FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C, 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal year ended December 31, 1997.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 33-8070-LA
MAXI GROUP, INC.
(Exact name of Issuer as specified in its charter)
Nevada 87-0420448
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
10 West 100 South, Ste 450 Salt Lake City, Utah 84101
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (801) 355-0252
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or such
shorter period that the Issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and none will be contained, to the
best of the Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
The aggregate market value of the common voting stock held by
non-affiliates as of March 31, 1998: Not Determinable.
Shares outstanding of the Issuer's common stock as of December 31,
1997: 25,925,000
The issuer had no significant revenue for its fiscal year ended December 31,
1997.
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PART I
Item 1. Description of Business.
(a) General Development of Business.
Maxi Group, Inc. (the "Issuer" or "Company"), was incorporated under
the laws of the State of Nevada on June 17, 1986. The Issuer was organized to
raise capital and then seek out, investigate and acquire any suitable asset,
property or other business opportunity without regard to any specific business
or industry.
In connection with its corporate purposes, the Issuer effected a public
offering of its $.001 par value common stock which became effective January 5,
1988, pursuant to which it sold 2,155,000 shares of common stock and raised
gross proceeds of $107,750. This offering was closed on April 22, 1988. This
offering was registered under the Securities Act of 1933 pursuant to a
Registration Statement on Form S-18 which was filed with the Securities &
Exchange Commission at the regional office in Los Angeles, California.
Subsequent to the close of the offering, the Issuer has been in the process of
investigating potential acquisitions, but has not made any acquisition. The
Company has not yet engaged in any significant business activities.
The Company formed a wholly-owned subsidiary, Zoe Capital Corp., a
public blind pool (blank check) company, for the purpose of allowing the
shareholders of the company to participate in another company which would seek a
business acquisition of its own. This was intended to diversify the number and
type of acquisitions which can potentially benefit the shareholders of the
Company. In connection with its formation, Zoe Capital Corp. issued 3,655,000
shares of common stock to the Company in exchange for $30,000. The shares were
issued as units with warrants to purchase another 3,655,000 shares of common
stock at $1.00 per share. The Company distributed all 3,655,000 of the Zoe units
to its shareholders on a 1 for 1 basis (one Zoe unit for every one Maxi share).
The shares were distributed at no cost to the individual Maxi Group shareholders
who were shareholders of record as of June 19, 1989, the Record Date.
(b) Financial Information about Industry Segments.
The Issuer does not presently have separate industry segments.
(c) Narrative Description of the Business.
General Discussion
The Company's business plan is to seek one or more potential business
ventures, anywhere in the United States, which, in the
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opinion of management may warrant involvement by the Company. The Company will
only acquire businesses which can generate or provide audited financial
statements. This will limit the types of businesses which the Company could
acquire to those firms which have previously had audited financial statements.
The Company recognizes that because of its limited financial, managerial and
other resources, the number of suitable potential business ventures which may be
available to it will be extremely limited. The Company's principal business
objective will be to seek long-term growth potential in the business venture in
which it participates rather than to seek immediate, short-term earnings. In
seeking to attain the Company's business objective, it will not restrict its
search to any particular business or industry, but may participate in business
ventures of essentially any kind or nature, including, but not limited to,
finance, high technology, manufacturing, natural resources, service, research
and development, communications, insurance, brokerage, transportation and
others. Management's discretion is unrestricted and it may participate in any
business venture whatsoever, which may meet the business objectives discussed
herein. It is emphasized that the business objectives discussed are extremely
general and are not intended to be restrictive upon the discretion of
management.
The Company will seek one or more potential business ventures from its
known sources, but will rely heavily on personal contacts of its officers and
directors as well as indirect associations between them and other business and
professional people. It is not anticipated that the Company will engage
professional firms specializing in business acquisitions or reorganizations. In
some instances, the Company may publish notices or advertisements seeking a
potential business venture in financial or trade publications.
The Company will not restrict its search to any specific kind of firms,
but may acquire a venture in its preliminary or development stage, may
participate in a business which is already in operation or in a business in
various stages of its corporate existence. It is impossible to predict at this
stage the status of any venture in which the Company may participate, in that
the venture may need additional capital, may merely desire to have its shares
publicly traded, or may seek other perceived advantages which the Company may
offer. In some instances, the business endeavors may involve the acquisition of
or merger with a corporation which does not need substantial additional cash but
which desire to establish a public trading market for its common stock.
