SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2001
Commission file number 000-25499
Flexxtech Corporation
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(Exact name of small business issuer as specified in its charter)
Nevada 88-0390360
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State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization
5777 W. Century Boulevard,
suite 767, Los Angeles, CA 84790
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(Address of principal executive offices) (Zip Code)
(310) 342-0794
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(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file
such reports) Yes [ ] No [X], and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of September 30, 2000, the issuer had outstanding 6,201,611 shares of
its Common Stock, $0.001 par value.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
FLEXXTECH CORPORATION
FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
FLEXXTECH CORPORATION
FORMERLY INFINITE TECHNOLOGY CORPORATION AND
COLOR STRATEGIES
BALANCE SHEET
MARCH 31, 2001
(Unaudited)
ASSETS
Current Asset:
Cash and cash equivalent $ 159,642
Accounts receivable 1,388,558
Inventory 533,081
Investments in stocks available for sale 194,000
Notes Receivable 0
Notes Receivable - related parties 941,507
Insurance Receivable 247,490
Deposits & other current assets 37,623
--------------
Total Current Asset 3,501,901
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Property & equipment, net 1,621,426
Goodwill on acquisition, net 1,797,000
--------------
TOTAL ASSETS $ 6,920,327
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LIABILITIES STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,490,611
Accrued expenses 114,765
Loans payable - Current 2,271,486
Loans payable related parties 432,500
Deferred income tax 0
Customer deposits 5,321
--------------
Total Current Liabilities 4,314,683
Long-term Liabilities:
Long-term Loans 28,155
STOCKHOLDERS' EQUITY
Common stock, authorized 25,000,000 shares at
$.001 par value, issued and outstanding
11,053,367 shares 10,553
Additional Paid in Capital 5,194,152
Accumulated deficit (2,145,716)
Accumulated other comprehensive income:
Unrealized gain on securities available for sale (481,500)
--------------
Total Stockholders' Equity 2,577,489
--------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,920,327
==============
The accompanying notes are an integral part of these financial statements.
FLEXXTECH CORPORATION
FORMERLY INFINITE TECHNOLOGY CORPORATION AND
COLOR STRATEGIES
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2001 & 2000
(Unaudited)
2001 2000
-------------- -------------
Sales $ 2,118,546 $ -
Cost of sales 1,774,592 -
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Gross profit 343,954 -
General and Administrative expenses 532,378 -
-------------- -------------
Loss from operations (188,424) -
Other income (expenses)
Realized loss on sale of marketable securities (51,958) -
Other income 1,153 -
Interest expense (61,936) -
-------------- -------------
Total other income (expenses) (112,741) -
-------------- -------------
Net loss before income tax (301,165) -
Provision of Income tax 2,400 -
-------------- -------------
Net Loss $ (303,565) $ -
============== =============
Other comprehensive loss:
Unrealized gain on investments available
for sale (115,130) -
-------------- -------------
Comprehensive Income (Loss) (418,695) -
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Basic and diluted loss per share $ (0.028) $ -
============== =============
Basic and diluted weighted average
shares outstanding* 10,996,457 2,668,417
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* The basic and diluted net loss per share has been restated to retroactively
effect a forward stock split in the ratio of one share for 13.09322865
shares on December 22, 1999, a 2:1 forward split on April 14, 2000, a 1:3
reverse split on April 29, 2000 and a 3:2 forward stock split at March 26,
2001.
The accompanying notes are an integral part of these financial statements.
