U.S. 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
(MARK ONE)
/ X / FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2001
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 _____________
ACCESSPOINT CORPORATION, INC.
-------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 33-0679477
- ------------------------------------------------ ----------------------------
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER
ORGANIZATION) IDENTIFICATION NUMBER)
38 EXECUTIVE PARK, SUITE 350, IRVINE, CA 92614
- ------------------------------------------------ ---------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (949) 852-8526
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 STOCK AS OF THE LATEST PRACTICABLE DATE.
Common stock, $0.001 par value 17,999,702
(CLASS) (OUTSTANDING AT APRIL 30, 2001)
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE) YES / X / NO / /
-1-
ACCESSPOINT CORPORATION
FORM 10-QSB QUARTERLY REPORT
AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2001
TABLE OF CONTENTS
PART I. - FINANCIAL INFORMATION
Item 1. Interim Consolidated Financial Statements:
Consolidated Balance Sheets as of March 31, 2001 and December
31, 2000
Consolidated Statements of Operations for the three months
ended, March 31, 2001 and 2000
Consolidated Statements of Cash Flows for the three months
ended March 31, 2001 and 2000
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
-2-
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
ACCESSPOINT CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
March 31, 2001
-3-
ACCESSPOINT CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
MARCH 31, 2001
TABLE OF CONTENTS
Independent Accountant's Report 5
Consolidated Balance Sheets 6
Consolidated Statements of Operations 7
Consolidated Statements of Cash Flows 8
Consolidated Statements of Changes in Stockholders' Equity 9
Notes to Consolidated Financial Statements 10
-4-
INDEPENDENT ACCOUNTANT'S REPORT
To the Board of Directors
ACCESSPOINT CORPORATION
Irvine, California
Members of the Board:
We have reviewed the accompanying consolidated balance sheets of Accesspoint
Corporation and its subsidiaries ("the Company") as of March 31, 2001, and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for the three months then ended, in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants. All information included in these financial
statements is the representation of the management of the Company.
A review consists principally of inquiries of Company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statement in order for them to be in
conformity with generally accepted accounting principles.
The accompanying March 31, 2000 financial statements of the Company are provided
for comparative purposes only, they were compiled by us in accordance with
Statements 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. We have not audited nor reviewed the March 31,
2000 financial statements and accordingly, do not express an opinion or any
other form of assurance on them.
May 9, 2001
Los Angeles, California
-5-
ACCESSPOINT CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
March 31, December, 31
2001 2000
---------- ------------
Current Assets
Cash and cash equivalents $128,769 $31,954
Accounts receivable, net 255,120 200,624
Inventory 640 1,911
Other receivables 14,486 16,682
Prepaid expenses 32,794 26,429
---------- ----------
Total Current Assets 431,809 277,600
---------- ----------
Fixed Assets
Furniture and equipment (net) 673,578 719,167
---------- ----------
Total Fixed Assets 673,578 719,167
---------- ----------
Other Assets
Deposits 366,675 413,796
---------- ----------
Total Other Assets 366,675 413,796
---------- ----------
Total Assets $1,472,062 $1,410,563
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December, 31
2001 2000
---------- ------------
Current Liabilities
Accounts payable and accrued expenses $1,511,857 $1,420,337
Accrued payroll taxes and penalties 840,192 704,971
Deferred compensation 221,477 223,977
Current portion, capitalized leases 220,376 210,704
Current portion, notes payable 992,500 992,500
---------- ----------
Total Current Liabilities 3,786,402 3,552,489
Capital Lease obligations, net of current portion 225,364 283,990
Notes payable, net of current portion 0 0
---------- ----------
Total Liabilities 4,011,766 3,836,479
---------- ----------
Stockholders' Equity
Common stock, $.001 par value, 25,000,000
shares authorized, 17,741,337 and 16,557,560
issued and outstanding, respectively 17,741 16,558
Preferred Stock, no par value, 5,000,000 shares
authorized, 3,000,000 and 0 shares issued
and outstanding, respectively 78,750 0
Additional paid in capital 6,382,233 5,390,011
Retained deficit (9,018,428) (7,832,485)
---------- ----------
Total Stockholders' Equity (2,539,704) (2,425,916)
---------- ----------
Total Liabilities and Stockholders' Equity $1,472,062 $1,410,563
========== ==========
<FN>
The accompanying notes are an integral part of these consolidated financial statements
</FN>
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ACCESSPOINT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
March 31, March 31,
2001 2000
----------- ----------
Sales, net $899,188 $497,991
Cost of sales 253,169 54,513
----------- ----------
Gross profit 646,019 443,478
Selling expenses 50,150 61,176
General and administrative expenses 1,626,518 1,134,732
----------- ----------
Income (loss) from operations (1,030,649) (752,430)
----------- ----------
Other (Income) Expense
Interest income (16) (74)
Penalties 71,976 0
Bad debt expense 23,612 0
Interest expense 55,222 22,720
----------- ----------
Total Other (Income) Expense 150,794 22,646
----------- ----------
Income (loss) before
income taxes (1,181,443) (775,076)
Provison for income taxes 4,500 2,400
----------- ----------
Net income (loss) ($1,185,943) ($777,476)
=========== ==========
Net loss per share (basic and diluted)
Basic ($0.07) ($0.05)
Diluted ($0.07) ($0.05)
Weighted average number of shares
Basic 17,149,449 14,888,000
Diluted 17,149,449 14,888,000
<FN>
The accompanying notes are an integral part of these consolidated financial statements
</FN>
-7-
ACCESSPOINT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended
March 31, March 31,
2001 2000
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) ($1,185,943) ($777,476)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization 0 65
Depreciation 80,981 63,202
Decrease (Increase) in receivables (54,496) 177,481
Decrease (Increase) in inventory 1,271 (1,880)
Decrease (Increase) in other receivables 2,196 (8,530)
Decrease (Increase) in prepaid expenses (6,365) 14,928
Decrease (Increase) in deposits 47,121 (17,240)
(Decrease) Increase in accounts payable
and accrued expenses 91,520 (19,411)
(Decrease) Increase in accrued payroll taxes 135,221 114,162
(Decrease) Increase in deferred compensation (2,500) 0
----------- ----------
Total Adjustments 294,949 322,777
----------- ----------
Net cash used in operations (890,994) (454,699)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of intangibles 0 0
Purchase of furniture and equipment (35,392) 0
----------- ----------
Net cash used in investing activities (35,392) 0
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of notes payable 0 105,000
Payments on capital leases (48,954) (33,019)
Sale of stock 1,072,155 592,711
----------- ----------
Net cash provided by financing activities 1,023,201 664,692
----------- ----------
Net change in cash and cash equivalents 96,815 209,993
----------- ----------
Cash and cash equivalents at beginning of year 31,954 54,348