Firms which seek the Company's participation in their operations
through a reorganization, asset acquisition, or some other means may desire to
do so to avoid what such firms may deem to be adverse factors related to
undertaking a public offering. Such factors include substantial time
requirements and legal costs,
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along with other conditions or requirements imposed by various
state laws.
To a large extent, a decision to participate in a specific business
endeavor may be made upon management's analysis of the quality of the other
firm's management and personnel, the anticipated acceptability of new products
or marketing concepts, the merit of technological changes, and numerous other
factors which are difficult, if not impossible, to analyze through the
application of any objective criteria. In many instances, it is anticipated that
the results of a specific firm to date may not necessarily be indicative of the
potential for the future because of the requirement to substantially shift
marketing approaches, expand significantly, change product emphasis, change or
substantially augment management, and other factors. Because the Company may
participate in business endeavors with newly organized firms or with firms which
are entering a new phase of their growth, it should be emphasized that the
Company will incur further risks since management in many instances will not
have proved its abilities or effectiveness, the eventual market of such firm's
product or services will likely not be established, and the profitability of the
firm will be unproved and cannot be predicted.
As part of the Company's investigation, officers and directors will
meet personally with management and key personnel of the firm sponsoring the
business opportunity, may visit and inspect material facilities, obtain
independent analysis or verification of certain information provided, check
references of management and key personnel, and conduct other reasonable
measures, to the extent of the Company's limited financial resources and
management and technical expertise.
Generally, the Company will analyze all available factors in the
circumstances and make a determination based upon a composite of available
facts, without reliance upon any single factor as controlling.
It is anticipated that business endeavors will be available to the
Company from various sources, including its officers and directors, professional
advisors, securities broker-dealers, venture capitalists, members of the
financial community, and other who may present unsolicited proposals. In certain
circumstances, the Company may agree to pay a finder's fee or to otherwise
compensate investment banking or other services provided by persons who are
unaffiliated with the Company but who submit a potential business endeavor in
which the Company participates. No such finder's or other fees will be paid to
any person who is an officer, director, owner of record or to the knowledge of
the Company owner beneficially, of 10% or more of the Company's issued and
outstanding stock, without the approval of a majority of disinterested
shareholders.
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The Company may acquire a business venture by conducting a
reorganization involving the issuance of securities in the Company. Due to the
requirements of certain provisions of the Internal Revenue Code of 1954 (as
amended) in order to obtain certain beneficial tax consequences in such
reorganizations, the number of shares held by all of the present shareholders of
the Company prior to such transaction or reorganization, including persons
purchasing shares in this offering, may be substantially less than the total
outstanding shares held by such shareholders in any reorganized entity. As noted
above, such a transaction may be based upon the sole determination of management
without any vote or approval by the shareholders of the Company. The result of
any such reorganization could be additional dilution to the shareholders of the
Company prior to such reorganization. If the Company were to issue substantial
additional securities in any such reorganization, or otherwise, such issuance
may have an adverse effect on any trading market which may develop in the
Company's securities in the future.
It is anticipated that the investigation of specific business endeavors
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys and others. If a
decision is made not to participate in a specific business endeavor, the costs
theretofore incurred in the related investigation would not be recoverable.
Furthermore, even if an agreement is reached for the participation in a specific
business venture, the failure to consummate that transaction may result in the
loss to the Company of the related costs incurred.
The Company will not participate in a business endeavor wherein it
invests the proceeds of this offering in an affiliate of the Company.
The Issuer has not yet engaged in any business activities. The Company
has no formal business plan or any particular area of business in which it
intends to engage. Management of the Company will attempt to acquire on behalf
of the Company assets, properties and/or ongoing businesses which it believes
are potential for successful development. This may include businesses or assets
related to manufacturing, retail and wholesale sales, industrial development,
and natural resource development or any other field of business or endeavor
which Management of the Company may encounter. Management of the Company have
not adopted any formal business plan or conducted any market studies with
respect to any business or industry. No representation is made that Management
of the Company have any particular expertise in connection with the proposed
activities of the Company or any particular industry or business field.
