PROSPECTUS
CLIXTIX, INC.
1,341,200 SHARES
COMMON STOCK
--------------------------
We have prepared this prospectus to allow Phyllis Maxwell, our
President, director and stockholder (the "Selling Shareholder") to use a "shelf"
registration process to sell up to 1,341,200 shares of our common stock which
were previously acquired in a private transaction. We will receive no proceeds
from the sale of these shares.
The minimum number of shares that an investor may purchase is 1000.
There is no trading market for our common stock; it is not listed on any
national securities exchange, the Nasdaq stock market, or the over the counter
market. Since we do not qualify for a listing on the Nasdaq stock market or
other national exchange, following the offering, if a trading market were to
develop for our common stock, it would most likely be on the NASD's Over the
Counter Bulletin Board market.
The Selling Shareholder is offering the shares on a no minimum basis.
This means that a minimum number of shares do not need to be sold before the
Selling Shareholder has access to the proceeds.
--------------------
See "Risk Factors" beginning on page 4 for a discussion of
risks to consider before purchasing our common stock.
--------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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Price to the Public(1) Maximum Proceeds to the Selling
Commissions Shareholder
- ----------------------------------------------------------------------------------------------------------
Per Share $0.02 -0- $0.02
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Total 1,341,200 Shares $26,824.00 -0- $26,824
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(1) The Selling Shareholder is offering the shares on a no minimum basis.
The date of this prospectus is April 9, 2002.
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TABLE OF CONTENTS
Prospectus Summary........................................................3
Risk Factors..............................................................4
Cautionary Note Regarding Forward-Looking Statements .....................6
Use of Proceeds...........................................................7
Determination of Offering Price...........................................7
Dilution..................................................................8
Plan of Distribution .....................................................8
Management's Discussion and Analysis of Financial
Condition and Results of Operations....................................11
Business ................................................................16
Legal Proceedings........................................................20
Management...............................................................20
Executive Compensation...................................................20
Principal Shareholders...................................................21
Selling Shareholders.....................................................22
Description of Capital Stock.............................................23
Limitation of Liability and indemnification matters .....................24
Interest of Named Experts and Counsel....................................25
Legal Matters............................................................25
Experts..................................................................25
Where You Can Find Additional Information................................25
Index to Financial Statements............................................27
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PROSPECTUS SUMMARY
This summary contains significant information about us and the
offering. You should read the entire prospectus, including the section titled
"Risk Factors" and our financial statements and the related notes, before
deciding to invest in our common stock.
Clixtix, Inc.
Our company through our wholly owned subsidiary, Maxwell Group
Entertainment, Inc., purchases tickets for Broadway and Off-Broadway productions
for groups of 20 or more in New York. We offer tickets for those productions
which meet certain criteria such as critical acclaim, wide audience appeal and
significant content and entertainment.
We also provide our customers with general information and
recommendations on the various productions and theatre events based upon
suitability for each client, critical reviews and word of mouth.
Our offices are located at 1501 Broadway, New York, New York 10036. Our
telephone number at our corporate offices is (212) 768-2990.
The Offering
Common stock offered by 1,341,200 shares
Selling Shareholder
Common stock to be outstanding 10,228,000 shares
after this offering
Use of proceeds None of the proceeds from the sale
of the common stock offered by
this prospectus will be received by
us.
Term of Offering The Selling Shareholder may commence
offering shares for sale in
accordance with this prospectus
following the effective date of the
Prospectus and may continue to offer
for a period of 12 months
thereafter.
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RISK FACTORS
You should consider carefully the following risks before you decide to
buy our common stock. Our business, financial condition or results of operations
could be materially and adversely affected by any of the following risks.
Our past revenue growth may not continue in the future which would materially
and adversely affect our profit levels.
Although we experienced revenue growth in recent years, for the year
ended December 31, 2001, our revenues declined by 15% compared to the year ended
December 31, 2000. The prediction of our future results is difficult and,
therefore, our past revenue growth should not be taken as an indication of any
growth that can be expected in the future.
To the extent that revenues do not grow at anticipated rates, or that
we are unable to secure or retain large contracts similar to those obtained in
prior periods, our business, results of operations and financial condition would
be materially and adversely affected because our profit levels will decline.
Our sales will not increase as anticipated if acceptance of the internet does
not occur.
Currently, only a small portion of our customers are solicited by
internet. Our company is listed as a source for group tickets on 5 web sites.
Our growth strategy is based in part on the premise that a significant portion
of the theatre-going public will seek to obtain tickets via the Internet. As
such, our success in expanding our business depends upon the widespread
acceptance of the internet as a key source for additional customers. If
acceptance of the internet does not occur, or if it occurs more slowly than
expected, our sales will not increase at the levels anticipated or may not
increase at all.
Internet access problems and failures could decrease the rate of our future
growth.
We currently solicit only a small portion of our sales via the
internet. Our services are currently listed on 5 web sites and approximately 400
search engines. Any persistent problems, failures or disruptions on those web
sites or on Internet access provided by third parties in general could prevent
the execution and success of our growth strategy.
Our long term liquidity and capital resources are uncertain which may adversely
affect our ability to continue our operations in the future.
In the event that our cash reserves are depleted, we may need to seek
additional capital. If we do, there can be no assurance that we will be
successful in raising a sufficient amount of additional capital or in internally
generating a sufficient amount of capital to meet our long term requirements. If
we are unable to generate the required amount of additional capital, our ability
to meet our obligations and to continue our operations may be adversely
affected.
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We may not be able to compete successfully against current and future
competitors.
We, through our wholly owned subsidiary, currently compete with at
least 17 companies in the New York City area, who provide services similar to
ours. Many of these, such as TDI, now a division of Broadway.com, and the
Shubert and Nederlander Theatres, may have significantly greater financial
resources, name recognition, and technical and marketing resources, and
virtually all of them are seeking to improve their technology, products and
services. We can not provide assurance that we will have the financial resources
or the technological expertise to successfully meet this competition.
Subscribers to the offering will have little or no influence on matters
requiring shareholder approval because we are controlled by our officers,
directors and entities affiliated with them who will be able to control all
matters requiring shareholder approval.
Phyllis Maxwell, our President, currently owns 73% of our issued and
outstanding shares of common stock. Following this offering, if all of the
shares offered are sold, Mrs. Maxwell will own 60% of our issued and outstanding
shares of common stock. Mrs. Maxwell will still be able to significantly
influence all matters requiring approval by our shareholders, including the
election of directors and the approval of mergers or other business combinations
transactions.
Our future performance is dependent on our ability to retain key personnel, the
loss of which would adversely affect our success and growth.
Our performance is substantially dependent on the performance of our
senior management and sales personnel. In particular, our success depends on the
continued efforts of our president, Phyllis Maxwell and our vice president, Mr.
Richard Kelley. Mrs. Maxwell has 23 years of experience and a strong
relationship with box office personnel and customers. Mr. Kelley has over thirty
years of experience as a company manager and theatre treasurer and he has an
extensive knowledge of theatre. Both Mrs. Maxwell's and Mr. Kelley's knowledge
of theatre and reputation are sought by clients. The loss of the services of
either Mrs. Maxwell or Mr. Kelley could have a material adverse effect on our
business, results of operations and financial condition as commission revenues
would most likely dramatically decline. Neither we nor our wholly owned
subsidiary have employment agreements in place with our senior management or key
employees.
Our management is inexperienced in managing a public company.