----------- ----------
Cash and cash equivalents at end of year $128,769 $264,341
=========== ==========
Supplemental cash flows disclosures:
Income tax payments $0 $0
----------- ----------
Interest payments $28,661 $17,982
----------- ----------
Non cash investing and financing
Addition of equipment on capital leases $0 $181,426
----------- ----------
<FN>
The accompanying notes are an integral part of these consolidated financial statements
</FN>
-8-
ACCESSPOINT CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
March 31, December 31,
2001 2000
------------ ------------
Retained (deficits)
Balance at beginning of period ($7,832,485) ($2,611,238)
Net income (loss) (1,185,943) (5,221,247)
------------ ------------
Balance at end of period (9,018,428) (7,832,485)
------------ ------------
Common stock, par value $.001 (thousands of shares)
Balance at beginning of period 16,558 14,832
Common stock issued 1,183 1,726
------------ ------------
Balance at end of period 17,741 16,558
------------ ------------
Preferred stock, no par value (thousands of shares)
Balance at beginning of period 0 0
Preferred stock issued 78,750 0
------------ ------------
Balance at end of period 78,750 0
------------ ------------
Additional paid in capital
Balance at beginning of period 5,390,011 2,315,265
Sale of common stock 992,222 3,074,746
------------ ------------
Balance at end of period 6,382,233 5,390,011
------------ ------------
Total stockholders' equity at end of period ($2,539,704) ($2,425,916)
============ ============
<FN>
The accompanying notes are an integral part of these consolidated financial statements
</FN>
-9-
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2001
Note A - NATURE OF ACTIVITIES
Incorporated in the State of Nevada, Accesspoint Corporation ("the
Company") is a "C" Corporation as organized under the Internal Revenue
Code. The Company has combined its mature Internet Application Services
technology platform with its credit card and check-processing platform
to provide bundled payment acceptance, processing and business
management services. These programs provide customers with multiple
payment acceptance capabilities including credit card and check
transaction, a fully operational e-commerce and business management Web
site, and a central web based management system for servicing both the
brick-and-mortar and web based sides to each business.
The Company focuses on specific markets that historically have been
under served by the transaction processing industry. The Company's
multi-application e-payment systems allow our growing national sales
channel to market a single source solution to merchants and businesses.
Clients enjoy the benefits of a versatile, powerful, multi-purpose
system that provides a comprehensive level of payment acceptance
options and value-added business services without having to manage the
multiple business relationships normally required for these functions.
The Accesspoint advantage is full transaction processing, settlement
and software delivered as a bundled service for the cost of an industry
standard transaction fee. Furthermore, as a result of the Company's
proprietary technology, prospective clients can be approved within
minutes, instead of the several-day time frame typically implemented by
the Company's competition.
In November 2000 the Company launched its card processing division,
managed by its wholly owned subsidiary, Processing Source
International, Inc. and began earning card processing revenues in
addition to its check processing revenues through the underwriting and
processing of these electronic payment transactions in its growing
merchant base.
The Company has targeted the Independent Sales Organization (ISO) and
Independent Agent marketplace as a prime driver and sales channel for
its services. The Company's technology makes it simple for these sale
organizations to electronically submit a client's application, track
the progress of that application, monitor merchant service, and even
track commissions, all in real time directly via a private label portal
provided by the Company. This program, called ISO Advantage, aims to
establish a new standard for service and support in the merchant
services industry and appears to present distinct marketplace
advantages for those sales organizations who enter the program.
-10-
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001
Note B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UNAUDITED INTERIM FINANCIAL INFORMATION
The accompanying financial statements have been prepared by Accesspoint
Corporation, ("Accesspoint" or the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC") Form
10-QSB and Item 310 of regulation S-B, and generally accepted
accounting principles for interim financial reporting. These financial
statements are unaudited and, in the opinion of management, include all
adjustments (consisting of normal recurring adjustments and accruals)
necessary for a fair presentation of the balance sheets, operations
results, and cash flows for the periods presented. Operating results
for the three-months ended March 31, 2001 and 2000 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 2001, or any future period, due to seasonal and other
factors. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting policies have been omitted in accordance with the rules and
regulations of the SEC. These financial statements should be read in
conjunction with the audited financial statements and accompanying
notes, included in the Company's Annual Report for the year ended
December 31, 2000.
REVENUE RECOGNITION
The Company recognizes revenue from; settlement fees for electronic
payment processing, credit and debit card payment settlement, check
conversion and financial processing programs and transaction fees
related to the use of its software and credit card processing products,
licensure of its software products, leasing of credit card equipment
and providing Internet access and hosting of Internet business services
and web sites.
Revenue from software and hardware sales and services are recognized as
products are shipped, downloaded, or used.
The Company reports income and expenses on the accrual basis for both
financial and income tax reporting purposes.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of J.S.J.
Capital III, Inc., Yamahamas, Inc. (subsequently renamed Accesspoint
Corporation), Accesspoint Corporation (subsequently dissolved), and its
wholly owned subsidiaries Processing Source International (PSI) and
Black Sun Graphics (BSG). All material intercompany accounts and
transactions have been eliminated in consolidation.
RISKS AND UNCERTAINTIES
The Company is subject to substantial risks from, among other things,
intense competition from the providers of financial electronic payment
processing, settlement services, software development and e-commerce
service companies specifically and the technology industry in general,
other risks associated with the Internet services industry, financing,
liquidity requirements, rapidly changing
-11-
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001
Note B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
customer requirements, limited operating history, and the volatility of
public markets.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates. Significant estimates include
collectibility of accounts receivable, accounts payable, sales returns
and recoverability of long-term assets.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The Company has made an allowance for doubtful accounts for trade
receivables.
