-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PNjlJU5hID6pypbq/vp7DE49vE/7xY9i9KY2O9XMP7pSTAqxxzdnfSO/K/qJ0W9N 5Ja7I/AzJnd+r85JC8BrUQ== 0001010549-00-000297.txt : 20000516 0001010549-00-000297.hdr.sgml : 20000516 ACCESSION NUMBER: 0001010549-00-000297 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAX INTERNET COMMUNICATIONS INC CENTRAL INDEX KEY: 0001061554 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-CONSUMER CREDIT REPORTING, COLLECTION AGENCIES [7320] IRS NUMBER: 752715335 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: SEC FILE NUMBER: 000-24273 FILM NUMBER: 633398 BUSINESS ADDRESS: STREET 1: 8115 PRESTON RD STREET 2: 8TH FL EAST CITY: DALLAS STATE: TX ZIP: 75225 BUSINESS PHONE: 2146910055 MAIL ADDRESS: STREET 1: 8115 PRESTON RD STREET 2: 8TH FL EAST CITY: DALLAS STATE: TX ZIP: 75225 FORMER COMPANY: FORMER CONFORMED NAME: VOXCOM HOLDINGS INC DATE OF NAME CHANGE: 19980512 10QSB/A 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB/A X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1999 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO _________ Commission file number 0-24273 MAX INTERNET COMMUNICATIONS, INC. (Exact name of registrant as specified in its charter) Nevada 75-2715335 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 8115 Preston Road, Eighth Floor - East Dallas, Texas 75225 (Address of principal executive offices) (214) 691-0055 (Registrant's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Number of shares outstanding of the Registrant's common stock (par value $.0001 per share) as of December 31, 1999: 15,924,492. Transitional Small Business Disclosure Format (Check one) Yes No X --- ---
MAX INTERNET COMMUNICATIONS, INC. PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS December 31, June 30, ASSETS 1999 1999 ------------ ------------ (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 599,841 $ 8,136,585 Accounts receivable 669,395 169,217 Inventories 5,985,737 1,286,539 Prepaid expenses 323,085 44,475 ------------ ------------ Total current assets 7,578,058 9,636,816 PROPERTY AND EQUIPMENT, AT COST Machinery and equipment 371,104 87,830 Furnishings 176,327 67,634 ------------ ------------ 547,431 155,464 Less accumulated depreciation 56,469 27,969 ------------ ------------ 490,962 127,495 OTHER ASSETS 804,638 901,336 ------------ ------------ $ 8,873,658 $ 10,665,647 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 1,732,620 $ 113,356 Accrued expenses 477,514 788,797 Deferred income 247,792 -- Notes payable to officers and directors 500,000 -- ------------ ------------ Total current liabilities 2,957,926 902,153 LONG-TERM DEBT -- -- COMMITMENTS AND CONTINGENCIES -- -- STOCKHOLDERS' EQUITY Preferred stock, $100 par value; Series A, authorized, 100,000 shares; issued and outstanding, 80,000 shares 8,000,000 8,000,000 Preferred stock, $.0001 par value; Series B convertible, authorized, 350,000 shares; none issued and outstanding -- -- Common stock, $.0001 par value; authorized, 50,000,000 shares; issued, 15,924,492 shares at December 31, 1999 and 15,772,823 shares at June 30, 1999 1,592 1,577 Additional paid-in capital 18,430,967 17,693,743 Accumulated deficit (20,304,327) (15,719,326) ------------ ------------ 6,128,232 9,975,994 Less 200,000 shares of common stock in treasury - at cost (212,500) (212,500) ------------ ------------ 5,915,732 9,763,494 ------------ ------------ $ 8,873,658 $ 10,665,647 ============ ============
See notes to financial statements. -1-
MAX INTERNET COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Three Months Six Months Six Months Ended Ended Ended Ended December 31, December 31, December 31, December 31, 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Net sales $ 119,395 $ 60,127 $ 256,549 $ 248,559 Cost of sales 75,662 27,346 174,027 94,066 ------------ ------------ ------------ ------------ Gross profit 43,733 32,781 82,522 154,493 Selling, general and administrative expenses 3,117,184 965,674 4,757,284 1,580,265 ------------ ------------ ------------ ------------ Operating (loss) (3,073,451) (932,893) (4,674,762) (1,425,772) Interest income 18,882 -- 95,314 -- Interest expense (5,530) (26,585) (5,553) (72,757) ------------ ------------ ------------ ------------ (Loss) from continuing operations (3,060,099) (959,478) (4,585,001) (1,498,529) Loss from discontinued operations -- (621,786) -- (1,780,392) Gain on disposal of discontinued operations -- -- -- 1,905,494 ------------ ------------ ------------ ------------ Net (loss) $ (3,060,099) $ (1,581,264) $ (4,585,001) $ (1,373,427) ============ ============ ============ ============ Earnings (loss) per share - basic and diluted: From continuing operations $(.19) $(.14) $(.29) $(.23) ===== ===== ===== ===== From discontinued operations $-- $(.09) $-- $ .02 ===== ===== ===== ===== (Loss) per share $(.19) $(.23) $(.29) $(.21) ===== ===== ===== ===== Weighted average shares outstanding 15,841,569 6,802,000 15,824,903 6,498,231 ============ ============ ============ ============
