U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
AMENDMENT NO. 1 to
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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PHYLLIS MAXWELL'S GROUPS, INC.
(Name of Small Business Issuer in Its Charter)
<TABLE>
<S> <C> <C>
New York 7990 13-3526402
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code) Identification Number)
</TABLE>
SUITE 1807 - 1501 BROADWAY
NEW YORK, NY 10036 (212) 768-2990
(Address, Including Zip Code, and Telephone Number, including Area Code,
of Registrant's Executive Offices)
PHYLLIS MAXWELL
C/O PHYLLIS MAXWELL'S GROUPS, INC.
SUITE 1807 - 1501 BROADWAY
NEW YORK, NY 10036 (212) 768-2990
(Name, Address, Including Zip Code, and Telephone Number, including Area Code,
of Agent for Service)
Copies of all correspondence to:
JOSEPH SIERCHIO, ESQ.
SIERCHIO & COMPANY, LLP
150 EAST 58TH STREET
NEW YORK, NEW YORK 10155
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APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this registration statement becomes effective.
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If this Form is filed to register additional securities for an offering pursuant
to Rule 426(b) under the Securities Act of 1933, check the following box and
list the Securities Act Registration Statement number of the earlier effective
Registration Statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, check the following box and list the Securities Act
Registration Statement number of the earlier Registration Statement for the same
offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act of 1933, check the following box and list the Securities Act
Registration Statement number of the earlier Registration Statement for the same
offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title Of Each Class Of Number of Shares Proposed Maximum Proposed Maximum Amount of
Securities To Be Registered To Be Registered Offering Price Aggregate Offering Registration
Per Share Price Fee
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<S> <C> <C> <C> <C>
Common Stock, $.0001 par 1,000,000 $0.05 (1) 50,000 $13.20
value
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</TABLE>
(1) Calculated in accordance with Rule 457(o) under the Securities Act of 1933.
<PAGE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(a), MAY DETERMINE.
2
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities, and it is not soliciting an offer to buy these
securities, in any state where the offer or sale is not permitted.
PHYLLIS MAXWELL'S GROUPS, INC.
1,000,000 SHARES
COMMON STOCK
--------------------------
The minimum number of shares that an investor may purchase is 1000. There
is no trading market for our common stock; it is not listed on any national
securities exchange, the Nasdaq stock market, or the over the counter market.
We are offering the shares directly on an all or none, best-efforts basis.
The offering will end on ________,2001, a date which is 90 days from the date of
this prospectus unless it is terminated by us on such earlier date as we may
deem appropriate or if extended by us for an additional 30 days to ____, 2001,
in our sole discretion and without notice. All funds received from the
subscribers will be held in escrow in an interest bearing account. If all shares
offered are not sold by _____________________, 2001, the offering will terminate
and all funds received from the subscribers will be returned promptly. Each of
our officers and directors or affiliated persons or related parties may, but are
not obligated to, purchase up to 100,000 shares on the same terms and conditions
as all other investors. The shares purchased by our officers and directors or
affiliated persons or related parties may be purchased for investment and not
for resale and will be included in determining whether the minimum offering
criteria has been satisfied.
--------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF
RISKS TO CONSIDER BEFORE PURCHASING OUR COMMON STOCK.
--------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
<TABLE>
<CAPTION>
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Price to the Public(1) Maximum Commissions(1) Proceeds to the
Company
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<S> <C> <C> <C>
Per Share $0.05 -0- $50,000.00
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Total 1,000,000 Shares $50,000.00 -0- $50,000.00
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</TABLE>
(1) We are offering the shares directly on an all or none best efforts basis.
The date of this prospectus is ________________, 2000.
3
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TABLE OF CONTENTS
Prospectus Summary............................................................5
Risk Factors..................................................................6
Cautionary Note Regarding Forward-Looking Statements .........................9
Use of Proceeds..............................................................10
Arbitrary Determination of Offering Price....................................11
Dilution.....................................................................11
Plan of Distribution ........................................................12
Selected Financial Data......................................................13
Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................14
Business ....................................................................18
Legal Proceedings............................................................22
Management...................................................................22
Executive Compensation.......................................................22
Principal Shareholders.......................................................23
Description of Capital Stock.................................................24
Limitation of Liability and indemnification matters .........................26
Legal Matters................................................................26
Interest of Named Experts and Counsel........................................26
Experts......................................................................27
Where You Can Find Additional Information....................................27
Index to Financial Statements................................................28
4
<PAGE>
PROSPECTUS SUMMARY
This summary contains significant information about us and the offering.
You should read the entire prospectus, including the section titled "Risk
Factors" and our financial statements and the related notes, before deciding to
invest in our common stock.
Phyllis Maxwell's Groups, Inc.
Our company purchases tickets for Broadway and Off-Broadway productions for
groups of 20 or more in New York. We offer tickets for those productions which
meet certain criteria such as critical acclaim, wide audience appeal and
significant content and entertainment.
We also provide our customers with general information and recommendations
on the various productions and theatre events based upon suitability for each
client, critical reviews and word of mouth.
Our offices are located at 1501 Broadway, New York, New York 10036. Our
telephone number at our corporate offices is (212) 768-2990.
The Offering
Common stock offered by us 1,000,000 shares
Common stock to be outstanding 11,500,000 shares
after this offering
Use of proceeds The proceeds from the sale of the
shares in this offering will be
utilized to substantially expand our
web site, implement new marketing
programs, and for the general
expansion of our business through
greater use of the internet.
Term of Offering 90 days (subject to our right to
extend the offering for an
additional 30 days or to earlier
terminate the offering, all without
notice.)
5
<PAGE>
RISK FACTORS
You should consider carefully the following risks before you decide to buy
our common stock. Our business, financial condition or results of operations
could be materially and adversely affected by any of the following risks.
OUR RECENT REVENUE GROWTH MAY NOT CONTINUE IN THE FUTURE WHICH WOULD MATERIALLY
AND ADVERSELY AFFECT OUR BUSINESS.
There can be no assurance that the revenue growth we have experienced in
recent periods will continue or increase. The prediction of our future results
is difficult and, therefore, our recent revenue growth should not be taken as an
indication of any growth that can be expected in the future.
To the extent that revenues do not grow at anticipated rates, or that we
are unable to secure or retain large contracts similar to those obtained in
prior periods, our business, results of operations and financial condition would
be materially and adversely affected.
OUR ANTICIPATED INCREASE IN SALES WILL BE ADVERSELY AFFECTED IF ACCEPTANCE OF
THE INTERNET DOES NOT OCCUR.
Currently, only a small portion of our customers are solicited by internet.
Our company is listed as a source for group tickets on 5 web sites. Our growth
strategy business is based on the premise that a significant portion of the
theatre-going public will seek to obtain tickets via the Internet. As such, our
success in expanding our business depends upon the widespread acceptance of the
internet as a key source for additional customers. If acceptance of the internet
does not occur, or if it occurs more slowly than expected, our anticipated
increase in sales will be materially and adversely affected or not develop at
all.
INTERNET ACCESS PROBLEMS AND FAILURES COULD ADVERSELY AFFECT OUR BUSINESS AND
FUTURE GROWTH.
We currently solicit only a small portion of our sales via the internet.
Our services are currently listed on 5 web sites and approximately 400 search
engines. Any persistent problems, failures or disruptions on those web sites or
on Internet access provided by third parties in general could materially and
adversely affect our growth strategy.
IT IS UNCLEAR HOW ANY EXISTING AND FUTURE LAWS ENACTED WILL BE APPLIED TO THE
INTERNET INDUSTRY AND WHAT EFFECT THOSE LAWS WILL HAVE ON US AS THE
IMPLEMENTATION OF CERTAIN TYPES OF LAWS MAY HAVE AN ADVERSE AFFECT OF OUR
BUSINESS.
6
<PAGE>
We are seeking to expand our technological capabilities to enable us to
provide our services on the Internet. A number of legislative and regulatory
proposals under consideration by federal, state, local and foreign governmental
organizations may lead to laws or regulations concerning various aspects of the
Internet, including, but not limited to, online content, user privacy, taxation,
access charges, liability for third-party activities and jurisdiction.
Additionally, it is uncertain how existing laws will be applied by the judiciary
to the Internet. The adoption of new laws or the application of existing laws
may decrease the growth in the use of the Internet, which could in turn decrease
our potential growth, and the demand for our services, increase our cost of
doing business or otherwise have a material adverse effect on our business,
results of operations and financial condition.
OUR LONG TERM LIQUIDITY AND CAPITAL RESOURCES ARE UNCERTAIN WHICH MAY ADVERSELY
AFFECT OUR ABILITY TO CONTINUE OUR OPERATIONS IN THE FUTURE.
In the event that our cash reserves are depleted, we may need to seek
additional capital. If we do, there can be no assurance that we will be
successful in raising a sufficient amount of additional capital or in internally
generating a sufficient amount of capital to meet our long term requirements. If
we are unable to generate the required amount of additional capital, our ability
to meet our obligations and to continue our operations may be adversely
affected.
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY AGAINST CURRENT AND FUTURE
COMPETITORS.
