8-K/A 1 v07291form8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) JULY 22, 2004 AXIA GROUP, INC. (Exact name of registrant as specified in its charter) NEVADA 00I- 9418 87-0509512 ------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 1324 N. MAGNOLIA AVENUE, EL CAJON, CALIFORNIA 92020 ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (619) 444-1919 ---------------------------------------------------------- (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.below): [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [_] Pre-commencement communications pursuant to Rule 13e-4(C) under the Exchange Act (17 CFR 240.13e-4(c)) This report amends the current report which we filed on July 23, 2004. As described in Item 9.01 - Financial Statements and Exhibits (Formally Item 7) below, our financial statements and proforma financial information have been filed as exhibits to this report. SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. Not Applicable. ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT. Not Applicable. ITEM 1.03 BANKRUPTCY OR RECEIVERSHIP. Not Applicable. SECTION 2 - FINANCIAL INFORMATION ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS. Please see Item 2 to our current report on Form 8-K filed on July 23, 2004 and incorporated herein by reference. ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. Not Applicable. ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT. Not Applicable. ITEM 2.04 TRIGGERING EVENTS THAT ACCELERATE OR INCREASE A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT. Not Applicable. ITEM 2.05 COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES. Not Applicable. ITEM 2.06 MATERIAL IMPAIRMENTS. Not Applicable. SECTION 3 - SECURITIES AND TRADING MARKETS ITEM 3.01 NOTICE OF DELISTING OR FAILURE TO SATISFY A CONTINUED LISTING RULE OR STANDARD: TRANSFER OF LISTING. Not Applicable. ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES. Not Applicable. ITEM 3.03 MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS. Not Applicable. SECTION 4 - MATTERS RELATED TO ACCOUNTANTS AND FINANCIAL STATEMENTS ITEM 4.01 CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT. Not Applicable. ITEM 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED AUDIT REPORT OR COMPLETED INTERIM REVIEW. Not Applicable. SECTION 5 - CORPORATE GOVERNANCE AND MANAGEMENT ITEM 5.01 CHANGES IN CONTROL OF REGISTRANT. Please see Item 1 to our current report on Form 8-K filed on July 23, 2004 and incorporated herein by reference. ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS. Not Applicable. ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS: CHANGE IN FISCAL YEAR. Not Applicable. ITEM 5.04 TEMPORARY SUSPENSION OF TRADING UNDER REGISTRANT'S EMPLOYEE BENEFIT PLANS. Not Applicable. ITEM 5.05 AMENDMENTS TO THE REGISTRANT'S CODE OF ETHICS, OR WAIVER OF A PROVISION OF THE CODE OF ETHICS. Not Applicable. SECTION 6 - [RESERVED] Not Applicable. SECTION 7 - REGULATION FD ITEM 7.01 REGULATION FD DISCLOSURE. Please see Item 5 to our current report on Form 8-K filed on July 23, 2004 and incorporated herein by reference. SECTION 8 - OTHER EVENTS ITEM 8.01 OTHER EVENTS. Not Applicable. SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. AXIA GROUP, INC. UNAUDITED CONDENSED COMBINED PRO FORMA FINANCIAL STATEMENTS INTRODUCTION The following unaudited condensed combining pro forma financial statements ("the pro forma combining financial statements") and explanatory notes have been prepared and give effect to the Stock Purchase Agreement (the Agreement) between Axia Group, Inc.(Axia) and D&R Crane, Inc. (D&R) as a reverse acquistion and has been accounted for as a recapitalization of Axia. D&R is the acquiring enterprise for purposes of accounting for the reverse acquisition, with Axia as the legal entity for reporting purposes. The Agreement was effective July 22, 2004 and provided for Axia to acquire all of the issued and outstanding common stock of D&R in exchange for 100,000,000 shares of Axia common stock and 5,000,000 shares of Axia Series B preferred stock. Currently, the year end for D&R is September 30 with December 31 being the year end for Axia. The accompanying pro forma combining financial statements are presented with the respective year ends of each entity and the nine and six month periods thereafter for D&R and Axia, respectively. The difference in the year ends and