UNITED STATES
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, 2001
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
For the transition period from __________ to ___________
Commission file number: 333-46828
CLIXTIX, INC.
-------------
(Exact name of small business issuer as specified in its charter)
New York 13-3526402
-------- ----------
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
Suite 1807-1501 Broadway, New York, NY 10036
--------------------------------------------
(Address of principal executive offices)
(212) 768-2990
--------------
(Issuer's telephone number)
PHYLLIS MAXWELL'S GROUPS, INC.
------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant 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:
11,500,000 shares of common stock outstanding as of October 31, 2001
Transitional Small Business Disclosure Format (Check One): Yes[__] No [X]
CLIXTIX, INC
FORM 10-QSB
INDEX
Page
PART I FINANCIAL INFORMATION.............................................3
Item 1. Financial Statements:.............................................3
Independent Accountants' Review Report............................3
Condensed Consolidated Balance Sheets.............................4
Condensed Consolidated Statements of Operations...................5
Condensed Consolidated Statements of Stockholder's Equity.........6
Condensed Consolidated Statements of Cash Flows...................7
Notes to Condensed Consolidated Financial Statements..............9
Item 2. Management's Discussion and Analysis or Plan of Operation........11
PART II OTHER INFORMATION..................................................17
Item 1. Legal Proceedings................................................17
Item 2. Changes in Securities............................................17
Item 3. Defaults Upon Senior Securities..................................17
Item 4. Submission of Matters to a Vote of Security Holders..............17
Item 5. Other Information................................................17
Item 6. Exhibits and Reports on Form 8-K.................................18
SIGNATURE PAGE..............................................................19
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Board of Directors and Stockholders
Clixtix, Inc. and Subsidiary
1501 Broadway
Suite 1807
New York, New York 10036
We have reviewed the accompanying condensed consolidated balance sheet of
Clixtix, Inc. and Subsidiary (formerly Phyllis Maxwell's Groups, Inc.) as of
September 30, 2001 and the related condensed consolidated statements of
operations for the three and nine month periods ended September 30, 2001 and
2000, and statements of stockholders' equity and cash flows for the nine month
periods ended September 30, 2001 and 2000. These condensed consolidated
financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
condensed consolidated financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements for them
to be in conformity with accounting principles generally accepted in the United
States of America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the balance sheet of Phyllis Maxwell's
Groups, Inc. as of December 31, 2000, presented herein, and the related
statements of operations, stockholders' equity and cash flows for the year then
ended not presented herein; and in our report dated March 6, 2001, we expressed
an unqualified opinion on those financial statements.
MARDEN, HARRISON & KREUTER
Certified Public Accountants, P.C.
/s/ Marden, Harrison & Kreuter
White Plains, New York
October 24, 2001
3
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS
-----------------------------------------------
September 30, December 31,
2001 2000
------------- -----------
(Unaudited)
ASSETS
Current assets:
Cash $ 35,990 $ 30,132
Commissions receivable 119,635 96,963
Other assets - 5,666
------------ ----------
Total current assets 155,625 132,761
Other assets 2,654 -
Loans receivable - stockholder 26,500 20,000
------------ ----------
Total assets $ 184,779 $ 152,761
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 43,708 $ 62,009
Deferred taxes payable 21,900 15,500
Loan payable - stockholder - 7,870
------------ ----------
Total liabilities 65,608 85,379
------------ ----------
Commitments
Stockholders' equity:
Common stock, $.001 par value; 20,000,000 shares authorized, 11,500,000
shares issued and outstanding at September 30, 2001 and 10,500,000 shares
issued and outstanding at
December 31, 2000 21,100 20,100
Additional paid-in capital 59,371 23,349
Retained earnings 38,700 23,933
------------ ----------
Total stockholders' equity 119,171 67,382
------------ ----------
Total liabilities and stockholders' equity $ 184,779 $ 152,761
============ ==========
See accountants' review report and notes to condensed consolidated
financial statements.
