SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 2002.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from to .
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
-------- ------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
268 West 400 South, Salt Lake City, Utah 84101
---------------------------------------------------------
(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 May 17, 2002, was 7,617,081.
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS..................................................2
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS..................................3
PART II
ITEM 1. LEGAL PROCEEDINGS.....................................................7
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES...............................7
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................8
ITEM 5. OTHER INFORMATION.....................................................8
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................8
SIGNATURES...................................................9
INDEX TO EXHIBITS...........................................10
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1
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Axia" 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 Axia as of the quarter ended March 31, 2002, 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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2
Axia Group, Inc. Interim Financial Statements
INDEX TO FINANCIAL STATEMENTS
PAGE
Consolidated Unaudited Condensed Balance Sheet March 31, 2002 ...............F-2
Consolidated Unaudited Condensed Statements of Operations for the Three
months ended March 31, 2002 and 2001.........................................F-4
Consolidated Unaudited Condensed Statements of Cash Flows for the Three
Months Ended March 31, 2002 and 2001.........................................F-5
Notes to Consolidated Unaudited Condensed Financial Statements March
31, 2002.....................................................................F-6
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F-1
AXIA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED BALANCE SHEETS
March 31, 2002
March 31,
2002
------------
ASSETS
Current Assets
Cash $ 304,921
Accounts receivable - trade, net of allowance 221,377
Prepaid expenses 130,877
Notes receivable - current 67,499
Securities available for sale 15,031
------------
Total Current Assets 739,705
Fixed Assets
Property and equipment, net 4,294,056
Land 1,090,535
------------
Total Fixed Assets 5,384,591
Other Assets
Real property held for sale 195,511
Investment securities available for sale 464,876
Notes receivable 299,082
------------
Total Other Assets 959,469
TOTAL ASSETS $ 7,083,765
============
See accompanying notes to financial statements
F-2
AXIA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED BALANCE SHEETS (Continued)
March 31, 2002
March 31,
2002
---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities
Accounts payable $ 85,055
Accrued liabilities 53,307
Unearned rent 48,937
Current portion long-term debt 1,188,000
---------------
Total Current Liabilities 1,375,299
Long-Term Liabilities
Notes and mortgages payable 3,790,418
IEPA liability 217,629
WVDEP liability 46,498
Less current portion (1,188,000)
---------------
Total Long-Term Liabilities 2,866,545
TOTAL LIABILITIES 4,241,844
MINORITY INTEREST 1,802,666
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; 7,607
7,606,870 shares issued and outstanding
Paid in capital 15,730,138
Treasury stock - 1,305,166 shares @ $.89 /share (1,172,688)
Accumulated deficit (13,225,478)
Unrealized gain (loss) on securities available for sale (300,324)
---------------
TOTAL STOCKHOLDERS' EQUITY 1,039,255
---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,083,765
===============
See accompanying notes to financial statements
F-3
AXIA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2002 and 2001
Three Months Ended
March 31,
2002 2001
------------- -----------
Revenue
Sale of property $ 2,332,000 $ -
Consulting revenue 79,725 171,053
Rental revenue 317,858 231,128
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Total Revenue 2,729,583 402,181
Costs of Revenue
Costs associated with the sale of property 2,330,386 -
Costs associated with consulting revenue 209,903 172,067
Costs associated with rental revenue 304,079 172,759
Interest cost associated with rental revenue 116,292 128,310
------------- -----------
Total Costs of Revenue 2,960,660 473,136
Gross Profit (Loss) (231,077) (70,955)
Selling, General & Administrative Expense 229,400 100,890
------------- -----------
Operating Profit (Loss) (460,477) (171,845)
Other Income (Expense)
Interest/Dividend Income 126 49,776
Interest Expense (2,960) (6,773)
Gain (Loss) from investment securities (79,444) (300,944)
Other income (expense) 6,132 (1,728)
