UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended March 31, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 0-24459
ACCESSTEL, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Utah 59-2159271
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9005 Cobble Canyon Lane, Sandy, Utah 84093
------------------------------------------
(Address of principal executive offices)
Issuer's telephone number: (800) 281-1088
Not applicable
---------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
As of March 31, 2003, the Company had 33,354,091 shares of common stock issued
and outstanding.
Transitional Small Business Disclosure Format: Yes [X] No [ ]
Documents incorporated by reference: None.
ACESSTEL, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - March 31, 2003 (Unaudited) and December 31,
2002
Statements of Operations (Unaudited) - Three Months Ended
March 31, 2003 and 2002
Statements of Cash Flows (Unaudited) - Three Months Ended
March 31, 2003 and 2002
Notes to Financial Statements (Unaudited) - Three Months Ended
March 31, 2003 and 2002
Item 2. Management's Discussion and Analysis or Plan of Operation
Item 3. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
CERTIFICATION
2
AccessTel, Inc.
Balance Sheets
March 31, December 31,
2003 2002
--------- ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ $
Other receivables
--------- ---------
Total current assets
--------- ---------
Property and equipment
Less: Accumulated depreciation
--------- ---------
--------- ---------
Other assets
--------- ---------
Total assets $ $
========= =========
(continued)
3
AccessTel, Inc.
Balance Sheets (continued)
March 31, December 31,
2003 2002
--------- ------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
Current liabilities:
Accounts payable and
accrued expenses $1,087,764 $1,087,764
Due to shareholder 367,748 333,071
Accrued interest payable 5,885 5,074
--------- ---------
Total current liabilities 1,461,397 1,425,909
--------- ---------
Stockholders' deficiency:
Common stock, $.001 par value
Authorized - 100,000,000 shares
Issued and Outstanding
33,354,091 shares 33,354 33,354
Additional paid-in capital 325,091 325,091
Accumulated deficit (1,819,842) (1,784,354)
--------- ---------
Total stockholders' deficiency (1,461,397) (1,425,909)
--------- ---------
Total liabilities and
stockholders' deficiency $ $
========= =========
See accompanying notes to financial statements.
4
AccessTel, Inc.
Statements of Operations (Unaudited)
Three Months Ended
March 31,
--------------------------
2003 2002
--------- ---------
Revenues $ $
Cost of revenues
------- -------
Gross profit
------- -------
General and administrative
expenses 34,677 38,211
Interest expense 811 576
------- -------
Net loss $ (35,488) $ (38,787)
======= =======
Net loss per common share
(basic and diluted) $ - $ -
======= ========
Weighted average common
shares outstanding
(basic and diluted) 33,354,091 33,354,091
========== ==========
See accompanying notes to financial statements.
5
AccessTel, Inc.
Statements of Cash Flows (Unaudited)
Three Months Ended
March 31,
--------------------------
2003 2002
--------- ---------
Cash flows from operating
activities:
Net loss $ (35,488) $ (38,787)
Adjustments to reconcile
net loss to net cash
provided by (used in)
operating activities:
Changes in operating
assets and liabilities:
Increase (decrease) in:
Accrued interest
payable 811 576
-------- --------
Net cash provided by (used in)
operating activities (34,677) (38,211)
-------- --------
Cash flows from financing
activities:
Due to shareholder 34,677 38,211
-------- --------
Net cash provided by (used in)
financing activities 34,677 38,211
-------- --------
Cash and cash equivalents:
Net increase (decrease) - -
At beginning of period - -
-------- --------
At end of period $ - $ -
======== ========
See accompanying notes to financial statements.
6
AccessTel, Inc.
Notes to Financial Statements (Unaudited)
Three Months Ended March 31, 2003 and 2002
1. Organization and Basis of Presentation
Organization - Shopss.com, Inc., a Utah corporation, changed its name to
AccessTel, Inc. (the "Company") effective February 16, 2001, in conjunction
with the acquisition of AccessTel, Inc., a Delaware corporation ("AccessTel"),
in a reverse merger transaction effective December 18, 2000.
