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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended July 31, 2001
[ ] Transition Report pursuant to 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 000-19457
LEGAL ACCESS TECHNOLOGIES, INC.
-------------------------------
(Exact name of Small Business Issuer as specified in its charter)
Nevada 87-0473323
- ------ ----------
(State or other jurisdiction of (IRS Employer
incorporation ) Identification No.)
2300 W. Sahara Ave., Suite 500
Las Vegas, NV 89102
- ------------- -----
(Address of principal executive offices (Zip Code)
Issuer's telephone number, including area code (702) 949-6115
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest
practicable date: 6,071,232 shares of Common Stock as of
July 31, 2001.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
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PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BASIS OF PRESENTATION
General
The accompanying un-audited financial statements have been
prepared in accordance with the instructions to Form 10-QSB and,
therefore, do not include all information and footnotes necessary
for a complete presentation of financial position, results of
operations, cash flows, and stockholders' equity (deficiency) in
conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a
fair presentation of the results of operations and financial position
have been included and all such adjustments are of a normal
recurring nature. Operating results for the three months ended
July 31, 2001 are not necessarily indicative of the results that
can be expected for the year ending April 30, 2002.
The financial statements present the activities of Legal Access
Technologies, Inc. and its subsidiaries Tele-Lawyer, Inc. and
Perspectives Health Management Corp., with the net assets of
Perspectives (other than cash) being shown as a business segment
held for sale. All significant inter-company balances and
transactions have been eliminated in the consolidation.
The balance sheet at April 30, 2001 was derived from the audited
financial statements of Tele-Lawyer, Inc. (See notes to the
financial statements, Note 1) included in LATI's Form 8K dated
August 27, 2001.
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LEGAL ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES
BALANCE SHEETS
JULY 31 AND APRIL 30, 2001 (Unaudited)
==========================================================================
ASSETS July
(unaudited) April
----------- -----------
Current assets
Cash and cash equivalents $ 252,541 $ 1,302
Accounts receivable 28,654 3,715
Net assets of business segment held
for sale 3,800,000
----------- -----------
4,081,195 5,017
Property and equipment, net of
accumulated depreciation of $72,709
and $61,339 on July 31 and April 30,
2001 115,395 126,268
----------- -----------
$ 4,196,590 $ 131,285
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
Current liabilities
Accounts payable $ 86,738 $ 96,983
Accrued expenses 231,364 129,518
----------- -----------
318,102 226,501
Long-term liabilities
Convertible notes plus accrued
interest 234,025
Related party debt 212,000 55,000
----------- -----------
446,025 55,000
----------- -----------
764,127 281,501
----------- -----------
Stockholders' equity (deficiency)
Common stock, $0.001 par and no par,
25,000,000 shares authorized,
6,071,232 and 5,354,997 shares
issued and outstanding 6,071 5,355
Additional paid-in capital 5,550,139 1,599,644
Accumulated deficit (2,123,747) (1,755,215)
----------- -----------
3,432,463 (150,216)
----------- -----------
$ 4,196,590 $ 131,285
=========== ===========
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LEGAL ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
THREE-MONTH PERIODS ENDED JULY 31, 2001 and 2000 (Unaudited)
==========================================================================
2001 2000
---- ----
Legal support services revenues $ 55,607 $ 57,686
----------- -----------
Operating costs and expenses
Legal support services 26,928 30,487
Software research and development costs 223,496 156,363
Selling, general, and administrative 215,175 174,629
----------- -----------
465,599 361,479
Loss from operations (409,992) (303,793)
Other income (expense)
Interest (5,449) 12,655
Rentals 601 400
----------- -----------
Loss from continuing operations (414,840) (290,738)
Income from operations of business
segment held for sale 46,308 -
----------- -----------
Net loss $ (368,532) $ (290,738)
=========== ===========
Basic and diluted income (loss)
per common share
Continuing Operations $ (.07) $ (.05)
Business Segment Held for Sale $ (.01) $ -
Net $ (.06) $ (.05)
=========== ===========
Weighted average common shares
outstanding 5,688,115 5,341,666
=========== ===========
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LEGAL ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
