UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For Quarterly Period Ended October 31, 1997
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period From______________ to __________________
Commission File Number 2-33108
ACCESS CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 31-0673364
- ----------------------------------- -------------------------------
(State or other jurisdiction of incorporation) (I.R.S. Employer Identification
Number)
4350 Glendale-Milford Road, Suite 250, Cincinnati, Ohio 45242-3700
- ------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (513)786-8350
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES ___x____ NO ________
Indicate the number of shares outstanding of each of the issuer's
classes of common shares, as of October 31, 1997. Common Stock, no par value:
4,865,559 shares.
PART I. FINANCIAL INFORMATION
ACCESS CORPORATION
BALANCE SHEETS
ASSETS
October 31, April 30,
1997 1997
CURRENT ASSETS:
Cash $1,896,383 $1,404,708
Accounts Receivable, Less Allowances 2,183,888 2,151,829
for Doubtful Accounts of $18,000
in October 1997 and $12,000 in April 1997
Inventories
Raw Materials and Purchase Parts 96,031 96,673
Work - in - Process 43,856 56,401
Finished Goods - 13,551
---------- ----------
139,887 166,625
Prepaid Expenses 88,533 135,362
Deferred Income Tax Benefit 90,709 112,000
---------- ----------
TOTAL CURRENT ASSETS 4,399,400 3,970,524
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Computer Hardware & Software 1,335,051 1,533,592
Machinery and Equipment 250,883 503,337
Office and Service Equipment 360,461 380,248
Leasehold Improvements 12,030 13,405
Tools, Dies and Fixtures 8,946 97,832
---------- ----------
1,967,371 2,528,414
Less Accumulated Depreciation (1,760,786) (2,289,920)
---------- ----------
206,585 238,494
GOODWILL 237,004 259,691
DEFERRED INCOME TAX BENEFIT 548,882 548,882
---------- ----------
TOTAL ASSETS $5,391,871 $5,017,591
========== ==========
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
ACCESS CORPORATION
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
October 31, April 30,
CURRENT LIABILITIES 1997 1997
Accounts Payable $ 277,480 $ 291,339
Accrued Salaries, Wages and Commissions 171,724 216,232
Accrued Taxes 22,472 4,198
Accrued Warranty Expense 38,096 11,018
Other Accrued Liabilities 15,130 69,206
Accrued Royalty 1,043,325 519,916
Advances from Customers 282,193 195,145
---------- ----------
TOTAL CURRENT LIABILITIES 1,850,420 1,307,054
PREPAID MAINTENANCE CONTRACT REVENUE 468,308 675,245
MANDATORILY REDEEMABLE PREFERRED STOCK 1,500,000 1,500,000
STOCKHOLDERS' EQUITY
Capital Stock
Common Stock, No Par Value, Authorized 488,183 488,183
8,000,000 Shares, Issued and Outstanding
4,881,829 Shares
Additional Paid-In Capital 10,657,652 10,657,652
Deficit from April 1, 1985 (9,557,309) (9,595,160)
16,270 Common Stock Shares In (15,383) (15,383)
Treasury, at Cost
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 1,573,143 1,535,292
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,391,871 $5,017,591
========== ==========
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
ACCESS CORPORATION
STATEMENT OF OPERATIONS
Three Months Ended
October 31,
1997 1996
REVENUE
System Sales $1,469,605 $ 567,449
Service & Service Depot 1,260,424 960,159
---------- ---------
Total 2,730,029 1,527,608
COST OF REVENUE
System Sales, exclusive of amortization shown
seperately below 861,921 325,015
Service & Service Depot 1,173,355 622,240
---------- ----------
Total 2,035,276 947,255
GROSS PROFIT BEFORE AMORTIZATION 694,753 580,353
AMORTIZATION OF COMPUTER SOFTWARE COST - 168,426
GROSS PROFIT 694,753 411,927
Sales and Administrative 747,142 488,882
Engineering, Research and Development - 84,310
---------- ----------
Total Costs and Expenses 747,142 573,192
LOSS FROM OPERATIONS (52,389) (161,265)
OTHER INCOME (EXPENSE)
Interest Income 12,899 19,705
Other Income (98) 3,762
Interest Expense - (1,144)
Other (7,226) 2,120
---------- ----------
