U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from .................... to ........................
Commission file number: 000-26971
MAXX INTERNATIONAL, INC.
(Name of small business issuer in its charter)
Utah
(State or other jurisdiction of incorporation or organization)
87-0284871
(I.R.S. Employer Identification No.)
c/o Solomon Broadcasting International, Inc.
130 S. El Camino Drive, Beverly Hills, CA 90212
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: 301-205-6220
AREA INVESTMENT AND DEVELOPMENT COMPANY
(Former name, former address and former fiscal year,
if changed since last report)
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 [X] No
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes ______ No ______
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 14,591,397 shares of common
stock as of June 30, 2000.
Transitional Small Business Disclosure Format (check one); Yes [ ] No [X]
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.................................................1
CONSOLIDATED BALANCE SHEETS AS OF
JUNE 30, 2000, DECEMBER 31, 1999 AND 1998 (UNAUDITED) ..............2
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
AND YEARS ENDED DECEMBER 31, 1999 AND 1998 (UNAUDITED)...............3
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
AND YEARS ENDED DECEMBER 31, 1999 AND 1998 (UNAUDITED)...............4
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000
AND YEARS ENDED DECEMBER 31, 1999 AND 1998 (UNAUDITED)...............5
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION ...............................................10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS...................................................11
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS...........................11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.....................................11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................11
ITEM 5. OTHER INFORMATION...................................................11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K....................................11
SIGNATURES....................................................................12
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited Financial Statements for the period ended June 30,
2000, have been prepared by the Company.
1
MAXX INTERNATIONAL INC AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(unaudited)
JUNE 30, DECEMBER 31, DECEMBER 31,
2000 1999 1998
----------- ----------- -----------
ASSETS
Current Assets:
Cash $ 111,951 $ 20,489 $ 0
Accounts Receivable 8,684
Due From Stockholder 34,974
Compact Disc and Video Production Costs 692,407
661,898
Other Current Assets 4,120
----------- ----------- -----------
Total Current Assets 1,514,034 20,489 0
COMPUTER EQUIPMENT AND LEASEHOLD
IMPROVEMENTS , Net of $13,010 Accumulated
Depreciation and Amortization 44,541
CREDIT CARD RIGHTS, Net of $417 Accumulated Amortization 99,583
CALLING CARD RIGHTS, Net of $417 Accumulated Amortization 99,583
BOOK RIGHTS,Net of $9,410 Accumulated Amortization 555,205
ORGANIZATION COSTS, Net of $ 3,042 Accumulated Amortization 42,590
GOODWILL, Net of $28,784 Accumulated Amortization 1,122,581
----------- ----------- -----------
TOTAL ASSETS $ 3,478,117 $ 20,489 $ 0
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Expenses $ 958,218 $ 35,000
Loans Payable 495,181
Note Payable 500,000
----------- ----------- -----------
Total Current Liabilities 1,953,399 0 35,000
----------- ----------- -----------
Stockholders' Equity:
Common Stock, $0.01 Par Value, 50,000,000 Authorized,
14,591,397 Shares Issued and Outstanding at June 30, 2000
and 9,048,171 Shares at December 31, 1999
and 3,048,171 Shares at December 31, 1998 145,914 90,482 30,482
Additional Paid-in Capital 3,165,488 116,700 31,700
Accumulated Deficit (1,786,684) (186,693) (97,182)
----------- ----------- -----------
Total Stockholders' Equity 1,524,718 20,489 (35,000)
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,478,117 $ 20,489 $ 0
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
2
MAXX INTERNATIONAL INC AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
SIX MONTHS YEARS ENDED
ENDED JUNE 30, DECEMBER 31,
2000 1999 1998
------------ ------------ ------------
INCOME
Net Sales $ 27,971 $ 0 $ 0
Interest Income 583 489 0
------------ ------------ ------------
GROSS INCOME 28,554 489 0
------------ ------------ ------------
EXPENSES
General and Administrative 1,628,545 90,000 480
------------ ------------ ------------
Total Expenses 1,628,545 90,000 480
------------ ------------ ------------
LOSS FROM OPERATIONS (1,599,991) (89,511) (480)
------------ ------------ ------------
DEBT FORGIVENESS ON SETTLEMENT OF PAYABLE 0 0 51,915
NET INCOME (LOSS) ($ 1,599,991) ($ 89,511) $ 51,435
============ ============ ============
BASIC INCOME (LOSS) PER SHARE ($ 0.13) ($ 0.01) $ 0.02
============ ============ ============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 12,545,717 7,634,474 3,048,171
============ ============ ============
The accompanying notes are an integral part of these financial statements.