Effective December 18, 2000, the Company entered into a Share Exchange
Agreement with AccessTel and the shareholders of AccessTel pursuant to which
the Company acquired all of the shares of AccessTel in exchange for 22,418,980
shares of common stock, which represented 80% of the issued and outstanding
shares of common stock of the Company after giving effect to the transaction.
An additional 13,681,560 shares of common stock were reserved for issuance
under the Company's stock option plan. At the closing of this transaction,
the existing officers and directors of the Company resigned, and new officers
and directors were appointed.
Litigation to rescind this transaction was subsequently commenced on May 1,
2001, and a receiver was appointed on May 3, 2001. This litigation was
settled during May 2003 (see Note 2).
Basis of Presentation - The accompanying financial statements as of December
31, 2002 and for the three months ended March 31, 2003 and 2002 include the
assets and liabilities of Shopss.com, Inc.'s operations and exclude the assets
and liabilities of AccessTel's operations due to the rescission litigation.
The information contained herein is based on the information available to the
receiver, but due to the commencement of litigation and the appointment of a
receiver, such information may not be complete or accurate. Information
provided herein is given to the best knowledge of the receiver, and where it
is indicated herein that "management believes" or similar references to
management's knowledge, this information is provided to the best knowledge of
the receiver, and not management.
Comments The accompanying interim financial statements are unaudited, but in
the opinion of management of the Company, contain all adjustments, which
include normal recurring adjustments, necessary to present fairly the
financial position at March 31, 2003, the results of operations for the three
months ended March 31, 2003 and 2002, and the cash flows for the three months
ended March 31, 2003 and 2002. The balance sheet as of December 31, 2002 is
derived from the Company's audited financial statements.
Certain information and footnote disclosures normally included in financial
statements that have been presented in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission with respect to interim
financial statements, although management of the Company believes that the
disclosures contained in these financial statements are adequate to make the
information presented therein not misleading. For further information, refer
to the financial statements and notes thereto included in the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2002, as filed
with the Securities and Exchange Commission.
The results of operations for the three months ended March 31, 2003 are not
necessarily indicative of the results of operations to be expected for the
full fiscal year ending December 31, 2003.
7
Going Concern - The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The Company has
suffered recurring losses, has no operations and has a deficiency in working
capital and shareholders' equity at March 31, 2003 and December 31, 2002.
These factors raise substantial doubt about the Company's ability to continue
as a going concern. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty. The Company's
independent certified public accountants have included a modification
paragraph in their report on the Company's financial statements for the year
ended December 31, 2002 with respect to this matter.
The Company is currently insolvent and has no business operations. The
Company's current efforts are focused on maintaining the corporate entity, and
until recently, pursing litigation against former management. As a result of
the matters described herein, the Company may have to file for protection
under the United States Bankruptcy Code. Accordingly, there can be no
assurances that the Company will be able to continue in existence.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
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.
Net Loss Per Common Share - Basic loss per common share is calculated by
dividing net loss by the weighted average number of common shares outstanding
during the period. Diluted loss per common share reflects the potential
dilution that would occur if all dilutive stock options and warrants were
exercised. These potentially dilutive securities were anti-dilutive for all
periods presented, and accordingly, basic and diluted loss per common share is
the same for all periods presented.
2. Legal Proceedings
On May 1, 2001, Reed & Wangsgard, L.C. (formerly Droz, Reed & Wangsgard, L.C.)
filed suit in the Third Judicial District Court of Salt Lake County, State of
Utah (the "Court"), Civil No. 010903821 (the "Action"), to assert claims, on
behalf of its clients, prior management of the Company, against AccessTel and
the original shareholders of AccessTel. The complaint in the Action demands
rescission of the Share Exchange Agreement, and alleges that the Company was
induced to enter into the Share Exchange Agreement through a series of false
representations made by AccessTel and its shareholders. The complaint also
includes alternative causes of actions for fraud, conversion, injunctive
relief, and the issuance of a Writ of Replevin.
On May 3, 2001, pursuant to the motion of Reed & Wangsgard, L.C., the
Honorable Raymond Uno, Judge of the Court, issued an Order appointing Leonard
W. Burningham, Esq., a member of the Utah State Bar, as receiver for the
Company. Pursuant to such Order, the receiver is authorized to prepare and
file reports with the Securities and Exchange Commission.
