UNITED STATES
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______ to ______
Commission file number: 000-26539
ACCESS NETWORK CORPORATION
____________________________________________
(Name of Small Business Issuer in its charter)
Nevada 88-0409450
________________________________ ___________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
2995 El Camino Road, Las Vegas, Nevada 89146
_______________________________________ __________
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: (702) 251-3211
________________
Securities registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be registered Each class is to be registered
None None
______________________ ______________________________
Securities registered under Section 12(g) of the Act:
Common
________________
(Title of class)
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 registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes [x] No [ ]
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Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $11,854.
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as
of a specified date within the past 60 days.
Market value of the Company's common equity held by non-affiliates is
$50,300. This is based on 201,000 shares sold in the Company's offering to
non-affiliates at $0.25 per share. The Company has no public market for its
common equity.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of December 31, 1999 the Company has issued and outstanding common
stock of 401,200 shares.
No documents have been incorporated by reference.
Transitional Small Business Disclosure Format: Yes [ ] No [x]
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PART I
Item 1. Description of Business
BUSINESS DEVELOPMENT
ACCESS NETWORK CORPORATION (the "Company" and/or the "Registrant") was
incorporated in the State of Nevada on September 8, 1998, with 25,000,000
shares of common stock authorized, par value $0.001 per share. On April 5,
1999 the Company commenced an offering of its common stock pursuant to an
exemption from the registration requirements of Section 5 of the Securities
Act of 1933, as amended (the "Act"), under Section 3(b), Regulation D, Rule
504, whereby it offered for sale up to 400,000 of its unregistered common
shares at an offering price of $0.25 per share. The offering was also
registered with the State of Nevada and was declared effective by the Nevada
Securities Division on February 8, 1999. The purpose of the offering was to
raise a minimum of $50,000 to fund the start-up-phase of its business
operations, that is, the wholesale marketing and distribution of specialty and
fashion packaging. The offering closed on April 6, 1999 with 201,200 shares
sold, for gross proceeds of $50,300.
BUSINESS OF REGISTRANT
Principal Products or Services and Their Market
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Introduction
The Company's business purpose is the marketing and sale of specialty
gift packaging to small businesses and individuals acting as independent sales
agents for direct marketing entities. The Company acts as a "wholesale
distributor", that is, it purchases its chosen product line from a
manufacturer(s)/supplier(s) and sells the same to small businesses and or
individuals interested in reselling or utilizing the same in the course of
their business operations. The Company's business purpose grew out of
Management's belief that there is a substantial niche in the packaging
industry for specialty and fashion packaging especially for giftware. The
Company currently has two products that it markets: its specialty gable boxes
(with coordinated wrap and ribbon) and its "Twelve Days of Christmas" video.
The Company concentrates its efforts on sales of specialty boxes and wrap,
mainly through mail order, to individuals acting as independent sales
agents/directors for direct marketing companies. Its "Twelve Days of
Christmas" video concept is on hold. The Company has had some revenues from
its initial product line although the same are relatively insignificant.
Other than certain limited marketing efforts commenced during the fourth
quarter of 1998, its offering conducted in early April 1999, and the
establishment of relationships with potential suppliers, the Company has
conducted only limited business operations since its inception.
Management believes that the Company's current marketing strategy must
remain flexible as its product line may change frequently to meet the demands
of its clientele unless certain of its products prove to be popular and
successful for its customers regardless of industry trends. Management further
believes that in order to be succeed in its business purpose it must (1)
recognize industry trends and make product choices in response to such market
analysis, (2) attract a steady clientele and be able to analyze and meet the
needs of such clientele in light of market trends at a competitive price; and
(3) market the product line to such clientele.
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Product: Special "Gourmet" Gift Boxes
The Company currently offers for sale two different styles of "gourmet"
gift boxes known as the one piece "Gable Box(es)". The colors of the Gable
Boxes consist of metallic white and gold and the dimensions are 3.5" X 3.5" X
13". These boxes were specifically chosen to satisfy the needs of the
Company's initial target market, that is independent sales directors for Mary
Kay, Inc., and were utilized as seasonal gift boxes by such individuals in
their sales of Mary Kay Cosmetics during the 1998 and 1999 Christmas season.
The Company also offers other related merchandise including wrap, tissue and
ribbon. The Company's Gable Boxes and related merchandise lend itself well to
coordinated gift wrapping. The Company believes that a beautifully wrapped
gift package (ie. a well designed and produced package) will do the following
for the Company's clients: (1) generate repeat business for the client; (2)
add to the value of the gift itself; and (3) enhance the client's image.
In 1999, the Company's inventory on hand increased from approximately 1,000
Gable Boxes to approximately 25,000 Gable Boxes and the Company leased a
10'x15'storage unit to store its inventory. The Company will continue to offer
this product line so long as it has positive response from its clientele and
is able to purchase the same at a competitive price.
Product: "Twelve Days of Christmas" Video
Also, on a limited/test basis, during the 1998 Christmas season, the
Company offered a demonstration video, on the preparation of the "Twelve Days
of Christmas" for the Company's clientele. The video was produced by the
Company's President, Marci Evans, in response to customers questions on the
use of the Gable Boxes in connection with the "12 Days of Christmas" gift set,
a high ticket specialty gift item marketed by Mary Kay independent sales
directors during the 1998 Christmas season. The videos provided a means to
demonstrate how to use the specialty gift boxes to best advantage and sold for
$5.00. The response from the Company's clients was favorable with several
videos sold. Although the Company continues to believe the concept is
worthwhile and had intended to produce the video a second time for the 1999
season on a more professional basis, it was not able to do so. The Company is
unsure if the its financial position will have sufficient capital to continue
pursuing the video concept.
Target Markets
WHOLESALE TRADE INDUSTRY OVERVIEW The Company considers itself a
wholesale marketer in the distribution industry. In a traditional distribution
channel, raw material moves from supplier to manufacturer (which fabricates
the finished product), then from manufacturer to a distributor such as the
Company, for distribution to points of purchase. The most popular channel for
moving product from manufacturer/supplier to the retailer, has been wholesale
distribution. The type of distributor most familiar to the public is the
merchant wholesale distributor, who buys the product outright from a supplier
(usually the manufacturer) and attempts to move inventory from their warehouse
to businesses interested in reselling the products or using them in the course
of their operations. The US Department of Commerce defines merchant
wholesalers as establishments primarily engaged in buying and selling
merchandise for their own account. Wholesale distributors are full service
distributors who in addition to taking title to the products, also take
responsibility for delivery to the buyer. The wholesale distribution industry
has evolved into six distinct areas, one of which is wholesale paper goods and
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services. The Company believes there is a specialty niche within the paper
goods market: specialty packaging. This is the main area where the Company
will concentrate its business operations, that is, it intends to act as a
wholesale distributor of specialty packaging including related products such
as wrap and ribbon. The wholesale packaging industry has grown in recent years
and the Company's business is based on its belief that a substantial "niche"
market exists within the industry for companies willing to specialize in
unique paper goods products. As it achieves a client base, the Company
intends to tailor its products to meet client needs in light of industry
trends which tend to change rapidly.
TARGET MARKETS FOR THE COMPANY The Company targets small business,
especially independent sales agents for companies in the direct sales industry
such as Mary Kay, Inc., NuSkin, Avon, and Amway, which might have the use of
specialty packaging in connection with either resales or as part of their own
overall business marketing approach. The Company has been and will continue
to be reliant on contacts that Ms. Evans has made during her years as a Mary
Kay, Inc. Independent Sales Director, as part of its marketing approach.
