U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUER
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
MAXPLANET, CORP.
(Name of Small Business Issuer in its charter)
DELAWARE 31-1478761
(State or Other Jurisdiction of (IRS Employer Incorporation or
Organization) Identification No.)
4400 US HIGHWAY ROUTE 9 SOUTH SUITE 2800
FREEHOLD, NEW JERSEY 07728
(Address of Principal Executive Offices and Zip Code)
Issuer's Telephone Number: (732) 625-0770
Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act: Common Stock, Par
Value $0.001
TABLE OF CONTENTS
ITEM NUMBER AND CAPTION PAGE
Part I - Item 1
Description of Business 3
a) Business History and Development 3
b) Description of Business 5
Risk Factors 14
Item 2
Management's Discussion and Analysis or Plan of Operation 24
Results of Operations 24
Liquidity and Capital Resources 25
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Item 3
Description of Properties 26
Item 4
Security Ownership of Certain Beneficial Owners and Management 26
Director Stockholders 27
Item 5
Directors, Executive Officers, Promoters, Control Persons and
Venture Capital Partners 27
Item 6
Executive Compensation 28
Salaries, Contracts of Officers - Employment Agreements 28
Item 7
Certain Relationships and Related Transactions 31
Item 8
Description of Securities 31
Part II - Item 1
Market Price of and Dividends on the Registrant's Common Equity
and Related Stockholder Matters 31
Item 2
Legal Proceedings 32
Item 3
Changes in and Disagreements with Accountants 32
Item 4
Recent Sales of Unregistered Securities 33
Item 5
Indemnification of Directors and Officers 33
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Part F/S Page - 34
Independent Auditor's Report
Financial Statements
Balance sheet
Statement of Operations
Statements of Stockholders' Equity
Statements of Cash Flows
Notes to Financial statements
Consolidated Balance Sheets at June 30, 199 (unaudited) and March 31, 1999
Consolidated Statement of Operations for the three months ended June 30, 1999
and 1998 (unaudited)
Consolidated Statement of Cash Flows for the three months ended June 30, 1999
and 1998
Notes to the Consolidated Financial Statements
Consolidated Balance Sheets at September 30, 1999 (unaudited) and March 31, 1999
Consolidated
Statement of Operations for the six and three months ended September 30, 1999
and 1998 (unaudited)
Consolidated Statement of Cash Flows for the six months ended September 30, 1999
and 1998
Notes to the Consolidated Financial Statements
Part III Page - 57
Index to Exhibits
(a) Certificate of Incorporation, as amended
(b) By - Laws
Reference is made to the two quarters (unaudited) reported in this Form 10-SB of
MaxPlanet, Corp., for the quarters ended June 30, 1999 and September 30, 1999,
filed herein, with the Securities and Exchange Commission (the "Quarterly
Reports"), which are incorporated herein by this reference. The Quarterly
Reports and six - month comparison contain the most recent interim (unaudited)
financial information on the Company in Part III, and Management's Discussion
and Analysis of Financial Condition and Results of Operations for the applicable
periods, which should be read in conjunction with the historical information
presented herein.
PART I
Item 1. Description of Business.
(a) Business History and Development.
MaxPlanet, Corp. formerly Maxnet, Inc., Concord International Group, Inc., and
formerly Robotic Systems and Technology, Inc. ("MaxPlanet") became a public
company in 1983 when its Registration Statement on Form S-18 was declared
effective by the Securities and Exchange Commission and the offering of its
securities was thereafter consummated. From approximately 1984 through November
1993,
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MaxPlanet was a non-operational company. From 1994 until December 31, 1997
MaxPlanet made several acquisitions, which were either unsuccessful ventures or
rescinded. MaxPlanet, Corp. filed an amendment with the State of Delaware on
July 27, 1999 changing its name from Maxnet, Inc. to MaxPlanet, Corp. Presently,
MaxPlanet, Corp. is an integrated Internet Development Company focused on
creating and expanding strategic alliances for its comprehensive network of
consumer and business oriented websites on its Internet sites www.MaxPlanet.com
and www.MundoMaximo.com. Through its 90% owned subsidiary, Valentino Salotti,
Inc., MaxPlanet wholesales and retails a line of custom leather furniture. In
conjunction with products from Valentino Salotti, Inc., MaxPlanet created
www.CustomLiving.com to offer Valentino Salotti products over the Internet.
Furthermore, through its wholly owned subsidiary Trident Recovery Systems, Inc.,
MaxPlanet offers debt collection services and also answers Users inquiries on
MaxPlanet's MaxLawyer.com over the Internet. Additionally, MaxPlanet owns a
wholly owned subsidiary Maxim Auction, Inc. and operates an auction Internet
site www.MaximAuction.com where MaxPlanet plans to offer for sale new
merchandise, excess merchandise, closeout and refurbished products to Internet
Users, consumers and small to medium-sized businesses. MaxPlanet opened it's
corporate website www.MXNT.com in July of 1998, developed and created the portal
community website www.Maxplanet.com in August of 1998 and officially launched
www.MaxPlanet.com on December 2, 1998.
MaxPlanet created the domain www.MundoMaximo.com (the Company's official Spanish
Portal Internet site) on January 7, 1999 and launched MundoMaximo.com on January
8, 1999 to capitalize on the growing global Hispanic online market. By creating
MundoMaximo.com as a Spanish-language Internet portal we provide Users with
information and interactive content centered on global Hispanic events in the
Spanish language. Because the language preference of many acculturated U.S.
Hispanics is English, we also offer our users the ability to access information
and services in the English language on www.MaxPlanet.com. MaxPlanet
incorporated Mundo Maximo, Corp. on September 10, 1999 as a wholly owned
subsidiary.
Furthermore, MaxPlanet owns the subsidiary MaxPlanet Radio, Corp. and operates
MaxPlanet Radio http://www.maxplanet.com/smpr/ on www.MaxPlanet.com, offering
originally programmed audio and video content over the Internet. MaxPlanet is
seeking to integrate and operate an audio/video digital encoding content
provider on the Internet for the listening of music, viewing of videos, movies,
interactive CD ROM's, computer software, PDA's (personal digital assistants),
WAP (wireless application protocol) for delivering content over digital wireless
networks into MaxPlanet Radio, Corp. (MPR, Corp.). Additionally, MaxPlanet plans
to continue to develop or acquire the content and services needed to appeal to
the Internet savvy and to the sophisticated shopper, bargain hunter, spontaneous
purchaser and active bidder.
Through acquisitions and an array of Internet properties MaxPlanet is offering
customers, advertisers and Users multiple outlets to entertainment, shopping and
information online. By providing Users with the option of shopping or bidding
MaxPlanet may be positioned to capture a share of online purchases and
advertising revenues. MaxPlanet's goals are to create multiple interactive
Portals with E-commerce and Auctions; Integrate Video, Music and an Internet
Radio Station as well as establish a desktop Information
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Business to Business/User to User WebPhoneBook / Telephonebook. MaxPlanet
anticipates that in addition to sales of Internet Development services,
furniture and products through E-Commerce MaxPlanet's principal source of
revenue will be fees paid by third parties for advertising their products and
services on www.MaxPlanet.com, www.MundoMaximo.com and its satellite sites.
MaxPlanet's www.MaxPlanet.com and www.MundoMaximo.com tie together all of
MaxPlanet's featured products and services and serve as the launch pads
(International Internet Portal Community) and vehicles for all of MaxPlanet's
featured product line and future objectives.
(b) Description of Business.
FURNITURE ON THE INTERNET: VALENTINO SALOTTI, INC., CUSTOMLIVING.COM. Organized
in 1996 as a New York Corporation, Valentino Salotti, Inc. designs and
distributes contemporary leather furniture and household products. Valentino
Salotti, Inc. (VS) currently occupies approximately 15,000-sq. ft of
warehouse/showroom space at 248 Flushing Ave, Brooklyn, New York 11205. Through
MaxPlanet's Internet developers and platforms mass distribution and
customization is to be increased by offering Valentino Salotti designs and
custom manufactured products over the Internet and a proposed Interactive -
Kiosk program.
On May 8, 1998, Maxplanet acquired Valentino Salotti and the closing took place.
The shareholders of Valentino Salotti received 500,000 shares of MaxPlanet,
Corp., common stock plus $50,000 in working capital.
MaxPlanet developed and created www.CustomLiving.com on July 16, 1998, which
enabled Valentino Salotti designs and custom manufactured products to be offered
over the Internet. MaxPlanet and Valentino Salotti are planning to offer
CustomLiving.com over Interactive-Kiosks in selected malls/shopping centers and
considering opening a CustomLiving flagship store in the New Jersey area.
MaxPlanet and Valentino Salotti are also contemplating offering select franchise
opportunities for individuals interested in opening CustomLiving stores
throughout the United States. The CustomLiving stores and Kiosks will enable the
customer to create a virtual room similar to the room that they are trying to
furnish with furniture of their choice on Interactive Kiosk monitors.
On February 17, 1999 MaxPlanet announced an agreement to sell ten-percent (10%)
of its wholly owned subsidiary Valentino Salotti, Inc. - www.CustomLiving.com
for $200,000.00 to A & J Capital LTD., Inc. The sale, which was to be accounted
for as a pooling of resources and is subject to certain conditions. MaxPlanet
recorded a one-time payment of $50,000.00 and received a promissory note in the
amount of $150,000.00 relating to the sale.
DIRECTORY PRODUCTS AND SERVICES ON THE INTERNET: WEBPHONEBOOK.COM,
TELEPHONEBOOK.NET. On June 4, 1998 MaxPlanet acquired research information and
business-plans for the Webphonebook / Portal - Community Internet project along
with WebPhoneBook.com and 17 other Domain Names from Intrasoft, Ltd. The
shareholders of Intrasoft, Ltd., received $70,000.
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MaxPlanet's product and service www.WebPhoneBook.com may be described as an
Internet industry information resource and online business directory.
WebPhoneBook.com seeks to place entire industries in simple to use interactive
categories and directories. WebPhoneBook.com seeks to be a source for various
industry specific business guides. The guides are to be basic, fast, and easy to
use giving consumer contact and product information for local businesses
nationwide, and eventually worldwide. The benefit to the User is that the User
will have a personalized search engine that will carry the interests that the
User chooses. MaxPlanet's WebPhoneBook will seek to be the Internet's Multimedia
Rolodex. Webphonebook.com is seeking to provide customers with valuable
information about commercial business to business services on the web without
all the "noise" or redundant information generated by traditional search
engines. Currently, search engine technology is sometimes a frustrating,
inefficient, time consuming method of finding a local service provider for any
goods or services. Webphonebook.com in conjunction with MaxPlanet.com and
MaxPlanet - state satellite sites may provide the User and consumer with the
name and information of someone that can help, located in the same area or the
closest area. Instead of trying to be all things to all people, MaxPlanet's
Webphonebook.com is seeking to be able to answer the question, "How Do I Find
Someone or Something Local That Can Help Me?"
MaxPlanet, Corp. announced that it had acquired New Hampshire based Ultra Web,
Inc. and www.Telephonebook.net on March 11, 1999. MaxPlanet acquired the domain
name www.Telephonebook.net, the name The Internet Yellow Pages, and certain
Internet related assets and databases. The shareholders of Ultra Web, Inc.
received 100,000 shares of MaxPlanet, Corp. common stock and $1.00. The
acquisitions are viewed as value added enhancements to MaxPlanet's
www.MaxPlanet.com community E-commerce shopping experience and information
resources.
Once fully implemented, the acquisition of www.Telephonebook.net and its
databases will enhance www.MaxPlanet.com. The strategic integration of UltraWeb,
Inc.'s licensed technology, databases, www.Telephonebook.net into
WebPhoneBook.com may translate to advertising and directory sales revenue for
MaxPlanet. MaxPlanet will be utilizing these new resources to add value to
MaxPlanet's network of sites including upgrading our gateways for businesses to
increase brand exposure. MaxPlanet is seeking to integrate these components into
a perfect fit for WebPhoneBook.com to become a desktop Internet Multimedia
Rolodex. MaxPlanet, Corp. applied for the documents necessary to file the
Articles of Dissolution dissolving the New Hampshire Corporation Ultra Web, Inc.
in October 1999.
MaxPlanet views this progression as one of the next steps for Information on the
Internet and is continuing the integration, posting new content and melding
Telephonebook.net into the WebPhoneBook.com project. Additionally, the
acquisition included the ability to utilize the licensed technology backbone of
InfoQuest, which allows Users to search a National directory with over 108
Million listings in less than 1/10th of a second.
The technology behind Telephonebook.net was among the first commercial directory
applications available on the Internet. Engineers began its development in 1994.
Telephonebook.net follows a well-organized business model and employs advanced
Internet technology. Telephonebook.net uses a proprietary technology known as
'InfoQuest.' This technology was written from the ground up with only one goal
in mind; to search telephone and directory databases as quickly and accurately
as possible.
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InfoQuest also has built in ability for graphics to be displayed in the search
results without slowing down the search time. Because of the graphical nature of
the Internet and advertisers' needs to display images in their ads, MaxPlanet
believes this capability may offer an advantage over other Internet search
engines. Infusing Telephonebook.net into WebPhoneBook may translate to increased
population and traffic. WebPhoneBook.com and Telephonebook.net are being
developed to increase manageability in managing a personalized business to
business search engine.
MaxPlanet will be integrating business links (Yellow Pages) and personal
listings (White Pages) of www.Telephonebook.net into Webphonebook.com and its
community of sites. MaxPlanet began the integration of Telephonebook.net's
entire business link and personal listing base of over 100,000,000 listings into
its community of sites in March 1999. Integration is commencing across multiple
portals, numerous affiliate sales sites and transactional points. MaxPlanet's
goals are to create interactive living Portals, Auction, Music, an Internet
Radio Station as well as an Information Business to Business / User to User
Telephonebook/WebPhoneBook under a complex integration. For some of these
Mission Critical Search functions and Applications MaxPlanet has purchased
software products from Thunderstone and Opensite. MaxPlanet may need more
scalability with the Multiple Portals and Multi-Media feeds. Recognizing many
shortcomings in every large enterprise site, MaxPlanet is also updating and
integrating its own Network for interior security as well as for integration
with outside vendors and Users. Therefore, MaxPlanet's complex integration
should lead to successful delivery and transactions.
SHOPPING AND ECOMMERCE ONLINE: 1CLASS.COM, ONECLASS.COM. On June 16, 1998,
MaxPlanet acquired the domain names, business plan, and the content of
OneClass.com and 1Class.com from Reich Brothers, Inc. Israel Goldreich, vice
president and director of MaxPlanet, Corp., is the principal shareholder of
Reich Brothers, Inc. The terms of the acquisition were as follows: shareholders
of Reich Brothers, Inc. received $6000.00, 25,000 shares of MaxPlanet common
stock and an option to purchase 100,000 shares of MaxPlanet, Corp. common stock
priced at $1.00 per share. The 1Class.com / OneClass.com executive summary and
site designation are being used as the model for MaxPlanet's E-Commerce shopping
and entertainment portal - community. MaxPlanet incorporated the acquisitions of
1Class.com / OneClass.com executive summary and sites into www.MaxPlanet.com's
E-Commerce shopping and entertainment portal community. Therefore,
www.MaxPlanet.com offers its Users' information, products and services that are
targeted toward individuals who are seeking fashionable, high profile products
and entertainment. MaxPlanet's Internet developers provide site development
services at competitive rates to high quality retailers and to content providers
looking to reach our customers. MaxPlanet also provides the requisite software
and hardware support to establish an on-line retail environment which maintains
integrity, security and privacy throughout the sales and fulfillment processes.
MAXPLANET, CORP. - MXNT ONLINE. On July 27, 1998 MaxPlanet officially announced
and launched www.MXNT.COM. Furthermore, the Company created MaxPlanet (the
Company's official Portal Internet site) in August of 1998 and officially
launched www.MaxPlanet.com on December 2, 1998. MaxPlanet's www.MaxPlanet.com
was created to tie together all of the featured products and services and
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serve as the launch pad (International Internet Portal Community) and vehicle
for all of MaxPlanet's featured product line and future objectives.
