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 June 30, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 0-24459
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)
5201 Great American Parkway, Suite 320-3102
Santa Clara, California 95054
-------------------------------------------
(Address of principal executive offices)
Issuer's telephone number: (408) 216-4756
Not applicable
----------------------------------------------------
(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 June 30, 2001, the Company had 33,354,091 shares of common stock
issued and outstanding.
Transitional Small Business Disclosure Format: Yes [X] No [ ]
Documents incorporated by reference: None.
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ACCESSTEL, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 2001
(Unaudited) and December 31, 2000
Consolidated Statements of Operations (Unaudited)
- Three Months and Six Months Ended June 30, 2001
and 2000
Consolidated Statements of Cash Flows (Unaudited)
- Six Months Ended June 30, 2001 and 2000
Notes to Consolidated Financial Statements
(Unaudited) - Three Months and Six Months Ended
June 30, 2001 and 2000
Item 2. Management's Discussion and Analysis or Plan of
Operation
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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Accesstel, Inc.
Balance Sheets
June 30, December 31,
2001 2000
--------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ $ 542,952
Other receivables 1,302
--------- ---------
Total current assets 544,272
--------- ---------
Property and equipment 38,223
Less: Accumulated depreciation (3,326)
--------- ---------
34,897
--------- ---------
Other assets 3,994
--------- ---------
Total assets $ $ 583,163
========= =========
(continued)
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Accesstel, Inc.
Balance Sheets (continued)
June 30, December 31,
2001 2000
--------- ---------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable and accrued
expenses $1,028,631 $1,028,631
Taxes payable 116,719
Loans from shareholder 69,132
--------- ---------
Total current liabilities 1,097,763 1,145,350
--------- ---------
Stockholders' deficiency:
Common stock, $.001 par value -
Authorized - 100,000,000 shares
Issued and Outstanding -
33,354,091 shares at June 30,
2001 and December 31, 2000,
respectively 33,354 33,354
Additional paid-in capital 325,091 759,535
Accumulated deficit (1,456,208) (1,355,076)
--------- ---------
Total stockholders' deficiency (1,097,763) (562,187)
--------- ---------
Total liabilities and
stockholders' deficiency $ $ 583,163
========= =========
See accompanying notes to financial statements.
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Accesstel, Inc.
Statements of Operations (Unaudited)
Three Months Ended
June 30,
--------------------------
2001 2000
--------- ---------
Revenues $ $
Cost of revenues
------ -------
Gross profit
------ -------
General and administrative
expenses 25,132
Interest expense 696
------ -------
Loss from continuing operations (25,132) (696)
------ -------
Discontinued operations:
Loss from operations (139,790)
Write-off of goodwill (586,077)
------ -------
(725,867)
------ -------
Net loss $(25,132) $(726,564)
====== =======
Net loss per common share
(basic and diluted):
Continuing operations $ - $ -
Discontinued operations - (0.05)
----- -----
$ - $(0.05)
===== ====
Weighted average common
shares outstanding
(basic and diluted) 33,354,091 14,497,160
========== ==========
See accompanying notes to financial statements.
-5-
Accesstel, Inc.
Statements of Operations (Unaudited)
Six Months Ended
June 30,
--------------------------
2001 2000
--------- ---------
Revenues $ $
Cost of revenues
------- ---------
Gross profit
------- ---------
General and administrative
expenses 101,132
Interest expense 6,101
------- ---------
Loss from continuing operations (101,132) (6,101)
------- ---------
Discontinued operations:
Loss from operations (461,415)
Write-off of goodwill (586,077)
------- ---------
(1,047,492)
------- ---------
Net loss $(101,132) $(1,053,594)
======= =========
Net loss per common share
(basic and diluted):
Continuing operations $ - $ -
Discontinued operations - (0.06)
----- -----
$ - $(0.06)
===== ====
Weighted average common
shares outstanding
(basic and diluted) 33,354,091 16,854,303
========== ==========
See accompanying notes to financial statements.
