UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended March 31, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 000-24459
ACCESSTEL, INC.
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(Exact name of small business issuer as specified in its charter)
Utah 59-2159271
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2904 E. Shady Lane, Highland Ranch, CO 80126
--------------------------------------------
(Address of principal executive offices)
Issuer's telephone number: (720) 404-1302
Not applicable
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(Former name, former address and former fiscal year,
if changed since last report.)
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 issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
As of March 31, 2004, the Company had 35,281,031 shares of common stock issued
and outstanding.
Transitional Small Business Disclosure Format: Yes [X] No [ ]
Documents incorporated by reference: None.
ACCESSTEL, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets March 31, 2004 (Unaudited) and December 31,
2003
Statements of Operations (Unaudited) Three Months Ended
March 31, 2004 and 2003
Statements of Cash Flows (Unaudited) Three Months Ended
March 31, 2004 and 2003
Notes to Financial Statements (Unaudited) Three Months Ended
March 31, 2004 and 2003
Item 2. Management's Discussion and Analysis or Plan of Operation
Item 3. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
CERTIFICATIONS
AccessTel, Inc.
Balance Sheets
March 31, December 31,
2004 2003
--------- ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ $
Other receivables
--------- ---------
Total current assets
--------- ---------
Property and equipment
Less: Accumulated depreciation
--------- ---------
--------- ---------
Other assets
--------- ---------
Total assets $ $
========= =========
(continued)
AccessTel, Inc.
Balance Sheets (continued)
March 31, December 31,
2004 2003
--------- ------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
Current liabilities:
Accounts payable and
accrued expenses $ 705,643 $ 700,643
Due to shareholder 433,434 428,434
Accrued interest payable 17,567 7,567
--------- ---------
Total current liabilities 1,156,644 1,136,644
--------- ---------
Stockholders' deficiency:
Common stock, $.001 par value
Authorized - 100,000,000 shares
Issued and Outstanding
35,281,031 and 34,781,031 shares 35,281 34,781
Additional paid-in capital 2,678,414 2,423,914
Accumulated deficit (3,870,339) (3,595,339)
--------- ---------
Total stockholders' deficiency (1,156,644) (1,136,644)
--------- ---------
Total liabilities and
stockholders' deficiency $ $
========= =========
See accompanying notes to financial statements.
AccessTel, Inc.
Statements of Operations (Unaudited)
Three Months Ended
March 31,
--------------------------
2004 2003
--------- ---------
Revenues $ $
Cost of revenues
------- -------
Gross profit
------- -------
General and administrative
expenses 265,000 34,677
Interest expense 10,000 811
------- -------
Net loss $(275,000) $ (35,488)
======= =======
Net loss per common share
(basic and diluted) $(.01) $(.10)
===== =====
Weighted average common
shares outstanding
(basic and diluted) 34,906,031 374,765
========== ==========
See accompanying notes to financial statements.
AccessTel, Inc.
Statements of Cash Flows (Unaudited)
Three Months Ended
March 31,
--------------------------
2004 2003
--------- ---------
Cash flows from operating
activities:
Net loss $ (275,000) $ (35,488)
Adjustments to reconcile
net loss to net cash
provided by (used in)
operating activities:
Equity based compensation 255,000
Changes in operating
assets and liabilities:
Increase (decrease) in:
Accrued interest
payable & other 15,000 811
-------- --------
Net cash provided by (used in)
operating activities (5,000) (34,677)
-------- --------
Cash flows from financing
activities:
Due to shareholder 5,000 34,677
-------- --------
Net cash provided by (used in)
financing activities 5,000 34,677
-------- --------
Cash and cash equivalents:
Net increase (decrease) - -
At beginning of period - -
-------- --------
At end of period $ - $ -
======== ========
See accompanying notes to financial statements.
AccessTel, Inc.
Notes to Financial Statements (Unaudited)
Three Months Ended March 31, 2004 and 2003
1. Business
Shopss.com, Inc., a Utah corporation, changed its name to AccessTel, Inc. (the
"Company") effective February 16, 2001, in conjunction with the acquisition of
AccessTel, Inc., a Delaware corporation ("AccessTel"), in a reverse merger
transaction effective December 18, 2000.
Effective December 18, 2000, the Company entered into a Share Exchange
Agreement with AccessTel and the shareholders of AccessTel pursuant to which
the Company acquired all of the shares of AccessTel in exchange for 22,418,980
shares of common stock, which represented 80% of the issued and outstanding
shares of common stock of the Company after giving effect to the transaction.