INTERNET DEVELOPERS: VFN.COM. On November 19, 1998 MaxPlanet formed a new
division of MXNT titled Max (Planet) Media Network with VFN.Com to develop Java
Component Technology, Webphonebook, E-Commerce, online multimedia solutions,
CustomLiving, www.MaxPlanet.com and www.MundoMaximo.com.
On December 15, 1998, MaxPlanet acquired (VFN.Com) Virtual Financial
Network.Com, Inc. in order to continue to build MaxPlanet's www.MaxPlanet.com.
The Max (Planet) Media division began focusing on the development of
www.MaxPlanet.com by providing their Internet development and marketing skills
to brand awareness strategies, broadcasting expertise, interactive shows, and
online audio/video markets. MaxPlanet acquired Florida based (VFN.Com) Virtual
Financial Network.Com, Inc. for 1,000,000 shares of MaxPlanet, Corp. common
stock and $50,000.00 in operating capital. MaxPlanet, Corp. filed The Articles
of Dissolution dissolving the Florida Corporation VFN.Com, Inc. on June 18,
1999. However, MaxPlanet still owns and operates the Internet site www.VFN.com.
MUNDOMAXIMO.COM, MAXPLANET - AFRICA, MAXPLANET - US STATES AND CITIES. MaxPlanet
created the domain www.MundoMaximo.com (the Company's official Spanish Portal
Internet site) on January 7, 1999 to capitalize on the growing global Hispanic
online market. MaxPlanet officially announced and launched MundoMaximo.com on
January 8, 1999. By creating MundoMaximo.com as a Spanish-language Internet
portal we provide Users with information and interactive content centered on
global Hispanic events in the Spanish language. Because the language preference
of many acculturated U.S. Hispanics is English, we also offer our users the
ability to access information and services in the English language on
www.MaxPlanet.com.
MundoMaximo.com draws viewers by providing a one-stop destination for
identifying, selecting and accessing resources, services, content and
information, a search engine, free e-mail, Spanish-language news feeds, chat
rooms and message boards. We are still a development stage company having
launched MundoMaximo.com web site in January 1999 and have not yet generated
significant revenue. MaxPlanet anticipates that the principal source of revenue
will be fees paid by third parties for advertising their products and services
on MundoMaximo.com. However, MaxPlanet does not expect any significant revenue
in 1999.
Even though Hispanic PC ownership is just 30 percent with only 15 percent
online, compared to the United States national average of 43 percent, Hispanics
are still the youngest cultural group in the United States. Therefore, through
MundoMaximo.com MaxPlanet is seeking to utilize and maximize this distribution
channel. Currently, there are over seven million Internet users in Latin
America; Our strategy is to target the younger, wealthier 25 percent of the
nearly 500 million people living in Latin America. MaxPlanet wants to align
ourselves with this affluent group which accounts for over 60 percent of
purchases in the Latin American region. With over 35 million Internet users
expected in the region by 2000, the market will be able to support healthy
competition. MaxPlanet believes the Latin market deserves Portal Space dedicated
to Hispanic Community news, products and lifestyle. Furthermore,
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MaxPlanet believes that since the opening of its South Florida Office in
December of 1998 it will bring tremendous value to this market place from its
Miami - South Florida location.
Similar to MundoMaximo, MaxPlanet launched MaxPlanet - Africa
http://www.MaxPlanet.com/Africa/ on June 25, 1999. Furthermore, MaxPlanet's
www.MaxPlanet.com portal will be offering Internet entrepreneurs and Users the
ability to meld their local community news, bulletin boards, shopping malls and
geography into State and City MaxPlanet satellites
(http://www.MaxPlanet.com/50states/). With the additions of local flavor to
www.MaxPlanet.com 's geography MaxPlanet is seeking to create local Portal
Centers.
By associating with local business people and entrepreneurs MaxPlanet is seeking
to create a Global MaxPlanet with distinctive individual MaxPlanet satellite
communities interacting in a MaxPlanet - Universe. With the launch of
MundoMaximo.com, MaxPlanet is building and preparing to launch 50 Portal States
in the USA -Complete with Regional Auctions, Shopping, Shows and more
(http://www.MaxPlanet.com/50states/).
TRIDENT RECOVERY SYSTEMS, INC., MAXLAWYER.COM. MaxPlanet acquired New York based
Trident Recovery Systems, Inc. on Feb. 11, 1999 and is presently going forward
with implementing MaxLawyer.com (http://www.MaxPlanet.com/MaxLaw). The terms of
the acquisition were as follows: Trident's shareholders received 500,000 shares
of MaxPlanet, Corp. common shares. Trident's core business is engaged in the
collection of debt in both the consumer and commercial fields. In comparison, to
other collection companies, Trident is a full service company handling accounts
from initial collection efforts through the legal process and beyond until the
debt is resolved. MaxPlanet - Trident plans include penetrating the U.S. market
through increased advertising, Internet integration, marketing and a focused
sales effort. MaxPlanet - Trident is also seeking to create a national network
of attorneys using MaxPlanet's MaxLawyer.com (http://www.MaxPlanet.com/MaxLaw)
and a marketable computer collection system.
Trident will seek to generate revenue for MaxPlanet and minimize risk as it
serves as its own collection agency and in the future may be utilizing
MaxPlanet's domain CollectionAgencies.com. Trident anticipates creating a
nationwide sales force with regional sales and service offices in every major
market through contracts and acquisitions with other collection and recovery
corporations. MaxPlanet has been building MaxLawyer.com as part of the terms of
the acquisition of Trident Recovery Systems, Inc. MaxPlanet - Trident plans to
penetrate the U.S. market through increased advertising, Internet integration,
marketing and a focused sales effort aimed at financial institutions, law-firms,
private practitioners and the creation of a national network of attorneys.
MaxPlanet is utilizing MaxLawyer.com as a legal resources information directory
and simple to use legal questionnaire for advertising revenue and to enhance the
online experience for www.MaxPlanet.com's and MaxLawyer.com's
(http://www.MaxPlanet.com/MaxLaw) Users.
MAXIMMUSIC.COM, MUSIC - AUDIO / VIDEO ONLINE:, MAXPLANET RADIO (MPR), MAXPLANET
RADIO, CORP.,. MaxPlanet's entrance into the delivery of music - audio / video
over the Internet began with the announcement of its Entertainment Division,
MaxPlanet Media-Entertainment
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and online recording label MAXIMMUSIC.com on November 25, 1998. MaxPlanet had
created the domain MAXIMMUSIC.com on November 24, 1998 to specialize in the
production, downloading, and distribution for independent music recording
artists.
On December 29, 1998 MaxPlanet announced and launched the MaxPlanet 365/24/7
Radio Party Station - MaxPlanet-Radio (MPR) in Real Audio for the 1999 New
Year's celebration on www.MaxPlanet.com. Furthermore, on January 5, 1999
MaxPlanet announced that it was preparing to launch a New Online Spanish Talk
Show and an Online Spanish Party Radio Station to compliment (MPR) and enhance
www.MundoMaximo.com.
MaxPlanet's MaxPlanet Radio was anticipating the revolution in Internet radio
programming which enables the distribution and sales platform of a new recording
artist to simultaneously create advertising and sales revenue for MaxPlanet and
the artist. MPR is about utilizing MaxPlanet's platforms and resources for
distribution. Whether MaxPlanet formats a CD, Tape, Mix, MP3, Real Audio;
Independent music and content distribution has given MaxPlanet a very exciting
niche market opportunity. In conjunction with premiering up and coming new
recording artists under MaxPlanet's MAXIMMUSIC.com label, MPR also plans to host
an Online Spanish Talk Show and a Virtual Spanish Party Radio Station.
Additionally, MaxPlanet's MPR has been contemplating developing a jukebox
whereby Users may be able to load a play-list of their favorites to play, record
a greatest hits CD or download directly to their PC. MaxPlanet's MAXIMMUSIC.com
is based on the unique philosophy of signing musical artists without exercising
bias toward young, unknown talents, and providing an outlet for their music to
be heard and purchased via the Internet.
MAXIMMUSIC.com is seeking to set itself apart from web-only businesses and
conventional record labels by successfully blending traditional brick and mortar
distribution with the sizzle and growth of Internet visibility and distribution.
MaxPlanet is typified by the philosophy of not exercising musical bias and
allowing the artist total creative freedom, thereby, attracting up-and-coming
talent from around the globe, but may also catch the attention of more
established acts who may call MAXIMMUSIC.com their label.
On March 22, 1999 MaxPlanet created MaxPlanet Radio, Corp. One of the objectives
for MaxPlanet Radio, Corp. is to eventually own and operate The MaxPlanet Radio
(MPR) Network http://www.maxplanet.com/smpr/, an audio/video content provider on
the Internet for the listening of music, viewing videos, movies, interactive CD
ROM's, and computer software. Furthermore, MaxPlanet plans to expand MPR with
MP3 and MP4 music databases in order to provide its Users with the opportunity
to download and listen to superior quality music products over the Internet. The
MPR, Corp.venture is being designed to have or acquire the capabilities and
resources to directly compete with Navarre Corporation's NetRadio, which also
offers originally programmed audio content over the Internet.
MaxPlanet is seeking to combine MaxPlanet's MaxPlanet-Radio (MPR) Network
technologies with various companies' proprietary music catalogs. This creates
the ability for the new entity to become an
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Internet Radio station that can offer digital downloading directly from various
catalogs of proprietary music and a platform to showcase new artists. Customers
may be able to create their own CDs, listen to music 24 hours a day and order
the music they are listening to.
Combining MaxPlanet's original shows and music with various proprietary catalogs
and in-house production studios creates a mix of User and Advertiser stickiness.
This may enable distributors to sell product directly to market, and offer the
User / consumer the ability to order directly from MaxPlanet. The synergies
between various catalog companies and MaxPlanet could lead to several exciting
opportunities such as providing an alternative source to sell product and market
various lines of compilation CD albums.
MaxPlanet's MaxPlanet Radio, Corp. plans to operate through an Internet Radio /
Jukebox Division, an Advertisement / Shows Division, an MP3 & MP4 downloads /
New Artists Division, and a CD Compilation Division. MaxPlanet's MPR, Corp. will
be seeking its initial advertising revenues from Retail Stores and Record Labels
(Major & Independent). MaxPlanet anticipates that in addition to sales of audio
and video related products the ventures principal source of revenue will be fees
paid by third parties for advertising and selling their products and services.
Presently, MaxPlanet's MaxPlanet Radio (MPR) http://www.maxplanet.com/mpr2/
operates as an audio / video content provider on the Internet for the listening
of music and viewing videos. MaxPlanet is seeking to become an aggregator of
streaming audio and video programming. Furthermore, MaxPlanet is planning to add
business divisions consisting of: (1) acquiring content (2) DVD authoring and
conversion for outside film studios, (3) providing content modules for Video on
Demand (VOD) servers, and (4) Wireless Application Protocol (WAP) for PDA's and
the Digital wireless network.
Based on a report from the research firm Jupiter Communications, estimates that
sales of music from digital downloading will grow to $146 million by 2003, which
researchers say will be about 5.7% of total online music revenue (Billboard
Magazine 7/24/99).
AUCTION ONLINE: MAXIMAUCTION.COM, MAXIM AUCTION, INC. Beginning with an
announcement in December of 1998, MaxPlanet was developing its auction Internet
site and plan to enter the online auction industry. MaxPlanet, Corp. created the
domain www.MaximAuction.com on December 23, 1998. Furthermore, on February 18,
1999 MaxPlanet's wholly owned Maxim Auction, Inc., a Nevada Corporation became
effective. MaxPlanet's announcement on April 15, 1999 "MaxPlanet Opens
MAX!Auction @ MaximAuction.com Beginning its "30 Day Release Beta," solidified
MaxPlanet's entrance into the online auction industry.
MaxPlanet, Corp. developed MaximAuction.com through its internal design team.
Initially, MaxPlanet.Com will host MaximAuction.com within its online community.
Within this web front MaximAuction.com captures the User preferences utilizing
OpenSite technology and creates an operating interconnected database utilizing a
product channel and selling system. Newsletters, Updates, Sales, Contests, and
Specials are being designed for the User within the MaximAuction.com community.
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MaxPlanet is operating MaximAuction.com for the sale of new merchandise, excess
merchandise, closeout and refurbished products to Internet Users, consumers and
small to medium-sized businesses. MaxPlanet believes that its online auction
will represent an exciting sales format for Users that leverages the interactive
nature of the Internet. MaxPlanet's MaximAuction.com will feature a rotating
selection of brand name products, merchandise, computers and consumer
electronics, which typically sell at significant discounts to prices found at
traditional retailers. MaximAuction.com will run auctions seven days a week,
offering many items in each of its daily auctions.
MaximAuction.com's online auctions will provide a distribution channel ranging
from new products to garage sales, flea market, and odd lot quantities of
closeout and even refurbished goods. The frequency of MaximAuction's auctions
and its ability to continuously add new items allow vendors to dispose of
inventory quickly to minimize the risk of price erosion. Online sales also allow
vendors to liquidate excess merchandise directly to a nationwide audience,
without cannibalizing their primary distribution channels. Furthermore,
MaximAuction.com will offer customers a unique retail experience- By attempting
to replicate the feel of a Windows 98 Explorer in its simplicity and in the
future, blending the site with Streaming Media - Video and Audio
(RealVideo-RealAudio) the Internet User will be able to post bids or items
through a Secure Socket Layer while not getting lost in a complicated system.
MaximAuction.com's plans also include a mail in bid as well as a posting
capability. The Auction is being constructed as a business community interwoven
with retail channels and advertising models.
MaxPlanet looked closely at developing a simplistic interface and Streaming
Media for MaximAuction.com. MaxPlanet believes that the MaximAuction.com
business model will offer something to the entire Internet community. MaxPlanet
seeks to provide a platform where Internet Users develop a chunk of Virtual real
estate, integrate Audio, Video and off line communities into MaximAuction.com's
community all the while building User confidence by allowing User autonomy.
Furthermore, MaxPlanet examined the sales philosophy and data from the
Television / Cable industries and concluded that one of the primary desires of
Y2K Internet Users, auctioneers, inventory distributors and product dealers is
autonomy. In conjunction with OpenSites technology, MaximAuction.com's tools
will search across merchandise and offer the User a multi-offering depending
upon the User desires. This tiered system will provide a User preference
database, which will focus a greater percentage of leads to clients, thereby
increasing an item's brand awareness and sales. As MaximAuction.com's system
learns the Users' preferences and the merchandise available for the channel,
MaxPlanet's Entertainment Division will simultaneously offer E-mercials of the
Users preferences onto the visitors' channel. Additionally, MaximAuction.com
will be offering Users E-mercials, text, and animated ads (MAX!) to all segments
of the Internet community.
With the opportunity to set their own prices on popular, brand name products
with the convenience of shopping 24 hours a day, seven days a week and the
element of an audio / video experience combined with an ever-changing
merchandise mix, entices Users / customers to participate in the auctions.
MaxPlanet is planning to employ merchandising techniques to manage the auction
process, which allows MaxPlanet to maximize revenues on products put into
auction. MaximAuction.com's auction management methodology capitalizes on
MaxPlanet's direct marketing and merchandising experience help predict the level
of
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customer traffic to the Website, the appropriate product mix of each auction and
the ultimate price realized on each product. MaxPlanet is designing its online
auctions to offer the customer an experience to encourage repeat visits by
customers and potential customers. MaxPlanet believes it may offer an experience
to its customers through an entertaining and fast auction process, tight control
of the order process and customer support. In addition, MaximAuction.com has
established multiple channels for communicating with customers before and after
the sale, including telephone, e-mail and online support. MaxPlanet will also be
incorporating other features to encourage repeat visits, including a
personalized page with a User's bidding history.
In the electronic commerce industry, a strong brand is critical to creating a
high level of vendor awareness and attracting customer traffic. Accordingly,
MaxPlanet's strategy is to aggressively increase its visibility and brand
recognition through a variety of marketing and promotional efforts.
Specifically, MaxPlanet intends to increase points of access by establishing
advertising relationships with other online companies similar to DoubleClick
(DCLK), NetGravity, 24/7 (TFSM), FlyCast (FCST), America Online, Inc. (AOL),
CNET, Inc. (CNET) and Wired Digital, Inc.