NET LOSS BEFORE INCOME TAXES (46,814) (136,822)
INCOME TAXES (16,909) -
NET LOSS (29,905) (136,822)
PREFERRED DIVIDEND - -
LOSS APPLICABLE TO COMMON SHARES $ (29,905) $ (136,822)
========== ==========
PER COMMON SHARE AND COMMON SHARE EQUIVALENTS
Net loss $ (0.01) $ (0.03)
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
ACCESS CORPORATION
STATEMENT OF EARNINGS
Six Months Ended
October 31,
1997 1996
REVENUE
System Sales $2,803,349 $1,161,418
Service 2,639,430 2,041,541
---------- ----------
5,442,779 3,202,959
COST OF REVENUE
System Sales 1,638,240 648,426
Service 2,367,849 1,293,079
---------- ----------
4,006,089 1,941,505
GROSS PROFIT BEFORE AMORTIZATION 1,436,690 1,261,454
AMORTIZATION OF COMPUTER SOFTWARE COST - 336,852
GROSS PROFIT 1,436,690 924,602
Sales and Administrative 1,395,006 1,101,607
Engineering, Research and Development - 144,624
---------- ----------
Total Costs and Expenses 1,395,006 1,246,231
EARNINGS FROM OPERATIONS 41,684 (321,629)
OTHER INCOME (EXPENSE)
Interest Income 27,424 41,540
Other Income (98) 3,731
Interest Expense (318) (2,176)
Other (9,550) 2,054
EARNINGS FROM CONTINUING OPERATIONS 59,142 (276,480)
BEFORE INCOME TAXES
INCOME TAXES 21,291 -
NET EARNINGS 37,851 (276,480)
PREFERRED DIVIDENDS - -
---------- ---------
INCOME APPLICABLE TO COMMON SHARES $ 37,851 $(276,480)
========== =========
PER COMMON SHARE AND COMMON SHARE EQUIVALENTS
Net Earnings $ .01 $ (0.06)
========== =========
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
ACCESS CORPORATION
STATEMENTS OF CASH FLOW
Three Months Ended
October 31,
1997 1996
CASH FLOW FROM:
OPERATING ACTIVITIES
Net Income (Loss) $ 37,851 $ (276,480)
Adjustments to Reconcile Net Earnings
To Net Cash Used in Operations:
Depreciation 59,098 62,788
Amortization 6,177 336,852
Deferred Income Tax 21,292 -
(Gain) Loss on Sale of Fixed Asset 7,630 (2,355)
Changes in Assets and Liabilities
Accounts Receivable (32,061) (29,298)
Inventories 26,738 112,477
Prepaid Expenses 46,830 (13,386)
Accounts Payable (13,859) (191,474)
Accrued Liabilities (53,231) (121,971)
Accrued Royalties 523,409 205,657
Advances From Customers 87,048 (175,614)
Prepaid Maintenance Contract Revenue (206,937) (133,114)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 509,985 (225,918)
INVESTING ACTIVITIES:
Capital Additions (34,820) (54,333)
Goodwill 16,510 -
---------- ----------
NET CASH (USED IN) INVESTING ACTIVITIES (18,310) (54,333)
FINANCING ACTIVITIES
Preferred Dividends (102,509)
Payments on Capital Leases (15,398)
---------- ----------
(117,907)
NET CHANGE IN CASH 491,675 (398,158)
CASH, Beginning of the Year 1,404,708 2,071,772
---------- ----------
CASH, October 31, 1997 and 1996 $1,896,383 $1,673,614
========== ==========
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
ACCESS CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
OCTOBER 31, 1997
NOTE A - CONDENSED FINANCIAL STATEMENTS
The condensed balance sheet as of October 31, 1997, the condensed
statement of earnings for the six month periods ended October 31, 1997
and 1996, and the condensed statements of cash flows for the six month
periods ended October 31, 1997 and 1996 have been prepared by the
Company without audit. These financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. All
adjustments made during the quarter ended October 31, 1997 are of a
normal recurring nature.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been 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 annual report on
Form 10-K for the year ended April 30, 1997. The results of operations
for the period ended October 31, 1997 are not necessarily indicative of
the operating results for the full year.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
The Company has two primary lines of business, Service and Electronic
Document Management Systems. Originally, the Company's service
activities were limited to the support of its proprietary products. The
Company is currently building and growing its business of maintaining