3
MAXX INTERNATIONAL INC AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
SIX MONTHS YEARS ENDED
ENDED JUNE 30, DECEMBER 31
2000 1999 1998
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) ($1,599,991) ($ 89,511) $ 51,435
Adjustments to Reconcile Net Income (Loss) to Net Cash
Used by Operating Activities:
Depreciation and Amortization 42,070 0 0
Decrease in Accounts Receivable 11,908 0 0
Increase in Other Current Assets (470) 0 0
Increase in Compact Disc and Video Production Costs (215,843) 0 0
Decrease in Concert Pre-Production Costs 133,102 0 0
Increase (Decrease) in Accounts Payable and Accrued Expenses 906,766 (32,461) (51,435)
----------- ----------- -----------
Net Cash Used by Operating Activities (722,458) (121,972) 0
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Computer Equipment (22,488) 0 0
Loans to Stockholder (132,450) 0 0
Repayment of Loans to Stockholder 50,043 0 0
Cash Paid for Credit Card Rights (100,000) 0 0
Cash Paid for Calling Card Rights (100,000)
Cash Paid for Organization Costs (45,166) 0 0
----------- ----------- -----------
Net Cash Used by Investing Activities (350,061) 0 0
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Received in Connection with Stock Acquisition 168,800 0 0
Cash Received for Issuance of Stock 0 142,461 0
Cash Received on Loans Payable 495,181 0 0
Cash Received for Note Payable 500,000 0 0
----------- ----------- -----------
Net Cash Provided by Financing Activities 1,163,981 142,461 0
----------- ----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 91,462 20,489 0
CASH AND CASH EQUIVALENTS, Beginning 20,489 0 0
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, Ending $ 111,951 $ 20,489 $ 0
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Period for:
Interest $0 $0 $0
Income Taxes $0 $0 $0
The accompanying notes are an integral part of these financial statements.
4
MAXX INTERNATIONAL INC AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000
AND YEARS ENDED DECEMBER 31, 1999 AND 1998
(unaudited)
Additional Total
Common Stock Paid-in Accumulated Stockholders'
Shares Amount Capital (Deficit) Equity
--------- ----------- ----------- ----------- -----------
Balance, January 1, 1998 3,048,171 $ 30,482 $ 31,700 ($ 148,617) ($ 86,435)
Net Income for the Year Ended
December 31, 1998 51,435 51,435
--------- ----------- ----------- ----------- -----------
Balance, January 1, 1999 3,048,171 30,482 31,700 (97,182) (35,000)
Net Loss for the Year Ended
December 31, 1999 (89,511) (89,511)
Issuance of Common Stock
for Cash and Debt 6,000,000 60,000 85,000 145,000
--------- ----------- ----------- ----------- -----------
Balance, January 1, 2000 9,048,171 90,482 116,700 (186,693) 20,489
Net Loss for the Six Months Ended
June 30, 2000 (1,599,991) (1,599,991)
Issuance of Common Stock
for Cash and Purchase of Assets
and Subsidiary 5,543,226 55,432 3,048,788 0 3,104,220
--------- ----------- ----------- ----------- -----------
Balance, June 30, 2000 14,591,397 $ 145,914 $ 3,165,488 ($1,786,684) $ 1,524,718
========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
5
MAXX INTERNATIONAL INC. AND SUBSIDIARY
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES, ORGANIZATION AND BUSINESS
The financial statements presented are those of Maxx International
Inc. and Subsidiary (the "Company")formerly Area Investment and
Development Company. The Company was organized under the laws of the
State of Utah on June 10, 1970. The Company was organized for the
purpose of seeking potential business ventures.
On February 19, 2000 the Company closed on an Asset Acquisition
Agreement with Maxx International, Inc., ("Maxx") whereby the company
acquired all of Maxx's assets in exchange for 3,500,000 restricted
shares of the Company's $.01 par value common stock. On April 17,
2000 the Company legally changed its name to Maxx International Inc.
