UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2004
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________.
Commission File No. 000-27277
MAXXZONE.COM, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0503197
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1770 N. Green Valley Parkway, Suite 3214
Henderson, Nevada 89014
(Address of principal executive offices, zip code)
(702) 616-7337
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [_]
As of March 31, 2004 there were 142,765,000 shares of the Registrant's common
stock, $0.001 par value per share, outstanding.
Transitional Small Business Disclosure Format (check one):
[_] Yes [X] No
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
maxxZone.com, Inc, a Nevada corporation ("maxxZone" or the "Company"), uses
words like "expects," "believes," "intends," "anticipates," "plans," "targets,"
"projects" or "estimates" in this Form 10-QSB. When used, these words and other,
similar words and phrases or statements that an event, action or result "will,"
"may," "could," or "should" occur, be taken or be achieved identify
"forward-looking" statements. Such forward-looking statements reflect our
current views with respect to future events and are subject to certain risks,
uncertainties and assumptions, including, the risks and uncertainties outlined
under the section titled "Management's Discussion and Analysis" in Item 2.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, believed, estimated or expected.
Our management has included projections and estimates in this Form 10-QSB, which
are based primarily on management's experience in the industry, assessments of
our results of operations, discussions and negotiations with third parties and a
review of information filed by our competitors with the Securities and Exchange
Commission or otherwise publicly available. We caution readers not to place
undue reliance on any such forward-looking statements, which speak only as of
the date made. We disclaim any obligation subsequently to revise any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
MAXXZONE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
(UNAUDITED)
MARCH 31,
2004
-----------
ASSETS
Current assets:
Cash $ 4,997
-----------
Total current assets 4,997
-----------
$ 4,997
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable $ 15,000
Accrued management fees - related party 36,904
-----------
Total current liabilities 51,904
-----------
Long-term liabilities:
Convertible debt 20,730
Convertible debt - related part 9,647
Accrued interest 3,190
-----------
Total long-term liabilities 33,567
-----------
Total liabilities 85,471
-----------
Stockholders' deficit:
Preferred stock, $0.001 par value,
5,000,000 shares
authorized, no shares issued and outstanding --
Common stock, $0.001 par value,
200,000,000 shares
authorized, 142,765,000 shares issued and outstanding 147,029
Additional paid-in capital 3,308,626
(Deficit) accumulated during development stage (3,536,129)
-----------
(80,474)
-----------
$ 4,997
===========
The accompanying notes are an integral part of these financial statements.
2
MAXXZONE.COM, INC.
(a Development Stage Company)
Statements of Operations
(unaudited)
JUNE 7, 2000
THREE MONTHS ENDING (INCEPTION)
MARCH 31, TO
------------------------------ MARCH 31,
2004 2003 2004
------------ ------------ ------------
Revenue $ -- $ -- $ --
------------ ------------ ------------
Expenses:
General and administrative expenses 10,251 6,470 60,231
General and administrative expenses - related party 13,555 15,990 157,928
Professional fees -- -- 52,673
Stock-based compensation 1,197,000 2,700,837 3,085,156
Loss on impairment of fixed assets and website -- -- 12,457
Depreciation and amortization -- 14,728 164,810
------------ ------------ ------------
Total expenses 1,220,806 2,738,025 3,533,255
------------ ------------ ------------
Other income (expense):
Interest (expense) -- (1,393) (2,874)
------------ ------------ ------------
Total other expense
-- (1,393) (2,874)
------------ ------------ ------------
Net (loss) $ (1,220,806) $ (2,739,418) $ (3,536,129)
============ ============ ============
Weighted average number of
common shares outstanding - basic and fully diluted 99,847,418 57,864,234
============ ============
Net (loss) per share - basic and fully diluted $ (0.01) $ (0.05)
============ ============
The accompanying notes are an integral part of these financial statements.
3
MAXXZONE.COM, INC.
(a Development Stage Company)
Statements of Cash Flows
(unaudited)
THREE MONTHS ENDING JUNE 7, 2000
MARCH 31, (INCEPTION) TO
-------------------------------- MARCH 31,
2004 2003 2004
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (1,220,806) $ (2,739,418) $ (3,536,129)
Adjustments to reconcile net (loss) to
net cash (used) by operating activities:
Stock-based compensation 1,197,000 2,693,452 3,085,156
Shares issued for expenses -- -- 12,000
Shares issued for interest expense -- -- 4,250
Loss on impairment of fixed assets and website -- -- 12,457
Depreciation and amortization -- 14,728 164,810
Changes in operating assets & liabilities
Decrease (increase) in prepaid expenses -
related party -- 300 --
Increase in accounts payable -- 6,671 --
(Decrease) in accrued management fees -
related party 27,965 (1,000) 37,967
------------- ------------- -------------
Net cash (used) by operating activities
4,159 (25,267) (219,489)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in checks issued in excess of cash -- 290 --
Note payable - related party -- 12,778 (5,043)
Convertible debt -- (35,000) 55,730
Accrued interest -- 1,393 --
Issuance of common stock -- 35,000 173,799
------------- ------------- -------------
Net cash provided by financing activities -- 14,461 224,486
------------- ------------- -------------
Net (decrease) in cash 4,159 (10,806) 4,997
Cash - beginning 838 10,806 --
------------- ------------- -------------
Cash - ending $ 4,997 $ -- $ 4,997
============= ============= =============
Supplemental disclosures:
Interest paid $ -- $ -- $ --
============= ============= =============
Income taxes paid $ -- $ -- $ --
============= ============= =============
Non-cash transactions:
Number of shares issued for services 70,500,000 64,698,570 127,458,000
============= ============= =============
Number of shares issued for expenses -- -- 160,000
============= ============= =============
Number of shares issued for interest -- -- 250,000
============= ============= =============
The accompanying notes are an integral part of these financial statements.
