FORM 10-K ANNUAL REPORT
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended April 30, 1998.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____________ to ______________
Commission file number: 2-33108
ACCESS CORPORATION
- ------------------
(Exact name of registrant as specified in its charter)
Ohio 31-0673364
------------- -----------
State of Incorporation I. R. S. Employer Identification Number
4350 Glendale-Milford Road, Suite 250, Cincinnati, Ohio 45242-3700
- ------------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (513)786-8350
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for at least the past 90 days. Yes X . No ___.
Indicate by check mark if disclosure of delinquent fillers
pursuant to Item 405 of Regulation S-K (par. 229.405 of this chapter) is not
contained herein, and will not 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-K or any amendment to this Form 10-K.
[ ] Inapplicable.
State the aggregate market value of the voting stock held by non-
affiliates of the registrant. The aggregate market value shall be computed by
reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within 60 days prior to the
date of filing. Because there is no established market for the Common Stock
of the Company, it is not possible to determine the aggregate market value of
such Common Stock held by non-affiliates.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the close of the period covered by
this report. Common Stock, without par value: 4,865,559 shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Current reports on Form 8-K dated June 8, 1998 and June 30, 1998.
PART I
ITEM 1. BUSINESS
The registrant ("Access" or the "Company") was incorporated under
the laws of the State of Ohio on November 18, 1963. Its executive offices are
located at 4350 Glendale-Milford Road, Suite 250, Cincinnati, Ohio 45242-3700,
and its telephone number is (513) 786-8350.
On June 30, 1998, at a Special Meeting of Shareholders, the
Company's shareholders approved its Plan of Complete Liquidation and
Dissolution. Pursuant to such Plan, on June 30, 1998;
(a) The Company sold all of the assets of its Hardware Service
Division to Scan-Optics, Inc. for a purchase price of
approximately $3.3 million in cash.
(b) The Company sold its remaining operating assets and
business, including those of its EDMS Division, to Access
Systems LLC ("Systems") in exchange for the assumption of
certain of the Company's liabilities and contingent payments
based on the future net profit before taxes of Systems.
For more information relation to these transactions, reference is
made to the Company's Proxy Statement dated June 9, 1998, which was filed as
an exhibit to the Company's Current Report on Form 8-K dated June 8, 1998 and
to the Company's press release dated June 30, 1998, which was filed as an
exhibit to the Company's Current Report on Form 8-K dated June 30, 1998, each
of which is incorporated herein by reference.
As a result of such sales, the Company no longer conducts any
business and its assets are being distributed to its shareholders pursuant to
such Plan.
DESCRIPTION OF PRODUCTS AND SERVICES
Prior to June 30, 1998, Access, a Cincinnati-based company, had two
business units: Enterprise Document Management Systems (EDMS) , and Hardware
Service, which maintains and installs components and systems. The description
of Access' business herein refers to its business prior to the asset sales on
June 30, 1998 as described above.
Founded over thirty years ago, Access has designed systems for use
by organizations throughout the world. Some have been in continuous use for
as long as twenty years.
Access' EDMS business unit provides software, software support and
professional services to assist its customers in the design, configuration,
installation and maintenance of enterprise document management and workflow
systems. The Hardware Service business unit provides hardware maintenance
services for components and systems. The Company has grown its third-party
equipment and prepress maintenance business. The Company is working with
manufacturers and distributors of high-value integrated equipment to provide
field maintenance services for equipment manufactured or sold by them.
EDMS BUSINESS
Access Corporation is dedicated to enhancing the quality of its
customers' products by providing world class software and professional
services for their document based processes. Access' early success in
automating the handling of document based information positioned the Company
to take a leadership role in the evolution of computer technology in the
specialized area of imaging, document management and business process
workflow.
Access provides document and workflow management solutions for specific
applications in three distinct markets: Utilities, Oil and Gas, and Discrete
Manufacturing. Focusing on plant operations, Access provides software,
software support and professional services to configure, install and maintain
enterprise document management solutions. This expertise initially came from
a concentration on providing document distribution applications for
manufacturing companies.
In 1996, Access began a focus on the Oil and Gas operating plant market
and received several major orders including the adoption of "Enterprise
Licenses" for the products Access provides from several Fortune 500
companies.
This focus was enhanced to include an initiative into Nuclear Power
Plant operations in mid 1997. Access believes the key to continuing
successful growth in its EDMS business will come from the recognition of the
Company as being the absolute leader in a specific market segment. This
market segment has been defined for our EDMS business, as "the plant based
document management and workflow systems for Utilities, Oil and Gas and
Manufacturing companies".
The EDMS Business experienced significant growth in fiscal 1996, in
terms of both revenues and staffing. In the first quarter of fiscal 1996,
Access acquired CimSoft, Inc., a systems integrator servicing a wide base of
EDMS customers within the United States. At the same time, Access also
formalized a strategic alliance with Cimage Enterprise Systems Ltd. (Cimage),
making Access the exclusive distribution and support provider for Cimage
products within North America. These two business ventures positioned Access
for (i)an increased customer base (ii)an additional leading edge software
offering, and (iii) additional personnel skilled in the sale and support of
EDMS applications. In addition to this new role as a software reseller,
Access continues to maintain Document Management Software and still provides
the industry's only large format EDMS available on the IBM AS/400 computer.
Access' EDMS software offerings fall into three product areas:
EDICS (Engineering Document Image Control System), Cimage Document Manager
System and the Staffware Workflow System. EDICS is primarily focused at
providing Document Life Cycle Management on the IBM AS/400 platform, Cimage
Document Management is focused on Document Distribution applications using
UNIX and Microsoft Windows NT servers and Staffware is a workflow system using
UNIX and Microsoft Windows NT servers.
Both products utilize a powerful database application for managing
documents and related information, including paper-based documents, A through
J-size drawings, Computer Aided Design (CAD) data, company procedures and
office correspondence. These documents come from multiple sources in
multiple formats. The EDMS applications integrate all of them into a single
system which fully automates the revision and distribution processes, and also
provides flexible tools for viewing, editing, and printing.
The EDMS Division also provides professional services to its
customers. Access' industry specialization allows it to apply its document
system expertise to its customer business problem in Document Management
Applications. While the various software modules are the same at each
customer, each implementation is unique through the "tailoring" of the
document organizational structure, document-to-document relationships, and
user interface presentation. Through Access' understanding of Document
Management requirements, customers have been able to achieve industry
compliance with regulatory agencies, become ISO 9000 certified, and achieve
system implementations in extremely short time periods.
HARDWARE SERVICE BUSINESS
Access' Hardware Service business unit provides quality hardware
service on a nationwide basis to the prepress industry, owners of equipment
manufactured and sold by third parties, and the Company's installed base of
EDMS customers. The hardware service revenue from services for equipment
manufactured and sold by third parties grew by 162% in fiscal 1998.
Third-party maintenance includes the support of non-Access
electronic and electromechanical equipment such as card embossers, microfiche
duplicators, microfilm scanners, large drawing format scanners, large format
plotters, highly sophisticated 5-1/4" and 12" laser drives, optical jukebox
systems, and prepress equipment. Access has a number of hardware
manufacturers and vendors and Support Partners that recommend Access as their
nationwide service provider.
Access' key to success in third-party maintenance is the ability to
provide its Support Partners with the benefits of having their own national
service company without having to build and support the infrastructure of a
nationwide service organization. Access offers a 24 hour-a-day, toll-free
dispatch center; rapid on-site service response, quality repairs and
preventive maintenance for their customers.