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Total Other Income (Expense) (76,146) (259,669)
Income (Loss) Before Minority Interest (536,623) (431,514)
Minority Interest in (Gain) Loss 61,942 -
------------- -----------
Net Profit (Loss) $ (474,681) $ (431,514)
============= ===========
Income (Loss) Per Common Share
Income (loss) before minority interest $ (0.08) $ (0.10)
Minority interest in loss (gain) 0.01 -
------------- -----------
Net income (loss) per weighted average common share
outstanding, basic & diluted
$ (0.07) $ (0.10)
------------- -----------
Weighted Average common shares outstanding, basic & 6,725,000 4,487,029
============= ===========
diluted
See accompanying notes to financial statements
F-4
AXIA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2002 and 2001
Three Months Ended
March 31
2002 2001
----------- -----------
Cash Flows From Operating Activities
Net Income (Loss) $ (474,681) $ (431,514)
Adjustments to reconcile net income (loss) to net cash provided
(used):
(Gain) loss from sale of investments 79,444 300,944
Minority interest in gain (loss) 61,942 -
Depreciation & amortization 58,232 46,276
Issuance of common stock for services 60,000 -
Decrease (increase) in assets:
Accounts & notes receivable (19,236) 21,335
Prepaid expenses 15,093 3,550
Securities (110,676) -
Property held for sale 547,127 -
Increase (decrease) in liabilities
Accounts & notes payable 48,840 121,646
Accrued liabilities (71,559) (98,223)
----------- -----------
Net Cash Provided (Used) by Operating Activities $ 194,526 $ (35,986)
Activites
Cash Flows From Investing Activities
Purchases of fixed assets (221,492) (3,221)
Cash received in acquisition 18,265 -
Issuance of notes receivable (55,000) -
Purchase of investments - (383,579)
Proceeds from sale of investments 118,022 191,950
----------- -----------
Net Cash Provided (Used) by Investing Activities $ (140,205) $ (194,850)
Cash Flows from Financing Activities
Purchase of treasury stock (18,716) -
Sale of common stock for cash - 226,614
Increase (reduction) in long-term debt (25,818) 33,884
----------- -----------
Net Cash Provided (Used) by Financing Activities $ (44,534) $ 260,498
Increase (Decrease) in Cash 9,787 29,662
Cash at Beginning of Period 295,134 178,420
----------- -----------
Cash at End of Period $ 304,921 $ 208,082
=========== ===========
See accompanying notes to financial statements
F-5
AXIA GROUP, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
March 31, 2002
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 Axia's Annual Report to Shareholders on Form 10-KSB for the fiscal year
ended December 31, 2001. These statements do include all normal recurring
adjustments which Axia 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, 2002.
2. TREASURY STOCK
During the quarter ended March 31, 2002, Axia purchased 49,000 shares of its own
stock in the open market for a cost of $18,716. Of the total 1,305,166 shares in
treasury stock, all but 5,000 shares are held in the accounts of subsidiary
corporations. Since the Company's stock buyback program began in October of
2001, Axia has purchased a total of 166,185 shares in the open market.
3. MINORITY INTEREST/REORGANIZATION CHANGES
As a result of the Axia/Nexia transaction the minority interest in the
transferred assets increased from $628,210 to $1,802,666. As a further result of
the above transaction, investment securities held by Axia's subsidiaries in
Nexia stock are now eliminated. The amount of this change is a decrease of
approximately $700,731.
4. NOTES INCLUDED BY REFERENCE
Except as indicated in Notes above, there have been no other material changes in
the information disclosed in the notes to the financial statements included in
Axia's Annual Report on Form 10-KSB for the year ended December 31, 2001 and the
notes to the financial statements included with Axia's Form 8K filed with the
SEC on February 26, 2002 and amended on May 1, 2002. 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
Axia is a holding company that operates in two primary areas of business:
acquiring, leasing and selling real estate; and, providing financial consulting
services. This business is transacted through a number of subsidiaries which are
owned by the Axia's majority owned subsidiary and holding company Nexia
Holdings, Inc.
The following discussion examines Axia's financial condition as a result of
operations for the first quarter, March 31, 2002, and compares those results
with the comparable period from last year.
Real Estate Operations
Axia's objective, with respect to real estate operations, is to acquire, through
subsidiaries, properties which management believes to be undervalued and which
Axia is able to acquire with limited cash outlays. Axia will consider properties
within the continental United States. Axia 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, Axia leases them to primarily
commercial tenants. Axia 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.