equipment manufactured and sold by third parties. The Company is
working with manufacturers and distributors of high value equipment to
develop its service business. The Company services on a nationwide
basis, end users on both maintenance contracts and a time and material
basis. Since April 1997, through the acquisition of the assets of
Graphic Systems Technology, Incorporated (GST), a company doing third
party maintenance in the prepress industry, Access has expanded into
this market. The Company is also a leader in the Electronic Document
Management Systems (EDMS) software business. In this line of business,
the Company is the exclusive North American reseller of Cimage software.
Fiscal year 1998 second quarter revenue of $2.7 million was up $1.2
million (79%) compared with revenue for the second quarter of fiscal
1997. Service revenue of $1.2 million increased $300,200 (32%) compared
with the second quarter of fiscal 1997. $251,300 of this increase
represented servicing of prepress equipment, which the Company commenced
with the purchase of GST's assets in April 1997. EDMS revenue of $1.5
million increased $902,200 (159%) compared with that in the second
quarter of fiscal 1997. The major contributor to this increase was from
sales to two customers which represented $798,100 in revenue.
Revenue for the first six months of fiscal 1997 of $5.4 million
increased 70% from that for the six months ended October 31, 1997.
Service revenue of $2.6 million was $590,400 (29%) higher than the $2.0
million of service revenue recorded for the six months ended October 31,
1996. The increase in revenue for service was attributable to the new
prepress service business the Company acquired from GST in April 1997.
Prepress revenue for the six months ended October 31, 1997 was $594,000.
EDMS revenue of $2.8 million was $1.6 million (141%) greater than EDMS
revenue of $1.2 million recorded in the first six months of fiscal 1997.
Three customers purchased software resulting in $1.7 million.
The Company's current backlog of orders is $1.8 million compared to $2.2
million at October 31, 1996. Service backlog of $998,900 was 39% lower
at October 31, 1997 than at October 31, 1996. Backlog relating to
maintenance contracts on the Company's proprietary micrographic hardware
decreased $504,500. The Company discontinued manufacturing this
equipment in fiscal 1993. The Service backlog is expected to be
delivered within the next twelve months. Current EDMS backlog of
$756,200 is 32% higher than that at the same date last year. This
increase in backlog is the result of the Company receiving more orders
for professional services which are delivered over a length of time.
The backlog is expected to be delivered within the next twelve months.
Gross Margins for the second quarter ended October 31, 1997 of 25%
deceased 2% form the comparable period in fiscal 1997, which was 27%.
Service gross margin of 6% was 29% lower than the 35% for this same
period in fiscal 1997. With the Company's entry into servicing the
prepress market, it doubled its number of field service representatives.
The addition of these trained personnel greatly expands the capability
of the Company to deliver service on a nationwide basis. In the second
quarter of fiscal 1998, the additional capacity was not fully utilized,
thus reducing the Company's gross margin for that period. The Company
expects substantial growth in its service business, increased
utilization of this additional personnel and improved service gross
margins within the next twelve months. EDMS gross margin before
amortization for the second quarter of fiscal 1998 was 41%, which was 2%
lower than the 43% recorded in the second quarter of fiscal 1997. EDMS
gross margin after amortization was 41% , compared to 13% for the same
period last year. The Company did not incur amortization expense for
EDMS Capitalized Software because the remaining EDMS computer software
development costs were written off in fiscal 1997.