On May 16, 2001, pursuant to the motion of Reed & Wangsgard, L.C., the
Honorable L.A. Dever, Judge of the Court, issued a Temporary Restraining Order
prohibiting the transfer of any shares of common stock issued by AccessTel
and/or Shopss.com, Inc. which were issued in the name of any defendant (other
than the transfer agent) or held for the benefit of any such defendant.
On May 27, 2001, pursuant to the motion of Reed & Wangsgard, L.C., the
Honorable L.A. Dever, Judge of the Court, issued a Preliminary Injunction
enjoining Atlas Stock Transfer Company from registering the transfer of, or
reissuing, any shares of common stock issued by the Company and/or Shopss.com,
Inc. which were issued in the name of any defendant (other than Atlas Stock
Transfer Company) or are held for the benefit of any defendant to the suit.
8
On January 17, 2002, Reed & Wangsgard, L.C. received written confirmation from
an agent of the Board of Directors of the Company that said Board of Directors
have come to a unanimous decision to settle the claim for rescission of the
Share Exchange Agreement by rescinding the Share Exchange Agreement. However,
the Board of Directors of the Company failed and/or refused to follow through
with their agreement to rescind the Share Exchange Agreement. As a result,
Reed & Wangsgard, L.C. filed a Motion to Enforce Settlement with respect to
the agreement to rescind the Share Exchange Agreement.
During February 2002, pursuant to the motion of counsel for AccessTel and the
original shareholders of AccessTel, the Honorable L.A. Dever, Judge of the
Court, issued an order limiting the Court's jurisdiction over certain of the
defendants to the Action. As a result, the Court continued to have
jurisdiction over the corporate defendants and through it, plaintiffs may
assert claims arising from the allegedly wrongful conduct of current
management.
On May 1, 2003, a settlement was reached between the remaining parties to the
Action. The material terms of the settlement include the requirement that the
corporate defendants surrender all right, title and interest in and to those
shares of common stock of the Company issued to them pursuant to the Exchange
Agreement, and that all members of management of the Company that had been
designated to serve as directors and executive officers of the Company at the
closing of the Exchange Agreement resign from their respective management
positions. As a result of the settlement, on May 6, 2003, prior management of
the Company that had filed the complaint, caused to be filed with the Court a
Motion to Dismiss the complaint. Subject to the granting of the Motion to
Dismiss the complaint, of the 16,718,763 shares issued to the corporate
defendants, 11,356,782 of the surrendered shares have been delivered to
counsel for prior management of the Company and will be duly canceled and
returned to the authorized but unissued common stock of the Company, and
5,361,981 shares will be transferred to a private third party unrelated to the
AccessTel parties pursuant to a confidential settlement of a separate legal
action involving a legal debt owed by one of the AccessTel parties to the
private third party. The current officers and directors of the Company
resigned, and David C. Merrell, a former director and executive officer of the
Company, was appointed as an interim officer and director of the Company.
Lawrence Liang, the Company's Chief Executive Officer, President and a
director, and Stuart Bockler, the Company's Chief Financial Officer, Secretary
and a director as of December 31, 2002, were named as defendants in the
Complaint, and resigned as officers and directors of the Company effective
April 24, 2003.
As a result of this settlement, the Company will record the cancellation of
11,356,782 shares of common stock during May 2003. As the settlement did not
result in the Company gaining control of the assets or operations of
AccessTel, the Company will not reflect such assets or operations in its
financial statements subsequent to the settlement date.
3. Transactions with Shareholder
During the three months ended March 31, 2003 and 2002, pursuant to a line of
credit with interest at 1% below the prime rate, a shareholder made advances
to or on behalf of the Company aggregating $6,177 and $9,711, respectively.
Related interest expense recorded during the three months ended March 31, 2003
and 2002 was $811 and $576, respectively. These advances have been used to
fund general and administrative expenses, consisting primarily of legal and
accounting fees. There can be no assurances that the shareholder will
continue to make such advances to or on behalf of the Company. The Company
also incurred fees to the shareholder for services rendered of $28,500 for the
three months ended March 31, 2003 and 2002.
