U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 31, 1999.
MaxPlanet, Corp.
(Exact name of registrant as specified in its charter)
Delaware 31-1478761
State or other (IRS Employer Id. No.)
jurisdiction of Incorporation)
4400 US Highway Route 9 South
Suite 2800
Freehold, New Jersey 07728
Address of Principal Office) Zip Code
Issuer's telephone number: (732) 625-0770
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
The number of shares outstanding of the registrant's Common Stock, $.0001 par
value, as of January 28, 2000 is 14,538,421 shares.
1
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
Dec. 31 March 31
1999 1999
--------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 33,562 $ 953,490
Accounts receivable 32,544 85,332
Marketable securities, at market value 201,027 89,582
Collections receivable, net 180,000 --
Inventory - Precious Stones 24,183 24,183
- Furniture 148,530 163,932
--------------------------
Total Current Assets 619,846 1,316,519
Fixed assets, net of accumulated depreciation 363,780 70,214
Other Noncurrent Assets
Intangible property, net of accumulated amortization 860,744 1,004,704
Collections receivable, net 551,396 875,000
Goodwill, net of accumulated amortization 321,160 339,239
Loans & notes receivable 471,568 342,550
Software development, net of accumulated amortization 44,770 54,924
Security deposit 12,530 13,030
--------------------------
Total Assets $ 3,245,794 $ 4,016,180
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 73,315 $ 57,902
Loan payable -- 100,000
Note payable (See note) -- 800,000
--------------------------
Total liabilities 73,315 957,902
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 (1,485,732) (601,317)
Accumulated other comprehensive income 84,754 (30,677)
--------------------------
Total Stockholders' Equity 3,172,479 3,058,278
--------------------------
--------------------------
Total Liabilities and Stockholders' Equity $ 3,245,794 $ 4,016,180
==========================
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
2
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
December 31, December 31,
1999 1998 1999 1998
--------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $ 266,126 $ 141,729 $ 84,111 $ 64,384
Cost of sales 156,444 100,069 67,254 20,023
--------------------------------------------------------
Gross Profit 109,682 41,660 16,857 44,361
Selling, general & administrative expenses 1,038,339 215,367 334,927 157,098
--------------------------------------------------------
Loss before provision for taxes on income (928,657) (173,707) (318,070) (112,737)
Realized loss on sale of marketable securities (40,538) -- (40,538) --
Unrealized loss on marketable securities 59,298 -- 83,296 --
Interest and dividend income 34,156 5,376 24,847 5,376
Interest expense (5,264) -- (5,264) --
Provision for taxes on income (3,410) (930) (3,410) (930)
--------------------------------------------------------
Net loss ($884,415) ($169,261) ($259,139) ($108,291)
========================================================
--------------------------------------------------------
Basic and diluted loss per common share ($0.06) ($0.02) ($0.02) ($0.01)
========================================================
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
3
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months
Ended Dec 31,
1999 1998
----------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($884,415) ($169,261)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 14,720 3,225
Amortization 184,614 33,388
Marketable securities received (70,313) --
Unrealized gains from marketable securities 59,298 --
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable 52,788 (10,794)
Inventory 15,402
Security deposits 500 (1,000)
Collections receivable 259,756 --
Decrease (increase) in:
Accounts payable (15,413) (16,553)
----------------------
Net cash used in operating activities (383,063) (160,995)
----------------------
Cash flows from investing activities:
Loans receivable (129,018) (174,015)
Purchases of marketable securities (230,981) --
Additions to intangible assets (68,887) --
Repayment of loans -- 100,000
Proceeds from sales of marketable securities 197,651 --
Purchases of property and equipment (305,630) (36,394)
----------------------
Net cash used in investing activities (536,865) (110,409)
----------------------
Cash flows from financing activities:
Net proceeds from issuance of stock -- 350,000
----------------------
Net cash provided by financing activities 0 350,000
----------------------
Net increase in cash and cash equivalents (919,928) 78,596
Cash and cash equivalents, beginning of period 953,490 --
----------------------
Cash and cash equivalents, end of period $ 33,562 $ 78,596
======================
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
4
<PAGE>
MAXPLANET, CORP. AND SUBSIDIARIES
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, 1998 9,060,921 $906 $970,781 ($284,497) $0
Net loss (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)
Net loss (409,566)
Issuance of common shares (stock sales and acquisitions) 950,000 95 72,164
Change in unrealized losses on marketable securities 5,221
-----------------------------------------------------------------
Balance on June 30, 1999 13,938,421 1,394 3,761,137 (1,010,883) (25,456)
Net loss (215,710)
Issuance of common shares (stock sales and acquisitions) 600,000 60 810,866
Change in unrealized losses on marketable securities 26,914
-----------------------------------------------------------------
Balance on September 30, 1999 14,538,421 1,454 4,572,003 (1,226,593) 1,458
Net loss (259,139)
Change in unrealized losses on marketable securities 83,296
-----------------------------------------------------------------
Balance on December 31, 1999 14,538,421 $1,454 $4,572,003 ($1,485,732) $84,754
=================================================================
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
5
<PAGE>
MaxPlanet, Corp.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - STATEMENT OF INFORMATION FURNISHED
The accompanying unaudited consolidated financial statements of Maxplanet, Corp.