Management of the Company may rely on independent experts or consultants in any
business field in connection with their examination and investigation of
potential acquisitions.
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Management of the Company presently have no specific assets, properties
or business operation which it has in mind for potential acquisition nor does it
have any particular areas of business or industry in which it intends to look
for such business acquisitions.
Item 2. Properties.
The Issuer has no significant properties or assets. The Company has no
office facilities or employees. The Company uses the business address of its
Secretary, who also provides accounting services, clerical and secretarial help,
for which the Company accrues $100 per month.
Item 3. Legal Proceedings.
There are not currently any material pending legal proceedings, to
which the Issuer is a party or of which any of its property is subject and no
such proceedings are known to the Issuer to be threatened or contemplated by or
against it.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of the security holders, through
solicitation of proxies or otherwise during the 4th quarter of the fiscal year
covered by this report.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
(a) Market Information.
The Issuer's common stock has not been publicly traded.
(b) Holders.
The approximate number of holders of the Issuer's common stock as of May 6,
1997, is 15.
(c) Dividends.
The Issuer has not paid any cash dividends to date and does not anticipate
or contemplate paying dividends in the foreseeable future. It is the present
intention of management to utilize all available funds for the development of
the Company's business.
The Company is authorized by its certificate of incorporation to issue up
to 100,000,000 shares of common stock, $.001 par value.
All shares of stock, when issued, will be fully-paid and
nonassessable. All shares are equal to each other with respect to
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voting, liquidation and dividend rights. Holders of shares of common stock are
entitled to one vote for each share they own at any stockholders' meeting.
Holders of shares of common stock are entitled to receive such dividends as may
be declared by the Board of Directors out of funds legally available therefor,
and upon liquidation are entitled to participate pro-rata in a distribution of
assets available for such a distribution to stockholders. There are no
conversion, pre-emptive or other subscription rights or privileges with respect
to any shares. Reference is made to the Company's Articles of Incorporation
together with the Amendments thereto and its By-Laws as well as to the
applicable statutes of the State of Nevada for a more complete description of
the rights and liabilities of holders of common stock. The common stock of the
Company does not have cumulative voting rights which means that the holders of
more than 50% of the shares voting for the election of directors may elect all
of the directors if they choose to do so. In such event, the holders of the
remaining shares aggregating less than 50% will not be able to elect any
directors.
Item 6 . Management's Discussion and Analysis or Plan of Operation.
The Company was formed to effectuate a public stock offering and then
to look for potential acquisitions. It has not yet made any acquisitions. The
Company has no significant assets.
The Company's plan of operations is to actively seek a business
combination with an ongoing private business enterprise, although no specific
combination is presently contemplated.
Item 7. Financial Statements.
See attached financial statements.
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
During the two most recent fiscal years, there has not been any change
in the principal independent accountant for the Issuer, and there has been no
disagreement on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange
Act.
(a) Identification of Directors.
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The current directors of the Issuer, who will serve until the next
annual meeting, or until their successors are elected or appointed and
qualified, are set forth below:
YEAR FIRST ELECTED
NAME AGE AS DIRECTOR POSITION
Robert W. Mann 49 Since Inception President and
Director
Gary B. Peterson 50 Since Inception Secretary-
Treasurer and
Director
(b) Identification of Executive Officers.
Same as above.
(c) Significant Employees.
The Issuer has no significant employees other than its officers and
directors.
(d) Family Relationships.
None
(e) Business Experience.
(1) Background
Robert W. Mann, graduated from Harvard University in 1970. He received his
MBA in finance at Northeastern University (Boston, Mass.) in 1973, his J.D. from
Southwestern University (Los Angeles) in 1977 and an LLM in taxation from New
York University in 1980. Since 1980 he has engaged in the private practice of
law in Los Angeles specializing in corporate taxation and finance. At the
present time Mr. Mann's principal efforts are devoted to managing his own
financial affairs.