9
4. New Accounting Pronouncements
In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations". SFAS No. 143 addresses the diverse accounting practices for
obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. The Company will be required to adopt
SFAS No. 143 effective January 1, 2003. The Company does not expect that the
adoption of SFAS No. 143 will have a significant effect on the Company's
financial statement presentation or disclosures.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities," which requires companies to recognize costs
associated with exit or disposal activities when they are incurred rather than
at the date of a commitment to an exit or disposal plan. Such costs covered by
SFAS No. 146 include lease termination costs and certain employee severance
costs that are associated with a restructuring, discontinued operation, plant
closing, or other exit or disposal activity. SFAS No. 146 replaces the
previous accounting guidance provided by the EITF No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring)." SFAS No.
146 is to be applied prospectively to exit or disposal activities initiated
after December 31, 2002. The Company does not anticipate that the adoption of
SFAS No. 146 will have a significant impact on the Company's financial
statement presentation or disclosures.
In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45,
"Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others". FIN No. 45 clarifies
disclosures that are required to be made for certain guarantees and
establishes a requirement to record a liability at fair value for certain
guarantees at the time of the guarantee's issuance. The disclosure
requirements of FIN No. 45 have been applied in the Company's financial
statements at December 31, 2002. The requirement to record a liability
applies to guarantees issued or modified after December 31, 2002. The Company
will adopt the measurement and recording provisions of FIN No. 45
prospectively beginning January 1, 2003.
In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable
Interest Entities, an Interpretation of ARB 51". FIN No. 46 requires that the
primary beneficiary in a variable interest entity consolidate the entity even
if the primary beneficiary does not have a majority voting interest. The
consolidation requirements of FIN No. 46 are required to be implemented for
any variable interest entity created on or after January 31, 2003. In
addition, FIN No. 46 requires disclosure of information regarding guarantees
or exposures to loss relating to any variable interest entity existing prior
to January 31, 2003 in financial statements issued after January 31, 2003.
FIN No. 46 is effective for the Company on January 31, 2003, and is not
expected to have a significant impact on the Company's financial statement
presentation or disclosures.
In April 2003, the FASB issued Statements of Financial Accounting Standards
No. 149 ("SFAS No. 149"), an amendment to SFAS No. 133. SFAS No. 149
clarifies under what circumstances a contract with initial investments meets
the characteristics of a derivative and when a derivative contains a financing
component. SFAS No. 149 is effective for contracts entered into or modified
after June 30, 2003.
In May 2003, the FASB issued Statements of Financial Accounting Standards No.
150 ("SFAS No. 150"). SFAS No. 150 established standards for how an issuer
classifies and measures in its statement of financial position certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances) because that
10
financial instrument embodies an obligation of the issuer. SFAS No. 150 is
effective for financial instruments entered into or modified after May 31,
2003 and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. SFAS No. 150 is to be implemented by reporting
the cumulative effect of a change in accounting principle for financial
instruments created before the issuance date of SFAS No. 150 and still
existing at the beginning of the interim period of adoption. Restatement is
not permitted. The adoption of SFAS No. 150 is not expected to have a
significant impact on the Company's financial statement presentation or
disclosures.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Cautionary Statement Pursuant to Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995:
This Quarterly Report on Form 10-QSB for the quarterly period ended March 31,
2003 contains "forward-looking" statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, including statements that include
the words "believes", "expects", "anticipates", or similar expressions. These
forward-looking statements may include, among others, statements of
expectations, beliefs, future plans and strategies, anticipated events or
trends, and similar expressions concerning matters that are not historical
facts. The forward-looking statements in this Quarterly Report on Form 10-QSB
for the quarterly period ended March 31, 2003 involve known and unknown risks,
uncertainties and other factors that could the cause actual results,
performance or achievements of the Company to differ materially from those
expressed in or implied by the forward-looking statements contained herein.