-6-
Accesstel, Inc.
Statements of Cash Flows (Unaudited)
Six Months Ended
June 30,
--------------------------
2001 2000
--------- ---------
Cash flows from operating
activities:
Net loss $(101,132) $(1,053,594)
Adjustments to reconcile
net loss to net cash
provided by (used in)
operating activities:
Depreciation and
Amortization 52,431
Write-off of goodwill 86,077
Other 32,000
Changes in operating
assets and liabilities:
(Increase) decrease in:
Accounts receivable 90,117
Inventory 27,676
Prepaid expenses 240
Other assets 8,882
Increase (decrease) in:
Accounts payable and
accrued expenses 1,045,695
Taxes payable 25,314
Customer deposits 174,554
--------- ---------
Net cash provided by (used in)
operating activities (69,132) 957,392
--------- ---------
(continued)
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Accesstel, Inc.
Statements of Cash Flows (Unaudited) (continued)
Six Months Ended
June 30,
--------------------------
2000 1999
--------- ---------
Cash flows from financing
activities:
Repayments to OSCM (396,966)
Decrease in bank payable (585,763)
Principal payments on leases
payable (5,090)
Increase in notes payable -
related parties 29,565
Loans from shareholder 69,132
--------- ---------
Net cash provided by (used in)
financing activities 69,132 (958,254)
--------- ---------
Cash and cash equivalents:
Net increase (decrease) - (862)
At beginning of period - 891
--------- ---------
At end of period $ - $ 29
========= =========
See accompanying notes to financial statements.
-8-
Accesstel, Inc.
Notes to Financial Statements (Unaudited)
Three Months and Six Months Ended June 30, 2001 and 2000
1. Organization and Basis of Presentation
Basis of Presentation - The accompanying financial statements include the
operations of Accesstel, Inc. and Shopss.com, Inc. as described below.
Shopss.com, Inc., a Utah corporation, changed its name to Accesstel, Inc.
on February 15, 2001, in conjunction with the acquisition of Accesstel,
Inc., a Delaware corporation, in a reverse merger transaction effective
December 18, 2000. Litigation to rescind this transaction was subsequently
commenced on May 1, 2001, and a receiver was appointed on May 3, 2001.
The accompanying financial statements have been prepared based on the
information available to current management, but due to the commencement of
litigation and the appointment of a receiver, such information may not be
complete or accurate. A copy of this document has been provided to members of
management, and the receiver has used his best efforts to have this
document reviewed by them and, if appropriate, amended and updated.
The financial statements for the three months and six months ended June 30,
2000 consist of the operations of Shopss.com, Inc., which have been
presented as discontinued operations. The financial statements for the
three months and six months ended June 30, 2001 include the operations of
Accesstel, Inc. The balance sheet as of December 31, 2000 includes the
assets and liabilities of both the Accesstel, Inc. and Shopss.com, Inc.
operations. The balance sheet as of June 30, 2001 includes the assets and
liabilities of Shopss.com, Inc.'s operations and excludes the assets and
liabilities of Accesstel, Inc.'s operations due to the rescission
litigation.
Accesstel, Inc., formerly Shopss.com, Inc., is referred to herein as the
"Company".
-9-
Comments - The accompanying interim financial statements are unaudited, but
in the opinion of management of the Company, contain all adjustments, which
include normal recurring adjustments, necessary to present fairly the
financial position at June 30, 2001, the results of operations for the
three months and six months ended June 30, 2001 and 2000, and the cash
flows for the six months ended June 30, 2001 and 2000. The accompanying
interim financial statements have not been reviewed by an independent
accounting firm. The balance sheet as of December 31, 2000 is derived from
the Company's audited financial statements.