On January 4, 2002, Golden Opportunity Development Corporation, ("GODC") a
former subsidiary of the Company (transferred to Nexia Holdings, Inc. in the
February 15, 2002 transaction) that has historically been engaged in the
business of operating and acquiring hospitality property, sold its only asset,
the General LaFayette Inn. Prior to January 4, 2002, GODC owned the General
Lafayette Inn, a 134 unit motel and restaurant, and four adjacent office/retail
buildings, located at 427 Lafayette Street, Baton Rouge, Louisiana (the
"Motel"). The Motel was sold for cash, in the amount of $2,332,000, to Lafayette
Development Holdings, LLC. ("Lafayette"), a Louisiana Limited Liability Company.
After payment of taxes, real estate commissions, and the mortgage on the
property, GODC realized net cash of $337,000. There is no material relationship
between Lafayette and the Company. GODC, or any of their affiliates, or any of
their officers or directors, or any associate of such officers or directors.
Since GODC divested itself of its Motel property on January 4, 2002, GODC has
been attempting to identify and acquire another hospitality property. Several
properties in Florida and California have been reviewed and due diligence is
progressing on a few, however, there is currently no agreement to acquire any
property. It should be noted that with the divestiture of the General LaFayette
Inn, the Company believes that a major source of negative cash flow and losses
for the Company has been eliminated. Over the four years the Company owned the
property, it accounted for $1,258,803 in losses and approximately $800,000 in
negative cash flows.
During January and February of 2002, Wasatch Capital, a subsidiary of Axia,
undertook approximately $150,000 in renovations to its Wallace-Bennett building
in downtown Salt Lake City. A portion of the space was used by the Greek
Ministry of Culture during the recent Olympic Games to showcase their
preparations for the upcoming Olympics in Greece. The other renovated space is
now occupied by an art gallery and they have signed a 2 year lease. The
renovations made previously unrentable space rentable and The Company believes
will improve our rental income and reduce losses from rental operations.
3
Axia recorded rental revenues of $317,858 for the quarter ended March 31, 2002,
as compared to $231,128 for the same quarter in 2001. This increase in rental
revenues was due to being able to rent out significant space for the Olympic
games held in Salt Lake City in February.
Axia had a gross loss from real estate operations of $102,513 for the quarter
ended March 31, 2002, compared to a loss of $69,941 for the same quarter, 2001.
The decline is due to a significant portion of the amount of rental revenues
received during the Olympic games being reinvested in improving and upgrading
the properties coupled with the drop in revenues from the sale of the General
Lafayette Inn.
Axia 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. Axia also intends to continue to purchase real estate primarily
for appreciation purposes. Accordingly, Axia 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
Axia, through its subsidiary Hudson Consulting Group, Inc., provides a variety
of financial consulting services to a wide range of clients. The primary service
performed by Axia involves assisting clients in structuring mergers and
acquisitions. This includes locating entities suitable to be merged with or
acquired by Axia's clients, as well as providing general advice related to the
structuring of mergers or acquisitions. Axia 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.
Axia'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 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 Axia is restricted as to resale. Axia accepts
equity with the expectation that its services will assist in the stock's
appreciation, thus allowing Axia to be compensated and to make a return on the
payments for its services.
Axia 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 Axia are somewhat
tied to the price of its clients' securities and Axia's ability to sell such
securities. A decline in the market price of a client's stock can affect the
total asset value of Axia's balance sheet and can result in Axia incurring
substantial losses on its income statement. Axia generally books securities that
it accepts as payment at a 50% to 95% discount of the current market value at
the time Axia accepts the securities due to illiquidity of the securities and
because of restrictions on resale.
Axia'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 50 different companies
whose operations range from that of high-tech Internet operations to oil and gas
companies. Axia 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, Axia's portfolio is considered extremely
volatile.
4
Revenues from Axia's financial consulting operations decreased for the quarter
ended March 31, 2002, as compared to the same quarter in 2001. Axia recorded
$79,725 in revenues for the quarter ended March 31, 2002, from its financial
consulting operations as compared to $171,053 for the same period of 2001. This
decrease was due to a slow down in consulting activities, due in part to adverse
conditions in the market- place as well as decreased business due to Salt Lake
City's focus on the Olympic Games and outside entities avoiding the area.