Gary B. Peterson, is currently associated with the CPA firm of Smith,
Peterson & Associates, LLC and was previously the chief financial officer of
Digitran Systems, Inc., a public company. During 1995 and 1996, he was the chief
executive officer of Data Security Corporation, a public company. From 1982
through 1995, Mr. Peterson was the shareholder/officer in the Utah C.P.A. firm
of Peterson, Siler & Stevenson. Mr. Peterson is qualified to practice as a CPA
in California and Utah and is a member of the Utah Society of Certified Public
Accountants and the American Institute of CPA's. Prior to starting his own
practice in 1982 he worked as a tax senior and manager with Price Waterhouse &
Company from 1972 to 1976, Touche Ross & Company from 1976 to 1977 and Charles
Huber &
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Associates from 1977 to 1978. Mr. Peterson worked as a controller
for Newbery Engineering and Construction Company from 1978 to 1982,
where he was responsible for all of the company's financial
matters. Mr. Peterson graduated with honors from Brigham Young
University in Provo, Utah in 1972. Mr. Peterson is the President
and a Director of Capital Growth, Inc., a company which effectuated
a Regulation A blind pool/blank check public offering. Mr.
Peterson's primary obligation will be to take potential
acquisitions first to Capital Growth. His principal role with Maxi
Group is to handle its financial, recordkeeping and bookkeeping
affairs and to review potential acquisitions from a financial point
of view.
(2) Directorships
Except as described herein, none of the Issuer's directors, nor any person
nominated or chosen to become a director holds any other directorships in any
other company with class of securities registered pursuant to Section 12 of the
Exchange Act or subject to the requirements of Section 15(d) of such Act or any
company registered as an investment company under the Investment Company Act of
1940.
(f) Involvement in Certain Legal Proceedings.
None of the officers or directors have been involved in any material legal
proceedings which occurred within the last five years of any type as described
in Section 401(f) of Regulation S-K.
Item 10. Executive Compensation.
(a) Cash Compensation.
Other than the $100 per month being accrued for the Company's president for
use of office facilities and accounting services, during the last fiscal year
none of the Issuer's officers or directors individually received any salary,
wage or other compensation. During 1997 a total of $1,200 was accrued for the
Company's president pursuant to this arrangement. During the current fiscal year
the Issuer will continue this arrangement but has no present plans to pay any
other compensation to officers or directors.
(b) Compensation Pursuant to Plans.
There are presently no ongoing pension or other plans or arrangements
pursuant to which remuneration is proposed to be paid in the future to any of
the officers and directors of the Issuer.
(c) Other Compensation.
None.
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(d) Compensation to Directors.
None.
Item 11. Security Ownership of Certain Beneficial Owners &
Management.
The following table sets forth the beneficial stock ownership of all
persons known by the Issuer to own more than 5% of the outstanding common stock,
and the officers and directors, both individually and as a group.
Name and Address of Position with Amount and Nature of % of
Beneficial Owner Company Beneficial Ownership Class
- --------------------- -------------- --------------------- ------
Robert W. Mann President and 23,976,000 (1) 93%
737 Westholme Ave Director
Los Angeles, CA 90024
Gary B. Peterson Secretary- 18,750 --
2726 E. 2500 N. Treasurer and
Layton, UT 84041 Director
All officers &
directors as a
group 2 persons 23,994,750 93%
(1) Includes all shares beneficially owned, regardless of the form of ownership.
Changes in Control.
There are no arrangements including pledges by any person of securities of
the Company, the operation of which may at a subsequent date result in a change
in control of the Company.
Item 12. Certain Relationships & Related Transactions.
During 1997, the Company issued 2,000,000 shares to the Company's
President for $2,000. The Company uses the office of an officer and director of
the Company, who also provides accounting, clerical and secretarial services as
needed, for $100 per month. The terms of these transactions were not determined
on an arms length basis.
No officer, director, promoter, or affiliate of the Issuer has or proposes
to have any direct or indirect material interest by security holdings,
contracts, options, or otherwise in the Issuer or any asset proposed to be
acquired by the Issuer other than as described herein.
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PART IV
Item 13. Exhibits and Reports on Form 8-K.
(a) The following documents are filed as a part of this report:
1. Audited Financial Statements are included as part of this report.
2. Financial Statement Schedules.
None.
3. Exhibits.
None
Reports on Form 8-K.
The Company filed no reports on Form 8-K during the last quarter of the
year ended December 31, 1997.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Issuer has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
MAXI GROUP, INC.
