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 September 30, 2003.
[ ] 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
------
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,
as of November 13, 2003 was 1,365,903.
1
..
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS................................4
ITEM 3. CONTROLS AND PROCEDURES ............................................5
PART II
ITEM 1. LEGAL PROCEEDINGS...................................................5
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES.............................5
ITEM 5. OTHER INFORMATION...................................................5
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K....................................7
INDEX TO EXHIBITS............................................................8
SIGNATURES...................................................................9
2
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Axia" refers to Axia Group, Inc., a Nevada
corporation, its subsidiary corporations and predecessors unless otherwise
indicated. The accompanying unaudited interim financial statements have been
prepared in accordance with the instructions to Form 10-QSB pursuant to the
Securities and Exchange Commission and, therefore, do not include all
information and footnotes necessary for a complete presentation of our financial
position, results of operations, cash flows and stockholders' equity in
conformity with generally accepted accounting principles in the United States of
America. In the opinion of management, all adjustments considered necessary for
a fair presentation of the results of operations and financial position have
been included and all such adjustments are of a normal recurring nature.
Our unaudited balance sheet as of September 30, 2003 and the related unaudited
statements of operations and cash flows for the three and nine months ended
September 30, 2003 are attached hereto as Pages F-1 through F-6 and are
incorporated herein by this reference.
3
ITEM 1. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
PAGE
Balance Sheet..............................................................F-2
Statements of Operations...................................................F-4
Statements of Cash Flows...................................................F-5
Notes to Financial Statements..............................................F-7
F-1
AXIA GROUP, INC.
(A Development Stage Company)
BALANCE SHEET
(Unaudited)
September 30, 2003
--- ---------------
ASSETS
CURRENT ASSETS
Cash $ -
Total Current Assets -
FIXED ASSETS, NET 1,039
--- ---------------
TOTAL ASSETS $ 1,039
=== ===============
The accompanying notes are an integral part of these financial statements
F-2
AXIA GROUP, INC.
(A Development Stage Company)
BALANCE SHEET (Continued)
(Unaudited)
September 30, 2003
------------------
LIABILITIES, REEDEMABLE CONVERTIBLE PREFERRED
STOCK AND STOCKHOLDERS' DEFICIT
LIABILITIES
Current Liabilities
Accounts payable $ 62,815
Accrued liabilities 35,917
Accounts payable - related parties 39,639
Stock subscription 64,413
IEPA liability 232,892
------------------
Total Current Liabilities 435,676
------------------
SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK 5,000
- - $5.00 par value, 20,000,000 shares authorized, 1,000 -------------------
shares issued and outstanding
STOCKHOLDERS' DEFICIT
Common stock - 200,000,000 shares authorized at 1,365
$0.001 par; 1,365,903 shares issued
Additional paid in capital 18,412,536
Treasury stock - 1,107 shares at cost (3,202)
Subscription receivable (45,000)
Accumulated deficit prior to the development stage (17,995,776)
Accumulated deficit during the development stage (809,560)
TOTAL STOCKHOLDERS' DEFICIT (439,637)
-----------------
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE $ 1,039
PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
=================
The accompanying notes are an integral part of these financial statements
F-3
AXIA GROUP, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
From Inception of
Three Months Ended Nine Months Ended Development Stage
on January 1,
September 30 September 30, 2003 through
---------------------- ---------------------- September 30,
2003 2002 2003 2002 2003
--------- --------- -------- ---------- -----------------
Revenue $ - $ - $ - $ - $ -
Cost of Revenue - - - - -
--------- --------- -------- ---------- -------------
Gross Margin - - - - -
--------- --------- -------- ---------- -------------
Expenses
General & Administrative
Expense 81,909 93,325 802,002 382,781 802,002
--------- --------- -------- ---------- -------------
Total Expenses 81,909 93,325 802,002 382,781 802,002
--------- --------- -------- ---------- -------------
Loss from Operations (81,909) (93,325) (802,002) (382,781) (802,002)
--------- --------- -------- ---------- -------------
Other Income (Expense)
Other Income 5,000 - 5,000 5,000
Interest Expense (3,983) - (12,558) - (12,558)
--------- --------- -------- ---------- -------------