An additional 13,681,560 shares of common stock were reserved for issuance
under the Company's stock option plan. At the closing of this transaction,
the existing officers and directors of the Company resigned, and new officers
and directors were appointed.
Litigation to rescind this transaction was subsequently commenced on May 1,
2001, and a receiver was appointed on May 3, 2001.
The information contained herein is based on the information available to the
receiver, but due to the commencement of litigation and the appointment of a
receiver, such information may not be complete or accurate. Information
provided herein is given to the best knowledge of the receiver, and where it
is indicated herein that "management believes" or similar references to
management's knowledge, this information is provided to the best knowledge of
the receiver, and not management.
The financial statements for the years ended December 31, 2002 and 2003
exclude the operations of AccessTel. The balance sheets as of December 31,
2002 and 2003 include the assets and liabilities of Shopss.com, Inc.'s
operations and excludes the assets and liabilities of AccessTel's operations
due to the rescission litigation.
In December 2003, the Company entered into a "Stock Purchase Agreement and
Plan of Reorganization" to issue 30,000,000 shares for all of the outstanding
common stock of Euro Offline, Inc., a privately held entity. Prior to the
closing and condition to the closing, the Company effectuated a reverse stock
split of 89 shares for 1 share. In addition a shareholder / related party debt
holder was to receive $100,000 for consideration to forgive amounts due from
the Company currently recorded and shown as "due to major shareholder of
$428,434 plus interest of $7,567 as of the closing date" plus 1,000,000 shares
of post split common stock of the Company. The Company and certain of its
shareholders have negotiated a "Compromise and Settlement" with the former
shareholders of Euro Offline, Inc. Each party contends that a substantial,
irreconcilable dispute exists among them for the failure of not consumating
the merger with Euro OffLine, Inc., therefore 27 million shares will be
returned to treasury with the former Euro Offline shareholders to receive
$40,000 in April 2004. The 3 million shares of common stock issued with the
aforementioned transaction with Euro Offline, Inc not under an agreement to be
returned to treasury as of the date of the audit report will be recorded as a
$900,000 cost of the aborted transaction with Euro Offline, Inc.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has suffered recurring
losses, has no operations and has a deficiency in working capital and
shareholders' equity at December 31, 2002 and 2003. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty. The Company's independent certified public
accountants have included a modification paragraph in their report on the
Company's financial statements for the year ended December 31, 2003 with
respect to this matter.
The Company is currently insolvent and has no business operations. The
Company's current efforts are focused on maintaining the corporate entity and
pursuing litigation against management. As a result of the matters described
herein, the Company may have to file for protection under the United States
Bankruptcy Code. Accordingly, there can be no assurances that the Company
will be able to continue in existence.
2. Summary of Significant Accounting Principles
Cash and Cash Equivalents
The Company classifies highly liquid temporary investments with an original
maturity of three months or less when purchased as cash equivalents.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheet for cash, receivables, and
accrued expenses approximate fair value based on the short-term maturity of
these instruments.
Stock-Based Compensation
SFAS No. 123, "Accounting for Stock-Based Compensation", establishes a fair
value method of accounting for stock-based compensation plans and for
transactions in which an entity acquires goods or services from non-employees
in exchange for equity instruments. SFAS No. 123 also encourages, but does
not require, companies to record compensation cost for stock-based employee
compensation. The Company has chosen to continue to account for stock-based
compensation utilizing the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees",
with pro forma disclosures of net income (loss) as if the fair value method
had been applied. Accordingly, compensation cost for stock options is
measured as the excess, if any, of the fair market price of the Company's
common stock at the date of grant over the amount an employee must pay to
acquire the stock.
Income Taxes
The Company utilizes the liability method of accounting for income taxes as
set forth in SFAS No. 109, "Accounting for Income Taxes." Under the liability
method, deferred taxes are determined based on the difference between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect in the years in which the differences are expected to reverse.
As of December 31, 2003, the Company had federal net operating loss
carryforwards of approximately $2.5 million, which expire beginning in 2021.
A 100% valuation allowance has been provided with respect to the deferred tax
assets as the Company cannot determine that it is more likely than not that it
will be able to realize the deferred tax assets.
Due to restrictions imposed by the Internal Revenue Code regarding substantial
changes in ownership of companies with loss carryforwards, the utilization of
the Company's federal net operating loss carryforwards will be limited as a
result of changes in the Company's stock ownership in prior years.