THREE-MONTH PERIODS ENDED JULY 31, 2001 AND YEAR
ENDED APRIL 30, 2001 (Unaudited)
==========================================================================
Shares issued Common Additional
and out- Stock par Paid-in Accumulated
standing value Capital Deficit
------------- --------- ----------- -------------
Balance, May 1,
2001 5,354,997 $ 5,355 1,599,644 $(1,755,215)
Net loss (368,532)
Reverse acquisition
of business
segment held
for sale 490,096 490 3,724,510
Settlement of debts 126,139 126 126,085
Common stock issued
for services 100,000 100 99,900
------------- --------- ----------- -------------
Balance, July 31,
2001 6,071,232 $ 6,071 $5,550,139 $(2,123,747)
============= ========= =========== =============
Balance, May 1,
2000 5,341,666 $ 5,342 $1,419,657 $ (430,681)
Net loss (1,324,534)
Capital contributions 140,000
Sale of common shares 13,331 13 39,987
------------- --------- ----------- -------------
Balance, April 30,
2000 5,354,997 $ 5,355 $1,599,644 $(1,755,215)
============= ========= =========== =============
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LEGAL ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
THREE-MONTH PERIODS ENDED JULY 31, 2001 and 2000 (Unaudited)
==========================================================================
2001 2000
------------- --------------
Operating activities
Net cash used in operating
activities $ (190,997) $ (265,564)
Investing activities
Purchase of property and equipment - (52,149)
Financing activities
Loans extended, related parties 157,000
Cash increase from business segment
held for sale 51,211
Debt and accrued interest assumed 234,025
------------- --------------
442,236 -
Net increase (decrease) in cash and
cash equivalents 251,239 (317,713)
Cash and cash equivalents, beginning
of year 1,302 1,041,138
Cash and cash equivalents,
end of year $ 252,541 $ 723,425
============= =============
Reconciliation of net loss to net
cash used in operating activities
Net loss $ (368,532) $ (290,738)
Non-cash items:
Depreciation 10,873
Common stock issued for services 100,000
Increase in operating (assets)
liabilities
Accounts receivable (24,939) 4,371
Accounts payable (10,245) 20,803
Accrued expenses 101,846
------------- --------------
Net cash used in operating
activities $ (190,997) $ (265,564)
============= ==============
Non-cash financing activity
Common stock issued for
settlement of debts $ 126,139
=============
Common stock issued for net
assets in reverse acquisition $ 3,725,000
=============
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LEGAL ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO INTERIM FINANCIAL STATEMENTS
1. Acquisition of Legal Access Technologies, Inc.
On June 12, 2001, in a transaction commonly referred to as a
reverse acquisition and accounted for as a purchase, Tele-Lawyer,
Inc. effectively acquired Dynamic Associates, Inc., which
contemporaneously changed its name to Legal Access Technologies,
Inc. ("LATI") and Tele-Lawyer became a wholly-owned subsidiary of
LATI. In a reverse acquisition, the legal acquirer is treated for
financial reporting purposes as the accounting acquiree, and
accordingly, these consolidated financial statements are prepared
as if Tele-Lawyer, Inc. acquired LATI as of June 12, 2001. As a
result, LATI's year-end has now changed from December 31 to April
30, which was Tele-Lawyer's year-end. For historical financial
information regarding Dynamic Associates, Inc. and Perspectives
Health Management Corporation, please refer to Dynamic's 10KSB
filing on April 16, 2001, which is incorporated herein by reference.
For historical financial statements of Tele-Lawyer, Inc., please
refer to LATI's Form 8K dated August 27, 2001, which is
incorporated herein by reference
The agreement called for each of Tele-Lawyer's shareholders to
receive one new share of LATI common stock for each common share
of Tele-Lawyer held; accordingly, 5,354,997 shares were issued to
Tele-Lawyer's shareholders. LATI's shareholders (formerly
Dynamic's shareholders) received one new share of LATI common
stock for every 153 shares held; accordingly, 490,096 shares were
issued to LATI's shareholders. In addition, each holder of an
option or warrant to purchase shares of Tele-Lawyer's common stock
exchanged the options and warrants for the same rights in LATI.
Management currently intends to discontinue the pre-merger
operations of LATI and to liquidate or sell its assets. The
principal assets of LATI at the time of the reverse acquisition
included certain accounts receivable and several service contracts
of its subsidiary. For purposes of these consolidated financial
statements, these assets are classified as "net assets of business
segment held for sale" and are summarized below. The estimated
fair market value of these assets is based on preliminary sale
negotiations.