Our current management has had only limited experience managing a
public company or a large operating company. There can be no assurance that we
will be able to effectively manage the expansion of our operations, that our
systems, procedures or controls will be adequate to support our operations or
that our management will be able to achieve the rapid execution necessary to
fully exploit the market opportunity for our products and services. Any
inability to manage growth effectively could have a material adverse effect on
our future success.
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The value and transferability of our shares may be adversely impacted by the
limited trading market for our shares and the penny stock rules.
There is no current trading market for our shares and there can be no
assurance that a trading market will develop, or, if a trading market does
develop, that it will be sustained. To the extent that a market develops for our
shares at all, they will likely appear in what is customarily known at the "pink
sheets" or on the NASD Bulletin Board, which may limit their marketability and
liquidity.
In addition, holders of our common stock may experience substantial
difficulty in selling their securities as a result of the "penny stock rules,"
which restrict the ability of brokers to sell certain securities of companies
whose assets or revenues fall below the thresholds established by those rules.
Future sales of shares by us may reduce the value of our stock.
The total amount of shares covered by this prospectus represents
approximately 13% of our outstanding shares on the date of this prospectus. If
required, we will seek to raise additional capital through the sale of our
common stock. Future sales of shares by us could cause the market price of our
common stock to decline.
The offering price of our shares was arbitrarily determined by the Selling
Shareholder and thus, is not an indication of the stock's valuation.
Prior to this offering, there has been no public trading market for our
shares. Until such time as our shares are traded on a market or securities
exchange, our Selling Shareholder will offer and sell our common stock at a
price of $.02 per share. Once traded on a market or securities exchange, the
offering price of our common stock will be determined by market factors.
The offering price of our shares in this offering has no relationship
to any established valuation criteria such as assets, book value or prospective
earnings. Among the factors considered by the Selling Shareholder were the
proceeds to be raised by the offering and the lack of trading market.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains statements that plan for or anticipate the
future, called "forward-looking statements." In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"could," "expects," "plans," "intends," "anticipates," "believes," "estimates,"
"predicts," "potential" or "continue" or the negative of those terms and other
comparable terminology.
These forward-looking statements include statements about:
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o our market opportunity;
o our strategies;
o competition;
o expected activities and expenditures as we pursue our business plan;
and
o the adequacy of our available cash resources.
These statements appear in a number of places in this report and
include statements regarding our intent, belief or current expectations, those
of our directors or officers with respect to, among other things: (i) trends
affecting our financial condition or results of operations, (ii) our business
and growth strategies, (iii) the Internet and Internet commerce and (iv) our
financing plans. Although we believe that the expectations reflected in the
forward-looking statement are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements.
The Private Securities Litigation Reform Act of 1995, which provides a
"safe harbor" for similar statements by existing public companies, does not
apply to our offering.
The accompanying information contained in this prospectus, including
the information discussed under the headings "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
"Business" identify important factors that could adversely affect actual results
and performance. All forward-looking statements attributable to us are expressly
qualified in their entirety by the cautionary statement appearing above.
USE OF PROCEEDS
The shares are being offered by this Prospectus on behalf of the
Selling Shareholder on a no minimum basis. None of the proceeds from the sale of
the common stock offered by this prospectus will be received by us. The Selling
Shareholder will have access to the proceeds as they are received.
If the 1,341,200 shares offered are sold, the gross proceeds of this
offering will be $26,824. We expect expenses of the offering, including, but not
limited to, accounting fees and legal fees, to be approximately $20,000. We will
be responsible for paying all the offering expenses. These expenses will be paid
from our working capital.
Except as described in this prospectus, no portion of the proceeds of
the offering will be paid to officers, directors and/or their affiliates or
associates.
DETERMINATION OF THE OFFERING PRICE
Our common stock is presently not traded on any market or securities
exchange. Until such time as our shares are traded on a market or securities
exchange, the Selling Shareholder must offer and sell our common stock at a
price of $.02 per share. Once traded on a market or
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securities exchange, the offering price of our common stock will be determined
by market factors.
The offering price has no relationship to any established criteria or
value, such as book value or earnings per share. The factors considered in
determining the offering price were the lack of trading market and the proceeds
to be raised by the offering.
We have not declared, and do not foresee declaring, any dividends now
or into the foreseeable future.
DILUTION
The common stock to be sold by the Selling Shareholder, which is all of
the common stock being offered pursuant to this prospectus, is common stock that
is currently issued and outstanding. Accordingly, there will be no dilution to
our existing shareholders.
PLAN OF DISTRIBUTION
The Selling Shareholder is offering 1,341,200 shares of common stock
offered through this prospectus. The shares of common stock may be offered and
sold from time to time by the Selling Shareholder or by her transferees,
pledgees, donees or their successors pursuant to this prospectus. If all of the
shares offered by the Selling Shareholder are sold in this offering, 6,136,800
shares will be held by the Selling Shareholder upon termination of any such
sales.
Until our shares of Common Stock are traded on a market or securities
exchange, the shares offered by this prospectus on behalf of the Selling
Shareholder and her pledgees, donees, transferees or other successors in
interest, may be sold from time to time directly by the Selling Shareholder at a
price of $.02 per share. Once our shares of Common Stock are traded on a market
or securities exchange, the Selling Shareholder may sell the shares in the
over-the-counter markets or otherwise, at market prices or at negotiated prices.
She may sell shares by one or a combination of the following:
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o privately negotiated transactions
In effecting sales, brokers or dealers engaged by the Selling
Shareholder may arrange for other brokers or dealers to participate. Brokers or
dealers will receive commissions or discounts from the Selling Shareholder in
amounts to be negotiated prior to the sale. The Selling Shareholder and any
broker-dealers which participate in the distribution may be deemed to be
underwriters within the meaning of Section 2(11) of the Securities Act, and any
proceeds or commissions received by them, and any profits on the resale of
shares sold by broker-dealers, may be deemed to be underwriting discounts and
commissions.
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If the Selling Shareholder notifies us that a material arrangement has
been entered into with a broker-dealer for the sale of shares through a block
trade, special offering, exchange distribution or secondary distribution or a
purchase by a broker or dealer, we will file, a prospectus supplement, if
required pursuant to the Securities Act, setting forth:
o the name of each of the participating broker-dealer,
o the number of shares involved,
o the price at which the shares were sold,
o the commissions paid or discounts or concessions allowed to the
broker-dealers, where applicable,
o a statement to the effect that the broker-dealers did not conduct any
investigation to verify the information set out or incorporated by
reference in this prospectus, and
o any other facts material to the transaction.
The Selling Shareholder and any broker-dealers participating in the
distributions of the shares may be deemed to be underwriters within the meaning
of Section 2(11) of the Securities Act of 1933. Any profit on the sale of shares
by the Selling Shareholder and any commissions or discounts given to any such
broker-dealer may be deemed to be underwriting commissions or discounts. The
shares may also be sold pursuant to Rule 144 under the Securities Act of 1933
beginning one year after the shares were issued.
We have filed the Registration Statement, of which this prospectus
forms a part, with respect to the sale of the shares by the Selling Shareholder.
There can be no assurance that the Selling Shareholder will sell any or all of
the offered shares. We have made a commitment to the Selling Shareholder that we
will keep the Registration Statement current for up to one year following the
effective date of such Registration Statement including, but not limited to, the
filing of supplements disclosing the number of shares sold in the offering.