Loss Per Share
The Company has adopted SFAS No. 128, "Earnings Per Share". SFAS No. 128
provides for the calculation of basic and diluted earnings per share. Basic
earnings per share includes no dilution and is computed by dividing net income
(loss) available to common stockholders by the weighted average number of
common shares outstanding for the period. Diluted earnings per share reflects
the potential dilution relating to outstanding stock options, warrants and
convertible debt. The loss per common share does not include the exercise of
outstanding stock options and warrants, since their effect would be anti-
dilutive.
Accounting for Long-Lived Assets
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of", establishes guidelines regarding when
impairment losses on long-lived assets, which include plant and equipment and
certain identifiable intangible assets, should be recognized and how
impairment losses should be measures. The Company periodically reviews such
assets for impairment whenever circumstances and situations indicate that the
carrying amounts may not be recoverable, and records any such losses in the
period in which such determination is made.
Accounting Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, 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.
3. Transactions with Shareholder
During the three months ended March 31, 2004 and 2004, a shareholder made
advances to or on behalf of the Company aggregating $5,000 and $6,711,
respectively. Related interest expense recorded during the three months ended
March 31, 2004 and 2003 was $10,000 and $811, respectively. These advances
have been used to fund general and administrative expenses, consisting
primarily of legal and accounting fees. There can be no assurances that the
shareholder will continue to make such advances to or on behalf of the
Company. The Company also incurred fees to the shareholder for services
rendered of $0 and $28,500 for the three months ended March 31, 2004 and 2003.
A former shareholder sold his right to amounts due from the Company of
$428,434 as part of the "Stock Purchase Agreement and Plan of Reorganization"
with Euro Offline, Inc in December 2003. This shareholder was to receive
$100,000 and one million shares of post split common stock. The shareholder
also had a right of return, should the Euro Offline, Inc reorganization or a
similiar transaction does not occur. The shareholder was also entitled to
reimbursement of certain expenses should the reorganization not occur.
Although the shareholder was paid the one million shares and a substantail
portion of the $100,000, the shareholder has asserted a material breach of
contract in May 2004. The Company is in active negotiations to settle such
dispute.
In an unrelated matter, on April 14, 2003, the Securities and Exchange
Commission (the "SEC") filed a civil action in the United States District
Court for the Southern District of Ohio, case number CV-03-326, against eight
individuals and four entities. Global Guarantee Corporation, including its
Chairman and President, were named defendants in this civil action, whom are
the entity and individual discussed in the aforementioned transactions with
shareholder.
4. Stockholders' Deficiency
On January 16, 2001, the Board of Directors of the Company unanimously adopted
and a majority of the shareholders approved a stock option plan that provides
for the issuance of up to 20,000,000 shares of common stock of the Company.
On January 24, 2001, the Board of Directors of the Company unanimously adopted
and a majority of the shareholders approved an amendment to the Articles of
Incorporation to increase the total authorized number of shares of capital
stock from 50,000,000 to 120,000,000, of which 100,000,000 shares are common
stock and 20,000,000 shares are preferred stock.
On February 16, 2001, the Company filed Articles of Amendment to its Articles
of Incorporation with the State of Utah to change the name of the Company from
Shopss.com, Inc. to AccessTel, Inc., and to increase the Company's equity
capitalization to 100,000,000 shares of common stock and 20,000,000 shares of
preferred stock.
Pursuant to the settlement of a legal action described hereafter, 11,356,782
shares were returned to treasury and recorded as a reduction to stockholders
deficit at par value. There was an additional 3,005,000 shares recorded as
issued and expensed at fair market value of $150,250 as of the legal
settlement date.
In December 2003, the Company effectuated a 89 for 1 reverse stock split. All
of such share data has been retroactively adjusted for such reverse split.
In December 2003, the Company issued 31 million shares pursuant to the Stock
Purchase Agreement and Plan of Reorganization with Euro Offline, Inc.
In December 2003, the Company issued 3,500,000 shares of common stock to
various consultants under a "Non-employee, directors and consultants retainer
stock plan". These shares were valued at $.30 per share or $1,050,000 and
expensed in December 2003.
In March 2004, the Company issued 500,000 shares of common stock for legal
services rendered. These shares were valued at the closing price of $.51 a
share on the day the Board of Directors approved the issuance of such stock.
In April 2004, the Company agreed to an "Compromise and Settlement Agreement"
whereby 27 million shares are to be returned to treasury as part of the
aborted transaction with Euro Offline, Inc. The 3 million shares not under an
agreement yet to be returned to the Company has been recorded as a cost of the
aborted Euro Offline, Inc. at $.30 per share or $900,000, the fair market
value of the stock at issuance date.