Selling and administrative expenses of $265,500 for the second quarter
of fiscal 1998 were $39,700 (18%) higher than the second quarter of
fiscal 1997. Selling expenses increased due to increased commissions on
orders received in the second quarter of fiscal 1998.
Engineering, research and development expenses were incurred for
maintaining, upgrading current products and developing new products in
the second quarter of fiscal 1997. Cimage Enterprise Systems Limited
performs all the engineering, research and development for the Cimage
software; therefore, the Company will no longer have a development
expense.
Interest income for the second quarter ended October 31, 1997 was
$12,900 compared with $19,700 for the second quarter ended October 31,
1996. Interest income for fiscal 1997 and 1996 was primarily the
interest received on cash being invested in short term investments.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of fiscal 1998, the Company increased its
cash balance by $491,700 resulting in a leaving $1,896,400 cash balance.
The Company provided $510,000 in cash from operations, invested $34,800
in fixed assets and provided $16,500 for transactions relating to the
assets acquired from GST.
Accrued Royalties increased $523,400 since April 30, 1997. The major
contributor for this increase was the accrual of royalties to Cimage
Enterprise Systems for software sold in Fiscal 1998. These royalties
are payable 60 days from the date of invoice.
On large customer orders there are provisions for progress payments to
be made by customers based on predetermined events. These advances
increased approximately $87,000 since April 30, 1997.
Working capital on October 31, 1997 was approximately $2,549,000, which
is $114,500 lower than the April 30, 1997 level. This primarily was the
result of an increase in accrued royalties for Cimage Enterprise
Systems.
The Company believes it is well positioned for the future. The Company
is a relatively small participant in the technically dynamic market
which is populated by large players like Microsoft and IBM, as well as
many middle and small size firms. In this fragmented market, a great
many companies are competing for each new customer order. The Company
faces a future filled with opportunities but also filled with a great
many risks, many of which are beyond its control.
PART II OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Registrant's Annual Meeting of Shareholders was held on October 7,
1997.
At the Annual Meeting, the holders of Common Stock of the Registrant
approved a resolution for the sale of substantially all of the assets of
the Company to Universal Document Management Systems, Inc. pursuant to
the Asset Purchase Agreement dated as of August 19, 1997, and the Plan
of Complete Liquidation and Dissolution of the Company. The vote of the
shareholders was:
FOR: 4,488,527.5
AGAINST: 9,120.0
ABSTAIN: 3,265.0
BROKER NON-VOTES: 364,646.5
The holders of Common Stock of the Registrant approved a resolution
setting the number of directors to be elected at eight. The vote of the
shareholders was:
FOR: 4,483,312.5
AGAINST: 4,010.0
ABSTAIN: 13,590.0
BROKER NON-VOTES: 364,646.5
The holders of Common Stock of the Registrant approved the appointment
of the following directors. The vote of the shareholders was:
FOR WITHHELD
James M. Anderson 4,500,232.5 680
Newton D. Baker 4,499,732.5 1,180
Kent P. Friel 4,500,232.5 680
James H. Hardie 4,500,232.5 680
Robert J. Kalthoff 4,499,732.5 1,180
Dennis J. Sullivan, Jr. 4,500,232.5 680
Scott D. Watkins 4,500,232.5 680
John W. Weil 4,500,232.5 680
The holders of Common Stock of the Registrant approved the appointment
of Deloitte & Touche LLP as the auditors of the Company for the fiscal
year ending April 30, 1998.
