SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 2001.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from to .
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Commission file number: I-9418
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AXIA GROUP INC.
(Exact name of small business issuer as specified in its charter)
Nevada 87-0509512
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
268 West 400 South, Salt Lake City, Utah 84101
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(Address of principal executive office) (Zip Code)
(801) 575-8073
------------------------------
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes XX No
-- ----
The number of outstanding shares of the issuer's common stock, $0.001 par value
(the only class of voting stock), as of August 20, 2001 was 5,444,449.
1
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS.................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS.................................4
PART II
ITEM 1. LEGAL PROCEEDINGS....................................................8
ITEM 5. OTHER INFORMATION....................................................9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K....................................10
SIGNATURES...................................................................11
INDEX TO EXHIBITS............................................................12
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2
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Axia Group, Inc., a Nevada
corporation, and its subsidiaries and predecessors unless otherwise indicated.
Consolidated, unaudited, condensed interim financial statements including a
balance sheet for the Company as of the quarter ended June 30, 2001, and
statements of operations, and statements of cash flows for the interim period up
to the date of such balance sheet and the comparable period of the preceding
year are attached hereto as Pages F-1 through F-6 and are incorporated herein by
this reference.
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3
ITEM 1. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
PAGE
Consolidated Unaudited Condensed Balance Sheet June 30, 2001 ...............F-2
Consolidated Unaudited Condensed Statements of Operations for the Three and
Six Months Ended June 30, 2001 and 2000.....................................F-4
Consolidated Unaudited Condensed Statements of Cash Flows for the Six
Months Ended June 30, 2001 and 2000.........................................F-5
Notes to Consolidated Unaudited Condensed Financial Statements June 30,2001 F-6
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F-1
AXIA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED BALANCE SHEETS
June 30, 2001
June 30, 2001
-------------------------
ASSETS
Current Assets
Cash $ 184,391
Accounts receivable - trade, net of allowance 531,714
Notes receivable - current 12,555
Securities available for sale 4,251,521
Total Current Assets 4,980,181
Fixed Assets
Property and equipment, net 5,771,191
Land 1,909,902
-------------------------
Total Fixed Assets 7,681,093
Other Assets
Real property held for sale 333,397
Investment securities at cost 120,000
Notes receivable 255,000
Total Other Assets 708,397
TOTAL ASSETS $ 13,369,671
=========================
See accompanying notes to financial statements
F-2
AXIA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED BALANCE SHEETS (Continued)
June 30, 2001
June 30, 2001
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities
Accounts payable $ 132,186
Accrued liabilities 82,444
Current portion long-term debt 797,604
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Total Current Liabilities 1,012,234
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Long-Term Liabilities
Notes and mortgages payable 5,856,209
IEPA liability 211,630
WVDEP liability 48,000
Less current portion (797,604)
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Total Long-Term Liabilities 5,318,235
TOTAL LIABILITIES 6,330,469
MINORITY INTEREST 609,506
STOCKHOLDERS' EQUITY
Preferred stock - 20,000,000 shares
authorized at $0.001 par, no shares issued -
Common stock - 200,000,000 shares
authorized at $0.001 par;
5,424,449 shares issued and outstanding 5,424
Paid in capital 16,205,087
Treasury stock - 441,730 shares @ $1.50/share (662,595)
Accumulated deficit (9,260,725)
Unrealized gain on securities available for sale 142,505
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TOTAL STOCKHOLDERS' EQUITY 6,429,696
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 13,369,671
==================
See accompanying notes to financial statements
F-3
AXIA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF
