,000
75 million 10,000
82.5 million 10,000
100 million 10,000
5.3.2.Employer will additionally grant to Employee shares of its
unregistered common stock in the amount of 10,000 shares upon commencement of
employment and 10,000 shares on each of the first four (4) anniversary dates of
such commencement upon which Employee is employed by Employer.
6. Expenses. During the term of employment provided for herein,
Employer shall pay or reimburse Employee, in accordance with its standard
policy, upon submission of vouchers by the Employee for all reasonable expenses
incurred by the Employee in the interest of Employer's business.
7. Termination.
7.1. Termination Events. Subject to the provisions of Paragraph 7.2
of this Section, this Agreement shall terminate:
7.1.1.Upon death of Employee.
7.1.2.At the option of the Employer if Employee shall become disabled
and remain disabled for a period of six (6) months. Disability shall be defined
as Employer's inability through illness or other cause to perform his normal
work load as measured by the twelve (12) months preceding the commencement of
such disability. During such disability, Employee shall be compensated in
accordance with Employer's standard policy regarding disability.
7.1.3.Upon mutual agreement.
7.1.4.From the period commencing six months following the date of
commencement of employment, by not less than 90 days notice in writing by the
Employer or Employee to the other.
7.2. Consequences of Termination. Upon termination for any reason set
forth above, all base salary payments under Section 5.1 shall be prorated and
paid to the following dates, and all further payment obligations to Employee
hereunder shall cease.
<PAGE>
7.2.1 For termination under 7.1.1, to the date of death.
7.2.2 For termination under 7.1.2, to the last day of the six month
disability period.
7.2.3 For termination under 7.1.3, to the date mutually agreed.
7.2.4 For termination under 7.1.4, to the last day of the notice
period.
8. Trade Secret and Confidential Information. During the term of
this Agreement, Employee will have access to confidential information and
business secrets specific to and regularly used in the operation of the business
of Employer. Employee acknowledges that such information constitutes valuable
and confidential information of the Employer, Employee shall not disclose any of
the aforesaid private company secrets, directly or indirectly, nor use them in
any way, either during the term of this Agreement or after termination of
employment. All files, records, electronic and magnetic files, documents,
specifications, equipment and similar information relating to the business of
Employer, whether prepared by Employee or otherwise coming into Employee's
possession shall remain the exclusive property of Employer and shall not be
removed from the premises of Employer except as shall be necessary for Employee
to perform Employee's duties under this Agreement. Upon termination of this
Agreement for any reason, Employee will deliver all such materials in his
possession and all copies thereof to Employer.
9. Restrictive Covenants.
9.1 Employee acknowledges that during the term of this Agreement
the Employer has agreed to provide to him, and he shall receive from the
Employer, special training and knowledge. Employee acknowledges that included in
the special knowledge received is the confidential information identified in
Section 8. Employee acknowledges that this confidential information is valuable
to the Employee and, therefore, its protection and maintenance constitutes
legitimate interest to be protected by the Employer by the enforcement of this
covenant not to compete. Therefore, Employee agrees that during the term of this
Agreement and for a period commencing upon the termination of the term of
Employee's employment hereunder and ending upon the second anniversary thereof,
unless otherwise extended pursuant to the terms hereof, Employee will not,
directly or indirectly, either as an employee, employer, consultant, agent,
principal, partner, stockholder, corporate officer, director, or in any other
individual or representative capacity, engage or participate in any business
that is in competition with the video Internet communications business of the
Employer as it exists upon the termination of the term of Employee's employment
hereunder, anywhere within the State of Texas. Employee represents to the
Employer that the enforcement of the restriction contained in this Section 9
would not be unduly burdensome to Employee. Employee further represents and
acknowledges that Employee is willing and able to compete in other geographical
areas not prohibited by this Section 9.
9.2 Employee agrees that a breach or violation of this covenant not
to compete by such Employee shall entitle the Employer, as a matter of right, to
an injunction issued by any court of competent jurisdiction, restraining any
further or continued breach or violation of this covenant. Such right to an
injunction shall be cumulative and in addition to, and not in lieu of, any other
remedies to which the Employer may show itself justly entitled. Further, during
any period in which Employee is in breach of this covenant not to compete, the
time period of this covenant shall be extended for an amount of time that
Employee is in breach hereof.