Date: May 22 , 1998 /s/ Robert W. Mann
------------------- -------------------
Robert W. Mann, President
Date: May 22 , 1998 /s/ Gary B. Peterson
------------------- ---------------------
Gary B. Peterson, Secretary-
Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Issuer and in the capacities and on the dates indicated.
Date: May 22 , 1998 /s/ Robert W. Mann
------------------- -------------------
Robert W. Mann, Director
Date: May 22 , 1998 /s/ Gary B. Peterson
------------------- ---------------------
Gary B. Peterson, Director
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MAXI GROUP, INC.
(A Development Stage Company)
Index
- --------------------------------------------------------------------------------
Page
Independent auditors' report F-1
Balance sheet, December 31, 1997 and 1996 F-2
Statement of operations for the years
ended December 31, 1997 and 1996 and
cumulative amounts since inception F-3
Statement of stockholders' deficit
from inception F-4
Statement of cash flows for the years
ended December 31, 1997 and 1996 and
cumulative amounts since inception F-6
Notes to financial statements F-7
- --------------------------------------------------------------------------------
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Maxi Group, Inc.
We have audited the accompanying balance sheet of Maxi Group, Inc., (a
development stage company) as of December 31, 1997 and 1996, and the related
statements of operations, stockholders' deficit and cash flows for the years
then ended and the cumulative amounts since inception. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Maxi Group, Inc., (a
development stage company) as of December 31, 1997 and 1996 and the results of
its operations and its cash flows for the years then ended and the cumulative
amounts since inception in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses and has a
stockholders' deficit. These conditions raise substantial doubt about its
ability to continue as a going concern. Management's plans regarding these
matters also are described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
TANNER+Co.
Salt Lake City, Utah
March 13, 1998
F-1
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MAXI GROUP, INC.
(A Development Stage Company)
Balance Sheet
December 31,
- --------------------------------------------------------------------------------------------------------
Assets 1997 1996
------
---------------------------------
Current assets -
cash $ 1,810 $ 2,475
---------------------------------
- --------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $ 4,970 $ 4,220
Payable to related party 6,620 5,420
---------------------------------
Total current liabilities 11,590 9,640
---------------------------------
Stockholders' deficit:
Common stock, $.001 par value; 100,000,000 shares
authorized; 25,925,000 and 23,925,000 shares issued
and outstanding as of December 31, 1997 and 1996, respectively 25,925 23,925
Additional paid-in capital 47,042 47,042
Accumulated deficit (82,747) (78,132)
---------------------------------
Total stockholders' deficit (9,780) (7,165)
---------------------------------
Total liabilities and stockholders' deficit $ 1,810 $ 2,475
---------------------------------
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-2
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MAXI GROUP, INC.
(A Development Stage Company)
Statement of Operations
Years Ended December 31, and Cumulative Amounts
- ----------------------------------------------------------------------------------------------------------
Cumulative
Amounts
Since
1997 1996 Inception
-----------------------------------------------------
Revenue - interest income $ 98 $ 90 $ 7,167
-----------------------------------------------------
Expenses:
Professional fees 2,800 1,620 55,904
Administrative expenses 1,913 2,238 15,583
Travel expenses - - 17,517
Amortization expense - - 160
-----------------------------------------------------
Total expenses 4,713 3,858 89,164
-----------------------------------------------------
Loss before income taxes (4,615) (3,768) (81,997)
Income tax expense - - -
-----------------------------------------------------
Net loss $ (4,615) (3,768) (81,997)
-----------------------------------------------------
Loss per share $ (.00) (.00) (.01)
-----------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-3
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MAXI GROUP, INC.