OPERATIONS For the Three and Six Months Ended June
30, 2001 and 2000
Three Months Ended Six Months Ended
June 30 June 30
2001 2000 2001 2000
-------------- ------------- ------------- -------------
Revenue
Additional gain recognition $ - $ 45,442 $ - $ 62,235
Consulting revenue 330,981 348,978 502,034 1,158,452
Rental revenue 186,201 197,722 417,329 444,120
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Total Revenue 517,182 592,142 919,963 1,664,807
Costs of Revenue
Costs associated with consulting revenue 203,219 357,204 375,886 867,379
Costs associated with rental revenue 312,319 192,758 485,078 366,866
Interest associated with rental revenue - 24,075 6,773 38,603
-------------- ------------- ------------- -------------
Total Costs of Revenue 515,538 574,037 867,737 1,272,848
Gross Profit 1,644 18,105 52,226 391,960
Selling, General & Administrative Expense 180,890 397,036 281,780 700,672
-------------- ------------- ------------- -------------
Operating Profit (Loss) (179,246) (378,931) (229,554) (308,713)
Other Income (Expense)
Interest Income 45 183,801 49,821 265,585
Interest Expense (131,467) (63,680) (259,777) (192,314)
Gain from sale of investment securities (5,786) 771,712 (306,730) 2,681,575
Other income (expense) (6,020) 147,787 (7,748) 196,302
-------------- ------------- ------------- -------------
Total Other Income (Expense) (143,228) 1,039,621 (524,434) 2,951,147
Income (Loss) Before Minority Interest (322,474) 660,690 (753,988) 2,642,435
Minority Interest in Loss - (30,121) - (207,902)
-------------- ------------- ------------- -------------
Net Profit (Loss) $ (322,474) $ 630,569 $ (753,988) $ 2,434,533
Income (Loss) Per Common Share
Income (loss) before minority interest $ (0.07) $ 0.24 $ (0.16) $ 0.85
Minority interest in gain - (0.01) - (0.07)
-------------- ------------- ------------- -------------
Net income (loss) per weighted average
common share outstanding
$ (0.07) 0.23 (0.16) 0.78
Weighted Average common shares
outstanding
4,819,378 2,795,508 4,628,549 3,016,411
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See accompanying notes to financial statements
F-4
AXIA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2001 and 2000
Six Months Ended
June 30
2001 2000
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Cash Flows From Operating Activities
Net Income (Loss) $ (753,988) $ 2,434,533
Adjustments to reconcile net income (loss) to net cash provided
(used):
(Gain) Loss from sale of investments 306,730 (2,681,575)
Minority interest in gain (loss) - 207,901
Depreciation & amortization 93,768 155,060
Issued stock for services 218,400 -
Decrease (increase) in assets:
Accounts & notes receivable (139,385) 1,042,283
Prepaid expenses 3,550 (18,890)
Securities - (2,074,509)
Increase (decrease) in liabilities
Accounts & notes payable 24,369 595,938
Accrued liabilities (98,775) (223,768)
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Net Cash Provided (Used) by Operating Activities $ (345,331) $ (1,754,903)
Activites
Cash Flows From Investing Activities
Capital expenditures 65,779 -
Elimination of unrealized (gain) loss - (430,314)
Purchase of investments (592,114) (1,082,637)
Proceeds from sale of investments 279,705 3,329,238
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Net Cash Provided (Used) by Investing Activities $ (246,630) $ 1,816,287
Cash Flows from Financing Activities
Sale of common stock for cash 331,614 -
Increase (reduction) in long-term debt (non-current) 266,318 665,519
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Net Cash Provided (Used) by Financing Activities $ 597,932 $ 665,519
Increase (Decrease) in Cash 5,971 726,903
Cash at Beginning of Period 178,420 18,314
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Cash at End of Period $ 184,391 $ 745,217
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See accompanying notes to financial statements
F-5
AXIA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 2001
1. Basis of Presentation
The accompanying consolidated unaudited condensed financial statements have been
prepared by management in accordance with the instructions in Form 10-QSB and,
therefore, do not include all information and footnotes required by generally
accepted accounting principles and should, therefore, be read in conjunction
with the Company's Annual Report to Shareholders on Form 10-KSB for the fiscal
year ended December 31, 2000. These statements do include all normal recurring
adjustments which the Company believes necessary for a fair presentation of the
statements. The interim operations results are not necessarily indicative of the
results for the full year ended December 31, 2001.
