<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-3
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 2, 1999
SKYLYNX COMMUNICATIONS, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
COLORADO 0-24687 84-1360029
- --------------- -------------------------- ----------
(State or other (Commission file number) (Employer Identi-
incorporation) fication No.)
600 South Cherry Street, Suite 305, Denver, Colorado 80246
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 316-0400
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103 Sarasota Quay, Sarasota, Florida 34236
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(Former name or former address, if changed since last report)
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<PAGE>
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------
(a) Financial Statements
--------------------
Pursuant to Item 7(a)(4), the Registrant files herewith the
following financial statements of the acquired business:
InterAccess Corporation Audited Financial Statements
Independent Auditor's Report
Balance sheet as of December 31, 1998
Statements of Operation and Accumulated Deficit for the year ended
December 31, 1998 and inception to December 31, 1997
Statements of Cash Flows for the years ended December 31, 1998 and
December 31, 1997
Notes to Financial Statements
(b) Pro Forma Financial Information
-------------------------------
Pursuant to Item 7(b) and Item 7(a)(4), the Registrant files
herewith the following unaudited pro forma consolidated financial information:
Pro Forma Consolidated Balance Sheet as of December 31, 1998
Pro Forma Consolidated Statements of Operations for the year ended
December 31, 1998
The unaudited Pro Forma Consolidated Sheet as of December 31, 1998 and
unaudited Pro Forma Consolidated Statements of Operations for the year ended
December 31, 1998 (collectively the Pro Forma Consolidated Financial
Statements) give effect to the acquisition by SkyLynx Communications of
certain assets of InterAccess Corporation. These transactions were accounted
for as a purchase in accordance with the provisions of Accounting Principles
Board Opinion Number 16.
The Pro Forma Consolidated Statements of Operations were prepared
assuming that the acquisition described above was consummated as of the
beginning of each period presented. The Pro Forma Consolidated Balance Sheet
includes the pro forma purchase accounting entries for the acquisition and was
prepared assuming that the transaction was consummated as of January 1, 1998.
The unaudited Pro Forma Consolidated Financial Statements are based upon
historical consolidated and combined financial statements of the Registrant
and InterAccess Corporation.
The pro forma adjustments and the resulting Pro Forma Consolidated
Financial Statements have been prepared based upon available information and
certain assumptions and estimates deemed appropriate by the Registrant. A
final determination of required purchase accounting adjustments and the
allocation of the purchase price to the assets acquired based upon their
respective fair values has not yet been made for the acquisition.
The Pro Forma Consolidated Balance Sheet and the Pro Forma Consolidated
Statements of Operations are not necessarily indicative of the results of
operations that actually would have been achieved had the acquisition been
consummated as of the dates indicated, or that may be achieved in the future.
Furthermore, the Pro Forma Consolidated Financial Statements do not reflect
changes that may occur as the result of post-combination activities and other
matters.
The Pro Forma Consolidated Financial Statements and notes thereto should
be read in conjunction with the accompanying historical financial statements
and notes thereto of InterAccess Corporation and the audited consolidated
financial statements of the Registrant and subsidiaries included in its Annual
Report on Form 10-KSB for the year ended December 31, 1998.
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INTERACCESS CORP.
Index to Financial Statements
Page
Independent auditors' report F-2
Balance sheet, December 31, 1998 F-3
Statement of operations, year ended December 31, 1998 F-4
Statement of shareholder's deficit, January 1, 1998 through
December 31, 1998 F-5
Statement of cash flows, year ended December 31, 1998 F-6
Summary of significant accounting policies F-7
Notes to financial statements F-9
F-1
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<PAGE>
To the Board of Directors and Shareholders
InterAccess Corp.
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of InterAccess Corp. as of
December 31, 1998, and the related statements of operations, shareholders'
equity and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of InterAccess Corp., as of
December 31, 1998, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting
principles.
Cordovano and Harvey, P.C.
Denver, Colorado
April 16, 1999
F-2
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INTERACCESS CORP.