No liabilities or other encumbrances were acquired from Maxx in the
asset acquisition. A fair market valuation is being performed.
Also in connection with the acquisition, Ken Kurtz and Carrie Kurtz
resigned as officers and directors of the Company and Ms. Gehring
resigned as secretary/treasurer and stayed on as a director. Michael
Solomon was appointed as director and chairman of the board of the
Company.
As a result of this asset acquisition, neither Ken Kurtz nor any
other party owns or controls over 50% of the outstanding stock of the
Company.
On March 27, 2000 the Company closed on a stock purchase agreement
with Pure Vision Internet Inc.(The "Subsidiary") The Company acquired
all of the Subsidiary's shares in exchange for 3,513,488 shares of
the Company's common stock, par value $.01 per share and various
options exercisable at various times. A fair market valuation is
being performed.
6
MAXX INTERNATIONAL INC. AND SUBSIDIARY
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2000
Use of Estimates
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 disclosures 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.
Doubtful Accounts
Accounts receivable have been adjusted for all known uncollectible
accounts and an additional allowance for doubtful accounts has not
been provided as the amount is not considered material.
Fair Value of Financial Instruments
Unless otherwise indicated, the fair values of all reported assets
and liabilities which represent financial instruments (none of which
are held for trading purposes) approximate the carrying values of
such amounts.
Property, Equipment and Depreciation
Property and equipment are stated at original cost to the Company.
The property and equipment are primarily being depreciated over lives
established by the Modified Accelerated Cost Recovery System (MARCS),
which approximates depreciation under generally accepted accounting
principles, as follows: five to seven years for equipment, and ten to
39 years (straight-line) for the property.
Credit Card Rights
The Company has acquired the rights to imprint reproductions of the
works of art located in the Museum of the Treasures of St. Peters in
the Vatican on financial credit or debit cards. The sublicense
agreement shall remain in effect until February 7, 2006. The rights
are being amortized over the term of the agreement.
7
MAXX INTERNATIONAL INC. AND SUBSIDIARY
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2000
Calling Card Rights
The Company has acquired the rights to imprint reproduction of the
works of art located in the Museum of the Treasurers of St. Peters in
the Vatican on products and services relating to telephone services.
The sublicense agreement shall remain in effect until February 7,
2006. The rights are being amortized over the term of the agreement.
Book Rights
The Company acquired the rights to publish various books. A fair
market valuation of these rights is being prepared. The rights are
stated at original cost to the Company. Any adjustments upon
attaining the valuation will be made prospectively. The rights are
being amortized over a 20 year life using the straight line method.
Organization Costs
Organization Costs are being amortized under the straight line method
over a period of 60 months.
Goodwill
The Company acquired all of the stock of Pure Vision Internet Inc. A
fair market valuation of this stock is being prepared. The stock is
presently being recorded at $.50 per share. Any adjustments upon
attaining the valuation will be made prospectively. Goodwill is being
amortized over a 10 year life using the straight line method.
8
MAXX INTERNATIONAL INC. AND SUBSIDIARY
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 2 -- DUE FROM STOCKHOLDERS
Due from stockholders represents short-term non-interest bearing loan
balances.
NOTE 3 -- LOANS PAYABLE
Loans payable represents short-term non-interest bearing loans.
NOTE 4 -- NOTE PAYABLE
Note payable represents a non-interest bearing demand note which is
intended to be converted to equity.
NOTE 5 -- SUBSEQUENT EVENTS
The Company has entered into a memorandum of understanding with Itex
Corporation ("Itex"). Under the terms of the memorandum the assets of
Itex will be acquired by the Company. This agreement is subject to a
completion of due diligence and must be approved by the board of
directors of both companies. Itex will receive shares of the common
stock for Itex's outstanding stock.
A stock split of 2 for 1 has been declared. The shares are payable on
July 6, 2000 to stockholders of record as of June 30, 2000.
9
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis should be read in conjunction with
the Consolidated Financial Statements and Notes thereto appearing elsewhere in
this Form 10-QSB and the previously filed Form 10-KSB for the period ending
December 31, 1999.