MaxPlanet plans to obtain merchandise directly and indirectly from computer and
consumer electronics manufacturers and through other vendors, such as retailers,
distributors and other various companies. Additionally, MaxPlanet will be
offering businesses an exclusive 'Premier Vendor' presence on MaximAuction.com,
with each auction channel listing representing annual advertising and sales
revenue to MaxPlanet.
JEWELRY ONLINE: LUXR, LTD., LUXR.COM. MaxPlanet, Corp. created www.LUXR.com and
signed an exclusive marketing agreement with New York based LUXR, Ltd., a
designer, importer, and distributor of fine jewelry, watches, and
estate-jewelry. LUXR, Ltd. and its products will be featured as a 'Premier
Vendor' on MaximAuction.com's Jewelry Channel.
Though relatively small, jewelry is considered one of the Internets fast-growing
retail categories. Online jewelry sales came to $38 million in 1998 and should
reach $56 million in 1999. Tiny compared with annual jewelry sales of some $35
billion, but online business is building rapidly, and online jewelry sales are
predicted to soar 250% to at least $140 million by 2001 according to Forrester
Research, Inc.
Therefore, in addition to signing a marketing contract with LUXR Ltd., to create
www.LUXR.com and market LUXR's products online, MaxPlanet acquired 5% of LUXR,
Ltd. as part of a $140,000.00 loan to LUXR, Ltd. on November 12, 1998.
Furthermore, MaxPlanet, Corp., through its board of directors, decided on April
29, 1999 to acquire an additional 25% of LUXR, Ltd. by converting the amount
owed to MaxPlanet, Corp. on the promissory note. Through this conversion of the
promissory note MaxPlanet acquired an additional 25% and increased its holdings
in LUXR, Ltd. to thirty percent (30%).
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DIGITAL ENCODING, ACQUIRING AUDIO / VIDEO CONTENT, DVD AUTHORING, CONVERSION FOR
FILM STUDIOS, CONTENT MODULES FOR VIDEO ON DEMAND (VOD) SERVERS. MaxPlanet,
Corp. is seeking to become an aggregator of streaming audio and video
programming including non-exclusive digital rights to feature length movies.
Once acquired, MaxPlanet is planning to offer a library of digital feature films
to its Users, thereby, creating additional services, marketing and advertising
opportunities while also expanding the audio and video content available
throughout MaxPlanet.com's network. Presently, MaxPlanet, Corp.'s MaxPlanet
Radio (MPR) http://www.maxplanet.com/mpr2/ operates audio / video content on the
Internet for the listening of music and viewing videos. Additionally, MaxPlanet
is seeking to become an aggregator of streaming audio, video programming and is
planning to add: (1) acquiring content (2) DVD authoring and conversion for
outside film studios, (3) providing content modules for Video on Demand (VOD)
servers, and (4) Wireless Application Protocol (WAP) for PDA's and the Digital
wireless network to its business divisions.
These additional levels of content potentially translates to more Users,
visitors, increased Ad sales, sponsorships, affiliate programs and increased
www.MaxPlanet.com brand awareness.
MaxPlanet's plans include penetrating the U.S. market through increased
advertising, Internet integration, marketing and a focused sales effort. By
offering products and services that incorporate the encoding, publishing,
distribution and management of digital media, MaxPlanet plans to enter the
streaming media industry in digitizing and optimizing audio and video content
for the Internet. MaxPlanet plans to offer a variety of digital media-on-demand
applications including online music distribution, distance learning, marketing
communications, training, rich media advertising and promotions, digital
archiving and video promotion.
MaxPlanet views these moves as bringing additional Internet-related services to
the digital encoding marketplace. MaxPlanet believes that its base business will
continue to operate and grow autonomously, while the additional plans bring
innovative technology and resources to expand MaxPlanet's business into new
areas.
MaxPlanet believes that it remains uniquely positioned as an Internet incubator,
representing a fresh innovative opportunity to experience and utilize a wide
range of Internet properties and services through a new brand, MaxPlanet. In
this way, MaxPlanet - MXNT reflects and relies on the health of the Internet
marketplace. As long as the Internet industry remains strong, MaxPlanet, Corp.
expects its value to continue growing as the Company brings new Internet
companies and properties into its MaxPlanet.com orbit.
RISK FACTORS
MaxPlanet is seeking to increase its sales by soliciting prospective
acquisitions, new business customers, generate increased sales from existing
customers (including increases in the number of Internet sites serviced),
promoting its Internet customer service capabilities to third party companies
and acquiring
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businesses. No assurances can be given that MaxPlanet will be able to replace
sales losses from its sites or acquire businesses with sufficient revenues to
sustain MaxPlanet's growth. The inability of MaxPlanet to replace or offset such
lost sales and acquire businesses will have a material adverse effect on
MaxPlanet's results of operations. (SEE "DESCRIPTION OF BUSINESS ," and
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.") DEPENDENCE ON FEW MAJOR SUBSIDIARIES; For the nine months ended
March 31, 1999, substantially all of MaxPlanet's revenues were derived from
Valentino Salotti, Inc., a 90% owned venture by MaxPlanet. In fiscal 1999,
MaxPlanet recognized revenue of approximately $149,681 as a result of the
acquisition of Valentino Salotti, Inc. (See "DESCRIPTION OF BUSINESS; FURNITURE
ON THE INTERNET:VALENTINO SALOTTI, INC., CUSTOMLIVING.COM.")
LIMITED OPERATING HISTORY. MaxPlanet opened MaxPlanet.com in December 1998,
Mundomaximo.com in January 1999 and began conducting business on the Internet.
Beginning in 1998, MaxPlanet funded certain startup and development activities.
Accordingly, there is an extremely limited operating history upon which to base
an evaluation of MaxPlanet and its business and prospects. MaxPlanet's business
and prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stage of
development, particularly companies in new and rapidly evolving markets such as
electronic commerce. Such risks for MaxPlanet include: an evolving and
unpredictable business model; management of growth; MaxPlanet's ability to
anticipate and adapt to a developing market; acceptance by customers of
MaxPlanet's Internet products, services, music genres, auctions and excess
merchandise sold at such auctions; dependence upon the level of traffic
activity; development of equal or superior Internet products and services by
competitors; dependence on vendors for merchandise; dependence for certain
services; and the ability to identify, attract, retain and motivate qualified
personnel. To address these risks, MaxPlanet must, among other things, continue
to expand its vendor channels and buyer resources, increase traffic to its
Websites, maintain its customer base and attract significant numbers of new
customers, respond to competitive developments, implement and execute
successfully its business strategy and continue to develop and upgrade its
technologies and customer services. There can be no assurance that MaxPlanet
will be successful in addressing these risks. In addition, MaxPlanet's limited
operating history prevents the use of detailed period- to-period comparisons of
its financial results.
In 1999, MaxPlanet began utilizing music-related products on its Internet sites.
Accordingly, MaxPlanet has only a very limited operating history on which to
base an evaluation of its business and prospects. For the year end March 31,
1999, approximately 0.0% of MaxPlanet's net revenues were derived from music
related products and operations. Following MaxPlanet's Internet creations of
MaximMusic.com, MaxPlanet Radio (MPR) and MaxPlanet Radio, Corp. it is expected
that approximately 20% to 30% of MaxPlanet's future revenues may be derived from
the wholesale distribution of pre-recorded music, MaxPlanet Radio (MPR) for
digitally downloaded music, advertising and product sales. (See "DESCRIPTION OF
BUSINESS; MAXIMMUSIC.COM, MUSIC - AUDIO / VIDEO ONLINE: MAXPLANET RADIO (MPR),
MAXPLANET RADIO, CORP., AND DIGITAL ENCODING, ACQUIRING AUDIO / VIDEO CONTENT,
DVD AUTHORING, CONVERSION FOR FILM STUDIOS, CONTENT MODULES FOR VIDEO ON DEMAND
(VOD) SERVERS.)
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Although MaxPlanet, Corp., Valentino Salotti, Inc., Trident Recovery Sources,
Inc., Maxim Auction, Inc. MaxPlanet Radio, Corp. and Mundo Maximo, Corp. are new
companies, and its management is motivated and experienced in many different
fields of business, MaxPlanet's prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in their
early stage of development, particularly companies in new and rapidly evolving
markets such as online auctions, music online and E-commerce. Such risks
include, but are not limited to, possible inability to respond promptly to
changes in a rapidly evolving and unpredictable business environment and the
risk of inability to manage growth. Development and sales of MaxPlanet's
enhanced musical compositions must compete with numerous artists and products.
Future revenues and profits are highly dependent on various factors, including,
but not limited to, the successful enhancement and distribution of MaxPlanet's
products and successful implementation of its planned marketing strategies. In
addition, continued representation of products, services, artists and production
of their products is subject to public popularity trends and the continued
appeal of the artists and their products. To address these risks, MaxPlanet
must, among other things, expand its customer base, successfully implement its
business and marketing strategies, continue to develop its websites and
transaction-processing systems, provide superior customer service, respond to
competitive developments, and attract and retain qualified personnel. If
MaxPlanet is not successful in addressing such risks, its profitability could be
adversely affected.
SALES SUBJECT TO SIGNIFICANT FLUCTUATIONS. MaxPlanet's products are
entertainment /information / E-commerce-related. The sales of
entertainment-related products are subject to various factors including, without
limitation, the popularity of the brands, the types of sites and links, genres
of music and recording artists, information resources and advertising budget
constraints. Such popularity may fluctuate greatly and irregularly, and thus
affect the sales of products and advertising revenues featuring certain brands,
artists, and types of music and furniture. To address these risks, MaxPlanet
must, among other things, expand its customer base, successfully implement its
business, advertising and marketing strategies, continue to develop its websites
and transaction-processing systems, provide superior customer service, respond
to competitive developments and changing or emerging trends in the
entertainment, information and music industry, and attract and retain qualified
personnel. There can be no assurance that prevailing popular preferences for
certain brands, artists and types of entertainment will remain relatively
constant or not fluctuate significantly, that MaxPlanet can identify and respond
to and capitalize on changing or emerging Internet industry trends, or that
sales of MaxPlanet's products would not be adversely affected by such trends and
its failure to adequately respond thereto. (See "DESCRIPTION OF BUSINESS.")
LIMITED EXPERIENCE AS A WHOLESALE OR RETAIL DISTRIBUTOR OF MUSIC PRODUCTS. Prior
to the creation of the domain MaximMusic.com in November 1998, current
management of MaxPlanet had no experience in the sale and distribution of
recorded music. However, following the venture to form MaxPlanet Radio (MPR) and
MaxPlanet Radio, Corp., MaxPlanet gained substantial knowledge and experience in
the sale and distribution of pre-recorded music. No assurances can be given,
however, that the inexperience of management of MaxPlanet in such business would
not have a material adverse effect on the operations of MaxPlanet and MaxPlanet
Radio, Corp.
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CONTINUED OPERATING LOSSES. Since inception, MaxPlanet has incurred significant
losses, and as of March 31, 1999 had an accumulated deficit. MaxPlanet intends
to invest significant funds in website development and technology, acquisitions,
and the development of traditional methods of advertising and distributing its
products. There can be no assurance that MaxPlanet will be able to generate
sufficient revenues from its operations or its websites to achieve or sustain
profitability in the future. (See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS".)
DEPENDENCE ON AFFILIATES AND DISTRIBUTORS. With the exception of sales generated
through advertising, MaxPlanet expects that a material portion of its sales will
continue to be made through affiliated and unaffiliated distributors. If
MaxPlanet is not successful in signing distribution agreements with affiliates
and distributors, its ability to sell its products may be materially adversely
affected. In addition, affiliates and distributors generally offer products of
several different companies, including products that may compete with
MaxPlanet's products. Typically, agreements with affiliates and distributors are
terminable at will and the termination of any affiliate's and distributor's
relationship with MaxPlanet may have a material adverse effect on any future
results of operations. In accordance with industry practice, MaxPlanet's music
products are to be sold on a return basis estimated to be approximately 25% of
sales and MaxPlanet intends to establish reserves for returns of finished
products in accordance with such industry standards. With the sale of finished
products, and any increase in returns, however, MaxPlanet's reserves could prove
to be inadequate which could adversely affect MaxPlanet's results of operations
as well as profits. Moreover, there can be no assurance that MaxPlanet will be
able to generate sufficient revenues from successful products and music releases
to cover the costs of unsuccessful products and music releases.
RECORDING MASTERS NOT INSURED. MaxPlanet is planning to be engaged in the audio
and video digitizing, downloading and recording industry and will be highly
dependent upon its access to libraries of music recording masters for its
business. Presently, MaxPlanet does not have an insurance policy covering
casualties to libraries of music recording masters but will obtain insurance for
them once they are purchased. However, there can be no assurance that such
insurance will be obtained, can be maintained at an acceptable cost to
MaxPlanet, or will cover all casualties to which the libraries of music
recording masters might be subject.
POTENTIAL FOR INTERNET DISTRIBUTION OF MAXPLANET'S PRODUCTS. In connection with
securing the distribution of its products and the products of others currently
sold through its Internet sites and subsidiaries, MaxPlanet has expended, and
will continue to expend capital resources to upgrade MaxPlanet's Internet
websites to market and distribute its products over the Internet and by making
its furniture, music and auction items available for sale and downloading to
wholesale consumers, in a variety of compositions. MaxPlanet has completed the
first stage of the development of its Internet websites, and is expected to
complete the design and development of its sites and have its websites available
for full commercial use by approximately the fourth quarter of fiscal 1999. No
assurances can be made however, that MaxPlanet will complete the enhancement of
its web sites or that such sites will be fully functional in fiscal 1999. The
failure of MaxPlanet's websites to be fully functional and permit the
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marketing, ordering, and sale of MaxPlanet's products on a wholesale and retail
basis over the Internet may substantially and adversely affect MaxPlanet's
future business prospects and its ability to expand and compete with other
larger corporations, several of which have significantly greater resources which
currently sell, market and distribute similar products to consumers over the
Internet. The online E-commerce market is new, rapidly evolving and intensely
competitive, and MaxPlanet expects that competition will further intensify in
the future. Barriers to entry are minimal, and current and new competitors can
launch new web sites at a relatively low cost. MaxPlanet competes and intends to
compete with a variety of companies, including (i) online vendors of furniture,
auctions, information/directories, food, vitamins & supplements, music, music
videos and other entertainment related products, (ii) online vendors of CD's,
dvd's, video movies, books and other related products, (iii) online service
providers which offer MP3 music products directly to or in cooperation with
other retailers, (iv) other retailers that offer music products, including mass
merchandisers, superstores and consumer electronic stores; and (v) non-store
retailers such as music clubs. Many of these traditional retailers also support
dedicated websites, which would compete directly with MaxPlanet.
DEPENDENCE ON SUPPLIERS, MANUFACTURERS, AND RAW MATERIALS. With the exception of
those products manufactured and sold by MaxPlanet's Valentino Salotti, Inc. -
CustomLiving.com subsidiary, substantially many of MaxPlanet's products are
outsourced. MaxPlanet has identified several furniture manufacturers located in
the Far East, United States and Canada that are capable of reproducing Valentino
Salotti's products at a reasonable cost, but has not entered into any other
production contracts. In regard to MaxPlanet's web development skills, the
ability to employ qualified personnel may pose a substantial problem, however,
MaxPlanet has identified several web development sources located in the United
States and Canada that are capable of creating and producing MaxPlanet's
products at a reasonable cost, but has not entered into any definitive
development contracts. MaxPlanet's music business is, however, dependent on
certain raw materials in the form of blank compact diskettes, on which MaxPlanet
encodes its master recordings for sale to consumers and end users. Any increase
in the price of blank compact diskettes, or the unavailability of blank compact
diskettes in the marketplace may have a significant adverse impact on the resale
price of some of MaxPlanet's products, revenue, gross profit margins, and the
demand for some of MaxPlanet's products. The loss of any one or more of
MaxPlanet's suppliers and Internet developers could have an adverse impact on
its ability to deliver a variety of salable products to its customers.