See notes to financial statements. -2-
MAX INTERNET COMMUNICATIONS, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) SIX MONTHS ENDED DECEMBER 31, 1999 Series A Common stock Preferred stock Additional -------------- ----------------- paid-in Accumulated Treasury Shares Amount Shares Amount Capital Deficit Stock ------------ ------------ ------------ ------------ ------------ ------------ ------------ Balances at June 30, 1999 15,772,823 $ 1,577 80,000 $ 8,000,000 $ 17,693,743 $(15,719,326) $ (212,500) Sales of common stock 126,669 12 -- -- 506,664 -- -- Stock options issued -- -- -- -- 96,188 -- -- Shares issued in payment of liabilities 25,000 3 -- -- 134,372 -- -- Net Loss -- -- -- -- -- (4,585,001) -- ------------ ------------ ------------ ------------ ------------ ------------ ------------ Balances at December 31, 1999 15,924,492 $ 1,592 80,000 $ 8,000,000 $ 18,430,967 $(20,304,327) $ (212,500) ============ ============ ============ ============ ============ ============ ============
See notes to financial statements. -3-
MAX INTERNET COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six months ended December 31, 1999 1998 ----------- ----------- Cash flows from operating activities Net earnings (loss) $(4,585,001) $(1,373,427) Gain from discontinued operations -- (125,102) Adjustments to reconcile net earnings (loss) to net cash used in operating activities: Depreciation and amortization 171,127 373,795 Stock options issued for services 96,188 -- Change in operating assets and liabilities: Prepaid expenses (281,735) (405,145) Receivables (500,178) (100,699) Inventories (4,699,198) (106,286) Other assets (42,804) 69,824 Accounts payable and accrued expenses 1,690,148 44,384 ----------- ----------- Net cash used in continuing operations (8,151,453) (1,622,656) Net cash used by discontinued operations -- (656,885) ----------- ----------- Net cash used in operating activities (8,151,453) (2,279,541) Cash flows from investing activities Purchase of property and equipment (391,967) (57,522) Cash flows from financing activities Sales of common stock 506,676 555,000 Borrowings on notes payable to stockholders 500,000 -- ----------- ----------- Net cash provided by financing activities 1,006,676 555,000 ----------- ----------- Net decrease in cash (7,536,744) (1,782,063) Cash and cash equivalents at beginning of period 8,136,585 1,774,091 ----------- ----------- Cash and cash equivalents at end of period $ 599,841 $ (7,972) =========== =========== Noncash financing activities: Issuance of common stock or options in payment of liabilities $ 230,563 $ 56,250 =========== =========== Conversion of convertible debentures $ -- $ 400,000 =========== =========== Conversion of Series B preferred stock $ -- $ 145,000 =========== ===========
See notes to financial statements -4- MAX INTERNET COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB. These financial statements have not been examined by independent certified public accountants, but in the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) necessary for a fair presentation of consolidated results of operations, financial position and cash flows at the dates and for the periods indicated, have been included. These financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the six-month and three-month periods ended December 31, 1999 are not necessarily indicative of the results that may be expected for the year ending June 30, 2000. For further information, refer to the consolidated financial statements and notes thereto for the fiscal year ended June 30, 1999 included in the Company's Form 10-KSB, as filed with the Securities and Exchange Commission on September 28, 1999. These financial statements include the accounts of MAX Internet Communications, Inc., (MAX) and its wholly-owned subsidiaries, MAXpc Technologies, Inc. (MAXpc), MAX Internet Communications