During 1999, Ms. Evans marketing efforts increased the client by over 100
retail clients. The Company has over 125 retail clients throughout the US.
Most of these clients are comprised of Independent Mary Kay Cosmetics Sales
Directors.
Ms. Evans will continue to pursue the same marketing approach as in the
past two years, that of Independent Sales Directors at Mary Kay almost
exclusively during the next 12 months, although the she will investigate other
potential markets, such as:
1. Sales Directors of Other Direct Marketing Companies The Company
will pursue sales directors with other direct marketing companies, such as
NuSkin and Avon, as one of its priority target markets.
2. Direct Marketing Companies -- The Company hopes that the inroads it
makes with sales associates of direct marketing companies may lead to
potential sales or sales contracts with the direct marketing companies
themselves. It is Management's belief that if it can provide a product which
assists the independent sales associates with boosting sales of their product,
the same could be a means of achieving certain referrals and recommendations
with the company itself, especially for specialty, seasonal packaging.
3. Maintaining a Wholesale/Retail Store Front the Company will
investigate the potential of this market although it is not a priority.
Maintaining a store front will require a large outlay of capital and is
something which will be looked at in connection with the Company's
investigation of marketing opportunities in the greater Las Vegas area.
4. Purchasing and Reselling Overstock Merchandise From Suppliers as
Ms. Evans establishes relationships with various manufacturers/suppliers, she
will be able to analyze overstock merchandise opportunities if they become
available. Such over-stock may be marketed in connection with a current
customer list, e-commerce, or a wholesale retail front.
5. Investing in Other Related Specialty Packaging Businesses.
6. Local Specialty Businesses in the Greater Las Vegas Area -- The
Company will investigate marketing opportunities in its own locale, that is
the greater Las Vegas area. Because Management is familiar with local
economy, and because southern Nevada is seeing a large economic growth, there
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appears to be a substantial opportunity to provide local services including
specialty products such as the Company's to local businesses. Ms. Evans has
been making numerous contacts with manufacturers and suppliers in order to be
aware of inventory and product lines. By doing so, she hopes to be prepared
to exploit local marketing opportunities for specialty packaging if and when
such opportunities arise.
7. The Internet Market the Company will pursue the Internet market
in general by establishing a web site for its products when and if it has
sufficient products available to warrant on-line marketing. Much of this
course of action will depend on the Company's ability to purchase inventory or
have inventory readily available to it to at a competitive price to make it
attractive to Internet customers. The Internet market is not a priority,
although, because web sites are inexpensive to set up, the Company may
establish a web site for its products shortly. It does not, however, intend
to depend on such web site as a primary revenue source.
The Company will rely on: (1) quality of service; (2) competitive
pricing to its clients and potential clients through volume purchase of
products from suppliers; (3) timely response to customers needs; and (4)
ability to recognize and anticipate market trends to help make inroads into
its target market.
Distribution Methods of the Products or Service
- -----------------------------------------------
The Company currently relies upon direct sales approach by Ms. Evans and
business referrals to distribute its products. Its current method involves:
(1) selecting a product which it believes will satisfy the needs of current
and potential clients with similar specialty packing needs; (2) volume
purchase of such products from suppliers which meet the Company's
specifications at a cost to the Company which will allow resale of such
products at a competitive price; and (3) marketing and distributing the same
to clients. The Company will concentrate on resellers and small business/
individuals working for direct sales corporation which use specialty packaging
as part of their own sales activities rather than on individual consumers. The
Company will use the following methods to market its products:
1. Mail Order -- The Company has utilized mail order to achieve its
limited sales to date and plans to continue with mail order sales. To date,
Ms. Evans has sent flyers to Mary Kay independent sale directors whom she
personally knows. Because such directors "network", the Company has received
many referrals from those independent sales directors who tried, and liked,
the Company's Gable Boxes. Ms. Evans then mails flyers to the referred
businesses. All of the Company's current customers were solicited in this
manner. Ms. Evans does not make general solicitations of the Mary Kay
Independent Sales Directors, nor does she intend to follow that approach in
the immediate future.
2. Web Site -- In the 2000, the Company intends to set up a web site
and hopes it will achieve sales of its products in this manner. Web sites can
be set up relatively inexpensively and the Company believes it will be
worthwhile to investigate this method of marketing its product. The Company is
aware that currently the worldwide web has some 50 million potential customers
looking at their computers to find products and services they need. The cost
for the Company to advertise on the web is relatively low compared to its
potential return. Most advertisements on the web are presented in the form of
banner ads, small graphical files hyper-linked to the advertiser's web site.
The Company intends to use on-line advertising provided free by local Internet
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providers. Local providers offer banner ads, and yellow page services for
local businesses by offering advertising and unlimited access to the
subscriber for 1 year for under $200 with no set-up fee. Internet providers
offer at least 20 of the most popular search engines at no additional cost.
Some providers provide a client with a showcase spot on their home page on a
rotating basis. The Company believe it is worthwhile to investigate this
marketing method and plans to shop for a local service which will provide the
best service.
3. Repeat business The Company believes that if it satisfies the
needs of existing customers, and keeps its product line fresh, competitive in
price, and in tune with popular trends, it will be able to rely on repeat
business from its customers.
4. Referrals The Company will also rely on business referrals within
certain specialty areas to help promote its products.
Competitive Business Conditions/Competitive Position in the Industry/Methods
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of Competition
- --------------
There are a large number of companies and individuals engaged in the
specialty packaging industry which is highly competitive with respect to name
recognition, quality of products, Internet and mail order presentation, and
advertising. The Company faces competition from a broad range of companies
in the retail packaging and fashion packaging industry, from retail packaging
stores and companies which offer products similar to the Company's. Many of
these competitors have achieved national, regional and local recognition and
engage in extensive advertising and promotional programs. The Company has
identified one local competitor in the greater Las Vegas area: Floral Supply
Syndicate. The Company anticipates that most of its competition will come
from small to medium size manufacturers and distributors of paperboard boxes
such as Floral Supply Syndicate, Premier Packaging, and Nashville Wraps. If
the Company establishes a web site for Internet sales, it can expect to
compete with over 65,000 companies which currently advertise specialty packing
on the Internet. The Company does not intend to directly compete with similar
entities but rather intends to attempt to carve a niche of its own in the
industry by marketing specialized products to a fairly narrow target market.
When and if the Company achieves success, it may expand into other markets as
revenues from operations become available; or, it may choose to expand by
raising additional funding. (See above: "Target Markets for the Company" for a
discussion on those markets the Company may pursue at a later date.)
Management believes that the larger, established wholesale packaging
companies do not the enjoy the same advantage in the "niche" markets in the
industry due to their more traditional sales approach. While the Company
realizes that it has a significant disadvantage in the marketplace due to its
limited resources and experience, it believes that it will be able to compete
in the market due to its unique target market, which it believes has remained
relatively untapped. Marci Evans, as an independent sales director of Mary
Kay, Inc., has a certain amount of insight into the needs of independent sales
agents in the direct marketing industry and believes that the Company can
identify and provide for those needs. The Company believes that its
competitive advantages are as follows:
1. Pricing: the Company prices its products at 25% over its cost,
depending on the cost of the product. The Company utilizes this pricing
strategy to attract volume buyers vs. one-item purchasers. The Company also
offers a price break on certain items when one or more cases are purchased.
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2. Product Line: The Company believes its largest advantage is its
specialization in specialty packaging for giftware and fashion packaging
market, especially Christmas products. Management acknowledges that it must
anticipate and recognize industry trends in specialty packaging in order to be
competitive. The Company believes its narrow market approach will help the
Company penetrate the packaging market and it will be able to then expand and
broaden its product lines to increase revenues. The Company also believes
that it can provide a product that is high in quality and that it can do so at
an affordable price by purchasing directly from the manufacturer/supplier.