5. Legal Proceedings
On May 1, 2001, Reed & Wangsgard, L.C. (formerly Droz, Reed & Wangsgard, L.C.)
filed suit in the Third Judicial District Court of Salt Lake County, State of
Utah (the "Court"), Civil No. 010903821 (the "Action"), to assert claims, on
behalf of its clients, prior management of the Company, against AccessTel and
the original shareholders of AccessTel. The complaint in the Action demands
rescission of the Share Exchange Agreement, and alleges that the Company was
induced to enter into the Share Exchange Agreement through a series of false
representations made by AccessTel and its shareholders. The complaint also
includes alternative causes of actions for fraud, conversion, injunctive
relief, and the issuance of a Writ of Replevin.
On May 3, 2001, pursuant to the motion of Reed & Wangsgard, L.C., the
Honorable Raymond Uno, Judge of the Court, issued an Order appointing Leonard
W. Burningham, Esq., a member of the Utah State Bar, as receiver for the
Company. Pursuant to such Order, the receiver is authorized to prepare and
file reports with the Securities and Exchange Commission.
On May 16, 2001, pursuant to the motion of Reed & Wangsgard, L.C., the
Honorable L.A. Dever, Judge of the Court, issued a Temporary Restraining Order
prohibiting the transfer of any shares of common stock issued by AccessTel
and/or Shopss.com, Inc. which were issued in the name of any defendant (other
than the transfer agent) or held for the benefit of any such defendant.
On May 27, 2001, pursuant to the motion of Reed & Wangsgard, L.C., the
Honorable L.A. Dever, Judge of the Court, issued a Preliminary Injunction
enjoining Atlas Stock Transfer Company from registering the transfer of, or
reissuing, any shares of common stock issued by the Company and/or Shopss.com,
Inc. which were issued in the name of any defendant (other than Atlas Stock
Transfer Company) or are held for the benefit of any defendant to the suit.
On January 17, 2002, Reed & Wangsgard, L.C. received written confirmation from
an agent of the Board of Directors of the Company that said Board of Directors
have come to a unanimous decision to settle the claim for rescission of the
Share Exchange Agreement by rescinding the Share Exchange Agreement. However,
the Board of Directors of the Company failed and/or refused to follow through
with their agreement to rescind the Share Exchange Agreement. As a result,
Reed & Wangsgard, L.C. filed a Motion to Enforce Settlement with respect to
the agreement to rescind the Share Exchange Agreement.
During February 2002, pursuant to the motion of counsel for AccessTel and the
original shareholders of AccessTel, the Honorable L.A. Dever, Judge of the
Court, issued an order limiting the Court's jurisdiction over certain of the
defendants to the Action. As a result, the Court continued to have
jurisdiction over the corporate defendants and through it, plaintiffs may
assert claims arising from the allegedly wrongful conduct of current
management.
On May 1, 2003, a settlement was reached between the remaining parties to the
Action. The material terms of the settlement include the requirement that the
corporate defendants surrender all right, title and interest in and to those
shares of common stock of the Company issued to them pursuant to the Exchange
Agreement, and that all members of management of the Company that had been
designated to serve as directors and executive officers of the Company at the
closing of the Exchange Agreement resign from their respective management
positions. As a result of the settlement, on May 6, 2003, prior management of
the Company that had filed the complaint, caused to be filed with the Court a
Motion to Dismiss the complaint. Subject to the granting of the Motion to
Dismiss the complaint, of the 16,718,763 shares issued to the corporate
defendants, 11,356,782 of the surrendered shares have been delivered to
counsel for prior management of the Company and will be duly canceled and
returned to the authorized but unissued common stock of the Company, and
5,361,981 shares will be transferred to a private third party unrelated to the
AccessTel parties pursuant to a confidential settlement of a separate legal
action involving a legal debt owed by one of the AccessTel parties to the
private third party. The current officers and directors of the Company
resigned, and David C. Merrell, a former director and executive officer of the
Company, was appointed as an interim officer and director of the Company.
Lawrence Liang, the Company's Chief Executive Officer, President and a
director, and Stuart Bockler, the Company's Chief Financial Officer, Secretary
and a director as of December 31, 2002, were named as defendants in the
Complaint, and resigned as officers and directors of the Company effective
April 24, 2003.