On April 11, 1997, the Company purchased certain assets of Graphic
Systems Technology, Inc. from Star Bank. Graphic Systems Technology provided
service for imagesetters and scanners. Access is qualified to meet the
demands of today's electronic prepress multi-vendor environment. Access
engineers are trained and cross-trained on a wide range of imagesetters,
scanners, networks/servers, and software applications ensuring the resolution
of a service problem.
MARKETING
The Company generally markets its own services and products in the
United States. Marketing of hardware maintenance services for third-party and
prepress equipment is conducted from Cincinnati, Ohio by one senior sales
manager, who has run service operations and worked with the Company's Support
Partners, manufacturers, and distributors to grow Access' base of end-user
customers.
The EDMS marketing operations are conducted from the Company's
headquarters in Cincinnati, Ohio and its branch office in Irvine, California.
The Company employs seven sales and marketing personnel in this business unit.
Enterprise Document Management Systems (EDMS), as well as related
computer systems, are produced and configured only in response to firm orders.
At the end of fiscal years 1998 and 1997, EDMS backlog totaled approximately
$1,608,900 and $1,335,400, respectively. The EDMS backlog at the end of
fiscal 1998 is expected to be delivered within fiscal 1999.
EDMS systems have been installed in 48 states, Japan, Europe,
Australia, Canada, Mexico, Jamaica, Puerto Rico, the Middle East, China, and
the former Soviet Union. Sales in and outside the United States are handled
predominantly on a direct basis. There is no recurring geographic market
concentration with respect to the sales of Access systems in the United
States.
Aggregate sales to international customers represented 1% of the
Company's annual sales in fiscal 1998. In fiscal year 1997, no domestic
distributors were employed.
EDMS' primary marketing focus is the sale of the Enterprise Document
Management System products to manufacturers, information processors, utilities
and other users of technical documentation.
No single customer accounts for a significant percentage of the
Company's revenues on a continuing basis. Net sales to the utilities industry
were 18.5% of fiscal 1998 revenues and 12.4% of fiscal 1997 revenues; net
sales to the various agencies of the federal government represented 2.2% of
fiscal 1998 revenues and 5.7% of fiscal 1997 revenues, (these contracts could
have been canceled at the election of the government); net sales to the
manufacturing industry were 18.9% of fiscal 1998 revenues and 17.4% of fiscal
1997 revenues; and net sales to the aerospace industry were 7.5% of fiscal
1998 revenues and 22% of fiscal 1997 revenues. Accounts receivable from the
Federal Government, Aerospace, Petroleum, Computer, Medical, Manufacturing and
Utilities industry at April 30, 1998 and April 30, 1997 were $1,684,900 and
$1,689,800, respectively.
COMPETITION
Increases in Enterprise Document Management Systems (EDMS)
competition continue to push system prices down to historically unprecedented
low levels. The highly publicized changes within IBM have inhibited the
growth of the Company's relationship with that organization. IBM discontinued
many partner programs which previously helped in marketing the Company's
product.
The Company has experienced competition from companies such as
Altras, Documentum, and Novasoft in the EDMS market.
There are few companies, in the fragmented hardware service
market, which like Access, are small and provide service on a national basis.
There are a number of large companies in this market such as Decision One,
IBM, and Tab in this market.
PURCHASING AND PRODUCTION
The majority of the EDMS software is supplied by Cimage. The EDMS
hardware and some miscellaneous software and supplies are purchased by the
Company from a number of suppliers. In the case of certain materials, the
Company employs a single source of supply, although alternative sources are
available. The Company integrates, installs and supports the EDMS software.
PATENTS
At the current time, technology utilized in the micrographic
storage and retrieval unit and related products sold by the Company are
protected by three unexpired United States patents owned by the Company.
EDMS PRODUCT DEVELOPMENT
Development on the Cimage software is performed by Cimage
Enterprise Systems Limited in the U.K. Access Corporation no longer has a
development operation. The engineers are employed to deliver and maintain
systems. In its customer service operation, the Company currently employs
approximately 12 persons with degrees in engineering and related fields.
During fiscal 1998 and fiscal 1997, the Company spent $666,341 and $312,068,
respectively, on specific customer orders and $-0- and $265,129, respectively,
on development operations.
EMPLOYEE RELATIONS
At April 30, 1998, the Company employed approximately 52 persons,
all on a full-time basis and all of whom were non-union. Approximately nine
employees were connected with marketing activities, while the others were
involved in production, installation, service, and financial or
administrative operations.
Standard hospitalization, prescription drug, dental, life
insurance, and disability protection are provided for all full-time employees.
The Company has a 401(k) Plan and a Section 125 Plan. The Company considers
its employee relations to be good.
ITEM 2. PROPERTIES
The principal operations of the Company are conducted in
approximately 19,678 square feet of leased plant and office space in
Cincinnati, Ohio. The Cincinnati property is occupied under a lease which
extends through May 1, 2002. The annual rental under this lease is $170,950.
The Company also operates a sales office in Irvine, California.
The Irvine property is occupied on a month to month basis.
The Company also operates an approximately 9600 square feet service
depot, manufacturing and parts activity facility in Hebron, Kentucky. This
property is occupied under a lease, effective July 1, 1997, which extends to
June 30, 2004. The annual rent under this lease is $58,656. All of these
leases have been assigned to and assumed by Systems, which is seeking a
modification or termination of them.
The Company owns automatic, custom-made machines used in the
production of its proprietary media and owns various standard tools and
equipment used in the production of Access products.
The capacity of the Company's Hardware Service and EDMS facilities
and equipment exceeds the current requirements of the Company's operations.
The Company owns computer hardware and software used for support,
and installation for its EDMS product.
The Cincinnati building occupied by the Company and the fixtures
and equipment therein are modern, well maintained, in satisfactory operating
condition and adequately insured. The building is air-conditioned.
ITEM 3. LEGAL PROCEEDINGS
In accordance with Regulation paragraph 229.103 item 103, no
disclosure is prequired at this time.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANTS' COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Currently there is no established market for the Company's Common
Shares and the Company is not aware of any reported bid quotations. The
Company has not paid, and has no plan to pay, dividends on its Common Shares,
but pursuant to its Plan of Complete Liquidation and Dissolution, is
distributing its assets to its shareholders. The number of holders of record
of Access Corporation's Common Shares as of April 30, 1998 was 381.