Plan of Operation
The mission of Maxx International, Inc. (the "Company") is to own and
manage Web content and media assets which are packaged and converged across
multiple distribution platforms to provide multifaceted revenue streams and
increase stockholder equity.
The Company is presently seeking to form a strategic alliance with another
entity and or investor to help satisfy its current cash flow needs for the next
twelve months. The Company is in the unique position of owning the exclusive
worldwide licensing rights to the seven private prayer books written by His
Holiness Pope John Paul II. Although there can be no assurance, a significant
publishing advance of $5,000,000 to $8,000,000 is anticipated once the approved
translations are received from the Vatican. The Company's marketing program
includes the distribution of a collection of music compact discs with unique
characteristics. This will involve famous national and international
entertainment idols, actors and sports stars reading various prayers contained
within the Pope's Prayer Books, combined with music.
In March 2000, the Company acquired 100% of the outstanding stock of Pure
Vision Internet Inc. ("Pure Vision") which manages 35,000 digital video and
audio files daily. Pure Vision is well established in the areas of web site
template development, video streaming, webcasting, web conferencing, hosting
sites, automatic e-commerce store generator, domain name provider and ISP/DSL
reseller. The main focus of Pure Vision for the last three years has been their
Web site www.thegospel.com. The Gospel.com is a Christian Web Community that
links the churches and ministries of today with the furthest points of the
world. As the Company develops, additional personnel will be required to staff
the various business centers.
The Company's operation to date consumed substantial amounts of cash. The
negative cash flow from operations is expected to continue and may accelerate in
the foreseeable future. The rate at which the Company expends its resources is
variable and may accelerate, depending on many factors, many of which are
outside the control of the Company. The Company anticipates that it will require
additional financing to fund its operations. Future financing may result in
additional issuance of debt, preferred stock and/or common stock securities, in
dilution to the holders of the common stock. Any such financing, if required,
may not be available on satisfactory terms or at all. There can be no assurance
that additional investments or financing will be available as needed to support
the development of the Company's products. Failure to obtain such capital on a
timely basis could result in lost business opportunities, or the financial
failure of the company.
10
Forward Looking Statements
Certain statements in this Quarterly Report that are not historical facts
constitute "forward- looking statements" within the meaning of the Federal
securities laws. Discussions containing such forward-looking statements may be
found in this sections entitled, "Management's Discussion and Analysis or Plan
of Operations", as well in this Quarterly Report generally. In addition, when
used in this Quarterly Report the words"anticipates," "intends," "seeks,"
"believes," "plan," "estimates," and "expects" and similar expressions as they
relate to us or our management are intended to identify such forward-looking
statements. Such statements are subject to a number of risks and uncertainties.
Our actual results, performance or achievements could differ materially from the
results expressed in, or implied by, these forward-looking statements. We
undertake no obligation to revise these forward-looking statements to reflect
any future events or circumstances.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are presently no other material pending legal proceedings to
which the Company or any of its subsidiaries is a party or to which any of its
property is subject and, to the best of its knowledge, no such actions against
the Company are contemplated or threatened.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
This Item is not applicable to the Company.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
This Item is not applicable to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
This Item is not applicable to the Company.
ITEM 5. OTHER INFORMATION
This Item is not applicable to the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
11
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K
A Form 8-K dated July 5, 2000, was filed reporting that on June 21, 2000,
the Company announced that its Board of Directors had declared a two-for-one
stock split in the form of a 100% stock dividend. The record date for the stock
split was set for June 30, 2000. One additional share of the Company's common
stock was distributed for each outstanding share on or about July 6, 2000.
Additionally, the Form 8-K dated July 5, 2000, reported that: (i) on June
5, 2000, the Board of Directors of the Company accepted the resignation of Rick
Garson as an officer and director of the Company; (ii) effective June 5, 2000,
the remaining directors elected Joseph Congiusti as a director of the Company;
and, (iii) on June 27, 2000, the Company entered into a Consulting Agreement
with Doyle Capital Management, Inc., a Nevada corporation.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MAXX INTERNATIONAL, INC.
Date: August 17, 2000 By: /s/ Adley Samson
--------------------
Adley Samson, C.F.O.
12