and Subsidiaries (the "Company") have been prepared in accordance with Form
10-QSB instructions and in the opinion of management contain all adjustments
(consisting of only normal recurring accruals) necessary to present fairly the
financial position as of December 31, 1999, the results of operations for the
nine and three month periods ended December 31, 1999 and cash flows for the nine
months ended December 31, 1999 and 1998. These results have been determined on
the basis of generally accepted accounting principles and practices applied
consistently with those used in the preparation of the Company's audited
financial statements at March 31, 1999.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that the accompanying unaudited
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Company's
audited financial statements at March 31, 1999 submitted on November 19,1999 in
the Company's filing of its Form 10SB12G.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. MaxPlanet, Corp. (the "Company") was incorporated under the laws of the State
of Delaware on October 26, 1982. Its corporate office is located at 4400 US
Highway Route 9 South Suite 2800 Freehold, New Jersey 07728. As of December 31,
1999, it has full - time employees and owns real property in Miami, Florida. The
Company intends to continue to seek to acquire, merge and or joint venture with
one or more existing businesses which have existing management, through merger
or acquisition, that may have potential for profit, and to that end, intends to
acquire properties or businesses, or a controlling interest therein. Management
of the Company will have virtually unlimited discretion in determining the
business activities in which the Company might engage. The Company currently
owns property and has interests in businesses. Moreover, it has identified
properties or business opportunities that it shall seek to expand and intend to
operate.
B. Principles of Consolidation
The consolidated financial statements include the Company's wholly owned
subsidiaries. All inter-company transactions have been eliminated in
consolidation.
C. Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required 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.
D. Revenue Recognition
The Company recognizes revenue and the related costs on product sales when
products are shipped.
E. 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.
F. Inventories
Inventories are stated at the lower of cost or market, with cost determined on a
first-in, first-out basis.
6
<PAGE>
G. 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 40 years.
H. 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.
I. Software Development Costs
Software development costs are capitalized in accordance with Statement of
Financial Accounting Standards (SFAS) No. 86. As of December 31, 1999,
capitalized software development costs, net of amortization were $44,770. 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.
J. 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
2000 to 2010.
K. Earnings Per Share
The Company had stock options outstanding as of December 31, 1999 and March 31,
1999, as contained in the Company's Form 10SB12G filed on November 19, 1999.
Therefore the basic and diluted shares outstanding (13,914,094 and 9,657,035)
are the same amount in relation to the computations pursuant to SFAS No. 128,
"Earnings Per Share."
L. 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.
7
<PAGE>
2. STOCKHOLDERS' EQUITY
The Company is authorized to issue up to 10,000,000 shares of its no par value
preferred stock. The preferred stock may be issued in series, from time to time
with such designation, rights, preferences and limitations as the Board of
Directors may determine by resolution. As of December 31, 1999, no shares of
preferred stock were issued or outstanding.
As of December 31, 1999, 14,538,421 shares of the Company's no par value common
stock had been issued and are outstanding.
3. RELATED PARTY TRANSACTIONS
The Company's directors and officers are also principal shareholders.
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
the Company should be read in conjunction with the consolidated financial
statements and notes thereto. The results of operations for the nine months
ended December 31, 1999 are not necessarily indicative of the results for the
entire fiscal year ending March 31, 2000.
Total Operating Revenues were $266,126 for the nine months ended December 31,
1999, as compared to $141,729 for the nine months ended December 31, 1998. The
increase from 1998 to 1999 of $124,397, or 88%, is due to the inclusion of the
revenues from Valentino Salotti, which, was acquired in May 1998, and the
increase in advertising revenues derived from the company's Internet site
MaxPlanet.com and its affiliate Internet sites. Revenues for the three months
ended December 31, 1999 totaled $84,111 versus $64,384 for the three months
ended December 31, 1998. The increase was principally due to an increase in the
revenues from Internet services.