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
<CAPTION>
ACCESS CORPORATION
<S>
SELECTED FINANCIAL DATA <C> <C> <C> <C> <C>
FOR THE YEARS ENDED April 30,1998 April 30,1997 April 30,1996 April 30,1995 April 30,1994
Summary of Earnings (Loss) from Operations
Net Sales $8,873,887 $6,929,353 $8,704,452 $6,041,782 $6,896,352
Gross Profit 2,009,308 1,496,282 3,310,058 2,352,750 2,573,260
Gross Profit as percentage of
of net sales 23% 22% 38% 39% 37%
Interest Expense 891 4,925 9,378 31,911 26,450
Net Earnings (Loss) (811,986) (1,050,732) 205,021 129,370 (615,239)
Preferred Dividend - - 102,510 64,685 -
Earnings(loss)applicable to
common shares $(811,986) $(1,050,732) $ 102,511 $ 64,685 ($615,239)
========= ========== ========= ========= =========
Average common shares outstanding 4,865,559 4,865,559 4,865,559 4,865,559 4,865,559
Per Basic and Dilutive Common Share Statistics
Net Earnings (Loss) $ (0.17) $ (0.22) $ 0.02 $ 0.01 $ (0.13)
Balance Sheet Data
Working Capital $2,245,780 $2,833,187 $2,925,217 $1,734,779 $ 695,922
Working Capital Ratio 2.8:1 3.2:1 3.0:1 3.3:1 1.7:1
Total Assets 4,410,089 5,017,591 6,241,633 5,129,248 5,132,511
Mandatorily redeemable
preferred stock 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000
Capital Stock and Other
Stockholders' equity $ 723,306 $1,535,292 $2,586,024 $2,483,512 $2,418,826
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
NET REVENUES
(In thousands)
1998 Change 1997 Change 1996
$8,874 28% $6,929 (20%) $8,704
Access Corporation had two primary lines of business. The Company is
a leader in the Enterprise Document Management Systems (EDMS) software
business. In this line of business, the Company is the exclusive North
American reseller of the Cimage software which provides software solutions for
its customers' technical process. The EDMS line of business consists of
Software Systems Sales, the sale of Software, Hardware and Professional
Services, as well as Software support. Originally, the Company's hardware
service activities were limited to the support of its proprietary products.
The Company has built its business of maintaining equipment manufactued and
sold by third parties. The Company has worked with manufacturers and
distributors of high value equipment to develop its service business. The
Company services, on a nationwide basis, end users on both maintenance
contracts and a time and materials basis.
The fluctations in the Company's overall revenues overall are
primarily a result of the changes in the Hardware Service operation. Hardware
Service sales were $3,961,400, $2,694,500 and $3,613,000 in fiscal years 1998,
1997, and 1996, respectively. These sales represented 45%, 39% and 42% of
total revenues, respectively. The decrease between 1997 and 1996 sales was
the result of the loss in fiscal 1997 of hardware service revenue on the
Company's proprietary micrographic equipment. These systems are slowly being
replaced with equipment using more current technology. This trend has
continued in fiscal 1998 and was replaced with an increase in third party
contracts for maintenance of scanners, plotters, jukeboxes and similar high
volume mission critical equipment. This more than made up for the loss of
micrographic service revenue.
In fiscal year 1998, sales to the U.S. commercial market continued to
exceed those to the federal government and international markets. Sales to
the U.S. commercial market represented 97.5% of the total revenue in fiscal
1998, compared with 90% in fiscal 1997 and 88% in fiscal 1996. The federal
government accounted for 2% of the total revenue in fiscal 1998, compared with
6% in fiscal 1997 and 11% in fiscal 1996. This reflects the Company's
emphasis on marketing to the commercial market. Sales to international
markets accounted for .5% of fiscal 1998 revenues, compared with 1% in fiscal
1997 and 11% in fiscal 1996.
Gross Profits (in thousands) 1998 Change 1997 Change 1996
Gross Profits $2,009 22% $1,496 (55%) $3,310
Percentage of net revenues 23% 22% 38%
The above Gross Profits for 1997 and 1996 were net of $1,068,900 and
$673,700 of amortization of computer software costs, respectively. In fiscal
1997, the Company accelerated the amortization of the software costs previously
capitalized. Although the Company continues to maintain and supports its
AS/400 EDMS software product, it did not believe that future revenues of this
product reduced by the estimated future costs, including maintenance and
support, are sufficient to absorb the amortization of the software costs.
EDMS gross margins before amortization in fiscal 1998 were 37%, which was a
decrease from fiscal 1997 and 1996 levels of 42% and 46%, respectively. In
fiscal 1998 there was no amortization cost. EDMS gross margins after
amortization in fiscal 1997 and 1998 were 17% and 33%, respectively. The
decrease in gross margins for EDMS in fiscal 1998 resulted from delivering and
supporting software which is not the Company's proprietary software. The
Company is required to pay a third party to assist in support of these
systems. In fiscal 1998, the Company provided services for which these
services were contracted to a third party. This also resulted in a lower
gross margin in fiscal 1998. Hardware service gross margin was 4% in fiscal
1998, which was 25% lower than in fiscal 1997 and 41% lower than in fiscal
1996. This decrease in gross margin in fiscal 1997 and 1998 is the result of
the reduction of the higher gross margin proprietary micrographic equipment
service being replaced with lower gross margin third party service. In fiscal
1998, the Company hired a consultant to evaluate the hardware service
operation. This resulted in a short term increase in cost. It is expected
that implementing this evaluation would not improve gross margins until such
time as the plan were completly implemented.
Selling, general and administrative expenses were $2,865,800,
$2,368,800 and $2,433,400 for fiscal 1998, fiscal 1997 and fiscal 1996,
respectively. The primary contributor to the increase in expenses in fiscal
1998 was an increase in commission expense. Commissions are paid upon
receiving the orders and revenue of the orders. Therefore, because there was
an increase in orders received and revenue, commission expense increased
compared to the increase in revenue in fiscal 1998.
Engineering, Research and Development (R&D) expenditures for prior
periods were incurred for maintaining and upgrading existing products. The
Company is not required to provide development for the Cimage software. Cimage
Enterprise Systems, Ltd provides development for the Cimage software. R&D
expenses decreased $265,100 in fiscal 1998 and $611,300 from fiscal 1996.
The Net Loss Before Income Taxes in fiscal 1998 of $812,000 compared
to the $1,050,700 Net Loss Before Income Taxes in fiscal 1997. Although the
Company increased revenue in fiscal 1998, the transistion from supporting
higher gross margin micrographic equipment to servicing a lower gross margin
third party equipment was the major contributor to the decrease in profits
(before amortization costs related to software costs accelerated in fiscal
1997).
LIQUIDITY AND CAPITAL RESOURCES
The Company had a cash balance of $1,033,091 and no bank borrowings at
April 30, 1998. Operating activities in fiscal 1998 used approximately
$308,800. The Company has not utilized the bank line of credit in the last
three fiscal years.
Accounts receivable, excluding the Graphic Systems Technology Inc's
accounts receivable purchased in fiscal 1998, decreased $64,700 during fiscal
1998. This decrease is the result of lower sales in the fourth quarter of
fiscal 1998 compared to fiscal 1997.
Prepaid maintenance contracts increased $245,600 from April 30, 1997
to April 30, 1998. This increase reflects the increase in annual prepaid
maintenance contracts for third party hardware service constomers.
The company receives progress payments on some of its EDMS System
orders. These are reported as current liabilities. Progress payments
increased $99,900 from April 30, 1997 to April 30, 1998.
Accrued royalties at April 30, 1998 deceased approximately $432,300
from those at April 30, 1997. This decrease in accrued royalties is basically
royalties paid to Cimage Enterprise Systems Limited accrued in fiscal 1997 and
paid in fiscal 1998.
Working capital at April 30, 1998 was $2,245,800, compared with
$2,833,200 at April 30, 1997.
Revenues from EDMS and Hardware Service sales are expected to provide
the cash flow required to operate the Company.
YEAR 2000
The Cimage Software which the Company resells will process date fields
for the 21st century. The internal accounting packages are complient with the
year 2000 processing. The Company employs personnel that manage its internal
information systems. The Company replaces and/or upgrades equipment and
software as needed. The new equipment and software is year 2000 compliant.