July 31, 2001
-------------
Accounts receivable, net $ 1,677,000
Healthcare contracts 2,900,000
Other assets, net 61,000
Accounts payable and accrued
expenses (438,000)
Estimated cost of disposal (400,000)
Net assets of business -------------
segment held for sale 3,800,000
The reverse acquisition also included the assumption of cash and
certain liabilities that are not included in the "net assets of
business segment held for sale." Cash of approximately $280,000
and a 10% convertible note, plus accrued interest discussed below
(see Note 2) are shown separately on the consolidated balance
sheet. Furthermore, a liability for approximately $126,000 was
assumed in the acquisition and settled at the time of the
acquisition through the issuance of LATI's common stock.
Including these items, the total estimated value of the net assets
acquired on June 12, 2001 was approximately $3,725,000.
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2. Convertible Notes
At the time of the reverse acquisition, management finalized an
agreement with the holders of Dynamic notes in the amount of
$8,676,500, to convert the notes into LATI's common stock at
the rate of $.15 per share. On June 12, 2001, $8,473,000 of
the notes had been converted,
increasing the number of common stock issued and outstanding by
56,486,667 shares for a total of 74,996,435 shares issued and
outstanding. These shares were reduced to 490,096 shares through
a 153 to 1 reverse stock split. The remaining $203,500 note is
outstanding at July 31, 2001 and bears interest at 10% per annum.
Interest accrued on this note at July 31, 2001 was $30,525.
3. Equity
Common stock. During the most recent three-month period presented,
LATI issued 126,139 shares of common stock valued at $1 per share
to settle debt obligations. LATI also issued 100,000 shares of
common stock valued at $1 per share for services, of which $62,500
was charged to software research and development costs and $37,500
was charged to selling, general, and administrative expense during
the most recent three-month period presented.
Stock options. LATI issued options to purchase 100,000 common
shares at $3 per share pursuant to its stock option plan. LATI
recognized no expense and has reported no pro forma effect of the
fair value method on reported results due to immateriality.
4. Going Concern
If LATI is successful in accomplishing its objectives, management
believes, but there is no assurance, that the expansion of the
affiliate network of LSOs will result in profitable operations
and generate positive cash flows. If unsuccessful, LATI may be
unable to continue as a going concern. The financial statements,
however, have been prepared assuming LATI will continue as a going
concern and reflect no adjustments that might result from the
outcome of these uncertainties.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Agreement with Tele-Lawyer, Inc.
On June 12, 2001, we consummated an agreement in which we acquired
all of the shares of Tele-Lawyer, Inc., a Nevada Corporation,
resulting in Tele-Lawyer becoming our wholly owned subsidiary (the
"Agreement"). This Agreement called for each of the Tele-Lawyer
shareholders to receive one share of our common stock for each
share of Tele-Lawyer common stock they held. In addition, each
holder of an option or warrant to purchase Tele-Lawyer common
stock under its incentive stock option plan was entitled to
receive an option to purchase the same number of shares of our
common stock under the same terms as provided in their option or
warrant agreement. Articles of Exchange to record this
transaction were filed with the Nevada Secretary of State on June
12, 2001.
As a consequence of this Agreement, we took the following actions:
1. Reduction in Debt. We converted over 97% of our outstanding note
holder debt into common stock. Each of the note holder's, with
the exception of one note holder, agreed to convert their debt
obligation into common stock at a rate of $0.15 of debt for each
share of common stock. This resulted in a remaining note
payable of $203,500, plus accrued interest of $30,525 as of July
31, 2001.
2. Reverse Split of Stock. We conducted a reverse split of our
common stock prior to consummation of the Agreement at a rate of
1 share of new common stock for every 153 shares of issued
stock, effectively reducing our issued and outstanding common
stock (before issuance of shares to the Tele-Lawyer
shareholders) to approximately 490,096 shares (after
adjustments). No fractional shares were issued. Shareholders
received one additional share for any fractional share resulting
from the reverse split. Shareholders with less than 153 shares
were paid the value of their shares based on the closing price
for our common stock on April 30, 2001, the record date for the
determination of the shareholder's right to vote at the annual
meeting. The closing price on that date was $0.01 per share.
We thus reduced our issued and outstanding shares from
74,966,435 to 490,096, or over 99%, prior to consummation of the
Agreement.