Under the Securities Exchange Act of 1934 and the regulations
thereunder, any person engaged in a distribution of the shares of our common
stock offered by this prospectus may not simultaneously engage in market making
activities with respect to our common stock during the applicable cooling off
periods prior to the commencement of such distribution. Also, the Selling
Shareholder is subject to applicable provisions which limit the timing of
purchases and sales of our common stock by the Selling Shareholder.
We have informed the Selling Stockholder that, during such time as she
may be engaged in a distribution of any of the shares we are registering by this
Registration Statement, she is required to comply with Regulation M. Regulation
M precludes any selling security holder, any affiliated purchasers and any
broker-dealer or other person who participates in a distribution from bidding
for or purchasing, or attempting to induce any person to bid for or purchase,
any security which is the subject of the distribution until the entire
distribution is complete. Regulation M defines a distribution as an offering of
securities that is distinguished from ordinary trading activities by the
magnitude of the offering and the presence of special selling efforts and
selling methods. Regulation M also defines a distribution participant as an
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underwriter, prospective underwriter, broker, dealer, or other person who has
agreed to participate or who is participating in a distribution.
Regulation M prohibits any bids or purchases made in order to stabilize
the price of a security in connection with the distribution of that security,
except as specifically permitted by Rule 104 of Regulation M. These stabilizing
transactions may cause the price of our common stock to be more than it would
otherwise be in the absence of these transactions. We have informed the Selling
Shareholder that stabilizing transactions permitted by Regulation M allow bids
to purchase our common stock if the stabilizing bids do not exceed a specified
maximum. Regulation M specifically prohibits stabilizing that is the result of
fraudulent, manipulative, or deceptive practices. Selling security holders and
distribution participants are required to consult with their own legal counsel
to ensure compliance with Regulation M.
Penny Stock Regulation. Shares of our common stock are subject to the rules
adopted by the Securities and Exchange Commission that regulate broker-dealer
practices in connection with transactions in penny stocks. Penny stocks are
generally equity securities with a price of less than $5.00 (other than
securities registered on certain national securities exchanges or quoted on the
Nasdaq system, provided that current price and volume information with respect
to transactions in those securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Securities and Exchange Commission, which
contains the following:
(1) a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading;
(2) a description of the brokers or dealers duties to the customer and of
the rights and remedies available to the customer with respect to
violation to such duties or other requirements of securities laws;
(3) a brief, clear, narrative description of a dealer market, including
bid and ask prices for penny stocks and the significance of the spread
between the bid and ask price;
(4) a toll-free telephone number for inquiries on disciplinary actions;
(5) definitions of significant terms in the disclosure document or in the
conduct of trading in penny stocks; and
(6) such other information and in such form (including language, type,
size and format), as the Securities and Exchange Commission shall
require by rule or regulation.
Prior to effecting any transaction in penny stock, the broker-dealer
also must provide the customer the following:
o the bid and offer quotations for the penny stock;
o the compensation of the broker-dealer and its salesperson in the
transaction;
o the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
o monthly account statements showing the market value of each penny
stock held in the customers account
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In addition, the penny stock rules require that prior to a transaction
in a penny stock not otherwise exempt from those rules, the broker-dealer must
make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchasers written acknowledgment
of the receipt of a risk disclosure statement, a written agreement to
transactions involving penny stocks, and a signed and dated copy of a written
suitably statement. These disclosure requirements may have the effect of
reducing the trading activity in the secondary market for a stock that becomes
subject to the penny stock rules. Holders of shares of our common stock may have
difficulty selling those shares because our common stock will probably be
subject to the penny stock rules.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with the Consolidated Financial
Statements and Notes to those financial statements included elsewhere in this
prospectus. 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 under "Risk Factors" and elsewhere
in this prospectus.
Overview
We, through our wholly-owned 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.
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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 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.
Despite the events that followed September 11, 2001, including the
cancellation of all Broadway performances for 3 days and the premature closing
of certain productions, during the year ended December 31, 2001 we did not
sustain any significant losses due to cancellation of performances. Generally,
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. Immediately following September
11, 2001, Broadway productions were cancelled for 3 days and many of our clients
cancelled or postponed trips to New York. However, we were successful in
minimizing any losses to us by reselling those tickets to other clients. The
ticket holders of the shows that were cancelled in the days following September
11, 2001 either received a refund or tickets for a later date.
We have been in operation since April 1988. Prior to 1989, Mrs. Maxwell
operated the same business as a sole proprietorship.
During 2001, we conducted a public offering in which we offered and
sold 1,000,000 shares of common stock at a price of $0.05 per share for total
consideration of $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 had 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
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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 all of the projects described
above. 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 theatre 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.
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
RESULTS OF OPERATIONS
For the year ended December 31, 2001, we had a net loss of $5,534
compared to a net loss of $30,517 for the year ended December 31, 2000, a
decreased loss of 82%. Although our commission revenues decreased by 15% from
$268,882 for the year ended December 31, 2000 to $228,009 for the year ended
December 31, 2001, our general and administrative expenses also decreased by 22%
from $307,696 for the year ended December 31, 2000 to $241,114 for the year
ended 2001. The decrease in commission revenues for the year ended December 31,
2001 was largely attributed to the devastating effects of September 11, 2001.
The events of September 11, 2001 had severe negative effects on the
business and economic condition in New York City and specifically, on the
theatre and tourism industries.
In the months following September 11, 2001, Broadway shows, the crux of
our business activity, felt the impact severely. Several shows closed
prematurely and others played to lower capacity. As a result of the closing of
productions and the decline of tourism in New York City, we suffered
cancellations of bookings in the last two quarters of 2001.
Many tour operators who comprise a significant portion of our clients,
experienced cancellations of previously booked trips and were unable to book
additional trips to New York City for apprehensive customers. As a result, the
tour operators were hesitant to schedule additional trips for 2002 until the
anxiety and disorder dissipated. In an effort to minimize any losses resulting
from tickets assigned to clients who cancelled their trips, we resold those
tickets to other clients.
Our general and administrative expenses which decreased by 22% for the
year ended December 31, 2001 include but are not limited to officers'
compensation, salaries and wages, employee benefit programs, consulting
expenses, professional fees, travel and entertainment, rent and other office
expenses. The $66,582 decrease in our general and administrative expenses for
the year ended December 31, 2001 can in part be attributed to the $46,000
decrease in our officers' compensation expense from $98,000 for the year ended
December 31, 2000 to $52,000 for the year ended December 31, 2001. This decrease
can be attributed to the
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fact that Mrs. Maxwell, our President, was paid a salary of $48,000 and did not
draw a bonus during this year, as compared to the year ended December 31, 2000
in which Mrs. Maxwell drew a salary of $48,000 and a bonus of $50,000. As a
result, payroll taxes decreased by 27% in 2001 from $13,949 for the year ended
December 31, 2000 to $10,238 for the year ended December 31, 2001.
Our travel and entertainment expenses for the year ended December 31,
2001 increased by approximately $7,066, or 60%, from $11,874 in the year ended
December 31, 2000 to $18,940 in the year ended December 31, 2001. The travel and
entertainment expense is a discretionary account and varies from year to year.
Until September 11, 2001, there had been 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. These factors contributed to the increase in our travel and
entertainment expense.
In 2000, we incurred additional costs in connection with the
preparation and filing of an initial public offering registration statement.
