<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 29, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM TO
------------------ --------------------
Commission file number: 0-12544
MAXSERV, INC.
---------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 74-2707626
---------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
8317 CROSS PARK DRIVE, AUSTIN, TEXAS 78754
-------------------------------------------
(Address of principal executive offices)
(512) 834-8341
----------------------------------
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
The number of shares of common stock of the issuer outstanding as of February
29, 1996 was 10,891,672.
Transitional Small Business Disclosure Format (check one): YES NO X
--- ---
1
<PAGE> 2
FORM 10-QSB INDEX
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Condensed Balance Sheet as of February 29, 1996 and May 31, 1995 .............. 3
Condensed Statement of Operations for the three months and nine months ended
February 29, 1996 and for the three months and nine months ended
February 28, 1995 ........................................................ 4
Condensed Statement of Cash Flows for the nine months ended
February 29, 1996 and February 28, 1995 .................................. 5
Notes to Condensed Financial Statements ....................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................................ 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ............................................................. 9
Item 2. Changes in Securities ......................................................... 9
Item 3. Defaults Upon Senior Securities ............................................... 9
Item 4. Submission of Matters to a Vote of Security Holders ........................... 9
Item 5. Other Information ............................................................. 9
Item 6. Exhibits and Reports on Form 8-K .............................................. 9
SIGNATURES ........................................................................................ 10
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
MAXSERV, INC.
CONDENSED BALANCE SHEET
- --------------------------------------------------------------------------------
(Unaudited, in thousands except share information)
<TABLE>
<CAPTION>
February 29, May 31,
ASSETS 1996 1995
------------ --------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,193 $ 2,097
Accounts receivable 4,660 4,279
Deferred tax asset 250 106
Prepaid expenses and other 100 486
-------- --------
Total current assets 6,203 6,968
Property and equipment, net 10,475 11,068
Intangible asset, net 1,609 1,893
Deferred tax asset 1,129 1,097
Other assets 39 168
-------- --------
$ 19,455 $ 21,194
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 639 $ 3,431
Accrued compensation 1,104 1,090
Accrued expenses 2,055 563
Deferred revenue 47 35
Current portion of long-term debt 169 273
-------- --------
Total current liabilities 4,014 5,392
Notes and capital lease obligations 47 167
-------- --------
Total liabilities 4,061 5,559
-------- --------
Stockholders' equity:
Common stock, $.01 par value; 25,000,000 shares authorized; 10,892,000 and
10,869,000 issued and outstanding at February 29,
1996 and May 31, 1995, respectively 109 109
Additional paid-in capital 18,101 18,083
Accumulated deficit (2,816) (2,557)
-------- --------
Total stockholders' equity 15,394 15,635
-------- --------
$ 19,455 $ 21,194
======== ========
</TABLE>
3
<PAGE> 4
MAXSERV, INC.
CONDENSED STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
(Unaudited, in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
February 29, February 28, February 29, February 28,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Service fees $ 13,481 $ 8,862 $ 38,565 $ 20,258
Cost of services provided 11,899 7,722 36,271 16,456
-------- -------- -------- --------
Gross service margin 1,582 1,140 2,294 3,802
Selling, general and administrative expenses 931 701 2,638 2,374
Interest expense (income), net 16 (38) 68 (21)
-------- -------- -------- --------
Income (loss) before provision (benefit) for income taxes 635 477 (412) 1,449
Provision (benefit) for income tax expense 238 116 (155) 493
-------- -------- -------- --------
Net income (loss) $ 397 $ 361 $ (257) $ 956
======== ======== ======== ========
Net income (loss) per share and equivalents:
Primary $ .04 $ .04 $ (.02) $ .11
======== ======== ======== ========
Fully diluted $ .04 $ .04 $ (.02) $ .11
======== ======== ======== ========
Weighted average shares and equivalents outstanding 11,233 10,215 11,237 8,686
======== ======== ======== ========
</TABLE>
4
<PAGE> 5
MAXSERV, INC.