FIXED ASSETS
Property and equipment are stated at cost less accumulated
depreciation. Depreciation is provided on the straight-line method over
the estimated useful lives of the assets, or the remaining term of the
lease, as follows:
Furniture and Fixtures 5 years
Equipment 5 years
Hardware and Software 3 years
INVENTORY
Inventory is valued at the lower of cost or market; cost is determined
on the weighted average method. As of March 31, 2001 and December 31,
2000 inventory consisted only of finished goods.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with
initial maturities of three months or less to be cash equivalents.
CONCENTRATION OF CREDIT RISK
Financial instruments, which subject the Company to credit risk,
consist primarily of cash equivalents and trade accounts receivable.
Concentration of credit risk with respect to trade accounts receivable
is generally diversified to the large number of entities comprising the
Company's customer base and their geographic dispersion. The Company
actively evaluates the creditworthiness of the customers with which it
conducts business.
ADVERTISING
Advertising costs are expensed in the year incurred.
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ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001
EARNINGS PER SHARE
Earnings per share are based on the weighted average number of shares
of common stock and common stock equivalents outstanding during each
period. Earnings per share are computed using the treasury stock
method. The options to purchase common shares are considered to be
outstanding for all periods presented but are not calculated as part of
the earnings per share.
STOCK-BASED COMPENSATION
The Company accounts for stock-based employee compensation arrangements
in accordance with the provisions of Accounting Principles Board
Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees," and
complies with the disclosure provisions of Statement of Financial
Accounting Standards ("SFAS") 123, "Accounting for Stock-Based
Compensation." Under APB 25, compensation cost is recognized over the
vesting period based on the difference, if any, on the date of grant
between the fair value of the Company's stock and the amount an
employee must pay to acquire the stock.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates long-lived assets for impairment whenever events
or changes in circumstances indicate that the carrying value of an
asset may not be recoverable. If the estimated future cash flows
(undiscounted and without interest charges) from the use of an asset
are less than the carrying value, a write-down would be recorded to
reduce the related asset to its estimated fair value. There have been
no such impairments to date.
Note C - BUSINESS COMBINATIONS
In May 2000 the Company completed the acquisition of Black Sun
Graphics, Inc. (a California Corporation), and accordingly, the
operating results of the acquired company have been included in the
accompanying condensed consolidated financial statements since the date
of acquisition. The aggregate purchase price of this acquisition was
approximately $350,000, comprised of 70,000 shares of restricted common
stock.
In April 2000 the Company completed the acquisition by JSJ Capital III,
Inc. ( a Nevada Corporation), with Accesspoint as the surviving
corporation. The separate existence of JSJ Capital III ceased as of the
date of completion of the acquisition. All issued and outstanding
shares of JSJ Capital III were converted into the right to receive
shares of Accesspoint upon completion of the acquisition. The
transaction has been accounted for as a reverse acquisition. The
transaction is a merger of a public non-reporting operating company
(old Accesspoint) into a non-operating reporting public shell
corporation with nominal assets. The owners of Accesspoint obtained
operating control of the combined company after the transaction. This
transaction has been recorded as a capital transaction, rather than a
business combination, equivalent to the issuance of stock by the public
non-reporting company for the net monetary assets of the shell
corporation, accompanied by a recapitalization. The accounting is
identical
-13-
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001
Note C - BUSINESS COMBINATIONS (CONTINUED)
to that resulting from a reverse acquisition, except that no goodwill
or other intangible has been recorded.
In March 1999 the Company completed a reverse acquisition by Yamahamas,
Inc. (a Nevada Corporation), with Yamahamas as the surviving
corporation. The separate existence of Accesspoint ceased as of the
date of completion of the acquisition. A total of 2,271,763 common
shares were exchanged in a 1:4.62 ratio. All issued and outstanding
shares of Accesspoint Corporation were converted into the right to
receive shares of Yamahamas, Inc. upon completion of the acquisition.
Subsequent to the completion of the reverse acquisition, Yamahamas,
Inc. changed its name to Accesspoint Corporation and trades on the
NASDAQ Bulletin Board Market under the symbol ASAP.
The transaction has been accounted for as a reverse acquisition. The
transaction is a merger of a private operating company (old
Accesspoint) into a non-operating public shell corporation with nominal
assets. The owners of old Accesspoint obtained operating control of the
combined company after the transaction.
In July 1999, the Company acquired PSI by exchanging 516,062 shares of
its common stock for all the issued and outstanding common stock of
PSI. The acquisition has been accounted for as a pooling-of-interests
under APB No. 16. Accordingly, all prior period consolidated financial
statements presented have been restated to include the combined results
of operations, financial position and cash flows of PSI as though it
has always been a part of the Company.
The results of operations for the separate companies and the combined
amounts presented in the consolidated financial statements are as
follows:
March 31, March 31,
2001 2000
---- ----
Sales
Accesspoint $ 511,073 $ 353,926
PSI 304,505 264,242
Black Sun Graphics 165,735 70,832
Eliminations (82,125) (191,009)
------------ ------------
Combined $ 899,188 $ 497,991
------------ ------------
Net Income (loss)
Accesspoint $( 753,428) $( 669,601)
PSI ( 462,941) ( 127,728)
Black Sun Graphics 30,426 19,853
------------ -----------
Combined $(1,185,943) $( 777,476)
------------ ------------
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ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001
Note D - CASH
The Company maintains its cash balances at various banks in the United
States. The balances are insured by the Federal Deposit Insurance
Corporation up to $100,000. As of March 31, 2001 and December 31, 2000,
there were no uninsured balances held at these banks.
Note E - FIXED ASSETS
Fixed assets consist of the following:
March 31, December 31,
2001 2000
--------- ------------
Furniture and fixtures $ 71,364 $ 71,364
Office equipment 244,623 243,634
Computer hardware and software 1,002,982 968,578
Leasehold improvements 67,236 67,236
----------- ------------
1,386,205 1,350,812
Accumulated depreciation (712,626) (631,645)
----------- ------------
Total $ 673,578 $ 719,167
----------- -----------
At March 31, 2001 and December 31, 2000 included in fixed assets are
costs of $737,996 of assets recorded under capital leases.