do Brasil LTDA (Brasil), and MAX Internet Communications Deutschland GmbH (GmbH), collectively, "the Company." MAX changed its name in November, 1999 from Voxcom Holdings, Inc. (Holdings). MAX Internet Communications Deutschland GmbH was incorporated in Frankfurt, Germany on August 4, 1999, and MAX Internet Communications do Brasil LTDA was formed in Rio de Janeiro, Brazil on September 14, 1999. Both of these companies sell and service the MAX i.c. Live card in their respective regions, as well as other products the company may develop. The financial statements include the operations of Brasil and GmbH from the dates of formation. NOTE B - BUSINESS MAX assembles, through contractors, and markets a PC Internet Media Processor Card, the MAX i.c. Live 3600, and an information appliance, the MAX i.c. Live Video Communication Station. The core technology of both products, the MAX i.c. Live Internet Media Processor, delivers the power to conduct true-motion, synchronized video and audio communications and high-quality video and audio streaming and browsing over a broadband Internet connection. The MAX i.c. Live Internet Media Processor also integrates full DVD and Dolby AC-3 surround sound for a complete video communication and entertainment solution. The MAX i.c. Live card enhances the performance of personal computers, either as an add-in at time of manufacture or installed into existing units. The card, with its own inbuilt processor, has the ability to perform multi-media software functions simultaneously if need be, without detracting from the central processor of the computer. Additional software can be added to the card as developed. The company continues to look for additional software applications which may be integrated into the card, and it is believed some of these will give rise to the availability of patent protection. The company will continue limited research and development in this regard. NOTE C - ACQUISITION AND DISPOSITION OF BUSINESSES Effective October 1, 1997, the company formed Home Business Group Inc. (HBG) to acquire certain assets and assume the liabilities of a company engaged in -5- MAX INTERNET COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS the business of home-based business seminars for no consideration. A major stockholder and officer of the acquired business is a stockholder and officer of the company. The acquisition was accounted for as a purchase. On September 30, 1998, the company sold the stock of HBG to HBG's management in exchange for the redemption of 200,000 shares of the company's common stock previously owned by such management. Effective January 15, 1999, the company closed AmeraPress, as it had been unable to generate sufficient business activity to justify its ongoing overhead following the sale of HBG described above. The company sold AmeraPress in June 1999. Effective February 19, 1999, the company closed Systems, as it had been unable to generate sufficient business activity to justify its ongoing overhead following the sale of HBG and the closure of AmeraPress described above. The company sold Systems in June 1999. During the quarter ended September 30, 1999, MAX formed two new subsidiaries, both of which are 100% owned. MAX Internet Communications Deutschland GmbH was incorporated in Frankfurt, Germany on August 4, 1999, and MAX Internet Communications do Brasil Ltda was formed in Rio de Janeiro, Brazil on September 14, 1999. Both of these companies will sell and service the MAX i.c. Live card in their respective regions, as well as other products the company may develop. NOTE D - RESTATEMENT The Company previously reported sales for the six and three months ended December 31, 1999 in the amount of $10,770,240 and $8,133,086, respectively. The majority of these reported sales were from the Brazilian subsidiary to purported customers in South America, and were recorded in reliance upon documentation that was later found to be falsified. South American sales in both the first and second quarters are being reversed following this discovery. -6- MAX INTERNET COMMUNICATIONS, INC. ITEM 2. Management's discussion and analysis. Results of Operations Six and three months ended December 31, 1999 compared to six and three months ended December 31, 1998 Net Sales Net sales from continuing operations were $256,549 for the six months ended December 31, 1999, an increase of $7,990 over the $248,559 for the six months ended December 31, 