3. Lower Overhead: The operating costs for national competitors can be
very expensive. Management believes that its lower operational costs will
enable the Company to compete because the lower overhead will keep prices to
clients down and allow for extra funds to be targeted where needed. In
addition, the Company is relying on business referral advertising and
"networking" which it believes will be effective due to the specialized
customer base it is trying to attract.
Sources and Availability of Raw Materials/Names of Principal Suppliers
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In 1999, the Company obtained its products from three sources: Floral
Supply Syndicate, Gift Box Corporation and Costco Wholesalers. The Company
pans to continue researching the availability of different suppliers for the
purchase of the Gable Box and other products and has established relationships
with numerous potential suppliers and has received pricing from several
different sources on different product lines. The Company plans to utilize
the distributor which provides the most competitive prices.
The Company utilizes United States Postal Service ground shipping to move
inventory from supplier to "warehouse" to customer.
Dependence on a Few Major Customers
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The Company currently has approximately l25 customers and is dependent
on such customers for any of its limited revenues. The Company will be
dependent on these customers to provide business referrals which can be
contacted by the Company. Although the Company believes there is a large
potential market out there for its products both at the retail and wholesale
level including Internet markets, its immediate future is dependent on
maintaining its current client list and expanding the same. The Company,
therefore, is not dependent on any major customer although it is dependent on
its current customer list to provide introductions to new potential customers.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalties Agreements,
- ----------------------------------------------------------------------------
Labor Contracts
- ---------------
None
Need for Government Approval
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None
Effect of Existing or Probable Government Regulations
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The only government regulations which may affect the Company would be
those federal, state and local regulatory standards regarding distribution and
shipping of the Company's products.
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Research and Development Activities in the Past Two Years
- ---------------------------------------------------------
The Company has been in business only since September of 1998. No money
has been spent on research and development. The Company's business development
was funded by capital raised in its initial.
Total Number of Employees
- --------------------------
The Company has no employees as of this date other than Marci Evans who
is also the Company's President, Secretary, CEO, CFO, and a Director. The
Company, upon commencement of substantive business operations, intends to
compensate Ms. Evans at a rate of $1,000 per month. The Company also intends
to compensate Ms. Stankiewicz when and if she begins performing services for
the Company beyond those required in her capacity as a director. The Company
has no plans to hire any additional employees during the next twelve months.
Once the Company is established, it may hire some additional part-time
employee to assist Ms. Evans.
Item 2. Description of Property
The Company does not own any property. The Company utilizes office space
in the home of Ms. Evans sufficient to conduct its day to day operations. Ms.
Evans does not charge the Company any rent. The Company intends to lease
office space in the near future and does not anticipate paying more than $500
per month for such space. The Company recently signed a year lease of a 10x15
feet storage unit from West Sahara Mini Storage at 6318 W. Sahara Ave., Las
Vegas, NV 89146; the lease is prepaid to October of 2000 and is $96.00 per
month.
Item 3. Legal Proceedings
The Company is not a party to any pending legal proceedings and, to the
best of its knowledge, no such action by or against the Company has been
threatened. None of the Company's officers, directors, or beneficial owners
of 5% or more of the Company's outstanding securities is a party to a
proceeding adverse to the Company nor do any of the foregoing individuals have
a material interest in a proceeding adverse to the Company.
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Market Information
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The Company has no public trading market for its common stock. Although
the Company intends to seek a quotation for its common shares on the NASD
Over-the-Counter Bulletin Board in the future, there is no assurance the
Company will do so, nor is there any assurance that should the Company
succeed in obtaining a listing for its securities on the NASD OTC Bulletin
Board or on some other exchange, that a trading market for the Company's stock
will develop. There are no outstanding options, warrants to purchase, or
securities convertible into common equity of the Company outstanding. The
Company has not agreed to register any shares of its common stock for any
shareholder.
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Shares Subject to Resale under Rule 144
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Of the 401,200 common shares of the Company's common stock currently
issued and outstanding, 201,200 are owned by public investors purchased in the
Company's offering conducted in reliance upon the exemption provided for under
Section 3(b), Regulation D, Rule 504 and registered with the State of Nevada,
and closed on April 6, 1999; and 200,000 are held by two of the Company's
officers and directors and issued in reliance on the "private placement"
exemption of Section 4(2)of the Securities Act of 1933, as amended. If a
market for the Company's common shares were to develop, such 200,000
"restricted" shares, held by the two officers/directors would not be available
for sale in the open market without registration, except in reliance upon Rule
144 under the Act or some other applicable exemption. In general, under Rule
144, a person or persons whose shares are aggregated, who beneficially owned
shares acquired in a non-public transaction for at least one year, including
persons who may be deemed "affiliates" of the Company as that term is defined
under the 1933 Act, would be entitled to sell within any three-month period a
number of shares that does not exceed the greater of 1% of the then
outstanding shares of Common Stock or the average weekly reported trading
volume on all national securities exchanges and through NASDAQ during the four
calendar weeks preceding such sale provided current public information is then
available. As of the date hereof, the 200,000 shares issued in reliance upon
Section 4(2)and therefore considered "restricted", have been beneficially
owned since September 8, 1998 which made them eligible for resale under Rule
144 as of September 9, 1999, provided all of the applicable terms and
conditions of Rule 144 were met, and provided a public market existed for the
Company's common shares.
Holders
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There are 35 shareholders of record of the Company's common stock.
Dividends
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The payment by the Company of dividends, if any, in the future, rests
within the discretion of its Board of Directors and will depend among other
things, upon the Company's earnings, its capital requirements and its
financial condition, as well as other relevant factors. The Company has not
paid or declared any dividends to date due to its present financial status.
The Company does not anticipate paying dividends on its common stock in the
foreseeable future but plans to retain earnings, if any, for the operation and
expansion of its business. There are no restrictions that limit the ability to
pay dividends on common equity or that are likely to limit the same in the
near future.
Issuances of Unregistered Securities
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There were no securities of the Company sold during the period covered
by this report.
Item 6. Management's Discussion and Analysis or Plan of Operation
Forward Looking Information
- ----------------------------
This report contains certain forward-looking statements and information
relating to the Company that are based upon beliefs of the Company's
Management as well as assumptions made by and information currently available
to the Management. When used in this Form 10-KSB, the words anticipate,
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believe, estimate, expect, and similar expressions, as they related to the
Company and the Company's Management, are intended to identify forward-looking
statements. Such statements reflect the current view of the Company with
respect to the future events and are subject to certain risks, uncertainties,
and assumptions. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described herein as anticipated, believed,
estimated or expected. The Company does not intend to update these forward
looking statements.
Results of Operations
- ---------------------
The following is a discussion of the results of operations for the year
ended December 31, 1999.
Revenues and Costs of Revenues
The Company achieves revenues from sale of its gift boxes. Cost of
revenues include inventory costs, inventory storage and shipping expenses.
Total revenues for the year ended December 31, 1999 were $11,854 as compared
to $8,951 in 1998. Although the Company only started business operations in
September of 1998, and its revenues in that year reflect only one quarter of
sales, the majority of the Company's revenues in 1999 were achieved in its
fourth quarter. The increase in 1999 sales is attributed to the number of
sales as well as an increase in the Company's client base. Costs of sales
increased in 1999 resulting in a gross profit margin of only 5% compared to
1998 net profits of approximately 24%. This large decrease in net profits is
due to the Company's main supplier of Gable Boxes selling its business
operations to a company that was not willing to offer the same volume
discounts as its predecessor.