DEPENDENCE ON MANAGEMENT AND KEY PERSONNEL. MaxPlanet is dependent upon several
of its management and key personnel, including engineers, technicians, marketing
and management personnel. MaxPlanet is particularly dependent on the continued
services of its officers and directors, including Henry Val, its Chief Executive
Officer and Director, Isaak Val, its President, Treasurer, Director and
President of the subsidiary Valentino Salotti, Israel Goldreich, its Vice
President, Secretary, Director and acting Chief Operating Officer. MaxPlanet has
entered into employment agreements with Henry Val and Israel Goldreich.
Furthermore, in connection with the employment of Messrs. H. Val and Goldreich,
MaxPlanet has obtained "key man" life insurance with respect to these
individuals.
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SIGNIFICANT CONTRACTUAL OBLIGATIONS TO CERTAIN MEMBERS OF MANAGEMENT. MaxPlanet
has entered into agreements with two principal executive officers which provide
for them to receive a percentage of any capital raised by MaxPlanet, the value
of any acquisition by MaxPlanet, and MaxPlanet's pre-tax profits. Furthermore,
MaxPlanet has also entered into employment agreements with Henry Val and Israel
Goldreich. Additionally, MaxPlanet has entered into definitive option agreements
with its principal executive officers.
COMPETITIVE BUSINESS CONDITIONS. In all lines of its business MaxPlanet faces
intense competition ranging from small regional businesses to large
international companies. MaxPlanet's ability to succeed in the future and to
meet future competition in the pursuit of satisfying the public's tastes will
depend on its ability to attract new brands, acquire new internet sites and
content, talented artists or persons or companies who control existing valuable
libraries of master recordings as well as the appeal of compositions in its
existing library. There can be no assurance that MaxPlanet will be able to
compete successfully against current and future competitors. New technologies
and the expansion of existing technologies may also increase the competitive
pressures on MaxPlanet. The creation and distribution of products over the
Internet is highly competitive and MaxPlanet has a substantial number of direct
competitors, including large companies with substantially greater financial and
marketing resources. Although MaxPlanet believes that its brand MaxPlanet is new
and unique, no assurance can be given that competitors possessing greater
financial resources and established distribution facilities will not be able to
develop products which directly compete with MaxPlanet's products and offered
them at substantially lower prices than those available from MaxPlanet. The
music production, encoding, digitizing, download and distribution business is
also highly price sensitive with a limited number of larger companies accounting
for a large percentage of the industry's annual sales. These companies are
significantly larger, have greater financial resources and have larger technical
and creative staffs than MaxPlanet.
SEASONALITY. MaxPlanet's results of operations and those of its Valentino
Salotti subsidiary are subject to seasonal variations and by the timing of many
of the holidays. In regard to other product distribution and in accordance with
industry practice, MaxPlanet records revenues for sales of music products,
except those related to telemarketing C.O.D. transactions, when such products
are shipped to retailers. Companies in this field usually experience a decline
in revenues and net income in January and February, due in significant part to
retailers having purchased products prior to December in anticipation of holiday
sales. If planned releases are delayed beyond the peak holiday season,
MaxPlanet's operating results could be materially adversely affected. MaxPlanet
believes that period-to-period comparisons of historical results are not
necessarily meaningful and should not be relied upon as an indication of future
results. MaxPlanet's results of operations in future periods may not meet the
expectations of securities analysts and investors, in which case the price of
MaxPlanet's Common Stock would likely be materially adversely affected.
COPYRIGHT AND TRADEMARK PROTECTION. MaxPlanet's success will depend in
substantial part on its ability to obtain and maintain copyright or trademark
protection for its brand, products and music compositions in order to preserve
the value of its recordings library; and to generate revenues from operations
without infringing on the proprietary rights of third parties. MaxPlanet is
currently not the
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subject of any action regarding the ownership or the right to market, reproduce
and distribute any of its recordings. In certain instances, MaxPlanet's rights
to its recordings are not exclusive, and MaxPlanet is engaged in licensing
activities involving both the acquisition of rights to certain master recordings
and compositions for its own projects, and the granting of sub-licenses or
rights to third parties concerning the use of MaxPlanet's master recordings. The
availability on acceptable terms of such cross-licensing arrangements is
generally made possible by existing industry practice based on reciprocity.
Should such industry practices change, there is no assurance that MaxPlanet will
be able to obtain licenses from third parties on terms satisfactory to MaxPlanet
or at all, and MaxPlanet's business, particularly with respect to compilation
products, could be materially adversely affected.
MaxPlanet has applied for either copyright / trademark / patent protection for
MaxPlanet, WebPhoneBook, CustomLiving, MAX!, "The First Internet Ambassador,"
and has applied for copyright / trademark protection of MaxPlanet in Japan.
Although MaxPlanet holds or has the exclusive and non-exclusive use of various
trademarks and copyrights associated with its brand MaxPlanet, CustomLiving,
MundoMaximo and other properties, even with such protection there is no
assurance that unauthorized use will not occur. In regard to MaxPlanet's music
recordings it does not intend to do so because it believes that patents would
not offer significant protection. MaxPlanet will be operating in an industry in
which revenues are often adversely affected by the unauthorized reproduction of
recordings for commercial sale, commonly referred to as "piracy", and by home
taping and or downloading for personal use. In addition, in the event that
another party infringes on any copyright or trademark covering MaxPlanet's
products, the enforcement of such rights is at the option of MaxPlanet. Also,
other parties may be issued copyrights or trademarks that may prevent the sale
of MaxPlanet's products or require licenses and the payment of royalties by
MaxPlanet.
DISPUTED INTELLECTUAL PROPERTY RIGHTS. MaxPlanet may receive notices from a
limited number of third parties claiming an ownership interest in certain master
music recordings published or purchased by MaxPlanet and sold through its
affiliates or distributors, demanding, among other things, that MaxPlanet
immediately cease distributing these master recordings, or in the alternative,
demanding that MaxPlanet pay them royalties. MaxPlanet is prepared to respond by
providing these entities with information regarding the chain of title to these
recordings, and may suspend the future release of recordings until the matters
are resolved. There can be no assurance that these type of matters will be
resolved to MaxPlanet's satisfaction or that additional claims will not be
brought against MaxPlanet in the future by other third parties, or that any such
claims will not be successful. If such a claim were successful, MaxPlanet's
business could be materially adversely affected. In addition to any potential
monetary liability for damages, MaxPlanet would be required to obtain a license
in order to continue to market the music compositions in question or could be
enjoined from enhancing or selling such compositions if such a license were not
made available on acceptable terms. Further, if MaxPlanet should become involved
in litigation, it could require significant financial and management resources
of MaxPlanet. No assurances can be given that MaxPlanet's right to use any and
or all of a cataloges master recordings, will not be subject to dispute which
may result in the delay or the inability to use or exploit any particular master
recording or require that MaxPlanet pay royalties which may not be available or
affordable by MaxPlanet.
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MaxPlanet will begin reserving and placing into escrow 5% of all sales derived
once it purchases its master recordings. MaxPlanet intends on a periodic basis
to review whether such 5% reserve is sufficient and may, based upon such
periodic reviews, increase or decrease such amount based upon the dollar amount
of claims it receives resulting from its master recordings. As of September 1999
because MaxPlanet had not generated a minimum of $100,000 of net sales from any
sales of master recordings, no funds were reserved and escrowed relating to
sales of master recordings. No assurances can be given that such 5% reserve
amount will be sufficient to offset any claims made against MaxPlanet based upon
its master recordings. Should MaxPlanet not prevail in any dispute concerning
the right to publish and distribute any master recording that may be subject to
dispute, MaxPlanet, its business and business prospects may be adversely and
materially affected, and in certain cases, MaxPlanet may not be able to license,
nor be able to afford to license these master recordings. In addition to these
potential claims, MaxPlanet may be subject to claims for indemnification or
contribution from its distributors. Should MaxPlanet not prevail in any such
action, or be forced to pay a royalty to any of these third parties, any
reserves established by MaxPlanet in the future may prove to be wholly
insufficient, and MaxPlanet, its business and business prospects may be
materially and adversely affected. Moreover, if MaxPlanet were required to
notify its distributors to cease distributing any of MaxPlanet's products, or to
escrow revenues from the sale of MaxPlanet's products because the right to sell
or exploit these products is contested, MaxPlanet's relationship with its
distributors may be adversely affected.
The market for MaxPlanet's products and services is characterized by rapidly
changing technology, changing customer needs, and frequent new product
introductions and evolving industry standards that may render existing products
and services obsolete. The life cycles of MaxPlanet's products are difficult to
estimate. MaxPlanet's growth and future financial performance will depend upon
its ability to enhance its existing products and to introduce new products on a
timely and cost-effective basis and that meet dynamic customer requirements.
There can be no assurance that MaxPlanet will be successful in developing new
products or enhancing its existing products or that such new or enhanced
products will receive market acceptance or be delivered timely to the market.
MaxPlanet has experienced product development delays in the past and may
experience delays in the future.
INSURANCE. MaxPlanet, Corp. maintains Worker's Compensation, Commercial
Property, Commercial General Liability, and is in the process of securing
additional insurance in regard to Directors and Officers Insurance. MaxPlanet,
Corp. utilizes the services of Barry M. Bloom Associates of New Jersey for all
of its Insurance needs.
YEAR 2000 ISSUES. Many existing computer programs use only two digits to
identify a year in the date field, with the result that data referring to Year
2000 and subsequent years may be misinterpreted by these programs. If present in
the computer applications of MaxPlanet, or its suppliers and customers, and not
corrected, this problem could cause computer applications to fail or create
erroneous results. This could cause a disruption in operations and have a
short-term adverse effect on MaxPlanet's business and results of operations.
Using internal staff and outside consultants, MaxPlanet is actively addressing
this situation and anticipates that it will not experience a material adverse
impact to its operations, liquidity or financial condition related to systems
under its control. Also, MaxPlanet is taking the necessary steps to provide
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itself with reasonable assurance that its service providers, suppliers,
customers and financial institutions are Year 2000 compliant. This process is
approximately 95% complete. The total cost to achieve Year 2000 compliance is
estimated at $250,000. The majority of this amount has already been expended,
primarily in the first and second fiscal quarters of 1999. MaxPlanet is
developing contingency plans to identify and mitigate potential problems and
disruptions to the Company's operations arising from the Year 2000 issue. This
process is expected to be completed by November 1999. While MaxPlanet believes
that its own internal assessment and planning efforts with respect to its
external service providers, suppliers, customers and financial institutions are
and will be adequate to address its Year 2000 concerns, there can be no
assurance that these efforts will be successful or will not have a material
adverse effect on MaxPlanet's operations.
GOVERNMENT REGULATIONS AND LEGAL UNCERTAINTIES. MaxPlanet is subject, both
directly and indirectly, to various laws and regulations relating to its
business, although there are few laws or regulations directly applicable to
access to the Internet. However, due to the increasing popularity and use of the
Internet, it is possible that a number of laws and regulations may be adopted
with respect to the Internet. Such laws and regulations may cover issues such as
user privacy, pricing, content, copyrights, distribution and characteristics and
quality of products and services. Furthermore, the growth and development of the
market for online commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on those companies conducting
business online. The enactment of any additional laws or regulations may impede
the growth of the Internet which could, in turn, decrease the demand for
MaxPlanet's products and services and increase MaxPlanet's cost of doing
business, or otherwise have an adverse effect on MaxPlanet. The applicability to
the Internet of existing laws in various jurisdictions governing issues such as
property ownership, sales and other taxes, libel and personal privacy is
uncertain and could expose MaxPlanet to substantial liability. The laws of
certain foreign countries provide the owner of copyrighted products with the
exclusive right to expose, through sound and video samples, copyrighted items
for sale to the public and the right to distribute such products. Any new
legislation or regulation, or the application of existing laws and regulations
to the Internet could have a material adverse effect on MaxPlanet.
POSSIBLE VOLATILITY OF STOCK PRICE. There may be significant volatility in the
market price of MaxPlanet's Common Stock. Quarterly operating results of
MaxPlanet, deviations in results of operations from estimates of securities
analysts, changes in general conditions in the economy or the Internet services
industry or other developments affecting MaxPlanet, or its competitors, could
cause the market price of MaxPlanet's Common Stock to fluctuate substantially.
The equity markets have, on occasion, experienced significant price and volume
fluctuations that have affected the market prices for many companies' securities
and have often been unrelated to the operating performance of these companies.
Any such fluctuations that occur may adversely affect the market price of
MaxPlanet's Common Stock. The market price of MaxPlanet's Common Stock could
also be adversely affected by critical or negative statements or reports by
brokerage firms, industry and/or financial analysts and/or industry periodicals
concerning MaxPlanet, its products, or by the advertising or marketing efforts
of competitors, or other factors that could affect consumer perception.
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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS. A number of statements
contained herein are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act that involve risks and uncertainties
that could cause actual results to differ materially from those expressed or
implied in the applicable statements. These risks and uncertainties include, but
are not limited to: MaxPlanet's vulnerability to rapid industry change,
technical obsolescence, limited customer base and reliance on a relatively small
number of customers, the possible impact of competitive products and pricing,
uncertainties in the duration of the life cycle of its products, manufacturing
difficulties, dependence on key personnel, market acceptance, reliance on a
limited number of outside vendors, potential difficulties managing growth, the
ability to perform on existing and future agreements, the availability of
financing, and other risks all, or any one of which may have a material adverse
effect on MaxPlanet, its business, business prospects, and financial condition.
YEAR 2000 ISSUES
Many existing computer programs use only two digits to identify a year in the
date field, with the result that data referring to the year 2000 and subsequent
years may be misinterpreted by these programs. If present in the computer
applications of MaxPlanet, or its suppliers and customers, and not corrected,
this problem could cause computer applications to fail or create erroneous
results. This could cause a disruption in operations and have a short-term
adverse effect on MaxPlanet's business and results of operations. Using internal
staff and outside consultants, MaxPlanet is actively addressing this situation
and anticipates that it will not experience a material adverse impact to its
operations, liquidity or financial condition related to systems under its
control. In addition, the majority of the computer hardware is new. Also,
MaxPlanet is taking the necessary steps to provide itself with reasonable
assurance that its service providers, suppliers, customers and financial
institutions are Year 2000 compliant. This process is approximately 95%
complete. The total cost to achieve Year 2000 compliance is estimated at
$250,000. The majority of this amount has already been expended, primarily in
the first and second fiscal quarters of 1999. MaxPlanet is developing
contingency plans to identify and mitigate potential problems and disruptions to
MaxPlanet's operations arising from the Year 2000 issue. This process is
expected to be completed by November 1999. While MaxPlanet believes that its own
internal assessment and planning efforts with respect to its external service
providers, suppliers, customers and financial institutions are and will be
adequate to address its Year 2000 concerns, there can be no assurance that these
efforts will be successful or will not have a material adverse effect on
MaxPlanet's operations.
Year 2000 Readiness Statement
MaxPlanet, Corp. utilizes and has its computer servers collocated at Monmouth
Internet, Corp. in New Jersey. Monmouth Internet has taken strong measures to
assure those third-party products and software utilized within those products
will be ready for the Year 2000. Monmouth Internet's Y2K initiative includes
assessment and necessary corrective measures or replacement of systems affecting
business operation and/or services rendered. "Systems" is defined as any
hardware, firmware or software used by Monmouth Internet to support its
function. Monmouth Internet's efforts to guarantee service uptime and redundancy
and even the smallest issues are covered.
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All of the hardware, software, and service vendors, which Monmouth Internet
uses, have Y2K compliance statements available. By using these companies,
MaxPlanet, Corp. believes that Monmouth Internet, Corp. is also Y2K compliant.
See "Risk Factors."
Item 2. Management's Discussion and Analysis or Plan of Operation.
Results of Operations
The following discussion of the financial condition and results of operations of
MaxPlanet should be read in conjunction with the consolidated financial
statements and notes thereto. The results of operations for the three and six
months ended September 30, 1999 are not necessarily indicative of the results
for the entire fiscal year ending March 31, 2000.
