SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2001
Commission file number 000-26539
ACCESS NETWORK CORPORATION
________________________________________________________________
(Exact name of small business issuer as specified in its charter)
Nevada 88-0409450
____________________________ ________________________________
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization
2995 El Camino Road, Las Vegas, Nevada 89146
________________________________________________ _____________
(Address of principal executive offices) (Zip Code)
(702) 251-3211
________________________________________________
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file
such reports) Yes [XX] No [ ], and (2) has been subject to such filing
requirements for the past 90 days. Yes [XX] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of the date hereof, the issuer had outstanding 601,200 shares of its
Common Stock, $0.001 par value.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements of Access Network Corporation, a
Nevada corporation (the "Company"), as of March 31, 2001 were prepared by
Management and commence on the following page. In the opinion of Management
the financial statements fairly present the financial condition of the
Company.
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2001
2
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
ASSETS (Unaudited)
March 31, December 31,
2001 2000
-------------- -------------
Current Assets:
Cash $ 11,244 $ 12,744
Accounts receivable 931 325
Inventory 4,826 5,318
Prepaid expenses - 792
Deposits 109 109
-------------- -------------
Total Current Assets 17,110 19,288
-------------- -------------
Total Assets $ 17,110 $ 19,288
============== =============
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ - $ -
-------------- -------------
Total Current Liabilities - -
Stockholders' Equity:
Common stock, $.001 par value; authorized
25,000,000 shares, issued and outstanding
601,200 shares on March 31, 2001 and
601,200 on December 31, 2000. 601 601
Additional Paid-in Capital 56,635 56,635
Accumulated Deficit (40,126) (37,948)
-------------- -------------
Total Stockholders' Equity 17,110 19,288
-------------- -------------
Total Liabilities and Stockholders' Equity $ 17,110 $ 19,288
============== =============
See Accompanying Notes to the Financial Statements.
3
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
(September 8,
Three Months Three Months 1998) Inception
Ended Ended to March 31,
March 31,2001 March 31,2000 2001
-------------- -------------- -------------
Sales: $ 605 $ - $ 24,559
Cost of Sales: 492 - 21,300
-------------- -------------- -------------
Gross Margin 113 - 3,259
Expenses:
Advertising & marketing - - 351
Amortization - - 185
Consulting 1,500 1,500 13,600
General and administrative 792 253 9,251
Officer/director bonus - - 10,000
Professional fees - 2,452 9,998
-------------- -------------- -------------
Total Expenses 2,292 4,205 43,385
-------------- -------------- -------------
Net Loss $ (2,179) $ (4,205) $ (40,126)
============== ============== =============
Net Loss Per Common Share
(basic and fully dilutive) $ (0.004) $ (0.010)
============== ==============
Weighted Average Shares
Common Stock Outstanding 601,200 401,200
============== ==============
See Accompanying Note to the Financial Statements.
4
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(September 8,
Three Months Three Months 1998) Inception
Ended Ended to March 31,
March 31,2001 March 31,2000 2001
-------------- -------------- -------------
Cash Flows Used In Operating Activities:
Net Loss $ (2,179) $ (4,205) $ (40,126)
Adjustments to Reconcile Net Loss to Cash
Flow used in Operations:
Common stock issued for bonus - - 10,000
Changes in Operating Assets and Liabilities:
(Increase) decrease in accounts receivable (606) 1,069 (931)
Decrease in prepaid expenses 792 245 -
(Increase) decrease in inventory 493 - (4,826)
Increase in deposits - - (109)
Increase (decrease) accounts payable - (1,632) -
-------------- -------------- -------------
Net Cash used in Operating Activities (1,500) (4,523) (35,992)
Cash Flows from Financing Activities:
Sale of common stock - - 47,236
-------------- -------------- -------------
Net Cash Provided by Financing Activities - - 47,236
-------------- -------------- -------------
Net Increase (Decrease) in Cash (1,500) (4,523) 11,244
Cash at Beginning of Period 12,744 33,164 -
-------------- -------------- -------------
Cash at End of Period $ 11,244 $ 28,641 $ 11,244
============== ============== =============
See Accompanying Note to the Financial Statements.