periods presented do not have a material impact on the accompanying unaudited pro forma combining financial statements. In accordance with Article 11 of Regulation S-X under the Securities Act, unaudited condensed pro forma combining balance sheets (the "pro forma combining balance sheets") as of June 30, 2004 for Axia and D&R and unaudited condensed combining pro forma statements of operations (the "pro forma combining statements of operations") for the six months ended June 30, 2004 for Axia and for the nine months ended June 30, 2004 for D & R and for the years ended December 31, 2003 and September 30, 2003 for Axia and D & R, respectively. These condensed combining pro forma financial statements have been prepared to reflect, for accounting purposes, the acquisition by Axia of D&R as if the reorganization had taken place at the beginning of the periods presented. There were no intercompany transactions between the entities during the periods presented. The accompanying pro forma combining financial statements have been prepared based upon the historical financial statements of the entities. The pro forma combining financial statements should be read in conjunction with the historical financial statements and related notes thereto of each entity. The pro forma combining financial statements are provided for illustrative purposes only, and are not necessarily indicative of the operating results or financial position that would have occurred if the reorganization had been consummated at the beginning of the periods or on the dates indicated, nor are they necessarily indicative of any future operating results or financial position of the combined entities. The pro forma combining financial statements do not include any adjustments related to any restructuring charges or one-time charges which may result from the reorganization or the final result of valuations of inventories, property, plant and equipment, intangible assets, debt, and other obligations. AXIA GROUP, INC. AND D & R CRANE, INC. UNAUDITED CONDENSED COMBINING PRO FORMA BALANCE SHEET

AXIA GROUP, INC. UNAUDITED CONDENSED COMBINING PRO FORMA STATEMENT OF OPERATIONS

AXIA GROUP, INC. UNAUDITED CONDENSED COMBINING PRO FORMA STATEMENT OF OPERATIONS FOR THE YEARS ENDED

D & R CRANE, INC FINANCIAL STATEMENTS June 30, 2004 and September 30, 2003 D & R CRANE, INC Balance Sheets ASSETS ------ June 30, September 30, 2004 2003 -------- -------- (Unaudited) CURRENT ASSETS Cash $ 29,715 $ 15,851 Accounts receivable, net 90,076 123,845 Employee advances 150 -- -------- -------- Total Current Assets 119,941 139,696 -------- -------- PROPERTY AND EQUIPMENT, NET 102,658 59,710 -------- -------- OTHER ASSETS Deposits 3,750 3,750 -------- -------- Total Other Assets 3,750 3,750 -------- -------- TOTAL ASSETS $226,349 $203,156 ======== ======== The accompanying notes are an integral part of these financial statements. 1 D & R CRANE, INC Balance Sheets (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) ----------------------------------------------

The accompanying notes are an integral part of these financial statements. 2 D & R CRANE, INC Statement of Operations (Unaudited) For the Nine Months Ended June 30, 2004 --------- NET SALES $ 658,412 COST OF SALES 361,560 --------- GROSS MARGIN 296,852 --------- OPERATING EXPENSES Selling, general and administrative 379,856 Payroll expense 228,137 Depreciation expense 13,858 --------- Total Operating Expenses 621,851 --------- LOSS FROM OPERATIONS (324,999) --------- OTHER INCOME (EXPENSES) Miscellaneous income 3,276 Interest expense (4,655) --------- Total Other Income (Expenses) (1,379) --------- LOSS BEFORE INCOME TAXES (326,378) PROVISION FOR INCOME TAXES -- --------- NET LOSS $(326,378) ========= BASIC LOSS PER SHARE $ (815.94) ========= BASIC WEIGHTED AVERAGE SHARES 400 ========= The accompanying notes are an integral part of these financial statements. 3 D & R CRANE, INC Statements of Stockholders' Equity (Deficit)

The accompanying notes are an integral part of these financial statements. 4 D & R CRANE, INC Statements of Cash Flows (Unaudited)