The Company has been working with their vendors as needed to receive
certification of year 2000 compliance.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent Auditors' Report
Stockholders and Board of Directors
Access Corporation
Cincinnati, Ohio
We have audited the accompanying balance sheets of ACCESS Corporation as
of April 30, 1998 and 1997, and the related statements of operations, of
capital stock and other stockholders' equity and of cash flows for each of the
three years in the period ended April 30, 1998. Our audits also included the
financial statement schedule listed in the Index at Item 14. These financial
statements and financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statements based on our audits.
We conducted our audits 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 audits provide 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 ACCESS Corporation
as of April 30, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended April 30, 1998, in
conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set for therein.
Deloitte & Touche LLP
Cincinnati, Ohio
June 9, 1998 (June 30, 1998 as to Note 10)
<TABLE>
ACCESS CORPORATION
BALANCE SHEETS
APRIL 30, 1998 AND 1997
<CAPTION>
<S> <C> <C>
ASSETS 1998 1997
CURRENT ASSETS:
Cash and cash equivalents $1,033,091 $1,404,708
Accounts receivable, less allowance
for doubtful accounts of $18,438 in 1998
and $12,000 in 1997: 2,216,489 2,227,046
Inventories
Raw materials and purchased parts 100,421 96,673
Work-in-process 33,313 56,401
Finished goods 7,217 13,551
--------- ---------
Total inventories 140,951 166,625
Prepaid expenses 99,182 229,862
Deferred income tax, net of valuation
allowance of $104,000 in 1998 and $300,000
in 1997 (Note 5) 22,000 112,000
--------- ---------
TOTAL CURRENT ASSETS 3,511,713 4,140,241
EQUIPMENT AND LEASEHOLD
IMPROVEMENTS:
Computer hardware and software 1,359,374 1,533,592
Machinery and equipment 243,455 503,337
Office and service equipment 360,461 380,248
Leasehold improvements 15,656 13,405
Tools, dies and fixtures 8,946 97,832
--------- ---------
Total 1,987,892 2,528,414
Less accumulated depreciation 1,804,559 2,289,920
--------- ---------
Net 183,333 238,494
GOODWILL (Note 9) 76,161 89,974
DEFERRED INCOME TAX BENEFIT,
net of valuation allowance of $3,010,318 in
1998 and $2,649,018 in 1997 (Note 5) 638,882 548,882
--------- ---------
TOTAL $4,410,089 $5,017,591
========== ==========
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
LIABILITIES AND CAPITAL STOCK AND
OTHER STOCKHOLDERS' EQUITY 1998 1997
<CAPTION>
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 502,216 $ 291,339
Accrued salaries, wages and commissions 219,572 216,232
Accrued royalty 87,626 519,916
Other accrued liabilities 161,486 84,422
Advances from customers 295,033 195,145
---------- ----------
Total current liabilities 1,265,933 1,307,054
PREPAID MAINTENANCE CONTRACTS 920,850 675,245
MANDATORILY REDEEMABLE CLASS ONE
PREFERRED STOCK (Note 2) 1,500,000 1,500,000
CAPITAL STOCK AND OTHER
STOCKHOLDERS' EQUITY (Notes 2,3):
Capital Stock:
Common Stock, no par value, authorized,
8,000,000 shares; issued and outstanding
4,881,829 in 1998 and 1997 488,183 488,183
Additional paid-in capital 10,657,652 10,657,652
Deficit from April 1, 1985 (10,407,146) ( 9,595,160)
16,270 Common Stock shares in treasury,
at cost (15,383) (15,383)
--------- ----------
Total capital stock and other
stockholders' equity 723,306 1,535,292
TOTAL $4,410,089 $5,017,591
========== ==========
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED APRIL 30, 1998, 1997 AND 1996
<CAPTION>
<S> <C> <C> <C>
1998 1997 1996
REVENUE:
Software System Sales $3,705,795 $2,894,565 $3,800,795
Software Support 1,206,687 1,340,272 1,290,668
Hardware Service 3,961,405 2,694,516 3,612,989
---------- ---------- ----------
Total 8,873,887 6,929,353 8,704,452
COST:
Software System Sales 2,137,491 1,633,973 2,052,266
Software Support 940,953 805,075 679,492
Hardware Service 3,786,135 1,925,101 1,988,932
---------- ---------- ----------
Total 6,864,579 4,364,149 4,720,690
GROSS PROFIT BEFORE AMORTIZATION 2,009,308 2,565,204 3,983,762
AMORTIZATION OF COMPUTER SOFTWARE
COST (Note 1) - 1,068,922 673,704
---------- ---------- ---------
GROSS PROFIT 2,009,308 1,496,282 3,310,058
OPERATING EXPENSES:
Selling, general and administrative 2,865,833 2,368,804 2,433,376
Engineering, research and development - 265,129 611,295
---------- --------- ----------
OPERATING INCOME (LOSS) (856,525) (1,137,651) 265,387
OTHER INCOME 45,430 91,844 54,612
INTEREST EXPENSE (891) (4,925) (9,378)
---------- --------- ----------
EARNINGS (LOSS) BEFORE INCOME TAXES (811,986) (1,050,732) 310,621
INCOME TAXES (Note 5) - - 105,600
---------- --------- ----------
NET EARNINGS (LOSS) (811,986) (1,050,732) 205,021
PREFERRED DIVIDEND - - 102,510
---------- --------- ----------
EARNINGS (LOSS) APPLICABLE
TO COMMON SHARES $(811,986) $(1,050,732) $102,511
========== ========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 4,865,559 4,865,559 4,865,559
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE
(Note 3):
Net earnings (loss) $ (0.17) $ (0.22) $ 0.02
========= ========= =========
<FN>
See notes to financial statements.
</TABLE>
</page>
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENTS OF CAPITAL STOCK AND OTHER
STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 30,1998, 1997 AND 1996
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additional Retained
Treasury Common Class A Common Paid-in Earnings
--------------------------------------------------------
Shares Amount Shares Amount Shares Amount Capital (Deficit)
BALANCE, April 30, 1995 16,270 $(15,383) 3,453,257 $345,326 1,428,572 $142,857 $10,760,162 $(8,749,449)
Class One Preferred Stock
Dividends (102,510)
Conversion of Class A Common
Stock to Common Stock 1,428,572 142,857 (1,428,572) (142,857)
Net earnings 205,021
-----------------------------------------------------------------------------------------
BALANCE, April 30,1996 16,270 (15,383) 4,881,829 488,183 - - 10,657,652 (8,544,428)
Net loss (1,050,732)
-----------------------------------------------------------------------------------------
BALANCE, April 30,1997 16,270 (15,383) 4,881,829 488,183 - - 10,657,652 (9,595,160)
Net loss (811,986)
-----------------------------------------------------------------------------------------
BALANCE, April 30,1998 16,270 $(15,383) 4,881,829 $488,183 - $ - $10,657,652 $(10,407,146)
=========================================================================================
<FN>
See notes to financial statements.