1998. Net sales were $119,395 for the three months ended December 31, 1999, an increase of $59,268 over the $60,127 for the three months ended December 31, 1998. Recognition of sales to certain distributors has been deferred until such time as the product moves through the distribution channels to the distributors' customers. Sales activity was still in the early stages at December 31, 1999. The company has discontinued the businesses that were the primary operations in the prior year and restructured its business plan to direct all resources to its MAX i.c. Live product. The marketing of the MAX i.c. Live product was in its early stages during the six months ended December 31, 1999. As of December 31, 1999 the marketing plan and materials are complete, and the first print ads appeared in November 1999. Contract negotiations for sales of the MAX i.c. Live product are ongoing, and are expected to generate increasing net sales and net earnings in future quarters. Selling, General and Administrative Expenses Selling, general and administrative expenses increased 201% to $4,757,284 for the six months ended December 31, 1999 from $1,580,265 for the six months ended December 31, 1998; and increased 223% to $3,117,184 for the three months ended December 31, 1999 from $965,674 for the three months ended December 31, 1998. This increase is due to significant increases in advertising, marketing and selling expenses related to the MAX i.c. Live product, as well as the overhead structure which has been put into place in order to generate and service expected future increases in net sales. Interest Income and Expense The interest income of $95,314 and $18,882, respectively, for the six and three months ended December 31, 1999 was earned on the available cash balances the Company has invested in money market funds. There was little interest expense during these periods. Interest expense for the six and three months ended December 31, 1998 of $72,757 and $26,585, respectively, was incurred primarily on convertible debentures. This debt has been fully converted to common stock as of November 1998, and no further interest is payable. Discontinued Operations On September 30, 1998, the company sold the stock of a wholly owned subsidiary, HBG, to HBG's management in exchange for the redemption of 200,000 shares of the Company's common stock previously owned by such management. Effective January 15, 1999, the company closed AmeraPress, as it had been unable to generate sufficient business activity to justify its ongoing overhead following the sale of HBG described above. AmeraPress was sold on June 30, 1999. -7- MAX INTERNET COMMUNICATIONS, INC. Management's discussion and analysis - continued Effective February 19, 1999, the company closed Systems, as it had been unable to generate sufficient business activity to justify its ongoing overhead following the sale of HBG and the closure of AmeraPress described above. Systems was sold on June 30, 1999. The financial statements for the six months ended December 31, 1998 reflect the results of operations of Systems, AmeraPress and HBG as discontinued operations. Restatement The Company previously reported sales for the six and three months ended December 31, 1999 in the amount of $10,770,240 and $8,133,086, respectively. The majority of these reported sales were from the Brazilian subsidiary to purported customers in South America, and were recorded in reliance upon documentation that was later found to be falsified. South American sales in both the first and second quarters are being reversed following this discovery. Management of the Brazilian unit has been dismissed and the company is reviewing available legal action. Effective December 31, 1999 MAX sold the stock of Brasil to Brasil's management. Upon learning of the misrepresentations of the Brazilian director, MAX rescinded the sale of Brasil and again owns 100% of the stock of this subsidiary. MAX has hired a new managing director in Brasil, and is currently in negotiations with various parties to complete the sale and delivery of the MAX i.c. Live cards that are in our warehouses in Brazil. However, there is no assurance that these sales will be consummated. Brasil is included as a wholly-owned subsidiary in these financial statements for the entire period. Liquidity and Capital Resources Cash and cash equivalents decreased $7,536,744 in the six months ended December 31, 1999. Net cash used in operating