CONDENSED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
February 29, February 28,
1996 1995
------- -------
<S> <C> <C>
Operating activities:
Net income (loss) $ (257) $ 956
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 3,244 1,504
Deferred income taxes (176) 157
Changes in operating assets and liabilities:
Increase in accounts receivable (381) (1,673)
Decrease (increase) in prepaid and other 363 (9)
Increase (decrease) in accounts payable (2,792) 707
Increase in accrued compensation and expenses 1,506 313
------- -------
Cash provided by operating activities 1,507 1,955
------- -------
Investing activities:
Purchase of property and equipment (2,205) (5,046)
------- -------
Financing activities:
Issuance of note payable -- 235
Payments on notes and capital leases (224) (242)
Proceeds from issuance of common stock 18 4,114
------- -------
Cash provided by (used in) financing activities (206) 4,107
------- -------
Increase (decrease) in cash and cash equivalents (904) 1,016
Cash and cash equivalents at the beginning of the period 2,097 1,592
------- -------
Cash and cash equivalents at the end of the period $ 1,193 $ 2,608
======= =======
</TABLE>
5
<PAGE> 6
MAXSERV, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
February 29, 1996
1. THE COMPANY AND BASIS OF PRESENTATION
MaxServ, Inc. is an information services company for household products
providing diagnostic assistance and support to technicians and consumers
involved with the installation, repair, care and operation of appliances,
personal computers, entertainment and other electronic products, heating and air
conditioning systems, and lawn and garden equipment. MaxServ also provides
telemarketing services for replacement parts and accessories covering all major
home products along with service order reservations and logistical support
services to consumers and professional technicians. The Company's information
products and services include in-bound and out-bound telephone services,
electronic catalogs, training, software development and systems integration.
MaxServ delivers its services throughout the United States and Canada, primarily
via four manned telephone support centers in Alabama, Arizona and Texas,
utilizing advanced technology and telecommunications systems.
The unaudited financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Item 310(b) of Regulation SB.
Accordingly, they do not include all the information and notes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments, consisting of normal recurring items
considered necessary for a fair presentation, have been included. Operating
results for the quarter and nine months ended February 29, 1996 are not
necessarily indicative of the results that may be expected for the year ending
May 31, 1996. These financial statements may contain forward looking information
that involve risks and uncertainties and should be read in conjunction with the
Company's Annual Report on Form 10-KSB for the year ended May 31, 1995.
2. STOCK TRANSACTION AND ACQUIRED SERVICES
In December 1994, MaxServ issued 3.3 million shares of the Company's common
stock in exchange for a ten year agreement for parts sales order services to
Sears' consumer and commercial customers and for logistic and scheduling needs
of Sears' repair technicians; the assumption of a total of 119,000 square feet
of call center operating facilities in Mobile, Alabama and Tucson, Arizona;
selected operating assets valued at $1.2 million permitting the assumption of
sales order service operations on January 1, 1995; and cash of $4.5 million. The
transaction was accounted for as assets transferred between parties under common
control with the Company recording the value of the assets received generally at
the transferor's book value. Sears' ownership of MaxServ's outstanding common
stock increased to approximately 65% upon closing of the transaction.
The cash has been fully used as part of the Company's substantial investments
during the last 15 months to update and enhance technology and
telecommunications, computer and information delivery systems. The acquired
operations currently generate about 80% of MaxServ's monthly call volume.
Services to Sears generated 93% of Company revenues for the three months and
nine months ended February 29, 1996 and 91% of Company revenues for the three
months and nine months ended February 28, 1995. Accounts receivable with Sears
at February 29, 1996 and May 31, 1995 totaled $4.3 million and $3.7 million, or
91% and 87% of total accounts receivable, respectively. Sears pays its accounts
on a timely basis in accordance with the terms of applicable service agreements.
Pursuant to annual price negotiations regarding the Company's long-term service
contracts, MaxServ and Sears agreed to increase prices for certain services for
calendar 1996. The adjusted prices primarily affect parts sales order services
and are anticipated to result in an aggregate revenue increase of approximately
$4 million. The revised pricing increased revenues $1.3 million during the
quarter ended February 29, 1996.