</TABLE>
</page>
<TABLE>
<PAGE>
ACCESS CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 1998, 1997 AND 1996
<CAPTION>
<S> <C> <C> <C>
1998 1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $(811,986) $(1,050,732) $ 205,021
Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:
Amortization 13,813 1,068,922 673,704
Depreciation 110,299 131,755 143,027
Deferred income taxes - (3,182) 105,600
Loss (gain) on disposal of equipment 7,630 (1,357) 1,111
Change in assets and liabilities:
Prepaid maintenance contracts 245,605 66,167 294,324
Accounts receivable 10,557 (120,675) 162,968
Inventories 25,674 74,548 224,355
Prepaid expenses 130,680 (111,020) (37,293)
Accounts payable 210,877 5,656 86,215
Accrued liabilities 80,404 (279,702) 244,716
Accrued royalties (432,290) 228,724 (33,299)
Advances from customers 99,888 (213,314) (448,994)
---------- ---------- ---------
Net cash provided by (used in)operating activities (308,849) (204,210) 1,621,455
---------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business, net of cash received - (229,628) (148,629)
Capital additions (62,768) (124,515) (166,010)
Proceeds from disposal of equipment - 13,397 6,267
---------- ---------- ---------
Net cash used in investing activities (62,768) (340,746) (308,372)
---------- ----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends on Class One Preferred Stock - (102,510) (64,685)
Payments on capital leases - (19,599) (60,112)
---------- ----------- ---------
Net cash used in financing activities - (122,109) (124,797)
---------- ---------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (371,617) (667,065) 1,188,286
CASH AND CASH EQUIVALENTS, Beginning of year 1,404,708 2,071,773 883,487
---------- ---------- ---------
CASH AND CASH EQUIVALENTS, End of year $1,033,091 $1,404,708 $2,071,773
========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid for interest $ 890 $ 3,400 $ 9,400
Dividends declared but unpaid on Class One
Preferred Stock totaled $102,510 (1996)
<FN>
See notes to financial statements.
</TABLE>
</page>
<PAGE>
NOTES TO FINANCIAL STATEMENTS ACCESS Corporation
For the years ended April 30, 1998, 1997 and 1996
NOTE 1: A Summary of Significant Accounting
Policies
Nature of Business
The Company services software and hardware for its installed base of
customers and third parties. It also markets software for the electronic
storage, control and processing of technical documentation.
Revenue Recognition
Revenues from the sale of new systems are recognized upon shipment. If
there are services performed, revenue is recognized at the time of customer
acceptance.
Revenue from prepaid maintenance agreements is recognized ratably over
the life of the maintenance contracts.
Inventories
Inventories comprised of material, labor, and related overhead expenses
are stated at the lower of cost (first-in, first-out method) or market.
Equipment and Leasehold Improvements
Equipment and leasehold improvements are recorded at cost and depreciated
over their estimated useful lives using the straight-line method. Computer
software purchased for internal use is depreciated over two years or its
useful life, whichever is less.
Computer Software Development Costs
Computer software development costs are recorded in accordance with
Statement of Financial Accounting Standards No. 86, Accounting for the Costs
of Computer Software to be Sold, Leased or Otherwise Marketed. Costs incurred
up to the point of establishing technological feasibility are expensed. Costs
incurred after establishment of technological feasibility were capitalized.
Amortization of these capitalized costs began in March 1993 when the products
were released to customers and were amortized over a period not to exceed five
years. Amortization expense was $673,704 for fiscal year 1996.
While the Company continues to maintain and support its AS/400 EDMS software
product, it does not believe that future revenues of this product reduced by
the estimated future costs, including maintenance and support, are sufficient
to absorb the amortization of the software costs previously capitalized.
Therefore, the Company accelerated the amortization of the remaining
unamortized cost. In fiscal year 1997 the Company wrote off $1,068,923,
which was the total that remained unamortized.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual amounts could differ from those estimates.
Statement of Cash Flows
Cash and cash equivalents consist of cash on hand, cash on deposit, and
short-term investments with original maturities less than ninety days.
Product Warranties
Under its product warranty policy, the Company has agreed to replace
certain parts or provide remedial service during the designated warranty
period. Costs associated with these programs are determined on the basis of
estimated net future costs.
Stock-Based Compensation
The Company adopted Statement of Financial Accounting Standards No. 123 -
Accounting for Stock-Based Compensation in 1997. The standard defines a fair-
value based method of accounting for stock-based compensation but permits
compensation expense to continue to be measured using the intrinsic value-
based method previously used. The Company continues to measuring
compensation expense using the intrinsic value-based method.
Goodwill
The Company is amortizing goodwill associated with the purchase of the
assets of Graphic Systems Technology, Inc. over a ten year period.
Reclassification
Certain reclassifications have been made to 1997 balances to be consistent
with the classifications used in 1998.
Note 2: Mandatorily Redeemable Preferred Stock and Notes Payable
On October 28, 1991, the Company entered into a Note Purchase Agreement
with Oce N.V. ("Oce"), which provided for borrowing by the Company of up to
$1.5 million to fund a major software development project. On August 26,
1992, $1,000,000 of then outstanding notes were redeemed in exchange for
10,000 shares of mandatorily redeemable Class One Preferred Stock. In April
1993, the Company issued to Oce an additional 5,000 shares of mandatorily
redeemable Class One Preferred Stock for $500,000.
The Class One Preferred Stock is divided into three series: 10,000
shares of 7% Class One Preferred Stock ($1,000,000); 2,500 shares of 9% Class
One Preferred Stock ($250,000), and 2,500 shares of variable rate Class One
Preferred Stock ($250,000). The variable rate Class One Preferred Stock was
issued at the rate of 9%. Dividends on the Class One Preferred Stock for any
fiscal year are cumulative only to the extent of 50% of the Company's net
after-tax earnings, as defined, for such year.
Annually, beginning in 1995, the Company is required to redeem the Class
One Preferred Stock at $100 per share plus accumulated dividends in an amount
equal to a specified portion of after-tax earnings, as defined. Unless
dividends on the Class One Preferred Stock are current, the Company may not
declare a dividend on its common shares or redeem or purchase any of its
common shares. Under the Note Purchase Agreement, Oce agreed to limitations
on the voting and transfer of the Company's stock (including the transfer of
such stock to a voting trust, the trustees of which are four of the Company's
directors) and Oce was released from its obligation under certain
circumstances to make a tender offer for the Company's common stock. As of
April 30, 1998, the Company had authorized and issued a total of 15,000 shares
of Class One Preferred Stock. The Company was not required to and has not
redeemed any Class One Preferred Stock in fiscal year 1998 or previously.
Note 3: Capital Stock
In 1992 the Company entered into a Voting Trust Agreement with Oce. The
Voting Trust Agreement required Oce to place the certificates for 1,904,763 of
the Company's Common Stock, less 100 shares, into a voting trust. The
trustees of the trust are four directors of the Company. Pursuant to the
Voting Trust Agreement, the shares will be voted for matters related to the
election of directors in the discretion of the voting trustees (except that
such shares will be voted for up to two director nominees designated by Oce)
and on all other matters by Oce pursuant to a proxy to be granted to it by the
voting trustees.
The Voting Trust Agreement is irrevocable for a period of ten years and
may be renewed, at the option of Oce, for additional periods of not more than
ten years each. The Voting Trust Agreement will automatically terminate:
* with respect to any such shares sold to a party unrelated to Oce
* upon the closing of any underwritten public offering of Common Stock which
results in not less than $10,000,000 in aggregate sales price of Common
Stock having been sold.
* upon the acquisition by any person of beneficial ownership of as many or
more shares of Common Stock as are owned by Oce.
Further, the Voting Trust Agreement may be terminated by notice by Oce to
the voting trustees at anytime after October 3, 1995.
If the Voting Trust Agreement is terminated by notice or is not renewed
on its tenth anniversary, Oce is required to make a tender offer for any and
all of the shares of Common Stock at a price per share not less than that
defined in the Note Purchase Agreement (Note 2) and calculated using the
Company's audited financial statements. If the calculated price per share is
less than zero, Oce is not required to make a tender offer.