4
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------
Nine Months Ended Three Months Ended
September 30, September 30,
-------------------------------- ----------------------------------
2001 2000 2001 2000
------------- ------------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Commission revenue $ 190,882 $ 167,697 $ 83,370 $ 59,302
General and administrative
expenses 172,488 173,251 63,655 72,819
------------ ------------ ------------ ------------
Income (loss) from operations 18,394 (5,554) 19,715 (13,517)
Interest income 3,501 3,073 1,111 1,307
------------ ------------ ------------ ------------
Income (loss) before income taxes 21,895 (2,481) 20,826 (12,210)
------------ ------------ ------------ ------------
Income taxes (benefit):
Current 728 800 - 500
Deferred 6,400 (1,000) 6,400 (3,600)
------------ ------------ ------------ ------------
7,128 (200) 6,400 (3,100)
------------ ------------ ------------ ------------
Net income (loss) $ 14,767 $ (2,281) $ 14,426 $ (9,110)
============ ============= ============ =============
Earnings per common share -
basic and diluted $ .00 $ .00 $ .00 $ .00
=========== ========== ============ ============
Weighted average common shares
outstanding - basic and diluted 11,000,000 10,150,000 11,500,000 10,500,000
============ ============ ============ ============
See accountants' review report and notes to condensed consolidated
financial statements.
5
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
CONDENSED CONSOLIDATED STATEMENTS
OF STOCKHOLDERS' EQUITY
-------------------------------------------
Additional
Common Stock Paid-In Retained
Shares Amount Capital Earnings Total
------ ------ ------- -------- -----
Nine months ended September 30, 2001 (unaudited):
Balances, December 31, 2000 10,500,000 $ 20,100 $ 23,349 $ 23,933 $ 67,382
Issuance of 1,000,000 of $.001 par value
common stock at price of $.03 per
share, net of issuance costs totaling
$12,978 1,000,000 1,000 36,022 - 37,022
Net income, nine months ended - - - 14,767 14,767
---------- --------- --------- ---------- ----------
Balances, September 30, 2001 11,500,000 $ 21,100 $ 59,371 $ 38,700 $ 119,171
========== ========= ========= ========== ==========
Nine months ended September 30, 2000 (unaudited):
Balances, December 31, 1999 10,000,000 $ 100 $23,349 $ 54,450 $ 77,899
Issuance of shares for professional
services 500,000 20,000 - - 20,000
Net loss, nine months ended - - - (2,281) (2,281)
---------- --------- --------- ---------- ----------
Balances, September 30, 2000 10,500,000 $ 20,100 $ 23,349 $ 52,169 $ 95,618
=========== ========= ========= ========== ==========
See accountants' review report and notes to condensed consolidated
financial statements.
6
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------------------
Nine Months Ended
September 30,
-------------
2001 2000
------------- -------------
(Unaudited) (Unaudited)
Cash flows provided by (used in):
Operating activities:
Cash received from customers $ 149,909 $ 152,543
Cash paid to suppliers and employees (169,476) (153,251)
Interest received 3,501 3,073
Income tax paid (728) (800)
---------- -----------
Net cash provided by (used in) operating activities (16,794) 1,565
---------- -----------
Financing activities:
Repayment of stockholder loan payable (7,870) -
Advances to stockholder (6,500) -
Proceeds from issuance of common stock 50,000 -
Expenses applicable to issuance of common stock (12,978) -
---------- -----------
Net cash provided by financing activities 22,562 -
---------- -----------
Net increase in cash 5,858 1,565
Cash, beginning of period 30,132 3,940
---------- -----------
Cash, end of period $ 35,990 $ 5,505
========== ===========
See accountants' review report and notes to condensed consolidated
financial statements.
7
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(CONCLUDED)
---------------------------------------------
Nine Months Ended
September 30,
2001 2000
------------- -------------
(Unaudited) (Unaudited)
Reconciliation of net income (loss) to net cash provided by
(used in) operating activities:
Net income (loss) $ 14,767 $ (2,281)
--------- ----------
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Issuance of common stock for professional
services - 20,000
Deferred income taxes payable 6,400 (1,000)
Changes in assets (increase) decrease:
Commission receivable (22,672) (15,154)
Other assets 3,012 -
Changes in liabilities increase:
Accounts payable (18,301) -
--------- ----------
Total adjustments (31,561) 3,846
--------- ----------
Net cash provided by (used in) operating activities $ (16,794) $ 1,565
========== ==========
Supplemental schedule of non-cash financing activities
On July 1, 2000, the Board of Directors approved issuance of 500,000 shares of
common stock to its legal counsel and a consultant based on the fair value of
shares of common stock issued totaling $20,000.