3. INCOME TAXES
The effective income tax rate is based on the expected annual rate for federal
and state income taxes.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
This discussion contains forward looking information that involves risks and
uncertainties including business conditions; demand for and acceptance of the
Company's services; local, national, and global economic environments; the
impact of competitive products and services; the Company's relationship with
Sears and other risks detailed from time to time in the Company's Securities and
Exchange Commission reports.
FINANCIAL CONDITION
With the December 1994 transaction with Sears, MaxServ further solidified its
dominant long-term outsource position with the largest domestic retailer and
servicer of household products. While the Company derives over 90% of its
revenues and margin from services provided to Sears and its results of
operations would be adversely affected should Sears materially diminish the
service relationship, management believes MaxServ's performance history, Sears'
commanding market presence, the associated long-term service contracts with
remaining terms of five and nine years, and Sears' ownership interest, combine
to provide a solid long-term operating and financial foundation.
Although the year-to-date operating results for fiscal 1996 have not been
profitable due to difficulties associated with parts sales order services as
discussed below, the gross margin for the third quarter improved dramatically to
$1.6 million from a loss of $131,000 in the second quarter of fiscal 1996.
Annually negotiated price increases for recurring transactions provided 45% of
the margin improvement, a lump sum receipt regarding contract clarification for
completed services provided 30%, and productivity and efficiency gains from
business and management systems enhancements provided 25%. Cash and working
capital both increased about $1.1 million from the second quarter to the third
quarter of fiscal 1996. The new prices are effective for calendar 1996 and are
anticipated to result in an aggregate revenue increase of approximately $4
million.
In addition, the substantial investments made during the past 15 months for
productivity and capacity increases, coupled with valuable personnel and
experience gains, position MaxServ to competitively benefit from the general
trend of domestic corporations to concentrate on their core businesses and
streamline ancillary in-house services through outsourcing. Leveraging the
Company's additional resources to expand and diversify its customer base and
service offerings is a realistic objective. During the first nine months of
fiscal 1996, revenues from customers other than Sears increased 32% over the
same period a year ago, continuing the excellent strides made during 1995 when
such revenues rose 130% for the year.
Operations for the nine months ended February 29, 1996 generated cash of $1.5
million, after the net liquidation of $2.8 million of accounts payable primarily
associated with capital expenditures incurred late in fiscal 1995. Capital
expenditures for the nine months were $2.2 million. Working capital increased
$613,000 and the Company's current ratio improved to 1.5 from 1.3.
Management does not anticipate using its revolving working capital or equipment
bank credit agreement for the remainder of fiscal 1996. At February 29, 1996,
$3.7 million of the revolving working capital loan facility and $2.8 million of
the equipment financing facility were available.
Management believes continuing operations and the bank credit agreement will
provide sufficient resources to allow the Company to meet its obligations, fund
capital requirements and pursue moderate growth through 1996. Although there can
be no assurance, management also believes it can obtain the necessary resources
to fund desirable acquisition or growth opportunities should any arise.
RESULTS OF OPERATIONS
Quarter and Nine Months Ended February 29, 1996 Compared to Quarter and Nine
Months Ended February 28, 1995
With the addition of parts sales order services and repair technician scheduling
services (TAD), plus growth in virtually all previously offered information
services, MaxServ increased its service fees 52% for the quarter and 90% for the
nine months ended February 29, 1996, compared to the same periods of the prior
year. The Company responded to 5.2 million calls and 16.7 million calls for the
quarter and nine-month periods, respectively, approximately two times the
quarterly volume and three times the year-to-date volume of a year ago.
Additionally, the previously mentioned price and contract adjustments increased
revenues by $1.3 million.
7
<PAGE> 8
The two new services are in-bound telemarketing and logistics support activities
and generate lower fees per call than the Company's diagnostic services.
However, call volumes are much higher. Such services were performed for only two
months during the quarter and nine-month periods ended February 28, 1995.
Compared to such prior periods, these services produced incremental fiscal 1996
fees of $3.6 million for the quarter and $15.3 million for the nine months,
based on additional calls of 1.5 million and 9.8 million, respectively.