Balance Sheet
December 31, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 344
Accounts receivable, net of allowance for uncollectible
accounts totaling $50,100 19,321
-----------
TOTAL CURRENT ASSETS 19,665
PROPERTY AND EQUIPMENT, less accumulated depreciation
of $50,800 (Note C) 15,629
-----------
$ 35,294
===========
LIABILITIES AND SHAREHOLDER'S DEFICIT
CURRENT LIABILITIES
Accounts payable $ 10,547
Current maturities on advances payable, related
parties (Note B) 21,340
Accrued interest expense, related party (Note B) 1,750
Unearned revenue 5,795
Other accrued expenses 2,506
-----------
TOTAL CURRENT LIABILITIES 41,938
SHAREHOLDERS' DEFICIT
Common stock, no par value; 7,500 shares authorized;
500 shares issued and outstanding 100
Retained deficit (6,744)
TOTAL SHAREHOLDER'S DEFICIT (6,644)
-----------
$ 35,294
</TABLE> ===========
See accompanying summary of significant accounting policies and
notes to the financial statements.
F-3
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INTERACCESS CORP.
Statement of Operations
For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
<S> <C>
REVENUES
Sales and services $ 273,516
Less: discounts (11,225)
-----------
NET REVENUES 262,291
-----------
OPERATING COSTS AND EXPENSES
Cost of sales and services 139,773
Salaries and payroll taxes 69,847
Consulting fees 15,901
Rent, related party (Note B) 6,425
Professional fees 2,155
Telephone 3,318
Travel 686
Insurance 5,068
Office and supplies 4,068
Depreciation 18,486
Other 3,393
PROVISION FOR UNCOLLECTIBLE ACCOUNTS 50,100
-----------
TOTAL OPERATING COSTS AND EXPENSES 319,220
LOSS FROM OPERATIONS (56,929)
NON-OPERATING (EXPENSE) INCOME
Interest expense (Note B) (1,813)
Interest income 41
-----------
LOSS BEFORE INCOME TAXES (58,701)
INCOME TAXES (Note D) -
-----------
NET LOSS $ (58,701)
Basic weighted average common shares outstanding 500
Basic loss per common share $ (117.40)
</TABLE>
See accompanying summary of significant accounting policies and
notes to the financial statements.
F-4
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INTERACCESS CORP.
Statement of Shareholder's Deficit
January 1, 1998 through December 31, 1998
<TABLE>
<CAPTION>
Common Stock Additional Total
Paid-in Retained Shareholders'
Shares Par Value Capital Deficit Equity
------ -------- --------- -------- ------------
<S> <C> <C> <C> <C> <C>
Balance,
January 1, 1998 500 $ 100 $ - $ 51,957 $ 52,057
Net loss for the
year ended
December 31,
1998 - - - (58,701) (58,701)
BALANCE,
December 31, 1998 500 $ 100 $ - $ (6,744) $ (6,644)
</TABLE>
See accompanying summary of significant accounting policies and notes to
the financial statements.
F-5
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INTERACCESS CORP.
Statement of Cash Flows
For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
<S> <C>
OPERATING ACTIVITIES
Net loss $ (58,701)
Transactions not requiring cash:
Depreciation 18,486
Provision for uncollectible accounts 44,100
Changes in current assets and current liabilities:
Increase in receivables and other current assets (11,408)
Increase in accounts payable and other current
liabilities 22,017
-----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 14,494
INVESTING ACTIVITIES
Purchases of equipment (6,039)
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NET CASH (USED IN) INVESTING ACTIVITIES (6,039)
FINANCING ACTIVITIES
Principal debt payments (13,248)
-----------
NET CASH (USED IN) FINANCING ACTIVITIES (13,248)
NET INCREASE IN CASH (4,793)
Cash, beginning of period 5,137
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CASH, END OF PERIOD $ 344
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ -
-----------
Income taxes $ -
-----------
</TABLE>
See accompanying summary of significant accounting policies and
notes to the financial statements.