If the Voting Trust Agreement is terminated by notice to the voting
trustees, the tender offer is required not later than six months after the end
of the fiscal year in which the first anniversary of the notice affected the
termination. If the agreement is not renewed, the tender offer is required
not later than six months after the end of that fiscal year end.
Common Shares
Holders of Common Stock ,including the voting trustees, have one vote per
share. Actions by a majority of voting trustees constitute the act of the
voting trust. In fiscal year 1996, the Company's Class A Common Stock was
converted to Common Stock
Earnings Per Share
The Financial Accounting Standards Board (FASB) issued Statements of
Financial Accounting Standard (SFAS) No. 128 - "Earnings per Share" in
February 1997. It replaced the presentation of primary and fully diluted
earnings per share (EPS) with basic and dilutive EPS. Basic EPS excludes all
dilution. It is based upon the weighted average number of common shares
outstanding during the period. Diluted EPS reflects the potential dilution
that would occur if stock options were exercised. However, if the effect on
EPS assuming exercise of stock options is anti-dilutive, which it would have
been in the periods presented, such dilution is not considered. The Company
adopted SFAS No. 128 in the third quarter of 1998. All previously reported
EPS amounts have been restated to the new presentation.
Stock Option Plans
During the year ended April 30, 1994, the Company adopted the 1993
incentive stock option plan covering 500,000 shares of its Common Stock. The
Company also amended the 1983, 1985 and 1991 plans to add provisions providing
that all outstanding stock options will become exercisable upon the occurrence
of a change of control or similar event.
Options may be granted under the 1991 and 1993 plans to officers and key
employees of the Company. Additionally, directors of the Company and other
persons in business relationships with the Company, such as independent
contractors and consultants, may be granted non-qualified options under the
1991 plan. No further options may be granted under the 1983 and 1985 plans.
Incentive stock options may be granted only to Company employees.
The option price under the plans may not be less than the fair market
value of the Common Stock at the date of grant, as determined by the Board of
Directors, which administers the plans. All options granted under the 1985
plan and any incentive stock options granted under the 1983, 1991 and 1993
plans may not be exercised prior to one year from date of grant and expire ten
years from the date of grant.
At April 30, 1998, 1997 and 1996 there were 779,900 shares reserved for
stock option plans of which 710,000 were granted at a weighted average
exercise price of $.42. No options were granted, exercised or cancelled
during 1998, 1997 and 1996.
<TABLE>
Options Outstanding and Exercisable at April 30, 1998:
<CAPTION>
Options Outstanding Options Exercisable
<S> <C> <C> <C> <C> <C>
Weighted
Average Weighted Weighted
Number of Remaining Average Number Average
Range of Options Contractual Exercise of Options Exercise
Exercise Price Outstanding Life (Months) Price Exercisable Price
$.15 - $.50 575,000 68 $ .28 458,333 $ .33
$.51 - $1.00 135,000 36 $1.00 135,000 $1.00
------- -------
710,000 593,333
</TABLE>
Had compensation cost for the Company's stock options been determined based on
the fair value at the grant dates for awards under the plan consistent with
the method of SFAS 123, the Company's net income (loss) and earnings per share
for 1998 and 1997 would have been the pro forma amounts indicated below.
Pro Forma Net Income and Net Income Per Share
1998 1997 1996
Net income (loss)
As reported ($811,986) ($1,050,732) $102,511
Pro forma ($811,986) ($1,050,732) $ 87,491
Net income (loss) per share
As reported ($.17) ($.22) $.02
Pro forma ($.17) ($.22) $.02
The fair value of the options was calculated utilizing the Black-Scholes
option-pricing model and the following key assumptions:
ASSUMPTIONS: 1998 1997 1996
Risk -free interest rate 6.4% 6.4% 6.4%
Dividend growth 0% 0% 0%
Volatility 0% 0% 0%
Expected Life (months) 68 70 70
Note 4: Engineering, Research and Development
Engineering, research and development costs for the years ended April 30,
1998, 1997 and 1996 are as follows:
1998 1997 1996
Charged to specific customer orders $666,341 $312,068 $380,741
Charged directly to engineering, research
and development -0- 265,129 611,295
------- ------- -------
Total cost of engineering, research and
development efforts $666,341 $577,197 $922,036
======= ======= ========
Note 5: Income Taxes
The provision for income taxes (benefit) includes the following:
1998 1997 1996
Federal:
Deferred $(163,300) $(415,682) $105,600
Currently payable (Refundable) 3,182 164,000
Tax benefit of net operating loss carryforward (164,000)
Valuation Allowance 163,300 412,500
_______ ________ ________
Total $ 0 $ 0 $105,600
======= ======== ========
Deferred income taxes reflect the net income tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes, and
(b) net operating loss carryforwards. The income tax effects of significant
items comprising the Company's net deferred income tax asset as of April 30,
1998 and 1997 are as follows:
1998 1997
Net operating loss carryforwards
Federal $3,413,000 $3,173,700
State 236,000 217,400
Temporary differences:
Depreciation 46,000 41,000
Accruals not deductible 53,000 24,000
Other 26,900 153,800
---------- ----------
Total $3,774,900 $3,609,900
Less Valuation Allowance (3,114,000) (2,949,000)
---------- ---------
Net deferred income tax asset $ 660,900 $ 660,900
======== ========
The amounts and expiration dates for the Company's net operating loss
carryforwards for income tax return purposes are summarized as follows:
Year Ending April 30 Federal
2002 $ 1,301,400
2004 2,761,800
2005 3,027,200
2008 459,100
2009 803,100
2012 990,700
2013 695,600
-----------
Total $10,038,900
==========
Note 6: Revenues to Major Customers
On a continuing basis, no single customer accounts for a significant
percentage of the Company's net sales. However, net revenues to customers in
selected industries as a percent of total revenues are as follows:
1998 1997 1996
Federal Government 2.2% 5.7% 10.9%
Aerospace 7.5% 22.0% 14.9%
Petroleum 13.6% 9.3% 4.5%
Computer 7.5% 10.9% 10.5%
Medical 1.2% 2.9% 8.6%
Manufacturing 18.9% 17.4% 1.5%
Utilities 18.5% 12.4% 33.4%
Accounts receivable from these customers at April 30, 1998 and April 30,
1997 were $1,684,900 and $1,689,800, respectively.
Note 7: Lease Commitments
The Company leases office facilities and equipment under operating
leases. Rent expense was $362,728 (1998) $351,259 (1997) and $244,718 (1996)
of which $70,531 (1998), $111,485 (1997), and $64,313 (1996), were under
short-term cancelable leases.
As of April 30, 1998, minimum annual payments under all non-cancelable
long-term operating lease agreements are: $237,098 (1999), $229,606 (2000),
$301,729 (2001), $301,729 (2002) and $14,664 (2003).
Note 8: CimSoft Acquisition
On July 31, 1995, the Company acquired CimSoft Incorporated, which started
business in June 1995, for $257,500 in a business combination which was
accounted for using the purchase method. The results of operations of the
company include CimSoft from the date of acquisition. Pro forma results of
operations of CimSoft are not material. CimSoft was a distributor of Cimage
software and a Cimage service provider in North America.