Information services provided directly to consumers were the primary diagnostic
service contributors to overall revenue growth by expanding 49% to $2.7 million
for the quarter and 35% to $7.9 million for the nine months, based on 45% and
42% increases in call volume, respectively for the periods.
These very large additions to MaxServ's business and facilities have placed
tremendous demands on the Company's management and technical staff and have
required substantial technology and capacity enhancements. During the current
quarter, significant gains were achieved to effectively integrate these
services, balance staffing levels with call volume, improve staff productivity,
and upgrade information delivery systems across four service centers. However,
when compared to the third quarter of a year ago, the productivity and
efficiency gains, together with the previously discussed price increases for
recurring transactions and volume growth, were substantially offset by the
higher capacity and system costs. As a result, the gross margin increase for the
current quarter over the prior year quarter was principally due to the lump sum
receipt regarding contract clarification for previously completed parts sales
order services. The gross margin reduction for the nine-month period is
attributable to parts sales order services, which generated a margin loss of
$1.4 million on fees of $14.5 million compared to a margin loss of $339,000 on
fees of $2.4 million in the prior year period, and the added cost of technology
and capacity enhancements to most of the Company's systems. The process of
integrating the new services and upgrading systems has proved to be more costly
and has taken longer than originally envisioned. While these initial efforts are
substantially complete, some further improvements are anticipated during the
fourth quarter of fiscal 1996.
To a much lesser degree, the lower fee arrangement associated with incremental
TAD volume of 573,000 calls for the quarter and 940,000 for the nine months,
over the same periods last year, also contributed to MaxServ's lower overall
margin ratios.
Although selling, general and administrative expenses have increased, such costs
continue to decrease as a percentage of service fees to 7% for both the quarter
the nine months compared to 8% and 12%, respectively, for the periods of the
preceding year. This improved overhead leverage reflects the ability of the
Company's administrative support structure to absorb significant growth and
management's continuing efforts to control such costs.
The weighted average shares and equivalents outstanding used in the per share
computations increased due to the issuance of common stock associated with the
December 1994 transaction with Sears. The additional weighted average shares
outstanding had the effect of reducing the per share loss amount by $.01 for the
nine months ended February 29, 1996.
8
<PAGE> 9
PART II - OTHER INFORMATION
ITEM 1. MATERIAL DEVELOPMENTS IN CONNECTION WITH LEGAL PROCEEDINGS.
None.
ITEM 2. MATERIAL MODIFICATION OF RIGHTS OF REGISTRANT'S SECURITIES.
None.
ITEM 3. DEFAULTS ON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.1* Amendment Agreement (amending the Parts Service
Agreement) among Sears, Roebuck and Co. and MaxServ,
Inc., dated January 31, 1996. Confidential treatment
has been requested for specific portions of this
document
10.2* Amendment Agreement (amending the Service Agreement)
among Sears, Roebuck and Co. and MaxServ, Inc., dated
January 31, 1996. Confidential treatment has been
requested for specific portions of this document
(b) Reports on Form 8-K
None.
------------------------
* Filed herewith.
9
<PAGE> 10
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
MAXSERV, INC.
Date: April 11, 1996 \s\ NEIL A. JOHNSON
-------------------------------------------------------
Neil A. Johnson
Senior Vice President, Finance, Treasurer and Secretary
(Principal Financial and Accounting Officer)
10
<PAGE> 11
EXHIBIT INDEX
EXHIBIT
NO.
10.1 Amendment Agreement (amending the Parts Service Agreement) among Sears,
Roebuck and Co. and MaxServ, Inc., dated January 31, 1996. Confidential
treatment has been requested for specific portions of this document.
10.2 Amendment Agreement (amending the Service Agreement) among Sears, Roebuck
and Co. and MaxServ, Inc., dated January 31, 1996. Confidential treatment
has been requested for specific portions of this document.
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.1
AMENDMENT AGREEMENT
REDACTED
<PAGE> 2
AMENDMENT AGREEMENT
This Amendment Agreement made as of this 31st day of January, 1996 by and
between MAXSERV, INC., a Delaware corporation (hereinafter called "MaxServ") and
SEARS, ROEBUCK AND CO., a New York corporation (hereinafter called "Sears").