As a result of this settlement, the Company has recorded the cancellation of
11,356,782 shares of common stock during May 2003. As the settlement did not
result in the Company gaining control of the assets or operations of
AccessTel, the Company will not reflect such assets or operations in its
financial statements subsequent to the settlement date.
The Company has also been sued by several creditors for non-payment of debts,
and judgments have been entered for the payment of such debts, plus interest
and legal fees, in some cases.
6. SUBSEQUENT EVENTS
In May 2004, the Company and certain of its shareholders are have negotiated a
"Compromise and Settlement" with the former shareholders of Euro Offline, Inc.
Each party contends that a substantial, irreconcilable dispute exists among
them for the failure of not consummating the merger with Euro OffLine, Inc.,
therefore 27 million shares will be returned to treasury with the former Euro
Offline shareholders have received $40,000.
In May 2004, a shareholder and creditor has asserted a material breach of
contract relating to the Euro Offline, Inc. merger. The Company is currently
negotiating with the shareholder / creditor relating to this matter. See Note
3.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Cautionary Statement Pursuant to Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995:
This Quarterly Report on Form 10-QSB for the quarterly period ended March 31,
2004 contains "forward-looking" statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, including statements that include
the words "believes", "expects", "anticipates", or similar expressions. These
forward-looking statements may include, among others, statements of
expectations, beliefs, future plans and strategies, anticipated events or
trends, and similar expressions concerning matters that are not historical
facts. The forward-looking statements in this Quarterly Report on Form 10-QSB
for the quarterly period ended March 31, 2004 involve known and unknown risks,
uncertainties and other factors that could the cause actual results,
performance or achievements of the Company to differ materially from those
expressed in or implied by the forward-looking statements contained herein.
The Company is currently insolvent and has no business operations. The
Company's current efforts are focused on maintaining the corporate entity, and
until recently, pursing litigation against former management. As a result of
the matters described herein, the Company may have to file for protection
under the United States Bankruptcy Code. Accordingly, there can be no
assurances that the Company will be able to continue in existence.
Results of Operations:
Three Months Ended March 31, 2004 and 2003 -
During the three months ended March 31, 2004, the Company incurred general and
administrative expenses of $265,000, and interest expense of $10,000 related
to stockholder advances.
During the three months ended March 31, 2003, the Company incurred general and
administrative expenses of $34,677, and interest expense of $811 related to
stockholder advances.
During the three months ended March 31, 2004, the Company incurred a net loss
of $275,000, as compared to a net loss of $35,488 for the three months ended
March 31, 2004.
Liquidity and Capital Resources March 31, 2004:
Operating Activities -
At March 31, 2004, the Company had no cash resources and a working capital
deficit, as a result of which the Company was insolvent.
Financing Activities -
During the three months ended March 31, 2004, a shareholder made advances to
or on behalf of the Company aggregating $5,000. These advances have been used
to fund general and administrative expenses, consisting primarily of legal and
accounting fees. There can be no assurances that the shareholder will
continue to make such advances to or on behalf of the Company.
ITEM 3. CONTROLS AND PROCEDURES
As of March 31, 2004, we carried out an evaluation, under the supervision
and with the participation of our President of the effectiveness of the design
and operation of our disclosure controls and procedures. Based on this
evaluation, our President concluded that our disclosure controls and
procedures are effective in timely alerting them to material information
required to be included in our periodic Securities and Exchange Commission
reports. It should be noted that the design of any system of controls is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions, regardless of how remote.
In addition, we reviewed our internal controls, and there have been no
significant changes in our internal controls or in other factors that could
significantly affect those controls subsequent to the date of their last
evaluation.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On May 1, 2001, Reed & Wangsgard, L.C. (formerly Droz, Reed & Wangsgard, L.C.)
filed suit in the Third Judicial District Court of Salt Lake County, State of
Utah (the "Court"), Civil No. 010903821 (the "Action"), to assert claims, on
behalf of its clients, prior management of the Company, against AccessTel and
the original shareholders of AccessTel. The complaint in the Action demands
rescission of the Share Exchange Agreement, and alleges that the Company was
induced to enter into the Share Exchange Agreement through a series of false
representations made by AccessTel and its shareholders. The complaint also
includes alternative causes of actions for fraud, conversion, injunctive
relief, and the issuance of a Writ of Replevin.
On May 3, 2001, pursuant to the motion of Reed & Wangsgard, L.C., the
Honorable Raymond Uno, Judge of the Court, issued an Order appointing Leonard
W. Burningham, Esq., a member of the Utah State Bar, as receiver for the
Company. Pursuant to such Order, the receiver is authorized to prepare and
file reports with the Securities and Exchange Commission.