Total Operating Revenues were $149,681 for the nine months ended March 31, 1999,
as compared to $30,230 for the twelve months ended June 30, 1998. The increase
from 1998 to 1999 of $119,451, or 395%, is due to the inclusion of the revenues
from Valentino Salotti, which, was acquired in May 1998.
Revenues for the six months ended September 30, 1999 totaled $182,015 versus
$77,345 for the six months ended September 30, 1998. The increase was
principally due to an increase in the revenues from Internet advertising and
services.
Cost of Sales increased to $138,775 for the nine months ended March 31, 1999,
from $34,798 for the year ended June 30, 1998. The increase of $103,977 or 298%
is due to the inclusion of cost of sales of Valentino Salotti, which was
acquired in May 1998. Cost of goods sold for the six months ended September 30,
1999 were $89,190 versus $80,046 for the same period of the prior year. The
increase was due to an increase of the sales of leather furniture by Valentino
Salotti.
Selling, General & Administrative Expenses increased by $455,023 in 1999 over
1998. This increase is attributable to the inclusion of Valentino Salotti and
its purchase of Virtual Financial Network.Com, Inc. on December 15, 1998. The
increased items include payroll, payroll taxes, amortization, depreciation, rent
and certain other administrative expenses. Expenses increased by $645,143 in the
six-month period ended September 30, 1999 versus the same period in the prior
year. This increase was principally due to an increase in MaxPlanet's Florida
Internet developers payroll and associated taxes, amortization of goodwill and
intangible property, depreciation, and other administrative expenses.
Other income and expenses increased by $135,995 in 1999 over 1998. This amount
included a realized gain of $148,296 on sales of marketable securities and an
increase of $19,306 of interest income offset by a decrease of $30,677 of
unrealized gains on marketable securities. Other income decreased by $19,618 for
the six months ended September 30, 1999 versus the six-month period ended
September 30, 1998. This decrease is due to an unrealized loss on marketable
securities partially offset by an increase in interest income.
24
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
MaxPlanet's capital requirements have historically exceeded its cash flow from
operations as MaxPlanet has been building its business. As a result, MaxPlanet
has depended upon sales of its common stock and borrowings from third parties to
finance its working capital requirements.
Cash and cash equivalents, and marketable securities increased by $880,816 to
$953,490 at March 31, 1999 from $72,674 at June 30, 1998. This increase is due
to the additional common stock issued by MaxPlanet during this period. Cash and
cash equivalents decreased by $861,184 to $92,306 as of September 30, 1999. This
decrease was due to operating expenses and additional investments that MaxPlanet
made during the fiscal year.
In May 1998, MaxPlanet purchased all of the outstanding stock of Valentino
Salotti, Inc. for 500,000 shares of common stock and $50,000 of working capital.
In June 1998 MaxPlanet acquired research information and business-plans for the
Webphonebook/Portal - Community Internet project along with WebPhoneBook.com and
17 other Domain Names from Intrasoft, Ltd. The shareholders of Intrasoft, Ltd.,
received $70,000.
In June 1998, MaxPlanet acquired the domain names, business plan, and the
content of OneClass.com and 1Class.com from Reich Brothers, Inc. The
shareholders of Reich Brothers, Inc. received $6000.00, 25,000 shares of
MaxPlanet common stock and an option to purchase 100,000 shares of MaxPlanet,
Corp. common stock priced at $1.00 per share.
In December 1998, MaxPlanet purchased all of the outstanding stock of Virtual
Financial Network.Com, Inc. (VFN.com) in exchange for 1,000,000 shares of common
stock and $50,000 in operating capital.
In February of 1999, MaxPlanet acquired 100% of the outstanding stock of Trident
Recovery Systems, Inc. for 500,000 shares of common stock.
In March of 1999, MaxPlanet acquired 100% of the outstanding stock of Ultra Web,
Inc. for 100,000 shares of common stock.
MaxPlanet has commitments under leases covering its facilities in New Jersey and
in Florida. Subsequently, MaxPlanet purchased its Florida facility in October of
1999. The minimum amounts of these lease payments are approximately $63,000 per
year for each of the next four years. The Company has also leased a number of
computer workstations for a period of three years.
The Company also has employment agreements with its Chief Executive Officer and
Vice President through December 31, 2010. The agreements provide for minimum
compensation and bonuses as determined by the Board of Directors.
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<PAGE>
MaxPlanet has no other significant commitments. The Company believes that its
liquidity position is adequate to meet all current financial needs. It may be
necessary for MaxPlanet to raise additional capital in the future to meet its
future and projected financial needs.
MaxPlanet has examined the Year 2000 computer issue. This issue concerns
computer hardware and software system's ability to recognize and process dates
after December 31, 1999 properly and accurately. MaxPlanet has utilized
purchased software that is Year 2000 compliant and does not expect Year 2000
issues to have a material impact on its business, operations or financial
condition. This is a Year 2000 readiness disclosure entitled to protection as
provided in the Year 2000 Information and Readiness Disclosure Act.
Item 3. Description of Property.
MaxPlanet's principal office, located at 4400 US Highway Route 9 South Suite
2800 Freehold, New Jersey 07728, is leased from the Freehold Executive Center
for the sum of $3,827.81 per month for a term of five years.
MaxPlanet's subsidiary Valentino Salotti, Inc. currently occupies approximately
15,000 sq. ft. of warehouse/showroom space, subleased from Tradeway Upholstery,
Inc. at 248 Flushing Avenue, Brooklyn, New York 11223 for a term of five years.
MaxPlanet also owns approximately 6500 sq. ft. in South Florida where MaxPlanet
operates its development and sales departments. The property is located at 14422
NW 7th Avenue, Miami, Florida 33168. MaxPlanet purchased its Florida facilities
on October 19, 1999. (See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS"). No
assurances can be made that these shareholders or their relatives may not in the
future demand increased rent from MaxPlanet in consideration for the use of
these properties, or that MaxPlanet will not relocate its operations at
substantial cost to the Company, if necessary, which may adversely affect
MaxPlanet's financial condition and results of operations.
Item 4. Security Ownership of Certain beneficial Owners and Management.
The following table sets forth, as of the date hereof, information regarding
ownership of the Company's Common Stock, by each person known by the Company to
be the beneficial owner of more than 5% of the Company's outstanding Common
Stock, by each director, by certain related shareholders, and by all executive
officers and directors of the Company as a group. All persons named below have
sole voting and investment power over their shares except as otherwise noted.
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DIRECTOR STOCKHOLDERS
- --------------------------------------------------------------------------------
Percent of Class
Shares of Common Stock ----------------
Beneficially Owned As Adjusted
------------------ -----------
Minimum Maximum
- --------------------------------------------------------------------------------
Name Actual Shares Shares
---- ------ ------ ------
- --------------------------------------------------------------------------------
Henry Val 5,027,000* 35.91%
- --------------------------------------------------------------------------------
A & J Capital 1,796,000 12.32%
- --------------------------------------------------------------------------------
Isaak Val 501,000 3.57%
- --------------------------------------------------------------------------------
Israel Goldreich 227,040** 1.61%
- --------------------------------------------------------------------------------
Directors Total 5,755,000 41.09%
- --------------------------------------------------------------------------------
* 5,000,000 are escrowed until MaxPlanet reaches sales of $1,000,000 or profit
of $250,000 whichever comes first. MaxPlanet estimates that sales of $1,000,000
may be achieved within 12 months of this filing.
** 125,000 are shares owned by Reich Brothers, Inc.
The CEO, Henry Val is the son of the President, Isaak Val.
1,000,000 shares of MaxPlanet, Corp. common shares of MaxPlanet, Corp. were part
of the acquisition of VFN.com (VFN.com, Inc.).
A & J Capital LTD., Inc. acquired 1,770,000 MaxPlanet, Corp. common shares as
part of MaxPlanet's 504 offering. A & J Capital acquired an additional 1,000,000
MaxPlanet common shares as part of a conversion on an $800,000.00 promissory
note.
A & J Capital agreed to the conversion of the lease on the property located at
14422 NW 7th Avenue, Miami, Florida 33168 to a purchase agreement for 500,000
MaxPlanet common shares on October 19, 1999. MaxPlanet, Corp. - MXNT has a total
of 14,538,421 outstanding shares as of November 12, 1999.
Item 5. Directors, Executive Officers, Control Persons and Venture Capital
Partners.
The officers and directors of the Company, and further information concerning
them, as follows:
Names Age Position
- --------------------------------------------------------------------------------
Henry Val 38 CEO & Director
Isaak Val 69 President & Director, President of
Valentino Salotti, Inc.
Israel Goldreich 34 Vice President, Acting COO, Secretary
& Director
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Henry Val has been associated with MaxPlanet, Corp. since 1993. Except for
certain periods of time in 1996 and 1997, Mr. Val served as a consultant to
MaxPlanet. Since 1990 Mr. Henry Val was the Chief Executive Officer of the
consulting company Alphamedia, Inc.
Israel Goldreich has been with MaxPlanet since March 25, 1998. Prior to joining
MaxPlanet, Mr. Goldreich worked full time with the consulting company Reich
Brothers, Inc. From 1992 through 1995 Mr. Goldreich attended the Massachusetts
School of Law in Andover.
Isaak Val has been with MaxPlanet since his appointment on February 16, 1999.
Mr. Isaak Val was appointed to be President of MaxPlanet on April 8, 1999. Isaak
Val has been in the custom furniture design, production and sales industry for
49 years. Isaak Val founded Tradeway Upholstery, Inc. and Valentino Salotti,
Inc. in Brooklyn, New York.
Item 6. Executive Compensation.
Since January 1, 1999 Henry Val and Israel Goldreich have received a salary of
$1000.00 per week. In addition, MaxPlanet, Corp. reimburses Mr. Henry Val (HV)
and Mr. Goldreich (IG) for business related expenses. Mr. Isaak Val (IV)
receives compensation for his duties as President of MaxPlanet and for operating
the subsidiary Valentino Salotti, Inc.
Salaries, Contracts of Officers - Employment Agreements.
As compensation for services rendered by Henry Val (HV), the Company provides HV
a salary as follows: HV is paid a salary of $25,000.00 for the first six -
months of employment beginning January 1, 1999. Beginning on June 1, 1999, HV is
paid an annual salary of $125,000.00 with an annual increase during the
following nine years of at least 10% per annum, each year. Said $125,000.00
annual compensation commenced on June 1, 1999. As compensation for services
rendered by Israel Goldreich (IG), the Company provides IG a salary as follows:
IG is paid a salary of $25,000.00 for the first six - months of employment
beginning January 1, 1999. Beginning on June 1, 1999, IG is paid an annual
salary of $100,000.00 with an annual increase during the following nine years of
at least 10% per annum, each year. Said $100,000.00 annual compensation
commenced on June 1, 1999.
SIGNIFICANT CONTRACTUAL OBLIGATIONS TO HV AND IG AS MEMBERS OF MANAGEMENT.
MaxPlanet entered into an employment agreement with HV as a principal executive
officer to provide for HV to receive a percentage of any capital raised by
MaxPlanet, the value of any acquisition by MaxPlanet, and MaxPlanet's pre-tax
profits. The officer, Henry Val, the CEO and COB of the Company will receive:
(1) 2.5% of all pre-tax profits recorded by the Company in accordance with
Generally Accepted Accounting Principles ("GAAP"); (2) the greater of (i) 2% of
the value of any acquisition by MaxPlanet (as computed by the purchase price
plus the value of any additional consideration paid in connection with such
acquisition) or (ii) 2% of the revenue reported by the acquired party in its
preceding fiscal year; and (3) 2.5% of any capital raised for MaxPlanet. In the
case that any portion of such consideration shall consist of publicly held
securities, the market price of these securities
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shall be used to determine value, and the value related to any option, warrant
or right to purchase these securities shall be determined by the Black-Scholes
Model. At HV's option, any compensation due under the foregoing provisions may
be converted into MaxPlanet's Common Stock at a conversion price equal to the
average closing bid price for the Common Stock 30 days prior to any such
acquisition or capital funding. Under these agreements, in the event of a change
of control the officers may resign and all amounts due and owing for the term of
the agreements shall become due and payable. Mr. Val waived fifty percent of his
1999 salary in exchange for options to purchase 150,000 shares of Common Stock
at $2.00 per share for three years.
In addition to the compensation provided hereof, HV shall receive bonuses in
such amounts as the Board of Directors may from time to time designate as well
as beginning 4/1/1999 through the term of this Agreement HV shall receive
additional compensation in the form of Employee Stock Options which will be
equal to the amount of 100,000 shares to be purchased (strike price) at the
closing price as of March 31, of the appropriate year. HV also receives
additional compensation in the event the Company has a profitable year in the
form of Employee Stock Options which will be equal to amount of 200,000 shares
to be purchased (strike price) at the closing price as of March 31, of the
appropriate year, plus an additional 5% of the pre-tax profit amount of the
Company for the appropriate year. HV shall have the option to accept the
additional 5% profit compensation as Cash or Company's Stock or (Employee Stock
Options that are equal to double amount of Cash compensation). The Company shall
properly and timely register all of the shares underlying the Employee Stock
Option Plan and additional compensation plans. Furthermore, HV participates in
the Management Incentive Plan with his bonus being 5% of pre-tax profits.
Nothing prohibits the Board of Directors from granting additional compensation
to HV and his salary shall be reviewed annually by the Board concerning
appropriate increases and/or grant appropriate bonuses for his contributions to
the Company and he shall be included in any cash or stock bonus or stock plan
heretofore or hereinafter adopted by the Company. Under no circumstances shall
the compensation be reduced without HV's consent. The Company recognizes that HV
may incur expenses from time to time for the Company's benefit and, in
furtherance of the business of the Company, certain expenses, including, but not
limited to, expenses for entertainment, travel and similar items, and upon
presentation by HV of appropriate vouchers therefore, the Company agrees to pay,
advance or reimburse HV for expenses reasonably incurred by HV for such business
purposes.
Additionally, MaxPlanet has entered into an employment agreement with IG as a
principal executive officer to provide for IG to receive a percentage of any
capital raised by MaxPlanet, the value of any acquisition by MaxPlanet, and
MaxPlanet's pre-tax profits. The officer, Israel Goldreich, the Vice President
and Secretary of the Company will receive: (1) 2.5% of all pre-tax profits
recorded by the Company in accordance with Generally Accepted Accounting
Principles ("GAAP"); (2) the greater of (i) 2% of the value of any acquisition
by MaxPlanet (as computed by the purchase price plus the value of any additional
consideration paid in connection with such acquisition) or (ii) 2% of the
revenue reported by the acquired party in its preceding fiscal year; and (3)
2.5% of any capital raised for MaxPlanet. In the case that any portion of such
consideration shall consist of publicly held securities, the market price of
these securities shall be used to determine value, and the value related to any
option, warrant or right to purchase these securities shall be determined by the
Black-Scholes Model. At IG's option, any
29
<PAGE>
compensation due under the foregoing provisions may be converted into
MaxPlanet's Common Stock at a conversion price equal to the average closing bid
price for the Common Stock 30 days prior to any such acquisition or capital
funding. Under these agreements, in the event of a change of control the
officers may resign and all amounts due and owing for the term of the agreements
shall become due and payable. Mr. Goldreich waived fifty percent of his 1999
salary in exchange for options to purchase 150,000 shares of Common Stock at
$2.00 per share for three years. In addition to the compensation provided, IG
shall receive bonuses in such amounts as the Board of Directors may from time to
time designate as well as beginning 4/1/1999 through the term of this Agreement
IG shall receive additional compensation in the form of Employee Stock Options
which will be equal to amount of 100,000 shares to be purchased (strike price)
at the closing price as of March 31, of the appropriate year. IG shall also
receive additional compensation in the event the Company has a profitable year
in the form of Employee Stock Options which will be equal to the amount of
200,000 shares to be purchased (strike price) at the closing price as of March
31, of the appropriate year, plus an additional 5% of the pre-tax profit amount
of the Company for the appropriate year. IG shall have the option to accept the
additional 5% profit compensation as Cash or Company's Stock or (Employee Stock
Options that are equal to double amount of Cash compensation). The Company shall
properly and timely register all of the shares underlying the Employee Stock
Option Plan and additional compensation plans.