Total costs incurred during 2000 by us for the offering were $45,000, including
the issuance of common stock to our legal counsel. Our professional fee expenses
for the year ended December 31, 2001 decreased by $15,274 from $44,000 for the
year ended December 31, 2000 to $28,726 for the year ended December 31, 2001.
The professional fees incurred in the year ended December 31, 2001 were also in
connection with our public offering and registration statement as well as the
preparation and filing of our periodic reports.
During 2000 we retained a computer consultant to update and improve our
computer system. As such, for the year ended December 31, 2001, our consulting
expenses decreased by 79% from $12,803 in the year ended December 31, 2000 to
$2,715 for the year ended December 31, 2001.
In the year ended December 31, 2001, we had interest income of $5,219
compared to an interest income of $4,449 in 2000, an increase of $770 or 17%.
The interest is earned on our cash reserves.
Our income tax benefit for the year ended December 31, 2001 decreased
by $1,496 or 39% from $3,848 in 2000 to $2,352 in 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
Despite the $50,000 in proceeds that we received from our public
offering in 2001, we ended 2001 with a cash position of $19,365. For the year
ended December 31, 2001, we had a cash flow from operating activities of
($35,919) compared to a cash flow from operating activities of $21,192 for the
year end December 31, 2000. The reduction in cash flow for the year ended
December 31, 2001 can be attributed to the reduction of $64,898 in cash received
from customers in 2001 as compared to in 2000. This is due to the reduction in
business in the months following the events of September 11, 2001. However, by
year end we felt the
14
demand for theatre tickets begin to stabilize. As such, we feel that our present
cash flow is sufficient to satisfy our current requirements through the year
ended December 31, 2002.
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. Although the demand for our services seems to have
stabilized, there is no assurance that this level of business will continue
throughout 2002. If needed, we may seek to obtain the financing through
additional public or private equity offerings. If we are unable to generate the
required amount of additional capital, our ability to implement any expansion
strategies may be adversely affected. No specific plans exist for a financing at
this time.
VARIABLES AND TRENDS
We have been conducting the same type of business activities for over
12 years. Key variables in our industry are caused by the lack of popularity or
attraction of certain productions. However, as a general matter, the demand to
see Broadway and Off-Broadway productions has been constant. Successful shows
are enjoying a longer run time (i.e., Cats ran for 18 years and Miss Saigon ran
for 9 years as of December 2000) and prior to September 11, 2001, more people
had been going to see theatrical productions.
In addition, there is a current trend of large, well financed companies
such as Disney, Clear Channel, Fox Theatricals and Dadger Theatricals furnishing
productions backed by substantial promotion dollars. In fact, Disney is
currently presenting three productions on Broadway and Clear Channel has
produced two productions with more scheduled in the coming season.
Our revenue stream is affected by the influx of tourism into New York
City and is directly dependent upon attendance levels at Broadway shows. 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 and theatre. 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 and theatre attendance in New York City, which
have been successful. However, there is no assurance that the levels of tourism
and theatre attendance will return to their normal levels in the near future.
Continued low levels of tourism and theatre attendance would 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 and theatre attendance
continues to increase, 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 4 years as of November. Cats and Miss Saigon closed after 17 years
and 10 years, respectively. The
15
longevity of several of the other shows (i.e., Les Miserables, Phantom of the
Opera and Chicago) have the potential to make for a solid future for Broadway
and Off-Broadway.
The trauma of September 11, 2001 affected the economic life of New York
City in many aspects. The theatre industry felt an impact as many shows closed
prematurely and others played to lower capacity. Some productions postponed
their openings until Spring 2002 and Fall 2002, cutting down the number of new
productions available for sale. By the end of 2001, the demand for theatre
tickets seemed to stabilize. However, it is unclear whether such demand will
continue given the generally unstable economic and political climate.
We currently employ a total of four employees of which are two are full
time, one is part time and one serves as a consultant. We may need to hire
additional employees during the year ending December 31, 2002 if our needs and
resources permit.
BUSINESS
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.
Neither we nor any of our related companies have ever undergone
bankruptcy, receivership, or similar proceeding.
Our Services
Our company, through our wholly-owned subsidiary, provides services for
groups who are interested in attending New York's Broadway and Off-Broadway
productions. We purchase group tickets from New York City theatres for certain
Broadway and Off-Broadway productions for our clients at box office prices. We
select those shows from all of the ongoing productions, that meet certain
customer criteria, such as critical appreciation, audience appeal, significant
content and entertainment.
We also provide our customers with information and recommendations on
the various productions and theatre events. We inform our clients of what is
expected in the upcoming
16
seasons, an important service for customers who must plan ahead, as much as a
year in some cases.
Our Current Sources of Revenues
With the exception of Saturday evening or some holiday performance
periods, our clients do not pay a fee for our services. All fees are paid by the
respective theatres from which the tickets are purchased. A group consists of a
minimum of 20 people. If the number in the group falls below 20 people, a fee is
charged to the customer. All fees for 20 or more tickets are paid by the
respective theatres from which the tickets were purchased. We do not maintain an
inventory of tickets. Tickets are purchased only when an order is placed by our
clients.
Our Customers
We have varied types of clients including:
(a) corporations of all sizes who utilize our services as employee incentives
and customer promotions;
(b) tour groups who bring pre-formed groups to New York and include theatre
performances in their program;
(c) schools and universities sponsoring student activities; and
(d) charities running fund raisers.
Our clients are located in all parts of the country with a
concentration in the northeast. Our clients are solicited by telephone,
recommendations from our existing clients and by the internet. We are currently
listed on five web sites (clixtix.com, pmaxtix.com, studentfriendlytravel.com,
disneycorporation.com, fordtheatre.com) as a source for group tickets.
We have a cadre of 2000 customers. However, no one customer accounts
for more than approximately 8% of our sales volume. Volume for customers vary
with seasons, popularity of certain shows or the customers' changing needs or
policies.
We are constantly soliciting new clients and servicing existing ones.
We have kept many clients throughout our 11 years of operation. However,
invariably, attrition of clients occurs due to personnel changes, mergers,
bankruptcy or policy changes at our corporate clients.
Some of our larger customers buy tickets in increments of 100, 200, or
more. Tour companies buy tickets in multiples of bus loads (i.e., 47-50
tickets). Some tour customers buy tickets for as many as three or four
performances for a group coming to New York for a three or four day visit.
Student groups come to perform with bands or as singers or choruses and include
theatre as part of their entertainment. Some participants in the Macy's
Thanksgiving Day Parade include theatres which we book. On occasion we have
arranged theatre, restaurant and other diversions in an entertainment package.
17
Our Competitive Business Conditions
Our business is highly competitive with at least seventeen companies,
in the New York City area, who provide similar services. Some of our largest
competitors are heavily financed and include producers such as Cameron
MacIntosh's TDI, now a division of Broadway.com, and theatre owner groups sales
such as Shubert and Nederlander Theatres. Despite this extensive competition,
over the last five years, we have not had bookings of less than $1,500,000. We
are able to maintain that competitive position based upon the direct and
personal contact between Mrs. Maxwell and her customers. In addition, we
maintain our strong competitive position by providing our clients with current
and regular information on current and future attractions through a newsletter
issued three times a year and bi weekly faxes.
After 23 years in the group sales industry on Broadway, we believe that
Mrs. Maxwell has built a following and has a strong relationship with box office
personnel. Our relationship with other industry professionals, such as
producers, box office personnel, general managers, company managers and public
relations firms, nurtured over the years, facilitates the services we provide.
