-----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, T+BEY14LWdRvrx6RTcKLwZQz/2f1OM9hCYhr+K9fgk1EjdnYsE2JddPHIciMU/hn NQxx2pxUSLfUX+tYixHHZQ== 0001010549-00-000304.txt : 20000516 0001010549-00-000304.hdr.sgml : 20000516 ACCESSION NUMBER: 0001010549-00-000304 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 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 SEC ACT: SEC FILE NUMBER: 000-24273 FILM NUMBER: 635325 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 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 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 March 31, 2000: 17,678,242. 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 March 31, June 30, ASSETS 2000 1999 ------------ ------------ (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 487,212 $ 8,136,585 Accounts receivable 629,254 169,217 Inventories 11,528,794 1,286,539 Prepaid expenses 628,642 44,475 ------------ ------------ Total current assets 13,273,902 9,636,816 PROPERTY AND EQUIPMENT, AT COST Machinery and equipment 476,289 87,830 Furnishings 176,327 67,634 ------------ ------------ 652,616 155,464 Less accumulated depreciation 74,052 27,969 ------------ ------------ 578,564 127,495 OTHER ASSETS 1,285,631 901,336 ------------ ------------ $ 15,138,097 $ 10,665,647 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 2,853,900 $ 113,356 Accrued expenses 169,821 788,797 Deferred income 204,786 -- ------------ ------------ Total current liabilities 3,228,507 902,153 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, 17,678,242 shares at March 31, 2000 and 15,772,823 shares at June 30, 1999 1,768 1,577 Additional paid-in capital 27,257,774 17,693,743 Accumulated deficit (23,137,452) (15,719,326) ------------ ------------ 12,122,090 9,975,994 Less 200,000 shares of common stock in treasury - at cost (212,500) (212,500) ------------ ------------ 11,909,590 9,763,494 ------------ ------------ $ 15,138,097 $ 10,665,647 ============ ============
See notes to financial statements. -1-
MAX INTERNET COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended March 31, March 31, March 31, March 31, 2000 1999 2000 1999 ------------ ------------ ------------ ------------ Net sales $ 140,853 $ (114,036) $ 397,402 $ 134,523 Cost of sales 57,465 (41,221) 231,492 52,845 ------------ ------------ ------------ ------------ Gross profit 83,388 (72,815) 165,910 81,678 Selling, general and administrative expenses 2,925,638 1,035,144 7,682,922 2,615,480 ------------ ------------ ------------ ------------ Operating (loss) (2,842,250) (1,107,959) (7,517,012) (2,533,802) Interest income 13,383 -- 108,697 -- Interest expense (4,258) (592) (9,811) (73,350) ------------ ------------ ------------ ------------ (Loss) from continuing operations (2,833,125) (1,108,551) (7,418,126) (2,607,152) Loss from discontinued operations -- (558,383) -- (2,338,703) Gain on disposal of discontinued operations -- -- -- 1,905,494 ------------ ------------ ------------ ------------ Net (loss) $ (2,833,125) $ (1,666,934) $ (7,418,126) $ (3,040,361) ============ ============ ============ ============ (Loss) per share - basic and diluted: From continuing operations $(.17) $(.14) $(.46) $(.38) ===== ===== ===== ===== From discontinued operations $-- $(.07) $-- $(.06) ===== ===== ===== ===== (Loss) per share $(.17) $(.21) $(.46) $(.44) ===== ===== ===== ===== Weighted average shares outstanding 17,104,061 7,758,247 16,248,188 6,912,105 ============ ============ ============ ============
See notes to financial statements. -2-
MAX INTERNET COMMUNICATIONS, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) NINE MONTHS ENDED MARCH 31, 2000 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 1,870,419 187 -- -- 9,289,097 -- -- Stock options issued -- -- -- -- 99,938 -- -- Shares issued in payment of liabilities 35,000 4 -- -- 174,996 -- -- Net loss -- -- -- -- -- (7,418,126) -- ------------ ------------ ------------ ------------ ------------ ------------ ------------ Balances at March 31, 2000 17,678,242 $ 1,768 80,000 $ 8,000,000 $ 27,257,774 $(23,137,452) $ (212,500) ============ ============ ============ ============ ============ ============ ============
See notes to financial statements. -3-
MAX INTERNET COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine months ended March 31, 2000 1999 ------------ ------------ Cash flows from operating activities Net (loss) $ (7,418,126) $ (3,040,361) Gain from discontinued operations -- 433,209 Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 266,525 486,907 Stock options issued for services 99,938 -- Change in operating assets and liabilities: Prepaid expenses (587,262) (11,001) Receivables (460,037) (61,585) Inventories (10,242,255) (163,420) Other assets (601,612) (266,000) Accounts payable and accrued expenses 2,501,354 130,858 ------------ ------------ Net cash used in continuing operations (16,441,475) (2,491,393) Net cash used by discontinued operations -- (666,080) ------------ ------------ Net cash used in operating activities (16,441,475) (3,157,473) Cash flows from investing activities Purchase of property and equipment (497,152) (57,930) Cash flows from financing activities Sales of common stock 9,289,284 12,801,700 Redemption of preferred stock -- (3,792,000) Dividends paid -- (41,954) Decrease in receivables from affiliates -- 32,805 Borrowings on notes payable to stockholders -- 210,579 ------------ ------------ Net cash provided by financing activities 9,289,284 9,211,130 ------------ ------------ Net increase (decrease) in cash (7,649,343) 5,995,727 Cash and cash equivalents at beginning of period 8,136,585 1,774,091 ------------ ------------ Cash and cash equivalents at end of period $ 487,212 $ 7,769,818 ============ ============ Noncash financing activities: Issuance of common stock or options in payment of liabilities $ 274,934 $ 56,250 ============ ============ Conversion of convertible debentures $ -- $ 400,000 ============ ============ Conversion of Series B preferred stock $ -- $ 340,000 ============ ============