FLEXXTECH CORPORATION
FORMERLY INFINITE TECHNOLOGY CORPORATION AND
COLOR STRATEGIES
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2001 & 2000
(Unaudited)
2001 2000
-------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (303,565) $ -
Adjustments to reconcile net loss to cash
used in operating activities
Depreciation and amortization 107,030 -
Amortization of goodwill 31,420 -
Loss on sale of marketable securities 51,958 -
(Increase)/decrease in current assets
Accounts receivable (136,003) -
Inventory (29,483) -
Deposits & other current assets (8,175) -
Increase/(decrease) in current liabilities
Accounts payable 180,383 (1,775)
Accrued expenses 37,174 -
Customers' deposit 1,923 -
-------------- -------------
NET CASH USED IN OPERATING ACTIVITIES (67,338) (1,775)
-------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale (Purchase) of marketable securities 98,443 -
Acquisition of property & equipment (43,749) -
-------------- -------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 54,694 -
-------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of common stock 66,057 -
Proceeds from notes receivable 111,017 -
Payments on loans (524,653) -
-------------- -------------
NET CASH USED IN FINANCING ACTIVITIES (347,579) -
-------------- -------------
NET DECREASE IN CASH AND CASH EQUIVALENT (360,223) (1,775)
CASH AND CASH EQUIVALENT -BEGINNING 519,865 2,869
-------------- -------------
CASH AND CASH EQUIVALENT -ENDING $ 159,642 $ 1,094
============== =============
The accompanying notes are an integral part of these financial statements.
FLEXXTECH CORPORATION
FORMERLY INFINITE TECHNOLOGY CORPORATION AND
COLOR STRATEGIES
NOTE TO UNAUDITED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
Organization:
The Company was organized on March 24, 1998, under the laws of the State of
Nevada, as Color Strategies. On December 20, 1999, the Company changed its
name to Infinite Technology Corporation. The Company changed its name to
Flexxtech Corporation in April 2000.
Principles of Consolidation:
The accompanying financial statements include the accounts of Flexxtech
Corporation (the "Parent"), and its 100% owned subsidiaries, Flexxtech
Holdings, Inc., Mardock Promotional Products, Inc, (an Oregon corporation),
82% owned Optv.com (a Nevada corporation) and 80% owned Primavera Corporation
and its wholly owned subsidiary North Texas Circuit Board Co., Inc. (a Texas
corporation). All significant intercompany accounts and transactions have been
eliminated in consolidation.
Basis of Preparation:
The accompanying unaudited condensed interim financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission for the presentation of interim financial information, but
do not include all the information and footnotes required by generally
accepted accounting principles for complete financial statements. The audited
financial statements for the two years ended December 31, 2000 was filed on
May 14, 2001 with the Securities and Exchange Commission and is hereby
referenced. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Prior to March 31, 2000
the Company was in the development stage whereby all the activities were
devoted to obtaining financing for the acquisitions of businesses. Operating
results for the three-month period ended March 31, 2001 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2001.
Cancellation of shares
Effective March 30, 2001, the Board of directors approved to cancel 750,000
shares of common stock issued to a related party, related through common share
holder, in exchange of various notes receivable. The notes were receivable
from an investment brokerage corporation totaling $1,250,000. The notes
carried interest ranging from 8% to 12% per year, were secured and due on
demand. The company returned the notes to the related party.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Report on Form 10-QSB contains forward-looking statements,
including (without limitation) statements concerning possible or assumed
future results of operations and those preceded by, followed by or that
include the words "believes," "could," "expects," "anticipates," or
similar expressions. For those statements, we assert the protection of the
safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. You should understand that various
events could cause those results to differ materially from those expressed in
such forward-looking statements: materially adverse changes in economic
conditions in the markets that we and our subsidiaries serve; competition
from others in the markets and industry segments occupied by us and our
subsidiaries; the ability to enter, the timing of entry and the profitability
of entering new markets; greater than expected costs or difficulties related
to the integration of the businesses acquired by our subsidiaries; and other
risks and uncertainties as may be detailed from time to time in our
public announcements and SEC filings.
The discussion and financial statements contained herein are for the
quarters ended March 31, 2001 and March 31, 2000. The following discussion
regarding the financial statements of the Company should be read in
conjunction with the financial statements of the Company included herewith.