The accompanying notes are an integral part of these financial statements. 5 D & R CRANE, INC Notes to the Financial Statements June 30, 2004 and September 30, 2003 NOTE 1 - CONDENSED FINANCIAL STATEMENTS The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's September 30, 2003 audited financial statements. The results of operations for the periods ended June 30, 2004 are not necessarily indicative of the operating results for the year ended September 30, 2004. NOTE 2 - MATERIAL EVENTS As of June 30, 2004, the Company borrowed $85,000 from the vice president of the company. The note is due on demand and has an annual interest rate of 0%. As of June 30, 2004, the Company borrowed $200,000 from a non-related party. The note is due on demand and has an imputed annual interest rate of 10%. NOTE 3 - SUBSEQUENT EVENTS Effective July 22, 2004, the Company entered into an agreement with Axia Group, Inc. (Axia) wherein Axia acquired 100% ownership in the Company from its shareholders in exchange for 100,000,000 shares of Axia common stock and 5,000,000 shares of Axia's Series B preferred stock. Axia is a public company with no operations on the date of the acquisition. The transaction will be treated as reorganization with Axia being the surviving legal entity and the Company being treated as the surviving accounting entity for financial reporting purposes. The Company will continue as a subsidiary of Axia. 6 D & R CRANE, INC FINANCIAL STATEMENTS September 30, 2003 C O N T E N T S Report of Independent Registered Public Accounting Firm......................2 Balance Sheet................................................................3 Statements of Operations.....................................................5 Statements of Stockholders' Equity (Deficit).................................6 Statements of Cash Flows.....................................................7 Notes to the Financial Statements............................................8 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors D & R Crane, Inc El Cajon, California We have audited the accompanying balance sheet of D & R Crane, Inc as of September 30, 2003 and the related statements of operations, stockholders' equity (deficit) and cash flows for the years ended September 30, 2003 and 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of D & R Crane, Inc as of September 30, 2003 and the results of its operations and its cash flows for the years ended September 30, 2003 and 2002, in conformity with accounting principles generally accepted in the United States of America. /s/ HJ Associates & Consultants, LLP HJ Associates & Consultants, LLP Salt Lake City, Utah September 23, 2004 D & R CRANE, INC Balance Sheet ASSETS ------ September 30, 2003 -------- CURRENT ASSETS Cash $ 15,851 Accounts receivable, net (Note 1) 123,845 -------- Total Current Assets 139,696 -------- PROPERTY AND EQUIPMENT, NET (Note 2) 59,710 -------- OTHER ASSETS Deposits (Note 5) 3,750 -------- Total Other Assets 3,750 -------- TOTAL ASSETS $203,156 ======== The accompanying notes are an integral part of these financial statements. 3 D & R CRANE, INC Balance Sheet (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES Accounts payable $ 71,952 Accrued expenses (Note 6) 59,616 Notes payable - related party (Note 4) 5,000 Current portion of contracts payable (Note 3) 17,251 Current portion of capital lease obligation 6,865 -------- Total Current Liabilities 160,684 -------- LONG TERM LIABILITIES Long term portion of contracts payable (Note 3) 34,064 -------- Total Long Term Liabilities 34,064 -------- TOTAL LIABILITIES 194,748 -------- STOCKHOLDERS' EQUITY Common stock, $1.00 par value; 100,000 shares authorized, 400 shares issued and outstanding 400 Retained Earnings 8,008 -------- Total Stockholders' Equity 8,408 -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $203,156 ======== The accompanying notes are an integral part of these financial statements. 4 D & R CRANE, INC Statements of Operations For the Years Ended September 30, ---------------------------- 2003 2002 ----------- ----------- NET SALES $ 1,004,275 $ 1,044,337 COST OF SALES 486,330 528,124 ----------- ----------- GROSS MARGIN 517,945 516,213 ----------- ----------- OPERATING EXPENSES Selling, general and administrative 282,593 355,071 Payroll expense 281,393 269,780 Depreciation expense 15,642 12,197 ----------- ----------- Total Operating Expenses 579,628 637,048 ----------- ----------- LOSS FROM OPERATIONS (61,683) (120,835) ----------- ----------- OTHER INCOME (EXPENSES) Impairment expense -- 2,108 Miscellaneous income 7,414 1,259 Interest expense (2,578) (11,362) ----------- ----------- Total Other Income (Expenses) 4,836 (7,995) ----------- ----------- LOSS BEFORE INCOME TAXES (56,847) (128,830) PROVISION FOR INCOME TAXES -- -- ----------- ----------- NET LOSS $ (56,847) $ (128,830) =========== =========== BASIC LOSS PER SHARE $ (142.12) $ (322.08) =========== =========== BASIC WEIGHTED AVERAGE SHARES 400 400 =========== =========== The accompanying notes are an integral part of these financial statements. 5 D & R CRANE, INC Statements of Stockholders' Equity