5
ACCESS NETWORK CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2001
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on September 8, 1998, under the laws of the state
of Nevada. The business purpose of the Company is to distribute, on a
wholesale basis, specialty packaging for small businesses nation wide.
The Company will adopt accounting policies and procedures based upon the
nature of future transactions.
NOTE B. INVENTORY
Inventory is stated at the lower of cost or market, determined on a first-in,
first-out basis.
NOTE C. EARNINGS (LOSS) PER SHARE
Basic EPS is determined using net income divided by the weighted average
shares outstanding during the period. Diluted EPS is computed by dividing net
income by the weighted average shares outstanding, assuming all dilutive
potential common shares were issued. Since the Company has no common shares
that are potentially issuable, such as stock options, convertible securities
or warrants, basic and diluted EPS are the same.
NOTE D. PUBLIC STOCK OFFERING
In June of 1999, the Company sold 201,200 shares of its common stock at $.25
per share for a total of $50,300. The net proceeds were to be used to
distribute, on a wholesale basis, specialty packaging for small businesses
nation wide.
NOTE E. RELATED PARTY TRANSACTIONS
The Company entered into an agreement with a company in which one of its
shareholders has a controlling interest for the purpose of processing credit
card sales of its products. Under terms of the agreement, the Company will
pay 2.5% of all of the sales processed by the Company using credit cards as a
method of payment. The credit card processing fees are deducted as processed
to arrive at net sales. The agreement was effective December 1, 1998. On
June 1, 2000, the Company issued 200,000 shares of its common stock to two of
its officers for their dedication and efforts to make the Company a success.
The stock was valued at the $.05 per share for a total of $10,000. When stock
is issued as a bonus, the Company's policy is to expense the assigned value in
the Statement of Operations.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR
PLAN OF OPERATION
The following discussion provides information which Management believes
is relevant to an assessment and understanding of the Company's plan of
operation. This discussion should be read in conjunction with the Company's
financial statements and notes.
Forward Looking Statements
- --------------------------
This Form 10-QSB includes, without limitation, certain statements
containing the words "believes", "anticipates", "estimates", and words of a
similar nature, which constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. This Act
provides a "safe harbor" for forward-looking statements to encourage companies
to provide prospective information about themselves so long as they identify
these statements as forward looking and provide meaningful, cautionary
statements identifying important factors that could cause actual results to
differ from the projected results. All statements other than statements of
historical fact made in this Form 10-QSB are forward-looking. In particular,
the statements herein regarding the future purchase of equipment, hiring
additional personnel, potential contracts with third parties, future cash
requirements, and future profitability are forward-looking statements.
Forward-looking statements reflect management's current expectations and are
inherently uncertain. The Company's actual results may differ significantly
from management's expectations.
General
- -------
The Company currently operates at 2995 El Camino Road, Las Vegas, Nevada
89146. The Company's principal business is providing speciality gift packaging
to small businesses, especially independent sale personnel of direct marketing
entities. The Company's fiscal year end is December 31.
Results of Operations
- ---------------------
Revenues and Costs of Revenues
The Company achieves revenues from sale of its gift boxes, videos and
t-shirts; costs of revenues include inventory costs, inventory storage and
shipping expenses as well as the usage of some of the inventory in promotions.
Total revenues for the the three months ended March 31, 2001 were $605; the
Company had no revenues during its first quarter last year. Costs of sales for
the first quarter were $492. The Company had a gross margin of 18% in the
first quarter and has averaged a 13% profit margin since inception. The
Company, however, has not experienced personnel costs since Marci Evans does
not take her $1,000 per month salary.
Assets
The Company's assets consist mainly of approximately $11,244 cash on
hand, inventory valued at $ 4,826 comprised of t-shirts, gable boxes and
specialty wrap and ribbon, accounts receivable of $ 931, and deposits equaling
$900.