Overview
The Company, through its wholly owned subsidiary, Flexxtech Holdings,
Inc., is engaged in the business of developing, operating, and
investing in emerging growth companies in technology. The Company's
objective is to build long-term capital appreciation for its
shareholders through the acquisition of technology companies. The
primary focus in technology will include the acquisition, investment,
and internal development in the following categories: Data Storage,
Internet Service Providers, Internet Portals, Internet Infrastructure,
Wireless Technologies, Computer Software, Computer Networking,
Financial Services, Telecommunications Networks equipment and
services, Semiconductor Equipment and Electronic Manufacturers and
Services.
Plan of Operation
The Company is a holding company through its wholly-owned subsidiary,
Flexxtech Holdings, Inc., of a variety of investments in the technology arena
that include 100% ownership in Mardock, Inc., 80% ownership in Primavera
Corporation, the parent company of North Texas Circuit Board Co., 82%
ownership in OpiTV.com, and investments in a variety of other technology
companies.
ROLL-UP STRATEGY
----------------
In addition to the circuit board roll-up plan the Company will seek out
additional industries where efficiencies through consolidation will greatly
benefit the Company. The thrust will be to:
. acquire "islands of excellence" in attractive, complementary
markets.
. Efficiently acquire and integrate new companies while preserving
their entrepreneurial spirit.
. Use the greater purchasing power to obtain improved vendor deals.
. Keep and integrate only those superior managers.
MERGER & ACQUISITION TENETS
---------------------------
. Build on the Company's organizational skill in performing
acquisitions; develop systems for managing the process from lead
evaluation, negotiation, contracting, and post-closing integration.
. Pay reasonable multiples with extra incentives to ensure seller
commitment.
. Exercise complete due diligence to ensure smooth integration of
personnel and operations.
. Achieve rapid returns on investment by implementing the Company's
best practices in the acquired operation.
. Reduce overhead by vacating unneeded premises.
. Centralize any duplicated support functions into the Headquarter
location.
In April 2000 the Company changed the direction and business plan of the
Company to its current model. Before April 2000 the Company virtually had no
meaningful business. New Officers and Directors were approved and appointed by
the shareholders to guide the Company and its new business plan. On April 26,
2000, the Company acquired 100% of Mardock, Inc., an Oregon Corporation, for
600,000 shares of the Company's common stock. On May 10, 2000 the Company
acquired 1,500,000 shares of the common stock of Infinite Networks, Inc. for
1,500,000 shares of the Company's common stock. On June 15, 2000, the Company
acquired 100,000 shares of common stock of Accesspoint Corporation, 100,000
shares of common stock of Ameri-First Financial Group, Inc., 100,000 shares of
Easyriders, Inc. and 180,000 shares of OpiTV.com in exchange for 1,500,000
shares of the Company's common stock.
On July 18, 2000, the Company, through its wholly-owned subsidiary Flexxtech
Holdings, Inc. acquired an additional 125,000 shares of Accesspoint
Corporation at a price of $4.00 per share, for a total of $500,000. The
acquisition consisted of the Company issuing 300,000 shares of common stock,
at a price of $1.00 per share and a promissory note for $200,000 at 10%
interest per annum, due on demand. The holder of the issued shares and Note is
Atlantis Aggressive Growth.
On August 14, 2000 the Company paid 100,000 shares of its common stock to
Sierra Nevada Advisors for financial consulting and advisory services. The
stock was valued at par value.
On August 15, 2000 the Company, through its wholly-owned subsidiary Flexxtech
Holdings, Inc. acquired 67% of Primavera Corporation, the parent company of
North Texas Circuit Board Company. Flexxtech Holdings was issues 203 newly
issued shares of Primavera Corporation in consideration of $1,575,000. On
October 31, 2000, the ownership was increased to 80% of Primavera Corporation.
The consideration is payable in cash of $1,250,000 by installments through
January 15, 2001 and in the form of 130,000 shares of the Company's common
stock at $2.50 per share. The cash installments have been delivered ahead of
schedule and we have delivered $1,250,000 through January 15 2001 to Primavera
and North Texas Circuit Board for working capital.