Overview:
The information contained herein is based on the information available to the
receiver, but due to the commencement of litigation and the appointment of a
receiver, such information may not be complete or accurate. Information
provided herein is given to the best knowledge of the receiver, and where it
is indicated herein that "management believes" or similar references to
management's knowledge, this information is provided to the best knowledge of
the receiver, and not management.
The Company is currently insolvent and has no business operations. The
Company's current efforts are focused on maintaining the corporate entity, and
until recently, pursing litigation against former management. As a result of
the matters described herein, the Company may have to file for protection
under the United States Bankruptcy Code. Accordingly, there can be no
assurances that the Company will be able to continue in existence.
Results of Operations:
Three Months Ended March 31, 2003 and 2002 -
During the three months ended March 31, 2003, the Company incurred general and
administrative expenses of $34,677, which consisted of legal and accounting
expenses of $6,177 and charges by a shareholder for services rendered of
$28,500, and interest expense of $811 related to such advances.
During the three months ended March 31, 2002, the Company incurred general and
administrative expenses of $38,211, which consisted of legal and accounting
expenses of $9,711 and charges by a shareholder for services rendered of
$28,500, and interest expense of $576 related to such advances.
During the three months ended March 31, 2003, the Company incurred a net loss
of $35,488, as compared to a net loss of $38,787 for the three months ended
March 31, 2002.
Liquidity and Capital Resources March 31, 2003:
Operating Activities -
At Mach 31, 2003, the Company had no cash resources and a working capital
deficit of $1,461,397, as a result of which the Company was insolvent.
12
Financing Activities -
During the three months ended March 31, 2003, pursuant to a line of credit
with interest at 1% below the prime rate, a shareholder made advances to or on
behalf of the Company aggregating $6,177. These advances have been used to
fund general and administrative expenses, consisting primarily of legal and
accounting fees. There can be no assurances that the shareholder will
continue to make such advances to or on behalf of the Company. The Company
also incurred fees to the shareholder for services rendered of $28,500 for the
three months ended March 31, 2003.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information
required to be disclosed in the reports filed or submitted under the Exchange
Act of 1934 is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms of the Securities and Exchange
Commission. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed in the reports filed under the Exchange Act of 1934 is accumulated
and communicated to management, including the Chief Executive Officer and
Chief Financial Officer (or persons performing such functions), as
appropriate, to allow timely decisions regarding required disclosure.
Within the 90 days prior to the filing of this report, the Company carried out
an evaluation, under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer and
Chief Financial Officer (or persons performing such functions), of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. Based upon and as of the date of that evaluation, the Chief
Executive Officer and Chief Financial Officer (or persons performing such
functions) concluded that the Company's disclosure controls and procedures are
effective to ensure that information required to be disclosed in the reports
the Company files and submits under the Exchange Act of 1934 is recorded,
processed, summarized and reported as and when required.
(b) Changes in Internal Controls
There were no changes in the Company's internal controls or in other factors
that could have significantly affected those controls subsequent to the date
of the Company's most recent evaluation.
13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On May 1, 2001, Reed & Wangsgard, L.C. (formerly Droz, Reed & Wangsgard, L.C.)
filed suit in the Third Judicial District Court of Salt Lake County, State of
Utah (the "Court"), Civil No. 010903821 (the "Action"), to assert claims, on
behalf of its clients, prior management of the Company, against AccessTel and
the original shareholders of AccessTel. The complaint in the Action demands
rescission of the Share Exchange Agreement, and alleges that the Company was
induced to enter into the Share Exchange Agreement through a series of false
representations made by AccessTel and its shareholders. The complaint also
includes alternative causes of actions for fraud, conversion, injunctive
relief, and the issuance of a Writ of Replevin.
On May 3, 2001, pursuant to the motion of Reed & Wangsgard, L.C., the
Honorable Raymond Uno, Judge of the Court, issued an Order appointing Leonard
W. Burningham, Esq., a member of the Utah State Bar, as receiver for the
Company. Pursuant to such Order, the receiver is authorized to prepare and
file reports with the Securities and Exchange Commission.