Assets
The Company's assets consist mainly of approximately $33,000 cash on
hand, inventory valued at $5,465 and accounts receivable of $1,284. In 1999,
the Company's inventory on hand increased from approximately 1,000 Gable Boxes
to approximately 25,000 Gable Boxes.
General and Administrative Expenses
General and Administrative expenses consist of advertising, consulting
fees, licenses and other fees, office expenses, professional fees, rent and
travel.
Liquidity and Capital Resources
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Comparative Periods
The Company total assets increased between 1998 and 1999 from $11,762 to
$40,921. Cash as of December 31, 1999 was $33,164 as compared to $7,474 as of
December 31, 1998. The change was primarily due to and increase in cash of
$25,690 between the period, due to the Company's offering that closed on April
6, 1999 with 201,200 shares sold, for gross proceeds of $50,300. The Company's
assets also increased in 1999 over 1998 due to an increase in inventory.
Net losses at fiscal year ended 1999 were $10,489 as opposed to income
of $1,042 in 1998. The Company, however, had only four months of operation in
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1998 compared to a full year in 1999. When comparing the 3 month periods
ended December 31, the Company had net losses in 1999's fourth quarter of
$3,970 compared to income of $1,227 in 1998's fourth quarter. The increase in
the Company's net losses are due to both an increase in costs of sales, and an
increase in general and administrative expenses. The Company's fourth quarter
1998 saw only $635 in general and administrative expenses which were mostly
fees and offices expenses; in 1999 fourth quarter, expenses were $4,510
reflecting the payment of $500 per month to a consultant, professional fees of
$1,800 and travel expenses of $737. The Company did not experience any of
these expenses during 1998 having entered into a consulting agreement with
Progressive Management and Consulting in January, 1999.
Cash Flows from Operations
Although the Company had net revenues from operations in 1998 it
experienced a net loss in 1999. Revenues from operations were insufficient to
fund its daily operations. The Company conducted financing through an
offering of its common stock to fund start up costs and losses from operations
in 1999. The Company's goal in 2000 is to research the manufactures of
Gable Boxes in an effort to achieve the same net profit margin as in 1998. If
it is able to achieve that same 24% profit margin, its cash flows from
operations will be sufficient to funds its business operations so long as the
Company did not expand its operations. The Company does not necessarily
believe that revenues received during 1999 are indicative of its results of
operations in the fiscal year of 2000.
Financing Activities
The Company has funded its operations mostly through its contributions by
officers and directors in September of 1998, and through an offering of its
common stock which closed in April of 1999. The Company has 201,400 shares
outstanding, the majority of which were issued in that offering for gross
proceeds of $50,300.
Cash Requirements over the Next Twelve Months
During the next twelve months, its cash requirements will include the
following: (1) $500 per month to its consultant, Progressive Management.
Progressive Management takes care of the Company's bookkeeping, audit
preparation and SEC filings and is controlled by the husband of Marci Evans,
Mr. Dennis Evans. (See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS"); (2)
compensation to Marci Evans of $1,000 per month; (3) Lease payments on a 10x15
feet storage unit from West Sahara Mini Storage at 6318 W. Sahara Ave., Las
Vegas, NV 89146; the lease is prepaid to October of 2000 and is $96.00 per
month; (4) an estimated $500 per month for office lease expenses when and if
the Company acquires office space; and (4) expenses associated with SEC
reporting compliance. The Company, therefore, will require a minimum of
$25,000 for the next 12 month for compensation for services and lease
payments. The Company believes that the funds it raised in its offering in
April of 1999 ($50,300 in gross proceeds), of which the Company has
approximately $33,000 remaining, will be sufficient to provide for the
foregoing cash requirements in the next twelve months, including some extra
expenses associated with setting up a web site.
There is no guarantee that the funds available to the Company will be
sufficient to achieve the Company's goal of penetrating the highly competitive
market of specialty packaging. The Company will use every effort to minimize
its expenses during its next year of operations. It has no plans for
12
<PAGE>
additional employees until or unless warranted due to business needs and it
will likely not rent office space but continue to use the home of Marci Evans.
The Company will utilize the services of Susan Stankiewicz, if needed, when
and if business is such that it requires additional employees especially to
take and process orders. Marci Evans has indicated that she is willing to
continue to forego her salary of $1,000 per month, if necessary. Ms. Evans
has not yet started receiving such salary.
Need for Additional Financing
If the Company does experience an increase in volume of sales as well as
an improved profit margin in the next twelve months, it may be forced to
discontinue operations unless it is able to raise sufficient capital to
continue pursuing its business plan. Management is not experienced
in developmental companies and may not have estimated its needs for
advertising and associated expenses in acquiring a client base accurately.
The Company may require additional funds and time to achieve these goals.
Even if the Company begins generating revenues, it could require additional
funding for expansion. It may be difficult for the Company to succeed in
securing additional financing. The Company may be able to attract some private
investors, or officers and directors may be willing to make additional cash
contributions, advancements or loans. Or, in the alternative, the Company
could attempt some form of debt or equity financing. However, there is no
guarantee that any of the foregoing methods of financing would be successful.
If the Company fails to achieve at least a portion of its business goals in
the next twelve months with the funds available to it, there is substantial
uncertainty as to whether it will continue operations.
Ms Evans intends to aggressively pursue a customer base of independent
sales directors for Mary Kay Inc. and other direct marketing companies over
the next 12 months.
YEAR 2000 ISSUES
Management has not encountered any problems with the Company's accounting
and operational systems. Management believes the operating systems in which
the company utilizes be to compliant and fully operational.
The Company is not dependent on computers other than for its internal
bookkeeping which is done on a Microsoft office 2000 system. The Company has
no relationship with any third parties which are dependent on computers other
than its bank.
Risks, Trends, Uncertainties
- ----------------------------
*Lack of Operating History* The Company was only recently organized
in September of 1998, and has conducted minimal operations since to date.
The Company has limited assets of approximately $40,000 most of which is
comprised of cash from its offering which closed in April of 1999. The Company
conducted operations during the last quarter of 1998 to test its ability to
market specialty packaging and met with some limited success with gross
revenues for that quarter of approximately $8,600 and net revenues of $2,100.
In 1999, The Company realized $11,854 as compared to $8,951 in 1998,
respectively, in gross sales from its Gable Boxes and related products.
Because of its limited capital and its lack of significant operating history,
the Company must be considered a development stage company. Development stage
companies are inherently more risky than established companies because there
is no earnings history and no assurance that future revenues will develop. The
13
<PAGE>
Company's potential profitability is questionable. (See "BUSINESS OF THE
REGISTRANT".)
*Competition* The Company plans to develop a niche in a market, that is
the specialty packaging business, which is highly competitive with respect to
name recognition, volume discounts, and quality of experienced service. There
are many well established competitors possessing substantially greater
financial, marketing, personnel and other resources than the Company. The
Company can expect to face significant competition from a broad range of
companies involved in the wholesale distribution and sales of specialty
packaging. Many of these competitors are innovators in the area of single-ply
paperboard folding cartons in the packing industry and represent years of
research in products and services. The Company, therefore, expects intense
competition from such companies involved in the paper goods markets which have
already achieved success in the industry and also have the resources,
technology and marketing know-how to readily address changes in the industry.
(See "BUSINESS OF THE REGISTRANT, Competitive Business Conditions/Competitive
Position in the Industry/Methods of Competition".)