We believe that Mrs. Maxwell has built a highly regarded reputation for
quality service and a comprehensive knowledge of the theatre. Her expertise
enables her to offer opinions as to what is appropriate for each client or
group. This type of personalized attention is sought after by our customers to
enable them to sell the appropriate shows, plan into future periods and consult
with knowledgeable theatre people.
There are several positive factors developing in the live entertainment
business. As cited elsewhere, New York theatre and Times Square are entering a
new era due to the transformation of Times Square and its environs into a safe,
exciting family oriented tourist destination as well as a mecca for the "bus and
tunnel" customers from the population centered in the megalopolis (these areas
are within a day roundtrip by bus to New York). New York is the second most
sought after tourist destination after Orlando, Florida. In 1999, 36 million
tourists journeyed to New York. A second trend is the production of family
entertainment on Broadway by American predominant entertainment companies.
Disney, who has three shows on Broadway, made the first inroad on 42nd Street to
give credibility to the Times Square Reclamation Project which was assured when
Disney revived and restored an historic theatre treasure, The New Amsterdam.
Clear Channel has two shows on Broadway and owns the Ford Theatre, a restoration
and consolidation of two theatres into a 1700 seat showplace. The financial
strength of these companies has brought about a large amount of advertising and
merchandising that has created a surge of demand which can only help our company
to do additional business. These expenditures and show-specific advertising
campaigns are creating a new audience created by this new awareness.
Ticket prices have moved upward in recent years. Our fees are based on
a fixed percentage of these rising prices. In addition, with the use of the
internet, it is expected that a whole new market will develop.
18
Our Suppliers
The ticket prices and information which we provide to our clients is
made available to us by the producers of the respective productions. The tickets
are offered to our customers at the prices established by the theatres. The
information and reduced group ticket prices provided by the producers are
essential to our sales of group theatre tickets. The reduced box office prices
established by the theatres are constantly changing and are determined by many
factors including projected low periods (January), weather, vacations, slow down
of long runs and certain days of the week, etc.
Regulatory Issues
The City of New York requires us to obtain an annual license and to
maintain an insurance policy against fraud. As such, we are bonded and licensed,
as per the City of New York regulations. We are also regulated by the New York
State Attorney General which regulates ticket resale prices.
Research and Development
Other than the costs associated with our search for new clients and
industries, we do not spend funds on research and development. However, as we
intend to expand the scope of our activities by placing greater reliance on the
internet, we expect that the amount of funds we spend on research and
development, in particular with respect to our web site, will slowly increase.
Telephone solicitation will continue at a modest cost to us. We maintain an 800
number as a service to clients across the country.
Employees
As of March 15, 2002, we employ a total of four employees of which two
are full time, one is part time and one serves as a consultant.
Leasehold
We operate a leased office, located at 1501 Broadway, Suite 1807,
New York, New York 10036. We have a ten year lease due to expire in April 2010.
Our annual rent for 2002 is approximately $16,500.
Equipment
We own and lease various pieces of office equipment including two
computers, a printer, a copier and a telephone system as well as additional
pieces of office furniture.
We believe that our properties are adequately covered by insurance as
we carry fire, theft and liability insurance. We also carry worker's
compensation insurance.
19
LEGAL PROCEEDINGS
We are not a party to any pending legal proceeding.
MANAGEMENT
Our director(s), executive officer(s) and other key employees, and
their ages, as of March 15, 2002 are as follows:
Name Age Positions held with the Company Since
- ---- --- ------------------------------- -----
Phyllis Maxwell 76 President and Director 1989
Richard Kelley 61 Director 1998
Allen Vershel 70 Director September 2000
The backgrounds of our directors, executive officers and significant
employees are as follows:
Phyllis Maxwell is the founder and has been president of our company
since 1989. After over 21 years of experience in theatre, we believe that Mrs.
Maxwell has built relationships with box office personnel as well as a
reputation for service and knowledge of theatre.
Richard Kelley has thirty years of experience in theatre including work
as a company manager and box office treasurer. Mr. Kelley has been with us since
September 1998. From 1988 through 1998, he served as the Director of Ticketing
Operations for the Stamford Center for the Arts. As a group theatre advisor, his
extensive knowledge of theatre (past, present and future) is an invaluable tool.
His advice and counsel is sought by clients.
Allen Vershel has been a director of our company since September 5,
2000. Dr. Vershel has degrees in dentistry, law and healthcare administration.
From 1978 to present, Dr. Vershel has been a consultant with Second Opinion
Dental Consultants where he reviews and evaluates dental malpractice cases for
attorneys and insurance companies. Dr. Vershel also serves on the Board of
Directors of two private companies.
EXECUTIVE COMPENSATION
The following summary compensation table reflects all compensation
awarded to, earned by, or paid to our Chief Executive Officer and president and
other employees for all services rendered to us in all capacities during each of
the years ended December 31, 2001, 2000 and 1999. None of our other executive
offices received salary and bonus exceeding $100,000 during those years.
20
- --------------------------------------------------------------------------------
Summary Compensation Table
- --------------------------------------------------------------------------------
All Annual
----------
Name and Principal Position Year Salary Bonus Compensation
--------------------------- ---- ------ ----- ------------
(**)
- -------------------------------------------------------------------------------
Phyllis Maxwell 2001 $48,000(1) $ 0 $ 0
President 2000 $48,000(1) $ 50,000 $ 0
1999 $48,500(1) $ 0 $ 0
- -------------------------------------------------------------------------------
Richard Kelley 2001 $55,000(2) $ 0 $ 0
Vice President 2000 $55,000(2) $ 0 $ 0
1999 $50,495(2) $ 0 $ 0
- -------------------------------------------------------------------------------
(1) Mrs. Maxwell receives health insurance and related fringe
benefits, which amounted in total to approximately $2,388 in 2001,
$2,388 in 2000 and $5,722 in 1999. As a requirement of business,
Mrs. Maxwell attends every show on Broadway and much of
Off-Broadway. (A portion of her expenses, such as meals,
transportation and entertainment of customers, are paid for by
us.)
(2) Mr. Kelley receives health insurance and other fringe benefits
which amounted in total to approximately $3,730 for 2001, $3,393
for 2000 and $3,200 for 1999. In addition, in 2001, Mr. Kelley
received $2,500 to cover his moving expenses and $2,500 to pay for
his expenses associated with show attendance including meals,
transportation and entertainment of customers.
Directors' Compensation
Directors are not compensated for their services as such.
Employment and Severance Agreement
There are no employment contracts or agreements between us and our
officers.
We do not have any employee stock option or other incentive plans.
PRINCIPAL SHAREHOLDERS
The following lists as of March 15, 2002 the beneficial ownership of
common stock of each person known to us who owns more than 5% of our issued and
outstanding common stock and of our directors, executive officers and
significant employees.
21
Name and address** of Amount and Nature Percent of
Beneficial Owner of Beneficial Ownership Class
- ------------------------- ----------------------- -----
Phyllis Maxwell 7,478,000 73%
Richard Kelley 20,000 *
Allen Vershel 18,000(1) *
All directors, executive officers 7,516,000 73%
And significant employees as a
Group (3 persons)
(1) Allen Vershel does not own any shares of our common stock directly.