Note 9: Graphic Systems Technology Asset Purchase
On April 11, 1997, the Company purchased certain assets of Graphic Systems
Technology, Inc. from Star Bank for $463,000. The Company simultaneously
sold the assets related to the Chameleon product line to Fong Brothers
Printing for $138,900, resulting in a cash purchase price of $324,100. The
Company also incurred liabilities of approximately $130,000. The purchase
price was assigned to the assets purchased and liabilities incurred based on
an estimated fair value, which included goodwill of approximately $259,691,
which was recorded as part of the transaction. The fair value of assets
purchased was based on information available at the time of issuing the 1997
financial statements and was subsequently adjusted reducing goodwill to
$89,974. Pro forma results of operations of Graphic Systems Technology, Inc.
are not meaningful. Graphic Systems Technology, Inc. was a third party
service provider in the prepress industry.
Note 10: Subsequent Event
On June 9, 1998 the company announced it had entered into agreements for the
sale of its operating assets and business. A special meeting for the
shareholders was held June 30, 1998. The purpose of the meeting was to obtain
approval from the shareholders of the Plan of Complete Liquidation and
Dissolution of the Company (the "Plan"). The Plan provides, among other
things, for the sale of the Company's Hardware Service Division to Scan-
Optics, Inc. and the sale of the Company's remaining operating assets,
including its EDMS Division, to ACCESS Systems LLC, a company organized and
owned by the Company's principal executive officers. The Company received
cash payments of approximately $2.8 million on June 30, 1998. Additional
consideration might be received uder the terms of the asset purchase agreement
in future periods.
Under the Plan of Liquidation, $1.5 million was distributed to Oce with
respect to its preferred stock and the Company's remaining cash, less certain
reserves, was distributed to shareholders of the Company (other than Oce) in
redemption of their common stock. The initital distribution was approximately
$1.1 million ($.38 per share of common stock). If additional consideration is
received by the Company under such asset purchase agreements and distributed
to the shareholders, the shareholders (other than Oce) may receive additional
amounts.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Directors. Set forth below is certain information regarding
the directors of the Company, which information has been obtained in part from
the records of the Company and in part from the Directors. All Directors have
been elected by the holders of the Company's Common Stock. All Directors are
elected annually.
JAMES M. ANDERSON, age 56. Mr. Anderson has been the President and
Chief Executive Officer of Children's Hospital, Cincinnati, Ohio, since
November 1996. Mr. Anderson was a partner of the law firm of Taft, Stettinius
& Hollister LLP from January 1982 to October 1996. He has been a Director of
the Company since October 1997. He was the Secretary of the Company from
1984 to 1996, and since November 1996. Taft, Stettinius & Hollister LLP has
served as general counsel for Access for many years. Mr. Anderson has been a
director for Cincinnati Stock Exchange from 1978 to present.
NEWTON D. BAKER, age 64. Mr. Baker has been the Executive Vice
President of the Company since October 1986. He has been the Treasurer of the
Company since July 1970 and Assistant Secretary since June 1974. He has been
a Director of the Company since 1988. Mr. Baker was appointed Secretary in
November 1996.
KENT P. FRIEL, age 62. Mr. Friel has been Chairman of the Board of
the Company since April 1986. Since June 1989 Mr. Friel has been President of
Schonberg Associates, Inc., which performs outplacement services for
organizations which may include the Company. He was President and Chief
Executive Officer of the Company from February 1986 through May 1989. He has
been a Director of the Company since 1983.
ROBERT J. KALTHOFF, age 72. Dr. Kalthoff has been Chairman of
Kalthoff International since January 1996, and was Chairman, President and
Treasurer from March 1990 to January 1995. Kalthoff International is an
information service and consulting firm for users and vendors in electronic
image information management industries. He has been a Director of the
Company since 1963.
DENNIS J. SULLIVAN, JR., age 66. Mr. Sullivan is currently an
Executive Counselor for Dan Pinger Public Relations, Inc. Mr. Sullivan served
as Executive Vice President and Chief Financial Officer of Cincinnati Bell,
Inc. from 1987 to February 1993. Mr. Sullivan is a director of Fifth Third
Bancorp, Fifth Third Bank, Associated Insurance, Anthem, Inc., and Kalthoff
International. He has been a Director of the Company since 1990.
SCOTT D. WATKINS, age 49. Mr. Watkins has been President of the
Company and Chief Operating Officer since April 1989, and Chief Executive
Officer since May 1989. Mr. Watkins is a Director of Cincinnati State
Community and Technical College. He has been a Director of the Company since
1989.
JOHN W. WEIL, age 72. Dr. Weil was President of Weil Associates,
Inc., which provides consulting services to industrial and non-profit
organizations from January 1985 to December 1997. He has been a Director of
the Company since 1985.
JAMES H. HARDIE, age 68. Mr. Hardie is, and since 1965 has been, a
partner in the law firm of Reed Smith Shaw & McClay, Pittsburgh, Pennsylvania.
That firm performs and has performed certain legal services from time to time
for Oce and certain of its subsidiaries since 1967. Mr. Hardie is also a
Director of Kiene Diesel Accessories, Inc., Respironics, Inc., and several
U.S. subsidiaries of Oce N.V. Mr. Hardie has been a Director of the Company
since 1987.
(b) Executive Officers. Set forth below is certain information
regarding the Executive Officers of the Company. All Executive Officers are
elected annually by the Board of Directors.
Name Age Position & Business Experience
Scott D. Watkins 49 President and Chief Operating
Officer since April 1989, and Chief
Executive Officer since May 1989.
Newton D. Baker 64 Executive Vice President of the
Company since October 1986; Treasurer
and Assistant Secretary of the
Company since prior to 1982.
Kim Bollinger 40 Vice President of Customer Ser-
vices for the Company since May 1993;
Director of Systems Management from
June 1992 to May 1993, and Manager of
Consulting Services from January 1990
to June 1992.
Marc D. Baines 38 Vice President of Sales for the Company
since August 1995; Vice President,
CimSoft Inc. June 1995 to August 1995;
Sales Director, Cimage Corporation
from March 1990 to May 1995.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth for the fiscal years ended April 30,
1998, 1997 and 1996, certain information regarding cash compensation as well
as certain other compensation paid to or accrued for the services rendered
during such years to each of the Executive Officers of the Company whose total
salary and bonus exceeded $100,000 in all capacities in which they served.
<TABLE>
I. SUMMARY COMPENSATION TABLE
<capation>
Long-Term Compensation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Annual
Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities
Annual Restricted Underlying All
Compen- Stock Options/ LTIP Other
Fiscal Salary(1) Bonus(1) sation Award SARS Payouts Compen.
Name and Principal Position Year ($) ($) ($) ($) (#)(3) ($) ($)(4)
- --------------------------------------------------------------------------------------------------------------------------
Scott D. Watkins 1998 170,000.00 - - - - - 6,717.50
President and Chief Executive 1997 170,000.00 - - - - - 6,717.50
Officer 1996 170,000.00 50,000.00 - - 200,000 - 7,103.88
Newton D. Baker 1998 118,000.00 - - - - - 4,000.00
Exec. Vice President, Treasurer 1997 125,000.00 - - - - - 4,000.00
and Asst. Secretary 1996 115,009.09 25,000.00 - - 100,000 - 4,000.00
Kimberly A.Bollinger 1998 84,200.00 - - - - - -
Vice President 1997 83,600.00 - - - - - -
Customer Services 1996 82,500.00 28,000.00 - - - - -
Marc D. Baines 1998 100,000.00 87,429.88 70,048.30(5) - - - -
Vice President 1997 84,600.00 5,225.70 54,496.27(5) - - - -
Sales 1996 68,726.68 - 71,818.07(5) - 50,000 - -
</TABLE>
(1) These include amounts that would have been payable, but were deferred
pursuant to election of an Executive Officer, such as through the
Company's 401(k) Savings Plan.