See accountants' review report and notes to condensed consolidated
financial statements.
8
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
-----------------------------------------
(1) Basis of Condensed Consolidation and Nature of Business. The accompanying
condensed consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, Maxwell Group Entertainment, Inc.
In August 2001, Maxwell Group Entertainment, Inc. was formed. During August
2001, Phyllis Maxwell's Groups, Inc. transferred its net assets to Maxwell
Group Entertainment, Inc. for its issued and outstanding common stock
forming a wholly owned subsidiary. On the same day of the transfer of
assets, through a Certificate of Amendment, Phyllis Maxwell's Groups, Inc.
changed its name to Clixtix, Inc.
In the opinion of the Company's management, the accompanying condensed
consolidated financial statements contain all adjustments (consisting of
only normal recurring accruals) necessary to present fairly the financial
position of the Company as of September 30, 2001 and the results of
operations and cash flows for the nine month periods ended September 30,
2001 and 2000. Because of the possible fluctuations in the marketplace and
in the entertainment industry, operating results of the Company on a
nine-month basis may not be indicative of operating results for the full
year.
(2) The Company's revenue stream is directly dependent upon in the
influx of tourism into New York City. The World Trade Center tragedy on
September 11, 2001 has had a severe impact on economic growth in New York
City, especially with respect to tourism. Through a combination of fewer
potential customers and possible cancellations by existing customers for
future performances, the Company's year end results may be negatively
impacted.
(3) The Company is not aware of any pending or threatened legal
proceedings which could have a material adverse effect on its financial
position or results of operations.
(4) Earnings per share:
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- ------
Nine months ended
September 30, 2001:
Basic EPS
Earnings available to common
stockholders $ 14,767 11,000,000 $ .00
========
Effective dilutive securities - -
----------- ------------
Diluted EPS
Earnings available to common
stockholders $ 14,767 11,000,000 $ .00
=========== ============ ========
9
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(CONTINUED)
-----------------------------------------
(4) Earnings per share - cont'd:
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- ------
Nine months ended
September 30, 2000:
Basic EPS
Loss applicable to common
stockholders $ (2,281) 10,150,000 $ .00
========
Effective dilutive securities - -
----------- ----------
Diluted EPS
Loss applicable to common
stockholders $ (2,281) 10,150,000 $ .00
============ ========== ========
10
Item 2. Management's Discussion and Analysis or Plan of Operation.
The following discussion of our financial condition and results of
operations should be read in conjunction with the Condensed Consolidated
Financial Statements and Notes to those financial statements included in this
Quarterly Report. This discussion contains forward-looking statements that
involve risks and uncertainties. Our actual results may differ materially from
those anticipated in these forward-looking statements as a result of various
factors including, but not limited to, those discussed in this Quarterly Report.
Overview
We were incorporated under the name Phyllis Maxwell's Groups, Inc. in
New York on April 18, 1989. On August 31, 2001, we filed a Certificate of
Amendment changing our name to Clixtix, Inc.
Our wholly owned subsidiary, Maxwell Group Entertainment, Inc., was
incorporated under the laws of New York on August 3, 2001.
On August 31, 2001, we and our subsidiary entered into an Agreement and
Plan of Reorganization (the "Agreement"). Under the terms of the Agreement, we
sold to our subsidiary all of our tangible and intangible assets appearing on
our Balance Sheet as of June 30, 2001 and our subsidiary assumed all of the
liabilities appearing on our Balance Sheet as of June 30, 2001 in consideration
for 100 shares of our subsidiary's common stock, which constitutes all of the
issued and outstanding stock of our subsidiary.