On September 8, 2000 the Company's subsidiary, Flexxtech Holdings, Inc.,
executed a Financial Advisory and Consulting Agreement with Ameri-First
Financial Group, a Nevada Corporation, whereas Flexxtech Holdings has agreed
to render financial advisory services in connection with the negotiation of
transactions, marketing and support of the Company, acquisitions, and
corporate development and organization. Under the one year agreement,
Flexxtech was issued 500,000 shares of the common stock of Ameri-First
Financial Group, Inc. (OTCBB: AMFR). Pursuant to the Agreement, Ameri-First
agrees to register the 500,000 shares with the Securities and Exchange
Commission within ninety days of this agreement. Each month the stock is not
registered, Ameri-First will pay a penalty of 50,000 shares per month.
On September 15, 2000 the Company, through its wholly-owned subsidiary
Flexxtech Holdings, Inc., acquired 80% or 7,578,000 of shares of common stock
of OpiTV.com from two principle shareholders of OpiTv.com in exchange for
100,000 shares of newly issued common stock of the Company at $6.25 per share.
Prior to the acquisition, the Company owned 180,000 shares of common stock of
OpiTV.com. The total holdings in OpiTV.com is 82%. The acquisition resulted in
goodwill of $805,000
On June 26, 2000 the Company commenced a private placement offering pursuant
to Regulation D, Rule 506, as amended and Regulation S, as amended. Through
March 31, 2001, the Company had 11,053,367 shares of common stock outstanding.
While there is no assurance the Company will be successful in raising
additional capital, the Company is actively seeking private equity financing
to assure that it will be capable of financing the continuation of business.
Any additional capital raised above and beyond what the Company needs as its
monthly expenditure would be used in increasing marketing and sales efforts
and future investments and acquisitions. Should the Company fail to raise
additional funding, it will be forced to curtail its growth, both through
internal development and through investments and acquisitions. As only a
holding company to date, the company does not generate its own revenues, but
relies on additional financing to pay its operation expenses. The Company is
currently developing a plan to provide a variety of consulting services to
emerging technology companies to include business and marketing plan
development, merchant and investment banking services and general business
consulting. The Company hopes to attract clients for these new services in the
third quarter of this year, therefore not relying on additional financing to
support its role as a holding company.
(a) Results of Operations
The Company has generated consolidated revenues of $2,118,546 for the quarter
ended March 31, 2001 as compared to no revenue for the quarter ended March 31,
2000. The Company anticipates an increase in generating revenues in the
future. Currently, the Company's cash needs include, but are at no means
limited to, rent, salaries and wages, cash raising expenses and to fund
operation of its subsidiaries, and for future acquisitions. On June 15, 2000,
the Company executed a promissory note with a shareholder in the amount of
$100,000 at 10% interest per annum, due September 15, 2000. On July 18, 2000
the Company executed a promissory note with a shareholder in the amount of
$200,000 at 10% interest per annum, due on demand. On December 15, 2000, the
Company sold 225,000 shares of Accesspoint Corporation to a shareholder for
$900,000 on a promissory note at 8% interest per annum and collateralized by
300,000 shares of the Company's common stock. The Company plans on growing its
revenues through the acquisition of various technology companies in various
markets and increasing its products and services in part through acquisition
of existing technology businesses. The Company will continue to seek capital
for acquisitions and in the internal development of those companies acquired.
The Company will seek capital through private investors and anticipates
attracting institutional investors in the near future. In the event the
Company does not attract such capital and is unable to generate revenues
sufficient to support its expenses, then the Company will be required to
curtail its operations, sell existing investments, and slow down its plan for
expansion. The Company, however, is taking all necessary action to limit its
overhead and cut expenses at its operating subsidiaries. The Company and does
not foresee a slow down in its acquisition plans and in its expansion plans
for sometime. The Company feels that the current economic conditions benefit
the Company in it choice of acquisitions.
Quarter Ended March 31, 2001 as Compared to Quarter Ended March 31, 2000
Revenues.