3. Issuance of Common Stock to Tele-Lawyer Shareholders. We issued
Tele-Lawyer shareholders approximately 5,354,997 shares of our
common stock in exchange for all their common stock of Tele-
Lawyer. We thus had 5,845,093 shares of common stock issued and
outstanding immediately following the acquisition of Tele-
Lawyer, or a reduction of over 92% based on the pre-stock split
number of shares.
4. Issuance of options and warrants. Following our shareholder's
approval of our new stock option plan. We issued options to
purchase 285,000 shares of common stock at $1 per share, options
to purchase an additional 441,231 shares of common stock at $3
per share, and warrants to purchase 458,880 shares of common
stock at $3 per share.
5. Name Change. We changed our name from Dynamic Associates, Inc.
to Legal Access Technologies, Inc. This was done through an
amendment to our articles of incorporation, which was approved
by our shareholders on June 11, 2001, and filed with the Nevada
Secretary of State on June 12, 2001.
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Additional Share Issuances
In addition, following the consummation of the Agreement:
1. We agreed on June 13, 2001 to settle our debt obligations to
two former officers and directors by issuing them the following
number of shares:
No. Of Shares
-------------
Grace Sim 45,264
Jan Wallace 80,875
These former officers and directors had each submitted their
resignations as our officers and directors on June 12, 2001, and
therefore did not participate as board members in our decision to
enter into this settlement. In consideration for receiving these
shares, these parties agreed to release us from any and all
obligation on this past due debt.
2. We declared a stock bonus of 25,000 shares be paid to each of
two officers and two key employees for services rendered and for
their agreement to defer payment of their salaries during a time
when we were having difficulty making payroll. A total of 100,000
shares of common stock were thus approved to be issued to these
individuals.
The Current Plan of Operations
Historically, as part of the Tele-Lawyer business, we have been in
the business of arranging for the provision of legal advice and
information to consumers of legal services through licensed
attorneys. We also produce and sell specialized phone
conferencing applications to professionals and associations. The
specialized phone conference applications are most often in the
form of continuing education programs for attorneys called Tele-
Seminars.
More recently, we have changed our business focus by concentrating
on sales of technology and services to, and the development of
strategic partnerships with, various non-profit associations and
government agencies in order to create a number of statewide hubs
for access to legal services. This process has involved the
expansion of our product and service offerings, as well as our
geographic coverage.
Over the next 18 months, we plan to set up statewide hubs for
access to legal services in all 50 states through strategic
partnerships and vendor arrangements with existing legal aid
groups, bar associations and state and federal courts ("Legal
Services Organizations"). These legal service hubs will feature
dual phone and web access as well as multi-level choices of price,
service and type of product for consumers of legal services. The
vendor and partnership arrangements with Legal Service
Organizations will not only provide us with direct income from the
sale of our technology and services, these arrangements will
provide a network for the marketing and sale to consumers of our
unbundled legal products and services within each state.
In addition, we plan to expand the sale of these unbundled
products and services through "sweeper team" activities directed
at other referral sources within each state (such as libraries,
prosecutors, public defenders, affinity groups, law schools,
government agencies and law firms), and then once
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we have established hubs in at least 50% of the states, we will
advance to national arrangements for marketing the unbundled legal
services and hubs.
Perspectives Health Management Corporation
Over the past two years, because of the down turn in the medical
management business created by changes to the Medicare reimbursement
rules, prior management had attempted to sell our wholly owned subsidiary,
Perspectives Health Management Corporation. Their efforts
to sell the Perspectives business were not successful; however, following
a recent strong sales effort initiated by current management, we have
received a number of letters of interest, one of which we are currently
pursuing in the hopes of consummating a sale. It is currently our intent
to sell this business and attempt to collect the current long outstanding,
past due, accounts receivable. It should be noted, however, that we have not,
as yet, reached any definitive agreement for the sale of this business or
its assets, and no assurance can therefore be given that the Perspectives
business or its assets can or will be sold in the near future or at all.
In the meantime, it is our intent to operate Perspectives until a buyer
can be found and/or its assets can be satisfactorily liquidated. To maintain
the perceived value of these assets until sold, we continue to:
1. Seek new hospital contracts to Perspectives' business operations to
enhance its value;
2. Aggressively collect Perspectives past due receivables; and
3. Evaluate and eliminate un-profitable hospital contracts, where
advisable.