We, through our subsidiary, provide services for groups who are
interested in attending New York's Broadway and Off-Broadway productions. We are
licensed by the City of New York to resell tickets to Broadway and Off-Broadway
theatre performances. Typically, we buy group tickets on behalf of a customer
group (usually a minimum of 20 persons) and our fee is paid, with limited
exceptions by the theatre. These exceptions include Saturday night tickets,
certain holiday periods or if the group falls below 20 persons, in which case
the fee is paid by the customer. On occasion, as a special service for group
customers, for an additional fee, as few as two or four tickets may be
purchased.
Revenue is not recognized by us until the date an invoice is generated.
Generally, our sales and billing process is as follows:
A customer will contact us regarding the availability of theatre
tickets. We will then contact the box office by phone regarding the customer's
inquiry. If the ticket availability is satisfactory to the customer, we will
send a written confirmation to the theatre detailing the show date and number of
tickets needed. Once we receive the signed confirmation back from the theatre,
we send the customer an invoice that details the price of the tickets. The price
is fixed and determinable. Upon our receipt from the customer of the
non-refundable amount due per the invoice, we will immediately remit the funds
to the respective show's box office. At that time, we have completed our work
necessary to earn our fee from the theatre. After the funds are received by the
box office, it sends the tickets to the customer. Our fee is delivered to us by
the theatres after the date of the show's performance. Our fee is 9.45% of the
ticket price.
Box offices tend not to pay commission or give discounted ticket prices
for holiday and weekend performances. If customers wish to purchase tickets for
these periods, we may charge a
11
commission that is, in that case, included in the invoice amount. As such, in
those instances, we receive our commission before the date of the performance.
During the quarter ended September 30, 2001, we did not sustain any
losses due to cancellation of performances. The closing of any one show will not
have a material effect on our revenue stream, since each fee is based on a
specific date of performance. When productions close after a long theatre run,
they tend to announce the closing dates well in advance of the last performance.
We have been in operation since April 1988. Prior to 1989, Mrs. Maxwell
operated the same business as a sole proprietorship.
On February 2, 2001 we commenced an initial public offering which was
terminated on May 24, 2001. We offered and sold 1,000,000 shares of our common
stock at a price of $0.05 per share for total consideration of $50,000. Our
proceeds from the sale of the shares were $50,000. Such proceeds were to be
utilized to substantially expand our website, implement new marketing programs,
and for the general expansion of our business through the greater use of the
internet as described below.
We had planned to inaugurate an Internet based marketing program that
would enable American ticket buyers who plan to visit other English speaking
countries to buy their tickets before leaving the United States and make
information on these venues readily available. The plan was also to enable
global buyers of individual tickets to purchase their tickets for Broadway and
Off-Broadway by the Internet before leaving for New York. All theatre
information is currently on our web sites for groups. The same information for
present and future shows would be necessary information for theatre goers to
plan their visits to New York.
We had also been looking into the possibility of establishing an email
ticket distribution system to be organized between us, one of the ticket sellers
(eg. Ticketmaster or Telecharge) with the cooperation of specific producers of
shows to have discounts and seat availabilities. This plan was in the formative
state and development had not begun. We have not initiated any discussions with
ticket sellers or producers.
We had also been exploring the organization of a hit theatre ticket
club for individual tickets to be sold on a subscription basis that would allow
ticket buyers in the New York area to buy 2 or 4 tickets in advance of the
theatre season. This plan has been successful when sold by New York
institutional theatres, touring companies and specific markets other than New
York. This plan would enable buyers to select three or four shows from different
producers rather than one theatre or one subscription house.
We had initially planned to develop the projects described above in the
next twelve months. However, based on the events of September 11, 2001 and the
subsequent negative effects on the business and economic condition in New York
City and specifically, on the theater industry, we have decided to focus our
efforts on our original business practice.
We are currently on five web sites (two of our own and three others
where we are listed as a source for group Broadway ticket sales) and on
approximately 400 search engines in the category of Broadway shows/Theatre Group
Sales Agency Entertainment. It is our intention to continue to be listed on
every possible search engine.