Total Other Income (Expense) 1,017 - (7,558) - (7,558)
--------- --------- -------- ---------- -------------
Net loss before discontinued (80,892) (93,325) (809,560) (382,781) (809,560)
operations
Loss from discontinued - (172,488) - (864,919) -
operations
--------- --------- -------- ---------- -------------
Net Loss $ (80,892) $(265,813) $(809,560) $(1,247,700) $ (809,560)
========= ========= ======== ========== =============
Basic Loss Per Common Share
Net loss before $ (0.06) $ (0.28) $ (0.86) $ (1.39)
discontinued operations
Loss from discontinued 0.00 (0.52) 0.00 (3.15)
operations ------ --------- -------- ----------
Net loss per share $ (0.06) $ (0.81) $ (0.86) $ (4.55)
======== ========= ======== ==========
Weighted average common
shares outstanding- 1,375,142 329,767 938,340 274,433
basic and diluted ========= ========= ======== ==========
The accompanying notes are an integral part of these financial statements
F-4
AXIA GROUP, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
From Inception
of Development
Stage on Jan 1,
Nine Months Ended 2003 through
September 30 Sept 30, 2003
---------------------- ---------------
2003 2002
--------- -----------
----------------------------------
Cash Flows From Operating Activities
-----------------------------------
Net Loss $(809,560) $(1,247,700) (809,560)
Adjustments to reconcile net
loss to net cash provided (used):
Loss from discontinued operations - 864,919 -
Services rendered in lieu of
payment for related party 20,000 20,000
receivable
Depreciation and amortization 120 12,082 120
Issued stock for services 640,000 367,854 640,000
Amortization of deferred Consulting 12,833 70,000 12,833
Changes in operating assets
and liabilities:
Accounts and notes receivable - 13,705 -
Other assets 96 - 96
Accounts payable 22,196 84,037 22,196
Accrued liabilities 10,168 (35,000) 10,168
Related party payable 39,639 72,627 39,639
--------- --------- ---------------
Net cash used in continuing
operations (64,508) 202,524 (64,508)
Net cash used in discontinued
operations - (997,840) -
--------- --------- ---------------
Net Cash Used in Operating Activities
(64,508) (795,316) (64,508)
--------- --------- ---------------
Cash Flows From Investing Activities
Purchase of property and equipment - (1,279) -
--------- --------- ---------------
Net cash used in continuing operations - (1,279) -
Net cash provided by discontinued
operations - 297,157 -
--------- --------- ---------------
Net Cash Used in Investing Activities - 295,878 -
--------- --------- ---------------
Cash Flows from Financing Activities
Cash for common stock deposit 64,413 1,650 64,413
Purchase of treasury stock - (31,996) -
Payment of long-term debt - (26,516) -
--------- --------- ---------------
Net cash used in continuing operations 64,413 (56,862) 64,413
Net cash provided by discontinuing
operations - 359,695 -
--------- --------- ---------------
Net Cash Provided (Used) by Financing
Activities 64,413 302,833 64,413
--------- --------- ---------------
Increase (Decrease) in Cash (95) (196,605) (95)
Cash at Beginning of Period 95 295,134 95
--------- --------- ---------------
Cash at End of Period $ - $ 98,529 $ -
========= ========= ===============
The accompanying notes are an integral part of these financial statements
F-5
AXIA GROUP, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
From Inception
of Development
Stage on Jan 1,
Nine Months Ended 2003 through
September 30 Sept 30, 2003
---------------------- ---------------
2003 2002
--------- ----------
-----------------------------------
Supplemental Cash Flow Information
-----------------------------------
Cash Paid for:
Interest $ - $ - $ -
Income taxes $ - $ 5,000 $ -
Non-Cash Financing Activities:
Cancellation of common stock
for related party receivable $(408,332) $ - $ (408,332)
Cancellation of common stock
for deferred consulting fees $ (38,500) $ - $ (38,500)
Contributed capital from
related party on recovery
of bad debt $ 408,332 $ - $ 408,332
Cancellation of common stock for
stock subscription receivable $ (90,000) $ - $ (90,000)
receivable
Common stock issued for services $ 640,000 $ 367,854 $ 640,000
The accompanying notes are an integral part of these financial statements
F-6
AXIA GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2003
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited financial statements have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted in
accordance with such rules and regulations. The information furnished in the
interim financial statements include normal recurring adjustments and reflects
all adjustments, which, in the opinion of management, are necessary for a fair
presentation of such financial statements. Although management believes the
disclosures and information presented are adequate to make the information not
misleading, it is suggested that these interim financial statements be read in
conjunction with the Company's most recent audited financial statements and
notes thereto included in its December 31, 2002 Annual Report on Form 10-KSB.