F-6
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INTERACCESS CORP.
Summary of Significant Accounting Policies
December 31, 1998
Use of Estimates
- ----------------
The preparation of the financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect certain 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. Accordingly, actual results could differ from those
estimates.
Cash Equivalents
- ----------------
For the purpose of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.
Property, Equipment and Depreciation
- ------------------------------------
Property and equipment is stated at cost and depreciated using the straight-
line method over the estimated useful lives of the assets. Maintenance and
repair costs are charged to expense as incurred. Gains or losses on
disposition of property and equipment are reflected in income.
Revenues
- --------
Revenues consist of monthly charged fees to members for Internet access,
Internet access consulting and for certain customers, hardware and other
computer equipment. Internet service revenues are recognized in the period
services are provided. Sales of products, such as computers and related
equipment are recognized when the products are delivered. From time to time,
Internet customers may prepay for Internet service. Deferred revenue of
$5,795 consists of payment received for services to be performed in future
periods.
Income Taxes
- ------------
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the recorded book basis and tax basis
of assets and liabilities for financial and income tax reporting. The
deferred tax assets and liabilities represent the future tax return
consequences of those differences, which will either be taxable or deductible
when the assets and liabilities are recovered or settled. Deferred taxes are
also recognized for operating losses that are available to offset future
taxable income and tax credits that are available to offset future federal
income taxes.
Fair Value of Financial Instruments
- -----------------------------------
The Company has determined, based on available market information and
appropriate valuation methodologies, that the fair value of its financial
instruments approximates carrying value. The carrying amounts of cash,
receivables, payables and other current liabilities approximate fair value due
to the short-term maturity of the instruments.
F-7
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INTERACCESS CORP.
Summary of Significant Accounting Policies
December 31, 1998
Earnings per Common Share
- -------------------------
Effective December 31, 1997, SFAS 128 "Earnings per Share" requires a dual
presentation of earnings per share-basic and diluted. Basic earnings per
common share has been computed based on the weighted average number of common
shares outstanding. Diluted earnings per share reflects the increase in
weighted average common shares outstanding that would result from the assumed
exercise of outstanding stock options. However, the Company has a simple
capital structure for the period presented and, therefore, there is no
variance between the basic and diluted earnings per share.
Recently Issued Accounting Pronouncements
- -----------------------------------------
The Company has adopted the following new accounting pronouncements for the
year ended December 31, 1998. There was no effect on the financial statements
presented from the adoption of the new pronouncements. SFAS No. 130,
"Reporting Comprehensive Income," requires the reporting and display of total
comprehensive income and its components in a full set of general-purpose
financial statements. SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," is based on the "management" approach for
reporting segments. The management approach designates the internal
organization that is used by management for making operating decisions and
assessing performance as the source of the Company's reportable segments.
SFAS No. 131 also requires disclosure about the Company's products, the
geographic areas in which it earns revenue and holds long-lived assets, and
its major customers. SFAS No. 132, "Employers' Disclosures about Pensions and
Other Post-retirement Benefits," which requires additional disclosures about
pension and other post-retirement benefit plans, but does not change the
measurement or recognition of those plans.
F-8
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INTERACCESS CORP.
Notes to Financial Statements
December 31, 1998
Note A: Nature of Organization
- -------------------------------
InterAccess Corp. (the "Company") was incorporated in Florida on March 29,
1995. The Company is an Internet service provider that was formed to help
members derive meaningful benefits from the extensive resources of the
Internet.
Note B: Related Party Transactions
- -----------------------------------
During the year ended December 31, 1998, the Company paid an affiliate $550
per month for office space on a month-to-month basis. Rent expense for the
year ended December 31, 1998 totaled $6,425. The affiliate also charges the
Company $2,973 for services provided during the year ended December 31, 1998.
The $2,973 is included in indebtedness to related parties in the accompanying
financial statements.
At January 1, 1998, the Company owed an officer $31,615 for working capital
advances. The advances bear interest at seven percent and are due on demand.