Certain information and footnote disclosures normally included in financial
statements that have been presented in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules
and regulations of the Securities and Exchange Commission with respect to
interim financial statements, although management of the Company believes
that the disclosures contained in these financial statements are adequate
to make the information presented therein not misleading. For further
information, refer to the financial statements and notes thereto included
in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2000, as filed with the Securities and Exchange Commission.
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.
The results of operations for the three months and six months ended June
30, 2001 are not necessarily indicative of the results of operations to be
expected for the full fiscal year ending December 31, 2001.
Going Concern - 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 June 30, 2001 and December 31,
2000. 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, 2000 with respect to this
matter.
Net Loss Per Common Share - Basic loss per common share is calculated by
dividing net loss by the weighted average number of common shares
outstanding during the period. Diluted loss per common share reflects the
potential dilution that would occur if all dilutive stock options and
warrants were exercised. These potentially dilutive securities were anti-
dilutive for all periods presented, and accordingly, basic and diluted loss
per common share is the same for all periods presented.
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2. Termination of Operations and Write-off of Goodwill
After the closing of the Asset Purchase Agreement with OSCM - OneStop.com,
a Florida corporation ("OSCM"), on October 27, 1999, the Company relied on
OSCM for a substantial portion of its working capital and provided OSCM
with computers and other equipment. As a result of certain financial
difficulties experienced by OSCM, OSCM was unable to provide working
capital to the Company and was also unable to pay the Company for the
equipment that the Company had delivered to OSCM and its affiliated
entities. As a result of these financial difficulties, the Company ceased
operations and became insolvent, sold or wrote-off its operating assets,
and terminated all of its employees during the three months ended June 30,
2000.
As a result of the foregoing, the Company determined that its decision to
refocus its business efforts to develop voice-over-internet protocol and
broadband wireless technology had impaired existing goodwill. Accordingly,
the Company wrote-off unamortized goodwill of $586,077 at June 30, 2000.
3. Acquisition of Accesstel, Inc.
Effective December 18, 2001, the Company entered into a Share Exchange
Agreement by and among Shopss.com, Inc., Accesstel, Inc., a Delaware
corporation, and the shareholders of Accesstel, Inc., pursuant to which the
Company acquired all of the shares of Accesstel, Inc. in exchange for
36,100,540 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.
On May 1, 2001, Droz, Reed & Wangsgard, LC filed suit in the Third Judicial
District Court of Salt Lake County, State of Utah, Civil No. 010903821, to
assert claims, on behalf of its clients, prior management of the Company,
against Accesstel, Inc., a Delaware corporation, and the original
shareholders of Accesstel, Inc. The Complaint 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, Inc. 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 Droz, Reed & Wangsgard, LC, 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.
-11-
On May 16, 2001, pursuant to the motion of Droz, Reed & Wangsgard, LC, 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, Inc. 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 Droz, Reed & Wangsgard, LC, 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.
The parties to the lawsuit are currently involved in settlement
negotiations. Although it is currently anticipated that a settlement of
the lawsuit, which is expected to include rescission of the Share Exchange
Agreement, will be entered into within the next several weeks, there can be
no assurances in this regard. It is anticipated that once the lawsuit is
settled and the Share Exchange Agreement is rescinded, the Company will
seek to acquire a new business opportunity, which may require related debt
or equity financing, although there can be no assurances that the Company
will be successful in this regard.
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.
-12-
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 June 30, 2001 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 include, among others, statements concerning the
Company's expectations regarding its working capital requirements, its
business, growth prospects, competition and results of operations, and
other 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 June 30,
2001 involve known and unknown risks, uncertainties and other factors that
could cause the 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 accompanying financial statements have been prepared based on the
information available to current management, 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 best knowledge of the receiver, and not
management. A copy of this document has been provided to members of
management, and the receiver has used his best efforts to have this
document reviewed by them and, if appropriate, amended and updated
The Company is currently insolvent and has no business operations. 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.