We currently compete with at least 17 companies in the New York City area,
who provide similar services to ours. Many of these, such as TDI and the Shubert
and Nederlander Theatres, may have significantly greater financial resources,
name recognition, and technical and marketing resources, and virtually all of
them are seeking to improve their technology, products and services. In addition
to our existing competitors, if we successfully implement our planned expansion
strategy, we will also be competing with such larger companies as Ticket Master
or Telecharge. We can not assure you that we will have the financial resources
or the technological expertise to successfully meet this competition.
SUBSCRIBERS TO THE OFFERING WILL HAVE LITTLE TO NO INFLUENCE ON MATTERS
REQUIRING SHAREHOLDER APPROVAL BECAUSE WE ARE CONTROLLED BY OUR OFFICERS,
DIRECTORS AND ENTITIES AFFILIATED WITH THEM WHO WILL BE ABLE TO CONTROL ALL
MATTERS REQUIRING SHAREHOLDER APPROVAL.
In the aggregate, Phyllis Maxwell, our president, owns 95% of our issued
and outstanding shares of common stock. Mrs. Maxwell will be able to
significantly influence all matters requiring approval by our shareholders,
including the election of directors and the approval of mergers or other
business combinations transactions.
7
<PAGE>
OUR FUTURE PERFORMANCE IS DEPENDENT ON OUR ABILITY TO RETAIN KEY PERSONNEL, THE
LOSS OF WHICH WOULD ADVERSELY AFFECT OUR BUSINESS.
Our performance is substantially dependent on the performance of our senior
management and sales personnel. In particular, our success depends on the
continued efforts of our president, Phyllis Maxwell and our vice president, Mr.
Richard Kelley. Mrs. Maxwell has 22 years of experience and a strong
relationship with box office personnel and customers. Mr. Kelley has thirty
years of experience as a company manager and theatre treasurer and he has an
extensive knowledge of theatre. Both Mrs. Maxwell's and Mr. Kelley's knowledge
of theatre and reputation are sought by clients. The loss of the services of
either of Mrs. Maxwell or Mr. Kelley could have a material adverse effect on our
business, results of operations and financial condition. We do not have
employment agreements in place with our senior management or key employees.
OUR MANAGEMENT IS INEXPERIENCED IN MANAGING A PUBLIC COMPANY.
Our current management has not had any previous experience managing a
public company or a large operating company. There can be no assurance that we
will be able to effectively manage the expansion of our operations, that our
systems, procedures or controls will be adequate to support our operations or
that our management will be able to achieve the rapid execution necessary to
fully exploit the market opportunity for our products and services. Any
inability to manage growth effectively could have a material adverse effect on
our business, results of operations and financial condition.
THE VALUE AND TRANSFERABILITY OF OUR SHARES MAY BE ADVERSELY IMPACTED BY THE
LIMITED TRADING MARKET FOR OUR SHARES AND THE PENNY STOCK RULES.
There is no current trading market for our shares and there can be no
assurance that a trading market will develop, or, if such trading market does
develop, that it will be sustained. To the extent that a market develops for our
shares at all, they will likely appear in what is customarily known at the "pink
sheets" or on the NASD Bulletin Board, which may limit their marketability and
liquidity.
To date, neither we nor anyone acting on our behalf has taken any
affirmative steps to request or encourage any broker/dealer to act as a market
maker for our shares. Further, we have not had any discussions with any market
maker regarding the participation of any market maker in the future trading
market, if any, for our shares. In addition, holders of our common stock may
experience substantial difficulty in selling their securities including as a
result of the "penny stock rules," which restrict the ability of brokers to sell
certain securities of companies whose assets or revenues fall below the
thresholds established by those rules.
8
<PAGE>
FUTURE SALES OF SHARES BY US MAY ADVERSELY IMPACT THE VALUE OF OUR STOCK.
The total amount of shares covered by this prospectus would represent
approximately 10% of the number of our outstanding shares on the date of this
prospectus. If required, we will seek to raise additional capital through the
sale of our common stock. Future sales of shares by us could cause the market
price of our common stock to decline.
THE OFFERING PRICE OF OUR SHARES WAS ARBITRARILY DETERMINED BY US AND THUS, IS
NOT AN INDICATION OF THE STOCK'S VALUATION.
Prior to this offering, there has been no public trading market for our
shares. The initial public offering price of our shares has been arbitrary
determined by us and does not bear any relationship to established valuation
criteria such as assets, book value or prospective earnings. Among the factors
considered by us were the proceeds to be raised by the offering, the lack of
trading market, the amount of capital to be contributed by the public in
proportion to the amount of stock to be retained by present stockholders and our
relative requirements.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains statements that plan for or anticipate the future,
called "forward-looking statements." In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"could," "expects," "plans," "intends," "anticipates," "believes," "estimates,"
"predicts," "potential" or "continue" or the negative of such terms and other
comparable terminology.
These forward-looking statements include statements about:
o our market opportunity;
o our strategies;
o competition;
o expected activities and expenditures as we pursue our business plan;
and
o the adequacy of our available cash resources.
These statements appear in a number of places in this report and include
statements regarding our intent, belief or current expectations, those of our
directors or officers with respect to, among other things: (i) trends affecting
our financial condition or results of operations, (ii) our business and growth
strategies, (iii) the Internet and Internet commerce and (iv) our financing
plans. Although we believe that the expectations reflected in the
forward-looking statement are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements.
9
<PAGE>
The Private Securities Litigation Reform Act of 1995, which provides a
"safe harbor" for similar statements by existing public companies, does not
apply to our offering.
The accompanying information contained in this prospectus, including the
information discussed under the headings "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
"Business" identify important factors that could adversely affect actual results
and performance. All forward-looking statements attributable to us are expressly
qualified in their entirety by the foregoing cautionary statement.
USE OF PROCEEDS
The shares are being offered directly by us on a best-efforts, all or none
basis. The shares will be sold on a first come-first serve basis. Unless all
1,000,000 shares are sold by ____________________, 2001 (which is 90 days of the
date of this Prospectus, which period may be extended for an additional 30 days
in our sole discretion), the offering will terminate and all of the funds
received from subscribers by the date on which the offering is terminated will
be promptly returned (along with any interest earned on their funds). The
proceeds of the offering will be held in escrow until the earlier of the date on
which (i) all 1,000,000 shares are sold or (ii) the offering is terminated.
Therefore, in the event that all 1,000,000 shares are not sold, prospective
investors funds may be held in escrow for as long as 120 days before they are
returned by the escrow agent.
If the 1,000,000 shares offered are sold, the gross proceeds of this
offering will be $50,000 and the net proceeds will be $50,000. We expect
expenses of the offering, including, but not limited to, accounting fees and
legal fees, to be approximately $19,000. Such expenses will be paid from our
working capital. In addition, a legal fee was paid through the issuance of
400,000 shares of our common stock, giving effect to a subsequent stock split of
100,000 to 1 on September 22, 2000, at a value of $4,000.
The proceeds will be utilized for the payment of expenses incurred by us in
creating and operating a web site and for our general expansion. We anticipate
that the costs required to enhance our web site will be approximately $20,000.
In addition, we expect to expend approximately $10,000 for part time employees
for information technology development and the coordination of our expansion.
Additional equipment purchases are estimated to be approximately $5,000. The
balance of the proceeds will be used for working capital reserve.
It may be necessary for us to incur some administrative costs for
preparation and filings of periodic reports with the Securities and Exchange
Commission, the amount of which is not expected to be more than $10,000 through
December 31, 2001. It is expected that these costs would be paid from existing
working capital and cash flow from operations. We expect to keep any proceeds
not utilized for these purposes in a working capital reserve.
Except as described in this prospectus, no portion of the proceeds of the
offering will be paid to officers, directors and/or their affiliates or
associates.
10
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ARBITRARY DETERMINATION OF OFFERING PRICE
There is no trading market for our shares. The initial offering price of
$0.05 per share has been arbitrarily determined by us, and bears no relationship
whatsoever to our assets, earnings, book value or any other objective standard
of value. Among the factors considered by us in determining the initial offering
price were:
* The lack of trading market
* The proceeds to be raised by the offering
* The amount of capital to be contributed by the public in proportion to the
amount of stock to be retained by present stockholders
We have not declared, and do not foresee declaring, any dividends now or
into the foreseeable future.
DILUTION
The difference between the public offering price per share and the pro
forma net tangible book value per share of our Common Stock after this offering
constitutes the dilution to investors in this offering. Net tangible book value
per share is determined by dividing our net tangible book value (total tangible
assets less total liabilities) by the number of outstanding shares of Common
Stock. Dilution arises mainly from the arbitrary decision by a company as to the
offering price per share. Dilution of the value of the shares purchased by the
public in this offering will also be due, in part, to the lower book value of
the shares presently outstanding, and in part, to expenses incurred in
connection with the public offering.
Net tangible book value is the net tangible assets of a company (total
assets less total liabilities and intangible assets; please refer to "Financial
Statements"). At September 30, 2000, we had a net tangible book value of
$128,249 or $.012 per share.