The Company repaid $13,248 during the year ended December 31, 1998. The
remaining balance of $18,367 at December 31, 1998 is included as due to
officer in the accompanying balance sheet. Accrued interest on the advances
totaled $1,750 at December 31, 1998 and is included as accrues interest
expense, related party in the accompanying financial statements.
Note C: Property and Equipment
- -------------------------------
Property and equipment consisted of the following at December 31, 1998:
<TABLE>
<CAPTION>
<S> <C>
Furniture $ 401
Computer hardware 62,640
Computer software 3,388
--------------
66,429
Less accumulated depreciation (50,800)
--------------
$ 15,629
</TABLE>
F-9
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INTERACCESS CORP.
Notes to Financial Statements
December 31, 1998
Note D: Income Taxes
- ----------------------
A reconciliation of the U.S. statutory federal income tax rate to the
effective rate follows for the year ended December 31, 1998:
<TABLE>
<CAPTION>
<S> <C>
U.S. statutory federal rate 16.48%
State income tax rate, net of federal benefit 0.00%
Net operating loss for which no tax benefit is
currently available - 16.48%
--------
0.00%
</TABLE>
Deferred taxes consisted of the following at December 31, 1998:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax asset, net operating loss
carryforward $ 9,675
Valuation allowance (9,675)
---------
Net deferred taxes $ -
</TABLE>
The valuation allowance offsets the deferred tax assets for which there is no
assurance of recovery. The change in the valuation allowance for the year
ended December 31, 1998 totaled $9,675. The net operating loss carryforward
expires through the year 2018.
The valuation allowance will be evaluated at the end of each year, considering
positive and negative evidence about whether the deferred tax asset will be
realized. At that time, the allowance will either be increased or reduced;
reduction could result in the complete elimination of the allowance if
positive evidence indicates that the value of the deferred tax assets is no
longer impaired and the allowance is no longer required.
F-10
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<PAGE>
INTERACCESS CORP.
Notes to Financial Statements
December 31, 1998
Note E: Year 2000 Compliance
- -----------------------------
The Year 2000 issue (Y2K) is the result of computer programs written using two
digits rather than four to define the applicable year. Any of the Company's
computer and telecommunications programs that have date sensitive software may
recognize a date using "00" as the year 1900 instead of 2000. This could
result in system failure or miscalculations causing disruptions in operations,
including the ability to process transactions, send invoices, or engage in
similar normal business activities.
The Company cannot determine the extent to which the Company is vulnerable to
third parties' failure to remediate their own Y2K problems. As a result,
there can be no guarantee that the systems of other companies on which the
Company's business relies will be timely converted, or that failure to convert
by another company, or a conversion that is incompatible with the Company's
systems, would have a material adverse affect on the Company. In view of the
foregoing, there can be no assurance that the Y2K issue will not have a
material adverse effect on the Company's business.
Note F: Subsequent Event
- --------------------------
Asset Purchase Agreement
------------------------
Effective February 2, 1999, the Company consummated an Asset Purchase
Agreement pursuant to which substantially all of its assets were sold to
SkyLynx Communications, Inc. ("SkyLynx"), an Internet service provider
operating in Florida, California and Oregon and serving approximately 1,400
customers. The purchase price of this acquisition was $390,770, consisting of
$195,385 in cash and 25,607 shares of SkyLynx common stock.
Unaudited Pro Forma Condensed, Combined Financial Information
-------------------------------------------------------------
The following unaudited pro forma condensed, combined balance sheet and
pro forma condensed, combined statement of operations gives effect to the
acquisition of the Company by SkyLynx as of and for the year ended December
31, 1998. The unaudited condensed, combined statement of operations is
presented as if the acquisition had occurred on January 1, 1998.
The unaudited pro forma condensed, combined financial information should
be read in conjunction with the separate audited financial statements and
notes thereto of each of the companies included in the pro forma as of and for
the year ended December 31, 1998.
F-11
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<PAGE>
INTERACCESS CORP.