Summary of Recent Transactions:
Immediately prior to October 27, 1999, the Company was an inactive public
company. Effective October 27, 1999, pursuant to an Asset Purchase
Agreement, the Company purchased from OSCM - OneStop.com, a Florida
corporation ("OSCM"), an 80% ownership interest in CCM, all rights to an
option to purchase the remaining 20% ownership interest in CCM, and all
-13-
assets relating to the Shopss.com virtual shopping mall owned by OSCM,
including all software, web-sites, and related technology, customers and
customer lists, patents, trademarks and trade names. In exchange for the
acquired assets, the Company issued to OSCM 12,000,000 shares of its common
stock, which represented approximately 60% of its outstanding shares of
common stock after giving effect to the transaction. The Company also
agreed to assume the liabilities relating to the Shopss.com business as
recorded on the financial statements of OSCM and the liabilities relating
to the option of the stockholders of CCM to require OSCM to purchase the
remaining 20% interest in CCM. Pursuant to a subsequent agreement in
principle between the Company and OSCM, clarifications were made to the
effect that none of the assets relating to the Shopss.com virtual shopping
mall would include any of the assets or liabilities relating to the virtual
shopping mall operated by a subsidiary of OSCM in Israel, any obligation of
the Company to pay cash for the assets acquired from OSCM was cancelled,
the holdings of OSCM in the Company were decreased by canceling 11,000,000
shares of common stock owned by OSCM, the Company issued a warrant to OSCM
to purchase 3,000,000 shares of common stock at $5.00 per share for a
period of two years, and the Company agreed to cancel all amounts due from
OSCM to the Company aggregating approximately $1,600,000. Immediately
after the closing of the Asset Purchase Agreement, the Company effected a
5.435034 forward split of its common stock.
After the closing of the Asset Purchase Agreement, the Company relied on
OSCM for a substantial portion of its working capital and provided OSCM
with computers and other equipment. As a result of certain financial
difficulties experienced by OSCM, OSCM was unable to provide working
capital to the Company and was also unable to pay the Company for the
equipment which the Company had delivered to OSCM and its affiliated
entities. As a result of these financial difficulties, the Company ceased
operations and became insolvent, sold or wrote-off its operating assets,
and terminated all of its employees during the three months ended June 30,
2000.
Effective December 18, 2001, the Company entered into a Share Exchange
Agreement by and among Shopss.com, Inc., Accesstel, Inc., a Delaware
corporation, and the shareholders of Accesstel, Inc., pursuant to which the
Company acquired all of the shares of Accesstel, Inc. in exchange for
36,100,540 shares of common stock, which represented 80% of the issued and
outstanding of common stock of the Company after giving effect to the
transaction.
On May 1, 2001, Droz, Reed & Wangsgard, LC filed suit in the Third Judicial
District Court of Salt Lake County, State of Utah, Civil No. 010903821, to
assert claims, on behalf of its clients, prior management of the Company,
against Accesstel, Inc., a Delaware corporation, and the original
shareholders of Accesstel, Inc. The Complaint 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, Inc. 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 Droz, Reed & Wangsgard, LC, 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.
-14-
On May 16, 2001, pursuant to the motion of Droz, Reed & Wangsgard, LC, 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, Inc. 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 Droz, Reed & Wangsgard, LC, 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.
The parties to the lawsuit are currently involved in settlement
negotiations. Although it is currently anticipated that a settlement of
the lawsuit, which is expected to include rescission of the Share Exchange
Agreement, will be entered into within the next several weeks, there can be
no assurances in this regard. It is anticipated that once the lawsuit is
settled and the Share Exchange Agreement is rescinded, the Company will
seek to acquire a new business opportunity, which may require related debt
or equity financing, although there can be no assurances that the Company
will be successful in this regard.
Results of Operations:
Three Months Ended June 30, 2001 and 2000 -
During the three months ended June 30, 2001, the Company incurred general
and administrative expenses of $25,132, consisting primarily of legal and
accounting expenses.