2. Sales of Securities
During the quarter, the Company sold restricted common shares to Wichita
Development Corporation in two separate transactions as well as Mr. John Fry.
The transactions are as follows:
On April 27, 2001, the Company sold 90,090 shares of restricted common stock at
a price of $.2775 per share for a total of $25,000 in cash. This was a private
placement of securities.
On June 5, 2001, the Company sold 121,212 shares of restricted common stock to
Wichita Development Corporation in return the Company received $50,000 in cash.
The shares sold by the Company were valued at $.4125 per share. This was a
private placement of securities.
On June 14, 2001, the Company sold 77,797 shares of restricted common stock to
John Fry (a director of the company) Jr. in a private transaction for $30,000 in
cash at an average price of $.3856. This transaction was subsequently recinded.
3. Additional Footnotes Included by Reference
Except as indicated in the Notes above, there have been no other material
changes in the information disclosed in the notes to the financial statements
included in the Company's Annual Report on Form 10- KSB for the year ended
December 31, 2000. Therefore those footnotes are included herein by reference.
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F-6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The Company operates in two primary areas of business: the Company acquires,
leases and sells real estate; and, the Company provide financial consulting
services. The following discussion examines the Company's financial condition as
a result of operations for the second quarter and year-to-date, 2001, and
compares those results with comparable periods from last year.
Real Estate Operations
The Company's objective, with respect to real estate operations, is to acquire,
through subsidiaries, properties which management believes to be undervalued and
which the Company is able to acquire with limited cash outlays. The Company will
consider properties within the continental United States. The Company attempts
to acquire such properties by assuming existing favorable financing and paying
the balance of the purchase price with nominal cash payments or through the
issuance of shares of common stock. Once such properties are acquired, the
Company leases them to primarily commercial tenants. The Company also makes
limited investments to improve the properties with the objective of increasing
occupancy and cash flows. Management believes that, with limited improvements
and effective management, properties can be sold at a profit within a relatively
short period of time.
The Company recorded rental revenues of $186,201 for the quarter ended June 30,
2001, as compared to $197,722 for the same quarter, 2000. This decline in rental
revenues was due to declines in occupancy.
Currently, the Company has negative cash flows from real estate operations of
$126,118 for the quarter ended June 30, 2001, compared to a negative cash flow
of $19,111 for the same quarter, 2000. This is attributable to commissions paid
upon refinancing properties, fees associated with purchases of properties, and a
decrease in occupancy rates in conjunction with an increase in repair costs
associated with the commercial spaces.
The Company will continue efforts to improve profitability and cash flow by
working to increase occupancy and rental income from those properties which have
a high vacancy rate as well as focusing on properties with the highest per
square foot rental rates. The Company also intends to continue to purchase real
estate primarily for appreciation purposes. Accordingly, the Company hopes to
not only minimize any real estate cash flow deficit, but also generate
sufficient cash to record a substantial profit upon property disposition.
Consulting Operations
The Company, through its majority owned Hudson Consulting Group, Inc., provides
a variety of financial consulting services to a wide range of clients. The
primary service performed by the Company involves assisting clients in
structuring mergers and acquisitions. This includes locating entities suitable
to be merged with or acquired by the Company's clients, as well as providing
general advice related to the structuring of mergers or acquisitions. The
Company also assists clients in restructuring their capital formation, advises
with respect to general corporate problem solving and provides shareholder
relations services designed to expose its clients to the investment community.