Operating results for the three and nine months ended September 30, 2003 are not
indicative of the results that may be expected for the year ending December 31,
2003.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using accounting principles
generally accepted in the United Stated of America applicable to a going concern
which contemplates the realization of assets and liquidation of liabilities in
the normal course of business. The Company has incurred cumulative operating
losses through September 30, 2003 of $18,805,336 and has a working capital
deficit of $435,676 at September 30, 2003 all of which raise substantial doubt
about the Company's ability to continue as a going concern.
Management's plans include raising equity capital and/or acquiring a business or
operations with sufficient revenues to support its operations. In the meantime,
the Company will rely on short-term financing from its management and
shareholders.
There can be no assurance that the Company can or will be successful in
implementing any of its plans or that they will be successful in enabling the
company to continue as a going concern. The Company's financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
NOTE 3 - DISCONTINUED OPERATIONS
Effective December 10, 2002, the Company decided to distribute 100% of its
ownership in Nexia Holdings, Inc. and Subsidiaries (Nexia) to its shareholders
through a pro-rata distribution of Nexia shares. The distribution has been
accounted for as a spin-off and all operations of Nexia have been reflected as
discontinued operations in the 2002 financial statements. Within the
discontinued operations of Nexia, there is further discontinued operations due
to the sale of Nexia's subsidiaries, Wichita Development, Salt Lake Development,
and Wichita Properties on June 30, 2003.
F-7
AXIA GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2003
NOTE 3 - DISCONTINUED OPERATIONS (CONTINUED)
The following is a summary of the loss from discontinued operations:
For the nine months ended
September 30, 2002
---------------------
Total Revenue $ 680,332
Costs of Revenue 953,760
---------------------
Gross Deficit (273,428)
Total Operating Expenses 335,803
---------------------
Operating Loss (609,231)
Total Other Income (Expenses) (227,728)
---------------------
Loss before Minority Interest (836,959)
Minority Interest in Loss 121,472
---------------------
Net Loss before Discontinued (715,487)
Discontinued Operations (149,432)
---------------------
Net Loss $ (864,919)
=====================
NOTE 4 - MATERIAL EVENTS
During July 2003, the Company negotiated a Settlement Agreement related to an
Investment Banking Agreement entered with West America Securities in March 2003,
whereby the Company agreed to accept $5,000 and 50,000 shares of ISA
Internationale, Inc. common stock in lieu of $50,000. The cash portion of the
Settlement Agreement was satisfied during the third quarter. In the event the
Company is unable to realize $50,000 from the sale of the ISA stock, West
America Securities will be liable for the short fall.
During July 2003, the Company entered into a Stock Purchase Agreement "(the
Agreement") with First Colonial Trust (Colonial), whereby Colonial agreed to
purchase up to 5,000,000 shares of restricted common stock of the Company at a
purchase price of 30% of the bid price per share on the day that the Company
receives payment for the specific number of shares purchase to be reflected in
written buy orders sent to the Company. These shares are to be exempt from
registration under Regulation S of the Securities Act of 1933.
During the third quarter, the Company became obligated to issue 1,036,110 shares
to Colonial as a result of cash proceeds of $64,413received under the agreement.
However, on September 3, 2003, Axia placed Colonial on notice of its intent to
terminate the Stock Purchase Agreement and the 1,036,110 shares have yet to be
issued.
During August 2003, the Company canceled 16,667 shares previously issued for a
stock subscription receivable of $90,000.
F-8
AXIA GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2003
NOTE 5 - STOCK OPTIONS
On September 3, 2003, 15,504 options issued to an employee expired unexercised.