12
FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
RESULTS OF OPERATIONS
For the quarter ended September 30, 2001, we had a net income of
$14,426 compared to a net loss of $9,110 for the quarter ended September 30,
2000. Our growth in net income can be attributed to the fact that our general
and administrative expenses decreased by $9,164, or 12.6%, from $72,819 for the
quarter ended September 30, 2000 to $63,655 for the quarter ended September 30,
2001. In addition, our commission revenues increased by 41% from $59,302 for the
quarter ended September 30, 2000 to $83,370 for the quarter ended September 30,
2001. The 41% increase in our commission revenues can be partly attributed to
the price increase of certain Broadway show ticket prices. During the quarter
and the nine months ended September 30, 2001, the ticket prices of certain shows
including The Producers and Mama Mia increased by approximately 10% to $100 per
ticket. As ticket prices increase, our commissions on those tickets increase
accordingly. A significant factor affecting our level of commission revenues is
the availability of tickets for the shows in high demand. Customer demand is a
factor beyond our control which varies from quarter to quarter. If our customers
are seeking to see shows for which there are few tickets available (i.e. The
Producers), we may have difficulty in obtaining such tickets which would cause
our commission revenues to decrease. In addition, the age of the highly demanded
shows also affects our ability to obtain tickets and, in turn, our commission
revenues. The longer a popular production has been running, the less difficulty
we face in obtaining and selling tickets.
For the nine months ended September 30, 2001, we had a net income of
$14,767 as compared to a net loss of $2,281 for the nine months ended September
30, 2000. Our net income can be attributed in part to the 14% increase in our
commission revenues from $167,697 for the nine months ended September 30, 2000
to $190,882 for the nine months ended September 30, 2001. In addition, our
general and administrative expenses decreased by 0.4% from $173,251 for the nine
months ended September 30, 2000 to $172,488 for the nine months ended September
30, 2001.
Our general and administrative expenses decreased by 13% for the
quarter ended September 30, 2001, as compared to the third quarter of 2000 and
also decreased by 0.4% for the nine months ended September 30, 2001 as compared
to the nine months ended September 30, 2000. Our general and administrative
expenses include, but are not limited to, salaries and wages, employee benefit
programs, consulting and professional fees, travel and entertainment, insurance,
telephone, office rent and other office expenses.
Our office rent expense increased by $472, or 11%, from $4,298 for the
quarter ended September 30, 2000 to $4,770 for the quarter ended September 30,
2001, and increased by 20% from $11,617 for the nine months ended September 30,
2000 to $13,970 for the nine months ended September 30, 2001. However, our
equipment rental expense decreased by $247, or 100%, from $247 for the quarter
ended September 30, 2000 to $0 for the quarter ended September 30, 2001, and by
53% from $2,261 for the nine month period ended September 30, 2001 to $1,056 for
the nine month period ended September 30, 2000. During the nine months ended
September 30, 2001, the lease for our office computer and printer matured. We
subsequently purchased a new computer and printer to replace the leased
equipment. As such, our equipment rental expenses for the quarter and nine
months ended September 30, 2001 decreased significantly. The rental expenses
increased for the quarter and nine months ended September 30, 2001 because we
entered into a new rental agreement following the first quarter of 2000 which
increased our rental expenses for the remainder of 2000 and for the first nine
months of 2001.
Our travel and entertainment expenses for the quarter ended September
30, 2001 increased by $4,688 from $144 in the quarter ended September 30, 2000
to $4,832 for the quarter ended September 30, 2001. For the nine months ended
September 30, 2001, the travel and entertainment
13
expenses increased by $8,969 or 131%, from $6,824 for the nine months ended
September 30, 2000 to $15,793 for the nine months ended September 30, 2001. The
travel and entertainment expense is a discretionary account and varies from
period to period. In the nine months ended September 30, 2001, there was an
increase in show openings, which we attend on a routine basis. In addition, we
conducted additional promotion including the entertainment of several buyers who
were engaged in long term planning. Moreover, in the second quarter of 2001, we
increased the number of employees who conduct promotions. These factors
contributed to the increase in our travel and entertainment expense.
Despite the increases in our expenses discussed above, our general and
administrative expenses as a whole decreased for both the quarter and the nine
months ended September 30, 2001 as compared to the same periods in the previous
year.
