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 June 30, 1999
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
6357 Vicuna Drive, Las Vegas, Nevada 89146
________________________________________________ _____________
(Address of principal executive offices) (Zip Code)
(702) 247-4474
________________________________________________
(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 [X] No [ ], and (2) has been subject to such filing
requirements for the past 90 days. Yes [ ] No [X]
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 September 15, 1999, the issuer had outstanding 401,200 shares of
its Common Stock, $0.001 par value.
1
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements of Access Network Corporation, a
Nevada corporation (the "Company"), as of June 30, 1999, 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.
2
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
3
TABLE OF CONTENTS
Page Number
ACCOUNTANT'S REPORT.................................... 1
FINANCIAL STATEMENT:
Balance Sheet..................................... 2
Statement of Operations and Deficit
Accumulated During the Development Stage......... 3
Statement of Changes in Stockholders' Equity...... 4
Statement of Cash Flows........................... 5
Notes to the Financial Statements................. 6
4
DAVID COFFEY 3651 Lindell Road, Suite A, Las Vegas, Nevada 89103
- ------------------------------------------------------------------------------
Certified Public Accountant (702)871-3979
To the Board of Directors and Stockholders
of Access Network Corporation
Las Vegas, Nevada
I have compiled the balance sheet of Access Network Corporation as of
June 30, 1999 and the related statements of operations, cash flows and changes
in stockholders' equity for the period ended in accordance with Statement on
Standards for Accounting and Review Services issued by the American Institute
of Certified Public Accountants.
A compilation is limited to presenting in the form of financial
statements information that is the representation of management. I have not
audited or reviewed the accompanying financial statements and, accordingly, do
not express an opinion or any other form of assurance on them.
/s/ David Coffey, CPA
David Coffey C.P.A.
July 23, 1999
5
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
JUNE 30, 1999
(Unaudited)
ASSETS
Cash $ 44,865
Organizational costs less accumulated
amortization of $30 155
Deposits 109
Income taxes receivable 220
Inventory 201
------
Total Assets $ 45,550
======
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable $ 0
--
Total Liabilities 0
Stockholders' Equity
Common stock, authorized 25,000,000 shares
at $.001 par value, issued and outstanding
401,200 shares 401
Additional paid-in capital 46,835
Deficit accumulated during the
development stage (1,686)
------
Total Stockholders' Equity 45,550
Total Liabilities and Stockholders' Equity $ 45,550
The accompanying notes are an integral part of
these financial statements.
6
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
FOR THE PERIOD ENDED June 30, 1999
(With Cumulative Figures From Inception)
(Unaudited)
From Inception,
January 1, 1999 Sept. 8, 1998
To June 30, 1999 To June 30, 1999
----------------- -----------------
Sales $ 0 $ 8,592
Cost of sales 0 (6,509)
--- -----
Gross margin 0 2,083
Expenses
Amortization 18 30
Consulting 3,000 3,000
Fees 103 203
Office supplies 0 536
----- -----
Total expenses 3,121 3,769
Net loss before income taxes (3,121) (1,686)
Income taxes receivable 220 0
----- -----
Net loss (2,901) $ (1,686)
=====
Retained earnings,
beginning of period 1,215
-----
Deficit accumulated during
the development stage $ (1,686)
=====
Earnings (loss) per share
assuming dilution:
Net loss $ (.01) $ (.01)
=== ===
Weighted average shares outstanding 300,600 260,360
======= =======
The accompanying notes are an integral part of
these financial statements.
7
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM September 8, 1998 (Date of Inception)
To June 30, 1999
(Unaudited)
Additional
Common Stock Paid-in
Shares Amount Capital Total
------- ------ ------- -----
Balance,
September 8, 1998 --- $ --- $ --- $ ---
Issuance of common
stock for cash 200,000 200 9,800 10,000
Net income --- --- --- 1,215
------- --- ----- -----
Balance,
December 31, 1998 200,000 200 9,800 11,215
Issuance of common
stock for cash 201,200 201 50,099 50,300
Less offering costs 0 0 (13,064) (13,064)
Less net loss --- -- --- (2,901)
------- --- --- -----
Balance,
June 30, 1999 401,200 $ 401 $ 46,835 $ 45,550
======= ===== ====== ======
The accompanying notes are an integral part of
these financial statements.