The accompanying notes are an integral part of these financial statements. 6 D & R CRANE, INC Statements of Cash Flows For the Years Ended September 30, ----------------------- 2003 2002 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (56,847) $(128,830) Adjustments to reconcile net loss to net cash used by operating activities: Impairment expense -- 2,108 Depreciation expense 15,642 12,197 Change in operating assets and liabilities: (Increase) decrease in accounts receivable (28,623) 160,690 Decrease in other receivable -- 21,107 (Decrease) in accounts payable (874) (35,859) Increase (decrease) in accrued expenses 17,727 (10,684) --------- --------- Net Cash Used for Operating Activities (52,975) 20,729 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets (5,600) -- --------- --------- Net Cash Used for Investing Activities (5,600) -- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from notes payable - related party 5,000 -- Payments on notes and contracts payable (13,939) (14,440) Payments on capital lease obligations (4,347) (3,634) --------- --------- Net Cash Used by Financing Activities (13,286) (18,074) --------- --------- NET INCREASE (DECREASE) IN CASH (71,861) 2,655 CASH AT BEGINNING OF YEAR 87,712 85,057 --------- --------- CASH AT END OF YEAR $ 15,851 $ 87,712 ========= ========= SUPPLEMENTAL CASH FLOW INFORMATION CASH PAID FOR: Interest $ 2,578 $ 11,362 Income taxes $ -- $ -- The accompanying notes are an integral part of these financial statements. 7 D & R CRANE, INC Notes to the Financial Statements September 30, 2003 and 2002 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Business and Organization D & R Crane, Inc. (the Company) is a California corporation organized and established in May 1992. The Company is principally engaged in the manufacture, installation and servicing of overhead crane and hoist systems in the Southern California area. b. Accounting Method The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a September 30 year-end. c. Cash and Cash Equivalents Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition. d. Property and Equipment Property and equipment are stated at cost. Expenditures for small tools, ordinary maintenance and repairs are charged to operations as incurred. Major additions and improvements are capitalized. Depreciation is computed using the straight-line and accelerated methods as follows: Machinery and equipment 5 years Vehicles 5 years Depreciation expense for the years ended September 30, 2003 and 2002 was $15,642 and $12,197, respectively. e. Revenue Recognition Revenue is recognized when services are completed or when the sales amount is determined, delivery of goods to the customer has occurred, and collection is reasonably assured. f. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 8 D & R CRANE, INC Notes to the Financial Statements September 30, 2003 and 2002 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) g. Concentrations of Risk Accounts Receivable Credit losses, if any, have been provided for in the financial statements and are based on management's expectations. The Company's accounts receivable are subject to potential concentrations of credit risk. The Company does not believe that it is subject to any unusual, or significant risk in the normal course of its business. Major Customers Net sales for the years ended September 30, 2003 and 2002 include sales to the following major customers, together with the receivables due from those customers: Net Sales September 30, -------------------------------- 2003 2002 ---------- ---------- Customer A $ 201,405 $ 238,398 Customer B -- 112,372 Customer C 125,291 186,194 Other 677,579 507,373 ---------- ---------- $1,004,275 $1,044,337 ========== ========== Because of the nature of the Company's business, the major customers may vary between years. 