IG shall participate in the Management Incentive Plan with his bonus being 5% of
pre-tax profits. Nothing shall prohibit the Board of Directors from granting
additional compensation to IG and his salary shall be reviewed annually by the
Board concerning appropriate increases and/or grant appropriate bonuses for his
contributions to the Company and he shall be included in any cash or stock bonus
or stock plan heretofore or hereinafter adopted by the Company. Under no
circumstances shall the compensation be reduced without IG's consent. The
Company recognizes that IG may incur expenses from time to time for the
Company's benefit and, in furtherance of the business of the Company, certain
expenses, including, but not limited to, expenses for entertainment, travel and
similar items, and upon presentation by IG of appropriate vouchers therefore,
the Company agrees to pay, advance or reimburse IG for expenses reasonably
incurred by IG for such business purposes.
SIGNIFICANT CONTRACTUAL OBLIGATIONS TO IG AND IV AS MEMBERS OF MANAGEMENT. Mr.
Goldreich (IG) and Mr. I. Val (IV) have each been offered and accepted option
agreements to purchase 500,000 shares of MaxPlanet Common shares priced at $1.50
a share. Furthermore, any and all of the options / shares are freely assignable
and receive immediate demand registration rights upon MaxPlanet, Corp.'s filing
a registration statement. The options / shares are to be registered at the first
registration filing of MaxPlanet, Corp. and are to remain registered and in
good-standing. In the event that demand registration is not accomplished within
a reasonable time of (3) three business days, MaxPlanet, Corp. shall be
responsible for any loss in value and legal fees. As a result of such
provisions, MaxPlanet's results of operations could be adversely affected, and
its amount of available cash could be diminished.
MaxPlanet generally grants stock options to employees and consultants with an
exercise price not less than the fair market value at the date of grant. We
account for stock option grants to employees in
30
<PAGE>
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and, accordingly, recognize no compensation expense
related to option grants. In cases where we grant options below the fair market
value of the stock at the date of grant the difference between the strike price
and the fair market value is treated as compensation expense and amortized over
the vesting period of the option, if any. Stock options granted to consultants
and others instead of cash compensation are recorded based upon management's
estimate of fair value of the options or the related services provided and
expensed over the vesting period, if any.
Item 7. Certain Relationships and Related Transactions.
MaxPlanet's subsidiary Valentino Salotti, Inc. currently occupies approximately
15,000 sq. ft. of warehouse/showroom space, subleased from Tradeway Upholstery,
Inc. at 248 Flushing Avenue, Brooklyn, New York 11223 for a term of five years.
MaxPlanet also purchased approximately 6500 sq. ft. in South Florida for the sum
of 500,000 common shares of MaxPlanet, Corp. from A & J Capital, a principal
shareholder of MaxPlanet, where MaxPlanet operates its development and
technology departments. The property is located at 14422 NW 7th Avenue, Miami,
Florida 33168.
Item 8. Description of Securities.
MaxPlanet is authorized to issue 50,000,000 shares of Common Stock par value
$.0001 per share and 10,000,000 shares of Preferred Stock par value $.0001 per
share. As of September 14, 1999 there were no preferred shares outstanding.
Holders of Common Stock are entitled to dividends as and when declared by the
Board of Directors from funds legally available therefore and, upon liquidation,
dissolution or winding up of the Company, to share ratably in all assets
remaining after payment of all liabilities. Holders of Common Stock do not have
preemptive rights and are entitled to one vote for each share of Common Stock
held of record by them. The Common Stock is not redeemable and does not have any
conversion rights. All of the outstanding shares of Common Stock are, and all of
the shares issued in MaxPlanet's offerings will be fully paid and
non-assessable. MaxPlanet intends to use any earnings, which it may generate to
finance the growth of its business of the foreseeable future.
Part II.
Item 1. Market Price of Securities; Dividends.
(a) Market for Shares.
MaxPlanet's shares have had a limited market in the Over The Counter Bulletin
Board (OTC-BB), under the Trading Symbol MXNT. The following is a summary of the
high and low bid for each quarter for the last three years:
Quarter Ending: High Bid: Low Bid:
- --------------------------------------------------------------------------------
9/99 2&7/8 1&3/16
6/99 8&3/8 1&11/16
3/99 3&1/2 7/8
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Quarter Ending: High Bid: Low Bid:
- --------------------------------------------------------------------------------
12/98 1&3/4 13/32
9/98 4&1/2 1/2
6/98 3&11/16 1/4
3/98 5/8 .01
Quarter Ending: High Bid: Low Bid:
- --------------------------------------------------------------------------------
12/97 1&3/4 13/32
9/97 6&1/8 1/2
6/97 1 1/2
3/97 4&11/16 1
(OTC-BB) quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commissions, and may not represent actual transactions.
(b) Dividend Policy.
MaxPlanet does not expect to declare or pay any dividends in the foreseeable
future, but instead intends to retain all earnings, if any, to expand
MaxPlanet's operations. The payment of dividends, if any, in the future is
within the discretion of the Board of Directors and will depend upon MaxPlanet's
earnings, if any, its capital requirements and financial condition, and other
relevant factors.
Item 2. Legal Proceedings.
Florida based Maxnet Holdings, Inc. filed a Federal Trademark Infringement
lawsuit against MaxPlanet, Corp. (formerly Maxnet, Inc.) in July of 1998. Maxnet
Holdings is requesting that MaxPlanet, Corp. change and refrain from using the
Maxnet name. MaxPlanet has subsequently filed an amendment with the State of
Delaware on July 27, 1999 changing its name to MaxPlanet, Corp.
MaxPlanet, Corp. complied with an order from the Securities and Exchange
Commission in October 1998 directing a private investigation into questions
relating to all offers and sales of securities and trading in securities that
may involve possible violations of section 17(a) and (b) of the Securities and
Exchange Act of 1933 and section 10(b) of the Securities and Exchange Act of
1934.
Item 3. Changes in and Disagreements with Accountants.
NONE
32
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Item 4. Recent Sales of Unregistered Securities.
MaxPlanet has raised additional capital through an offering by private
placement.
In a Disclosure Statement dated September 15, 1997, MaxPlanet undertook a
private placement offering at $0.50 per share of common stock and raised
$335,000.00 and issued 670,000 shares.
In a Disclosure Statement dated March 15, 1998, MaxPlanet undertook a private
placement offering at $0.06 per share of common stock and raised $168,000.00 and
issued 1,150,000 shares.
In a Disclosure Statement dated October 28, 1998, MaxPlanet undertook a private
placement offering at $0.40 per share of common stock and raised $303,900.00 and
issued 770,000 shares.
MaxPlanet continued with the private placement offering at $0.40 per share of
common stock Disclosure Statement dated October 28, 1998 and raised an
additional $428,900 and issued 1,082,500 shares.
MaxPlanet, Corp. - MXNT has a total of 14,538,421outstanding shares and 1216
shareholders of record as of November 12, 1999.
Additionally, the following table lists the (Restricted) shares issued in
connection with acquisitions, purchases and conversions by MaxPlanet. (See
"DESCRIPTION OF BUSINESS.")
Valentino Salotti, Inc. - 500,000
Reich Brothers, Inc. - 25,000
VFN.Com, Inc. - 1,000,000
Trident Recovery, Inc. - 500,000
UltraWeb, Inc. - Telephonebook.net - 100,000
A & J Capital LTD., Inc. - 1,500,000
Item 5. Indemnification of Directors and Officers.
Delaware law provides for full indemnification of officers and directors acting
as such.
33
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
MaxPlanet, Corp.
We have audited the accompanying consolidated balance sheets of MaxPlanet,
Corp. and Subsidiaries (the "Company") as of March 31, 1999 and June 30, 1998
and the related consolidated statements of operations, cash flows, and changes
in stockholders' equity for the nine months ended March 31, 1999 and the year
ended June 30, 1998. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
MaxPlanet, Corp. and Subsidiaries as of March 31, 1999 and June 30, 1998, and
the consolidated results of operations and their cash flows for the nine months
ended March 31, 1999 and the year ended June 30, 1998 in conformity with
generally accepted accounting principles.
/s/ Robert Rescigno, CPA
Robert Rescigno, CPA
3562 Centerview Avenue
Wantagh, NY 11793
November 4, 1999
34
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
(FORMERLY MAXNET, INC.)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 31, June 30,
1999 1998
--------------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 953,490 $ 72,674
Accounts receivable 85,332 7,550
Marketable securities, at market value 89,582 --
Inventory - Precious Stones 24,183 25,188
- Furniture 163,932 149,632
--------------------------
Total Current Assets 1,316,519 255,044
Fixed assets, net of accumulated depreciation 70,214 12,460
Other Noncurrent Assets
Intangible property, net of accumulated amortization 1,004,704 76,007
Collections receivable, net 875,000 --
Goodwill, net of accumulated amortization 339,239 359,707
Loans & notes receivable 342,550 10,000
Software development, net of accumulated amortization 54,924 --
Security deposit 13,030 1,000
--------------------------
Total Assets $ 4,016,180 $ 714,218
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 57,902 $ 17,028
Loan payable 100,000 10,000
Note payable (See note) 800,000 --
--------------------------
Total liabilities 957,902 27,028
Stockholders' Equity
Common Stock, $.0001 par value, 50,000,000 authorized,
12,988,421 and 9,060,921 shares issued and outstanding
in 1999 and 1998, respectively 1,299 906
Preferred Stock, 10,000,000 authorized, 0 issued
and outstanding, $.0001 par value
Additional paid-in-capital 3,688,973 970,781
Retained deficit (601,317) (284,497)
Accumulated other comprehensive income (30,677) --
--------------------------
Total Stockholders' Equity 3,058,278 687,190
--------------------------
--------------------------
Total Liabilities and Stockholders' Equity $ 4,016,180 $ 714,218
==========================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
35
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
(FROMERLY MAXNET, INC.)
CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended March 31, 1999
and Year Ended June 30, 1998
Nine months Year ended
ended Mar. 31 Jun. 30
------------------------
Net Sales $ 149,681 $ 30,230
Cost of sales 138,775 34,798
------------------------
Gross Profit 10,906 (4,568)
Selling, general & administrative expenses 463,721 8,698
------------------------
Loss before provision for taxes on income (452,815) (13,266)
Realized gains on sales of marketable securities 148,296 --
Unrealized loss on marketable securities (30,677) --
Interest income 19,306 --
Provision for income taxes (930) --
------------------------
Net loss ($316,820) ($ 13,266)
========================
------------------------
Basic and diluted loss per common share ($ 0.03) N/A
========================
The accompanying notes are an integral part of these
consolidated financial statements.
36
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
(FORMERLY MAXNET, INC.)
CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Stock Paid-In Retained Comprehensive
Shares Amount Capital Earnings Income
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1997 8,560,921 $ 856 $ 609,461 ($271,231) $ 0
Net income (13,266)
Issuance of common shares (Valentino Salotti acquisition) 500,000 50 361,320
-------------------------------------------------------------
Balance, June 30, 1998 9,060,921 906 970,781 (284,497) 0
Net income (316,820)
Issuance of common shares (stock sales and acquisitions) 3,927,500 393 2,718,192
Change in unrealized losses on marketable securities (30,677)
-------------------------------------------------------------
Balance, March 31, 1999 12,988,421 $1,299 $3,688,973 ($601,317) ($30,677)
=============================================================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
37
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
(FROMERLY MAXNET, INC.)
CONSOLIDATED STATEMENT OF CASH FLOWS For the Nine Months
Ended March 31, 1999
and Year Ended June 30, 1998
<TABLE>
<CAPTION>
Cash flows from operating activities: 1999 1998
--------------------------
<S> <C> <C>
Net loss ($ 316,820) ($ 13,266)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 7,458 1,037
Amortization 95,387 1,613
Unrealized loss from marketable securities 30,677 --
Changes in operating assets and liabilities:
(Increase) decrease in:
Inventories (13,295) (25,188)
Software development (60,000) --
Accounts receivable (77,782) (7,550)
Security deposits (12,030) (1,000)
Increase in:
Accounts payable 40,874 17,028
--------------------------
Net cash used in operating activities (305,531) (27,326)
--------------------------
Cash flows from investing activities:
Loans receivable (332,550) --
Purchases of marketable securities (241,439) --
Proceeds from sales of marketable securities 68,667 --
Purchases of property and equipment (65,479) --
--------------------------
Net cash used in investing activities (570,801) --
--------------------------
Cash flows from financing activities:
Net proceeds from issuance of stock 867,148 --
Net proceeds from loans payable 890,000 100,000
--------------------------
Net cash provided by financing activities 1,757,148 100,000
--------------------------
Net increase in cash and cash equivalents 880,816 72,674
Cash and cash equivalents, beginning of period 72,674 --
--------------------------
Cash and cash equivalents, end of period $ 953,490 $ 72,674
==========================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
38
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
(FORMERLY MAXNET, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - COMPANY BACKGROUND AND SUMMARY
Organization and Description of Business
Presently, MaxPlanet, Corp. is an integrated Internet Development Company
focused on creating and expanding strategic alliances for its
comprehensive network of consumer and business oriented websites on its
Internet sites and www.MaxPlanet.com and www.MundoMaximo.com. Through its
90% owned subsidiary, Valentino Salotti, Inc., MaxPlanet wholesales and
retails a line of custom leather furniture. Furthermore, through its
wholly owned subsidiary Trident Recovery Systems, Inc., MaxPlanet offers
debt collection services and also answers Users inquiries on MaxPlanet's
MaxLawyer.com over the Internet. Additionally, MaxPlanet owns a wholly
owned subsidiary Maxim Auction, Inc. and operates an auction Internet site
www.MaximAuction.com where MaxPlanet plans to offer for sale new
merchandise, excess merchandise, closeout and refurbished products to
Internet Users, consumers and small to medium-sized businesses.
MaxPlanet, Corp. formerly Maxnet, Inc., Concord International Group, Inc.,
and Robotic Systems and Technology, Inc. ("MaxPlanet") became a public
company in 1983 when its Registration Statement on Form S-18 was declared
effective by the Securities and Exchange Commission and the offering of
its securities was thereafter consummated. From approximately 1984 through
November 1993, MaxPlanet was a non-operational company. From 1994 until
December 31, 1997 MaxPlanet made several acquisitions which were either
unsuccessful ventures or rescinded. MaxPlanet, Corp. filed an amendment
with the State of Delaware on July 27, 1999 changing its name to
MaxPlanet, Corp.
On June 17, 1997 the Company, effected one for fifty reverse split of its
common stock. This reduced the number of shares outstanding from
29,016,050 to 580,321.
On May 8, 1998 MaxPlanet purchased all the outstanding stock of Valentino
Salotti, Inc. (VS) for 500,000 shares of common stock and $50,000 in
working capital. Valentino Salotti designs and distributes contemporary
leather furniture. Valentino Salotti, Inc. (VS) New York Corporation was
organized in 1996.
On June 4, 1998, the Company acquired certain assets of Intrasoft, Ltd.
Intrasoft's assets include WebPhoneBook.com and 17 other Domain Names. The
terms of the acquisition of certain Intrasoft, Ltd. assets were as
follows: the shareholders of Intrasoft, Ltd., received $70,000.
WebPhoneBook.com may be described as an industry information resource, and
online business directory.
39
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
(FORMERLY MAXNET, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On June 16, 1998, MaxPlanet acquired the domain names and the content of
OneClass.com and 1Class.com from Reich Brothers, Inc. Israel Goldreich,
vice president and director of MaxPlanet, Corp., is the principle
shareholder of Reich Brothers, Inc. The terms of the acquisition were as
follows: shareholders of Reich Brothers, Inc. received $6,000 and 25,000
shares of MaxPlanet common stock, in addition to 100,000 options of common
stock. The 1Class.com site designation is to become the model for
MaxPlanet's E-Commerce Shopping section.
Furthermore, MaxPlanet created MXNT.COM, (the Company's corporate Internet
site) and MaxPlanet.com. MaxPlanet.com ties together all of the Company's
featured products and will serve as the launch (internet-site) vehicle for
all of the Company's featured product line and future objectives.