FOR: 4,493,312.5
AGAINST: 4,160.0
ABSTAIN: 3,440.0
BROKER NON-VOTES: 364,646.5
ITEM 5. OTHER INFORMATION
The Company has entered into an Asset Purchase Agreement dated as
of August 19, 1997 (the "Asset Purchase Agreement") providing for the
sale of substantially all of its assets (the "Asset Sale") to Universal
Document Management Systems, Inc. ("Purchaser"). A copy of the Asset
Purchase Agreement is attached hereto as Exhibit 2.1.
The Asset Purchase Agreement was approved by the Company's
shareholders at the Annual Meeting. At the Annual Meeting, the
Company's shareholders also approved the Plan of Complete Liquidation
and Dissolution (the "Plan" a copy of which is attached hereto as
Exhibit 2.2) providing for the liquidations of the Company (the
"Liquidation").
Under the terms of the Asset Purchase Agreement, the Company will
sell all of its assets (except the Excluded Assets) to the Purchaser for
$3.0 million in cash subject to the adjustment described below (plus the
Contingent Consideration) and Purchaser will assume all of the company's
liabilities other than costs of the Asset Sale to the extent they exceed
$50,000. The Excluded Assets will consist of $1.5 million in cash to be
paid to Oce N.V. ("Oce") pursuant to the Agreement dated as of August
19,1997 between the Company and Oce (the "Oce Agreement"), the cash
proceeds received by the Company after the date of the Asset Purchase
Agreement upon the exercise of any stock options and certain personal
property owned by Company employees. The Asset Purchase Agreement
provides that, if, immediately prior to the Closing, the Company has
less than $1.5 million in cash, but has at least $3.2 million in cash
and accounts receivable, then the Company will use a portion of the $3.0
million to be paid by Purchaser at the Closing to make such $1.5 million
payment to Oce, and Purchaser will pay to the Company 50% of all
collections of the company's accounts receivable as of the Closing until
the Company has been able to distribute $3.0 million to the holders of
the Common Stock (other than Oce).
The purchase price is subject to adjustment for acquisitions by
the Company prior to the Closing upon mutual agreement of Purchaser and
the Company. The Company is also entitled to receive Contingent
Consideration in cash up to $1.0 million based upon gross profit of the
Company's hardware service business unit (or Purchaser's conduct of that
business after the closing of the Asset Sale) for the fiscal year
ending April 30, 1998, calculated as follows:
If Accountable Earnings are: Additional Consideration will be:
$2,000,000 or greater $1,000,000
$1,950,000 to $1,999,999.99 800,000
$1,900,000 to $1,949,999.99 600,000
$1,850,000 to $1,899,999.99 400,000
$1,800,000 to $1,849,999.99 200,000
Less Than $1,800,000 0
Pursuant to the Asset Purchase Agreement, Purchaser is to pay any
such amount within 120 days after April 30, 1998.
In the Asset Purchaser Agreement, the Company has made certain
representations, warranties and disclosures to Purchaser with respect
to, among other things, the Company's organization, corporate authority
relating to the Asset Sale, financial statements, liabilities and
obligations, employees, employee benefit plans, contracts, insurance
policies, intellectual property, tax returns and liabilities, compliance
with law, litigation and business. The Asset Purchase Agreement
contains certain representations by Purchaser as to its organization,
corporate authority relating to the Asset Sale and filings to be made in
connection with its mutual public offering.
Pursuant to the Asset Purchase Agreement, the Company has agreed
that, prior to the closing of the Asset Sale, it will use its best
efforts to cause the consummation of the Asset Sale, operate its
business in the ordinary course, use reasonable efforts to preserve the
business of the Company and its relationship with third parties intact,
notify Purchaser of certain events use its best efforts to obtain any
necessary approvals of third parties and refrain from engaging in
certain actions with respect to its employees, contracts, capital
assets, or liabilities. The Company has also agreed not to pay any
dividends or distributions or redeem any of its capital stock prior to
the Closing.