On May 16, 2001, pursuant to the motion of Reed & Wangsgard, L.C., the
Honorable L.A. Dever, Judge of the Court, issued a Temporary Restraining Order
prohibiting the transfer of any shares of common stock issued by AccessTel
and/or Shopss.com, Inc. which were issued in the name of any defendant (other
than the transfer agent) or held for the benefit of any such defendant.
On May 27, 2001, pursuant to the motion of Reed & Wangsgard, L.C., the
Honorable L.A. Dever, Judge of the Court, issued a Preliminary Injunction
enjoining Atlas Stock Transfer Company from registering the transfer of, or
reissuing, any shares of common stock issued by the Company and/or Shopss.com,
Inc. which were issued in the name of any defendant (other than Atlas Stock
Transfer Company) or are held for the benefit of any defendant to the suit.
On January 17, 2002, Reed & Wangsgard, L.C. received written confirmation from
an agent of the Board of Directors of the Company that said Board of Directors
have come to a unanimous decision to settle the claim for rescission of the
Share Exchange Agreement by rescinding the Share Exchange Agreement. However,
the Board of Directors of the Company failed and/or refused to follow through
with their agreement to rescind the Share Exchange Agreement. As a result,
Reed & Wangsgard, L.C. filed a Motion to Enforce Settlement with respect to
the agreement to rescind the Share Exchange Agreement.
During February 2002, pursuant to the motion of counsel for AccessTel and the
original shareholders of AccessTel, the Honorable L.A. Dever, Judge of the
Court, issued an order limiting the Court's jurisdiction over certain of the
defendants to the Action. As a result, the Court continued to have
jurisdiction over the corporate defendants and through it, plaintiffs may
assert claims arising from the allegedly wrongful conduct of current
management.
On May 1, 2003, a settlement was reached between the remaining parties to the
Action. The material terms of the settlement include the requirement that the
corporate defendants surrender all right, title and interest in and to those
shares of common stock of the Company issued to them pursuant to the Exchange
Agreement, and that all members of management of the Company that had been
designated to serve as directors and executive officers of the Company at the
closing of the Exchange Agreement resign from their respective management
positions. As a result of the settlement, on May 6, 2003, prior management of
the Company that had filed the complaint, caused to be filed with the Court a
Motion to Dismiss the complaint. Subject to the granting of the Motion to
Dismiss the complaint, of the 16,718,763 shares issued to the corporate
defendants, 11,356,782 of the surrendered shares have been delivered to
counsel for prior management of the Company and will be duly canceled and
returned to the authorized but unissued common stock of the Company, and
5,361,981 shares will be transferred to a private third party unrelated to the
AccessTel parties pursuant to a confidential settlement of a separate legal
action involving a legal debt owed by one of the AccessTel parties to the
private third party. The current officers and directors of the Company
resigned, and David C. Merrell, a former director and executive officer of the
Company, was appointed as an interim officer and director of the Company.
Lawrence Liang, the Company's Chief Executive Officer, President and a
director, and Stuart Bockler, the Company's Chief Financial Officer, Secretary
and a director as of December 31, 2002, were named as defendants in the
Complaint, and resigned as officers and directors of the Company effective
April 24, 2003.
As a result of this settlement, the Company will record the cancellation of
11,356,782 shares of common stock during May 2003. As the settlement did not
result in the Company gaining control of the assets or operations of
AccessTel, the Company will not reflect such assets or operations in its
financial statements subsequent to the settlement date.
The Company has also been sued by several creditors for non-payment of debts,
and judgments have been entered for the payment of such debts, plus interest
and legal fees, in some cases.
ITEM 2. CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
In May 2004, the Company and certain of its shareholders are have
negotiated a "Compromise and Settlement" with the former shareholders of Euro
Offline, Inc. Each party contends that a substantial, irreconcilable dispute
exists among them for the failure of not consummating the merger with Euro
OffLine, Inc., therefore 27 million shares will be returned to treasury with
the former Euro Offline shareholders have received $40,000.
In May 2004, a shareholder and creditor has asserted a material
breach of contract relating to the Euro Offline, Inc. merger. The Company is
currently negotiating with the shareholder / creditor relating to this matter.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
31.1 302 Certification of Kevin Marion
32 906 Certification
Reports on Form 8-K
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AccessTel, Inc.
---------------
(Registrant)
/s/ KEVIN MARION
Date: June 21, 2004 By: _________________________
Kevin Marion
President and director