*No Formal Market Feasibility Study* The Company has not conducted a
formal market feasibility study or analysis to see if the product/services the
Company proposes to offer will be widely accepted locally or nationally. This
lack of market analysis poses an additional risk to the Company. The Company
has based its decision to continue forward in the specialty packaging business
based its operations in the fourth quarter of 1998 and fiscal year 1999, which
was comprised of very limited product line marketed to a limited number of
small business users. The Company does not consider its limited success
during last year's fourth quarter to be indicative of what it can expect in
the future, nor of the feasibility of the Company to be able to succeed with
its business purposes. (See "BUSINESS OF THE REGISTRANT, Principal Products or
Services and Their Market.")
* Lack of Market Definition and Plan* Defining and measuring the
wholesale distribution of specialty packaging market has been difficult.
Wholesale trade is immense and almost all products sold to retail, commercial,
institutional and industry markets move through wholesale trade. The industry
has evolved into six distinct areas, one of which is wholesale paper goods and
services. The Company believes there is a specialty niche within the paper
goods market: specialty packaging. Although the Company has established that
a market for its goods and services exists, it has had no experience in
wholesale marketing nor in packaging and may have a difficult time defining
its market and narrowing the scope of its focus in order to best penetrate a
highly competitive industry with the limited funds available to it. The
Company must be able to identity and recognize industry trends, which change
frequently, and be flexible enough to address changes to meet customers'
needs. Although Management has formulated certain approaches it has used on a
limited basis and intends to continue to use regarding product line and
initial marketing approach, the Company has no definitive overall marketing
approach which will evolve as the Company conducts operations.
*Conflicts of Interest and Potential Conflicts of Interest* All of the
Company's officers/directors are involved with other business and/or interests
which will take a portion of their time. (See "Item 5. DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS".) Although these individuals are
willing to work full-time for the Company, they may not be able to devote 100%
of their time to the Company. Marci Evans, the Company's President, Secretary,
and a Director, is an independent Senior Sales Director for Mary Kay Cosmetics
and such position will require a portion of her time and efforts; Susan
14
<PAGE>
Stankiewicz currently serves as Vice-President and a Director of another
corporation, which will require a portion of her time; and, Michael
Stankiewicz intends to attend school at the University of Nevada at least
part-time. Each of the directors, therefore, has other interests which will
demand a certain amount of their time, which, in some instances, could be
substantial. There is no assurance, therefore, if a conflict of interest
arose, that it would be resolved in favor of the Company. In addition, members
of Management may become involved in other business entities which have the
same or similar activities as the Company and unforseen conflicts of interest
could develop.
*Inexperience of Management* Although Ms. Evans and Ms. Stankiewicz
have a varied background and business experience between them, and both have
served in various capacities with other start-up companies in the past,
neither have had experience in running a company in the start-up and
development stage, nor has either of these individuals had any experience in
the marketing, on a wholesale basis, of specialty packaging. Mr. Stankiewicz
has had no business experience. This lack of experience provides for
considerable risk to the Company's ultimate success.
*Dependence on Management/Key Personnel* The Company is extremely
dependent on Management. The loss of any of its officers could have a
material adverse effect on the Company's business. Because of the Company's
limited resources, no key person insurance has been, or will be purchased on
any of its officers. In addition, the future success of the Company is
dependent on the performance of Management, especially Marci Evans, and her
ability to attract and motivate and retain highly qualified employees, when
and if the Company has sufficient funds to do so. In the meantime, the
Company's business plan is based almost entirely on Marci Evans' analysis of
market trends, her product choices in response to such marketing analysis, her
ability to attract and maintain a steady customer base, and her ability to
market the product line to such clientele. The Company, as of this date cannot
afford to hire additional personnel to perform marketing services and all will
be performed by Management, mostly Ms. Evans. The Company is highly dependent,
therefore, on Ms. Evans ability to market its products. Because substantially
all of the Company's current customers are a result of Ms. Evans business and
personal contacts in the Mary Kay network, the loss of Marci Evans' services
would have a material adverse effect on the Company. In addition, in the
start-up phase, Management will continue to provide the Company, without
charge, the usage of a personal computer, copier, miscellaneous office
equipment, and a vehicle.
*Need for Additional Financing* Unless the Company is able to generate
sufficient revenues to successfully develop and sustain its business
operations, the survival of the Company will likely depend on additional
financing. No assurance can be made that such financing would be available,
and, if available, whether it would take the form of debt or equity financing.
In either case, additional financing could have a negative impact on the
Company's shareholders. The Company may seek financing in the form of debt
financing in the form of a loan which could be from an individual or financial
institution. Such loan could put the Company at risk for amounts greater than
its assets, and, if not promptly repaid, could result in bankruptcy. If the
Company attempted equity financing in the form of either a private placement
or a another type of offering, there can be no assurance that the Company
would be successful in selling such an offering or finding an underwriter
willing to do; such an offering could result in further dilution to present
shareholders.
15
<PAGE>
*Dependence on Suppliers* Management believes that in order to compete
in the wholesale marketing and distribution of specialty packaging, it must
offer products which are readily available, high in quality and competitively
priced. The Company has begun establishing relationships with a number of
manufacturer/suppliers which it believes can meet the foregoing criteria. It
has not entered into nor plans to enter into any long term purchase contracts
with any of these manufacturer/suppliers. In 1999, the Company purchased
products from the following, Floral Supply Syndicate, Gift Box Corporation and
Costco Wholesalers. The Company must be able to purchase from its suppliers at
a price which will allow it to be competitive in the market place or find
others. In 1999, a buyout of its existing supplier, cut Company's profit
margin when the new owner did not offer the same volume discounts as it's
predecessor.
* Seasonality of Specialty Packaging * Distribution of specialty
packaging is extremely seasonable especially in the target market niche the
Company is soliciting. In general, traditional holidays spur seasonal
consumer buying. The fourth calendar quarter is typically the highest sales
volume quarter for sales in the industry as a whole. The Company will have a
more difficult type forecasting purchasing and sales patterns, and, as a
result, it may be very difficult for the Company to survive the seasonableness
of the industry.
Item 7. Financial Statements
The following financial statements are included herewith: the Company's
audited financial statements for the year ended December 31, 1998, and the
audited financial statements for the year ended December 31, 1999.
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1999, AND DECEMBER 31, 1998
TABLE OF CONTENTS
Page Number
INDEPENDENT ACCOUNTANT'S REPORT 1
FINANCIAL STATEMENT
Balance Sheets 2
Statements of Operations and Deficit
Accumulated During the Development Stage 3
Statement of Changes in Stockholders' Equity 4
Statements of Cash Flows 5
Notes to the Financial Statements 6-7
16
<PAGE>
DAVID E. COFFEY 3651 LINDELL ROAD, SUITE A, LAS VEGAS, NEVADA 89103
CERTIFIED PUBLIC ACCOUNTANT (702) 871-3979
INDEPENDENT ACCOUNTANT'S REPORT
To the Board of Directors and Stockholders
of Access Network Corporation
Las Vegas, Nevada
I have audited the accompanying balance sheets of Access Network
Corporation (a development stage company) as of December 31, 1999, and
December 31, 1998, and the related statements of operations, cash flows, and
changes in stockholders' equity for the period from September 8, 1998, (date
of inception) to December 31, 1998. These statements are the responsibility of
Access Network Corporation's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion, the accompanying financial statements present fairly, in
all material respects, the financial position of Access Network Corporation as
of December 31, 1999, and December 31, 1998, and the results of operations,
cash flows, and changes in stockholders' equity for the periods then ended, as
well as the cumulative period from September 8, 1998, in conformity with
generally accepted accounting principles.
/s/David Coffey C.P.A.
David Coffey, C. P. A.