After giving effect to the sale of the 1,000,000 shares being offered at an
initial public offering price of $.05 per share and after deducting estimated
expenses of this offering ($19,000), our adjusted net tangible book value at
September 30, 2000 after the offering would have been $159,249 or $.014 per
share, representing an immediate increase in net tangible book value of $.002
per share to the existing shareholders and an immediate dilution of $.036 or 72%
per share to new investors.
The following table illustrates the above information with respect to
dilution to new investors on a per share basis:
Initial public offering price $.050
Pro forma net tangible book value at September 30, 2000 .012
Increase in pro forma net tangible book value attributed to new investors .002
Adjusted pro forma net tangible book value after offering .014
Dilution to new investors .036
11
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The following table sets forth, on a pro forma basis as of September 30,
2000, with respect to our existing stockholders and new investors, a comparison
of the number of shares of common stock we issued, percentage ownership of those
shares, the total consideration paid, the percentage of consideration paid and
the average per share.
<TABLE>
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Shares Purchased Total Consideration
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Average
Number Percentage Amount Percentage Price per Share
------ ---------- ------ ---------- ---------------
<S> <C> <C> <C> <C> <C>
Existing shareholders 10,500,000 91.3% $28,449 36.3% $.003
New investors 1,000,000 8.7 50,000 63.7 .050
Total 11,500,000 100.0% $78,449 100.0% $.007
</TABLE>
PLAN OF DISTRIBUTION
We offer the right to subscribe for 1,000,000 shares at $0.05 per share.
The minimum number of shares you can purchase is 1,000. We propose to offer the
shares directly on a best efforts, all or none basis. Therefore, all 1,000,000
shares must be sold before the offering can be completed. No compensation is to
be paid to any person for the offer and sale of the shares. Our president and
other Board members, Allen Vershel and Richard Kelley, may distribute
prospectuses related to this offering. We estimate that approximately 200
Prospectuses will be distributed by them. They intend to distribute Prospectuses
to acquaintances, friends and business associates.
Although the Company's president and directors are associated persons as
that term is defined in Rule 3a4-1 under the Exchange Act, they will deemed not
to be a broker for the following reasons:
* They are not subject to a statutory disqualification as that term is
defined in Section 3(a)(39) of the Exchange Act at the time of their
participation in the sale of our securities.
* They will not be compensated for their participation in the sale of the
Company's securities by the payment of commission or other remuneration
based either directly or indirectly on transactions in securities.
* They are not associated persons of a broker or dealers at the time of their
participation in the sale of the Company's securities.
* They meet all of the following conditions:
* The associated persons primarily perform, or are intended primarily to
perform at the end of the offering, substantial duties for or on
behalf of the Company otherwise than in connection with transactions
in securities; and
* The associated person was not a broker or dealer, or an associated
person of a broker or dealer, within the preceding 12 months; and
* The associated person does not participate in selling an offering of
securities for any other issuer more than once every 12 months other
than in reliance on paragraphs (a)(4)(i) or (a)(4)(iii) of Rule 3a4-1
under the Exchange Act.
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As of the date of this prospectus, no broker has been retained by us for
the sale of shares being offered. In the event a broker who may be deemed an
underwriter is retained by us, an amendment to our registration statement will
be filed.
Method of Subscribing
You may subscribe by filling in and signing the subscription agreement and
delivering it, prior to the expiration date, to us. The subscription price of
$0.05 per share must be paid in cash or by check, bank draft or postal express
money order payable in United States dollars to the order of Sierchio & Company,
LLP, as Escrow Agent and delivered to us. We reserve the right to reject any
subscription in whole or in part in our sole discretion for any reason
whatsoever notwithstanding the tender of payment at any time prior to our
acceptance of the subscriptions received.
The funds received from the subscribers will be held by our legal counsel,
Sierchio & Company, LLP, as escrow agent, in an interest bearing account. If all
1,000,000 shares are not sold by ________________________, 2001 (90 days from
the date of this Prospectus, which period may be extended for an additional 30
days by us in our sole discretion), the offering will terminate and all funds
received from subscribers by the date the offering is terminated will be
promptly returned (along with any interest earned on those funds) to the
subscribers.
Expiration Date
This offering will expire on __________________, 2001, 90 days from the
date from the date of this prospectus, unless concluded by us on an earlier date
as we may deem appropriate or extended by us for an additional 30 days in our
sole discretion and without notice.
SELECTED FINANCIAL DATA
Below are summary statements of operations data for the nine months ended
September 30, 2000 and 1999, and the years ended December 31, 1999 and December
31, 1998, and summary balance sheet data as of September 30, 2000 and 1999, and
December 31, 1999 and 1998. This information should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this
prospectus.
13
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<TABLE>
<CAPTION>
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Nine Months Ended Years Ended December 31,
September 30, 1999 1998
2000 1999
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<S> <C> <C> <C> <C>
Commission Revenue $ 167,697 $ 155,764 $ 231,087 $ 157,358
General Administrative
Expense 158,251 105,345 171,973 133,981
Income from Operations 9,446 50,419 59,114 23,377
Net Income 8,849 36,948 42,181 17,368
Retained Earnings 99,800 85,718 90,951 48,770
Earnings Per Share:
Weighted Average Common Shares
Outstanding- Basic and Diluted 10,150,000 10,000,000 10,000,000 10,000,000
Basic & Diluted .001 .004 .004 .002
Total Assets 169,704 145,498 152,985 92,850
Total Liabilities 41,455 36,331 38,585 20,631
Stockholders Equity 128,249 109,167 114,400 72,219
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with the Consolidated Financial
Statements and Notes to those financial statements included elsewhere in this
prospectus. This discussion contains forward-looking statements that involve
risks and uncertainties. Our actual results may differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including but not limited to, those set forth under "Risk Factors" and elsewhere
in this prospectus.
Overview
We are licensed by the City of New York to resell tickets to Broadway and
Off-Broadway theatre performances. Typically, we buy group tickets on behalf of
a customer group (usually a minimum of 20 persons) and our fee is paid, with
limited exceptions by the theatre. These exceptions include Saturday night
tickets, certain holiday periods or if the group falls below 20 persons, in
which case the fee is paid by the customer. On occasion, as a
14
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special service for group customers, for an additional fee, as few as two or
four tickets may be purchased.
Revenue is not recognized by us until the date the invoice is generated.
Generally, our sales and billing process is as follows:
A customer will contact us regarding the availability of theatre tickets.
We will then contact the box office by phone regarding the customer's inquiry.
If the ticket availability is satisfactory to the customer, we will send a
written confirmation to the theatre detailing the show date and number of
tickets needed. Once we receive the signed confirmation back from the theatre,
we send the customer an invoice that details the price of the tickets. The price
is fixed and determinable. Upon our receipt from the customer of the
non-refundable amount due per the invoice, we will immediately remit the funds
to the respective show's box office. At that time, we have completed our work
necessary to earn our fee from the theatre. After the funds are received by the
box office, it sends the tickets to the customer. Our fee is delivered to us by
the theatres after the date of the show's performance. Our fee is 9.45% of the
ticket price.
Box offices tend not to pay commission or give discounted ticket prices for
holiday and weekend performances. If customers wish to purchase tickets for
these periods, we may charge a commission that is, in that case, included in the
invoice amount. As such, in those instances, we receive our commission before
the date of the performance.
During the nine month periods ended September 30, 2000 and 1999 and the
years ended December 31, 1999 and 1998, we did not sustain any losses due to
cancellation of performances. The closing of any one show will not have a
material effect on our revenue stream, since each fee is based on a specific
date of performance. When productions are closing after a long theatre run, they
tend to announce the closing dates well in advance of the last performance.
We have been in operation since April 1988. Prior to 1989, Mrs. Maxwell
operated the same business as a sole proprietorship.
We plan to inaugurate an Internet based marketing program that will enable
American ticket buyers who plan to visit other English speaking countries to buy
their tickets before leaving the United States and make information on these
venues readily available. The plan would also enable global buyers of individual
tickets to purchase their tickets for Broadway and Off-Broadway tickets by the
Internet before leaving for New York. All theatre information is currently on
our web sites for groups. The same information for present and future shows
would be necessary information for theatre goers to plan their visits to New
York.
We are also looking into the possibility of establishing an email ticket
distribution system to be organized between us, one of the ticket sellers (eg.
Ticketmaster or Telecharge) with the cooperation of specific producers of shows
to have discounts and seat availabilities. This plan is in the formative state
and development will not begin until completion of the
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offering. At this point in time, however, we have not initiated any discussions
with ticket sellers or producers.
We are exploring the organization of a hit theatre ticket club for
individual tickets to be sold on a subscription basis that will allow ticket
buyers in the New York area to buy 2 or 4 tickets in advance of the theatre
season. This plan has been successful when sold by New York institutional
theatres, touring companies and specific markets other than New York. This plan
would enable buyers to select three or four shows from different producers
rather than one theatre or one subscription house.