Notes to Financial Statements
December 31, 1998
Note F: Subsequent event, continued
- --------------------------------------
Unaudited Pro Forma Condensed, Combined Financial Information, continued
------------------------------------------------------------------------
These unaudited pro forma condensed, combined statements are not
necessarily indicative of results of operations had the acquisition occurred
at January 1, 1998, nor of the results to be expected in the future.
The following footnotes should be read in understanding pro forma
adjustments to the unaudited pro forma condensed, consolidated statements.
(a) Adjustment to reflect the $390,770 asset purchase by SkyLynx;
$170,385 allocated to the customer list, $25,000 allocated to property and
equipment, and $195,385 allocated to the covenant not to compete. SkyLynx
paid $195,385 in cash for the customer list and property and equipment.
SkyLynx issued 25,607 common shares valued at market of approximately $7.63
per share as of the date of closing, in exchange for a covenant not to
compete from the principals of InterAccess.
(b) Adjustment to recognize depreciation on the property and amortization
of the customer list and covenant not to compete agreement. The property was
depreciated over three years ($8,333), the customer list was amortized over
three years ($56,795), and the covenant not to compete was amortized over 18
months ($130,257). Total pro forma amortization and depreciation expense
equals $195,385.
(c) Adjustment to revise the weighted average common shares outstanding
and basic loss per share for the 25,607 common shares issued in the asset
purchase agreement.
(d) Reflects balances at December 31, 1998 of the Company that were not
acquired by SkyLynx.
The unaudited pro forma condensed, combined financial statements do not
show a pro forma benefit for income taxes. The benefit from net operating
losses has been offset by the establishing of a valuation allowance equal to
the deferred tax asset derived from net operating losses. The valuation
allowance offsets the net deferred tax asset for which there is no assurance
of recovery.
F-12
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INTERACCESS CORP.
Notes to Financial Statements
December 31, 1998
Note F: Subsequent event
- --------------------------
Unaudited Pro Forma Condensed, Combined Financial Information, continued
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<TABLE>
<CAPTION>
PRO FORMA CONDENSED, COMBINED BALANCE SHEET
DECEMBER 31, 1998
SkyLynx (d)
InterAccessCommunica- Pro Forma Pro Forma Pro Forma
Corp. tions, Inc. Adjustments Adjustments Combined
---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Cash $ 344 $ 512,925 $ (344) $(195,385) (a) $317,540
Current assets 19,665 533,060 (19,665) (195,385) (a) 337,675
Total assets 35,294 2,407,603 (35,294) 195,385 2,602,988
Current
liabilities 41,938 1,134,474 (41,938) - 1,134,474
Total liabilities 41,938 1,134,474 (41,938) - 1,134,474
Retained equity
(deficit) (6,744)(5,553,586) 6,744 - (5,553,586)
Total shareholders'
equity (6,644) 1,273,129 6,644 195,385 (a)1,468,514
</TABLE>
PRO FORMA CONDENSED, COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
SkyLynx (d)
InterAccessCommunica- Pro Forma Pro Forma Pro Forma
Corp. tions, Inc. Adjustments Adjustments Combined
---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $ 262,291 $ 7,898 $ - $ 270,189
Operating costs
and expenses 319,220 5,300,834 195,385 (b)5,815,439
Loss from
operations (56,929)(5,292,936) (195,385)(b)(5,545,250)
Interest and other
income (expenses) (1,772) 18,104 16,332
Net loss (58,701)(5,274,832) (195,385) (b)(5,528,918)
Weighted average
common shares
outstanding 500 8,946,874 25,607 (c)8,972,481
Basic loss per
share $ (117.40) $ (0.60) (c) (.62)
</TABLE>
F-13
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SIGNATURE
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 hereunto duly authorized.
SKYLYNX COMMUNICATIONS , INC.
Dated: July 2, 1999 By: /s/ Jeffery A. Mathias
------------ ---------------------------------
Jeffery A. Mathias, President