The Company's consulting subsidiary generates revenues through consulting fees
payable in the client's equity securities, cash, other assets or some
combination of the three. The primary form of compensation
4
received is the equity securities of clients. When payment is made in the form
of equity, the number of shares to be paid is usually dependent upon the price
of the client's common stock (if such price is available) and the extent of
consulting services to be provided. The typical value used to determine the
number of shares to be paid is one-half or less of the stock's bid price, which
accounts for the fact that most of the equity received as payment by the Company
is restricted as to resale. The Company accepts equity with the expectation that
its services will assist in the stock's appreciation, thus allowing the Company
to be compensated and to make a return on the payments for its services.
The Company generates cash flow, in part, by liquidating non-cash assets (equity
securities) received as fees for consulting services. As most fees are paid in
the form of equity, the revenues and cash flows realized by the Company are
somewhat tied to the price of its clients' securities and the Company's ability
to sell such securities. A decline in the market price of a client's stock can
affect the total asset value of the Company's balance sheet and can result in
the Company incurring substantial losses on its income statement. The Company
generally books securities that it accepts as payment at a 25% to 75% discount
of the current market value at the time the Company accepts the securities due
to illiquidity of the securities because of restrictions on resale.
The Company's portfolio consists primarily of restricted and unrestricted shares
of common stock in micro to small cap publicly traded companies. This portfolio
currently consists of shares of common stock in over 60 different companies
whose operations range from that of high-tech Internet operations to oil and gas
companies. The Company believes that the diversity of its current holdings is
such that the overall volatility of its portfolio is significantly less than in
prior years of operation. Nonetheless, the Company's portfolio is considered
extremely volatile.
Revenues from the Company's financial consulting operations decreased for the
quarter ended June 30, 2001, as compared to the same quarter in 2000. The
Company recorded $330,981 in revenues for the quarter ended June 30, 2001, from
its financial consulting operations as compared to $348,978 for the same period
of 2000. This decrease was due to a slow down in consulting activities, due in
part to adverse conditions in the marketplace. The company anticipates that
revenues in this area will rebound as current projects in the pipeline come to
fruition.
During the quarter ended June 30, 2001, the Company sold investment securities
owned by the Company and its subsidiaries. The bulk of the securities sold were
securities that the Company and its majority owned subsidiaries acquired in past
years for services rendered to clients by the Company's consulting subsidiaries.
During the quarter ended June 30, 2001, the Company and its subsidiaries sold
$87,755 in investment securities. The Company's basis in the securities was
approximately $128,789. The company continued to liquidate securities it felt
would not rebound to prevent future losses and to provide needed working
capital.
Company Operations as a Whole
Revenues
Gross revenues for the three month periods ended June 30, 2001 were $517,182, as
compared to $592,142 for the same period in 2000. Gross revenues for the quarter
ended June 30, 2001, decreased 13% from June 30, 2000. The decrease in revenues
is due to a $45,442 decrease in additional gain recognition, a $17,997 decrease
in consulting revenues, and a $11,521 decrease in rental revenues.
5
Gross revenues for the six month periods ended June 30, 2001 were $919,963, as
compared to $1,664,807 for the same period in 2000. The decrease in revenues is
due to a $62,235 decrease in additional gain recognition, a $656,418 decrease in
consulting revenues, and a $26,791 decrease in rental revenues.
Profits
The Company recorded an operating loss of $179,246 for the three months ended
June 30, 2001, compared to an operating loss of $378,931 for the comparable
period in the year 2000. The Company recorded a net loss of $322,474 for the
three months ended June 30, 2001, compared to a net profit of $630,569 for the
comparable period in 2000. The Company's decrease in net profitability for the
three month period ended June 30, 2001, as compared to the same period in 2000,
was due to the lack of gains from the sale of investment securities.
The Company's operating loss of $229,554 for the six months ended June 30, 2001,
is substantially less than an operating loss of $308,713 for the comparable
period in the year 2000. The Company recorded a net loss of $753,988 for the six
months ended June 30, 2001, compared to a net profit of $2,434,533 for the
comparable period in 2000. The Company's decrease in net profitability for the
six month period ended June 30, 2001, as compared to the same period in 2000,
was due to the lack of gains from the sale of investment securities as well as a
$265,000 reduction in interest income.