We are currently on five web sites (two of our own and three others where
we are listed as a source for group Broadway ticket sales) and on approximately
400 search engines in the category of Broadway shows/Theatre Group Sales Agency
Entertainment. It is our intention to continue to be listed on every possible
search engine.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
RESULTS OF OPERATIONS
For the nine months ended September 30, 2000, we had a net income of $8,849
as compared to a net income of $36,948 for the nine months ended September 30,
1999. This reduction in net income is attributable to the fact that our
expenses, consisting primarily of general and administrative expenses increased
by 50% from $105,345 for the nine months ended September 30, 1999 to $158,251
for the nine months ended September 30, 2000.
Of the $52,906 increase in our general and administrative expenses for the
nine months ended September 30, 2000, approximately $34,000 can be attributed to
an increase in our overall salary expenses. Several additional part time
employees were hired during the nine months ended September 30, 2000. Our
President's salary during this period was the same as the salary she drew during
the same period in 1999.
In addition, our professional fees, also a part of our general and
administrative expenses, increased by approximately $10,000 in the nine month
period ended September 30, 2000 as compared to the same nine month period in
1999. Of this increase, $5,000 is attributable to the legal and consulting fees
which were paid through the issuance of 500,000 shares (giving effect to a
subsequent stock split). Also, we retained a computer consultant to update and
improve our computer systems. For the nine months ended September 30, 2000, our
employee benefit program expenses increased by approximately $3,500 as compared
to the same period in 1999 due to an increase in health insurance costs.
Our interest income increased by $844 or 38% for the nine month period
ending September 30, 2000 as compared to the period ending September 30, 1999.
This interest was earned on our cash reserves.
Our income taxes were reduced by $12,030 or 77%, from $15,700 for the nine
months ended September 30, 1999 to $3,670 for the nine month period ended
September 30, 2000.
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Our income taxes are based on the prescribed statutory rates based on our income
before taxes for the relevant period.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended September 30, 2000, we had a cash flow from
operating activities of $1,565, compared to a cash flow from operating
activities of $29,615 for the nine months ended September 30, 1999. The
reduction in cash flow for the nine months ended September 30, 2000 of 95%, as
compared to the same nine month period in 1999 is primarily attributable to the
cash paid to suppliers and employees. The additional part time employees hired
during the nine months ended September 30, 2000 were paid a salary as compared
to the nine months ended September 30, 1999, in which we did not incur
equivalent expenses. In addition, a fee was paid to a computer consultant.
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
RESULTS OF OPERATIONS
For the year ended December 31, 1999, we had a net income of $42,181
compared to a net income of $17,368 in 1998, an increase of 142.9%. Although our
operating expenses, consisting primarily of general and administrative expenses,
increased by 28.4% from $133,981 for the year ended December 31, 1998 to
$171,973 for the year ended 1999, our commission revenues increased by 46.9%
from $157,358 for the year ended December 31, 1998 to $231,087 for the year
ended December 31, 1999.
The increase in our general and administrative expenses for the year ended
December 31, 1999 can be attributed to the fact that Mrs. Maxwell, our
President, was paid a salary during this period, as compared to the year ended
December 31, 1998 in which Mrs. Maxwell did not draw a salary.
In the year ended December 31, 1999, we had interest income of $2,454
compared to an interest income of $2,791 in 1998, a decrease of $337 or 12%. The
interest is earned on our cash reserves.
Our income taxes for the year ended December 31, 1999 increased by $10,587
or 120% from $8,800 in 1998 to $19,387. Our income taxes are calculated based on
the prescribed statutory rates based on our income before taxes for the specific
period.
LIQUIDITY AND CAPITAL RESOURCES
We ended 1999 with a cash position of $38,078. We feel that our present
cash flow is sufficient to satisfy our current requirements through the year
ending December 31, 2001. We expect to use the proceeds from this offering to
expand our operations and develop a web site. We anticipate a capital
requirement of approximately $35,000 for our web site production and expansion
consisting of approximately $20,000 for the enhancement of our web site, $10,000
for part time employees and $5,000 for additional equipment purchases. Our
present marketing methods will continue.
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However, we may require significant additional financial resources for
future expansion, especially if the expansion is effected through the
acquisition of related businesses. It is not possible to quantify what amount
may actually be required. If needed, we may seek to obtain the financing through
public or private equity offerings. If we are unable to generate the required
amount of additional capital, our ability to implement our expansion strategies
may be adversely affected. No specific plans exist for a financing at this time.
VARIABLES AND TRENDS
We have been conducting the same type of business activities for over 11
years. Key variables in our industry are caused by the lack of popularity or
attraction of certain productions. However, the demand to see Broadway and
Off-Broadway productions is constant. Successful shows are enjoying a longer run
time (i.e. Cats ran for 18 years and Miss Saigon will have run for 9 years in
December 2000) and more people are going to see theatre.
In addition, there is a current trend of large, well financed companies
such as Disney, SFX, Fox Theatricals and Dadger Theatricals furnishing
productions backed by substantial promotion dollars. In fact, Disney is
currently presenting three productions on Broadway and SFX has produced two
productions with more scheduled in the coming season.
New theatres and the "rebirth" of the Time Square area of New York City as
well as the subsequent tourist increase promise more interest and business in
theatre. All of the influences, changes and product development taking place
including the changes in Times Square, the participation of the business giants
and the promotion of all of live entertainment and the new theatres and
restoration of several elegant historic showplaces can only affect us
positively. Lion King (Disney) has been playing to 101% (standing room) capacity
for 3 years as of November. Cats and Miss Saigon will close after 17 years and
10 years, respectively. The longevity of several of the other shows (i.e. Fosse,
Les Miserables, Phantom of the Opera and Chicago) makes for a solid future for
Broadway and Off-Broadway.
BUSINESS
Overview
We were incorporated under the laws of New York on April 18, 1989.
Neither we nor any of our related companies have ever undergone bankruptcy,
receivership, or similar proceeding.
Our Services
Our company provides services for groups who are interested in attending
New York's Broadway and Off-Broadway productions. We purchase group tickets from
New York City theatres for certain Broadway and Off-Broadway productions for our
clients at box office
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prices. We select those shows from all of the ongoing productions, that meet
certain customer criteria, such as critical appreciation, audience appeal,
significant content and entertainment.
We also provide our customers with information and recommendations on the
various productions and theatre events. We inform our clients of what is
expected in the upcoming seasons, an important service for customers who must
plan ahead, as much as a year in some cases.
Our Current Sources of Revenues
With the exception of Saturday evening or some holiday performance periods,
our clients do not pay a fee for our services. All fees are paid by the
respective theatres from which the tickets are purchased. A group consists of a
minimum of 20 people. If the number in the group falls below 20 people, a fee is
charged to the customer. All fees for 20 or more tickets are paid by the
respective theatres from which the tickets were purchased. We do not maintain an
inventory of tickets. Tickets are purchased only when an order is placed by our
clients.
Our Customers
We have varied types of clients including:
(a) corporations of all sizes who utilize our services as employee incentives
and customer promotions;
(b) tour groups who bring pre-formed groups to New York and include theatre
performances in their program;
(c) schools and universities sponsoring student activities; and
(d) charities running fund raisers.
Our clients are located in all parts of the country with a concentration in
the northeast. Our clients are solicited by telephone, recommendations from our
existing clients and by the internet. We are currently listed on five web sites
(clixtix.com, pmaxtix.com, studentfriendlytravel.com, disneycorporation.com,
fordtheatre.com) as a source for group tickets.
We have a cadre of 2000 customers. However, no one customer accounts for
more than approximately 8% of our sales volume. Volume for customers vary with
seasons, popularity of certain shows or the customers' changing needs or
policies.
We are constantly soliciting new clients and servicing existing ones. We
have kept many clients throughout our 11 years of operation. However,
invariably, attrition of clients occurs due to personnel changes, mergers,
bankruptcy or policy changes at our corporate clients.
Some of our larger customers buy tickets in increments of 100, 200, or
more. Tour companies buy tickets in multiples of bus loads (ie. 47-50 tickets).
Some tour customers buy
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tickets for as many as three or four performances for a group coming to New York
for a three or four day visit. Student groups come to perform with bands or as
singers or choruses and include theatre as part of their entertainment. Some
participants in the Macy's Thanksgiving Day Parade include theatres which we
book. On occasion we have arranged theatre, restaurant and other diversions in
an entertainment package.
Our Competitive Business Conditions
Our business is highly competitive with at least seventeen companies, in
the New York City area, who provide similar services. Some of our largest
competitors are heavily financed and include producers such as Cameron
MacIntosh's TDI, and theatre owner groups sales such as Shubert and Nederlander
Theatres. Despite this extensive competition, over the last five years, we have
not had bookings of less than $1,500,000. We are able to maintain that
competitive position based upon the direct and personal contact between Mrs.
Maxwell and her customers. In addition, we maintain our strong competitive
position by providing our clients with current and regular information on
current and future attractions through a newsletter issued three times a year
and bi weekly faxes.
After 22 years in the group sales industry on Broadway, we believe that
Mrs. Maxwell has built a following and has a strong relationship with box office
personnel. Our relationship with other industry professionals, such as
producers, box office personnel, general managers, company managers and public
relations firms, nurtured over the years, facilitates the services we provide.