On December 15, 1998, MaxPlanet completed the acquisition of a Florida
based technology and marketing company, Virtual Financial Network.Com,
Inc. (VFN.Com) for 1,000,000 in common stock and $50,000.00 operating
capital.
On February 9, 1999, MaxPlanet acquired 100% of the outstanding stock of
Trident Recovery Systems, Inc., ("TRS") for 500,000 common shares of
MaxPlanet. TRS offers debt collection and other legal services to
companies.
On February 25, 1999, MaxPlanet sold a 10% interest in Valentino Salotti,
Inc. for $200,000. The Company received $50,000 and a note receivable for
$150,000, bearing interest at a rate of 10% per annum. The note will
mature in twelve months.
On April 1, 1999, the Board of Directors announced that the company's
fiscal year would be changed from June 30 to March 31.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the Company's wholly and
majority owned subsidiaries. All intercompany transactions have been
eliminated in consolidation.
40
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
(FORMERLY MAXNET, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Use of Estimates
The preparation of the consolidated 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 the disclosure of contingent assets and liabilities at the
date of the financial statements as well as revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenue and the related costs on product sales when
products are shipped.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. The Company did
not pay income taxes or interest expense for the reported period.
Inventories
Inventories are stated at the lower of cost or market, with cost
determined on a first-in, first-out basis, and consist of precious stones
valued at $24,183 and finished leather goods valued at $163,932.
Property and Equipment
Property and equipment is stated at cost, less accumulated depreciation.
Depreciation is provided for on a straight-line basis with estimated
useful lives ranging from 3 to 7 years.
Intangibles
Goodwill is amortized on a straight-line basis over 15 years. Internet
domain names purchased are amortized on a straight-line basis over 5
years.
The carrying value of the long-lived assets are reviewed if the facts and
circumstances suggest that such assets may be permanently impaired, in
accordance with SFAS No. 121, "Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of." Such review is based upon the
undiscounted expected future operating cash flows derived from such
businesses and, in the event such result is less than the carrying value
of the long-lived assets, including goodwill, the carrying value of such
assets would be reduced to an amount that reflects the expected future
benefit.
41
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
(FORMERLY MAXNET, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Software Development Costs
Software development costs are capitalized in accordance with Statement of
Financial Accounting Standards (SFAS) No. 86. As of March 31, 1999,
capitalized software development costs, net of amortization were $54,924.
The capitalization of these costs begins when a product's technological
feasibility has been established and ends when the product is available
for general release to customers. Amortization is computed using an
estimated economic life of five years for all capitalized software costs.
Income Taxes
The Company records income taxes under the provisions of SFAS No. 109,
"Accounting for Income Taxes." Deferred income taxes arise from temporary
differences resulting from income and expense items reported in different
periods. The Company has a net operating loss carry forward for federal
income tax purposes available to offset taxes in future periods from the
year ended 1999 to 2010.
Earnings Per Share
Basic and diluted earnings per share are calculated in accordance with
Financial Accounting Standard Board ("FASB") Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share." Under this
standard, basic earnings per share is computed by dividing income
available to common shareholders by the weighted-average number of shares
outstanding for the period. Diluted earnings per share include the
potential dilution from the exercise of outstanding dilutive stock options
and warrants for common shares using the treasury method. As of March 31,
1999 and June 30, 1998, 100,000 common stock options were outstanding.
Accordingly, the fully diluted earnings per share are higher than the
basic earnings per share.
Stock Options
The Company accounts for stock option grants to employees in accordance
with Accounting Principles Board Opinion ("APB") No. 25, "Accounting for
Stock Issued to Employees," and, accordingly, recognizes no compensation
expense related to such grants. On June 16, 1998, the Company granted an
option to acquire 100,000 shares to its Vice President. At March 31, 1999,
and June 30, 1998, the grant was still outstanding. The basic shares
outstanding were 12,988,421 and 9,060,921 at March 31, 1999 and June 30,
1998, respectively. The diluted shares 13,088,421 and 9,160,921 at March
31, 1999 and June 30, 1998, respectively.
42
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
(FORMERLY MAXNET, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Effect of New Accounting Pronouncements
In June 1997, SFAS No. 130, "Reporting Comprehensive Income," was issued.
SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. SFAS No. 130 requires that a company (a) classify
items of other comprehensive income by their nature in a financial
statement and (b) display the accumulated balance of other comprehensive
income separately from retained earnings and additional paid-in-capital in
the equity section of the balance sheet. SFAS No. 130 is effective for
fiscal years beginning after December 15, 1997. Reclassification of
financial statements for earlier periods provided for a comparative
purpose is required.
In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," was issued. SFAS No. 131 establishes standards
for the way that public companies report selected information about
operating segments in annual financial statements and requires that those
companies report selected information about segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas, and major
customers. SFAS No. 131 is effective for financial statements for periods
beginning after December 15, 1997. The Company has not determined the
effect, if any, SFAS No. 131 will have on the disclosures in its
consolidated financial statement.
Segment Disclosure
In June 1997, the FABS issued SFAS No. 131, "Disclosure about Segments of
an Enterprise and Related Information." SFAS 131, applicable to public
companies, established new standards for reporting information about
operating segments in annual financial statements. The disclosure
prescribed by SFAS 131 is effective beginning with the year ended December
31, 1998. The Company operates in two different segments: Internet
development and wholesale and retail furniture sales. The operations for
the nine months ended March 31, 1999 are as follows:
-------------------------------------------------------------------
Internet Furniture
development sales Total
-------------------------------------------------------------------
Income $ 8,040 $141,641 $ 149,681
-------------------------------------------------------------------
Cost of Goods Sold 872 137,903 138,775
-------------------------------------------------------------------
Gross Profit 7,168 3,738 10,906
-------------------------------------------------------------------
Expenses 440,358 23,363 463,721
-------------------------------------------------------------------
Other Income 135,995 0 135,995
-------------------------------------------------------------------
Net Loss $(297,195) $(19,625) $(316,820)
-------------------------------------------------------------------
43
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
(FORMERLY MAXNET, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - COLLECTIONS RECEIVABLE
On February 9, 1999, the Company purchased 100% of the outstanding stock
of TRS, a debt collection service company. TRS had judgements entered in
excess of one million dollars. Past history reveals that a portion of
these receivables will be uncollectible. The Company has decided that an
allowance would be necessary and has valued these receivables at $875,000,
which represented the total purchase price.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
A. Commitments
The Company leases their office and sales facilities. The leases provide
for a rent abatement that is being amortized over the life of the lease.
Future minimum lease payments, on a cash basis, under all operating leases
at March 31, 1999, are as follows:
1999 $ 21,072
2000 $ 62,508
2001 $ 63,468
2002 $ 64,469
2003 $ 65,499
Thereafter $ 6,465
--------
Total $283,481
========
B. Contingent Liabilities
On July 29, 1998, Florida based Maxnet Holdings, Inc, filed a Federal
Trademark Infringement lawsuit against the Company. Maxnet Holdings
alleges that the Company has infringed upon their federally registered
service mark, violated the Federal Anti-dilution Act of 1995, and is
engaging in unfair competition. The Company is working towards an amicable
solution, but short of that the lawsuit does not appear to have any
material adverse effect on the Company.
C. Employment Agreements
The Company's employment agreement with its Chief Executive Officer and
Vice President extends through December 2010. The agreements provide for
minimum annual compensation, and bonuses as determined by the Board of
Directors. The officers were also granted options to purchase 100,000
shares of common stock, each, on April 1, 1999. Each officer is eligible
to receive addition compensation, in the form of cash or stock, based upon
the performance of the Company.
44
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
(FORMERLY MAXNET, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company also has an agreement with the exclusive legal representative
of Trident Recovery Systems. The attorney has retained a lien on all the
files of the accounts that have been substantially completed.
NOTE 5 - NOTE PAYABLE - RELATED PARTY TRANSACTIONS
On, February 25, 1999, A & J Capital, Inc. ("A&J") (a significant
shareholder owning more than 5% of the outstanding shares of the Company)
purchased 10% of Valentino Salotti, Inc. for $200,000. A&J gave the
Company $50,000 and a twelve month note for $150,000 as consideration.
On, March 10, 1999, A&J issued the Company a six-month convertible note
bearing interest at 12% per annum for $800,000. The note is convertible
into 1,000,000 common shares of the Company, upon maturity as full
payment. It is anticipated that A & J Capital, Inc. will convert the note
upon maturity.
NOTE 6 - SUBSEQUENT EVENTS
On February 10, 1999, MaxPlanet, Corp. announced that it has executed
Letters of Intent to acquire UltraWeb, Inc. for 100,000 shares of common
stock. This transaction was completed on March 11, 1999. As of the date of
this audit the assets had not been transferred, hence the transaction has
not yet been recorded on the books of the Company.
On April 27, 1999, the Company converted a note receivable from LUXR, Ltd.
Into 25% of the outstanding common stock of LUXR. The note had an original
value of $140,000 plus accrued interest of $12,600 at the time of
conversion. After conversion the company now owns 30% of LUXR Ltd and
hence will be recorded based on the equity method of accounting.
45
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
(FORMERLY MAXNET, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - - - - - - - - - - - - - - - - - - - - - - -
Certain of the statements included in these financial statements
constitute forward-looking statements within the meaning of Section 27A of
the Securities Exchange Act of 1934, as amended. The Company notes that a
variety of factors could cause the Company's actual results and experience
to differ materially from those expressed in these forward-looking
statements. These financial statements may contain forward-looking
statements, made pursuant to the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, that involve risks and
uncertainties, which might cause the actual results to differ materially
from those projected in any forward-looking statements. Factors which
could affect results include the development and introduction of
competitive technologies, the market awareness and acceptance of the
MaxPlanet technologies, the overall market demand for internet services,
the presence of technologically inferior products and services which are
priced or promoted to compete with MaxPlanet services, the ability to
attract and retain technical personnel, and the ability of the Company to
protect its proprietary information.
46
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
June 30, March 31
1999 1999
--------------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 388,938 $ 953,490
Accounts receivable 32,902 85,332
Marketable securities, at market value 148,582 89,582
Collections receivable, net 180,000 --
Inventory - Precious Stones 24,183 24,183
- Furniture 163,932 163,932
--------------------------
Total Current Assets 938,537 1,316,519
Fixed assets, net of accumulated depreciation 89,398 70,214
Other Noncurrent Assets
Intangible property, net of accumulated amortization 964,149 1,004,704
Collections receivable, net 642,764 875,000
Goodwill, net of accumulated amortization 333,213 339,239
Loans & notes receivable 660,385 342,550
Software development, net of accumulated amortization 42,083 54,924
Security deposit 13,030 13,030
--------------------------
Total Assets $ 3,683,559 $ 4,016,180
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 56,261 $ 57,902
Loan payable 100,000 100,000
Note payable (See note) -- 800,000
--------------------------
Total liabilities 156,261 957,902
Stockholders' Equity
Common Stock, $.0001 par value, 50,000,000 authorized,
13,938,421 and 9,060,921 shares issued and outstanding
in 1999 and 1998, respectively 1,394 1,299
Preferred Stock, 10,000,000 authorized, 0 issued
and outstanding, $.0001 par value
Additional paid-in-capital 4,561,137 3,688,973
Retained deficit (1,009,777) (601,317)
Accumulated other comprehensive income (25,456) (30,677)
--------------------------
Total Stockholders' Equity 3,527,298 3,058,278
--------------------------
--------------------------
Total Liabilities and Stockholders' Equity $ 3,683,559 $ 4,016,180
==========================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
47
<PAGE>
MAXNPLANET, CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended
June 30,
1999 1998
---------------------
Net Sales $ 56,580 $ 30,230
Cost of sales 48,843 35,756
---------------------
Gross Profit 7,737 (5,526)
Selling, general & administrative expenses 397,685 13,460
---------------------
Loss before provision for taxes on income (389,948) (18,986)
Unrealized loss on marketable securities (25,456)
Interest income 6,944 --
---------------------
Net loss ($408,460) ($18,986)
=====================
---------------------
Basic and diluted loss per common share ($ 0.03) N/A
=====================
The accompanying notes are an integral part of these
consolidated financial statements.
48
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months
Ended June 30,
Cash flows from operating activities: 1999 1998
---------------------
<S> <C> <C>
Net loss ($408,460) ($18,986)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 4,907 --
Amortization 61,538 --
Unrealized gains from marketable securities (5,221) --
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable 52,430 (5,500)
Security deposits -- (1,000)
Collections receivable 52,238
Decrease (increase) in:
Accounts payable (1,641) 17,028
---------------------
Net cash used in operating activities (244,209) (8,458)
---------------------
Cash flows from investing activities:
Loans receivable (317,835) (10,000)
Purchases of marketable securities (117,888) --
Repayment of loans 100,000
Proceeds from sales of marketable securities 57,398 --
Purchases of property and equipment (14,277) (12,458)
---------------------
Net cash used in investing activities (392,602) 77,542
---------------------
Cash flows from financing activities:
Net proceeds from issuance of stock 72,259 --
---------------------
Net cash provided by financing activities 72,259 0
---------------------
Net increase in cash and cash equivalents (564,552) 69,084
Cash and cash equivalents, beginning of period 953,490 --
---------------------
Cash and cash equivalents, end of period $ 388,938 $ 69,084
=====================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
49
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (all of which were normal recurring
adjustments) necessary to present fairly the consolidated financial position of
Maxplanet, Corp. ("the Company") at June 30, 1999 and March 31, 1999, and the
results of its operations, its cash flows and comprehensive income for the three
month interim period presented.
The accounting policies followed by the Company are set forth in Note 2 to the
Company's consolidated financial statements for the year ended March 31, 1999.
NOTE 2
The results of operations for the three months ended June 30, 1999 are not
necessarily indicative of the results to be expected for the full year.
NOTE 3
During the three months ended June 30, 1999 and 1998 the Company operated
principally in two industry segments - Internet Development and Furniture sales.
The accounting policies used to develop segment information correspond to those
described in the summary of significant accounting policies (See note 2 of the
March 31, 1999 financial statements). Segment profit or loss is based on profit
or loss from operations before the provision for benefit for income taxes. The
reportable segments are distinct business units operating in different
industries and are separately managed. The following information about the
business segments are for the three-month period ended June 30, 1999.
- --------------------------------------------------------------------------------
Internet Furniture
development sales Total
- --------------------------------------------------------------------------------
Income $ 4,693 $ 51,887 $ 56,580
- --------------------------------------------------------------------------------
Cost of Goods Sold 0 48,843 48,843
- --------------------------------------------------------------------------------
Gross Profit 4,693 3,044 7,737
- --------------------------------------------------------------------------------
Expenses 393,134 4,551 397,685
- --------------------------------------------------------------------------------
Other Loss (18,512) 0 (18,512)
- --------------------------------------------------------------------------------
Net Loss $(406,954) $ (1,506) $(408,460)
- --------------------------------------------------------------------------------
50
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FORWARD LOOKING STATEMENTS
Statements about the Company's future expectations and all other statements in
this document other than historical facts are "forward-looking statements"
within the meaning of Section 27A of the Securities Exchange Act of 1933,
Section 21E of the Securities Exchange Act of 1934, and as that term is defined
in the Private Securities Litigation Reform Act of 1995. The Company intends
that such forward-looking statements involve risks and uncertainties and are
subject to change at any time, and the Company's actual results could therefore
differ materially from expected or inferred results.