On May 16, 2001, pursuant to the motion of Reed & Wangsgard, L.C., the
Honorable L.A. Dever, Judge of the Court, issued a Temporary Restraining Order
prohibiting the transfer of any shares of common stock issued by AccessTel
and/or Shopss.com, Inc. which were issued in the name of any defendant (other
than the transfer agent) or held for the benefit of any such defendant.
On May 27, 2001, pursuant to the motion of Reed & Wangsgard, L.C., the
Honorable L.A. Dever, Judge of the Court, issued a Preliminary Injunction
enjoining Atlas Stock Transfer Company from registering the transfer of, or
reissuing, any shares of common stock issued by the Company and/or Shopss.com,
Inc. which were issued in the name of any defendant (other than Atlas Stock
Transfer Company) or are held for the benefit of any defendant to the suit.
On January 17, 2002, Reed & Wangsgard, L.C. received written confirmation from
an agent of the Board of Directors of the Company that said Board of Directors
have come to a unanimous decision to settle the claim for rescission of the
Share Exchange Agreement by rescinding the Share Exchange Agreement. However,
the Board of Directors of the Company failed and/or refused to follow through
with their agreement to rescind the Share Exchange Agreement. As a result,
Reed & Wangsgard, L.C. filed a Motion to Enforce Settlement with respect to
the agreement to rescind the Share Exchange Agreement.
During February 2002, pursuant to the motion of counsel for AccessTel and the
original shareholders of AccessTel, the Honorable L.A. Dever, Judge of the
Court, issued an order limiting the Court's jurisdiction over certain of the
defendants to the Action. As a result, the Court continued to have
jurisdiction over the corporate defendants and through it, plaintiffs may
assert claims arising from the allegedly wrongful conduct of current
management.
On May 1, 2003, a settlement was reached between the remaining parties to the
Action. The material terms of the settlement include the requirement that the
corporate defendants surrender all right, title and interest in and to those
shares of common stock of the Company issued to them pursuant to the Exchange
Agreement, and that all members of management of the Company that had been
designated to serve as directors and executive officers of the Company at the
closing of the Exchange Agreement resign from their respective management
positions. As a result of the settlement, on May 6, 2003, prior management of
the Company that had filed the complaint, caused to be filed with the Court a
Motion to Dismiss the complaint. Subject to the granting of the Motion to
Dismiss the complaint, of the 16,718,763 shares issued to the corporate
14
defendants, 11,356,782 of the surrendered shares have been delivered to
counsel for prior management of the Company and will be duly canceled and
returned to the authorized but unissued common stock of the Company, and
5,361,981 shares will be transferred to a private third party unrelated to the
AccessTel parties pursuant to a confidential settlement of a separate legal
action involving a legal debt owed by one of the AccessTel parties to the
private third party. The current officers and directors of the Company
resigned, and David C. Merrell, a former director and executive officer of the
Company, was appointed as an interim officer and director of the Company.
Lawrence Liang, the Company's Chief Executive Officer, President and a
director, and Stuart Bockler, the Company's Chief Financial Officer, Secretary
and a director as of December 31, 2002, were named as defendants in the
Complaint, and resigned as officers and directors of the Company effective
April 24, 2003.
As a result of this settlement, the Company will record the cancellation of
11,356,782 shares of common stock during May 2003. As the settlement did not
result in the Company gaining control of the assets or operations of
AccessTel, the Company will not reflect such assets or operations in its
financial statements subsequent to the settlement date.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
A list of exhibits required to be filed as part of this report is
set forth in the Index to Exhibits, which immediately precedes such
exhibits, and is incorporated herein by reference.
Reports on Form 8-K
Three Months Ended March 31, 2003: None
15
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AccessTel, Inc.
---------------
(Registrant)
/s/ DAVID C. MERRELL
Date: June 11, 2003 By:_________________________
David C. Merrell
President and Chief
Financial Officer
16
CERTIFICATION
I, David C. Merrell, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of AccessTel, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report.
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and I have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to me by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date;
5. I have disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
/s/ DAVID C. MERRELL
June 11, 2003 By: _________________________
President and Chief
Financial Officer
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INDEX TO EXHIBITS
Exhibit
Number Description of Document
------ -----------------------
99.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
18