9 D & R CRANE, INC Notes to the Financial Statements September 30, 2003 and 2002 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) h. Provision for Income Taxes Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Net deferred tax assets consist of the following components as of September 30, 2003 and 2002: 2003 2002 Deferred tax assets NOL Carryover $ 56,283 $ 40,820 Accrued Expenses 3,375 -- Deferred tax liabilities: Depreciation -- (2,600) Valuation allowance (59,658) (38,220) -------- -------- Net deferred tax asset $ -- $ -- ======== ======== The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rate of 39% to pretax income from continuing operations for the years ended September 30, 2003 and 2002 due to the following: 2003 2002 -------- -------- Book Income $(22,170) $(50,245) Meals & Entertainment 866 1,380 Other (134) 3,493 Stock for Services/Options Expense Valuation allowance 21,438 45,372 -------- -------- $ -- $ -- ======== ======== At September 30, 2003, the Company had net operating loss carryforwards of approximately $140,000 that may be offset against future taxable income from the year 2003 through 2023. No tax benefit has been reported in the September 30, 2003 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. 10 D & R CRANE, INC Notes to the Financial Statements September 30, 2003 and 2002 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) h. Provision for Income Taxes (Continued) Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years. i. Newly Issued Accounting Pronouncements During the year ended September 30, 2003, the Company adopted the following accounting pronouncements: SFAS No. 143 -- In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations, which established a uniform methodology for accounting for estimated reclamation and abandonment costs. The statement was effective for fiscal years beginning after June 15, 2002. The adoption of SFAS No. 143 did not have a material effect on the financial statements of the Company. SFAS No. 145 -- On April 30, 2002, the FASB issued FASB Statement No. 145 (SFAS 145), "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS 145 rescinds both FASB Statement No. 4 (SFAS 4), "Reporting Gains and Losses from Extinguishment of Debt," and the amendment to SFAS 4, FASB Statement No. 64 (SFAS 64), "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." Through this rescission, SFAS 145 eliminates the requirement (in both SFAS 4 and SFAS 64) that gains and losses from the extinguishment of debt be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect. However, an entity is not prohibited from classifying such gains and losses as extraordinary items, so long as it meets the criteria in paragraph 20 of Accounting Principles Board Opinion No. 30, Reporting the Results of Operations Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. Further, SFAS 145 amends paragraph 14(a) of FASB Statement No. 13, "Accounting for Leases", to eliminate an inconsistency between the accounting for sale-leaseback transactions and certain lease modifications that have economic effects that are similar to sale-leaseback transactions. The amendment requires that a lease modification (1) results in recognition of the gain or loss in the 9 financial statements, (2) is subject to FASB Statement No. 66, "Accounting for Sales of Real Estate," if the leased asset is real estate (including integral equipment), and (3) is subject (in its entirety) to the sale-leaseback rules of FASB Statement No. 98, "Accounting for Leases: Sale-Leaseback Transactions Involving Real Estate, Sales-Type Leases of Real Estate, Definition of the Lease Term, and Initial Direct Costs of Direct Financing Leases." Generally, FAS 145 is effective for transactions occurring after May 15, 2002. The adoption of SFAS 145 did not have a material effect on the financial statements of the Company. 