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, 1998.
[ ] 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.)
836 South Slate Canyon Dr, Provo, Utah 84606
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (801) 356-3735
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 19, 1999: Not Determinable.
Shares outstanding of the Issuer's common stock as of December 31,
1998: 25,925,000
The issuer had no significant revenue for its fiscal year ended
December 31, 1998.
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
(A) BUSINESS DEVELOPMENT.
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 in 1988,
pursuant to which it sold 2,155,000 shares of common stock and
raised gross proceeds of $107,750. 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. 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.
Since its public offering, the Company has issued additional
shares of common stock for cash on various occasions in private
offerings. At December 31, 1998, the Company had 25,925,000 shares
issued and outstanding.
Subsequent to the end of the fiscal year for which this report
is filed, the Company reverse split its common stock on a 10 to 1
basis, reducing the total issued and outstanding to 2,592,500
shares. The Company then issued an additional 22,000,000 shares
for a total consideration of $22,000 cash. In conjunction with
this, existing managment resigned and appointed new management.
(B) BUSINESS OF ISSUER.
General Discussion
The Company's business plan is to seek one or more potential
business ventures, anywhere in the United States, which, in the
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,
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.
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.
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.
(C) REPORTS TO SECURITY HOLDERS.
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (The "Exchange
Act") and, in accordance therewith, files reports and other
information with the Commission. Reports and other information
filed by the Company with the Commission pursuant to the
informational requirements of the Exchange Act are available for
inspection and copying at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following regional offices of
the Commission: New York Regional Office, 7 World Trade Center,
New York, New York 10007; Chicago Regional Office, 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material may be
obtained from the public reference section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission maintains an Internet Web site that contains
reports, proxy and information statements and other information
regarding issuers that file such reports electronically with the
Commission. Such site is accessible by the public through any
Internet access service provider and is located at
http://www.sec.gov. Copies of the Company's Annual, Quarterly and
other Reports filed by the Company with the Commission are also
available upon request, without charge, by writing the Company.
ITEM 2. PROPERTIES.
The Issuer has no significant properties or assets. The
Company has no office facilities or employees. The Company uses
the address of its President.
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 record holders of the Issuer's
common stock as of March 16, 1999, is 14.
(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
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.
MAXI GROUP, Inc.
(A Development Stage Company)
Index to Financial Statements
Page
Independent auditors' report F-1
Balance sheet at December 31, 1998 and 1997 F-2
Statement of operations for the years
ended December 31, 1998 and 1997 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, 1998 and 1997 and
cumulative amounts since inception F-6
Notes to financial statements F-7
<PAGE>
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, 1998 and 1997, 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, 1998 and 1997 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 8, 1999, Except for
Note 8, which is dated March 11, 1999
F-1
<PAGE>
MAXI GROUP, INC.
(A Development Stage Company)
Balance Sheet
<TABLE>
<CAPTION>
December 31,
- ----------------------------------------------------------------------------------------------------------
Assets 1998 1997
------
-----------------------------------
<S> <C> <C>
Current assets -
cash $ 1,669 $ 1,810
-----------------------------------
- ----------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $ 4,220 $ 4,970
Payable to related parties 11,820 6,620
-----------------------------------
Total current liabilities 16,040 11,590
-----------------------------------
Stockholders' deficit:
Common stock, $.001 par value; 100,000,000
shares authorized; 2,592,500 shares
issued and outstanding 2,593 2,593
Additional paid-in capital 70,374 70,374
Accumulated deficit (87,338) (82,747)
-----------------------------------
Total stockholders' deficit (14,371) (9,780)
-----------------------------------
Total liabilities and stockholders' deficit $ 1,669 $ 1,810
-----------------------------------
- -------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MAXI GROUP, INC.