For the three months ended March 31, 2001 and the year ended December
31, 2000, included in accumulated depreciation are $341,765 and
$295,474, recorded on assets under capital leases, respectively.
Note F- COMMITMENTS AND CONTINGENCIES
Capital Leases - The Company leases certain machinery and equipment
under capital leases. Future minimum payments under capital leases are:
2002 $ 220,676
2003 193,371
2004 30,277
2005 1,416
OPERATING LEASES - The Company leases certain of its facilities and
equipment under non-cancelable operating leases. Future minimum rental
payments under leases that have initial or remaining non-cancelable
lease terms in excess of one year are:
2002 $ 357,614
2003 34,475
2004 34,475
2005 3,972
-15-
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001
Note F - COMMITMENTS AND CONTINGENCIES (CONTINUED)
Rent expense for the three months ended March 31, 2001 and the year
ended December 31, 2000 was $138,445 and $404,612, respectively.
EMPLOYMENT AGREEMENTS - The Company has entered into certain employment
agreements as follows for the retention of key employees:
Dated January 4, 1999 the Company entered into an employment agreement
for the services of Tom M. Djokovich as Chief Executive Officer at a
base salary of two hundred thousand dollars ($200,000) per annum,
increasing by at least ten percent per annum for the duration of the
agreement. The agreement also calls for the payment of cash bonuses
based on revenue and net income, and the granting of stock options to
purchase fifty thousand (50,000) shares of the Company stock per year
for the duration of the agreement at an exercise price of $2.00 per
share. The agreement terminates on December 31, 2001.
Dated August 1, 2000 the Company entered into an employment agreement
for the services of Alfred Urcuyo as President of PSI at a base salary
of two hundred thousand dollars ($200,000) per annum. The agreement
calls for escalations of base salary on attainment of certain gross
revenue levels. The agreement also calls for stock incentive options,
based on revenue attainment levels, of up to $100,000 annually based on
the then current market value of the stock. The agreement terminates on
July 31, 2006.
The Company has also entered into several employment contracts with
employees of PSI at varying salary levels for two-year periods. The
agreements call for cash and stock incentive bonuses based on levels of
gross revenue attainment.
CONSULTING AGREEMENTS - During the first quarter of 2001 the Company
entered into a consulting agreement with another corporation for media
relations. This agreement stipulated for the payment of 20,000 shares
of common stock per month for three months for payment of services. The
corporation was also granted 30,000 stock options for the purchase of
common stock at $1.00 per share for a period of twelve months. As of
March31, 2001 60,000 shares have been issued with a value of $116,250.
The Company has entered into a consulting agreement with an individual
in an advisory capacity. Compensation for services is 6,000 shares of
common stock issued pro-rata over twelve months and 2,400 stock options
for the purchase of common stock at an exercise price of $3.37 per
share. The stock options also vest pro-rata over twelve months. As of
March 31, 2001 the Company has issued 1000 shares of stock with a value
of $3,688 to this individual.
-16-
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001
Note F - COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company has entered into a consulting agreement with another
company for their marketing services. The contract stipulates payment
of 3,125 shares of stock for each of eight agreed upon projects for a
total of 25,000 shares. Payment is to be made at the completion of each
project. As of March 31, 2001 3,125 shares have been issued under this
agreement with a value of $4,883.
The Company has entered into a consulting agreement with an individual
for services. The agreement stipulates payment of 15,000 shares for
services from November 2000 to February 2001. As of March 31, 2001,
15,000 shares had been issued under this agreement with a value of
$30,000.
Note H - STOCK AND WARRANTS
At March 31, 2001, the Company has 25,000,000 shares authorized and
17,663,212 shares issued and outstanding of common stock. The Company
had 5,000,000 shares authorized and no issued and outstanding preferred
stock.
In addition, the Company had outstanding at March 31, 2001, 1,735,000
warrants convertible into common shares at various prices ranging from
$0.34 to $7.50, with expirations dates through October 2005.
WEIGHTED AVERAGE WEIGHTED AVERAGE
EXERCISE PRICE RANGE AMOUNT CONTRACTUAL LIFE EXERCISE PRICE
-------------------- ------- ---------------- --------------
$0.01 - $0.34 375,000 45 months $0.34
$5.25 - $6.00 90,000 35 months $5.96
$7.00 1,270,000 23 months $7.00
At March 31, 2001, the Company has common stock reserved for the
following reasons:
Exercise of common stock warrants 1,735,000
Exercise of employee stock options 3,851,101
---------
5,586,101
-17-
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001
Note J - DEBT
At March 31, 2001 and December 31, 2000, the Company had notes payable
outstanding in the aggregate amount of $1,438,240 and $1,487,194,
respectively. Payable as follows:
March 31, December 31,
2001 2000
----------- ------------
Note payable to a trust of a related party,
interest at 12% per annum, due on demand $ 100,000 $100,000
Note payable to a corporation, interest at 5%
per annum, due on demand 127,500 127,500
Note payable to an individual, interest at
5% per annum, due on demand 115,000 115,000
Note payable to a related party, interest at
10% per annum, due on demand 160,000 160,000
Note payable to a corporation, interest at
5% per annum, due on demand 40,000 40,000
Note payable to a corporation, interest at 8%
per annum, due October 16, 2001, convertible
at the option of the holder into common stock
equal to the face value of the note 450,000 450,000
Capitalized lease obligations, interest at
varying rates, payments through May 2004 445,740 494,694
---------- ---------
1,438,240 1,487,194
Current portion 1,212,876 1,203,204
--------- ---------
Long-term portion $ 225,364 $ 283,990
--------- ---------
-18-
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001
Note K - SECURITIES AGREEMENT
On October 16, 2000, the Company, in conjunction with a $450,000
convertible note (see Note I), issued a Callable Common Stock Warrant
and a Common Stock Warrant to another corporation.
The Callable Common Stock Warrant's term is from October 16, 2000 to
October 16, 2002 for the purchase of up to 1,200,000 shares of common
stock at $7.50 per share. The Company may elect to call this warrant at
any time for $.0001 per warrant share, or $120 for the entire warrant.
The Common Stock Warrant's term is from October 16, 2000 to October 16,
2005. This warrant allows the holder to purchase up to 70,000 shares of
common stock for 110% of the volume weighted average price per share on
the day prior to exercise.