4
MAXXZONE.COM, INC.
(a Development Stage Company)
Notes
NOTE 1 - BASIS OF PRESENTATION
The interim financial statements included herein, presented in accordance with
United States generally accepted accounting principles and stated in US dollars,
have been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments, which, in the opinion of management, are necessary for fair
presentation of the information contained therein. It is suggested that these
interim financial statements be read in conjunction with the financial
statements of the Company for the period ended December 31, 2003 and notes
thereto included in the Company's Form 10-KSB. The Company follows the same
accounting policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative of annual
results.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As shown in the accompanying financial
statements, the Company has incurred a net loss of $3,536,129 for the period
from June 7, 2000 (inception) to March 31, 2004, and has no sales. The future of
the Company is dependent upon its ability to obtain financing and upon future
profitable operations from the development of its new business opportunities.
Management has plans to seek additional capital through debt and/or equity
financing. The financial statements do not include any adjustments relating to
the recoverability and classification of recorded assets, or the amounts of and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. These financial statements do not include any adjustments
that might arise from this uncertainty.
NOTE 8 - STOCKHOLDER'S EQUITY
The Company is authorized to issue 200,000,000 shares of its $0.001 par value
common stock and 5,000,000 shares of its $0.001 par value preferred stock.
The Company issued 70,500,000 shares of its $0.001 par value common stock to
several individuals and entities for stock-based compensation valued at
$1,197,000.
NOTE 9 - RELATED PARTY TRANSACTIONS
The Company had a balance of $36,904 in accrued management fees to an officer
and director of the Company as of March 31, 2004.
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
The Company had no recorded revenues or cost of revenues for the quarter ending
March 31, 2004, no change from the quarter ending March 31, 2003.
General and administrative expenses increased to $10,251 for the quarter ending
March 31, 2004, an increase of 58% over expenses of $6,470 for the quarter
ending March 31, 2003. General and administrative expenses in this first quarter
of 2004 consist primarily of travel expenses, rent, consulting, stock transfer
agent and filing fees and other general corporate and office expenses.
Stock-based compensation expenses for the quarter ending March 31, 2004 was
$1,197,000, a decrease of 55% over expenses of $2,700,837 for the quarter ending
March 31, 2003. These stock-based compensation expenses in the first quarter of
2004 primarily relate to consulting fees from various stock based consulting
agreements entered into in the first quarter of 2004.
No depreciation expenses for the quarter ending were incurred, compared to
$14,728 of depreciation expenses incurred for the quarter ending March 31, 2003.
The net loss for the quarter ending March 31, 2004 is $1,135,335 (net loss per
share of $0.01) compared to the quarter ending March 31, 2003, $2,739,418 (net
loss per share of $.05).
LIQUIDITY AND CAPITAL RESOURCES
The Company does not currently have an adequate source of reliable, long-term
revenue to fund operations. As a result, maxxZone is reliant on outside sources
of capital funding. There can be no assurances that the Company will in the
future achieve a consistent and reliable revenue stream adequate to support
continued operations. In addition, there are no assurances that the Company will
be able to secure adequate sources of new capital funding, whether it is in the
form of share capital, debt, or other financing sources.
maxxZone has cash and cash equivalents of 4,997, total current liabilities of
$84,400 and total assets of $4,997 at March 31, 2004. The Company continues to
incur costs, but has not secured adequate new revenue to cover the costs.
During the quarter ending March 31, 2004, maxxZone issued 125,000,000 shares of
common stock, registered on Form S-8 to various consultants and professional
advisors to maxxZone.
PLAN OF OPERATION FOR THE NEXT 12 MONTHS
The Company will focus on consummating the transactions pursuant to its recent
acquisition of assets and liabilities of American Card Services, Inc., a
Delaware corporation ("ACS") and operating a business based on the assets it has
purchased from ACS.
SUBSEQUENT EVENTS TO QUARTER ENDING MARCH 31, 2004
See Item 5, below, regarding that Certain Asset Purchase Agreement dated April
21, 2004, by and between maxxZone and ACS
ITEM 3. CONTROLS AND PROCEDURES.