51
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
Sept. 30 March 31
1999 1999
--------------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 92,306 $ 953,490
Accounts receivable 37,402 85,332
Marketable securities, at market value 222,894 89,582
Collections receivable, net 180,000 --
Inventory - Precious Stones 24,183 24,183
- Furniture 163,932 163,932
--------------------------
Total Current Assets 720,717 1,316,519
Fixed assets, net of accumulated depreciation 104,517 70,214
Other Noncurrent Assets
Intangible property, net of accumulated amortization 921,598 1,004,704
Collections receivable, net 599,264 875,000
Goodwill, net of accumulated amortization 329,195 339,239
Loans & notes receivable 752,389 342,550
Software development, net of accumulated amortization 40,417 54,924
Security deposit 15,030 13,030
--------------------------
Total Assets $ 3,483,127 $ 4,016,180
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 34,805 $ 57,902
Loan payable 100,000 100,000
Note payable (See note) -- 800,000
--------------------------
Total liabilities 134,805 957,902
Stockholders' Equity
Common Stock, $.0001 par value, 50,000,000 authorized,
14,538,421 and 9,060,921 shares issued and outstanding
in 1999 and 1998, respectively 1,454 1,299
Preferred Stock, 10,000,000 authorized, 0 issued
and outstanding, $.0001 par value
Additional paid-in-capital 4,572,003 3,688,973
Retained deficit (1,226,593) (601,317)
Accumulated other comprehensive income 1,458 (30,677)
--------------------------
Total Stockholders' Equity 3,348,322 3,058,278
--------------------------
--------------------------
Total Liabilities and Stockholders' Equity $ 3,483,127 $ 4,016,180
==========================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
52
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
September 30, September 30,
1999 1998 1999 1998
----------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $ 182,015 $ 77,345 $ 125,435 $ 47,115
Cost of sales 89,190 80,046 40,347 44,290
----------------------------------------------------
Gross Profit 92,825 (2,701) 85,088 2,825
Selling, general & administrative expenses 703,412 58,269 305,727 44,809
----------------------------------------------------
Loss before provision for taxes on income (610,587) (60,970) (220,639) (41,984)
Unrealized loss on marketable securities (23,998) -- 1,458 --
Interest income 9,309 -- 3,471 --
----------------------------------------------------
Net loss ($625,276) ($60,970) ($215,710) ($41,984)
====================================================
----------------------------------------------------
Basic and diluted loss per common share ($ 0.05) N/A ($ 0.02) N/A
====================================================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
53
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months
Ended Sept 30,
Cash flows from operating activities: 1999 1998
------------------------
<S> <C> <C>
Net loss ($625,276) ($ 60,970)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 8,473 1,524
Amortization 107,887 2,419
Marketable securities received (70,313) --
Unrealized gains from marketable securities 1,458 --
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable 47,930 10,742
Security deposits -- (1,000)
Collections receivable 95,738
Decrease (increase) in:
Accounts payable 23,097 17,028
------------------------
Net cash used in operating activities (411,006) (30,257)
------------------------
Cash flows from investing activities:
Loans receivable (409,839) (10,000)
Purchases of marketable securities (117,888) --
Repayment of loans -- 100,000
Proceeds from sales of marketable securities 103,379 --
Purchases of property and equipment (25,830) (13,456)
------------------------
Net cash used in investing activities (450,178) 76,544
------------------------
Cash flows from financing activities:
Net proceeds from issuance of stock -- --
------------------------
Net cash provided by financing activities 0 0
------------------------
Net increase in cash and cash equivalents (861,184) 46,287
Cash and cash equivalents, beginning of period 953,490 --
------------------------
Cash and cash equivalents, end of period $ 92,306 $ 46,287
========================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
54
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (all of which were normal recurring
adjustments) necessary to present fairly the consolidated financial position of
MaxPlanet, Corp. ("the Company") at September 30, 1999 and March 31, 1999, and
the results of its operations, its cash flows and comprehensive income for the
three month interim period presented.
The accounting policies followed by the Company are set forth in Note 2 to the
Company's consolidated financial statements for the year ended March 31, 1999.
NOTE 2
The results of operations for the six months ended September 30, 1999 are not
necessarily indicative of the results to be expected for the full year.
NOTE 3
During the six months ended September 30, 1999 and 1998 the Company operated
principally in two industry segments - Internet Development and Furniture sales.
The accounting policies used to develop segment information correspond to those
described in the summary of significant accounting policies (See note 2 of the
March 31, 1999 financial statements). Segment profit or loss is based on profit
or loss from operations before the provision for benefit for income taxes. The
reportable segments are distinct business units operating in different
industries and are separately managed. The following information about the
business segments are for the six-month period ended September 30, 1999.
- --------------------------------------------------------------------------------
Internet Furniture Total
development sales
- --------------------------------------------------------------------------------
Income $ 132,118 $ 49,897 $ 182,015
- --------------------------------------------------------------------------------
Cost of Goods Sold 51,151 38,039 89,190
- --------------------------------------------------------------------------------
Gross Profit 80,967 11,858 92,825
- --------------------------------------------------------------------------------
Expenses 690,703 12,709 703,412
- --------------------------------------------------------------------------------
Other Loss (14,689) 0 (14,689)
- --------------------------------------------------------------------------------
Net Loss $(624,426) $ (850) $(625,276)
- --------------------------------------------------------------------------------
55
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FORWARD LOOKING STATEMENTS
Statements about the Company's future expectations and all other statements in
this document other than historical facts are "forward-looking statements"
within the meaning of Section 27A of the Securities Exchange Act of 1933,
Section 21E of the Securities Exchange Act of 1934, and as that term is defined
in the Private Securities Litigation Reform Act of 1995. The Company intends
that such forward-looking statements involve risks and uncertainties and are
subject to change at any time, and the Company's actual results could therefore
differ materially from expected or inferred results.
56
State of Delaware
Office of the Secretary of State
--------------------------------
PAGE 1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY "MAXNET, INC." IS DULY INCORPORATED UNDER THE LAWS OF THE STATE OF
DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE EXISTENCE SO FAR AS
THE RECORDS OF THIS OFFICE SHOW, AS OF THE TWELFTH DAY OF JULY, A.D. 1999.
AND I DO HEREBY FURTHER CERTIFY THAT THE SAID "MAXNET, INC." WAS
INCORPORATED ON THE TWENTY-SIXTH DAY OF OCTOBER, A.D. 1982.
AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES HAVE BEEN PAID TO
DATE.
AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL REPORTS HAVE BEEN FILED TO
DATE.
AND I DO HEREBY FURTHER CERTIFY THAT THE EFFECTIVE DATE OF THE AFORESAID
IS THE TWELFTH DAY OF JULY, A.D. 1999.
/s/ Edward J. Freel
----------------------------------------
Edward J. Freel, Secretary of State
0946981 8300 [SEAL] AUTHENTICATION: 9858075
991282919 DATE: 07-12-99
<PAGE>
State of Delaware
Office of the Secretary of State
PAGE 1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "MAXNET, INC.", CHANGING ITS NAME FROM "MAXNET, INC." TO "MAXPLANET CORP.",
FILED IN THIS OFFICE ON THE TWENTY-SEVENTH DAY OF JULY, A.D. 1999, AT 9 O'CLOCK
A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/s/ Edward J. Freel
----------------------------------------
Edward J. Freel, Secretary of State
0946981 8100 [SEAL] AUTHENTICATION: 9892365
991309935 DATE: 07-29-99
BYLAWS
OF
MAXPLANET, CORP.
(a Delaware corporation)
------------------------
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTTNG STOCK. Certificates representing stock
in the corporation shall be signed by, or in the name of, the corporation by the
Chairperson or Vice-Chairperson of the Board of Directors, if any, or by the
President or a Vice-President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if such person were such officer, transfer
agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or
uncertificated shares in place of any certificate theretofore issued by it,
alleged to have been lost, stolen, or destroyed, and the Board of Directors may
require the owner of the lost, stolen, or destroyed certificate, or such owner's
legal representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the
General Corporation Law, the Board of Directors of the corporation may provide
by resolution or resolutions that some or all of any or all classes or series of
the stock of the corporation shall be uncertificated shares. Within a reasonable
time after the issuance or transfer of any
<PAGE>
uncertificated shares, the corporation shall send to the registered owner
thereof any written notice prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by the registered holder's attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary of the corporation or with a transfer
agent or a registrar, if any, and, in the case of shares represented by
certificates, on surrender of the certificate or certificates for such shares of
stock properly endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the Board of Directors may fix
a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
<PAGE>
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining the stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
the General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right
to notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more than
one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder; provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares of
stock of any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation, except as any provision of law
may otherwise require.
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the directors, provided, that the first annual
meeting shall be held on a date
<PAGE>
within thirteen months after the organization of the corporation, and each
successive annual meeting shall be held on a date within thirteen months after
the date of the preceding annual meeting. A special meeting shall be held on the
date and at the time fixed by the directors.
- PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the directors may, from time
to time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Delaware.
- CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall
be given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or purposes for which
the meeting is called. The notice of any meeting shall also include, or be
accompanied by, any additional statements, information, or documents prescribed
by the General Corporation Law. Except as otherwise provided by the General
Corporation Law, a copy of the notice of any meeting shall be given, personally
or by mail, not less than ten days nor more than sixty days before the date of
the meeting, unless the lapse of the prescribed period of time shall have been
waived, and directed to each stockholder at such stockholder's record address or
at such other address which such stockholder may have furnished by request in
writing to the Secretary of the corporation. Notice by mail shall be deemed to
be given when deposited, with postage thereon prepaid, in the United States
Mail. If a meeting is adjourned to another time, not more than thirty days
hence, and/or to another place, and if an announcement of the adjourned time
and/or place is made at the meeting, it shall not be necessary to give notice of
the adjourned meeting unless the directors, after adjournment, fix a new record
date for the adjourned meeting. Notice need not be given to any stockholder who
submits a written waiver of notice signed by such stockholder before or after
the time stated therein. Attendance of a stockholder at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall
<PAGE>
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city or other municipality or
community where the meeting is to be held, which place shall be specified in the
notice of the meeting, or if not so specified, at the place where the meeting is
to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. The stock ledger shall be the only evidence as to
who are the stockholders entitled to examine the stock ledger, the list required
by this section or the books of the corporation, or to vote at any meeting of
stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting - the Chairperson of the Board, if any, the Vice-Chairperson of the
Board, if any, the President, a Vice-President, or, if none of the foregoing is
in office and present and acting, by a chairperson to be chosen by the
stockholders. The Secretary of the corporation, or in such Secretary's absence,
an Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present the chairperson of the
meeting shall appoint a secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for such stockholder by proxy in all matters in which a
stockholder is entitled to participate, whether by waiving notice of any
meeting, voting or participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the stockholder or by such
stockholder's attorney-in-fact. No proxy shall be voted or acted upon after
three years from its date unless such proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and, if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally.
- INSPECTORS. The directors, in advance of any meeting, may, but
need not, appoint one or more inspectors of election to act at the meeting or
any adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by the directors in
advance of the meeting or at the meeting by the person presiding thereat. Each
inspector, if any, before entering upon the discharge of duties of inspector,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of such
inspector's ability. The inspectors, if any, shall determine the number of
shares of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots, or consents, hear and determine
all challenges and questions arising in connection with the right to vote, count
and tabulate all votes, ballots, or consents, determine the result, and do such
acts as are proper to conduct the election or vote with fairness to all
stockholders. On request of the
<PAGE>
person presiding at the meeting, the inspector or inspectors, if any, shall make
a report in writing of any challenge, question, or matter determined by such
inspector or inspectors and execute a certificate of any fact found by such
inspector or inspectors. Except as may otherwise be required by subsection (e)
of Section 231 of the General Corporation Law, the provisions of that Section
shall not apply to the corporation.
- QUORUM. The holders of a majority of the outstanding shares of
stock shall constitute a quorum at a meeting of stockholders for the transaction
of any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
- VOTING. Each share of stock shall entitle the holder thereof to
one vote. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors. Any other action shall be authorized by a majority of
the votes cast except where the General Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power, and except as
may be otherwise prescribed by the provisions of the certificate of
incorporation and these Bylaws. In the election of directors, and for any other
action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Except as any provision of
the General Corporation Law may otherwise require, any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. Action taken pursuant to this paragraph shall be
subject to the provisions of Section 228 of the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed by or under the direction of the Board of Directors
of the corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder,
a citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of persons. Thereafter the number of
directors constituting the whole board shall be at least one. Subject to the
foregoing limitation and except for the first Board of
<PAGE>
Directors, such number maybe fixed from time to time by action of the
stockholders or of the directors, or, if the number is not fixed, the number
shall be . The number of directors may be increased or decreased by
action of the stockholders or of the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the
members thereof shall have been named in the certificate of incorporation, shall
be elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
are elected and qualified or until their earlier resignation or removal. Except
as the General Corporation Law may otherwise require, in the interim between
annual meetings of stockholders or of special meetings of stockholders called
for the election of directors and/or for the removal of one or more directors
and for the filling of any vacancy in that connection, newly created
directorships and any vacancies in the Board of Directors, including unfilled
vacancies resulting from the removal of directors for cause or without cause,
may be filled by the vote of a majority of the remaining directors then in
office, although less than a quorum, or by the sole remaining director.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairperson of the Board, if any, the Vice-Chairperson of the
Board, if any, of the President, or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be given
for special meetings in sufficient time for the convenient assembly of the
directors thereat. Notice need not be given to any director or to any member of
a committee of directors who submits a written waiver of notice signed by such
director or member before or after the time stated therein. Attendance of any
such person at a meeting shall constitute a waiver of notice of such meeting,
except when such person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to
<PAGE>
be transacted at, nor the purpose of, any regular or special meeting of the
directors need be specified in any written waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall constitute
a quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board. A majority
of the directors present, whether or not a quorum is present, may adjourn a
meeting to another time and place. Except as herein otherwise provided, and
except as otherwise provided by the General Corporation Law, the vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board. The quorum and voting provisions herein stated
shall not be construed as conflicting with any provisions of the General
Corporation Law and these Bylaws which govern a meeting of directors held to
fill vacancies and newly created directorships in the Board or action of
disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
- CHAIRPERSON OF THE MEETING. The Chairperson of the Board, if any
and if present and acting, shall preside at all meetings. Otherwise, the
Vice-Chairperson of the Board, if any and if present and acting, or the
President, if present and acting, or any other director chosen by the Board,
shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the
General Corporation Law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of any member of
any such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not such member or members
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board, shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the corporation with
the exception of any power or authority the delegation of which is prohibited by
Section 141 of the General Corporation Law, and may authorize the seal of the
corporation to be affixed to all papers which may require it.
<PAGE>
7. WRITTEN ACTION. Any action required or permitted to be taken at
any meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a
Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by the
Board of Directors, a Chairperson of the Board, a Vice-Chairperson of the Board,
an Executive Vice-President, one or more other Vice-Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
with such titles as the resolution of the Board of Directors choosing them shall
designate. Except as may otherwise be provided in the resolution of the Board of
Directors choosing such officer, no officer other than the Chairperson or
Vice-Chairperson of the Board, if any, need be a director. Any number of offices
may be held by the same person, as the directors may determine.
Unless otherwise provided in the resolution choosing such officer,
each officer shall be chosen for a term which shall continue until the meeting
of the Board of Directors following the next annual meeting of stockholders and
until such officer's successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and
perform such duties in the management and operation of the corporation as shall
be prescribed in the resolutions of the Board of Directors designating and
choosing such officers and prescribing their authority and duties, and shall
have such additional authority and duties as are incident to their office except
to the extent that such resolutions may be inconsistent therewith. The Secretary
or an Assistant Secretary of the corporation shall record all of the proceedings
of all meetings and actions in writing of stockholders, directors, and
committees of directors, and shall exercise such additional authority and
perform such additional duties as the Board shall assign to such Secretary or
Assistant Secretary. Any officer may be removed, with or without cause, by the
Board of Directors. Any vacancy in any office may be filled by the Board of
Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors
shall prescribe.
ARTICLE V
FISCAL YEAR
<PAGE>
The fiscal year of the corporation shall be fixed, and shall be
subject to change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and
the provisions of the General Corporation Law, the power to amend, alter, or
repeal these Bylaws and to adopt new Bylaws may be exercised by the Board of
Directors or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true, and correct
copy of the Bylaws of MAXPLANET, CORP., a Delaware corporation, as in effect
on the date hereof.
Dated: 7/27/99
/s/ Israel Goldreich
----------------------------------------
Israel Goldreich
Secretary of MaxPlanet, Corp.
(SEAL)
<PAGE>
[LETTERHEAD OF MAXPLANET, CORPORATION]
In accordance with Section 12 of the Securities Exchange act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereto duly authorized.
MaxPlanet, Corp.
----------------
Registrant
Date November 19, 1999
------------------------------
By /s/ Henry Val
---------------------------------
Henry Val, CEO and Chairman of the Board
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