Liabilities
The Company has no liabilities
7
Comparative Periods - First quarters March 31 2001 and 2000
The Company total assets decreased between first quarter 2001 and first
quarter 2000 from $ 35,084 to $ 17,110. Cash as of March 31, 2001 was $11,224
compared to $ 28,641 as of March 31, 2000. The change was primarily due to
general and administrative expenses especially a $500 per month consulting
fee.
Net losses for the three months ended March 31, 2000 were $4,205 as
opposed to a loss of $2,179 in the first three months of 2001. The decrease
in the Company's net losses during the first quarter of 2001 is mostly due to
a decrease in professional fees; the Company paid $2,292 in professional fees
in the first quarter of 2000 compared to none in the first quarter of 2001.
Liquidity and Capital Resources
- --------------------------------
Cash Flows from Operations
The Company experienced losses from operations in 1999, 2000 and in the
first quarter of this year. The Company continues to rely on funds raised in
its public offering which closed in April of 1999 to fund its daily operations
as well the purchase and sale of its merchandise. The Company had less cash
flows from operations in each quarter of 2000 and the first quarter of 2001
due to a significant decrease in revenues beginning in 2000 while experiencing
an increase in overall expenses. Although the Company did increase its net
profit margin, it has not able to generate sufficient cash flows to fund its
day to day operations. It is unlikely that the Company will be able to
increase its revenues sufficiently to fund operations which have declined in
each year since the start of operations in the 4th quarter of 1998. The
Company needs to increase its volume substantially to provide sufficient cash
flows for operations. If it is not able to do so in the next 12 months, the
Company will require additional financing.
Financing Activities
The Company has funded its operations mostly through its contributions by
officers and directors through September of 1998, and through an offering of
its common stock which closed in April of 1999. The Company has 601,400
shares outstanding: 200,000 shares issued for cash to its founders, 201,200
shares sold in its offering which closed in April 1999 for gross proceeds of
$50,300; and 200,000 of which were issued as bonuses to two of the Company's
officers. Marci Evans, the Company's President and CEO, has not been paid a
salary since inception and agreed to forego the same until the Company began
seeing more revenues from operations.
Cash Requirements over the Next Twelve Months
During the next twelve months, its cash requirements will include the
following: (1) $500 per month to its consultant, Progressive Management.
Progressive Management takes care of the Company's bookkeeping, audit
preparation and SEC filings and is controlled by the husband of Marci Evans,
Mr. Dennis Evans; (2) compensation to Marci Evans of $1,000 per month; (3)
Lease payments on a 10x15 feet storage unit from West Sahara Mini Storage at
6318 W. Sahara Ave., Las Vegas, NV 89146; the lease is prepaid to September 1,
2001 and is $96.00 per month; (4) an estimated $500 per month for office lease
expenses when and if the Company acquires office space; and (4) expenses
associated with SEC reporting compliance. The Company, therefore, will
require a minimum of $25,000 for the next 12 months for compensation for
services and lease payments.
8
Management acknowledges that the funds available to the Company will
not be sufficient to achieve the Company's goal of penetrating the highly
competitive market of specialty packaging, nor will the remaining cash
available to it be sufficient to fund day to day operations during the current
fiscal year. The Company will use every effort to minimize its expenses during
its next year of operations. It has no plans for additional employees until
or unless warranted due to business needs and it will likely not rent office
space but continue to use the home of Marci Evans. The Company will utilize
the services of Susan Stankiewicz, if needed, when and if business is such
that it requires additional employees especially to take and process orders.
Marci Evans has indicated that she is willing to continue to forego her salary
of $1,000 per month, if necessary. Ms. Evans has not yet started receiving
such salary.