(A Development Stage Company)
Statement of Operations
- -------------------------------------------------------------------------------------------------------------------
Cumulative
Years Ended Amounts
December 31, Since
-----------------------------------
1998 1997 Inception
-----------------------------------------------------
<S> <C> <C> <C>
Revenue - interest income $ 73 $ 98 $ 7,240
-----------------------------------------------------
Expenses:
Professional fees 2,223 2,800 58,877
Administrative expenses 1,241 1,913 16,824
Travel expenses - - 17,517
Amortization expense - - 160
Rent expense 1,200 - 1,200
-----------------------------------------------------
Total expenses 4,664 4,713 94,578
-----------------------------------------------------
Loss before income taxes (4,591) (4,615) (87,338)
Income tax expense - - -
-----------------------------------------------------
Net loss $ (4,591) $ (4,615) $ (87,338)
-----------------------------------------------------
Loss per common share
-basic and diluted $ (.00) $ (.00) $ (.07)
-----------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MAXI GROUP, INC.
(A Development Stage Company)
Statement of Stockholders' Deficit
From Inception Through December 31, 1998
- ----------------------------------------------------------------------------------------------------------
Common Stock Additional Stock
------------------------------- Paid-In Subscriptions Accumulated
Shares Amount Capital Receivable Deficit
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, June 17, 1986 - $ - $ - $ - $ -
Shares issued to initial
stockholders for cash 300,000 300 14,700 - -
Net loss for the period ended
December 31, 1986 - - - - (129)
-------------------------------------------------------------------------------
Balance, December 31, 1986 300,000 300 14,700 - (129)
Contribution of initial
stockholders' shares for
cancellation (150,000) (150) 150 - -
Net loss for the year ended
December 31, 1987 - - - - (289)
-------------------------------------------------------------------------------
Balance, December 31, 1987 150,000 150 14,850 - (418)
Shares issued pursuant to
public offering for cash 215,500 216 65,264 - -
Net loss for the year ended
December 31, 1988 - - - - (19,221)
-------------------------------------------------------------------------------
Balance, December 31, 1988 365,500 366 80,114 - (19,639)
Distribution of stock - - (30,000) - -
Net loss for the year ended
December 31, 1989 - - - - (16,066)
-------------------------------------------------------------------------------
Balance, December 31, 1989 365,500 366 50,114 - (35,705)
Net loss for the year ended
December 31, 1990 - - - - (8,830)
-------------------------------------------------------------------------------
Balance, December 31, 1990 365,500 366 50,114 - (44,535)
Shares issued in private
placement 200,000 200 9,800 (9,000) -
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net loss for the year ended
December 31, 1991 - - - - (7,238)
-------------------------------------------------------------------------------
Balance, December 31, 1991 565,500 566 59,914 (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 565,500 566 59,914 (7,433) (57,029)
Cancellation of shares (200,000) (200) (7,233) - -
Shares issued in private
placement, June 1993 1,827,000 1,827 14,093 7,433 -
Net loss for the year ended
December 31, 1993 - - - - (5,506)
-------------------------------------------------------------------------------
Balance, December 31, 1993 2,192,500 2,193 66,774 - (62,535)
Net loss for the year ended
December 31, 1994 - - - - (7,358)
-------------------------------------------------------------------------------
Balance, December 31, 1994 2,192,500 2,193 66,774 - (69,893)
Net loss for the year ended
December 31, 1995 - - - - (4,471)
-------------------------------------------------------------------------------
Balance, December 31, 1995 2,192,500 2,193 66,774 - (74,364)
Shares issued in private
placement, August 1996 200,000 200 1,800 - -
Net loss for the year ended
December 31, 1996 - - - - (3,768)
-------------------------------------------------------------------------------
Balance, December 31, 1996 2,392,500 2,393 68,574 - (78,132)
Shares issued in private
placement, February 1997 200,000 200 1,800 - -
Net loss for the year ended
December 31, 1997 - - - - (4,615)
-------------------------------------------------------------------------------
Balance, December 31, 1997 2,592,500 2,593 70,374 - (82,747)
Net loss for the year ended
December 31, 1998 - - - - (4,591)
-------------------------------------------------------------------------------
2,592,500 $ 2,593 $ 70,374 $ - $ (87,338)
-------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MAXI GROUP, INC.