Management Plans
To become profitable, we plan to expand our client/affiliate
network of Legal Services Organizations ("LSO") nationwide. An
LSO is a legal aid foundation, state bar association, state or
federal court or any membership organization that seeks to provide
legal services to its members. We generate revenues through an
LSO by providing technology solutions directly for the LSO as well
as by servicing the clients who enter our network through the LSO.
As of the most recent quarter, we service a relatively small
number of LSOs. We currently have executed or pending agreements
with multiple LSOs in seven states that we believe will have a
significant, positive impact on revenues and profitability.
In order to expand our affiliate network of LSOs, we must raise
additional capital to support this growth. We anticipate selling
some or all of the assets of Perspectives to do this. Management
believes that the sale of these assets, plus the recovery of all
or a portion of the accounts receivable owed to Perspectives, will
provide the majority of the financing needed to expand the
affiliate network of LSOs.
If these objectives are accomplished, management believes, but
there is no assurance, that the expansion of the affiliate network
of LSOs will result in profitable operations and positive cash
flows. If unsuccessful, LATI may be unable to continue as
a going concern.
Change in the Board of Directors
As a result of the reverse acquisition, Jan Wallace and Grace Sim
resigned as our directors and were
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replaced by Michael Cane and
Elliot Schear. In addition, on June 25, 2001, the new board
appointed Russell Roth to fill its remaining vacancy.
Assets
At July 31, 2001, we had cash of $252,541 as compared to $1,302 as
of April 30, 2001. The increase was attributable to cash received
through the reverse acquisition of Dynamic and its subsidiaries.
Through the reverse acquisition, we also acquired net assets with
an estimated fair market value of $3,800,000, which are currently
held for sale. At July 31, 2001, accounts receivable was $28,654
as compared with $3,715 as of April 30, 2001. The increase
reflects our new agreements with Legal Service Organizations, many
of which are currently in a development stage. Not included in
these accounts receivable are those of Perspectives, which are
labelled as "Net assets of business segment held for sale".
Equipment, net of accumulated depreciation was $115,395 as of July
31, 2001 as compared to $126,268 as of April 30, 2001.
Liabilities and Stockholders' Equity
At July 31, 2001, we had accounts payable of $86,738 as compared
to $96,983 at April 30, 2001. In addition, we had accrued expenses
of $231,364 at July 31, 2001 as compared to $129,518 as of April
30, 2001. The increase in accrued expenses was attributable to
accrued salaries of several of our management employees, who had
agreed to defer their salaries because of cash shortages. The
management employees who agreed to temporarily defer their
salaries during this time were the CEO, CFO, VP of Business
Development, Director of Technology and Director of Operations.
The total accrued salaries at July 31, 2001 were $220,079.
At July 31, 2001, the balance outstanding of convertible notes we
owed was $203,500, plus accrued interest of $30,525. This was
substantially reduced from the prior year through the conversion
program of debt to equity described above. We increased our
related party debt from $55,000 on April 30, 2001 to $212,000 on
July 31, 2001. This debt consists of a series of un-secured,
interest bearing demand loans provided by our CEO. Together with
the cash flow generated from Perspectives, these loans were used
to fund our operations during the period.
Stockholders' equity was $3,386,155 as of July 31, 2001, as
compared to ($150,216) as of April 30, 2001. This increase was
largely due to the reverse acquisition and the conversion of the
convertible note debt to equity.
Results of Operations
We generated $55,607 in legal support services revenues during the
first quarter of this year as compared to $57,686 in the first
quarter of the prior year. General and Administrative Expenses
were $215,175 in this quarter as compared to $174,630 in the first
quarter of 2000, and we incurred $223,496 in software research and
development costs in this quarter, as compared to $156,363 in the
first quarter of the prior year. We also generated income from
the operations of Perspectives (noted as business segment held for
sale) of $46,308. As a result, we showed a net loss of $368,532
or $.06 per share in this quarter as compared to a loss of
$290,738 or $.05 per share in the first quarter last year.
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We continue to make relatively large investments of capital in the
development of our software products, focusing on the completion
of web-based systems we have recently contracted with Legal
Service Organizations to develop. Following the completion of
these systems, we expect revenues to increase.