Note M - RELATED PARTY TRANSACTIONS
Throughout the history of the Company, certain members of the Board of
Directors, members of the immediate family of management, and general
management have made loans to the Company to cover operating expenses
or operating deficiencies.
Note N - INCOME TAXES
Total Federal and State income tax expense for the three months ended
March 31, 2001 was $2,400. This amount represents the minimum annual
tax liability under California tax code. No future benefit for the
realization of an operating loss carry-forward, in the form of an
asset, has been recognized due to the ongoing nature of the losses and
the potential inability for the Company to ever realize their benefit.
For the period ended March 31 2001, there is no difference between the
federal statutory tax rate and the effective tax rate. At the year
ended December 31, 2000 the Company had available net operating loss
carry-forwards of approximately $7,010,000 after adjusting for
limitation, to be offset against future taxable income. The operating
loss carry forwards will expire at various dates through the year 2015.
-19-
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001
Note O - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, accounts receivable,
deposits and accounts payable approximate their fair value because of
the short maturity of those instruments.
The carrying amounts of the Company's long-term debt and capital lease
obligations approximate their fair value because of the short maturity
and/or interest rates which are comparable to those currently available
to the Company on obligations with similar terms.
Note P - GOING CONCERN
The Company has suffered recurring losses and cash deficiencies. These
issues may raise substantial concern about its ability to continue as a
going concern.
Management has prepared the following statement in order to address
these and other concerns:
The Company made substantial investments last year in the development
of infrastructure to support its transaction processing and business
automation services. During the first quarter of 2001 the Company has
continued to make investments in the development of our sales and
distribution channels and expanded its roll in the processing industry
with the development of support for new non-cash payment services,
features and sales channel management services. These continued
investments in both fixed assets and strategic marketing agreements
have provided the Company with expanded revenue generating
capabilities.
The continued investments in assets and the development of a marketing
channel during the Company's transition from a third party software and
web services provider to a primary provider of financial transaction
underwriting, processing and business management services has in large
part contributed to the continued losses.
The purpose of these investments is to develop the Company's sales and
distribution Infrastructure, enhance its sales management and account
servicing capabilities and expand its transaction processing product
offerings. Today the Company is are experiencing increasing revenues
through these investments and anticipate per client average monthly
gross revenues to continue to increase during the first full year of
operations in the processing industry.
-20-
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001
Note P - GOING CONCERN (CONTINUED)
Currently, the wholly owned subsidiary, Processing Source
International, Inc. (PSI), is a member processor, under the sponsorship
of Chase Manhattan Bank, within the Visa/MasterCard association for the
processing of card transactions and the Company's sponsorship through
First National Bank of Omaha for the processing of electronic checks
and check conversion within the National Automated Clearing House
Association (NACHA) network. These strategic relationships combined
with its extensive experience in the Internet technology sector are
allowing the Company to provide bundled services typically not
available elsewhere.
The Company's newly developed revenue sources have allowed the Company
to experience an increase in gross revenues for the period ended March
31, 2001 as compared to the period ended March 31, 2000 of
approximately 80%. It is anticipated that the continued successful
development of the expanded role as a primary processor will contribute
to both predictable and increased revenues during the first full year
of operations as a processor. The Company anticipates being able to
finance operations through direct revenues near the end of its first
full year of operations as a processor.
In the near term, the Company is currently engaged in on going capital
formation efforts. The Company is in discussions for the placement of
debt and equity in an amount or amounts sufficient to fund the amount
or amounts of the Company's projected deficits in the current year.
-21-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-QSB contains forward-looking statements in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
elsewhere. These statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology such as "may", "will", "should", "expects", "plans", "anticipates",
"believes", "estimates", "predicts", "potential" or "continue" or the negative
of such terms or other comparable terminology. These statements are only
predictions and involve known and unknown risks, uncertainties and other
factors, including the risks outlined under "Factors That May Affect Future
Results and Market Price of Stock", that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activities, performance or
achievements expressed or implied by such forward-looking statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Moreover, neither we nor any
other person assumes responsibility for the accuracy and completeness of such
statements.
Overview
Our Company was incorporated in Nevada on October 11, 1995. On March
19, 1999 we merged with Yamahama's, Inc., a Nevada corporation. On April 12,
2000 we merged with J.S.J. Capital, III, Inc., a Nevada corporation. Reference
to Company or Accesspoint Corporation in this report refers to the historical
Accesspoint Corporation, unless the context otherwise requires.
Accesspoint Corporation is a vertically integrated provider of
electronic transaction processing and value-added business services. Our
transaction processing service routes, authorizes, captures, and settles all
types of non-cash payment transactions for retailers and businesses nationwide.
Accesspoint services the payment processing needs of sellers by (1) providing
merchant underwriting, risk management and account services, and (2) supporting
the network and technology services necessary for both retail (in-store) and
Internet point of sale transactions. To this core function Accesspoint provides
sellers with a entire suite of integrated business applications that centralize
the management of (A) both in-store and online transaction processing and
accounting, (B) automated web site design, hosting services and catalog creation
and management, (C) merchandising and benefits management, (D) order processing
and tracking services, and (E) a whole host of reporting and monitoring tools.
Our multi-application e-payment and e-commerce systems provide a single
source solution to merchants, businesses and the sales organizations that market
our products. Our clients enjoy the benefits of a versatile, powerful,
multi-purpose system that provides a comprehensive level of payment acceptance
options and value-added businesses services without having to manage the
multiple business relationships normally required for these functions.
COMPARISON OF THREE MONTHS ENDED MARCH 31, 2001 AND 2000
Revenues for the three months ended, March 31, 2001 increased to
$899,188 from $497,991 for the three months ended, March 31, 2000. The increase
of $401,197, or 80.6% is due primarily to the growth of our sales channel and
merchant portfolio for our transaction processing and underwriting services
during this three-month period, which has begun to produce revenues.
Cost of sales for the three months ended, March 31, 2001 increased to
$253,169 from $54,513 for the three months ended, March 31, 2000. The increase
of $198,656 or 364.4% resulted primarily from the growth in sales associated
with our transaction processing and underwriting services.