The obligation of Purchaser to consummate the Asset Sale is
subject to the satisfaction or waiver by the closing date of certain
conditions, including (a) satisfactory completion of Purchaser's due
diligence, (b) the accuracy of the company's representations and
warranties in the Asset Purchase Agreement, (c) performance by the
Company of its covenants in the Asset Purchase Agreement, (d) receipt of
a legal opinion and other documents, (e) the absence of any injunction
preventing, or litigation challenging the validity of, the Asset Sale,
(f) the absence of any change with a material adverse effect on the
Company since April 30, 1997, (g) the approval of Purchaser's
registration statement for its initial public offering, (h) the
simultaneous closing of Purchaser's initial public offering and the
acquisition of eight other corporations and (i) execution of employment
agreements between Purchaser and each of Messrs. Watkins and Baker which
have been executed.
The obligation of the Company to consummate the Asset Sale is also
subject to the satisfaction or waiver by the closing date of certain
conditions, including (a) the accuracy of Purchaser's representations
and warranties in the Asset Purchase Agreement, (b) performance by
Purchaser of its covenants in the Asset Purchase Agreement, (c) receipt
of a legal opinion and other documents, (d) the absence of any
injunction preventing, or litigation challenging the validity of, the
Asset Sale, (e) the receipt by the Company and Purchaser of all
necessary government and other third party approvals and consents, (f)
the approval of the Asset Sale by the Company's shareholders (which was
obtained on October 7, 1997), and (g) the Oce Agreement being in full
force and effect.
The Asset Purchase Agreement may be terminated and the Asset Sale
may be abandoned:
(a) at any time prior to the Closing by mutual agreement,
(b) at any time prior to the Closing by Purchaser or the
company if the other breaches the Asset Purchase Agreement and the
breach is not cured within 20 days after receipt of notice.
(c) by either Purchaser or the Company if the Closing does
not occur by December 31, 1997,
(d) by the Company if (i) its Board of Directors determines
in the exercise of its fiduciary duty that such action is
appropriate in furtherance of the best interest of its
shareholders in order to accept an alternative proposal
as described above and (ii) the Company pays Purchaser a
cash "break-up" fee of $250,000, or
(e) by Purchaser if at Closing the Company does not have $1.5
million in cash and the sum of its cash and accounts
receivable is less than $3.2 million.
Pursuant to the Asset Purchase Agreement, Purchaser will assume
all of the Company's obligations under its Executive Retention
Agreements with each of Messrs. Scott D. Watkins and Newton D. Baker.
Purchaser has also agreed to make offers of employment to all or
substantially all of the Company's employees as of the Closing Date on
terms and conditions substantially similar to the then current terms and
conditions of their employment. As a condition of closing imposed by
Purchaser, Messrs. Watkins and Baker were required to enter into two-
year Employment Agreements with the Purchaser. Messrs. Watkins and
Baker have entered into these agreements with Purchaser, effective upon
the closing, providing for base compensation and bonus opportunity
substantially equivalent to that current paid by the Company, but which
are less favorable in other respects than the compensation and benefits
they are currently receiving.
Upon the consummation of the Asset Sale, the Company will no
longer be involved in any active business. The Company will receive
cash for its assets which will be distributed to its shareholders. Upon
such distribution the Common Stock will be redeemed and cancelled and
the shareholders will no longer be shareholders in the Company, although
they will be beneficiaries of the liquidating trust which will be
established under the Plan. As a result of such redemption, the Company
will no longer be required to file reports under the Securities Exchange
Act of 1934, as amended. The former business of the Company will be
owned by Purchaser and the shareholders of the Company will have no
interest therein.
In 1987, Oce purchased 1,333,334 shares of the Company's Class B
Common Stock for approximately $4 million ($3.00 per share). In
February 1989, Oce purchased from the Company an additional 571,429
shares of Class B Common Stock for approximately $2 million ($3.50 per
share) and also purchased 276,191 shares of Common Stock owned by other
shareholders for $2.50 per share. In 1992, all of the Class B Common
Stock held by Oce was converted into an equal number of shares of Common
Stock and substantially all of such Common Stock was deposited in a
voting trust (the "Voting Trust").