(A Development Stage Company)
Statement of Cash Flows
- -------------------------------------------------------------------------------------------------------------------
Cumulative
Years Ended Amounts
December 31, Since
-----------------------------------
1998 1997 Inception
-----------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (4,591)$ (4,615) $ (87,338)
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization expense - - 160
(Decrease) increase in accounts
payable (750) 750 4,220
-----------------------------------------------------
Net cash used in
operating activities (5,341) (3,865) (82,958)
-----------------------------------------------------
Cash flows from investing activities:
Organization costs - - (160)
Investment - - (30,000)
Increase in related party payable 5,200 1,200 11,820
-----------------------------------------------------
Net cash provided by (used in)
investing activities 5,200 1,200 (18,340)
-----------------------------------------------------
Cash flows from financing activities:
Proceeds from initial issuance of
common stock - - 15,000
Net proceeds from issuance of -
common stock 2,000 96,377
Public offering costs - - (8,410)
-----------------------------------------------------
Net cash provided by
financing activities - 2,000 102,967
-----------------------------------------------------
Net (decrease) increase in cash (141) (665) 1,669
Cash, beginning of period 1,810 2,475 -
-----------------------------------------------------
Cash, end of period $ 1,669 $ 1,810 $ 1,669
-----------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-6
</TABLE>
<PAGE>
MAXI GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
1. Summary of Significant Accounting Policies
Organization
The Company was organized under the laws of the State of Nevada on June 17, 1986
(date of inception). 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.
Earning Per Share
The computation of basic earning per common share is based on the weighted
average number of shares outstanding during each year.
The computation of diluted earnings per common share is based on the weighted
average number of shares outstanding during the year plus the common stock
equivalents which would arise from the exercise of stock options and warrants
outstanding using the treasury stock method and the average market price per
share during the year.
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.
- --------------------------------------------------------------------------------
F-7
<PAGE>
MAXI GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
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
$4,591 for the year ended December 31, 1998, and as of December 31, 1998, has a
deficit in equity of $14,371.
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, 1998 and 1997, 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 $7,820 and $6,620 to
the officer as of December 31, 1998 and 1997, respectively.
At December 31, 1998 the Company owed an officer $4,000 related cash advances
made during the year ended December 31, 1998. The advances are non-interest
bearing and have no specific repayment terms. The officer has agreed to accept
unregistered common stock in exchange for the advances at $.001 per share.
During the year ended December 31, 1993, the Company issued and additional
1,827,000 shares of restricted common stock to the Company's president in
exchange for $23,353. During the year ending December 31, 1997, the Company
issued an additional 200,000 shares of restricted common stock to the
Company's president for $2,000.
- --------------------------------------------------------------------------------
F-8
<PAGE>
MAXI GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
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 215,500 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 $.50 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 200,000 shares at $.05 per share to the
Company's president. The Company received $1,000 in cash and $9,000 receivable
due on demand for such issuance.
During the year ended December 31, 1993, the Company received back and canceled
200,000 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 1,827,000 shares of restricted common stock during
June 1993 by the same officer.
In 1997 and, the Company issued 200,000 shares at $.01 per share to the
Company's president. The Company received $2,000 in cash for 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, 1998 and 1997, and since inception.
- --------------------------------------------------------------------------------
F-9
<PAGE>
MAXI GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
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:
Years Ended
December 31, Cumulative
-------------------------------
1998 1997 Amounts
-----------------------------------------------
Income tax benefit at
statutory rate $ 1,000 $ 1,000 $ 29,000
Change in valuation
allowance (1,000) (1,000) (29,000)
-----------------------------------------------
$ - $ - $ -
-----------------------------------------------
Deferred tax assets are as follows:
December 31,
-----------------------------------
1998 1997
-----------------------------------
Operating loss carryforward $ 29,000 $ 28,000
Valuation allowance (29,000) (28,000)
-----------------------------------
$ - $ -
-----------------------------------
The Company has net operating loss carryforwards of approximately $85,000, 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.