The $9,164 decrease in our general and administrative expenses for the
quarter ended September 30, 2001 as compared to the quarter ended September 30,
2000 can be attributed in part to the $5,917, or 19%, decrease in our salaries
and wages. The decrease in our salaries and wages expense can be attributed to
the fact that our President drew a decreased salary in the quarter ended
September 30, 2001 as compared to the quarter ended September 30, 2000. There
were no significant changes in our salaries and wages expenses for the nine
month periods ended September 30, 2001 and 2000.
Another factor that contributed to our decrease in general and
administrative expenses was the reduction of our professional fee expenses for
both the quarter and nine months ended September 30, 2001. During the quarter
ended September 30, 2000 and the first six months of 2001, we incurred
additional legal and accounting costs in connection with the preparation and
filing of our initial public offering registration statement, conducting our
offering, and preparing our periodic reports. Our professional fee expenses
decreased by $11,752, or 42%, from $27,901 for the quarter ending September 30,
2000 to $16,149 for the quarter ending September 30, 2001. In the nine months
ending September 30, 2001, our professional expenses decreased by $8,582, or
31%, from $28,074 for the nine months ended September 30, 2000 to $19,492 for
the nine months ended September 30, 2001. These significant decreases in our
professional fee expenses are due directly to the preparation and filing of our
registration statement and our Forms 10-KSB and 10-QSB.
Our income taxes for the quarter ended September 30, 2001 increased by
$9,500, or over 300%, from a tax benefit of $3,100 for the quarter ended
September 30, 2000 to income taxes of $6,400 for the quarter ended September 30,
2001. Our income taxes for the nine months ended September 30, 2001 increased by
$7,328 from a tax benefit of $200 for the nine months ended September 30, 2000
to $7,128 for the nine months ended September 30, 2001. Our income taxes are
calculated based on the prescribed statutory rates based on our income before
taxes for the specific period.
LIQUIDITY AND CAPITAL RESOURCES
We ended the nine months ended September 30, 2001 with a cash position
of $35,990 as compared to a cash position of $5,505 for the nine months ending
September 30, 2000. A portion of the $30,485 increase in our cash position is
attributable to the $50,000 in proceeds from the issuance of shares in our
initial public offering. In the nine months ended September 30, 2001, we also
repayed a loan to a stockholder, advanced funds to a stockholder and paid
expenses associated to the issuance of our common stock. We feel that our
present cash flow is sufficient to satisfy our current requirements through the
year ending December 31, 2001. We expect to use the proceeds from our public
offering to expand our operations and develop a web site. We anticipate a
capital requirement of approximately $35,000 for our web site production and
expansion consisting of
14
approximately $20,000 for the enhancement of our web site, $10,000 for part time
employees and $5,000 for additional equipment purchases. Our present marketing
methods will continue.
However, we may require significant additional financial resources for
future expansion, especially if the expansion is effected through the
acquisition of related businesses. It is not possible to quantify what amount
may actually be required. If needed, we may seek to obtain the financing through
public or private equity offerings. If we are unable to generate the required
amount of additional capital, our ability to implement our expansion strategies
may be adversely affected. No specific plans exist for a financing at this time.
VARIABLES AND TRENDS
Due to the possible fluctuations in the marketplace and the
entertainment industry, our operating results on a nine-month basis may not be
indicative of our operating results for a full year.
We have been conducting the same type of business activities for
approximately 12 years. Key variables in our industry are caused by the lack of
popularity or attraction of certain productions. However, the demand to see
Broadway and Off-Broadway productions has been constant. Successful shows have
been enjoying a longer run time (i.e. Cats ran for 18 years and Miss Saigon ran
for 9 years as of December 2000) and more people have been going to see theatre.
In addition, there is a current trend of large, well financed companies
such as Disney, SFX, Fox Theatricals and Dadger Theatricals furnishing
productions backed by substantial promotion dollars. In fact, Disney is
currently presenting three productions on Broadway and SFX has produced two
productions with more scheduled in the coming season.