Selling and marketing expenses for the three months ended, March 31,
2001 decreased to $50,150 from $61,176 for the three months ended, March 31,
2000. This decrease of $11,026, or 18.0% resulted primarily from the decrease in
commissions associated with the decline in sales from the retail division of our
subsidiary, PSI. Moreover, we have focused on reducing overhead costs, including
the reduction in trade show expenses, advertising consulting costs, and printing
costs for brochure and promotional materials during the development and rollout
of our processing and underwriting platform.
-22-
General and administrative expenses for the three months ended, March
31, 2001 increased to $1,626,518 from $1,134,732 for the three months ended,
March 31, 2000. The increase of $491,786, or 43.3% resulted primarily from an
increase in legal and accounting expenses, an increase in consulting services,
an increase in total payroll expense of $151,269 from $655,052 in 2000 to
$806,320 in 2001, and an increase in facilities expenses primarily due to
business development needs and expansion during the development and rollout of
our processing and underwriting platform. Depreciation expense also increased in
the amount of $17,779 from $63,202 in 2000 to $80,981 in 2001 due to the
increase in fixed assets.
Interest expense, net, for the three months ended, March 31, 2001 was
$55,206, as compared to $22,646 for the three months ended, March 31, 2000. The
increase of $32,560, or 143.8% in interest expense resulted primarily from the
addition of furniture & fixtures and computer equipment financed under capital
lease agreements.
Other expense, net, for the three months ended, March 31, 2001 was
$95,588. This includes primarily the write-off of bad debt and the accrual of
penalties associated with unpaid payroll taxes.
Net loss for the three months ended, March 31, 2001 and the three
months ended, March 31, 2000 was $(1,185,943) and $(777,476), respectively.
LIQUIDITY AND CAPITAL RESOURCES
Working capital (deficit) at March 31, 2001 was $(3,354,593) as
compared to $(3,274,889) at December 31, 2000.
We have funded our operations and working capital needs through a
series of private equity and debt offerings including Regulation D and
Regulation S private placements and loans.
Cash and cash equivalents at March 31, 2001 were $128,769, an increase
of $96,815 from December 31, 2000. During the three months ended, March 31,
2001, the Company used $890,994 net cash in operating activities as compared to
using $454,699 for the three months ended, March 31, 2000. This increase of cash
used in operations of $436,295 was primarily a result of the increase in the net
loss for 2001, coupled with an increase in payroll tax liabilities for the
quarter ended, March 31, 2001.
During the three months ended, March 31, 2001, we used $35,392 for
investing activities as compared to $0, for the three months ended, March 31,
2000. The increased use of cash for investing activities resulted from the
acquisition of furniture and fixtures under fixed assets.
During the three months ended, March 31, 2001, we generated net cash of
$1,023,201 from financing activities as compared to $664,692 for the three
months ended, March 31, 2000. The increase of $358,509 resulted from funds
raised in a Regulation D, Rule 504, and Regulation S, Rule 144 private placement
of common stock.
Without further equity offerings through private placements, we believe
that our cash, cash equivalents and short-term investments at March 31, 2001
will not be sufficient to meet our liquidity needs over the next twelve months.
We currently leases office space on a short-term twelve-month sub-lease
basis and could be required to move after the expiration of the twelve-month
period in June 2001. We are attempting to re-negotiate a longer-term lease at
its present location. The major capital expenditures we could incur if it needed
to move would be related to relocation of office computers, local area network
hardware, office telephony and office equipment and furniture. However, we house
our Internet computer servers and Internet network equipment and components at
the Exodus Communications Center located in Irvine, CA. We do not anticipate a
foreseeable need to re-locate its Internet computer servers, Internet network
equipment and components.
We had, at March 31, 2001, working capital of $(3,354,593). We believe
that cash generated from operations will not be totally sufficient to fund our
current and anticipated cash requirements. We plan to obtain additional
financing from equity and debt placements. We do not believe that our current
operational plans for the next twelve months will be curtailed or delayed
because of the lack of sufficient financing. We have been able to raise capital
in a series of equity and debt offerings in the past. While there can be no
assurances that we will be able to obtain such additional financing, on terms
acceptable to us and at the times required, or at all, we believe that
sufficient capital can be raised in the foreseeable future.
-23-
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities and Use of Proceeds
On October 1, 1999 we filed a Certificate of Amendment amending our
Articles of Incorporation. The amendment, among other things, changed our
authorized capital to 30,000,000 shares consisting of 25,000,000 shares of
common stock, par value $.001, and 5,000,000 shares of preferred stock, par
value $.001. The amendment further specified that our Board of Directors would
be authorized to fix and determine by resolution the relative rights and
preferences of the preferred shares.
Our Board of Directors adopted a resolution fixing and determining the
relative rights and preferences of the preferred shares. The resolution was
filed as a Certificate of Determination on April 17, 2000. The Certificate of
Determination designated the initial series of preferred shares as Series A and
designated the number of shares constituting Series A as 2,500,000. Pursuant to
the relative rights and preferences adopted by our Board of Directors, the
preferred shares, Series A, are non-voting and convertible into common stock of
our corporation. The preferred shares, Series A, are restricted so that the our
Corporation has the right of first refusal on any proposed sale or transfer and
the right to purchase the shares on the occurrence of certain other events, such
as the termination of the holder's employment with our Company or any of its
subsidiaries. The preferred shares, Series A, are redeemable by our Corporation
at the rate of $0.10 per share. The preferred shares, Series A, are also
entitled to special dividends as may be declared by our Board of Directors and
to certain liquidation preferences.
On May 26, 2000, we filed a Certificate of Amendment of Determination
of Preferences of Preferred Shares which changed number of shares constituting
the preferred shares, Series A, to 5,000,000. The rights and preferences of the
preferred shares, Series A, do not effect the rights of the holders of our
common stock.
On January 2, 2001 we issued 2,000,000 preferred shares, Series A, to
Al Urcuyo, 500,000 preferred shares, Series A, to Walter E. Burch and 500,000
preferred shares, Series A, to Eric J. Odegard. The shares were issued in
accordance with separate Stock Bonus Agreements between us and the above
persons, as parts of separate compensation packages upon the attainment of the
above persons of certain employment performance milestones.