9.3 In addition to the restrictions set forth in paragraph (a) o
this Section 9, Employee shall not for a period commencing upon the termination
of the term of Employee's engagement hereunder and ending upon the second
anniversary thereof either directly or indirectly, (i) solicit or attempt to
solicit any of the customers of the video Internet communications business of
Employer on whom Employee called or with whom Employee became acquainted during
Employee's association with the Employer, whether for Employee or for any other
person, firm or corporation within the State of Texas or (ii) recruit or attempt
to recruit, directly or by assisting others, any other employee of the Employer
or any of its affiliates.
<PAGE>
9.4 The representation and covenants contained in this Section 9 on
the part of Employee will be construed as ancillary to and independent of any
other provision of this Agreement, and the existence of any claim or cause of
action of Employee against the Employer or any officer, director, or shareholder
of the Employer or any officer, director, or shareholder of the Employer,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Employer of the covenants of the Employee
contained in this Section 9. In addition, the provisions of this Section 9 shall
continue to be binding upon Employee in accordance with its terms,
notwithstanding the termination of Employee's engagement hereunder for any
reason.
10. General Provisions.
10.1 Notice. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by certified mail by
Employer to the residence of Employee, or by Employee to Employer's principal
office.
10.2. Assignability. This Agreement and the rights, and benefits
hereunder shall not be assignable or in any way alienated by Employee. Employer
shall have the right of assignment and transfer of its rights hereunder to any
successor to the majority of its assets and any such successor shall be bound by
the terms hereof.
10.3. Waiver of Breach. The waiver by Employer or Employee of a breach
of any provisions of this Agreement by the other shall not operate or be
construed as a waiver of any subsequent breach.
10.4. Entire Agreement. This instrument contains the entire agreement
of the parties. It may not be changed orally, but only by an agreement in
writing, signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
10.5. Governing Law. This Employment Agreement shall be governed by the
laws of the State of Texas.
10.6 Arbitration. Any controversy between the parties to this
Agreement involving the construction or application of any of the terms,
covenants or conditions of this Agreement or arising out of any section hereof
or any condition in connection with the termination of employment, shall, on the
written request of one party served on the other, be submitted to binding
arbitration in Dallas, Texas, and such arbitration shall comply with and be
governed by the Commercial Arbitration Rules of the American Arbitration
Association. Each party hereto shall appoint one person as an arbitrator within
30 days after service of the request for arbitration, and the two arbitrators so
chosen shall select a third impartial arbitrator with fifteen days of the date
on which the second arbitrator is selected. The arbitrators shall decide all
questions presented to them by majority vote. The decision of a majority of the
arbitrators shall be final and conclusive on all parties hereto. The expenses of
arbitration conducted pursuant to this Section shall be borne by the parties in
such proportions as the arbitrators may decide, All parties shall be entitled to
be represented by counsel of their choosing throughout the arbitration
proceedings.
10.7. Consulting Agreement. Pending receipt of Employee's H-I work
visa, this Agreement shall be deemed to be a consulting contract and shall be
converted automatically into an employment agreement upon receipt of such visa.
<PAGE>
IN WITNESS WHEREOF, Employer has caused this Employment Agreement to be
executed in its corporate name by its corporate officers thereunto duly
authorized, and Employee has executed this Employment Agreement.
EMPLOYEE:
/s/ Thomas Fehr
----------------------------------------
Thomas Fehr
EMPLOYER:
VOXCOM HOLDINGS, INC.
By: /s/ Donald G. McLellan
---------------------------------
Donald G. McLellan, President
EXHIBIT 21.1
VOXCOM HOLDINGS, INC.
Name of Subsidiary State of Organization
------------------------ ----------------------
MAXpc Technologies, Inc. Texas
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<CIK> 1061554
<NAME> Voxcom Holdings, Inc.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 8,136,585
<SECURITIES> 0
<RECEIVABLES> 199,217
<ALLOWANCES> (30,000)
<INVENTORY> 1,286,539
<CURRENT-ASSETS> 9,636,816
<PP&E> 155,464
<DEPRECIATION> 27,969
<TOTAL-ASSETS> 10,665,647
<CURRENT-LIABILITIES> 902,153
<BONDS> 0
0
8,000,000
<COMMON> 1,577
<OTHER-SE> 1,761,917
<TOTAL-LIABILITY-AND-EQUITY> 10,665,647
<SALES> 397,989
<TOTAL-REVENUES> 397,989
<CGS> 185,235
<TOTAL-COSTS> 4,077,924
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 76,971
<INCOME-PRETAX> (3,865,677)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,865,677)
<DISCONTINUED> (1,494,978)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,360,655)
<EPS-BASIC> (.60)
<EPS-DILUTED> (.60)
</TABLE>