Las Vegas, Nevada
February 15, 2000
F-1
<PAGE> 17
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
December 31, December 31,
1999 1998
ASSETS ------------ ------------
Cash $ 33,164 $ 7,474
Accounts receivable 1,284 1,087
Inventory 5,465 201
Prepaid expenses 899 3,000
Deposits 109 0
------------ ------------
Total Assets $ 40,921 $ 11,762
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable $ 3,132 $ 720
------------ ------------
Total Liabilities 3,132 720
Stockholders' Equity
Common stock, authorized 25,000,000
shares at $.001 par value, issued and
outstanding 401,200 shares and 200,000
shares, respectively 401 200
Additional paid-in capital 46,835 9,800
Income (deficit) accumulated during the
development stage (9,447) 1,042
------------ ------------
Total Stockholders' Equity 37,789 11,042
------------ ------------
Total Liabilities and Stockholders' Equity $ 40,921 $ 11,762
============ ============
The accompanying notes are an integral part of
these financial statements.
F-2
<PAGE> 18
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
<TABLE>
<CAPTION>
For the three For the three For the twelve Inception, Inception,
months ended months ended months ended Sept.8,1998, to Sept.8,1998,
Dec.31, 1999 Dec.31, 1998 Dec.31,1999 Dec.31,1998 to Dec.31, 1999
------------- ------------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Sales $ 11,854 $ 8,591 $ 11,854 $ 8,591 $ 20,445
Cost of sales 11,314 6,609 11,314 6,509 17,823
------------- ------------- -------------- ------------ ---------------
Gross margin 540 2,082 540 2,082 2,622
Expenses
Organizational expense 0 0 0 185 185
Advertising 0 0 351 0 351
Consulting 1,500 0 6,100 0 6,100
Licenses and fees 391 100 579 100 679
Office expenses 0 535 0 535 535
Professional fees 1,800 0 3,400 0 3,400
Rent 82 0 82 0 82
Travel 737 0 737 0 737
------------- ------------- -------------- ------------ --------------
Total expenses 4,510 635 11,249 820 12,069
Net income (loss) before
provision for income taxes (3,970) 1,447 (10,709) 1,262 (9,447)
Income taxes 0 (220) 220 (220)
------------- ------------- -------------- ------------ ---------------
Net income (loss) (3,970) 1,227 (10,489) 1,042 (9,447)
Retained earnings (deficit)
beginning of period (5,477) (185) 1,042 0 0
------------- ------------- -------------- ------------ ---------------
Deficit accumulated
during the development
stage $ (9,447) $ 1,042 $ (9,447) $ 1,042 $ (9,447)
============= ============= ============== ============ ===============
Earnings (loss) per share
assuming dilution: $ (0.01) $ 0.01 $ (0.03) $ 0.01 $ (0.03)
============= ============= ============== ============ ===============
Weighted average shares
outstanding 401,200 200,000 317,367 200,000 300,600
============= ============= ============== ============ ===============
The accompanying notes are an integral part of
these financial statements.
F-3
</TABLE>
<PAGE> 19
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM SEPTEMBER 8,1998, ( Date of Inception ) TO
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Common Stock Additional
----------------------- Paid-in
Shares Amount Capital Total
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
$ $ $
Balance,
September 8, 1998 - - - -
Issuance of common stock for cash
November 19,1998 200,000 200 9,800 10,000
Retained earnings 0 0 0 1,042
---------- ---------- ---------- ----------
Balance, December 31, 1998 200,000 200 9,800 11,042
Issuance of common stock for cash
June 11, 1999 201,200 201 50,099 50,300
Less offering costs 0 0 (13,064) (13,064)
Less net loss 0 0 0 (10,489)
---------- ---------- ---------- ----------
Balance, December 31, 1999 401,200 $ 401 $ 46,835 $ 37,789
========== ========== ========== ==========
The accompanying notes are an integral part of
these financial statements
F-4
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the three For the three For the twelve Inception, Inception,
months ended months ended months ended Sept.8, 1998, to Sept. 8, 1998,
Dec. 31,1999 Dec. 31, 1998 Dec. 31, 1999 Dec.31, 1998 to Dec. 31, 1999
------------- ------------- -------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES
Net income or (loss) $ (3,970) $ 1,227 $ (10,489) $ 1,042 $ (9,447)
Adjustments to reconcile net
loss to cash used by operating
activity
Accounts payable 1,532 535 2,412 720 3,132
Accounts receivable (1,064) (1,087) (197) (1,087) (1,284)
Inventories (3,435) (201) (5,264) (201) (5,465)
Prepaid expenses (899) (3,000) 2,101 (3,000) (899)
Deposits 0 0 (109) 0 (109)
------------- ------------- -------------- ------------- ----------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES (7,836) (2,526) (11,646) (2,526) (14,072)
CASH FLOWS USED BY
INVESTING ACTIVITIES 0 0 0 0 0
------------- ------------- -------------- ------------- ----------------
NET CASH USED BY
INVESTING ACTIVITIES 0 0 0 0 0
CASH FLOWS FROM
FINANCING ACTIVITIES
Sale of common stock 0 200 201 200 401
Paid-in capital 0 9,800 37,035 9,800 59,899
Less offering costs 0 0 0 0 (13,064)
------------- ------------- -------------- ------------- ----------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 0 10,000 37,236 10,000 47,236
NET INCREASE IN CASH (7,836) 7,474 25,690 7,474 33,164
CASH AT BEGINNING OF PERIOD 41,000 0 7,474 0 0
------------- ------------- -------------- ------------- ----------------
CASH AT END OF PERIOD $ 33,164 $ 7,474 $ 33,164 $ 7,474 $ 33,164
============ ============= ============== ============= ================
The accompanying notes are an integral part of
these financial statements.
F-5
</TABLE>
<PAGE> 21
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999, AND DECEMBER 31, 1998
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on September 8, 1998, under
the laws of the State of Nevada. The business purpose of
the Company is to distribute, on a wholesale basis, specialty
packaging for small businesses nation wide.
The Company will adopt accounting policies and procedures
based upon the nature of future transactions.
NOTE B INVENTORY
Inventory is stated at the lower of cost or market determined
on a first-in, first-out basis.
NOTE C OFFERING COSTS
Offering costs are reported as a reduction in the amount of
paid-in capital received for sale of the shares.
NOTE D EARNINGS (LOSS) PER SHARE
Basic EPS is determined using net income divided by the
weighted average shares outstanding during the period.
Diluted EPS is computed by dividing net income by the
weighted average shares outstanding, assuming all dilutive
potential common shares were issued. Since the Company
has no common shares that are potentially issuable, such as
stock options, convertible securities or warrants, basic and
diluted EPS are the same.
NOTE E PUBLIC STOCK OFFERING
In June of 1999, the Company sold 201,200 shares of its
common stock at $.25 per share for a total of $50,300.
The net proceeds were to be used to distribute, on a wholesale
basis, specialty packaging for small businesses nation wide.
NOTE F RELATED PARTY TRANSACTIONS
The Company has entered into an agreement with a company,
F-6
<PAGE> 22
ACCESS NETWORK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,1999, AND DECEMBER 31,1998
(continued)
NOTE F RELATED PARTY TRANSACTIONS (continued)
in which one of its shareholders has a controlling interest,
for the processing of credit card sales of its products. Under
terms of the agreement, the Company will pay 2.5% of all
of the sales processed by the Company using credit cards
as a method of payment. The credit card processing fees are
deducted as processed to arrive at net sales. The agreement
was effective December 1, 1998.