activities for the period was $8,151,453. This cash used in operating activities primarily consisted of increases in receivables of $500,178, inventories of $4,699,198 and prepaid expenses of $281,735; offset by an increase in accounts payable and accrued expenses of $1,690,148. The company continues to increase inventories in part because of the need to purchase certain components well in advance of the scheduled production date, due to competition for these parts. Cash used in investing activities consisted of approximately $392,000 in purchases of property and equipment. Financing activities generated approximately $1,007,000, consisting of $507,000 of sales of common stock and $500,000 of borrowings from two officer / directors. Working capital at December 31, 1999 decreased by 47%, to $4,620,132 from $8,734,663 at June 30, 1999. This was caused primarily by the losses of the company during that period. Due to the need to purchase inventories in advance, the selling of product on terms to customers, and the lack of significant sales to date, the company anticipates it will need additional working capital resources. To this end, in February 2000 the company finalized a private equity investment that has provided net proceeds to the company of approximately $6,500,000 in cash. In addition, the investor has an option to acquire 400,000 additional shares for $4,000,000 in cash. There is no assurance that its working capital, combined with the private equity investment, will be sufficient to fund inventory and receivable increases and meet ongoing overhead expenses, plus pursue an aggressive advertising and marketing campaign for the MAXpc product. Therefore, the company may need to raise additional funds through equity or debt offerings in the future. -8- MAX INTERNET COMMUNICATIONS, INC. Management's discussion and analysis - continued Year 2000 The company began an internal assessment of its Year 2000 preparedness in the early months of 1998, through a review of all equipment and software. Any issues found were addressed through software and hardware updates provided to our company by the software and/or hardware vendors. These updates were provided at minimal cost. The company also contacted its major component suppliers and its contract manufacturers. None indicated that it anticipated any material internal risks. At this date, the company has not experienced problems related to Year 2000 compliance, and is not aware of any remaining problems related to Year 2000 issues. However, the company will continue to monitor the status of suppliers and manufacturers. Forward Looking Statements This document includes statements which may constitute "forward-looking" statements, usually containing the words "believe", "estimate", "project", "expect" or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company's products in the marketplace, competitive factors, changes in regulatory environments, and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this filing. -9- MAX INTERNET COMMUNICATIONS, INC. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The company has filed a lawsuit alleging breach of contract against Heartland Payment Systems, LLC (Heartland), a credit card processing company which has performed this function for the company. Heartland then filed suit against the company alleging breach of contract, and asking for an unspecified amount. As yet, this case has not yet reached the discovery stage. Management believes that the ultimate resolution of this case will not have a material effect on financial position, results of operations or cash flows. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27. Financial Data Schedule (b) Reports on Form 8-K None 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. MAX Internet Communications, Inc. (Registrant) Date: May 15, 2000 /s/ Donald G. McLellan -------------------------------------------- Donald G. McLellan, President /s/ Leslie D. Crone -------------------------------------------- Leslie D. Crone, Chief Financial Officer -10- EX-27 2 FDS
5 0001061554 MAX INTERNET COMMUNICATIONS, INC. 1 US DOLLARD 3-MOS JUN-30-2000 OCT-1-1999 DEC-31-1999 1 599,841 0 669,395 50,000 5,985,737 7,578,058 547,431 56,469 8,873,658 2,957,926 0 0 8,000,000 1,592 (2,085,860) 8,873,658 119,395 119,395 75,662 75,662 3,117,184 40,000 5,530 (3,060,099) 0 (3,060,099) 0 0 0 (3,060,099) (.19) (.19)
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