However, Allen Vershel owns 1,000 shares of our Common Stock as custodian for
each of Austin A. Vershel, Benjamin A. Vershel, Leo I. Vershel, Lisa R. Vershel,
Marin E. Vershel and Rachel M. Vershel, all of whom are his grandchildren. In
addition, of the 18,000 shares listed in the table above, 10,000 shares are
owned by Suzanne Vershel, Mr. Vershel's wife. Mrs. Vershel also owns 1,000
shares of Common Stock as custodian for each of Owen K. Smith and Sophia K.
Smith, her grandchildren.
* Less than 1%
**Unless otherwise referenced, the address for each of the above mentioned
parties is c/o Clixtix, Inc., 1501 Broadway, Suite 1807, New York, New York
10036.
SELLING SHAREHOLDERS
This prospectus relates to the offering by the Selling Shareholder of
shares of our common stock acquired by her in a private transaction. All of the
shares of common stock offered by this Prospectus are being offered by the
Selling Shareholder for her own account.
The Selling Shareholder, as a condition to our filing of this
registration statement, has agreed that we will only be obligated to maintain
the registration statement of which this prospectus is a part, effective for a
period of 12 months from the effective date.
Phyllis Maxwell, our President and director, currently owns an
aggregate of 7,478,000 shares, or 73% of our issued and outstanding common stock
that she purchased from us in a private transaction on April 18, 1989. Mrs.
Maxwell has sole voting and investment power over the shares of common stock
owned by her. She is offering up to 1,341,200 shares of common stock by this
Prospectus. If all 1,341,200 shares offered are sold in this offering, Mrs.
Maxwell will own 6,136,800 shares, or 60% of our issued and outstanding stock.
There is no assurance, however, that all of the shares offered by the Selling
Shareholders will be sold.
22
DESCRIPTION OF CAPITAL STOCK
Common Stock
We are authorized to issue 20,000,000 shares of common stock, $0.0001
par value per share, of which 10,228,000 shares were issued and outstanding as
of the date of this prospectus. Each outstanding share of common stock entitles
the holder to one vote, either in person or by proxy, on all matters that may be
voted upon by the owners of those shares at meetings of the stockholders.
The holders of common stock (i) have equal rights to dividends from
funds legally available for the payment of dividends, when, as and if declared
by our board of directors; (ii) are entitled to share ratably in all of our
assets available for distribution to holders of common stock upon liquidation,
dissolution or winding up of our affairs; (iii) do not have preemptive,
subscription or conversion rights, and (iv) are entitled to one non-cumulative
vote per share on all matters on which stockholders may vote at all meetings of
stockholders.
All shares of common stock which are the subject of this offering, when
issued, will be fully paid for and non-assessable, with no personal liability
attaching to their ownership. The holders of shares of our common stock do not
have cumulative voting rights, which means that the holders of more than 50% of
the outstanding shares, voting for the election of directors, can elect all of
our directors if they so choose and, in that event, the holders of the remaining
shares will not be able to elect any of our directors.
Each share of common stock is entitled to share pro rata in dividends
and distributions with respect to the common stock when, as and if declared by
the board of directors from funds legally available for that purpose. No holder
of any shares of common stock has any pre-emptive right to subscribe for any of
our securities. Upon dissolution, liquidation or winding up of our company, the
assets will be divided pro rata on a share-for-share basis among holders of the
shares of common stock after any required distribution to the holders of
preferred stock, if any. All shares of common stock outstanding are fully paid
and nonassessable.
Each shareholder of common stock is entitled to one vote per share with
respect to all matters that are required by law to be submitted to shareholders.
The shareholders are not entitled to cumulative voting in the election of
directors. Accordingly, the holders of more than 50% of the shares voting in the
election of directors will be able to elect all the directors if they choose to
do so.
Dividends
We have not declared any dividends since inception, and have no present
intention of paying any cash dividends on our common stock in the foreseeable
future. The payment of dividends, if any, in the future, rests within the
discretion of our board of directors and will depend, among other things, upon
our earnings, our capital requirements and our financial condition, as well as
other relevant facts.
23
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Stocktrans,
Inc.,7 E. Lancaster Avenue, Ardmore, Pennsylvania 19003.
Market for our Common Stock
There has been no trading market for our common stock.
There are currently 68 holders of our outstanding common stock. Other
than the 1,000,000 shares sold in our initial public offering which was
terminated on May 24, 2001, our outstanding common stock was sold in reliance
upon an exemption from registration contained in Section 4(2) of the Securities
Act. There can be no assurance that a trading market will develop.
There are no outstanding options or warrants to purchase, or securities
convertible into, our common equity. Of the 10,228,000 shares of our common
stock currently issued and outstanding, 9,228,000 are restricted securities as
that term is defined in the Securities Act of 1933.
As of the date of this prospectus, 1,000,000 of our shares of common
stock are immediately eligible for sale in the public market without restriction
or further registration under the Securities Act of 1933, unless purchased by or
issued to any "affiliate" of ours, as that term is defined in Rule 144
promulgated under the Securities Act of 1933, described below. All other
outstanding shares of our common stock are "restricted securities" as that term
is defined under Rule 144, in that those shares were issued in private
transactions not involving a public offering and may not be sold in the absence
of registration other than in accordance with Rule 144, 144(k) or 701
promulgated under the Securities Act of 1933 or another exemption from
registration.
Sales of substantial amounts of our common stock under Rule 144, this
prospectus or otherwise could adversely affect the prevailing market price of
our common stock and could impair our ability to raise capital through the
future sale of our securities.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
We believe that provisions of our Articles of Incorporation and bylaws
will be useful to attract and retain qualified persons as directors and
officers. Our Articles of Incorporation limit the liability of directors and
officers to the fullest extent permitted by New York law. This is intended to
allow our directors and officers the benefit of New York's corporation law which
provides that directors and officers of New York corporations may be relieved of
monetary liabilities for breach of their fiduciary duties as directors, except
under circumstances which involve acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law.
24
Insofar as indemnification for liabilities arising under the Securities
Act of 1993 may be permitted to our directors, officers and controlling persons
under the provisions mentioned above, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission that indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against those liabilities
(other than our payment of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted by a director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether the indemnification by us is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of that issue.
INTEREST OF NAMED EXPERTS AND COUNSEL
Joseph Sierchio, a member of Eiseman, Levine, Lehrhaupt & Kakoyiannis,
P.C., our legal counsel, owns 354,600 shares of our common stock.
LEGAL MATTERS
The validity of the issuance of the common stock offered hereby has
been passed upon for us by Eiseman, Levine, Lehrhaupt & Kakoyiannis, P.C., New
York, New York.
EXPERTS
The financial statements of Clixtix, Inc. at December 31, 2000 and
2001, appearing in this prospectus and in the registration statement have been
audited by Marden, Harrison & Kreuter, CPAs, P.C., independent certified public
accountants, as described in their report regarding the financial statement
appearing elsewhere in this Registration Statement, and are included in reliance
upon that report given upon the authority of that firm as experts in auditing
and accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a
registration statement on Form SB-2. This prospectus, which is a part of the
registration statement, does not contain all of the information included in the
registration statement. Some information is omitted and you should refer to the
registration statement and its exhibits. With respect to references made in this
prospectus to any of our contracts, agreements or other documents, those
references are not necessarily complete and you should refer to the exhibits
attached to the registration statement for copies of the actual contract,
agreement or other document. You may review a copy of the registration
statement, including exhibits, at the Securities and Exchange Commission's
public reference room at Judiciary Plaza, 450 Fifth Street, N.W.,
25
Washington, D.C. 20549 or Seven World Trade Center, 13th Floor, New York, New
York 10048 or Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661.