8
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED June 30, 1999
(With Cumulative Figures From Inception)
(Unaudited)
From Inception,
January 1, 1999 Sept. 8, 1999
To June 30, 1999 To June 30, 1999
----------------- ----------------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net Loss $ (2,901) $ (1,686)
Non-cash items included in net loss
Amortization 18 30
Adjustments to reconcile net loss to
cash used by operating activity
Prepaid offering costs 3,000 0
Accounts receivable 1,087 0
Deposits (109) (109)
Income taxes receivable (220) (220)
Inventory 0 (201)
Accounts payable (720) 0
----------------- ----------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 155 (2,186)
CASH FLOWS USED BY INVESTING ACTIVITIES
Organizational costs 0 185
----------------- ----------------
NET CASH USED BY
INVESTING ACTIVITIES 0 185
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 201 401
Paid-in capital 50,099 59,899
Less offering costs (13,064) (13,064)
----------------- ----------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 37,236 47,236
NET INCREASE IN CASH 37,391 $ 44,865
================
CASH AT BEGINNING OF PERIOD 7,474
-----------------
CASH AT END OF PERIOD $ 44,865
=================
The accompanying notes are an integral part of
these financial statements.
9
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 1999
NOTES TO THE FINANCIAL STATEMENTS
Access Network Corporation (the Company) has elected to omit
substantially all footnotes to the financial statements for the six months
ended June 30, 1999, since there have been no material changes (other than
indicated in the other footnotes) to the information previously reported by
the Company in the audited financial statements for the four months ended
April 30, 1999.
UNAUDITED INFORMATION
The information furnished herein was taken from the books and records
of the Company without audit. However, such information reflects all
adjustments which are, in the opinion of management, necessary to properly
reflect the results of the period presented. The information presented is not
necessarily indicative of the results from operations expected for the full
fiscal year.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 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.
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,
future profitability and year 2000 issues 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 6357 Vicuna Drive, 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 of each year.
The Company is a development stage company with no revenues during its last
two fiscal quarters and total revenues from operations from inception in
September of 1998 to the June 30, 1999 of $8,592, all of which were achieved
in 1998. Total costs of sales for that same period was $6,509 with a net
income for the year ended December 31, 1998 of $2,083. During Company's second
fiscal quarter its net assets decreased to $45,550 from $53,363 at April 30,
1999. This decrease of $7,813 was largely due to a decrease in cash due to
expenditures of $3,000 in consulting fees related to the preparation and
filing of the Company's Form 10-SB. The Company has inventory of $201 and has
yet to purchase inventory in 1999. The Company anticipate purchasing
inventory in the later part of the 3rd quarter in anticipation of the holiday
season. Currently the Company has generated no income from sales in 1999.
The Company's operations are extremely seasonal, and it anticipates that
the bulk of its revenues, if any, will be generated in the 4th quarter of its
fiscal year. (The specialty packaging industry and fashion packaging industry
in general rely on traditional holidays which spur consumer buying.) In 1998
the Company generated all of it revenues during the 4th quarter and Management
believes this to be the trend for the current year. The Company's goal is to
continue with the same net profit margin of approximately 24% in order to be
competitive and will rely on volume for revenues. In addition, the Company
acknowledges that it has a very limited product line during its first quarter
of operation (the 4th quarter of 1998). The Company's product line to date is
comprised of two different styles of "gourmet" gift boxes known as the one
piece "Gable Box(es)". The colors of the Gable Boxes consist of metallic
white and gold and the dimensions are 3.5" X 3.5" X 13". These boxes were
specifically chosen to satisfy the needs of the Company's initial target
market, that is independent sales directors for Mary Kay, Inc., and were
11
utilized as seasonal gift boxes by such individuals in their sales of Mary Kay
Cosmetics during the 1998 Christmas season. The Company also offers other
related merchandise including wrap, tissue and ribbon. The Company's Gable
Boxes and related merchandise lend itself well to coordinated gift wrapping.