A summary of the status of the Company's outstanding stock options as of
September 30, 2003 and 2002 and changes during the periods then ended is
presented below:
2003 2002
Shares Weighted Avg. Shares Weighted Avg.
Excercise price Excercise Price
---------------------- ----------------------
Outstanding, beginning of period 26,322 $ 14.37 35,985 $ 27.35
Granted - 141,667 0.15
Expired/Cancelled (15,504) 3.30 (109,834) 0.22
Exercised - - (27,163) 0.17
-------- --------- --------- --------
Outstanding, end of period 10,818 $ 26.92 40,655 $ 17.79
(unaudited) ======== ========= ========= ========
Exercisable (unaudited) 10,818 $ 26.92 40,655 $ 17.79
======== ========= ========= ========
Outstanding Exercisable
--------------------------------------- -------------------------
Weighted
Number Average Weighted Number Weighted
Outstanding Remaining Average Exercisable Average
Range of at Sept. 30, Contractual Exercise at Sept. 30, Exercise
Exercise Prices 2003 Life Price 2003 Price
$ 6.60 - 7.50 984 3.07 $ 7.36 984 $ 7.36
18.00 167 3.14 18.00 167 18.00
29.06 9,667 2.99 29.06 9,667 29.06
----------- ----------- --------- ----------- ----------
$ 6.60 - 29.06 10,818 3.00 $ 26.92 10,818 $ 26.92
=========== =========== ========= =========== ==========
F-9
AXIA GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2003
NOTE 5 - STOCK OPTIONS (CONTINUED)
Options granted to employees or employee directors are accounted for under APB
25, "Accounting for Stock Issued to Employees." All of these shares were granted
either at or above the market price of the Company's common stock on the date of
grant and no compensation expense was recognized. Had compensation cost for the
grant of the options been determined based on the fair value at the grant dates
consistent with the method of FASB Statement 123, "Accounting for Stock Based
Compensation," the Company's net loss and loss per share would have been
increased to the pro forma amounts indicated below:
For the Nine Months Ended
September 30,
----------------------------
2003 2002
(Unaudited) (Unaudited)
------------- -----------
Net (loss) as reported $ (809,560) $ (1,247,700)
Pro forma (809,560) (1,445,720)
Basic (loss) per share as reported $ (0.86) $ (4.55)
Pro forma (0.86) (5.27)
F-10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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, 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 10-QSB
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
General
- -------
Axia was a holding company that operated in two primary areas of business:
acquiring, leasing and selling real estate; and, providing financial consulting
services. This business was spun-off in December of 2002 and Axia has no current
operations. In order to accurately reflect the spin-off, the financial
statements above include the results from Axia's former business up to the time
of the spin-off as discontinued operations in the 2002 income statement.
Capital Resources and Liquidity
- -------------------------------
Axia is a development stage company and has no meaningful capital resources.
Impact of Inflation
- -------------------
Axia believes that inflation has had a negligible effect on operations over the
past three years.
Plan of Operations
- ------------------
Axia has no plans for the purchase of any plant or equipment.
As of January 1, 2003, the Company has reverted back to the development stage
and currently has no employees. Axia has no current plans to make any changes in
the number of employees and does not anticipate doing so until it acquires a
business or an interest in an operating company.
Axia does not expect to generate any meaningful revenue or incur operating
expenses unless and until it acquires an interest in an operating company.
Axia's plan of operation for the coming year is to identify and acquire a
favorable business opportunity. Axia does not plan to limit its options to any
particular industry, but will evaluate each opportunity on its merits. Axia has
reviewed and evaluated a number of business ventures for possible acquisition or
participation by Axia. Axia does not have any commitment or understanding to
enter into or become engaged in a transaction as of the date of this filing.
Axia continues to investigate, review, and evaluate business opportunities as
they become available and will seek to acquire or become engaged in business
4
opportunities at such time as specific opportunities warrant. Axia anticipates
that its owners, affiliates, and consultants will provide it with sufficient
capital to continue operations until the end of the year 2003, but there can be
no assurance that this expectation will be fully realized.