The Company is uncertain as to whether it will operate at a profit through
fiscal 2001. Since the Company's activities are closely tied to the securities
markets, future profitability or its revenue growth tends to follow changes in
the market place. There can be no guarantee that profitability or revenue growth
can be sustained in the future.
Expenses
General and administrative expenses for the three months ended June 30, 2001,
were $180,890 compared to $397,036 for the same period in 2000. General and
administrative expenses for the six months ended June 30, 2001, were $281,780
compared to $700,672 for the same period in 2000. The reason for the decrease is
continued efforts to streamline operations and to eliminate non-performing
assets and their associated administrative expenses.
Depreciation and amortization expenses for the three months ended June 30, 2001,
and June 30, 2000, were $93,768 and $155,060, respectively. The decrease was due
to a disposition of assets during 2000 as well as some assets being fully
depreciated and not yet replaced.
Capital Resources and Liquidity
On June 30, 2001, the Company had current assets of $4,980,181 and $13,369,671
in total assets compared to $2,918,238 of current assets and $11,467,275 in
total assets at the year ended December 31, 2000. The Company had net working
capital of $3,967,947 on June 30, 2001, compared to net working capital of
$1,684,645 on December 31, 2000. The increase in total assets is attributable to
unrealized gains on securities available for sale for the quarter. The major
contributing factor to the change in working capital is the receipt of
securities for consulting services which have appreciated in value since their
receipt.
Total stockholders' equity in the Company was $6,429,696 as of June 30, 2001,
compared to $4,719,212 as of December 31, 2000 and $5,841,140 on March 31, 2001.
This increase is also attributable to the receipt of securities and their
respective increase in value mentioned above.
Net Cash flow used in operating activities was $345,331 for the six months ended
6
June 30, 2001, compared to cash flow used in operating activities of $1,754,903
for the six months ended June 30, 2000. Cash flows used in operating activities
for the six months ended June 30, 2001, are primarily attributable to loss on
the sale of investments and changes in net current assets and liabilities.
Cash flow used by investing activities was $246,630 for the six months ended
June 30, 2001, compared to cash flow provided by investing activities of
$1,816,287 for the same period in 2000. The decrease is largely due to the
purchase of investment securities coupled with a large reduction in the proceeds
from the sale of investment securities.
Cash flow provided by financing activities was $597,932 for the six months ended
June 30, 2001, compared to cash flows provided by financing activities of
$665,519 for the six months ended June 30, 2000. The decrease was largely due to
financing through sale of common stock rather than financing through debt
issuances.
Due to the Company's debt service on real estate holdings, willingness to
acquire properties with negative cash flow shortages and acceptance of non-cash
assets for consulting services, the Company may experience occasional cash flow
shortages.
Impact of Inflation
The Company believes that inflation has had a negligible effect on operations
over the past three years. The Company believes that it can offset inflationary
increases in the cost of materials and labor by increasing sales and improving
operating efficiencies.
Known Trends, Events, or Uncertainties
General Real Estate Investment Risks
The Company's investments are subject to varying degrees of risk generally
incident to the ownership of real property. Real estate values and income from
the Company's current properties may be adversely affected by changes in
national or local economic conditions and neighborhood characteristics, changes
in interest rates and in the availability, cost and terms of mortgage funds, the
impact of present or future environmental legislation and compliance with
environmental laws, the ongoing need for capital improvements, changes in
governmental rules and fiscal policies, civil unrest, acts of God, including
earthquakes and other natural disasters which may result in uninsured losses,
acts of war, adverse changes in zoning laws and other factors which are beyond
the control of the Company.