The Company believes that a beautifully wrapped gift package (ie. a well
designed and produced package) will do the following for the Company's
clients: (1) generate repeat business for the client; (2) add to the value of
the gift itself; and (3) enhance the client's image. The Company currently
has a limited inventory on hand of approximately 1,000 Gable Boxes and will
purchase additional inventory and other types of product inventory when and as
needed. Marci Evans, the Company's President and CEO, attends to most of the
marketing of the Gable Boxes and intends to sell the same line of Gable Boxes
to the Company's current and new customers during the 1999 Christmas season
because such customers have indicated satisfaction with the product and a
willingness to repurchase.
Also, on a limited/test basis, during the 1998 Christmas season, the
Company offered a demonstration video, on the preparation of the "Twelve Days
of Christmas" for the Company's clientele. The video was produced by the
Company's President, Marci Evans, in response to customers questions on the
use of the Gable Boxes in connection with the "12 Days of Christmas" gift set,
a high ticket specialty gift item marketed by Mary Kay independent sales
directors during the 1998 Christmas season. The videos provided a means to
demonstrate how to use the specialty gift boxes to best advantage and sold for
$5.00. The response from the Company's clients was favorable with several
videos sold. Ms. Evans believe the concept is worthwhile for the Company to
pursue and intends to produce the video a second time for the 1999 season on a
more professional basis. The Company has been seeking professional assistance
in producing the video at a cost effective price, and has contacted Steve
Lemon of Hurricane, Utah, owner of "The Studio" for complete production. No
agreement with Mr. Lemon has been signed as of the date of this registration
statement for the production of the video, nor has a definitive date been set
to begin the same.
PLAN OF OPERATION
During the Company's next 12 months, the Company will concentrate on the
marketing of its Gable Boxes, and as well as other product line, if any, to
current and new customers. The Company has spent the last couple of months in
the research of new wholesalers of the speciality gift packaging. Management
has been in contact with companies that stock or drop ship the products which
the Company currently sells. The Company plans to use Floral Supply
Syndicate, Nashville Wraps, U.S. Box Corporation, Gift Box and Costco
Wholesale. Management and spoken with representatives of these companies and
has determined that the wholesale box to be used by the Company vary greatly
in price and in discount by volume. Management will research which companies
offer the best price per 100 units, volume discount, drop shipment and reorder
time. During September of 1999, the Company purchased $1,000 worth of its
"Gable Boxes", and intends to purchase approximately $2,500 worth of
additional inventory in the near future.
The Company attributes last years sales to personal business contacts of
the Management and believes the sales season this year will also follow the
same trend. Management hopes the referrals from last years sales season will
expand the Company's presence in this specialized market place. The Company
does not plan to use any advertisement at this point in time but will continue
to pursue it's current market aggressively in the 4th quarter of 1999 through
the efforts of the Company's President, and her contacts in the Mary Kay
12
Cosmetics industry. The Company will also target other small business,
especially independent sales agents for companies in the direct sales industry
such as NuSkin, Avon, and Amway, which might have the use of specialty
packaging in connection with either resales or as part of their own overall
business marketing approach. The Company has been and will continue to be
reliant on contacts that Ms. Evans has made during her years as a Mary Kay,
Inc. Independent Sales Director, as part of its marketing approach.
Currently, as a result of Evans marketing efforts in last year's fourth
quarter, the Company has 25 retail clients in 12 different states. Most of
these clients are comprised of Independent Mary Kay Cosmetics Sales Directors.
Ms. Evans will make contact with each of these contacts as part of her initial
marketing efforts.
Ms. Evans intends to continue to pursue these Independent Sales
Directors at Mary Kay as the Company's target market almost exclusively during
the next 12 months, although the she will investigate other potential markets,
such as:
1. Sales Directors of Other Direct Marketing Companies The Company
will pursue sales directors with other direct marketing companies, such as
NuSkin and Avon, as one of its priority target markets. Ms. Evans hopes to
attend seminars sponsored for independent sales directors with her products in
hopes of achieving some sales.
2. Direct Marketing Companies -- The Company hopes that the inroads it
makes with sales associates of direct marketing companies may lead to
potential sales or sales contracts with the direct marketing companies
themselves. It is Management's belief that if it can provide a product which
assists the independent sales associates with boosting sales of their product,
the same could be a means of achieving certain referrals and recommendations
with the company itself, especially for specialty, seasonal packaging.
3. Maintaining a Wholesale/Retail Store Front the Company will
investigate the potential of this market although it is not a priority.