Reference is hereby made to the Parts Service Agreement ("Agreement") made as of
December 29, 1994, by and between MaxServ and Sears with respect to the
provision of Teleparts and Technical Assistance Desk Services by MaxServ to
Sears.
Sears and MaxServ desire to amend the Agreement to change the pricing provision
of Addendum #1, Technical Assistance Desk Services, and Addendum #2, Teleparts
Services, for the 1996 calendar year and to add Addendum #3, Technical
Assistance Desk and Teleparts
Support Services;
Now, Therefore, MaxServ and Sears mutually agree as follows:
1. Addendum #1, Technical Assistance Desk Services, is hereby amended
to change the pricing therefor for the 1996 calendar year by adding to
Addendum #1 the pricing provision attached hereto as Exhibit A.
2. Addendum #2, Teleparts Services, is hereby amended to change the
pricing therefor for the 1996 calendar year by adding to Addendum #2
the pricing provision attached hereto as Exhibit B.
3. The Agreement is hereby amended by adding Exhibit C hereto as an
Addendum #3, Technical Assistance Desk and Teleparts Support Services,
to the Agreement providing for the costs of support services to be
provided for the Technical Assistance Desk and Teleparts Services
systems.
Such amendments to be effective January 1, 1996.
The Agreement, as herein amended, is fully ratified and affirmed.
In WITNESS WHEREOF, MaxServ and Sears have caused this Amendment Agreement to be
executed by person duly authorized thereunto as of the date first above stated.
<TABLE>
<CAPTION>
MAXSERV, INC. SEARS, ROEBUCK AND CO.
<S> <C>
By: Neil A. Johnson By: Daniel A. Mihalovich
----------------------------- -----------------------------
Name: Neil A. Johnson Name: Daniel A. Mihalovich
----------------------------- -----------------------------
Title: Sr. Vice President Finance Title: Vice President Product Services
---------------------------- ---------------------------------
</TABLE>
<PAGE> 3
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
(EXHIBIT A)
TECHNICAL ASSISTANCE DESK SERVICES
PRICING
The Technical Assistance Desk services will be provided under the following fee
structure:
MONTHLY
INCOMING CALL INCREMENTAL
STEP VOLUME PRICE PER CALL*
---- ------------- ---------------
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
* Changes # could result in pricing changes.
Price includes charges for all services as outlined in Description Of
Service to be provided in connection with TAD Services pursuant to this
Agreement.
Calendar 1996
<PAGE> 4
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
(EXHIBIT B)
TELEPARTS SERVICES
PRICING
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
THE TELEPARTS SERVICES PRICING AND REVISED FEE STRUCTURE FOR CALENDAR YEAR 1996
IS AS FOLLOWS:
A payment of # will be paid to MaxServ in January or February, 1996.
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
The service fee rates that are applicable to various categories of Teleparts
Revenue are defined in the following schedule.
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
For 1996, there will be # as
provided in calendar year 1995.
Changes # could result in pricing changes.
Calendar 1996
<PAGE> 5
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
(EXHIBIT C)
ADDENDUM #3 TO PARTS SERVICE AGREEMENT BETWEEN
SEARS, ROEBUCK AND CO.
AND MAXSERV, INC.
DATED AS OF DECEMBER 29, 1994
TECHNICAL ASSISTANCE DESK AND TELEPARTS SUPPORT SERVICES
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
Calendar 1996
<PAGE> 1
EXHIBIT 10.2
AMENDMENT AGREEMENT
REDACTED
<PAGE> 2
AMENDMENT AGREEMENT
This Amendment Agreement made as of this 31st day of January, 1996 by and
between MAXSERV, INC., a Delaware corporation (hereinafter called "MaxServ") and
SEARS, ROEBUCK AND CO., a New York corporation (hereinafter called "Sears").
Reference is hereby made to the Service Agreement ("Agreement") made as of May
20, 1993, by and between MaxServ and Sears with respect to the provision of
certain services by MaxServ to Sears.