We believe that Mrs. Maxwell has built a highly regarded reputation for
quality service and a comprehensive knowledge of the theatre. Her expertise
enables her to offer opinions as to what is appropriate for each client or
group. This type of personalized attention is sought after by our customers to
enable them to sell the appropriate shows, plan into future periods and consult
with knowledgeable theatre people.
There are several positive factors developing in the live entertainment
business. As cited elsewhere, New York theatre and Times Square are entering a
new era due to the transformation of Times Square and its environs into a safe,
exciting family oriented tourist destination as well as a mecca for the "bus and
tunnel" customers from the population centered in the megalopolis (these areas
are within a day roundtrip by bus to New York). New York is the second most
sought after tourist destination after Orlando, Florida. In 1999, 36 million
tourists journeyed to New York. A second trend is the production of family
entertainment on Broadway by American predominant entertainment companies.
Disney, who has three shows on Broadway, made the first inroad on 42nd Street to
give credibility to the Times Square Reclamation Project which was assured when
Disney revived and restored an historic theatre treasure, The New Amsterdam. SFX
has two shows on Broadway and owns the Ford Theatre, a restoration and
consolidation of two theatres into a 1700 seat showplace. The financial strength
of these companies has brought about a large amount of advertising and
merchandising that has created a surge of demand which can only help our company
to do additional business. These expenditures and show-specific advertising
campaigns are creating a new audience created by this new awareness.
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Ticket prices have moved upward in recent years. Our fees are based on a
fixed percentage of these rising prices and coupled with the increased demand
can only increase future revenue. With the use of the internet, it is expected
that a whole new market will develop. We intend to use this means to develop and
expand our business to the global market place.
Our Suppliers
The ticket prices and information which we provide to our clients is made
available to us by the producers of the respective productions. The tickets are
offered to our customers at the prices established by the theatres. The
information and reduced group ticket prices provided by the producers are
essential to our sales of group theatre tickets. The reduced box office prices
established by the theatres are constantly changing and are determined by many
factors including projected low periods (January), weather, vacations, slow down
of long runs and certain days of the week, etc.
Regulatory Issues
The City of New York requires us to obtain an annual license and to
maintain an insurance policy against fraud. As such, we are bonded and licensed,
as per the City of New York regulations. We are also regulated by the New York
State Attorney General which regulates ticket resale prices.
Research and Development
Other than the costs associated with our search for new clients and
industries, we do not spend funds on research and development. However, as we
intend to expand the scope of our activities by placing greater reliance on the
internet, we expect that the amount of funds we spend on research and
development, in particular with respect to our web site, will slowly increase.
Telephone solicitation will continue at a modest cost to us. We maintain an 800
number as a service to clients across the country.
Employees
As of December 1, 2000, we employ a total of four employees of which two
are full time, one is part time and one serves as a consultant.
Leasehold
We operate a leased office, located at 1501 Broadway, Suite 1807, New York,
New York 10036. We have a ten year lease due to expire in April 2010. Our annual
rent for 2000 is approximately $16,500.
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Equipment
We own and lease various pieces of office equipment including two
computers, a printer, a copier and a telephone system as well as additional
pieces of office furniture.
We believe that our properties are adequately covered by insurance as we
carry fire, theft and liability insurance. We also carry worker's compensation
insurance.
LEGAL PROCEEDINGS
We are not a party to any pending legal proceeding.
MANAGEMENT
Our director(s), executive officer(s) and other key employees, and their
ages, as of December 1, 2000 are as follows:
Name Age Positions held with the Company Since
---- --- ------------------------------- -----
Phyllis Maxwell 74 President and Director 1989
Richard Kelley 60 Director 1998
Allen Vershel 69 Director September 2000
The backgrounds of our directors, executive officers and significant
employees are as follows:
Phyllis Maxwell is the founder and has been president of our company since
1989. After over 20 years of experience in theatre, we believe that Mrs. Maxwell
has built relationships with box office personnel as well as a reputation for
service and knowledge of theatre.
Richard Kelley has thirty years of experience in theatre including work as
a company manager and box office treasurer. Mr. Kelley has been with us since
September 1998. From 1988 through 1998, he served as the Director of Ticketing
Operations for the Stamford Center for the Arts. As a group theatre advisor, his
extensive knowledge of theatre (past, present and future) is an invaluable tool.
His advice and counsel is sought by clients.
Allen Vershel has been a director of our company since September 5, 2000.
Dr. Vershel has degrees in dentistry, law and healthcare administration degrees.
From 1978 to present, Dr. Vershel has been a consultant with Second Opinion
Dental Consultants where he reviews and evaluates dental malpractice cases for
attorneys and insurance companies. Dr. Vershel also serves on the Board of
Directors of two private companies.
EXECUTIVE COMPENSATION
The following summary compensation table reflects all compensation awarded
to, earned by, or paid to our Chief Executive Officer and president and other
employees for all
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services rendered to us in all capacities during each of the years ended
December 31, 1997, 1998 and 1999. None of our other executive offices received
salary and bonus exceeding $100,000 during those years.
---------------------------------------------------------------------------
Summary Compensation Table
---------------------------------------------------------------------------
All Annual
Name and Principal Position Year Salary Bonus Compensation
(**)
---------------------------------------------------------------------------
Phyllis Maxwell 1997 $48,500 $ 0 $ 0
President 1998 $ 4,000 $ 0 $ 0
1999 $48,500(1) $ 0 $ 0
---------------------------------------------------------------------------
Richard Kelley 1997 $ -- $ -- $ --
Vice President (Sept. - Dec.) 1998 $28,000 $ 0 $ 0
1999 $50,495(2) $ 0 $ 0
---------------------------------------------------------------------------
(1) Mrs. Maxwell receives health insurance and related fringe benefits, which
amounted in total to approximately $5,722 in 1999 and $7,068 in 1998. As a
requirement of business, Mrs. Maxwell attends every show on Broadway and
much of Off-Broadway. (A portion of her expenses, such as meals,
transportation and entertainment of customers, are paid for by us.)
(2) Mr. Kelley receives health insurance and other fringe benefits which
amounted in total to approximately $1,050 in 1998 and $3,200 for 1999.
Directors' Compensation
Directors are not compensated for their services as such.
Employment and Severance Agreement
There are no employment contracts or agreements between us and our
officers.
We do not have any employee stock option or other incentive plans.
PRINCIPAL SHAREHOLDERS
The following lists as of December 1, 2000 the beneficial ownership of
common stock of each person known to us who owns more than 5% of our issued and
outstanding common stock and of our directors, executive officers and
significant employees.
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Name and address* of Amount and Nature Percent of
Beneficial Owner of Beneficial Ownership Class
---------------- ----------------------- -----
Phyllis Maxwell 10,000,000 95%
Richard Kelley 0 0
Allen Vershel 0 0
All directors, executive officers 10,000,000 95%
And significant employees as a
Group (3 persons)
*Unless otherwise referenced, the address for each of the above mentioned
parties is c/o Phyllis Maxwell's Groups, Inc., 1501 Broadway, Suite 1807, New
York, New York 10036.
DESCRIPTION OF CAPITAL STOCK
Common Stock
We are authorized to issue 20,000,000 shares of common stock, $0.0001 par
value per share, of which 10,500,000 shares were issued and outstanding as of
the date of this prospectus. Each outstanding share of common stock entitles the
holder to one vote, either in person or by proxy, on all matters that may be
voted upon by the owners of those shares at meetings of the stockholders.
The holders of common stock (i) have equal rights to dividends from funds
legally available for the payment of dividends, when, as and if declared by our
board of directors; (ii) are entitled to share ratably in all of our assets
available for distribution to holders of common stock upon liquidation,
dissolution or winding up of our affairs; (iii) do not have preemptive,
subscription or conversion rights, and (iv) are entitled to one non-cumulative
vote per share on all matters on which stockholders may vote at all meetings of
stockholders.
All shares of common stock which are the subject of this offering, when
issued, will be fully paid for and non-assessable, with no personal liability
attaching to their ownership. The holders of shares of our common stock do not
have cumulative voting rights, which means that the holders of more than 50% of
the outstanding shares, voting for the election of directors, can elect all of
our directors if they so choose and, in that event, the holders of the remaining
shares will not be able to elect any of our directors.
Each share of common stock is entitled to share pro rata in dividends and
distributions with respect to the common stock when, as and if declared by the
board of directors from funds legally available for that purpose. No holder of
any shares of common stock has any pre-emptive right to subscribe for any of our
securities. Upon dissolution, liquidation or winding up of our company, the
assets will be divided pro rata on a share-for-share basis among holders of the
shares of common stock after any required distribution to the holders of
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preferred stock, if any. All shares of common stock outstanding are fully paid
and nonassessable.
Each shareholder of common stock is entitled to one vote per share with
respect to all matters that are required by law to be submitted to shareholders.
The shareholders are not entitled to cumulative voting in the election of
directors. Accordingly, the holders of more than 50% of the shares voting in the
election of directors will be able to elect all the directors if they choose to
do so.
Dividends
We have not declared any dividends since inception, and have no present
intention of paying any cash dividends on our common stock in the foreseeable
future. The payment of dividends, if any, in the future, rests within the
discretion of our board of directors and will depend, among other things, upon
our earnings, our capital requirements and our financial condition, as well as
other relevant facts.