Cost of Sales increased to $156,444 for the nine months ended December 31, 1999,
from $67,254 for the comparative period in the previous year. The increase of
$89,190 or 132% is due to the inclusion of cost of sales of Valentino Salotti,
which was acquired in May 1998. Cost of goods sold for the three months ended
December 31, 1999 were $100,069 versus $20,023 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 $703,412 for the nine
months ended December 31, 1999 over 1998. This increase is attributable to the
inclusion of Valentino Salotti and an increase in the following items including
payroll, payroll taxes, amortization, depreciation, rent and certain other
administrative expenses. Expenses increased by $58,269 in the three month period
ended December 31, 1999 versus the same period in the prior year. This increase
was principally due to an increase in payroll, and associated taxes,
amortization of goodwill and intangible property, depreciation, and other
administrative expenses.
Other income and expenses increased by $42,865 in 1999 over 1998. This amount
included a unrealized gain of $59,286 on sales of marketable securities and an
increase of $28,780 of interest income offset by a decrease of $40,538 of
realized gains on marketable securities. Other income increased by $54,485 for
the three months ended December 31, 1999 versus the three month period ended
December 31, 1998. This increase is due to an increase in unrealized gains on
marketable securities and an increase in interest income partially offset by a
decrease in realized losses on sales of marketable securities.
LIQUIDITY AND CAPITAL RESOURCES
Our capital requirements have historically exceeded our cash flow from
operations as we have been building our business. As a result, we have depended
upon sales of our common stock and borrowings from third parties to finance our
working capital requirements.
Cash and cash equivalents, and marketable securities decreased by $808,483 to
$234,589 at December 31, 1999 from $1,043,072 at March 31, 1999. This decrease
is
8
<PAGE>
due to operating expenses and additional investments that the Company made
during the nine months ended December 31, 1999.
In May 1998, the company acquired Valentino Salotti, Inc. for 500,000 shares of
common stock and $50,000 of working capital.
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 Internet Domain Names from Intrasoft, Ltd. The
shareholders of Intrasoft, Ltd., received $70,000.
On June 16, 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, the Company 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 operating capital.
In February of 1999, the Company acquired Trident Recovery Systems, Inc. for
500,000 shares of common stock.
In March of 1999 the Company acquired Ultra Web, Inc., the domain name
www.Telephonebook.net and certain Internet related assets. The shareholders of
Ultra Web, Inc. received 100,000 shares of common stock and $1.00.
The Company has commitments under a lease covering its facilities in New Jersey.
The minimum amount of these lease payments are approximately $51,000 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 purchased its
development facility in Miami, Florida on October 19, 1999.
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.
The Company has no other significant commitments. It may be necessary for the
Company to raise additional capital in the future to meet its future and
projected financial needs.
Irrespective of whether the Company's cash assets prove to be inadequate to meet
the Company's operational needs, the Company might seek to compensate providers
of services by issuance of stock in lieu of cash.
Statements about the Company's future expectations and all other statements in
this quarterly report other than historical facts are "forward-looking
statements" within the meaning of Section 27A of the Securities 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 are subject to the safe harbor created
thereby. Since these statements involve risks and uncertainties and are subject
to change at any time, the Company's actual results could differ materially from
expected or inferred results.
9
<PAGE>
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBIT 27 - FINANCIAL DATA SCHEDULE
(b) There have been no reports on Form 8-K for the quarter ending
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MAXPLANET, CORP.
(Registrant)
Date:
By /s/ Henry Val
---------------------------------
Henry Val, CEO and Chairman of the Board
10
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> DEC-31-1999
<CASH> 33562
<SECURITIES> 201027
<RECEIVABLES> 242544
<ALLOWANCES> 30000
<INVENTORY> 172713
<CURRENT-ASSETS> 619846
<PP&E> 383007
<DEPRECIATION> 19227
<TOTAL-ASSETS> 3245794
<CURRENT-LIABILITIES> 73315
<BONDS> 0
0
0
<COMMON> 1454
<OTHER-SE> 3171025
<TOTAL-LIABILITY-AND-EQUITY> 3245794
<SALES> 266126
<TOTAL-REVENUES> 266126
<CGS> 156444
<TOTAL-COSTS> 1038339
<OTHER-EXPENSES> 40538
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5264
<INCOME-PRETAX> (881005)
<INCOME-TAX> 3410
<INCOME-CONTINUING> (884415)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> (884415)
<EPS-BASIC> (.06)
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</TABLE>