Value and Illiquidity of Real Estate
Real estate investments are relatively illiquid. The ability of the Company to
vary its ownership of real estate property in response to changes in economic
and other conditions is limited. If the Company must sell an investment, there
can be no assurance that the Company will be able to dispose of it in the time
period it desires or that the sales price of any investment will recoup the
amount of the Company's investment.
Property Taxes
The Company's real property is subject to real property taxes. The real property
taxes on this property may increase or decrease as property tax rates change and
as the property is assessed or reassessed by taxing authorities. If property
taxes increase, the Company's operations could be adversely affected.
7
Forward Looking Statements
The information herein contains certain forward looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E
of the Securities Exchange Act of 1934, as amended, which are intended to be
covered by the safe harbors created thereby. Investors are cautioned that all
forward looking statements involve risks and uncertainty, including, without
limitation, the ability of the Company to continue its expansion strategy,
changes in the real estate markets, labor and employee benefits, as well as
general market conditions, competition, and pricing. Although the Company
believes that the assumptions underlying the forward looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward looking statements
included in the Form 10QSB will prove to be accurate. In view of the significant
uncertainties inherent in the forward looking statements included herein, the
inclusion of such information should not be regarded as a representation by the
Company or any other person that the objectives and plans of the Company will be
achieved
PART II
ITEM 1. LEGAL PROCEEDINGS
During the second quarter of 2001, with the exception of information provided
below no material developments occurred regarding the Company's legal
proceedings. For more information please see the Company's Form 10-KSB for the
year ended December 31, 2000
American Registrar & Transfer Company v. YP.Net, Inc. f/k/a Rigl
Corporation, Bruce M. Pritchett, Hudson Consulting Group, Inc., Montana Capital
International, Ltd. and Moore & Elrod, Inc.. American Registrar & Transfer
Company on or about March 20, 2000, filed an interpleader action in the Third
Judicial District Court, Salt Lake County, State of Utah, Civil No. 000902312.
It filed suit claiming that there was a dispute as to 732,667 shares of the
common stock of YP.Net held in the name of Hudson. Hudson accepted service of
the complaint and filed an answer, a counter claim and a cross claim. In the
counter claim Hudson asserted that American Registrar had no right to deny the
transfer of the subject shares. In the cross claim Hudson seeks damages against
YP.Net for its failure to deliver 542,667 shares of common stock due to Hudson
under the terms of a written agreement between the parties. Yp.Net has refused
to make an appearance in the case and Hudson has served its cross claim on
YP.Net, answer to that claim is due on or about the 2nd of April 2001.
Management intends to pursue its right to the transfer of the interplead shares
and the recovery of the additional shares of common stock set forth in its cross
claim. Shares of YP.Net trade on the "pink sheets" and have not traded for more
than $0.50 since September of 2000. Subsequent to the end of the period, this
case has been settled by mediation accepted by the court. The Company will
receive $85,000 cash in return for the cancellation of the shares previously
issued to it and release of further claims on shares it may have been due.
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES
On April 27, 2001, the Company issued 90,090 shares of its common stock at
$0.2775 per share to Wichita Development Corporation for cash pursuant to
section 4(2) of the Securities Act of 1933 in an isolated private transaction by
the Company which did not involve a public offering. The Company made this
offering based on the following factors: (1) The issuance was an isolated
private transaction by the Company which did not involve a public offering,
being made to one corporation for cash; (2) there was only one offeree who was
issued stock for cash; (3) the offeree has not resold the stock but has
continued to hold it since the date of issue; (4) there were no subsequent or
8
contemporaneous public offerings of the stock; (5) the stock was not broken down
into smaller denominations; and (6) the negotiations for the sale of the stock
took place directly between the offeree and the Company.
On June 6, 2001, the Company sold 121,212 shares of restricted common stock to
Wichita Development Corporation in return the Company received $50,000 in cash.