The Company had revenues of $2,118,546 for the quarter ended March 31, 2001 as
compared to no revenue for the quarter ended March 31, 2000. The increase in
revenues was the result of the acquisition of Mardock, Inc. on April 26, 2000,
and the acquisition of Primavera Corporation, the parent company of North
Texas Circuit Board Company on August 15, 2000.
Cost of Sales.
The Company incurred Cost of Sales of $1,774,592 for the quarter ended March
31, 2001 as compared to none for the quarter ended March 31, 2000. The
increase in Cost of Sales is the result of consolidated Cost of Sales from the
Company's subsidiaries, Mardock, Inc., Primavera Corporation and its wholly
owned subsidiary, North Texas Circuit Board Co.
General, Administrative and Selling Expenses.
The Company incurred costs of $532,378 for the quarter ended March 31, 2001 as
compared to none for the quarter ended March 31, 2000. The increase of
operating expenses is the result of the Mardock and North Texas Circuit Board
acquisitions and their consolidated operating expenses and an increase in
rent, salaries, wages, and expenses related to raising capital for the
Company.
Net loss before income taxes.
The Company has a loss before taxes of $301,165 for the quarter ended March
31, 2001 as compared to no loss or income for the quarter ended March 31, 2000
Net loss.
The Company had a net loss of $303,565 for the quarter ended March 31, 2001 as
compared to no loss or profit for the quarter ended March 31, 2000. The net
loss was mostly due to the acquisition and inclusion of operations of North
Texas Circuit Board Co. and Mardock, Inc., from the period of acquisition
through March 31, 2001 and the increase in general and administrative expenses
of the Company.
Unrealized gain on investments.
The Company has an unrealized loss on marketable investments available for
sale of $115,130 for the quarter ended March 31, 2001.The unrealized gain is
contributed to the fluctuating market value of the securities the Company's
subsidiary, Flexxtech Holdings, Inc. owns, at the end of the year. The
securities owned are marked to market on the last day of the trading month for
the period ended.
Liquidity and Capital Resources
The Company's business plan was restructured in April 2000 to its now current
plan. The Company must continue to raise capital to fulfill its plan of
acquiring technology companies and assisting in the development of those
companies internally. A majority of the company's expenses are related to
raising capital. Future expenses will include legal and accounting and other
professional fee expenses. If the Company is unable to raise any additional
capital its operations will be curtailed and it may have to liquidate its
current investments for operating capital. As of March 31, 2001, the Company
had total Current Assets of $3,501,901 and Current Liabilities of $4,314,683.
Cash and cash equivalents were $159,642. Stockholders' Equity was$2,577,489.
In its acquisition of North Texas Circuit Board, Management feels that it has
made necessary cost cutting efforts to reduce the debt and increase
productivity of the Company. In its turn-around effort, management feels
additional capital will be needed to complete a full turnaround, but that the
Company has made significant strides toward a successful turnaround.
Management feels that other operations of the Company are financially sound at
this time and
that no outside forces, including inflation has had a significant impact on
its operations. The Company will continue to raise capital for acquisitions
and the internal development of its subsidiaries.
Effective March 30, 2001, the Board of directors approved to cancel 750,000
shares of common stock issued to a related party, related through common share
holder, in exchange of various notes receivable. The notes were receivable
from a Corporation totaling $1,250,000. The notes carried interest ranging
from 8% to 12% per year, were secured and due on demand. The company returned
the notes to the related party.
Subsidiaries
Flexxtech Holdings, Inc. is a wholly-owned subsidiary of Company. On April 26,
2000, Flexxtech Holdings acquired 100% of the outstanding common stock of
Mardock, Inc., an Oregon Corporation. The Company issued 600,000 shares of its
newly issued common stock for all of the shares of Mardock. Mardock,
established in 1986, is a designer, manufacturer, and distributor of apparel
and promotional products to the corporate community. Mardock is in the process
of developing an e-commerce site for corporate promotional products. Greg
Mardock, the President and CEO of Mardock, Inc. is also a director of the
Company. On August 31, 2000, Greg Mardock became President of Flexxtech
Corporation
On August 15, 2000 the Company, through its wholly-owned subsidiary Flexxtech
Holdings, Inc. acquired 67% of Primavera Corporation, the parent company of
North Texas Circuit Board Company. Flexxtech Holdings was issues 203 newly
issued shares of Primavera Corporation in consideration of $1,575,000. On
October 31, 2000, the ownership was increased to 80% of Primavera Corporation.