11 D & R CRANE, INC Notes to the Financial Statements September 30, 2003 and 2002 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) i. Newly Issued Accounting Pronouncements (Continued) SFAS No. 146 -- In June 2002, the FASB issued SFAS No. 146, "Accounting for Exit or Disposal Activities" (SFAS 146). SFAS 146 addresses significant issues regarding the recognition, measurement, and reporting of costs that are associated with exit and disposal activities, including restructuring activities that are currently accounted for under EITF No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." The scope of SFAS 146 also includes costs related to terminating a contract that is not a capital lease and termination benefits that employees who are involuntarily terminated receive under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract. SFAS 146 will be effective for exit or disposal activities that are initiated after December 31, 2002 and early application is encouraged. The provisions of EITF No. 94-3 shall continue to apply for an exit activity initiated under an exit plan that met the criteria of EITF No. 94-3 prior to the adoption of SFAS 146. The effect on adoption of SFAS 146 will change on a prospective basis the timing of when the restructuring charges are recorded from a commitment date approach to when the liability is incurred. The adoption of SFAS 146 did not have a material effect on the financial statements of the Company. SFAS No. 147 -- In October 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 147, "Acquisitions of Certain Financial Institutions" which is effective for acquisitions on or after October 1, 2002. This statement provides interpretive guidance on the application of the purchase method to acquisitions of financial institutions. Except for transactions between two or more mutual enterprises, this Statement removes acquisitions of financial institutions from the scope of both SFAS 72 and Interpretation 9 and requires that those transactions be accounted for in accordance with SFAS No. 141, "Business Combinations" and No. 142, "Goodwill and Other Intangible Assets". The adoption of SFAS No. 147 did not have a material effect on the financial statements of the Company. SFAS No. 148 -- In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock Based Compensation-Transition and Disclosure-an amendment of FASB Statement No. 123" which is effective for financial statements issued for fiscal years ending after December 15, 2002. This Statement amends SFAS 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based compensation and the effect of the method used on reported results. The adoption of SFAS No. 148 did not have a material effect on the financial statements of the Company. 12 D & R CRANE, INC Notes to the Financial Statements September 30, 2003 and 2002 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) i. Newly Issued Accounting Pronouncements (Continued) SFAS No. 149 -- In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" which is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. This statement amends and clarifies financial accounting for derivative instruments embedded in other contracts (collectively referred to as derivatives) and hedging activities under SFAS 133. The adoption of SFAS No. 149 did not have a material effect on the financial statements of the Company. SFAS No. 150 -- In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" which is effective for financial instruments entered into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. This Statement establishes standards for how an issuer classifies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) because that financial instrument embodies an obligation of the issuer. The adoption of SFAS No. 150 did not have a material effect on the financial statements of the Company. FASB Interpretation No. 45 -- "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others - an Interpretation of FASB Statements No. 5, 57 and 107". The initial recognition and initial measurement provisions of this Interpretation are to be applied prospectively to guarantees issued or modified after December 31, 2002. The disclosure requirements in the Interpretation were effective for financial statements of interim or annual periods ending after December 15, 2002. The adoption of FASB Interpretation No. 45 did not have a material effect on the financial statements of the Company. FASB Interpretation No. 46 -- In January 2003, the FASB issued FASB Interpretation No. 46 "Consolidation of Variable Interest Entities." FIN 46 provides guidance on the identification of entities for which control is achieved through means other than through voting rights, variable interest entities, and how to determine when and which business enterprises should consolidate variable interest entities. This interpretation applies immediately to variable interest entities created after January 31, 2003. It applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The adoption of FIN 46 did not have a material impact on the Company's financial statements. 