In 1991, Oce agreed to lend the Company up to $1.5 million in
cash. The notes representing such loans were later exchanged for
Preferred Stock currently held by Oce.
Accordingly, Oce has invested approximately $8.2 million in stock
of the company, for which it will receive a $1.5 million (plus accrued
dividends, in any) under the Oce Agreement and the Plan.
Oce currently owns Class One Preferred Stock of the company with
an aggregate liquidation preference of $1.5 million (plus accrued and
unpaid dividends, if any) and 2,180,954 shares of Common Stock,
substantially all of which are held by the Voting Trust. Pursuant to
the Oce Agreement, Oce has agreed that if it receives $1.5 million (plus
accrued dividends, if any) in cash upon the Liquidation, it will
surrender all of its shares to the Company and waive any further claim
for payment or distribution with respect thereto.
Pursuant to the Oce Agreement, Oce voted its shares of the Company
in favor of the Plan and the Asset Sale.
At or promptly after the Closing of the Asset Sale, the Company
will contribute to a trust for the benefit of its shareholders (the
"Liquidating Trust") its right to receive the Contingent Consideration
under the Asset Purchase Agreement, together with any cash amounts
retained by the Company as described below. Messrs. Watkins and Baker
will be the trustees of the Liquidating Trust under the trust agreement.
The trustees may invest the corpus of such Trust in short-term money
market investments described above until such funds are distributed to
former shareholders. The right of shareholders to receive any
distributions from the Liquidating Trust will not be transferable except
by will or by operation of law.
Pursuant to the Plan, the company will be completely liquidated
and all of its assets will be distributed to its shareholders. Pursuant
to the Oce Agreement, Oce will receive a distribution of $1.5 million
(plus accrued dividends, if any). The proceeds of the Asset Sale and
the exercise of any stock options (less than amounts retained by the
Company in the discretion of the Board of Directors for liabilities not
assumed by the Purchaser) will be distributed pro rata to all other
holders of Common Stock. Assuming that all outstanding stock options
with an exercise price of less than $1.00 are exercised, and that no
such reserves are retained by the Company, it is expected that this
would result in a distribution of approximately $.90 per share in cash
with respect to each share of Common Stock (other than those held by
Oce). Receipt of the Contingent Consideration would result in an
additional distribution of from $.01 to $.30 per share.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. Refer to EXHIBIT INDEX on page 12 of this Quarterly Report
on Form 10-Q
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
second quarter of fiscal year 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
ACCESS CORPORATION
Date: December 2, 1997 s/Newton D. Baker
-----------------
Newton D. Baker
Executive Vice President
Date: December 2, 1997 s/ Barbara A. Sommer
--------------------
Barbara A. Sommer
Assistant Treasurer & Chief Accounting
Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
ACCESS CORPORATION
Date: December 2, 1997 NEWTON D. BAKER
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Newton D. Baker
Executive Vice President
Date: December 2, 1997 BARBARA A. SOMMER
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Barbara A. Sommer
Assistant Treasurer & Chief Accounting
Officer
EXHIBIT INDEX
(2) Asset Purchase Agreement and Plan of Complete Liquidation and
Dissolution
(1) Asset Purchase Agreement, dated August 19, 1997, between
Universal Document Management Systems, Incorporated and Access
Corporation is attached hereto as Exhibit 2.1.
(2) Plan of Complete Liquidation and Dissolution of Asset
Corporation is attached hereto as Exhibit 2.2.
(11) Statement re-computation of per share earnings
(a) The calculation of net earnings per common share and common
share equivalent for three month periods ended October 31, 1997
and 1996 is attached as Exhibit 11(a)
(b) The calculation of net earnings per common share and common
share equivalent for six month periods ended October 31, 1997 and 1996
is attached as Exhibit 11(b).
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