- --------------------------------------------------------------------------------
F-10
<PAGE>
MAXI GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
7. Earnings Per Share
Financial accounting standards requires companies to present basic earnings per
share (EPS) and diluted earnings per share along with additional informational
disclosures. Information related to earnings per share is as follows:
Years Ended Cumulative
December 31, Amounts
------------------------
Since
1998 1997 Inception
-----------------------------------------
Basic and Diluted EPS:
Net loss available to common
stockholders $ (4,591)$ (4,615)$ (87,338)
-----------------------------------------
Weighted average common
shares 2,592,000 2,575,000 1,243,000
-----------------------------------------
Net loss per share $ (.00)$ (.00)$ (.07)
-----------------------------------------
8. Subsequent Event
Effective March 9, 1999, the Company's shareholders approved a 1 for 10 reverse
stock split. All references in the financial statements to number of shares have
been retroactively restated to reflect the decreased number of shares
outstanding.
On March 11, 1999, the Company issued 22,000,000 shares (post split) for
$22,000. In connection with this issuance the Company's management/officers
resigned, and a new officer was appointed.
- --------------------------------------------------------------------------------
F-11
<PAGE>
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.
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:
<TABLE>
<S> <C> <C> <C>
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
</TABLE>
Subsequent to the end of the fiscal year, these persons
resigned as officers and directors of the Company, and the person
named below was appointed in their stead.
<TABLE>
<S> <C> <C> <C>
YEAR FIRST ELECTED
NAME AGE AS DIRECTOR POSITION
Mathew W. Evans 28 March, 1999 President,
Secretary-
Treasurer and
Director
</TABLE>
(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 &
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.
Mathew W. Evans, has been employed as a City Planner with the
cities of Provo, Utah (April, 1997 - Present) and Riverton, Utah
(January, 1995 - April. 1997). He received a Bachelor of Science
Degree in Geography from Utah State University in Logan, Utah, with
emphasis in Rural Planning and Urban Geography, and also received
a certificate in Urban and Regional Planning from the University of
Utah.
(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 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 1998 a total of
$1,200 was accrued for a former officer pursuant to this
arrangement. During the current fiscal year the Issuer 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.
(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.
<TABLE>
<S> <C> <C> <C>
Name and Address of Position with Amount and Nature of % of
Beneficial Owner Company Beneficial Ownership Class
Mathew W. Evans President 22,000,000 (1) 89%
836 S Slate Canyon Dr Secretary-
Provo, UT 84606 Treasurer and
Director
Robert W. Mann Former 2,397,600 (1) 9.7%
737 Westholme Ave President and
Los Angeles, CA 90024 Director
Gary B. Peterson Former 1,875 (1) --
2726 E. 2500 N. Secretary-
Layton, UT 84041 Treasurer and
Director
All officers &
directors as a group 1 person 22,000,000 89%
</TABLE>
(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 1998, the Company issued 22,000,000 shares to the
Company's President for $22,000. The Company used the office of
a former officer and director of the Company, who also provided
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.
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, 1998.
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: March 24, 1998 /s/ Mathew W. Evans
Mathew W. Evans, President
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: March 24 1998 /s/ Mathew W. Evans
Mathew W. Evans, Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MAXI GROUP, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,669
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,669
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,669
<CURRENT-LIABILITIES> 16,040
<BONDS> 0
0
0
<COMMON> 2,593
<OTHER-SE> (16,964)
<TOTAL-LIABILITY-AND-EQUITY> 1,669
<SALES> 0
<TOTAL-REVENUES> 73
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,664
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,591)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,591)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,591)
<EPS-PRIMARY> (.00)
<EPS-DILUTED> (.00)
</TABLE>