(A Development Stage Company)
Statement of Stockholders' Deficit
From Inception (June 17, 1986) Through
December 31, 1997
- ----------------------------------------------------------------------------------------------------------
Additional Stock
Common Stock Paid-In Subscriptions Accumulated
-------------------------------
Shares Amount Capital Receivable Deficit
-------------------------------------------------------------------------------
Balance, June 17, 1986 - $ - $ - $ - $ -
Shares issued to initial
stockholders for cash,
June 1986, at $.005 3,000,000 3,000 12,000 - -
Net loss for the period
ended December 31, 1986 - - - - (129)
-------------------------------------------------------------------------------
Balance, December 31, 1986 3,000,000 3,000 12,000 - (129)
Contribution of initial
stockholders' shares for
cancellation (1,500,000) (1,500) 1,500 - -
Net loss for the year
ended December 31, 1987 - - - - (289)
-------------------------------------------------------------------------------
Balance, December 31, 1987 1,500,000 1,500 13,500 - (418)
Shares issued pursuant to
public offering for cash,
April , at $.05 per share 2,155,000 2,155 63,325 - -
Net loss for the year
ended December 31, 1988 - - - - (19,221)
-------------------------------------------------------------------------------
Balance, December 31, 1988 3,655,000 3,655 76,825 - (19,639)
Distribution of stock - - (30,000) - -
Net loss for the year
ended December 31, 1989 - - - - (16,066)
-------------------------------------------------------------------------------
Balance, December 31, 1989 3,655,000 3,655 46,825 - (35,705)
Net loss for the year
ended December 31, 1990 - - - - (8,830)
-------------------------------------------------------------------------------
Balance, December 31, 1990 3,655,000 3,655 46,825 - (44,535)
Shares issued in private
placement 2,000,000 2,000 8,000 (9,000) -
- -----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-4
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MAXI GROUP, INC.
(A Development Stage Company)
Statement of Stockholders' Deficit
Continued
- ----------------------------------------------------------------------------------------------------------
Additional Stock
Common Stock Paid-In Subscriptions Accumulated
-------------------------------
Shares Amount Capital Receivable Deficit
-------------------------------------------------------------------------------
Net loss for the year
ended December 31, 1991 - - - - (7,238)
-------------------------------------------------------------------------------
Balance, December 31, 1991 5,655,000 5,655 54,825 (9,000) (51,773)
Payments received on
stock subscription
receivable - - - 1,567 -
Net loss for the year
ended December 31, 1992 - - - - (5,256)
-------------------------------------------------------------------------------
Balance, December 31, 1992 5,655,000 5,655 54,825 (7,433) (57,029)
Cancellation of 2,000,000
shares, June 1993 (2,000,000) (2,000) (5,433) - -
Shares issued in private
placement, June 1993 18,270,000 18,270 (2,350) 7,433 -
Net loss for the year
ended December 31, 1993 - - - - (5,506)
-------------------------------------------------------------------------------
Balance, December 31, 1993 21,925,000 21,925 47,042 - (62,535)
Net loss for the year
ended December 31, 1994 - - - - (7,358)
-------------------------------------------------------------------------------
Balance, December 31, 1994 21,925,000 21,925 47,042 - (69,893)
Net loss for the year
ended December 31, 1995 - - - - (4,471)
-------------------------------------------------------------------------------
Balance, December 31, 1995 21,925,000 21,925 47,042 - (74,364)
Shares issued in private
placement, August 1996 2,000,000 2,000 - - -
Net loss for the year
ended December 31, 1996 - - - - (3,768)
-------------------------------------------------------------------------------
Balance, December 31, 1996 23,925,000 23,925 47,042 - (78,132)
Shares issued in private
placement, February 1997 2,000,000 2,000 - - -
Net loss for the year
ended December 31, 1997 - - - - (4,615)
-------------------------------------------------------------------------------
25,925,000 $ 25,925 $ 47,042 $ - $ (82,747)
-------------------------------------------------------------------------------
F-5
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MAXI GROUP, INC.