13 D & R CRANE, INC Notes to the Financial Statements September 30, 2003 and 2002 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) i. Newly Issued Accounting Pronouncements (Continued) During the year ended December 31, 2003, the Company adopted the following Emerging Issues Task Force Consensuses: EITF Issue No. 00-21 "Revenue Arrangements with Multiple Deliverables", EITF Issue No. 01 -8 " Determining Whether an Arrangement Contains a Lease", EITF Issue No. 02-3 "Issues Related to Accounting for Contracts Involved in Energy Trading and Risk Management Activities", EITF Issue No. 02-9 "Accounting by a Reseller for Certain Consideration Received from a Vendor", EITF Issue No. 02-17, "Recognition of Customer Relationship Intangible Assets Acquired in a Business Combination", EITF Issue No. 02-18 "Accounting for Subsequent Investments in an Investee after Suspension of Equity Method Loss Recognition", EITF Issue No. 03-1, "The Meaning of Other Than Temporary and its Application to Certain Instruments", EITF Issue No. 03-5, "Applicability of AICPA Statement of Position 9702, `Software Revenue Recognition' to Non-Software Deliverables in an Arrangement Containing More Than Incidental Software", EITF Issue No. 03-7, "Accounting for the Settlement of the Equity Settled Portion of a Convertible Debt Instrument That Permits or Requires the Conversion Spread to be Settled in Stock", EITF Issue No. 03-10, "Application of EITF Issue No. 02-16 by Resellers to Sales Incentives Offered to Consumers by Manufacturers. NOTE 2 - PROPERTY AND EQUIPMENT Property and equipment consisted of the following at September 30, 2003: Machinery and equipment $ 14,120 Vehicles 99,773 --------- 113,893 Less accumulated depreciation (54,183) --------- $ 59,710 ========= NOTE 3 - CONTRACTS PAYABLE Contracts payable at September 30, 2003 consist of the following installment contracts: Contract with Ford Motor Company interest rate of 0.9%, secured with vehicle, maturing on January 24, 2006 $23,996 Contract with Ford Motor Company, interest rate of 9%, secured with vehicle, maturing on August 25, 2006 11,829 14 D & R CRANE, INC Notes to the Financial Statements September 30, 2003 and 2002 NOTE 3 - CONTRACTS PAYABLE (Continued) Contract with Toyota Motor Credit, interest rate of 4.5%, secured with vehicle, maturing on June 17, 2008 15,490 ------- Total contracts payable 51,315 Less: current portion 17,251 ------- Long-term contracts payable $34,064 ======= Maturities of long-term debt are as follows: Year ending September 30: 2004 $17,251 2005 16,813 2006 11,516 2007 3,381 2008 2,354 Thereafter -- ------- Total $51,315 ======= NOTE 4 - NOTES PAYABLE - RELATED PARTY Notes Payable - Related Party at September 30, 2003 consist of the following: Note payable to a related party dated February 21, 2003, no interest imputed, unsecured, due on demand $5,000 All amounts are classified as current liabilities. NOTE 5 - ACCRUED EXPENSES Accrued expenses consisted of the following at September 30, 2003: Credit Cards $47,610 Accrued payroll 2,549 Payroll tax liabilities 195 Other accrued payroll taxes 4,032 Accrued workers compensation 3,338 Sales tax payable 1,892 ------- $59,616 ======= 15 D & R CRANE, INC Notes to the Financial Statements September 30, 2003 and 2002 NOTE 6 - SUBSEQUENT EVENTS Effective July 22, 2004, the Company entered into an agreement with Axia Group, Inc. (Axia) wherein Axia acquired 100% ownership in the Company from its shareholders in exchange for 100,000,000 shares of Axia common stock and 5,000,000 shares of Axia's Series B preferred stock. Axia is a public company with no operations on the date of the acquisition. The transaction will be treated as reorganization with Axia being the surviving legal entity and the Company being treated as the surviving accounting entity for financial reporting purposes. The Company will continue as a subsidiary of Axia. 16 (a) Exhibits. Please see Item 7 to our current report on Form 8-K filed on July 23, 2004 and incorporated herein by reference. 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 hereunto duly authorized. AXIA GROUP, INC. (Registrant) Date: October 5, 2004 By: /s/ Jody R. Regan ---------------------------------------- Jody R. Regan, President and director

AXIA GROUP, INC. 8-K/A