Our revenue stream is directly dependent upon the influx of tourism
into New York City. The terrorist attacks on the World Trade Center on September
11, 2001 have had a severe impact on the economic situation in New York City,
especially with respect to tourism. Although there have been several advertising
campaigns undertaken as well as promotions at many of the city's hotels and
restaurants in an effort to encourage tourism to New York City, there is no
assurance that the level of tourism will return to its normal levels in the near
future. Continued low levels of tourism may have adverse effects on our
business.
New theatres and the "rebirth" of the Time Square area of New York City
as well as the subsequent tourist increase had promised more interest and
business in theatre. Assuming that the level of tourism increases, all of these
influences, changes and product development taking place including the changes
in Times Square, the participation of the business giants and the promotion of
all of live entertainment and the new theatres and restoration of several
elegant historic showplaces can only affect us positively. Lion King (Disney)
has been playing to 101% (standing room) capacity for 3 years as of November.
Cats and Miss Saigon closed after 17 years and 10 years, respectively. The
longevity of several of the other shows (i.e. Fosse, Les Miserables, Phantom of
the Opera and Chicago) have the potential to make for a solid future for
Broadway and Off-Broadway.
As at September 30, 2001, we employed a total of four employees of
which two are full time, one is part time and one serves as consultant. We
anticipate hiring additional employees during the year ending December 31, 2002
as our needs and resources permit.
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C. Forward Looking Statements
This report includes "Forward-Looking Statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. Any
statements that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions or future
events or performance (often, but not always, using words or phrases such as
"expects" or "does not expect", "is expected", "anticipates" or "does not
anticipate", "plans", "estimates" or "intends", or stating that certain actions,
events or results "may", "could", "would", "might" or "will" be taken, occur or
be achieved) are not statements of historical fact and may be considered
"forward looking statements". These types of statements are included in the
section entitled "Management's Discussion and Analysis or Plan of Operation."
Forward-looking statements are based on expectations, estimates and projections
at the time the statements are made that involve a number of risks and
uncertainties which could cause actual results or events to differ materially
from those presently anticipated. Although we believe that the expectations
reflected in such forward-looking statements are reasonable, we can give no
assurance that such expectations will prove to have been correct.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not a party to any pending legal proceedings nor is any
of its property subject to pending legal proceedings.
Item 2. Changes in Securities and Use of Proceeds.
Not Applicable.
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
On August 28, 2001, a special meeting of our stockholders was held. We
did not solicit proxies for such meeting.
At the meeting, the Board of Directors as previously reported to the
Commission was re-elected in its entirety.
The following additional matters were unanimously voted upon by the
three stockholders present:
(a) the amendment of our Certificate of Incorporation changing our name to
Clixtix, Inc;
(b) the amendment of our Certificate of Incorporation to include a
provision stating that whenever under the New York Business Corporation
Law shareholders are required or permitted to take action by vote, such
action may be taken on written consent signed by the holders of
outstanding shares having at least the minimum number of votes
necessary to take such action at a meeting at which all shares entitled
to vote thereon were present and voted;
(c) the authorization for us to enter into the Agreement and Plan of
Reorganization between us and Maxwell Group Entertainment, Inc.;
(d) authorization for effecting our restructuring under the terms and
conditions of such Agreement and Plan of Reorganization; and
(e) selection of our current auditors, Marden, Harrison & Kreuter,
Certified Public Accountants, P.C., as our independent auditors for the
year ended December 31, 2001.
Item 5. Other Information.
Not Applicable.
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Item 6. Exhibits and Reports on Form 8-K.
(a) Not Applicable.
(b) We filed a Form 8-K on September 7, 2001 regarding our Agreement and
Plan of Reorganization with Maxwell Group Entertainment (in response
to Item 2) and the filing of our Certificate of Amendment of the
Certificate of Incorporation (in response to Item 5.)
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SIGNATURES
In accordance with the requirements of the Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: November 14, 2001 CLIXTIX, INC.
By: /s/ Phyllis Maxwell
-------------------
Phyllis Maxwell, President
By: /s/ Richard Kelly
-----------------
Richard Kelly, Vice President
(principal financial officer,
principal accounting officer)
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