(A Development Stage Company)
Statement of Cash Flows
Years Ended December 31, and Cumulative Amounts
- ----------------------------------------------------------------------------------------------------------
Cumulative
Amounts
Since
1997 1996 Inception
-----------------------------------------------------
Cash flows from operating activities:
Net loss $ (4,615) $ (3,768) $ (82,747)
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization expense - - 160
Increase in accounts payable 750 - 4,970
-----------------------------------------------------
Net cash used in
operating activities (3,865) (3,768) (77,617)
-----------------------------------------------------
Cash flows from investing activities:
Organization costs - - (160)
Investment - - (30,000)
Increase in related party payable 1,200 1,200 6,620
-----------------------------------------------------
Net cash provided by (used in)
investing activities 1,200 1,200 (23,540)
-----------------------------------------------------
Cash flows from financing activities:
Proceeds from initial issuance of
common stock - - 15,000
Net proceeds from issuance of
common stock 2,000 2,000 96,377
Public offering costs - - (8,410)
-----------------------------------------------------
Net cash provided by
financing activities 2,000 2,000 102,967
-----------------------------------------------------
Net (decrease) increase in cash (665) (568) 1,810
Cash, beginning of period 2,475 3,043 -
-----------------------------------------------------
Cash, end of period $ 1,810 $ 2,475 $ 1,810
-----------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-6
</TABLE>
<PAGE>
MAXI GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1997 and 1996
- --------------------------------------------------------------------------------
1. Summary of Significant Accounting Policies
Organization
The Company was organized under the laws of the State of Nevada on June 17,
1986. The Company has not commenced planned principal operations. The Company
proposes to seek business ventures which will allow for long-term growth.
Further, the Company is considered a development stage company as defined in
SFAS No. 7 and has not, thus far, engaged in business activities of any kind.
The Company has, at the present time, not paid any dividends and any dividends
that may be paid in the future will depend upon the financial requirements of
the Company and other relevant factors.
Cash and Cash Equivalents
Cash equivalents are generally comprised of certain highly liquid investments
with maturities of less than three months.
Loss Per Share
The computation of loss per share of common stock is based on the weighted
average number of shares outstanding.
Use of Estimates in Preparation of Financial statements The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
2. Going Concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. Because of significant losses, the
excess of current liabilities over current assets, and a stockholders' deficit,
the Company's ability to continue as a going concern is dependent on attaining
future profitable operations, and obtaining additional financial and/or capital.
As shown in the statement of operations, the Company reported a net loss of
$4,615 for the year ended December 31, 1997, and as of December 31, 1997, has a
deficit in equity of $9,780.
- --------------------------------------------------------------------------------
F-7
<PAGE>
MAXI GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
2. Going Concern
Continued
Management of the Company is currently developing a plan to attempt to resolve
these uncertainties. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
3. Related Party Transactions
Commencing January 1, 1996, the Company agreed to pay $100 per month to a
shareholder, officer and director of the Company for accounting and office
expenses. The Company incurred expenses under the agreement of $1,200 and $1,200
for the years ending December 31, 1997 and 1996, respectively. At January 1,
1996, the Company owed $8,440 to an accounting firm whose managing partner was
an officer and director of the Company. On January 1, 1996, the officer
terminated his employment with the accounting firm and at the time of
termination agreed to accept one-half of the outstanding obligation, with the
balance to be paid to the accounting firm. The Company owed $6,620 and $5,420 to
the officer as of December 31, 1997 and 1996, respectively.
During the year ended December 31, 1993, the Company issued and additional
18,270,000 shares of restricted common stock to the Company's president in
exchange for $18,270. During the year ending December 31, 1997 and 1996, the
Company issued an additional 2,000,000 shares per year of restricted common
stock to the Company's president for $2,000 each year.
4. Common Stock
The initial issuance of the Company's common stock occurred in June 1986. During
April 1988, the Company completed the sale of 2,155,000 shares of its previously
authorized but unissued common stock. This offering was registered with the
Securities and Exchange Commission on Form S-18, in accordance with the
Securities Act of 1933. The stock was sold at an offering price of $.05 per
share. Proceeds net of offering costs amounted to $65,480. The proceeds were
deposited in an interest bearing account.
In November 1991, the Company issued 2,000,000 shares at $.005 per share to the
Company's president. The Company received $1,000 in cash and $9,000 receivable
due on demand for such issuance.
- --------------------------------------------------------------------------------
F-8
<PAGE>
MAXI GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
4. Common Stock Continued
During the year ended December 31, 1993, the Company received back and canceled
2,000,000 shares of common stock and the related subscription agreement with an
officer of the Company. The amounts previously paid for the stock ($2,567) were
applied to the purchase of 18,270,000 shares of restricted common stock during
June 1993 by the same officer.
In 1997 and 1996, the Company issued 2,000,000 shares at $.001 per share to the
Company's president. The Company received $2,000 in cash for each such issuance.
5. Supplemental Cash Flow Disclosure
The Company has not paid any amounts for interest or income taxes during the
years ended December 31, 1997 and 1996, and since inception.