Sears and MaxServ desire to amend the Agreement to change the pricing provision
of Addendum #2, Parts Support Service, Addendum #3, Technical Support Service
and Addendum #5, Home Office Center Support Service, for the 1996 calendar year
to be effective
January 1, 1996;
Now, Therefore, MaxServ and Sears mutually agree as follows:
1. Addendum #2, Parts Support Service, is hereby amended to change the
pricing therefor by adding to Addendum #2 the pricing provision
attached hereto as Exhibit A.
2. Addendum #3, Technical Support Service, is hereby amended to change
the pricing therefor by adding to Addendum #3 the pricing provision
attached hereto as Exhibit B.
3. Addendum #5, Home Office Center Support Service, is hereby amended
to change the pricing therefor by adding to Addendum #5 the pricing
provision attached hereto as Exhibit C.
Such amendments to be effective January 1, 1996.
The Agreement, as herein amended, is fully ratified and affirmed.
In WITNESS WHEREOF, MaxServ and Sears have caused this Amendment Agreement to be
executed by person duly authorized thereunto as of the date first above stated.
<TABLE>
<CAPTION>
MAXSERV, INC. SEARS, ROEBUCK AND CO.
<S> <C>
By: Neil A. Johnson By: Daniel A. Mihalovich
------------------------------- -------------------------------
Name: Neil A. Johnson Name: Daniel A. Mihalo0vich
----------------------------- -----------------------------
Title: Sr. Vice President Finance Title: Vice President Product Services
----------------------------- ---------------------------------
</TABLE>
<PAGE> 3
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
(EXHIBIT A)
PARTS SUPPORT SERVICE
PRICING
The Parts Support Service will be provided under the following revised fee
structure:
MONTHLY
INCOMING CALL
STEP VOLUME* PRICE PER CALL***
---- ------------- -----------------
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
*** Changes # could result in pricing changes.
Price includes charges for everything to be provided in connection with
performing this service.
Calendar 1996
<PAGE> 4
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
(EXHIBIT B)
TECHNICAL SUPPORT SERVICE
PRICING
The Technical Support Services will be priced under two different fee
structures, one for # and the other for #.
THE # WILL BE PROVIDED UNDER THE FOLLOWING FEE
STRUCTURE:
MONTHLY
INCOMING CALL
STEP VOLUME* PRICE PER CALL***
---- ------------- -----------------
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
THE # WILL BE PROVIDED UNDER THE FOLLOWING FEE
STRUCTURE:
MONTHLY
INCOMING CALL
STEP VOLUME* PRICE PER CALL***
---- ------------- -----------------
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
*** Changes # could result in pricing changes.
Price includes charges for everything to be provided in connection with
performing this service.
#
MaxServ will provide Technical Support Services for #
to be determined and agreed upon between
MaxServ and Sears.
Calendar 1996
<PAGE> 5
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
(EXHIBIT C)
HOME OFFICE CENTER SUPPORT SERVICE
PRICING
The Home Office Center Support service will be provided under the following
revised fee structure:
MONTHLY
INCOMING CALL
STEP VOLUME* PRICE PER CALL***
---- ------------- -----------------
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
#CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
*** Changes # of operation could result in pricing changes.
Price includes charges for everything to be provided in connection with
performing this service.
#
# will be provided at a fee of #
.
Calendar 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
CONDENSED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED FEBRUARY 29, 1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) CONDENSED FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> FEB-29-1996
<CASH> 1,193
<SECURITIES> 0
<RECEIVABLES> 4,660
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,203
<PP&E> 16,692
<DEPRECIATION> 6,217
<TOTAL-ASSETS> 19,455
<CURRENT-LIABILITIES> 4,014
<BONDS> 47
<COMMON> 109
0
0
<OTHER-SE> 15,285
<TOTAL-LIABILITY-AND-EQUITY> 19,455
<SALES> 0
<TOTAL-REVENUES> 38,565
<CGS> 0
<TOTAL-COSTS> 36,271
<OTHER-EXPENSES> 2,638
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 68
<INCOME-PRETAX> (412)
<INCOME-TAX> (155)
<INCOME-CONTINUING> (257)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (257)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