Need for Additional Financing
If the Company does experience an increase in volume of sales as well as
an improved profit margin in the next twelve months, it may be forced to
discontinue operations unless it is able to raise sufficient capital to
continue pursuing its business plan. Even if the Company begins generating
revenues, it could require additional funding for expansion. It may be
difficult for the Company to succeed in securing additional financing. The
Company may be able to attract some private investors, or officers and
directors may be willing to make additional cash contributions, advancements
or loans. Or, in the alternative, the Company could attempt some form of debt
or equity financing. However, there is no guarantee that any of the foregoing
methods of financing would be successful. If the Company fails to achieve at
least a portion of its business goals in the next twelve months with the funds
available to it, there is substantial uncertainty as to whether it will
continue operations.
Ms Evans intends to aggressively pursue a customer base of independent
sales directors for Mary Kay Inc. and other direct marketing companies over
the next 12 months, especially during the 2001 Holiday season.
Risks, Trends, Uncertainties
- -----------------------------
Limited Operations/Insignificant Revenues. The Company was organized in
September of 1998, and has conducted minimal operations since that date. The
Company has limited assets of approximately $17,000 of which $11,000 is
comprised of cash. In 2000, the Company realized only $3,508 in revenues; its
first quarter of 2001 saw only $605 in revenues. Because of its limited
capital and its lack of significant operating history, the Company must be
considered a development stage company. Development stage companies are
inherently more risky than established companies because there is no earnings
history and no assurance that future revenues will develop. The Company's
potential profitability is questionable.
Competition. The Company is attempting to develop a niche in a market,
that is the specialty packaging and t-shirt business, which is highly
competitive with respect to name recognition, volume discounts, and quality of
experienced service. There are many well established competitors possessing
substantially greater financial, marketing, personnel and other resources than
the Company. The Company faces significant competition from a broad range of
companies involved in the wholesale distribution and sales of specialty
packaging and other specialty items. Many of these competitors are innovators
in the area of single-ply paperboard folding cartons in the packing industry
and represent years of research in products and services. There is intense
competition from such companies involved in the paper goods markets which have
already achieved success in the industry and also have the resources,
technology and marketing know-how to readily address changes in the industry.
9
Competition has proven tougher than anticipated and has resulted in decreasing
revenues to the Company.
No Formal Market Feasibility Study/Lack of Marketing Plan. The Company
has never conducted a formal market feasibility study or analysis to see if
the product/services the it is offering will be widely accepted locally or
nationally. This lack of market has posed an additional risk to the Company
which has based its decision to continue forward in the specialty packaging
business on its operations in the fourth quarter of 1998 and fiscal year 1999.
The Company has a limited product line and limited customer base which make it
difficult for it to assess market feasibility or formulate marketing plans.
The Company does not consider its extremely limited results of operations to
date to be indicative of the feasibility of the Company to be able to succeed
with its business purposes. Although it has established that a market for its
goods and services exists, Management has no experience in wholesale marketing
nor in packaging and is having a difficult time defining its marketing plan to
best penetrate a highly competitive industry. The Company must be able to
identity and recognize industry trends, which change frequently, and be
flexible enough to address changes to meet customers' needs. Lack of revenues
has forced the Company to rethink its business objectives and marketing
approach as its initial marketing approach of trying to penetrate a very
specialized niche has not proven successful.
Conflicts of Interest and Potential Conflicts of Interest. All of the
Company's officers/directors are involved with other business and/or interests
which will take a portion of their time. Although these individuals are
willing to work full-time for the Company, they may not be able to devote 100%
of their time to the Company. Marci Evans, the Company's President, Secretary,
and a Director, is an independent Senior Sales Director for Mary Kay Cosmetics
and such position will require a portion of her time and efforts; Susan
Stankiewicz currently serves as Vice-President and a Director of another
corporation, which will require a portion of her time; Michael Stankiewicz
attends school full time at Clark County Community College. Each of the
directors, therefore, has other interests which will demand a certain amount
of their time, which, in some instances, could be substantial. There is no
assurance, therefore, if a conflict of interest arose, that it would be
resolved in favor of the Company. In addition, members of Management may
become involved in other business entities which have the same or similar
activities as the Company and unforseen conflicts of interest could develop.