During the quarter ended March 31, 2002, Axia sold investment securities owned
by Axia and its subsidiaries. The bulk of the securities sold were securities
that Axia and its majority owned subsidiaries acquired in past years for
services rendered to clients by Axia's consulting subsidiaries. During the
quarter ended March 31, 2002, Axia and its subsidiaries sold $118,022 in
investment securities. Axia's basis in the securities was approximately
$197,466. Axia 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 March 31, 2002, were
$2,729,583, as compared to $402,181 for the same period in 2001. The increase in
revenues is due to the sale of the General LaFayette Inn of $2,332,000, a
$98,000 decrease in consulting revenues, and a $86,000 increase in rental
revenues.
Profits
Axia recorded an operating loss of $460,477 for the three months ended March 31,
2002, compared to an operating loss of $171,845 for the comparable period in the
year 2001. Axia recorded a net loss of $474,681 for the three months ended March
31, 2002, compared to a net loss of $431,514 for the comparable period in 2001.
Axia's increase in net loss for the three month period ended March 31, 2002, as
compared to the same period in 2001, was due largely to costs associated with
the issuance of stock for services rendered.
Axia is uncertain as to whether it will operate at a profit through fiscal 2002.
Since Axia'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 realized
in the future.
Expenses
General and administrative expenses for the three months ended March 31, 2002
were $229,400, as compared to $100,890 for the same period in 2001. The reason
for the increase is due to costs associated with stock issuances mentioned
above.
Depreciation and amortization expenses for the three months ended March 31, 2002
and March 31, 2001 were $58,232 and $46,276, respectively.
Capital Resources and Liquidity
At the quarter ended March 31, 2002, Axia had current assets of $739,705 and
$7,083,765 in total assets compared to $1,696,383 of current assets and
$9,795,034 in total assets at the year ended December 31, 2001. Axia had a net
working capital deficit of $635,594 at the quarter ended March 31, 2002 compared
to net working capital of $106,602 at the year ended March 31, 2001. The
decrease in current and total assets is attributable to unrealized losses and
markdowns on securities available for sale for the quarter. Net stockholders'
equity in Axia was $1,039,255 as of March 31, 2002, compared to $5,841,140 as of
5
March 31, 2001. This large decrease is attributable to changes in the values of
securities, as well as increases in minority interest in the subsidiaries caused
by the recent acquisition of Nexia Holdings, Inc.
Net Cash flow provided by operating activities was $194,526 for the quarter
ended March 31, 2002, compared to cash flow used in operating activities of
$35,986 for the quarter ended March 31, 2001. Cash flows used in operating
activities for the three months ended March 31, 2002 are primarily attributable
to changes in the securities portfolio and property held for sale.
Cash flow used in investing activities was $140,205 for the three months ended
March 31, 2002, compared to cash flow used in investing activities of $194,850
for the same period in 2001. The change is due to the purchase of capital
improvements coupled with a lack of the purchase of investments as in the
previous year.
Cash flow used in financing activities was $44,534 for the three months ended
March 31, 2002, compared to cash flows provided by financing activities of
$260,498 for the three months ended March 31, 2001. The decrease was largely due
to a lack of the sale of common stock for cash.
Due to Axia'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, Axia may experience occasional cash flow shortages.
Impact of Inflation
Axia believes that inflation has had a negligible effect on operations over the
past three years. Axia 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
Axia's investments are subject to varying degrees of risk generally incident to
the ownership of real property. Real estate values and income from Axia'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 Axia.
Value and Illiquidity of Real Estate
Real estate investments are relatively illiquid. The ability of Axia to vary its
ownership of real estate property in response to changes in economic and other
conditions is limited. If Axia must sell an investment, there can be no
assurance that Axia 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 Axia's
investment.
Property Taxes
Axia'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, Axia's operations could be adversely affected.