F-7
<PAGE> 23
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Officers and Directors
- ----------------------
The names and ages of all directors and executive officers of the
Company, along with their respective positions, term of office and period such
position(s) was held, is as follows:
Name Age Position Held & Since
- -------------------- --- ---------------------
Marci Evans 38 President/Secretary, Chairman of
the Board of Directors, Chief Executive
Officer, Chief Financial Officer
----------------------
Since September 8, 1998(1)
Susan Stankiewicz 43 Director
------------------------
Since September 8, 1998(1)
Michael Stankiewicz 23 Director, Vice President
------------------------
Since September 8, 1998(1)
(1) Each of the above individuals will serve in their respective capacities
until the next annual meeting of the shareholders or until a successor is duly
qualified and elected.
Biographical Information on Officers and Directors
- --------------------------------------------------
MARCI EVANS, age 38, currently acts as the Company's President, Secretary,
Director, and Chief Financial and Executive Officer. Currently she is also
and Independent Senior Sales Director of Mary Kay Cosmetics, Inc., since 1994.
During 1996-98, Ms Evans acted as the Secretary and a director of the
following corporations: Image Perfect Incorporated, a Nevada company engaged
in the artwork industry; Express Entry Systems, another Nevada corporation
engaged in providing graphic design to individuals, small businesses and
organizations; and All-Wrapped Up, a Nevada corporation involved in providing
retail gift services. Ms. Evans acted in such capacities only in the start-up
phase and performed only her required duties in her respective positions as an
executive officer and director with those three companies. Each of those
corporations has new management. From 1994-96, she was the Secretary and a
Director of Gem Source Incorporated, a Nevada corporation engaged in the
jewelry business where she performed only such minimal duties as required as
in her position as a executive officer and director of such corporation. From
1987 through 1995, Ms. Evans was Vice President of Sensuous Sandwich Shoppes
of Nevada, Inc., a company which owns retail delis in Las Vegas, Nevada and
Salt Lake City, Utah. Ms. Evans was the owner/operator of the Las Vegas,
Nevada location and operational consultant to the Salt Lake City location.
24
<PAGE>
From 1985 through 1987, Evans was secretary of Brian-Evans Inc., a partnership
which owned retail bakery operations in Las Vegas, Nevada. From 1984 through
1985, Marci Evans worked for American Savings Bank in Salt Lake City, Utah, as
a Construction Loan Officer, and from 1978 through 1983, she worked for First
Security Bank of Utah, N.A. in Salt Lake City as a Foreign Exchange
Administrator. Marci Evans attended the University of Utah in connection with
the American Institute of Banking from 1978-82.
MICHAEL STANKIEWICZ, age 23, serves as the Company's Vice-President and a
director. From 1994 - 1996, Mr. Stankiewicz was self-employed as a commercial
fisherman in the State of Alaska. After some time off, from 1998 through the
present date, he is again employed as a commercial fisherman in Alaska. Mr.
Stankiewicz graduated from Haltom High School in 1994 and is currently
applying for enrollment at the University of Nevada Las Vegas.
SUSAN STANKIEWICZ, age 43, is a Director of the Company. Since September of
1998, Ms. Stankiewicz has also been a director and Vice President of Millennia
Automated Products, Inc. a company in the vending business in the greater Las
Vegas area. During 1997 and 1998, Susan Stankiewicz was employed as office
manager of Apple Orthodontix she managed three different locales of Apple
Orthodontix in the Dallas/Ft. Worth area. From 1993 through 1998, Ms.
Stankiewicz was the owner/operator of Sweet Stuff Vending, based in Dallas,
Texas. Ms. Stankiewicz attended Brigham Young University during 1974 and 1975
where she studied General Business.
Family Relationships
- --------------------
Michael Stankiewicz is the son of Susan Stankiewicz and nephew to Marci
Evans. Susan Stankiewicz is the sister of Marci Evans. There are no other
familial relationships between officers and directors.
Involvement in Other Public Companies.
- --------------------------------------
None of the Company's directors are involved in other public companies
that would be described as "reporting" companies, except Susan Stankiewicz.
Ms. Stankiewicz is a director of Millennia Automated Products, Inc.
("Millennia"), a Nevada public company which has recently became a reporting
issuer. Millennia is seeking a listing on the NASD OTC Bulletin Board and
filed its Form 10SB General Form for Registration of Securities of Small
Business Issuers with the Securities and Exchange Commission on April 19,
1999. Generally, an issuer is subject to reporting obligations sixty (60)
days after such filing. Millennia became a reporting company on June 19,
1999.
Involvement in Certain Legal Proceedings
- ----------------------------------------
Except as indicated below and/or hereinbefore, to the knowledge of
Management, during the past five years, no present or former director,
executive officer, or person nominated to become a director or executive
officer of the Company:
(1) Filed a petition under federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer appointed
by a court for the business or property of such person, or any partnership in
which he was a general partner at or within two years before the time of such
filing, or any corporation or business association of which he was an
executive officer at or within two years before the time of such filing;
(2) Was convicted in a criminal proceeding or named subject of a
pending criminal proceeding (excluding traffic violations and other minor
offences);
(3) Was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him or her from or
otherwise limiting his/her involvement in any type of business, securities or
banking activities;
(4) Was found by a court of competent jurisdiction in a civil
action, by the Securities and Exchange Commission or the Commodity Futures
Trading Commission, to have violated any federal or state securities law, and
the judgment in such civil action or finding by the Securities and Exchange
Commission has not been subsequently reversed, suspended, or vacated.
Beneficial Ownership Reporting Compliance
- -----------------------------------------
Base solely on the review of Form 3's furnished to the Company, to the
best of its knowledge, each of the Company's officers/directors and 10%
shareholders has filed their Initial Statement of Beneficial Ownership on Form
3, although the same were filed approximately two weeks late. There are no
known failures to file any report as to the best of the Company's knowledge,
were no other reports required to be filed in 1999 by these individuals.
Item 6. Executive Compensation
The following table sets forth certain information as to compensation
received by the Company's Chief Executive Officer who is also a director of
the Company and its President and Secretary, as of December 31, 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------------------------------------------------------
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name Annual Restricted Other
and Compensa- Stock Underlying LTIP Compensa-
Principal sation Award Options/ Payouts tion
Position Year Salary($) Bonus($) ($) ($) SAR's(#) ($) ($)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Marci Evans(1) 1999 -0- -0- -0- -0- -0- -0- -0-
President, CEO, CFO 1998 -0- -0- -0- -0- -0- -0- -0-
Secretary
Director
- ------------------------------------------------------------------------------------------------
(1) The Company had intended to compensate Ms. Evans $1,000 per month at such time as the
Company actually commences conducting operations. (See "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.") Ms. Evans has not yet started receiving such monthly compensation. Ms. Evans has
not yet received any compensation from the Company as of the date of this report.
</TABLE>
Options/Sar Grants
- ------------------
There were no stock options or stock appreciation rights granted to any
executive officer since its inception through present date.
Aggregated Option/Sar Exercises and Fiscal Year End Option/Sar Value Table
- --------------------------------------------------------------------------
Not applicable.
Long Term Incentive Plans
- -------------------------
26
<PAGE>
There are no long term incentive plans in effect and therefore no awards
have been given to any executive officer in the past year.
Compensation of Directors
- -------------------------
The Company pays no fees to members of the Company's Board of Directors
for the performance of their duties as directors. The Company has not
established committees of the Board of Directors.