Inexperience of Management. Although Ms. Evans and Ms. Stankiewicz
have a varied background and business experience between them, and both have
served in various capacities with other start-up companies in the past,
neither have had experience in running a company in the start-up and
development stage, nor has either of these individuals had any experience in
the marketing, on a wholesale basis, of specialty packaging. Mr. Stankiewicz
has had no business experience. This lack of experience provides for
considerable risk to the Company's ultimate success.
Dependence on Management/Key Personnel. The Company is extremely
dependent on Management. The loss of any of its officers could have a
material adverse effect on the Company's business. Because of the Company's
limited resources, no key person insurance has been, or will be purchased on
any of its officers. In addition, the future success of the Company is
dependent on the performance of Management, especially Marci Evans, and her
ability to attract and motivate and retain highly qualified employees, when
and if the Company has sufficient funds to do so. In the meantime, the
Company's business plan is based almost entirely on Marci Evans' analysis of
market trends, her product choices in response to such marketing analysis, her
ability to attract and maintain a steady customer base, and her ability to
market the product line to such clientele. The Company, as of this date cannot
10
afford to hire additional personnel to perform marketing services and all will
be performed by Management, mostly Ms. Evans. The Company is highly dependent,
therefore, on Ms. Evans ability to market its products. Because substantially
all of the Company's current customers are a result of Ms. Evans business and
personal contacts in the Mary Kay network, the loss of Marci Evans' services
would have a material adverse effect on the Company. In addition, in the
start-up phase, Management will continue to provide the Company, without
charge, the usage of a personal computer, copier, miscellaneous office
equipment, and a vehicle.
Need for Additional Financing. Unless the Company is able to generate
sufficient revenues to successfully develop and sustain its business
operations, the survival of the Company will likely depend on additional
financing. No assurance can be made that such financing would be available,
and, if available, whether it would take the form of debt or equity financing.
In either case, additional financing could have a negative impact on the
Company's shareholders. The Company may seek financing in the form of debt
financing in the form of a loan which could be from an individual or financial
institution. Such loan could put the Company at risk for amounts greater than
its assets, and, if not promptly repaid, could result in bankruptcy. If the
Company attempted equity financing in the form of either a private placement
or a another type of offering, there can be no assurance that the Company
would be successful in selling such an offering or finding an underwriter
willing to do; such an offering could result in further dilution to present
shareholders.
Dependence on Suppliers. Management believes that in order to compete
in the wholesale marketing and distribution of specialty packaging, it must
offer products which are readily available, high in quality and competitively
priced. The Company has tried to establish relationships with a number of
manufacturer/suppliers which it believes can meet the foregoing criteria. It
has not entered into nor plans to enter into any long term purchase contracts
with any of these manufacturer/suppliers. In 1999, the Company purchased
products from the following, Floral Supply Syndicate, Gift Box Corporation and
Costco Wholesalers. In late 1999, a buyout of its existing supplier cut
Company's profit margin when the new owner did not offer the same volume
discounts as its predecessor. The Company has not succeeded in replacing that
supplier to its satisfaction, and has instead begun exploring alternative
situations such as other product lines and international suppliers.
Seasonality of Specialty Packaging. Distribution of specialty packaging
is extremely seasonable especially in the target market niche the Company is
soliciting. In general, traditional holidays spur seasonal consumer buying.
The fourth calendar quarter is typically the highest sales volume quarter for
sales in the industry as a whole. The Company will have a more difficult time
forecasting purchasing and sales patterns, and, as a result, it may be very
difficult for the Company to survive the seasonableness of the industry.
ANY FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-QSB REFLECT
MANAGEMENT'S BEST JUDGMENT BASED ON FACTORS CURRENTLY KNOWN AND INVOLVE RISKS
AND UNCERTAINTIES. ACTUAL RESULTS MAY VARY MATERIALLY.
11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. Changes in Securities
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits filed with this Report
None
(b) Reports on Form 8-K
No reports on 8-K were filed during the quarter reported on.
12
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ACCESS NETWORK CORPORATION
(Registrant)
Date: May 12, 2001 By: /s/ Marci Evans
------------------------
Marci Evans, President
and Director