Transfer Agent and Registrar
Currently, we are acting as our own transfer agent and registrar for our
common stock. Upon completion of the offering we will engage Stocktrans, Inc.,7
E. Lancaster Avenue, Ardmore, Pennsylvania 19003 to act as our transfer agent.
Market for our Common Stock
There has been no trading market for our common stock.
There are currently three holders of our outstanding common stock. The
outstanding common stock was sold in reliance upon an exemption from
registration contained in Section 4(2) of the Securities Act. There can be no
assurance that a trading market will develop. To date, neither we nor anyone
acting on our behalf has taken any affirmative steps to retain or encourage any
broker/dealer to act as a market maker for our common stock. Further, there have
been no discussions or understandings, preliminary or otherwise, between us or
anyone acting on our behalf and any market maker regarding the participation of
any such market maker in the future trading market, if any, for our common
stock.
There are no outstanding options or warrants to purchase, or securities
convertible into, our common equity. The 10,500,000 shares of our common stock
currently outstanding are restricted securities as that term is defined in the
Securities Act of 1933.
As of the date of this prospectus, none our shares of common stock are
immediately eligible for sale in the public market without restriction or
further registration under the Securities Act of 1933, unless purchased by or
issued to any "affiliate" of ours, as that term is defined in Rule 144
promulgated under the Securities Act of 1933, described below. All other
outstanding shares of our common stock are "restricted securities" as such term
is defined under Rule 144, in that those shares were issued in private
transactions not involving a public
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offering and may not be sold in the absence of registration other than in
accordance with Rule 144, 144(k) or 701 promulgated under the Securities Act of
1933 or another exemption from registration.
Sales of substantial amounts of our common stock under Rule 144, this
prospectus or otherwise could adversely affect the prevailing market price of
our common stock and could impair our ability to raise capital through the
future sale of our securities.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
We believe that provisions of our Articles of Incorporation and bylaws will
be useful to attract and retain qualified persons as directors and officers. Our
Articles of Incorporation limit the liability of directors and officers to the
fullest extent permitted by New York law. This is intended to allow our
directors and officers the benefit of New York's corporation law which provides
that directors and officers of New York corporations may be relieved of monetary
liabilities for breach of their fiduciary duties as directors, except under
circumstances which involve acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1993 may be permitted to our directors, officers and controlling persons
under the foregoing provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission that indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against those liabilities
(other than our payment of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, we will, unless in the opinion of our counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether the indemnification by us is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of that issue.
INTEREST OF NAMED EXPERTS AND COUNSEL
Joseph Sierchio, a principal of Sierchio & Company, LLP, our legal counsel,
owns 280,000 shares of our common stock.
LEGAL MATTERS
The validity of the issuance of the common stock offered hereby has been
passed upon for us by Sierchio & Company, LLP, New York, New York.
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EXPERTS
The financial statements of Phyllis Maxwell's Groups, Inc. at December 31,
1999 and 1998, appearing in this prospectus and in the registration statement
have been audited by Marden, Harrison & Kreuter, CPAs, P.C., independent
certified accountants, as described in their report regarding the financial
statement appearing elsewhere in this Registration Statement, and are included
in reliance upon that report given upon the authority of that firm as experts in
auditing and accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2. This prospectus, which is a part of the registration
statement, does not contain all of the information included in the registration
statement. Some information is omitted and you should refer to the registration
statement and its exhibits. With respect to references made in this prospectus
to any of our contracts, agreements or other documents, those references are not
necessarily complete and you should refer to the exhibits attached to the
registration statement for copies of the actual contract, agreement or other
document. You may review a copy of the registration statement, including
exhibits, at the Securities and Exchange Commission's public reference room at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 or Seven World
Trade Center, 13th Floor, New York, New York 10048 or Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661.
The public may obtain information on the operation of the public reference
room by calling the Securities and Exchange Commission at 1-800-SEC-0330.
We intend to send an annual report, including audited financial statements,
to our shareholders. We will also file annual, quarterly and current reports,
proxy statements and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements or other information
on file at the public reference rooms. You can also request copies of these
documents, for a copying fee, by writing to the Securities and Exchange
Commission.
Our registration statement can be reviewed by accessing the Securities and
Exchange Commission's Internet site at http://www.sec.gov, which contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Securities and Exchange
Commission.
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INDEX TO
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1999
--------------------------------------
CONTENTS
--------
Independent auditors' report
Financial statements:
Balance sheets
Statements of operations and retained earnings
Statements of cash flows
Notes to financial statements
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Phyllis Maxwell's Groups, Inc.
1501 Broadway
Suite 1807
New York, New York 10036
We have audited the accompanying balance sheets of Phyllis Maxwell's Groups,
Inc. as of December 31, 1998 and 1999 and the related statements of income,
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Phyllis Maxwell's Groups, Inc.
as of December 31, 1998 and 1999, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
MARDEN, HARRISON & KREUTER
Certified Public Accountants, P.C.
White Plains, New York
August 7, 2000
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PHYLLIS MAXWELL'S GROUPS, INC.
BALANCE SHEETS
-----------------
<TABLE>
<CAPTION>
Year ended Year ended Nine months ended
December 31, December 31, September 30,
1998 1999 2000
-------- -------- --------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 529 $ 38,078 $ 39,643
Commissions receivable 80,472 92,111 107,265
Other assets 34 5,666 5,666
-------- -------- --------
Total current assets 81,035 135,855 152,574
Loans receivable - stockholder 11,815 17,130 17,130
-------- -------- --------
Total assets $ 92,850 $152,985 $169,704
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,013 $ 330 $ 330
Deferred taxes payable 19,618 38,255 41,125
-------- -------- --------
Total liabilities 20,631 38,585 41,455
-------- -------- --------
Commitments
Stockholders' equity:
Common stock, no par value; 20,000,000
shares authorized, 10,000,000 shares issued
and outstanding at December 31, 1998 and
1999; 10,500,000 shares issued and
outstanding at September 30, 2000 100 100 5,100
Additional paid-in capital 23,349 23,349 23,349
Retained earnings 48,770 90,951 99,800
-------- -------- --------
Total stockholders' equity 72,219 114,400 128,249
-------- -------- --------
Total liabilities and stockholders' equity $ 92,850 $152,985 $169,704
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
PHYLLIS MAXWELL'S GROUPS, INC.
STATEMENTS OF INCOME
---------------------------
<TABLE>
<CAPTION>
Nine months Nine months
Year ended Year ended ended ended
December 31, December 31, September 30, September 30,
1998 1999 1999 2000
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Commission revenue $ 157,358 $ 231,087 $ 155,764 $ 167,697
General and administrative expenses 133,981 171,973 105,345 158,251
----------- ----------- ----------- -----------
Income from operations 23,377 59,114 50,419 9,446
Interest income 2,791 2,454 2,229 3,073
----------- ----------- ----------- -----------
Income before income taxes 26,168 61,568 52,648 12,519
----------- ----------- ----------- -----------
Income taxes:
Current 1,182 750 650 800
Deferred 7,618 18,637 15,050 2,870
----------- ----------- ----------- -----------
8,800 19,387 15,700 3,670
----------- ----------- ----------- -----------
Net income $ 17,368 $ 42,181 $ 36,948 $ 8,849
=========== =========== =========== ===========
Net income per common share -
basic and diluted .002 .004 .004 .001
=========== =========== =========== ===========
Weighted average common shares
Outstanding - basic and dilutive 10,000,000 10,000,000 10,000,000 10,150,000
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
PHYLLIS MAXWELL'S GROUPS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
------------------------------------------
<TABLE>
<CAPTION>
Common Stock Additional
------------ Paid-In Retained
Shares Amount Capital Earnings Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1997 10,000,000 $ 100 $ 23,349 $ 31,402 $ 54,851
Net income, year ended 1998 -- -- -- 17,368 17,368
---------- ---------- ---------- ---------- ----------
Balances, December 31, 1998 10,000,000 100 23,349 48,770 72,219
Net income, year ended 1999 -- -- -- 42,181 42,181
---------- ---------- ---------- ---------- ----------
Balances, December 31, 1999 10,000,000 $ 100 $ 23,349 $ 90,951 $ 114,400
========== ========== ========== ========== ==========
Nine months ended September 30, 1999:
Balances, December 31, 1998 10,000,000 $ 100 $ 23,349 $ 48,770 $ 72,219
Net income, nine months ended -- -- -- 36,948 36,948
---------- ---------- ---------- ---------- ----------
Balances, September 30, 1999 10,000,000 $ 100 $ 23,349 $ 85,718 $ 109,167
========== ========== ========== ========== ==========
Nine months ended September 30, 2000:
Balances, December 31, 1999 10,000,000 $ 100 $ 23,349 $ 90,951 $ 114,400
Issuance of shares for professional
services 500,000 5,000 -- -- 5,000
Net income, nine months ended -- -- -- 8,849 8,849
---------- ---------- ---------- ---------- ----------
Balances, September 30, 2000 10,500,000 $ 5,100 $ 23,349 $ 99,800 $ 128,249
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
PHYLLIS MAXWELL'S GROUPS, INC.