The public may obtain information on the operation of the public
reference room by calling the Securities and Exchange Commission at
1-800-SEC-0330.
We intend to send an annual report, including audited financial
statements, to our shareholders. We will also file annual, quarterly and current
reports, proxy statements and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements or other information
on file at the public reference rooms. You can also request copies of these
documents, for a copying fee, by writing to the Securities and Exchange
Commission.
Our registration statement can be reviewed by accessing the Securities
and Exchange Commission's Internet site at http://www.sec.gov, which contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Securities and Exchange
Commission.
26
INDEX TO
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2000 AND 2001
------------------------------------------
CONTENTS
-----------
Independent auditors' report 28
Financial statements:
Consolidated balance sheets 29
Consolidated statements of income 30
Consolidated statements of stockholders' equity 31
Consolidated statements of cash flows 32
Notes to consolidated financial statements 34
27
[LETTERHEAD OF MARDEN, HARRISON & KREUTER, CPAs, P.C.]
INDEPENDENT AUDITORS' REPORT
- ----------------------------
To the Board of Directors and Stockholders
Clixtix, Inc. and Subsidiary
1501 Broadway
Suite 1807
New York, New York 10036
We have audited the accompanying consolidated balance sheets of Clixtix, Inc.
and Subsidiary (formerly Phyllis Maxwell's Group, Inc.) as of December 31, 2001
and 2000 and the related consolidated statements of income, stockholders' equity
and cash flows for the years then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Clixtix, Inc. and
Subsidiary (formerly Phyllis Maxwell's Groups, Inc.) as of December 31, 2001 and
2000, and the results of its operations and its cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
MARDEN, HARRISON & KREUTER
Certified Public Accountants, P.C.
/s/ Marden, Harrison & Kreuter
White Plains, New York
February 14, 2002
28
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
-----------------------------
December 31, December 31,
2001 2000
------------ ------------
ASSETS
- ------
Current assets:
Cash $ 19,365 $ 30,132
Commissions receivable 103,539 96,963
Other assets - 5,666
---------- ----------
Total current assets 122,904 132,761
Loans receivable - stockholder - 20,000
Other assets 2,654 -
---------- ----------
Total assets $ 125,558 $ 152,761
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 39,708 $ 62,009
Deferred income taxes payable 12,420 15,500
Loan payable - stockholder - 7,870
---------- ----------
Total liabilities 52,128 85,379
---------- ----------
Commitments
Stockholders' equity:
Common stock, .0001 par value; 20,000,000
shares authorized, 10,228,000 shares issued
and outstanding at December 31, 2001;
10,500,000 shares issued and outstanding
at December 31, 2000 20,973 20,100
Additional paid-in capital 34,058 23,349
Retained earnings 18,399 23,933
---------- ----------
Total stockholders' equity 73,430 67,382
---------- ----------
Total liabilities and stockholders' equity $ 125,558 $ 152,761
========== ==========
The accompanying notes are an integral part of these financial statements.
29
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2001 AND 2000
-------------------------------------------
Year ended Year ended
December 31, December 31,
2001 2000
----------- --------------
Commission revenue $ 228,009 $ 268,882
General and administrative expenses 241,114 307,696
---------- ----------
Loss from operations (13,105) (38,814)
Interest income 5,219 4,449
---------- ----------
Loss before income taxes (7,886) (34,365)
---------- ----------
Income taxes (benefit):
Current 728 1,270
Deferred (3,080) (5,118)
---------- ----------
(2,352) (3,848)
---------- ----------
Net loss $ (5,534) $ (30,517)
=========== ==========
Earnings (loss) per common share -
basic and diluted $ .00 $ .00
========== ==========
Weighted average common shares
outstanding - basic and dilutive 10,940,615 10,269,231
========== ==========
The accompanying notes are an integral part of these financial statements.
30
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2001 AND 2000
------------------------------------------
Common Stock Additional
------------ Paid-In Retained
Shares Amount Capital Earnings Total
------ ------ ------- -------- -----
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, year ended 2000 - - - (30,517) (30,517)
---------- -------- -------- -------- --------
Balances, December 31, 2000 10,500,000 20,100 23,349 23,933 67,382
Issuance of 1,000,000 of $.001 per value
common stock at a price of $.05 per
share, net of issuance costs totalling
$12,978 1,000,000 1,000 36,022 - 37,022
Cancellation of 1,272,000 shares of
common stock, accepted in satisfaction
of stockholder loan receivable (1,272,000) (127) (25,313) - (25,440)
Net loss, year ended 2001 - - - (5,534) (5,534)
---------- -------- -------- -------- --------
Balances, December 31, 2001 10,228,000 $ 20,973 $ 34,058 $ 18,399 $ 73,430
========== ======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
31
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001 AND 2000
------------------------------------------
Year ended Year ended
December 31, December 31,
2001 2000
------------- ------------
Cash flows provided by (used in):
Operating activities:
Cash received from customers $ 199,132 $ 264,030
Cash paid to suppliers and
employees (238,102) (246,187)
Interest received 3,779 4,449
Income tax paid (728) (1,100)
------------ ------------
Net cash provided by (used in)
operating activities (35,919) 21,192
------------ ------------
Financing activities:
Advances from stockholder - 25,000
Advances to stockholder (4,000) (20,000)
Repayment of loan payable stockholder (7,870) -
Proceeds from issuance of common stock 50,000 -
Issue costs associated with issuance of common stock (12,978) -
------------ ------------
Net cash provided by financing activities 25,152 5,000
------------ ------------
Net increase (decrease) in cash (10,767) 26,192
Cash, beginning of year 30,132 3,940
------------ ------------
Cash, end of year $ 19,365 $ 30,132
============ ============
The accompanying notes are an integral part of these financial statements.
32
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONCLUDED)
-----------------------------
Year ended Year ended
December 31, December 31,
2001 2000
------------- ------------
Reconciliation of net loss to net cash provided by
operating activities:
Net loss $ (5,534) $(30,517)
-------- --------
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Issuance of common stock for
professional services - 20,000
Deferred income taxes (3,080) (5,118)
Accrued interest (1,440) -
Changes in assets (increase)
decrease:
Commissions receivable (6,576) (4,852)
Other assets 3,012 -
Changes in liabilities increase (decrease):
Accounts payable (22,301) 41,679
-------- --------
Total adjustments (30,385) 51,709
-------- --------
Net cash provided by (used in)
operating activities $(35,919) $ 21,192
======== ========
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 a fair value of
$20,000 for common stock issued.
On December 30, 2001, the Company accepted 1,272,000 of the Company's common
stock from the Company's President as repayment of a stockholder loan receivable
totalling $25,440. These shares were cancelled upon acceptance.
The accompanying notes are an integral part of these financial statements.
33
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2001 AND 2000
------------------------------------------
(1) Nature of operations:
Clixtix, Inc. and its wholly owned subsidiary Maxwell Group
Entertainment, Inc. (collectively the "Company") are licensed by
the City of New York to resell group tickets to Broadway and off-Broadway
performances.
(2) Basis of consolidation and nature of business:
The accompanying 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. All intercompany
accounts and transactions have been eliminated in consolidation.