The preferred shares, Series A, were issued to the above persons as
employee incentive awards under our 1999 Stock Incentive Plan. We did not
publicly offer any securities and no underwriter was utilized and we paid no
finder's fees, discounts or commissions in connection with the above issuance.
The issuance was exempt pursuant to Section 4(2) of the Act, Regulation D
promulgated there under, and pursuant to Section 25102(f) of the California
Corporations Code. The above persons acquired the preferred shares, Series A,
for their own account for investment with no then present intention of dividing
their interests with others or of reselling or otherwise disposing of all or any
portion of the preferred shares, Series A. The preferred shares, Series A, were
issued in a private transaction, which was not part of a distribution of
securities. We, or our officers or directors or our or their affiliates or
representatives, had a pre-existing personal or business relationship with the
above persons.
On January 1, 2001 we issued 20,000 shares of common voting stock to
Capital Holdings Group Worldwide, Inc. pursuant to a consulting agreement with
Alliance Consulting Group, Inc. These shares were issued in exchange for
consultant services rendered to the Company. We did not publicly offer any
securities and no underwriter was utilized and we did not pay any finder's fees,
discounts or commissions in connection with the above offer. The offer was
exempt pursuant to Section 4(2) of the Act, Regulation D, and pursuant to
Section 25102(f) of the California Corporations Code. Capital Holdings Group
Worldwide, Inc. acquired the shares for their own account for exchange of
services with no then present intention of dividing his interest with others or
of reselling or otherwise disposing of all or any portion of the shares. The
shares were offered in a private transaction, which was not part of a
distribution of the shares. We, or our officers or directors or our or their
affiliates or representatives, had a pre-existing personal or business
relationship with Alliance Consulting Group, Ltd.
On January 17, 2001 we issued 3,125 shares of common voting stock to
Mark Deo. These shares were issued in exchange for consultant services rendered
to the Company. We did not publicly offer any securities and no underwriter was
utilized and we did not pay any finder's fees, discounts or commissions in
connection with the above offer. The offer was exempt pursuant to Section 4(2)
of the Act, Regulation D, and pursuant to Section 25102(f) of the California
Corporations Code. Mark Deo acquired the shares for their own account for
exchange of services with no then present intention of
-24-
dividing his interest with others or of reselling or otherwise disposing of all
or any portion of the shares. The shares were offered in a private transaction,
which was not part of a distribution of the shares. We, or our officers or
directors or our or their affiliates or representatives, had a pre-existing
personal or business relationship with Mark Deo.
On January 24, 2001 we issued 21,165 shares of common voting stock to
Greg Tolleson. These shares were issued in exchange for consultant services
rendered to the Company. We did not publicly offer any securities and no
underwriter was utilized and we did not pay any finder's fees, discounts or
commissions in connection with the above offer. The offer was exempt pursuant to
Section 4(2) of the Act, Regulation D, and pursuant to Section 25102(f) of the
California Corporations Code. Mr. Tolleson acquired the shares for his own
account for exchange of services with no then present intention of dividing his
interest with others or of reselling or otherwise disposing of all or any
portion of the shares. The shares were offered in a private transaction, which
was not part of a distribution of the shares. We, or our officers or directors
or our or their affiliates or representatives, had a pre-existing personal or
business relationship with Mr. Tolleson.
On February 1, 2001 we issued 20,000 shares of common voting stock to
Capital Holdings Group Worldwide, Inc. pursuant to a consulting agreement with
Alliance Consulting Group, Inc. These shares were issued in exchange for
consultant services rendered to the Company. We did not publicly offer any
securities and no underwriter was utilized and we did not pay any finder's fees,
discounts or commissions in connection with the above offer. The offer was
exempt pursuant to Section 4(2) of the Act, Regulation D, and pursuant to
Section 25102(f) of the California Corporations Code. Capital Holdings Group
Worldwide, Inc. acquired the shares for their own account for exchange of
services with no then present intention of dividing his interest with others or
of reselling or otherwise disposing of all or any portion of the shares. The
shares were offered in a private transaction, which was not part of a
distribution of the shares. We, or our officers or directors or our or their
affiliates or representatives, had a pre-existing personal or business
relationship with Alliance Consulting Group, Ltd.
On February 1, 2001 we sold 10,000 shares of common voting stock to
John G. Eliason, an individual. The shares were sold at a price of $0.78 per
share for a total purchase price of $7,800.00. The shares were sold pursuant to
a written agreement. We did not publicly offer any securities and no underwriter
was utilized and we did not pay any finder's fees, discounts or commissions in
connection with the above offer and sale. The offer and sale was exempt pursuant
to Section 4(2) of the Act, Regulation D, and pursuant to Section 25102(f) of
the California Corporations Code. Mr. Eliason acquired the shares for his own
account for investment with no then present intention of dividing his interest
with others or of reselling or otherwise disposing of all or any portion of the
shares. The shares were purchased in a private transaction, which was not part
of a distribution of the shares. We, or our officers or directors or our or
their affiliates or representatives, had a pre-existing personal or business
relationship with Mr. Eliason.
On February 14, 2000 we issued 15,000 shares of common voting stock to
John Dupont, an individual. The shares were issued in exchange for consulting
services. We did not publicly offer any securities and no underwriter was
utilized and we did not pay any finder's fees, discounts or commissions in
connection with the above issuance, offer or sale. The issuance, offer or sale
was exempt pursuant to Section 4(2) of the Act, Regulation S, Regulation D
promulgated thereunder, and pursuant to Section 25102(f) of the California
Corporations Code. Mr. Dupont acquired the shares for his own account in
exchange for services rendered to the Company with no then present intention of
dividing his interest with others or of reselling or otherwise disposing of all
or any portion of the shares. The shares were issued in a private transaction,
which was not part of a distribution of the shares. We, or our officers or
directors or our or their affiliates or representatives, had a pre-existing
personal or business relationship with Mr. Dupont.