Maintaining a store front will require a large outlay of capital and is
something which will be looked at in connection with the Company's
investigation of marketing opportunities in the greater Las Vegas area.
4. Purchasing and Reselling Overstock Merchandise From Suppliers as
Ms. Evans establishes relationships with various manufacturers/suppliers, she
will be able to analyze overstock merchandise opportunities if they become
available. Such over-stock may be marketed in connection with a current
customer list, e-commerce, or a wholesale retail front.
5. Investing in Other Related Specialty Packaging Businesses.
6. Local Specialty Businesses in the Greater Las Vegas Area -- The
Company will investigate marketing opportunities in its own locale, that is
the greater Las Vegas area. Because Management is familiar with local
economy, and because southern Nevada is seeing a large economic growth, there
appears to be a substantial opportunity to provide local services including
specialty products such as the Company's to local businesses. Ms. Evans has
been making numerous contacts with manufacturers and suppliers in order to be
aware of inventory and product lines. By doing so, she hopes to be prepared
to exploit local marketing opportunities for specialty packaging if and when
such opportunities arise.
13
7. The Internet Market the Company will pursue the Internet market
in general by establishing a web site for its products when and if it has
sufficient products available to warrant on-line marketing. Much of this
course of action will depend on the Company's ability to purchase inventory or
have inventory readily available to it to at a competitive price to make it
attractive to Internet customers. The Internet market is not a priority,
although, because web sites are inexpensive to set up, the Company may
establish a web site for its products shortly. It does not, however, intend
to depend on such web site as a primary revenue source.
During the next twelve months, the Company's cash requirements will be
minimal. The Company's consulting firm, Progressive Management and Consulting,
initially engaged at a monthly fee of $500 per month, has agreed to defer its
monthly fees until such time the company the Company can financial support
such payment. Compensation to Marci Evans, the Company's President, of $1,000
per month, will also be deferred until the Company revenues can support her
salary. The Company has not yet leased any office space. The Company will,
however, incur certain legal and accounting expenses in connection with
Securities and Exchange Commission reporting requirements imposed on the
Company as of August 29, 1999, the date it became a "reporting company" under
the Securities and Exchange Act of 1934. The Company anticipates that it will
require a minimum of $4,000 per year in legal and accounting fees to meet
these reporting requirements. The Company has approximately $45,000 at June
30, 1999, which it believes will be sufficient to provide for the its very
minimal cash requirements for day to day operations in the next twelve months,
as well at provide for costs of purchasing inventory, minimal marketing
expenditures, and cover legal and accounting expenses.
The Company has no plans for any purchases of significant equipment, but
has plans to lease a storage unit for the storage of bulk purchases by the
Company. The Company has not chosen a property, but has found units in the
Company's general Las Vegas area are leasing for $100 to $150 per month.
There are no plans for additional employees until it is warranted by sales of
the Company. If the Company does not succeed in seeing limited revenues or, at
minimum, the potential of limited revenues, 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. Management is not experienced
in developmental companies and may not have developed a sufficient or
appropriate marketing plan nor estimated its needs for advertising and
associated expenses in acquiring a client base accurately. The Company may
require additional funds and time to achieve these goals. 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.
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.
Year 2000 Compliance Management believes that the Company's accounting and
operational systems are year 2000 compliant. The Company is not dependent on
14
computers other than for its internal bookkeeping which is done on a system
that is Year 2000 compliant. The Company has no relationship with any third
parties which are dependent on computers other than its bank. The Company's
bank has reported that it is Year 2000 compliant. The only way that the
Company perceives that it can be impacted by Y2K is: (1) if one of its
suppliers is not Y2K compliant which could provide for delays in shipping of
inventory to the Company; or (2) if one of the Company's shippers is not Y2K
compliant thereby causing delays in shipments to customers. The Company
intends to purchase the majority of its inventory before the 1999 year end
because its business is seasonal with the majority of its sales in the fourth
quarter. The Company will use United Parcel Service which it believes is Year
2000 system compliant for its shipments. Again, Management believes that the
majority of its sales will be completed before the 1999 year end. The Company
believes it will then have time to deal with any Y2K issues when and as they
arise.
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.
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
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K -- None
15
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: September 20, 1999 By: /s/Marci Evans
------------------------
Marci Evans, President
and Director