6
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 Axia 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 Axia 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 Axia or any other
person that the objectives and plans of Axia will be achieved
PART II
ITEM 1. LEGAL PROCEEDINGS
During the first quarter of 2002, with the exception of information provided
below, no material developments occurred regarding Axia's legal proceedings. For
more information please see Axia's Form 10-KSB for the year ended December 31,
2001
Hudson Consulting Group, Inc. v. Technical Ventures, Inc.. Suit was filed by
Hudson Consulting Group, Inc. (a subsidiary of Axia), on October 10, 2001,
against Technical Ventures, Inc., in the Third Judicial District Court of Salt
Lake County, State of Utah, and assigned civil cause No. 010908909. Hudson has
filed suit seeking recovery of fees owed to it arising from an Advisory
Agreement entered into in July of 1999. The suit alleges that 575,000 shares of
Technical Ventures, Inc., common stock has not been delivered to Hudson as
required by the agreement. The trial court has entered a default after
authorized service on Technical Ventures, Inc., by certified mail. Hudson's
request to enter a default judgment was heard by the Court on March 17, 2002,
and judgement in the sum of $172,500 was granted.
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES
On January 23, 2002, the board of directors authorized the issuance of
1,570,513 shares of restricted common stock in the name of the Company's
president Richard Surber as additional collateral for the loans to subsidiaries
for which he has provided his personal guaranty to secure the loan. Mr. Surber
was further granted the voting rights to those shares during the term that he
holds the shares as collateral to his personal guaranty. 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.
On February 28, 2002, the board authorized the issuance of 30,000 shares of
restricted common stock to Anastasios Giannakourou for the purchase of various
light fixtures and flooring installed in a building owned by Wasatch Capital,
Inc. a subsidiary of the Company. The shares transferred by the Company were
valued at $0.50 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 transfer
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 services; (2) there was only one offeree who was
issued stock for purchase of lighting fixtures and flooring; (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
7
negotiations for the sale of the stock took place directly between the offeree
and the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Exhibits required to be attached by Item 601 of Regulation S-B
are listed in the Index to Exhibits on page 9 of this Form 10-QSB, and
are incorporated herein by this reference.
(b) Reports on Form 8-K. Axia filed two reports on Form 8-K during the
quarter for which this report is filed. They are as follows:
(1) On January 4th, 2002, Golden Opportunity Development
Corporation, a majority owned subsidiary of Axia, sold it's
sole asset, a 134 unit motel in Baton Rouge, Louisiana (filed
January 14th, 2002).
(2) On February 15th, 2002, Axia entered into a stock purchase
agreement with Kelly's Coffee Group, Inc. (now known as Nexia
Holdings, Inc.), whereby Axia's operations were reorganized in
an acquisition of over eighty percent of Kelly's Coffee Group,
Inc.'s stock (filed February 27th, 2002 and amended on May 1,
2002).
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8
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 30th day of May, 2002.
AXIA GROUP, INC.
/s/ Richard D. Surber
- -----------------------------------------------
Richard D. Surber May 30, 2002
President, Chief Executive Officer and Director
/s/ Ed Haidenthaller May 30, 2002
- ------------------------------------------------
Ed Haidenthaller
Chief Financial Officer/Chief Operations Officer
9
INDEX TO EXHIBITS
EXHIBIT PAGE DESCRIPTION
NO. NO.
- --- ---
3(i) * Articles of Incorporation of Axia (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 Axia's Form
10-KSB for the year ended December 31, 1993).
3(ii) * Bylaws of Axia, as amended (incorporated herein by
reference from Exhibit 3(ii) of Axia's Form 10 KSB
for the year ended December 31, 1995).
3(iii),4 * Certificate of Determination of the Rights and
Preferences of Preferred Stock by Axia for 5,000,000
shares of preferred stock out of the 20,000,000
authorized (incorporated herein by reference from a
Form 8-K filed on August 24, 2001).
10(i)(o) * Stock Purchase Agreement dated February 15, 2002 with
Nexia Group, Inc. for acquisition of 82% of the
common stock of Nexia in exchange for various assets
and holdings in subsidiary corporations.
(Incorporated by reference from Exhibit 1 of Form 8K
filed with the SEC on February 27, 2002 and amended
on May 1, 2002)
* Previously filed as indicated and incorporated herein by
reference from the referenced filings previously made by Axia.
10