6. Income Taxes
The difference between income taxes at statutory rates and the amount presented
in the financial statements is a result of the following:
Year Ended
December 31, Cumulative
-------------------------------
1997 1996 Amounts
-----------------------------------------------
Income tax benefit at
statutory rate $ 1,000 $ 1,000 $ 28,000
Change in valuation
allowance (1,000) (1,000) (28,000)
-----------------------------------------------
$ - $ - $ -
-----------------------------------------------
- --------------------------------------------------------------------------------
F-9
<PAGE>
MAXI GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
6. Income Taxes Continued
Deferred tax assets are as follows:
December 31,
-----------------------------------
1997 1996
-----------------------------------
Operating loss carryforward $ 28,000 $ 27,000
Valuation allowance (28,000) (27,000)
-----------------------------------
$ - $ -
-----------------------------------
The Company has net operating loss carryforwards of approximately $82,000, which
begin to expire in the year 2001. The amount of net operating loss carryforward
that can be used in any one year will be limited by significant changes in
ownership of the Company and by the applicable tax laws which are in effect at
the time such carryforwards can be utilized.
7. Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 (SFAS 128) "Earnings Per Share," which
requires companies to present basic earnings per share (EPS) and diluted
earnings per share, instead of the primary and fully diluted EPS as previously
required. The new standard also requires additional informational disclosures,
and makes certain modifications to the previously applicable EPS calculations
defined in Accounting Principles Board No. 15. The new standard is required to
be adopted by all public companies for reporting periods ending after December
15, 1997, and requires restatement of EPS for all prior periods reported. During
the year ended December 31, 1997, the Company adopted this standard.
- --------------------------------------------------------------------------------
F-10
<PAGE>
MAXI GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
7. Earnings Per Share Continued
Earnings per share information in accordance with SFAS 128 is as follows:
Year Ended December 31, 1997
-----------------------------------------------
Loss Shares Per-Share
(Numerator) (Denominator) Amount
-----------------------------------------------
Net loss $ (4,615)
Less preferred stock
dividends -
----------------
Basic EPS
Loss available to
common stockholders (4,615) 25,758,000 $ (.00)
-------------
Effect of Dilutive Securities
Stock options - -
---------------------------------
Diluted EPS
Loss available to common
stockholders plus assumed
conversions $ (4,615) 25,758,000 $ (.00)
-----------------------------------------------
Year Ended December 31, 1996
-----------------------------------------------
Loss Shares Per-Share
(Numerator) (Denominator) Amount
-----------------------------------------------
Net loss $ (3,768)
Less preferred stock
dividends -
----------------
Basic EPS
Loss available to
common stockholders (3,768) 21,925,000 $ (.00)
-------------
Effect of Dilutive Securities
Stock options - -
---------------------------------
Diluted EPS
Loss available to common
stockholders plus assumed
conversions $ (3,768) 21,925,000 $ (.00)
-----------------------------------------------
- --------------------------------------------------------------------------------
F-11
<PAGE>
MAXI GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
7. Earnings Per Share Continued
Cumulative Amounts
-----------------------------------------------
Loss Shares Per-Share
(Numerator) (Denominator) Amount
-----------------------------------------------
Net loss $ (82,747)
Less preferred stock
dividends -
----------------
Basic EPS
Loss available to
common stockholders (82,747) 11,258,000 $ (.01)
-------------
Effect of Dilutive Securities
Stock options - -
---------------------------------
Diluted EPS
Loss available to common
stockholders plus assumed
conversions $ (82,747) 11,258,000 $ (.01)
-----------------------------------------------
- --------------------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MAXI GROUP,
INC. DECEMBER 31, 1997 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,810
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,810
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,810
<CURRENT-LIABILITIES> 11,590
<BONDS> 0
0
0
<COMMON> 25,925
<OTHER-SE> (35,705)
<TOTAL-LIABILITY-AND-EQUITY> 1,810
<SALES> 0
<TOTAL-REVENUES> 98
<CGS> 0
<TOTAL-COSTS> 4,713
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,615)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,615)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,615)
<EPS-PRIMARY> (.00)
<EPS-DILUTED> (.00)
</TABLE>