STATEMENTS OF CASH FLOWS
------------------------------
<TABLE>
<CAPTION>
Nine months Nine months
Year ended Year ended ended ended
December 31, December 31, September 30, September 30,
1998 1999 1999 2000
--------- --------- --------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Cash flows provided by (used in):
Operating activities:
Cash received from customers $ 131,039 $ 219,448 $ 134,031 $ 152,543
Cash paid to suppliers and
employees (128,738) (178,288) (105,995) (153,251)
Interest received 2,791 2,454 2,229 3,073
Income tax paid (1,182) (750) (650) (800)
--------- --------- --------- ---------
Net cash provided by
operating activities 3,910 42,864 29,615 1,565
--------- --------- --------- ---------
Financing activities:
Loans to stockholder (3,381) (5,315) (12,000) --
--------- --------- --------- ---------
Net cash used in
financing activities (3,381) (5,315) (12,000) --
--------- --------- --------- ---------
Net increase in cash 529 37,549 17,615 1,565
Cash, beginning of period -- 529 529 38,078
--------- --------- --------- ---------
Cash, end of period $ 529 $ 38,078 $ 18,144 $ 39,643
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
PHYLLIS MAXWELL'S GROUPS, INC.
STATEMENTS OF CASH FLOWS
(CONCLUDED)
-----------------------------
<TABLE>
<CAPTION>
Nine months Nine months
Year ended Year ended ended ended
December 31, December 31, September 30, September 30,
1998 1999 1999 2000
-------- -------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Reconciliation of net income to net
cash provided by operating activities:
Net income $ 17,368 $ 42,181 $ 36,948 $ 8,849
-------- -------- -------- --------
Adjustments to reconcile net income
to net cash provided by
operating activities:
Issuance of common stock for
professional services -- -- -- 5,000
Deferred income taxes payable 7,618 18,637 15,050 2,870
Changes in assets (increase) decrease:
Commission receivable (26,319) (11,639) (21,733) (15,154)
Other assets 6,910 (5,632) -- --
Changes in liabilities increase (decrease):
Accounts payable (1,667) (683) (650) --
-------- -------- -------- --------
Total adjustments (13,458) 683 (6,033) (7,284)
-------- -------- -------- --------
Net cash provided by
operating activities $ 3,910 $ 42,864 $ 29,615 $ 1,565
======== ======== ======== ========
Supplemental schedule of non-cash financing activities:
On July 1, 2000, the Board of Directors approved issuance of 500,000 shares of common stock to its legal
counsel and a consultant.
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
PHYLLIS MAXWELL'S GROUPS, INC.
NOTES TO FINANCIAL STATEMENTS
(Including data applicable to unaudited periods)
YEARS ENDED DECEMBER 31, 1998 AND 1999
------------------------------------------
(1) Nature of operations:
Phyllis Maxwell's Groups, Inc. (the Company) is licensed by the City of New
York to resell group tickets to Broadway and off-Broadway performances.
(2) Interim financial statements:
The balance sheet as of September 30, 2000 and the related statements of
operations and retained earnings and cash flows for the nine month periods
ended September 30, 1999 and 2000 are unaudited. However, in the opinion of
management these interim financial statements include all adjustments
(consisting of only normal recurring adjustments) which are necessary for
the fair presentation of the results for the interim periods presented. The
results of operations for the unaudited nine-month period ended September
30, 2000 are not necessarily indicative of the results which may be
expected for the entire 2000 fiscal year.
(3) Summary of significant accounting policies:
(A) Revenue recognition:
Commission revenue is recognized at the date the invoice is generated.
The Company is paid directly from the theatre after the date of the
performance, which may be over a year after the date of the invoice.
The Company may have losses due to cancellation of performances.
Historically, these losses have not been significant and losses under
present obligations are not expected to be significant. Accordingly,
no provision has been made for future losses that may result from a
cancellation of a performance. It is at least reasonably possible that
the Company's estimate will change in the near term.
(B) Income taxes:
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." Under
Statement No. 109, the asset and liability method is used in
accounting for income taxes. Deferred taxes are recognized for
temporary differences between the basis of assets and liabilities for
financial statement and income tax purposes. The temporary differences
relate primarily to the bases of revenue recognition for financial and
income tax reporting purposes. The deferred taxes represent the future
tax return consequences of those differences which will either be
taxable or deductible when the assets and liabilities are recovered or
settled.
35
<PAGE>
PHYLLIS MAXWELL'S GROUPS, INC.
NOTES TO FINANCIAL STATEMENTS
(Including data applicable to unaudited periods)
YEARS ENDED DECEMBER 31, 1998 AND 1999
------------------------------------------
(3) Summary of significant accounting policies (con't):
(C) Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from the estimates.
(D) Net income per share:
Net income per share-basic is computed based on the weighted average
number of shares of common stock outstanding. Net income per
share-dilutive reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or
converted into common stock or other contracts to issue common stock
were exercised or converted into common stock or otherwise resulted in
the issuance of common stock and is computed similarly to "fully
diluted" net income per share that was reported under previous
accounting standards. Dilutive potential common shares do not have a
significant dilutive effect.
(4) Stockholders' equity:
(A) Common stock and per share data:
The common stock and per share data for all periods gives effect to a
stock split, declared by the Company's Board of Directors on September
22, 2000, of 100,000 to 1 shares which occured immediately before the
date of the Company's initial public offering.
(B) Issuance of common stock
On July 1, 2000, the Company issued 400,000 shares of its common stock
to its legal counsel and 100,000 shares of its common stock to a
consultant based on fair value of services rendered totaling $5,000.
(C) Initial public offering:
In September 2000, the Company filed an initial public offering
registration with the Securities and Exchange Commission in hopes of
issuing an additional 1,000,000 shares of common stock at an issuance
price of $.05 per share.
Following the issuance of these shares, the Company's current
President will own 95% of the outstanding common stock of the Company.
36
<PAGE>
PHYLLIS MAXWELL'S GROUPS, INC.
NOTES TO FINANCIAL STATEMENTS
(Including data applicable to unaudited periods)
YEARS ENDED DECEMBER 31, 1998 AND 1999
------------------------------------------
(5) Operating leases:
At December 31, 1999, the Company is obligated under operating leases for
office space and office equipment, with minimum lease payments through
April 2010 as follows:
Year ending
December 31, Amount
------------ ------
2000 $ 16,973
2001 16,558
2002 16,354
2003 16,354
2004 16,354
Thereafter 96,909
--------
$179,502
========
Rent expense for the years ended December 31, 1998 and 1999 applicable to
these operating leases was $14,119 and $16,447, respectively.
Rent expense for the nine-month periods ended September 30, 1999 and 2000
applicable to these operating leases was approximately $11,800 and $13,900,
respectively.
(6) Concentration risk:
Financial instruments, which potentially expose the Company to
concentrations of credit risks, consist primarily of cash and commissions
receivable.
Commissions receivable are due from production companies, which operate in
theaters throughout New York City. The Company minimizes its risks by
monitoring its customer balances.
The Company at times during the year maintains its cash in accounts which
exceed Federally insured limits for such accounts. The Company limits its
credit risk by selecting financial institutions considered to be highly
creditworthy.
(7) Related party:
(A) Loans receivable - stockholder:
At December 31, 1998 and 1999, the Company has advanced its
stockholder amounts totaling $11,815 and $17,130, respectively. At
September 30, 2000, the Company has advanced its stockholder amounts
totaling $17,130. These advances are noninterest bearing and are not
expected to be repaid within one year.
37
<PAGE>
PHYLLIS MAXWELL'S GROUPS, INC.
NOTES TO FINANCIAL STATEMENTS
(Including data applicable to unaudited periods)
YEARS ENDED DECEMBER 31, 1998 AND 1999
------------------------------------------
(8) Income taxes:
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
Year ended Year ended Nine months Nine months
December 31, December 31, ended September ended September
1998 1999 30, 1999 30, 2000
------------ ------------ --------------- ---------------
<S> <C> <C> <C> <C>
Current
Federal $ 256 $ 100 $ -- $ --
State and local 926 650 650 800
------- ------- ------- -------
1,182 750 650 800
------- ------- ------- -------
Deferred
Federal 3,075 7,576 6,500 1,400
State and local 4,543 11,061 8,550 1,470
------- ------- ------- -------
7,618 18,637 15,050 2,870
------- ------- ------- -------
Total $ 8,800 $19,387 $15,700 $ 3,670
======= ======= ======= =======
</TABLE>
A reconciliation of the statutory Federal income tax rate to the provision
for income taxes is as follows:
<TABLE>
<CAPTION>
Year ended Year ended Nine months Nine months
December 31, December 31, ended September ended September
1998 1999 30, 1999 30, 2000
------------ ------------ --------------- ---------------
<S> <C> <C> <C> <C>
Statutory Federal income
tax rate 34% 34% 34% 34%
State and local taxes 18 18 18 18
Effect of graduated
rates on statutory rate (18) (20) (22) (22)
---- ---- ---- ----
34% 32% 30% 30%
==== ==== ==== ====
</TABLE>
38
<PAGE>
PHYLLIS MAXWELL'S GROUPS, INC.