Within 90 days prior to the filing of this report, the Company carried out an
evaluation, under the supervision and with the participation of its management,
including the President and Chief Executive Officer, of the design and operation
of its disclosure controls and procedures. Based on this evaluation, the
Company's President and Chief Executive Officer concluded that the Company's
disclosure controls and procedures are effective for the gathering, analyzing
and disclosing the information the Company is required to disclose in the
reports it files under the Securities Exchange Act of 1934, within the time
periods specified in the SEC's rules and forms. There have been no significant
changes in the Company's internal controls or in other factors that could
significantly affect the internal controls subsequent to the date of this
evaluation.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not a party to any material legal proceedings and to our
knowledge, no such proceedings are threatened or contemplated. ACS management is
expected to be appointed to management positions in maxxZone in late May 2004,
at which time the Company intends to change its name to "American Card Services"
and commence operations utilizing such acquired assets.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
On April 27, 2004, maxxZone.com, Inc., a Nevada corporation ("maxxZone")
acquired substantially all of the assets, and assumed substantially all of the
liabilities, of ACS, pursuant to the terms of an Asset Purchase Agreement dated
April 21, 2004, by and between maxxZone and ACS (the "Asset Purchase
Agreement"). The ACS assets purchased by maxxZone includes a debit card product
that can be purchased and loaded at retail merchants. With the proper
identification, the cardholder can order up to two Debit MasterCard cards, which
add the ability to make purchases wherever MasterCard cards are accepted,
including phone and Internet orders and purchases at restaurants, car rentals
and hotels. In consideration for the purchase of the assets, maxxZone is
obligated to issue that number of shares of its common stock equal to 85% of the
issued and outstanding shares of common stock of maxxZone.
ACS management is expected to be appointed to management positions in maxxZone
in late May, 2004, at which time the Company intends to change its name to
"American Card Services" and commence operations utilizing such acquired assets.
Subsequent to maxxZone's acquisition, the assets and liabilities of maxxZone
prior to the acquisition of ACS's assets were sold and assumed, respectively, to
Global Capital Trust, an entity with principal administrative offices in St.
Kitts and Nevis, pursuant to a letter agreement by and among by and among
maxxZone.com, Inc., a Nevada corporation, Global Capital Trust, MaxxPlay
Enterprises, Inc. and Roland Becker.
On April 23, 2004, Stephen J. Careaga was appointed to the Board of Directors of
maxxZone.
Mr. Careaga, age 39, was the founder and CEO of Harbor Medical, Inc., a medical
products distribution company which he subsequently sold to Bound Tree
Corporation, a distributor of emergency medical supplies with annual revenues of
over $45 million in 1998. Subsequently, Bound Tree retained Mr. Careaga to
manage it's Washington State operations. In March 2001, Mr. Careaga gounded and
was the Chariman & CEO of Civil Communications, Inc., an Internet Communications
Company providing innovative technology servies to Police & Fire Departments. He
was also the founder and Executive Director of Firefighters National Trust, a
national non-profit charity sreving the families of firefighters killed in the
line of duty. Mr. Careaga is a former firefighter and police officer.
Firefighters National Trust has raised over 11 million dollars in 2.5 years
under Mr. Careaga's direction.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
A list of exhibits required to be filed as part of this Quarterly Report is set
forth in the Index to Exhibits, which immediately precedes such exhibits and is
incorporated herein by reference.
(b) Reports on Form 8-K
Subsequent to the quarter for which this report is filed, the Company filed a
Current Report on Form 8-K, on May 11, 2004, disclosing under Item 2,
Acquisition of Disposition of Assets, that Certain Asset Purchase Agreement
dated April 21, 2004, by and between maxxZone and ACS, pursuant to which
maxxZone acquired substantially all of the assets, and all of the liabilities,
of ACS. Additionally, under Item 5, Other Events and Regulation FD Disclosure,
maxxZone disclosed the appointment of Stephen J. Careaga to the maxxZone Board
of Directors.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: May 17, 2004 MAXXZONE.COM, INC.
/s/ Roland Becker
------------------------------------------
Roland Becker
President and Chief Executive Officer
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
2.1 Agreement and Plan of Reorganization dated February 14, 2003,
by and between maxxZone.com, Inc. and of Maxxplay Enterprises,
Inc. (1)
3.1.1 Articles of Incorporation (2)
3.1.2 Form of Certificate of Amendment to Articles of Incorporation
(1)
3.1.3 Form of Certificate of Amendment to Articles of Incorporation
(1)
3.2.1 Bylaws (2)
3.2.2 Amended Bylaws (3)
31.1 Certification of Chief Executive Officer of maxxZone.com, Inc.
required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities
Exchange Act of 1934, as amended
31.2 Certification of Chief Executive Officer and Chief Financial
Officer of maxxZone.com, Inc. required by Rule 13a-14(b) or
Rule 15d-14(b) of the Securities Exchange Act of 1934, as
amended, and 18 U.S.C. Section 1350
(1) Incorporated by reference to the exhibits to the Company's Current Report on
Form 8-K, file number 000-33465, filed on May 11, 2004.
(2) Incorporated by reference to the exhibits to the Company's registration
statement on Form 10-SB, file number 000-33465, filed on December 31, 2001.
(3) Incorporated by reference to the exhibits to the Company's Current Report on
Form 8-K, filed on December 11, 2003.