During the three months ended June 30, 2000, the Company incurred a loss
from discontinued operations of ($725,867) and interest expense of $696,
resulting in a net loss of ($726,564). The loss from discontinued operations
consisted of a loss from operations of ($139,790) and a write-off of goodwill
of ($586,077). The Company wrote-off unamortized goodwill of $586,077 at
June 30, 2000 as a result of its decision to refocus its business efforts
to develop voice-over-internet protocol and broadband wireless technology.
Six Months Ended June 30, 2001 and 2000 -
During the six months ended June 30, 2001, the Company incurred general and
administrative expenses of $101,132, consisting primarily of legal and
accounting expenses.
-15-
During the six months ended June 30, 2000, the Company incurred a loss from
discontinued operations of ($1,047,492) and interest expense of $6,101,
resulting in a net loss of ($1,053,594). The loss from discontinued
operations consisted of a loss from operations of ($461,415) and a write-off
of goodwill of ($586,077). The Company wrote-off unamortized goodwill of
$586,077 at June 30, 2000 as a result of its decision to refocus its
business efforts to develop voice-over-internet protocol and broadband
wireless technology.
Liquidity and Capital Resources - June 30, 2001:
Operating Activities -
At June 30, 2001, the Company had no cash resources and a working capital
deficit of ($1,097,763), as a result of which the Company was insolvent. The
Company utilized $69,132 of cash in operating activities during the six
months ended June 30, 2001, as compared to generating $957,392 of cash
during the six months ended June 30, 2000.
Financing Activities -
During the six months ended June 30, 2001, a shareholder made advances to
or on behalf of the Company aggregating $69,132 pursuant to a line of
credit with interest at 1% below the prime rate. 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.
During 1999, OSCM, through its subsidiary Shopss.com in Israel ("Shopss.com
- Israel"), was providing services similar to the Company in Israel.
Shopss.com - Israel collected monies through credit cards in 1999, which
were cleared through the Company. In January 2000, as a result of customer
dissatisfaction issues, the Company began getting chargebacks from the bank
for sales by Shopss.com - Israel. The Company received chargebacks of
$585,763 against its bank account, which was recorded as a liability due
the bank at December 31, 1999. During the six months ended June 30, 2000,
the Company paid the bank $585,763 and made net payments to OSCM of
$396,966.
-16-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Effective December 18, 2001, the Company entered into a Share Exchange
Agreement by and among Shopss.com, Inc., Accesstel, Inc., a Delaware
corporation, and the shareholders of Accesstel, Inc., pursuant to which the
Company acquired all of the shares of Accesstel, Inc. in exchange for
36,100,540 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.
On May 1, 2001, Droz, Reed & Wangsgard, LC filed suit in the Third Judicial
District Court of Salt Lake County, State of Utah, Civil No. 010903821, to
assert claims, on behalf of its clients, prior management of the Company,
against Accesstel, Inc., a Delaware corporation, and the original
shareholders of Accesstel, Inc. The Complaint 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, Inc. 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 Droz, Reed & Wangsgard, LC, 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 Droz, Reed & Wangsgard, LC, 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, Inc. 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 Droz, Reed & Wangsgard, LC, 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.
-18-
The parties to the lawsuit are currently involved in settlement
negotiations. Although it is currently anticipated that a settlement of
the lawsuit, which is expected to include rescission of the Share Exchange
Agreement, will be entered into within the next several weeks, there can be
no assurances in this regard. It is anticipated that once the lawsuit is
settled and the Share Exchange Agreement is rescinded, the Company will
seek to acquire a new business opportunity, which may require related debt
or equity financing, although there can be no assurances that the Company
will be successful in this regard.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None
(b) Reports on Form 8-K:
Three Months Ended June 30, 2001 - None
-19-
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/ LEONARD W. BURNINGHAM
Date: August 20, 2001 By: _________________________
Leonard W. Burningham
Receiver
(Duly Authorized Officer)