Employment Contracts and Termination of Employment
- --------------------------------------------------
and Change in Control Arrangements
- -----------------------------------
The Company has no employment contracts in effect with any of the members
of its Board of Directors or its executive officers nor are there any
agreements or understandings with such persons regarding termination of
employment or change-in-control arrangements. The Company has agreed to
compensate Ms. Evans $1,000 per month for services rendered in her capacity as
Secretary and President of the Company, and in the marketing of the Company's
products, and such time as the Company actually commences substantive
operations. Because much of the Company's business will rely on Ms. Evans'
knowledge and business contacts, Ms. Evans may be entitled to additional
compensation at a future date. Such compensation will be at the discretion of
the Board of Directors and will be authorized based on several different
factors such as, the nature and quantity of work Ms. Evans performs, the
results of her marketing efforts, and the amount of revenues, if any, which
may result from her efforts, etc. Such compensation could take the form of
cash bonuses, or salary arrangements over and above of the current agreed upon
salary of $1,000 per month; or it could take the form of restricted stock
awards, or option grants. If Ms. Evans' efforts have positive results, it is
likely that the Company will enter into some sort of employment agreement with
her. The same holds true for Ms. Stankiewicz. Because of the Company limited
revenues from operations, it has not yet begun compensating Ms. Evans. (See
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS".)
Item 11. Security Ownership Certain Beneficial Owners and Management
The following table sets forth the amount and nature of beneficial
ownership of each person known to a beneficial owner of more than five percent
of the issued and outstanding shares of the Company. The following
information is based on 401,200 shares issued and outstanding as of the date
hereof .
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
_____________________________________________________________________________
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent of
Class Owner Owner Class
- --------- ------------- -------------- ----------
Common Marci Evans(1) 150,000 Shares 37.39%
6357 Vicuna Drive, Sole Voting Power
Las Vegas, Nevada
89146
Common Michael Stankiewicz(2) 50,000 Shares 12.46%
6357 Vicuna Drive Sole Voting Power
Las Vegas, NV 89146
____________________________________________________________________________
(1) Also an officer and director
(2) Also an officer and director
27
<PAGE>
The following table sets forth the amount and nature of beneficial
ownership of each of the executive officers and directors of the Company. The
information below is based on 401,200 shares issued and outstanding as of the
date hereof.
SECURITY OWNERSHIP OF MANAGEMENT
_____________________________________________________________________________
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent of
Class Owner Owner(1) Class
- -------- ------------------- ---------------- ------------
Common Marci Evans 150,000 Shares 37.39%
6357 Vicuna Drive Sole Voting Power
Las Vegas, NV 89146
Common Michael Stankiewicz 50,000 Shares 12.46%
6357 Vicuna Drive Sole Voting Power
Las Vegas, NV 89146
Common Susan Stankiewicz(2) -0- Shares(2) -0-
5800 W. Charleston
#1035
Las Vegas, 89146
_____________________________________________________________________________
Officers & Directors as a group 200,000 shares(3) 49.85%
(1) None of the Company's officer or directors have any rights to acquire
additional shares of the Company's common stock, beneficially or otherwise.
(2) Susan Stankiewicz currently resides with her daughter, Rachel Burton, who
owns 800 shares of the Company. Rachel Burtons retains sole voting power over
her shares.
_____________________________________________________________________________
Changes in Control
- ------------------
The Company has no arrangements which might result in a change in
control of the Company.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Two of the Company's officers received an aggregate of 200,000 common
shares of the Company's stock at inception for a $10,000 cash contribution.
The Company has also agreed to compensate Ms. Evans for services performed for
the Company in the future at a rate of $1,000 per month. Because the Company's
business plan will rely mostly on Ms. Evans' efforts, there is the possibility
that Ms. Evans will receive additional compensation in the future for her
contributions to the Company. This compensation may be substantial. The
Board of Directors has the authority to approve additional compensation for
Mr. Evans if she performs substantial services to the Company in its initial
phase of operations. The amount and type of such compensation will depend on
the amount and success of Ms. Evans' services and as well as the Company's
cash flow. The Board of Directors has authorized and Management has budgeted
only $12,000 for Ms. Evans' salary for the next 12 months. Because the Company
does not intend to hire additional personnel within that time period, it will
be mostly reliant on Ms. Evans abilities to make decisions regarding specialty
packaging products, and the combined efforts of Ms. Evans and Ms. Stankiewicz
to market such packaging. Additional compensation to Ms. Evans and Ms.
Stankiewicz, if any, could be substantial, and could take the form of salary
28
<PAGE>
increases, cash bonuses, restricted stock awards, or stock options. The
potential for Ms. Evans and Ms. Stankiewicz to benefit personally from their
contributions to the Company exists, therefore, although the amount and nature
of such benefit has yet to be determined. (See "Executive Compensation".)
The Company has entered into two contracts which could be construed as a
related party transactions: one with MK Resources, Inc., a Nevada corporation
("MK") which is 100% owned by Marci Evans and her husband, Dennis Evans; and
one with Progressive Management, of which Dennis Evans, Marci Evans' husband
is President. The MK contract, which is a contract for credit card processing
services, provides that MK will provide credit card processing to the Company
for a fee of 2.5% of the orders processed, deducted on a monthly basis. The
effective date of the contract is September 15, 1998, and it may be
terminated by either party with 30 days written notice. In addition, MK has
acted as a supplier of the specialty packaging which the Company has marketed
to date; there is no contract between MK and the Company regarding MK's
supplying such packaging, and the Company is free to purchase its specialty
packaging products from whatever source it believes offers the Company the
best deal. It is likely that the Company will not continue to utilize MK as
it has already actively solicited other entities for the purchase of products.
The Progressive Management agreement is a consulting agreement entered
into on January 1, 1999 whereby Progressive has agreed to provide the
following services to the Company: bookkeeping, audit preparations and SEC
filing preparations for $500 per month.
PART III
Item 13. Exhibits and Reports on 8-K
(a) Exhibits
No. Description
- ---- ------------
3.1* Articles of Incorporation
3.2* Bylaws
10.1* Agreement with MK Resources, Inc.
10.2* Agreement with Progressive Management Consulting Inc.
27** Financial Data Schedule
* Filed as part of the Company's Registration Statement on Form 10SB with the
Securities and Exchange Commission on June 29, 1999.
** Filed herewith
(b) Report on Form 8-K
No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
29
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Registrant:
ACCESS NETWORK CORPORATION
Date: March 24, 2000 By: /s/ Marci Evans
-----------------------------
Marci Evans
President, Secretary
Chief Executive Officer, Chief
Financial Officer, Chairman of
the Board of Directors
In accordance with the Exchange Act, this report has been signed below by
the persons on behalf of the registrant and in the capacities and on the dates
indicated.
Date: March 24, 2000 By: /s/ Marci Evans
-----------------------------
Marci Evans
President, Secretary
Chief Executive Officer, Chief
Financial Officer, Chairman of
the Board of Directors
Date: March 24, 2000 By: /s/ Susan Stankiewicz
-------------------------------
Susan Stankiewicz
Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S AUDITED FINANCIAL STATEMENTS FOR ITS YEAR ENDED DECEMBER 31, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 33,164
<SECURITIES> 0
<RECEIVABLES> 1,284
<ALLOWANCES> 0
<INVENTORY> 5,465
<CURRENT-ASSETS> 1,008
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 40,921
<CURRENT-LIABILITIES> 3,182
<BONDS> 0
0
0
<COMMON> 401
<OTHER-SE> 37,388
<TOTAL-LIABILITY-AND-EQUITY> 40,921
<SALES> 11,854
<TOTAL-REVENUES> 11,854
<CGS> 11,314
<TOTAL-COSTS> 11,314
<OTHER-EXPENSES> 11,249
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,709)
<INCOME-TAX> 220
<INCOME-CONTINUING> (10,489)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,489)
<EPS-BASIC> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