The consideration was payable in cash of $1,250,000 by installments through
January 15, 2001 and in the form of 130,000 shares of the Company's common
stock at $2.50 per share. The Company has delivered $1,250,000 to Primavera
and North Texas Circuit Board for working capital as well as issued 130,000
shares. All terms of the Primavera acquisition have been satisfied.
For the three months ended March 31, 2001, North Texas Circuit Board Company
had net revenue of $1,978,467. A net loss for the same periods was $108,157.
Primavera Corporation was formed in Texas on April 26, 2000. The Company is a
holding company which operates primarily through its wholly-owned subsidiary,
North Texas Circuit Board Company ("NTCB"), which was formed in 1978 in the
state of Texas. NTCB manufacturers printed circuit boards on a quick-turn
basis. On May 11, 2000, Primavera acquired 100% of the common stock of NTCB.
On September 15, 2000 the Company, through its wholly-owned subsidiary
Flexxtech Holdings, Inc., acquired 80% or 7,578,000 of the shares of common
stock of OpiTV.com from two principle shareholders of OpiTv.com in exchange
for 100,000 shares of newly issued common stock of the Company at $6.25 per
share. Howard Frantom the Chairman, President and CEO of OpiTV.com and the
Company passed away in December 2000. Greg Mardock, President and Director of
Company was elected Chairman, President and CEO. Out of the 100,000 shares to
be issued, 60,000 shares of Common stock which was to be issued to Howard
Frantom have not been issued pursuant to default. Prior to the acquisition,
the Company owned 180,000 shares of common stock of OpiTV.com. The total
holdings in OpiTV.com is 82%. The acquisition resulted in goodwill of $805,000
OpiTV.com, a Nevada Corporation, was formed on October 12, 1999. OpiTV is an
I-Commerce technology company that is engaged in the development of a
Set-Top-Box (STB) device on a rental or acquisition basis. The STB is a
convergence device, giving the consumer high-speed Internet access and
enhanced communications as well as full computing capabilities in their home
or office. OpiTV plans on distributing the STB in January 2001 and is
currently finalizing manufacturing arrangements. Sales will be made through
agent's distributors and sub-licenses. OpiTV has no revenues to date and
operating expenses of approximately $20,000 per month, consisting mostly of
wages, rent and sales expenses. Opitv.com had no revenues in the quarter2000.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Mardock, Inc., the wholly-owned subsidiary of our subsidiary Flexxtech
Holdings, Inc., became the holder of a secured promissory note in principal
amount of $1,270,000, accruing interest at 10% per annum, in regard to the
sale of 500,000 shares of our common stock. The note was made by Ameri-First
Financial Group, Inc., is secured by the assets of Ameri-First and is due on
demand. Mardock, Inc. has made demand for payment and Ameri-First Financial
Group, Inc. has failed to pay. The note is now due and unpaid. On January 3,
2001 Mardock, Inc. filed a complaint against Ameri-First Financial Group, Inc.
to collect on the Note. The complaint was filed in the Los Angeles County
superior Court. The Complaint was amended on January 5, 2001. The amended
complaint includes causes of action for breach of promissory note, common
counts and foreclosure of security interest. The amended complaint seeks
unpaid principle, interests and attorney fees and costs. The amended complaint
names Ameri-First Financial Group, Inc., Pacific Sports Holdings, Inc., Oregon
Outerwear, Inc., Tahoe Pacific Corporation, Southbay Golf, Inc. and outback
Apparel group, Inc. as defendants. We are pursuing the possibility of
resolving the action prior to trial.