NOTES TO FINANCIAL STATEMENTS
(Including data applicable to unaudited periods)
YEARS ENDED DECEMBER 31, 1998 AND 1999
------------------------------------------
(8) Income taxes - cont'd:
The details of deferred income tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
Year ended Year ended Nine months Nine months
December 31, December 31, ended September ended September
1998 1999 30, 1999 30, 2000
------------ ------------ --------------- ---------------
<S> <C> <C> <C> <C>
Deferred income tax liabilities:
Accounts receivable $19,618 $38,255 $34,668 $41,125
------- ------- ------- -------
Net deferred income tax
liabilities $19,618 $38,255 $34,668 $41,125
======= ======= ======= =======
</TABLE>
39
<PAGE>
PHYLLIS MAXWELL'S GROUPS, INC.
1,000,000 Shares of
Common Stock
--------------------
PROSPECTUS
--------------------
_________, 2000
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth an itemization of various expenses, all of
which we will pay, in connection with the sale and distribution of the
securities being registered. All of the amounts shown are estimates, except the
Securities and Exchange Commission registration fee.
Securities and Exchange Commission Registration Fee $ 13.20
Accounting Fees and Expenses $ 1,500.00
Legal Fees and Expenses $15,000.00
Miscellaneous $ 2,500.00
Total $19,013.20
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Except as hereinafter set forth, there is no charter provision, bylaw,
contract, arrangement or statute under which any officer or director of the
registrant is insured or indemnified in any manner against any liability which
he may incur in his capacity as such.
Indemnification of Directors and Officers
Section 722 of New York Business Corporation Law, as amended, provides for
the indemnification of the company's officers, directors and corporate employees
and agents under certain circumstances as follows:
AUTHORIZATION FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS
(a) A corporation may indemnify any person, made, or threatened to be made,
a party to an action or proceeding other than one by or in the right of the
corporation to procure a judgment in
40
<PAGE>
its favor, whether civil or criminal, including an action by or in the right of
any other corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
which any director or officer of the corporation served in any capacity at the
request of the corporation, by reason of the fact that he, his testator or
intestate, was a director or officer of the corporation, or served such other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise in any capacity, against judgments, fines, amounts paid in settlement
and reasonable expenses, including attorney's fees actually and necessarily
incurred as a result of such action or proceeding, or any appeal therein, if
such director or officer acted, in good faith, for a purpose which he reasonably
believed to be in, or, in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
not opposed to, the best interests of the corporation and, in criminal actions
or proceedings, in addition, had no reasonable cause to believe that his conduct
was unlawful.
(b) The termination of any such civil or criminal action or proceeding by
judgment, settlement, conviction or upon a plea of nolo contendre, or its
equivalent, shall not in itself create a presumption that any such director or
officer did not act, in good faith, for a purpose which he reasonably believed
to be in, or, in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
not opposed to, the best interests of the corporation or that he had reasonable
cause to believe that his conduct was unlawful.
(c) A corporation may indemnify any person made, or threatened to be made,
a party to an action by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he, his testator or intestate, is or was
a director or officer of the corporation, or is or was serving at the request of
the corporation as a director or officer of any other corporation of any type or
kind, domestic or foreign, of any partnership, joint venture, trust, employee
benefit plan or other enterprise, against amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense or settlement of such action, or
in connection with an appeal therein if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best interests of
the corporation, except that no indemnification under this paragraph shall be
made in respect of (1) a threatened action, or a pending action which is settled
or otherwise disposed of, or (2) any claim issue or matter as to which such
person shall have been adjudged to be liable to the corporation, unless and only
to the extent that the court on which the action was brought, or if no action
was brought, any court of competent jurisdiction , determines upon application
that, in view of all the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such portion of the settlement amount and
expenses as the court deems proper.
(d) For the purpose of this section, a corporation shall be deemed to have
requested a person to serve an employee benefit plan where the performance by
such person of his duties to the corporation also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be considered fines; and
action taken or
41
<PAGE>
omitted by a person with respect to an employee benefit plan in the performance
of such person's duties for a purpose reasonably believed by such person to be
in the interest of the participants and beneficiaries of the plan shall be
deemed to be for a purpose which is not opposed to the best interests of the
corporation.
Section 723 of the New York Business Corporation Law, as amended, provides
for the payment of indemnification other than by a court award.
Notwithstanding a failure of a corporation to provide indemnification and
despite any contrary resolution of the board or of the shareholders, Section 724
of New York Business Corporation Law, as amended, provides for the
indemnification of a company's officers and directors by a court. Moreover,
Section 726 of the New York Business Corporation Law provides for the situations
in which a corporation shall have the power to purchase and maintain insurance
for indemnification of directors and officers.
The Securities and Exchange Commission's Policy on Indemnification
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to any provisions contained in its certificate of
incorporation, or by-laws, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether indemnification by it is against public policy
as expressed in the Act and will be governed by the final adjudication of such
issue.
Our articles of incorporation provide that the corporation shall, to the
fullest extent permitted by the Business Corporation Law of the State of New
York, indemnify any and all persons whom it shall have power to indemnify under
Article 7 thereof.
The indemnification provided by our Articles of Incorporation is not
exclusive of any other rights to which those indemnified may be entitled under
the bylaws, any agreement, vote of shareholders or disinterested directors or
otherwise, and any procedure provided for by any of the foregoing, both as to
action in his or her official capacity and as to action in another while holding
such office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of heirs, executors
and administrators of such a person.
Our by-laws give effect to the foregoing provision's of our Articles of
Incorporation.
42
<PAGE>
The Company may obtain liability insurance for its directors and officers
covering, subject to exceptions, any actual or alleged negligent act, error,
omission, misstatement, misleading statement, neglect or breach of duty by such
directors or officers, individually or collectively, in the discharge of their
duties in their capacity as directors or officers of Phyllis Maxwell's Groups,
Inc.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Set forth in chronological order is information regarding shares of common
stock issued during the past three years. Also included is the consideration, if
any, received by us for such shares and information relating to the section of
the Securities Act of 1933 (the "Securities Act"), or rule of the Securities and
Exchange Commission under which exemption from registration was claimed.
On July 1, 2000, the company issued 400,000 shares of its Common Stock,
giving effect to a stock split of 100,000 to 1 on September 22, 2000, to
Sierchio & Albert, P.C., the company's legal counsel, in consideration for legal
services performed for the company. The company believes that such transaction
was exempt from registration under the Securities Act pursuant to Section 4(2)
and the rules and regulations promulgated thereunder as a transaction by an
issuer not involving any public offering
On July 1, 2000, the company issued 100,000 shares of its Common Stock,
giving effect to a stock split of 100,000 to 1 on September 22, 2000, to Mr.
Tony Russo in consideration for consulting services performed for the company.
The company believes that such transaction was exempt from registration under
the Securities Act pursuant to Section 4(2) and the rules and regulations
promulgated thereunder as a transaction by an issuer not involving any public
offering
43
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
The following Exhibits are attached hereto:
EXHIBIT DESCRIPTION OF EXHIBIT AND FILING REFERENCE
NUMBER
3.1(a) Articles of Incorporation*
3.1(b) Certificate of Amendment to the Articles of Incorporation*
3.2 Bylaws*
5.1 Opinion of Sierchio & Albert, P.C., regarding the legality of
the securities being registered*
23.1 Consent of Sierchio & Albert, P.C. (included in Exhibit 5.1)*
23.2 Consent of Marden, Harrison & Kreuter, CPAs, P.C.
27.1 Financial Data Schedule
* Filed Previously.
(B) FINANCIAL STATEMENT SCHEDULES
Financial Statement Schedules omitted because the information is included
in the Financial Statements and Notes thereto.
ITEM 17. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 14 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a
44
<PAGE>
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
45
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorizes this registration
statement to be signed on its behalf by the undersigned, in the City of New
York, State of New York, on the 6th day of December, 2000.
PHYLLIS MAXWELL'S GROUPS, INC.
By: /S/ Phyllis Maxwell
Phyllis Maxwell
President
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated:
SIGNATURE TITLE DATE
/s/ Phyllis Maxwell President and Director December 6, 2000
Phyllis Maxwell
/s/ Richard Kelley Vice President and Director December 6, 2000
Richard Kelley
46
<PAGE>
EXHIBIT INDEX
The following Exhibits are attached hereto:
EXHIBIT DESCRIPTION OF EXHIBIT AND FILING REFERENCE PAGE
NUMBER
3.1(a) Articles of Incorporation*
3.1(b) Certificate of Amendment to the Articles of Incorporation*
3.2 Bylaws*
5.1 Opinion of Sierchio & Albert, P.C., regarding the legality
of the securities being registered*
23.1 Consent of Sierchio & Albert, P.C. (included in
Exhibit 5.1)*
23.2 Consent of Marden, Harrison & Kreuter, CPAs, P.C. 48
27.1 Financial Data Schedule 49
* Previously Filed.
47