ITEM 3 CONTROLS AND PROCEDURES
Axia's president acts both as the Company's chief executive officer and chief
financial officer ("Certifying Officer") and is responsible for establishing and
maintaining disclosure controls and procedures for the Company. The Certifying
Officer has concluded (based on his evaluation of these controls and procedures
as of a date within 90 days of the filing of this report) that the design and
operation of the Company's disclosure controls and procedures (as defined in
Rule 13a-14(c) under the Securities Exchange Act of 1934) are effective. No
significant changes were made in the Company's internal controls or in other
factors that could significantly affect those controls subsequent to the date of
the evaluation, including any corrective actions with regard to slight
deficiencies and material weaknesses. Due to the Certifying Officer's dual role
as chief executive officer and chief financial officer, the Company has no
segregation of duties related to internal controls.
PART II
ITEM 1. LEGAL PROCEEDINGS
Axia Group, Inc. vs. West America Securities Corporation and Robert Kay. Suit
filed by Axia in the Third Judicial District Court of Salt Lake County, State of
Utah, Civil No. 020911034 on October 15, 2002. The suit seek recovery of $50,000
advanced to the defendants pursuant to an investment banking agreement. The
parties signed an agreement to settle the claims on August 19, 2003. The terms
of settlement provide that the defendants pay Axia $5,000 in cash, this payment
has been received, and deliver to Axia not less than 50,000 shares of the common
stock of ISA Internationale, Inc. no later than December 30, 2003. The ISA
shares are to have a liquidation value of not less than $50,000 through January
15, 2004. The parties agreed to dismiss the pending litigation without
prejudice.
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES
Pursuant to the Stock Purchase Agreement ("Agreement") signed during July 2003
with First Colonial Trust ("Colonial"), the Company received cash proceeds of
$64,413 pursuant to the Agreement. The Company has not issued any shares to
Colonial because of allegations of noncompliance with the terms of the
Agreement. The number shares which Axia may be obligated to issue totals
1,036,110. For more information on this transaction See, "Item 5. Other
Information" below.
ITEM 5. OTHER INFORMATION
On May 2, 2003 the Company entered into an agreement with Hudson Consulting
Group, Inc. (Hudson) in which Hudson would assist the Company in it's effecting
the purchase of businesses and assets relative to its business and growth
strategy, the preparation of reports and forms for filing with the SEC,
including Form 8-Ks, annual and quarterly reports, replies and amendments to
documents previously submitted to the SEC, advice concerning the acquisition of
other operations or businesses, corporate governance issues and record
maintenance, general business and financial issues consulting, and other
services that may assist the Company in its plans and future The Company agrees
to pay Consultant by issuing 666,667 (post-split) shares of restricted common
stock, and a total of $10,000 in cash or the total amount of hourly
5
billings reported by Consultant on a monthly basis, whichever is greater.
Hudson's president and director is Richard Surber, the president and a director
of the Company. Hudson was formerly a subsidiary of the Company.
On July 9, 2003, Axia. entered into an Offshore Stock Purchase Agreement (the
"Agreement") with First Colonial Trust, a British Virgin Islands corporation
(Colonial). Pursuant to the Agreement Colonial had the right to purchase up to
5,000,000 shares of Axia common stock pursuant to Regulation S of the Securities
Act of 1933 at a purchase price equivalent to 30% of the bid price per share on
the day that Axia received payment from Colonial for the specified number of
shares to be reflected in written buy orders sent to Axia.
The Agreement called for Axia to deliver a certificate in the amount of
5,000,000 shares of its restricted common stock (Certificate) to a designated
escrow agent within 14 days of the day the Agreement was executed. Colonial
wouldl only be deemed to have voting control or the power to dispose of that
portion of the shares of common stock that will be released at the direction of
Colonial upon payment being rendered in U.S. dollars to Axia or a designated
third party escrow agent.
It was anticipated that subsequent to the delivery of the Certificate
representing such shares, Colonial would begin drawing against the Certificate
at Colonial's discretion, excepting that at no time would Colonial have direct
or indirect beneficial ownership of more than 9.9% of the total issued and
outstanding shares of Axia. Colonial could at its option resell the shares to
its clients in compliance with Regulation S or hold such shares for their own
account.
In the event Colonial acts as a selling agent with respect to reselling the Axia
shares, Colonial was responsible for disclosing any mark ups, commissions or
other consideration Colonial or its representatives received directly or
indirectly as a result of reselling the Axia shares.