Item 2. Changes in Securities
On June 26, 2000 we commenced a private placement offering ("Offering")
pursuant to Regulation D, Rule 506, as amended and Regulation S, as amended
for the sale of up to 3,000,000 shares of our common stock at a price of $2.50
per share. On September 8, 2000 we amended the Offering price to $5.00 per
share and commenced a new phase of the Offering. In the three months ended
March 31, 2001, pursuant to Regulation D, we sold 6,000 shares at $1.67 per
share for proceeds of $10,000, and 31,800 shares at 3.33 per share for
proceeds of $105,894. We also issued 600 promotional shares for par value
$.001 which resulted in no proceeds. In the three months ended March 31, 2001,
pursuant to Regulation S, we sold 9,180 shares at $1.67 per share for proceeds
of $15,300 and 8,387 shares at 3.33 for proceeds of $27,928.
In the three months ended March 31, 2001, we sold a total of 38,400
shares pursuant to the exemptions afforded by Regulation D resulting in gross
proceeds of $115,894. In the three months ended March 31, 2001, we sold a
total of 17,567 shares pursuant to the provisions of Regulation S resulting in
gross proceeds of $43,228. We sold a total of 836,498 shares of common stock
pursuant to the Offering as of March 31, 2001. The total gross Offering
proceeds as of March 31, 2001 were $1,850,361. We utilized the services of
finders in placing the Offering. We did not utilize the services of brokers
or underwriters. The Offering was self-underwritten. The Offering expenses
were approximately $277,554 or %15 of the gross Offering proceeds. We paid
finders' fees in the approximate amount of $185,036. The balance of the
Offering expenses were related to general sales expenses, including, but not
limited to, due diligence, accounting and legal expenses.
The Shares are being offered to persons who are "accredited investors,"
as defined under Rule 506 of Regulation D of the Securities Act of 1933 as
amended (the "Act"). An additional thirty-five (35) non-accredited investors
may participate in the Offering. Accredited investors must have a net worth or
joint net worth with their spouse of $1,000,000.00 or more, or have individual
income in excess of $200,000.00 (or $300,000.00 joint income with a spouse) in
each of the two most recent years and who reasonably expects an income of
$200,000.00 (or $300,000.00 joint income with a spouse) in the current year.
The Offering is being conducted by us as a self underwriting. Shares in
the Offering are available only through us. The Offering is being conducted
over a three month period commencing on September 8, 2000. We have the option
to extend the Offering up to an additional three months. We are making the
Offering on a best efforts basis. This means that we have not establish any
minimum amount of proceeds that must be generated in the Offering.
Accordingly, investors who subscribe for Shares in the earlier stages of the
Offering will assume a substantially greater risk than investors who subscribe
for Shares later in the Offering.
Even if we sell all of the Shares covered by the Offering and raise
maximum proceeds, such proceeds may be insufficient to implement our business
investment plan. There is no guarantee that the funds generated by the
Offering will be sufficient to cover the financial requirements for our
growth.
We have arbitrarily set the price of the Shares in the Offering. The
price of the Shares is based upon the amount of capital that we desire to
raise and the percentage of our outstanding capital stock that we are willing
to sell at this point in our development. We have established the price of the
Shares and the value of our company without an independent appraisal. The
price has no relationship to book value per share, current earnings or other
generally accepted measurements of value. The Offering may involve immediate
and substantial dilution.
Effective March 30, 2001, the Board of directors approved to cancel
750,000 shares of common stock issued to a related party, related through
common share holder, in exchange of various notes receivable. The notes were
receivable from a corporation totaling $1,250,000. The notes carried interest
ranging from 8% to 12% per year, were secured and due on demand. The company
returned the notes to the related party.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Item 5. Other Information.
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits filed with this Report
Not Applicable.
(b) Reports on Form 8-K
We filed a report on Form 8-K/A on March 26, 2001. The report on Form
8-K/A included as an attachment a letter from our former accountant David
Coffey, CPA.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FLEXXTECH CORPORATION
(Registrant)
Date: May 21, 2001 By: /s/ Greg Mardock
------------------------
Greg Mardock
President