Liquidity and Capital Resources
Cash Flows. At July 31, 2001, we maintained $252,541 in cash and
cash equivalents. At this time and currently, the
operations of the Tele-Lawyer business has been in high need of
cash to support operations and development obligations of recent
contracts. This need has been satisfied to a minimal extent thus
far through: (a) unsecured demand loans from our CEO; (b) cash
flow from the operations of Perspectives; and (c) the deferral of
management's salaries. Subsequent to the balance sheet date, we
have been seeking to further satisfy this business liquidity need
through: (a) loans from shareholders and unaffiliated parties; (b)
aggressive collection of outstanding Perspectives' receivables;
(c) the sale of the Perspectives' business; and (d) sales of our
common stock. This has been and will be management's major focus
in the short term.
Capital Expenditures. We expect an increase in capital
expenditures in order to expand our affiliate network of Legal
Services Organizations. This increase will be necessary to
support the technology infrastructure required to host our services.
Forward Looking Statements
The information contained in this section and elsewhere may at
times represent management's best estimates of our
future financial and technological performance, based upon
assumptions believed to be reasonable. Management makes no
representation or warranty, however, as to the accuracy or
completeness of any of these assumptions, and nothing contained in
this document should be relied upon as a promise or representation
as to any future performance or events. Our ability to
accomplish these objectives, and whether or not it will be
financially successful is dependent upon numerous factors, each of
which could have a material effect on the results obtained. Some
of these factors are within the discretion and control of
management and others are beyond management's control. Management
considers the assumptions and hypothesis used in preparing any
forward looking assessments of profitability contained in this
document to be reasonable; however, we cannot assure investors
that any projections or assessments contained in this document, or
otherwise made by management, will be realized or achieved at any
level.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
We issued a total of 56,580,006 shares of our common stock from
January 1, 2001 through June 1, 2001 at a deemed value of $0.15
per share, to our note holders pursuant under an exemption from
registration provided by Regulation S of the US Securities Laws in
exchange for the conversion of the note holder's debt.
We issued out 5,354,997 shares of our common stock to Tele-Lawyer
shareholders in June 2001 as part of our acquisition of Tele-
Lawyer, Inc. The shares were issued out under an exemption from
registration provided by Rule 506 of Regulation D of the US
Securities Laws.
We issued out 126,139 shares of our common stock to our former
directors and officers in consideration of the cancellation of our
obligation to them for past due salaries. The shares were issued
out under a general exemption from registration provided by Section
4(2) of the US Securities Laws.
We issued out 100,000 shares of our common stock to several of our
officers and key employees as a bonus. The shares were issued out
under a general exemption from registration provided by Section
4(2) of the US Securities Laws.
In addition, we issued options to purchase 100,000 shares of our
common stock during this period. These options were issued
pursuant to our stock option plan, registered with the Securities
and Exchange Commission through a filing of a Form S8 on July 5,
2001. All options are exercisable at a rate of $3 per share, with
some option rights not yet vested.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
We are currently in default under an existing unsecured note
obligation in the amount of $203,500. Negotiations with the
existing note holder ceased in May after the parties had appeared
to reach an agreement in settlement of this debt. At this time and
over the past several months, management has been unable to obtain
a return phone call from the note holder's counsel, despite
several attempts.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 11, 2001, we held our annual shareholder's meeting in
which our shareholders voted on the following proposals:
1. To acquire Tele-Lawyer, Inc., a Nevada corporation, through a
share exchange, wherein we were the surviving entity and Tele-
Lawyer became our wholly owned subsidiary.
2. To allow for the postponement of the shareholder meeting for
the solicitation of additional votes, if necessary.
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3. To approve the amendment to the articles of incorporation to
change our name to "Legal Access Technologies, Inc.".
4. To approve a reverse stock split at a rate of 153 to 1.
5. To ratify a stock option plan approved by the board of
directors.
6. To re-elect the members of the board of directors.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K
We filed a Form 8K and Form 8K/A on August 13 and August 27, 2001,
respectively, with the US Securities and Exchange Commission to announce
the acquisition by share exchange of Tele-Lawyer, Inc., the resignation
of our former directors and officers, the appointment of their
replacements, our name change, the reverse stock split and the
conversion of our note debt.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
LEGAL ACCESS TECHNOLOGIES, INC.
Date: September 13, 2001 /s/ MICHAEL A. CANE
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MICHAEL A. CANE
President, Secretary & Director
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