(3) Summary of significant accounting policies:
(A) Revenue recognition:
Commission revenue is recognized at the date the invoice is
generated. The Company is paid directly from the theatre after
the date of the performance, which may be over a year after the
date of the invoice. The Company may have losses due to
cancellation of performances. Historically, these losses have
not been significant and losses under present obligations are
not expected to be significant. Accordingly, no provision has
been made for future losses that may result from a cancellation
of a performance. It is at least reasonably possible that the
Company's estimate will change in the near term.
(B) Income taxes:
The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Under Statement No. 109, the asset and liability method
is used in accounting for income taxes. Deferred taxes are
recognized for temporary differences between the basis of assets
and liabilities for financial statement and income tax purposes.
The temporary differences relate primarily to the bases of
revenue recognition for financial and income tax reporting
purposes. The deferred taxes represent the future tax return
consequences of those differences, which will either be taxable
or deductible when the assets and liabilities are recovered or
settled.
34
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
YEARS ENDED DECEMBER 31, 2001 AND 2000
------------------------------------------
(3) Summary of significant accounting policies - cont'd:
(C) Use of estimates:
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure 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 the estimates.
(D) Earnings (loss) per share:
Earnings (loss) per share-basic is computed based on the
weighted average number of shares of common stock outstanding.
Earnings (loss) per share-dilutive reflects the potential
dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock
or other contracts to issue common stock were exercised or
converted into common stock or otherwise resulted in the
issuance of common stock and is computed similarly to "fully
diluted" earnings (loss) per share that was reported under
previous accounting standards. Dilutive potential common shares
do not have a significant dilutive effect.
(4) Stockholders' equity:
(A) Common stock and per share data:
The common stock and per share data for all periods gives effect
to a stock split, declared by the Company's Board of Directors
on September 22, 2000, of 100,000 to 1 shares which occured
immediately before the date of the Company's initial public
offering.
(B) Issuance of common stock
On July 1, 2000, the Company issued 400,000 shares of its common
stock to its legal counsel and 100,000 share of its common stock
to a consultant based on fair value of the common shares issued
totalling $20,000 ($.04 per share).
35
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
YEARS ENDED DECEMBER 31, 2001 AND 2000
------------------------------------------
(4) Stockholders' equity - cont'd:
(C) Initial public offering:
In September 2000, the Company filed an initial public offering
registration with the Securities and Exchange Commission for
purpose of issuing an additional 1,000,000 shares of common
stock at an issuance price of $.05 per share. This filing was
approved by the Securities and Exchange Commission during
February 2001. Total costs incurred during the year ended
December 31, 2000 by the Company for the offering, including the
issuance of common stock to the Company's legal counsel (see
Note 4B), were $45,000. The offering was completed during May
2001. Net proceeds from this offering were $37,022, net of
issuance costs of $12,978.
Following the issuance of the initial public offering of common
shares, the Company's current President owned 87% of the
outstanding common stock of the Company.
(D) Cancellation of common stock:
On December 30, 2001, the Company accepted 1,272,000 of the
Company's common stock from the Company's President as repayment
of an outstanding stockholder loan receivable totalling $25,440.
These common shares were cancelled upon acceptance by the
Company (Note 7(A)).
(5) Operating leases:
At December 31, 2001, the Company is obligated under operating leases for
office space and office equipment, with minimum lease payments through
April 2010 as follows:
Year ending
December 31, Amount
------------ ------
2002 $ 16,354
2003 16,354
2004 16,354
2005 16,354
2006 16,354
Thereafter 64,201
---------
$ 145,971
=========
Rent expense for the years ended December 31, 2001 and 2000 applicable to
these operating leases was $20,080 and $16,973, respectively.
36
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
YEARS ENDED DECEMBER 31, 2001 AND 2000
------------------------------------------
(6) Concentration risk:
Financial instruments, which potentially expose the Company to
concentrations of credit risks, consist primarily of cash and
commissions receivable.
Commissions receivable are due from production companies, which
operate in theaters throughout New York City. The Company minimizes its
risks by monitoring its customer balances.
The Company at times during the year maintains its cash in accounts,
which exceed Federally insured limits for such accounts. The Company limits
its credit risk by selecting financial institutions considered to be highly
creditworthy.
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. The possibility of fewer potential
customers for future performances may negatively impact the Company's
future results.
(7) Related party:
(A) Loans receivable - stockholder:
At December 31, 2000, the Company has advanced a stockholder
$20,000. There were additional amounts advanced and satisfied
during 2001, as more fully described in Note 4(D).
(B) Loan payable - stockholder:
At December 31, 2001 and 2000, the Company has a loan from a
stockholder totalling $-0- and $7,870, respectively. This loan
is non-interest bearing.
(8) Income taxes:
The components of income tax expense are as follows:
Year ended Year ended
December 31, December 31,
2001 2000
------------ ------------
Current
Federal $ - $ -
State and local 728 1,270
--------- --------
728 1,270
--------- --------
37
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
YEARS ENDED DECEMBER 31, 2001 AND 2000
------------------------------------------
(8) Income taxes - cont'd:
Year ended Year ended
December 31, December 31,
2001 2000
------------ ------------
Deferred
Federal (980) (4,600)
State and local (2,100) (518)
------------ --------
(3,080) (5,118)
------------ --------
Total $ (2,352) $ (3,848)
============ =========
A reconciliation of the statutory Federal income tax rate to the provision
for income taxes is as follows:
Year ended Year ended
December 31, December 31,
2001 2000
------------ ------------
Statutory Federal income
tax rate 34% 34%
State and local taxes 18 18
Effect of net operating
loss (24) (24)
Effect of graduated
rates on statutory rate (28) (28)
---- ----
0% 0%
==== ====
38
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
YEARS ENDED DECEMBER 31, 2001 AND 2000
------------------------------------------
(8) Income taxes - cont'd:
The details of deferred income tax assets and liabilities are as follows:
Year ended Year ended
December 31, December 31,
2001 2000
------------ ------------
Deferred income tax assets:
Net operating loss
carryforward $ 17,000 $ 13,800
Accounts payable 1,580 1,700
Deferred income tax liabilities:
Commissions receivable (31,000) (31,000)
----------- ----------
Deferred income tax
liabilities, net $ (12,420) $ (15,500)
=========== ==========
At December 31, 2001, the Company has net operating loss carryforwards for
Federal income tax purposes of approximately $50,000, which expire through
2016.
(9) Earnings (loss) per share:
Income
(Loss) Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- ------
Year ended December 31, 2001:
-----------------------------
Basic EPS
Loss available to common
stockholders $ (5,534) 10,940,615 $.00
====
Effective dilutive securities - -
--------- ----------
Diluted EPS
Loss available to common
stockholders $ (5,534) 10,940,615 $.00
========== ========== ====
39
CLIXTIX, INC. AND SUBSIDIARY
(FORMERLY PHYLLIS MAXWELL'S GROUPS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONCLUDED)
YEARS ENDED DECEMBER 31, 2001 AND 2000
------------------------------------------
(9) Earnings (loss) per share - cont'd:
Income
(Loss) Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- ------
Year ended December 31, 2000:
-----------------------------
Basic EPS
Loss available to common
stockholders $ (30,517) 10,269,231 $.00
====
Effective dilutive securities - -
---------- ----------
Diluted EPS
Loss available to common
stockholders $ (30,517) 10,269,231 $.00
=========== ========== ====
40
CLIXTIX, INC.
1,341,200 Shares of
Common Stock
--------------------
PROSPECTUS
--------------------
April 9, 2002
41