On February 15, 2001 we issued 19,582 shares of common voting stock to
Martin E. Janis. These shares were issued in exchange for consultant services
rendered to the Company. We did not publicly offer any securities and no
underwriter was utilized and we did not pay any finder's fees, discounts or
commissions in connection with the above offer. The offer was exempt pursuant to
Section 4(2) of the Act, Regulation D, and pursuant to Section 25102(f) of the
California Corporations Code. Mr. Janis acquired the shares for his own account
for exchange of services with no then present intention of dividing his interest
with others or of reselling or otherwise disposing of all or any portion of the
shares. The shares were offered in a private transaction, which was not part of
a distribution of the shares. We, or our officers or directors or our or their
affiliates or representatives, had a pre-existing personal or business
relationship with Mr. Janis.
On February 21, 2001 we sold 10,000 shares of common voting stock to
Paul Crupi, an individual. The shares were sold at a price of $0.94 per share
for a total purchase price of $9,400.00. The shares were sold pursuant to a
written agreement. We did not publicly offer any securities and no underwriter
was utilized and we did not pay any finder's fees, discounts or commissions in
connection with the above offer and sale. The offer and sale was exempt pursuant
to Section 4(2) of the Act, Regulation D, and pursuant to Section 25102(f) of
the California Corporations Code. Mr. Crupi acquired the shares for his own
account for investment with no then present intention of dividing his interest
with others or of reselling or otherwise
-25-
disposing of all or any portion of the shares. The shares were purchased in a
private transaction, which was not part of a distribution of the shares. We, or
our officers or directors or our or their affiliates or representatives, had a
pre-existing personal or business relationship with Mr. Crupi.
On March 1, 2001 we issued 20,000 shares of common voting stock to
Capital Holdings Group Worldwide, Inc. pursuant to a consulting agreement with
Alliance Consulting Group, Inc. These shares were issued in exchange for
consultant services rendered to the Company. We did not publicly offer any
securities and no underwriter was utilized and we did not pay any finder's fees,
discounts or commissions in connection with the above offer. The offer was
exempt pursuant to Section 4(2) of the Act, Regulation D, and pursuant to
Section 25102(f) of the California Corporations Code. Capital Holdings Group
Worldwide, Inc. acquired the shares for their own account for exchange of
services with no then present intention of dividing his interest with others or
of reselling or otherwise disposing of all or any portion of the shares. The
shares were offered in a private transaction, which was not part of a
distribution of the shares. We, or our officers or directors or our or their
affiliates or representatives, had a pre-existing personal or business
relationship with Alliance Consulting Group, Ltd.
During the three months ended, March 31, 2001 we sold a total of
1,044,900 shares of common voting stock to Citizen Asia Pacific Limited. The
shares were sold at various prices ranging from $0.53 to $1.33 per share
representing a total purchase price and proceeds to our Company of $790,354. As
a convenience to Citizen Asia Pacific Limited, the certificates representing the
above shares were created naming holders designated by Citizen Asia Pacific
Limited from time to time. We did not publicly offer any securities and no
underwriter was utilized. We paid no other finder's fees, discounts or
commissions in connection with the above offer and sale. The offer and sale was
exempt pursuant to Regulation S because Citizen Asia Pacific Limited is a non
U.S. company and neither Citizen Asia Pacific Limited nor any person or entity
for whom Citizen Asia Pacific Limited was acting as fiduciary is a U.S. person.
Further, the above offer and sale was made in an offshore transaction and there
were no directed selling efforts in the United States in connection with the
above offer and sale.
The proceeds from the above sales of unregistered securities were used
primarily to fund the day-to-day operations of the Company.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
Alfred Urcuyo, is President and Chief Executive Officer of Processing
Source International, Inc. (PSI), a wholly owned subsidiary of our Company, and
holds the Office of the President and serves as a Director of our Company. PSI
entered into a new employment agreement with Al Urcuyo on August 1, 2000. The
new agreement went into effect on January 1, 2001. The Employment Agreement
provides for an annual salary of $200,000 and other benefits. The employment
agreement provides that Mr. Urcuyo's annual compensation it to be increased to
Four Hundred Thousand Dollars ($400,000.00) per year on the first day of the
first month immediately following the generation by PSI of One Million Dollars
($1,000,000.00) per month gross revenue. The employment agreement further
provides that Mr. Urcuyo's annual compensation is to be increased to Six Hundred
Thousand Dollars ($600,000.00) per year on the first day of the fist month
immediately following the generation by PSI of Two Million Five Hundred Thousand
Dollars ($2,500,000.00) per month gross revenue.
The Employment Agreement with Mr. Urcuyo also provides for non-cash
compensation. In addition to the cash compensation set forth above, the Company
granted to Mr. Urcuyo an option to purchase 32,051 shares of our Company's
Common Stock per year during the term of the Agreement, with an exercise price
of $3.12 each, which vest at a rate of 1/12th (2,670) per month. The options are
exercisable for a period of five (5) years from the grant date and carry the
same registration rights granted to members of PSI's and our Company's executive
management team.
-26-
Item 6. Exhibits and Reports on Form 8-K
The following Exhibits are incorporated herein by reference or are filed with
this report as indicated below.
(a) Exhibits
3.1 * Certificate of Amendment of Articles of Incorporation
4.1 * Certificate of Determination of Preferences of Preferred
Shares of Accesspoint Corporation
4.2 * Certificate of Amendment of Determination of Preferences
of Preferred Shares of Accesspoint Corporation
10.1* Stock Purchase Agreement - John G. Eliason
10.2* Stock Purchase Agreement - Paul Crupi
10.3* Stock Bonus Agreement - Al Urcuyo
10.4* Stock Bonus Agreement - Eric Odegard
10.5* Stock Bonus Agreement - Walter Burch
10.6* Employment Agreement - Al Urcuyo
10.7* Stock Option Agreement - Al Urcuyo
10.8** Stock Purchase Agreement - Citizen Asia Pacific
Limited
10.9** Amended Stock Purchase Agreement - Citizen Asia Pacific
Limited
10.10* Media Relations Service Agreement - Alliance
Consulting Group
* Attached to this Form 10-QSB.
** Incorporated by reference from the exhibit to the Current
Report on Form 10-KSB filed by us on April 16, 2001
(b) Reports on Form 8-K
None.
-27-
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.
Dated: May 21, 2001 ACCESSPOINT CORPORATION
By: /s/ Tom M. Djokovich
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Tom M. Djokovich,
Chairman of the Board and
Chief Executive Officer
By: /s/ James W. Bentley
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James W. Bentley,
President
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