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 nine-month and three-month periods ended March 31, 2000 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. Effective March 31, 2000 MAXpc was merged into MAX. 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. -5- MAX INTERNET COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS 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 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. Effective December 31, 1999 MAX sold the stock of Brasil to Brasil's management. Shortly after the sale, the company discovered its management in Brazil misled the company regarding its sales transactions in South America. As a result, management of the Brazilian unit has been dismissed, and the sale of Brasil has been rescinded. MAX again owns 100% of the stock of this subsidiary, and Brasil has been included in these financial statements for the entire period. -6- MAX INTERNET COMMUNICATIONS, INC. ITEM 2. Management's discussion and analysis. Results of Operations Nine and three months ended March 31, 2000 compared to nine and three months ended March 31, 1999. Net Sales Net sales from continuing operations were $397,402 for the nine months ended March 31, 2000, an increase of $262,879 over the $134,523 for the nine months ended March 31, 1999. Net sales were $140,853 for the three months ended March 31, 2000. The net sales returns for the three months ended March 31, 1999 of ($114,036) arose from one significant return in the quarter, offset by other sales. Recognition of sales to certain distributors has been deferred until such time as the product moves through the distribution channels to the distributors' customers. The company continues to position the MAX i.c. Live product with value-added resellers, original equipment manufacturers, channel distributors and end users. In addition, the company continues to gain positive exposure to its products through an evaluation program, trade shows, industry magazines and the like. To date, enthusiasm for the company's products and technology has been high, but significant sales have not yet been consummated. Contract negotiations for sales of the MAX i.c. Live products 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 194% to $7,682,922 for the nine months ended March 31, 2000 from $2,615,480 for the nine months ended March 31, 1999; and increased 183% to $2,925,638 for the three months ended March 31, 2000 from $1,035,144 for the three months ended March 31, 1999. These increases are due to significant increases in advertising, marketing and selling expenses related to the MAX i.c. Live product, as well as costs of operating Brasil and GmbH and 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 $108,697 and $13,383, respectively, for the nine and three months ended March 31, 2000 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 nine and three months ended March 31, 1999 of $73,350 and $592, 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. Income Taxes No income taxes have been accrued due to operating losses of the company. 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. Liquidity and Capital Resources Cash and cash equivalents decreased $7,649,343 in the nine months ended March 31, 2000. Net cash used in operating activities for the period was $16,441,475. This cash used in operating activities primarily consisted of increases in receivables of $460,037, inventories of $10,242,255, prepaid expenses of $587,262 and other assets of $601,612; offset by an increase in accounts payable and accrued expenses of $2,501,354. 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. In addition, the company purchases a portion of its inventory based on a production schedule in order to maintain its production capacity with the manufacturer. The company has also purchased inventory in response to expected sales in South America which have not been consummated. Cash used in investing activities consisted of approximately $497,000 in purchases of property and equipment. Financing activities generated approximately $9,289,000, consisting of sales of common stock. Working capital at March 31, 2000 increased by 15%, to $10,045,395 from $8,734,663 at June 30, 1999. This was due primarily to the cash received from the sales of common stock, offset by the losses of the company during that period. Due to net operating losses, 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 needs additional financing in the immediate future. Management is currently in negotiations with various parties to secure additional equity or debt financing. There is no assurance the company will be successful in these efforts. Year 2000 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. -8- 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. This case is in the early stages of discovery. 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 A report on Form 8-K was filed on February 24, 2000 concerning the sale of MAX Internet Communications do Brasil Ltda. 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 -9- EX-27 2 FDS
5 0001061554 MAX INTERNET COMMUNICATIONS, INC. 1 US DOLLARS 3-MOS JUN-30-2000 JAN-01-2000 MAR-31-2000 1 487,212 0 684,254 55,000 11,528,794 13,273,902 652,616 74,052 15,138,097 3,228,507 0 0 8,000,000 1,768 3,907,822 15,138,097 140,853 140,853 57,465 57,465 2,925,638 48,594 4,258 (2,833,125) 0 (2,833,125) 0 0 0 (2,833,125) (.17) (.17)
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