The shares sold by the Company were valued at $.4125 per share. The Company
issued the shares pursuant to section 4(2) of the Securities Act of 1933 in an
isolated private transaction by the Company which did not involve a public
offering. The Company made this offering based on the following factors: (1) The
issuance was an isolated private transaction by the Company which did not
involve a public offering, being made to a single corporation for cash; (2)
there was only one offeree who was issued stock for cash; (3) the offeree has
not resold the stock but has continued to hold it since the date of issue; (4)
there were no subsequent or contemporaneous public offerings of the stock; (5)
the stock was not broken down into smaller denominations; and (6) the
negotiations for the sale of the stock took place directly between the offeree
and the Company.
Axia Group, Inc., its subsidiaries, and its officers and directors own in excess
of 50% of the outstanding shares of Witchita Development Corporation.
On June 14, 2001, the Company sold 77,7972 shares of restricted common stock to
John E. Fry Jr. in return the Company received $30,000 in cash. The shares sold
by the Company were valued at $.3856 per share. The Company issued the shares
pursuant to section 4(2) of the Securities Act of 1933 in an isolated private
transaction by the Company which did not involve a public offering. The Company
made this offering based on the following factors: (1) The issuance was an
isolated private transaction by the Company which did not involve a public
offering, being made to a single individual for cash; (2) there was only one
offeree who was issued stock for cash; (3) the offeree has not resold the stock
but has continued to hold it since the date of issue; (4) there were no
subsequent or contemporaneous public offerings of the stock; (5) the stock was
not broken down into smaller denominations; and (6) the negotiations for the
sale of the stock took place directly between the offeree and the Company. This
transaction has subsequently been rescinded and the shares have been canceled.
ITEM 5. OTHER INFORMATION
In a continuing effort to streamline operations, the Company has merged
operations of Canton Financial Services Corporation with Hudson Consulting
Group, Inc. Hudson is the surviving company. This will provide for better
matching of income and expenses of the Company's consulting divisions.
On June 25, 2001, West Jordan Real Estate Holdings, Inc. (WJRH), a majority
owned subsidiary of the Company, purchased a 77,256 square foot shopping center
located in Salt Lake City. WJRH purchased the property pursuant to a lease
option agreement that it entered into several years ago. WJRH purchased the
property for approximately $799,000 through bank financing in the amount of
$650,000 and accrued cash payments. WJRH will use approximately $125,000 of the
bank financing to make renovations to the property. The shopping center's
current occupancy rate is in excess of 90% and generates a positive cash flow.
According to a recent MAI appraisal, the property is valued at $1.49 million
meaning that WJRH currently has equity in excess of $850,000. This MAI appraisal
was based upon income numbers which are no longer current. Consequently, it is
management's belief that the property's current market value would be in excess
of $2,000,000.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Exhibits required to be attached by Item 601 of Regulation S-B
are listed in the Index to Exhibits on page 13 of this Form 10-QSB, and
are incorporated herein by this reference.
(b) Reports on Form 8-K. The Company filed one report on Form 8-K during
the quarter for which this report is filed.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, there unto duly
authorized, this 20th day of August, 2001.
AXIA GROUP, INC.
/s/ Richard D. Surber
- ---------------------------
Richard D. Surber August 20, 2001
President, Chief Executive Officer and Director
/s/ Ed Haidenthaller August 20, 2001
- ---------------------------
Ed Haidenthaller
Chief Financial Officer
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INDEX TO EXHIBITS
EXHIBIT PAGE DESCRIPTION
NO. NO.
3(i) * Articles of Incorporation of the Company (note that these were
amended by the Articles of Merger constituting Exhibit 2 to this
Form 10-KSB) (incorporated herein by reference from Exhibit No.
3(i) to the Company's Form 10-KSB for the year ended December 31,
1993).
3(ii) * Bylaws of the Company, as amended (incorporated herein by
reference from Exhibit 3(ii) of the Company's Form 10 KSB for the
year ended December 31, 1995).
* Previously filed as indicated and incorporated herein by
reference from the referenced filings previously made by the
Company.
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