In any event, Axia was to receive 30% of the proceeds from any such resales of
up to 5,000,000 shares based upon the bid price on the day of such sale. The bid
price of Axia is subject to change based upon market fluctuations. Accordingly,
the net dollar amount Axia received fluctuated significantly because the market
price of Axia's common stock varied .
On September 3, 2003, Axia placed Colonial on notice that it was cancelling the
contract. Various issues had been raised at that point about Colonial's
compliance with the terms and conditions of the agreement. The number of shares
that are to be delivered under the terms of the agreement was 1,036,110 with
total proceeds of $64,413 received by Axia. No sales or transfers to Colonial
have been effected as of the date of this Form 10QSB filing. Axia is in the
process of investigating what course of action it will take, if any, beyond
terminating the Offshore Stock Purchase Agreement with First Colonial.
On October 14, 2003, the Securities and Exchange Commission commenced a civil
action in the United States District Court Central Division in the District of
Utah, against multiple defendants, including First Colonial Trust. The
Complaint, amongst many allegations, states that First Colonial engaged in a
massive scheme to mislead and defraud in excess of 1,000 foreign investors,
primarily located in the United Kingdom. The allegations include but are not
limited to First Colonial and other defendants: (1) blatantly lying about the
issuers businesses; (2) misrepresentations as to the tradeability of shares,
i.e. that restricted shares under Regulation S of the Securities Act of 1933
were freely tradeable; (3) misrepresentations as to the commission First
Colonial was charging, i.e. First Colonial was apparently representing that it
only received a 2% commission versus actually receiving a 70% commission.
6
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 11 of this Form 10-QSB, and
are incorporated herein by this reference.
(b) Reports on Form 8-K. The Company filed the following reports on Form 8-K
during the quarter for which this report is filed.
(1) On September 4, 2003, the Company filed a Form 8-K disclosing its
intent to cancel the Offshore Stock Purchase Agreement with First
Colonial Trust.
7
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).
3(iii) * 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).
3(iv) * Restatement of the Articles of Incorporation for the
Company, they will provide for specific authority for the
Board of Directors of Axia to carry out forward and reverse
splits of all classes of Axia's common shares.
(incorporated herein by reference from a Form 14C filed on
March 21, 2003)
Material Contracts
10(i) * Consulting Agreement between Axia Group, Inc and Hudson
Consulting Group, Inc., (incorporated herein by reference
from the 10-QSB for the period ended June 30,2003.)
10(ii) * Offshore Stock Purchase Agreement entered into 9th day of
July, 2003, by and between Axia Group, Inc., a Nevada
corporation and First Colonial Trust , a British Virgin
Islands corporation. (incorporated by reference from
exhibit no. 10(ii) to the Company's form 10-QSB for the
period ended June 30, 2003.)
Certifications
31(i) 11 Certification of Chief Executive Officer and
Chief Financial Officer
32(ii) 12 Certification of Chief Executive Officer and
Chief Financial Officer
* Previously filed as indicated and incorporated herein by reference from
the referenced filings previously made by the Company.
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 13th day of November 2003.
AXIA GROUP, INC.
/s/
- ----------------------------------
Richard D. Surber November 13, 2003
President, Chief Executive Officer and Director
9
EXHIBIT 31(i)
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Richard Surber, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Axia Group, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant"s internal control
over financial reporting that occurred during the registrant"s most recent
fiscal quarter (the registrant"s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant"s internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant"s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant"s
internal control over financial reporting.
Date: November 13, 2003
/s/
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Richard Surber
Chief Executive Officer and Chief Financial Officer
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Exhibit 32(i)
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Richard Surber, Chief Executive Officer and Chief Financial Officer of Axia
Group, Inc., (the "Registrant"), do hereby certify in accordance with 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, based on my knowledge:
(1) the Quarterly Report on Form 10-QSB of the Registrant, to which this
certification is attached as an exhibit (the ""Report""), fully complies with
the requirements of section 13(a) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Registrant.
DATED: November 13, 2003
/s/
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Richard Surber
Chief Executive Officer and
Chief Financial Officer
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