(2) No perquisites were provided or other personal benefits paid to a named
Executive Officer in fiscal year 1998, 1997 or 1996 which exceeded the
lesser of $50,000 or 10% of the total annual salary and bonus reported
for such named Executive Officer.
(3) These numbers represent options for shares of Common Stock awarded
pursuant to the Company's stock option plans. See the next table titled,
"Option/SAR Exercises and Year-End Value Table" for more detailed
information on such options.
(4) Represents life insurance benefits.
(5) Represents commissions.
(a) Cash Compensation of Executive Officers
----------------------------------------
Compensation Committee Interlocks and Insider Participation.
-----------------------------------------------------------
The Board has established an Executive Compensation Committee which
considers and makes recommendations to the Board of Directors concerning the
compensation of the executives of the Company. During the fiscal year ended
April 30, 1998, this committee met one time and consisted of Messrs. Friel,
Hardie and Sullivan.
Neither Mr. Hardie nor Mr. Sullivan was an officer or
employee of the Company or any of its subsidiaries in fiscal 1998 or any prior
year. As noted above, Mr. Friel, who is not an employee of the Company, has
been Chairman of the Board of the Company since April 1986 and was President
and Chief Executive Officer of the Company from February 1986 through May
1989.
II. OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information with respect to the named Executive
Officers concerning the exercise of options and/or SAR's during fiscal year 1998
and unexercised options and SAR's held at April 30, 1998.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FY- END
OPTION/SAR VALUE
<CAPTION>
<S> <C> <C> <C> <C>
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares Value at FY-End (#) at FY-End ($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
- ------------------------------------------------------------------------------
Scott D. Watkins 0 0 313,333/66,667 *
Newton D. Baker 0 0 196,667/33,333 *
Kimberly A. Bollinger 0 0 50,000/0 *
Marc D. Baines 0 0 33,333/16,667 *
<FN>
* Access Common Stock is not traded actively; therefore, there was no
established market value at April 30, 1998 and the value of the Options/SARs was not
quantifiable.
</TABLE>
(b) COMPENSATION OF DIRECTORS. Each non-employee director
receives an annual fee of $6,000. Any such person who is the Chairman, any
member of the Audit Committee, or a director who resides outside the
metropolitan Cincinnati area receives an additional $2,000 annually for each
position held. In addition, each such director is reimbursed for expenses
incurred in connection with his attendance at any Board or Committee meeting.
(Mr. Hardie is compensated on the same basis as the other non-employee
directors.) Directors may be granted options under one of the Company's Stock
Option plans; however, no options were granted in fiscal 1998.
Retention Agreements:
On August 24, 1994, the Company entered into Executive Retention
Agreements with each of Mr. Watkins and Mr. Baker. These Agreements provide
if during the six months preceding or the 24 months following a Change in
Control (as defined therein), Mr. Watkins' or Mr. Baker's employment is
terminated by the Company (other than for Cause or Disability) or by such
executive officer for Good Reason, such executive officer shall be entitled to
a severence payment equal to twice his highest annual salary in the last five
years, continued insurance coverage and up to $25,000 for outplacement
services. Change of Control is defined to include a merger or other business
combination after which the existing shareholders of the Company have less
than 50% of the voting power, the sale of all or substantially all of the
assets of the Company, the acquisition by, or commencement of a tender offer
by any person other than Oce or Prudential, of or for 20% of the Company's
voting power, or a change in the majority of the Board of Directors without
approval of the existing directors. Good Reason includes an adverse change in
salary, authority or benefits. The Executive Retention Agreements have been
assigned to and assumed by Systems.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of June 5, 1998, the beneficial
ownership of the Company's Common Stock by (l) each person known to the
Company to own more than 5% of the outstanding shares of Common Stock, (2)
each Director, nominee for Director, and named Executive Officer individually,
and (3) all Directors, nominees for Director, and Officers as a group. The
information in the table has been in part received from the persons listed and
in part taken from the records of the Company.
Beneficial ownership of Common Stock of the Company has been
determined for this purpose in accordance with Rule 13d-3 of the Securities
and Exchange Commission ("SEC"), under which a person is deemed to be the
beneficial owner of Common Stock if he has or shares voting power or
investment power in respect of such Common Stock or has the right to acquire
such ownership within 60 days. Accordingly, the amounts shown on the table
represent beneficial ownership for the purposes of compliance with SEC
reporting requirements, and do not necessarily bear on the economic incidents
of ownership of Common Stock.
Amount & Nature
Name and, with of Beneficial
Respect to 5% Ownership
Ownership, Percent of
Address Direct Indirect Common Stock
_______________ _______ ________ _____________
Oce N.V. (1) 100 2,180,854 44.82%
St. Urbanusweg 43
5900 MA Venlo
The Netherlands
Kent P. Friel, 2,180,854 -- 44.82%
Dennis J. Sullivan, Jr.,
John W. Weil, and
Scott D. Watkins as
Voting Trustees (1)(2)
James M. Anderson 23,700 -- .49%
Newton D. Baker (2)(3) 987,437 -- 19.51%
Kimberly A. Bollinger 52,000 -- 1.06%
Marc D. Baines 33,333 -- .68%
Kent P. Friel (4) 10,742 -- .22%
James H. Hardie (5) -- -- --
Robert J. Kalthoff 133,564 58,181 3.94%
Dennis J.Sullivan,Jr. (4) 20,100 -- .41%
Scott D. Watkins (2)(3)(4) 1,121,543 -- 21.66%
John W. Weil (4) 15,000 -- .31%
All directors and 2,397,419 58,181 44.98%
officers as a group
(11 persons)(2)(3)(4)
(1) On April 27, 1992, Oce entered into the Voting Trust Agreement
appointing Kent P. Friel, Dennis J. Sullivan, Jr., John W. Weil, and Scott D.
Watkins (the "Voting Trustees") as voting trustees for 2,180,854 shares.
The Voting Trustees vote on matters relating to the election of directors,
including setting the number of directors, in their discretion, except that
the Voting Trustees must vote for up to two nominees for director designated
by Oce in its discretion. Oce retains the right to obtain the Voting
Trustees' proxy as to the voting of such shares with respect to all issues not
related to the election of directors. (See "Certain Transactions-Agreements
with Oce".) Oce retains the right to dispose of such shares, subject to
certain restrictions in the Note Purchase Agreement. As a result of these
arrangements, Oce and the Voting Trustees share beneficial ownership of such
shares.
The Voting Trust created under the Voting Trust Agreement has a
term of 10 years, and Oce has agreed to renew it for an additional term of 10
years. The Voting Trust will terminate upon the sale of the shares of Common
Stock subject thereto, but only with respect to those so sold and subject to
the provison that Oce may not sell more than 50% of its shares without consent
of the Company, the closing of any underwritten public offering of Common
Stock as a result of which not less than $10 million in aggregate sales price
to the public of Common Stock shall have been sold in such offering plus any
previously underwritten public offering or the acquisition by any person of
more shares of Common Stock than are held by Oce. Oce can also terminate the
Voting Trust by notice given at any time after October 3, 1995, but if Oce
does so, it may be required to make a tender offer on specified terms for all
shares of Common Stock following the fiscal year in which the anniversary of
the giving of notice occurs.
Mr. Watkins is President and Chief Executive Officer of the
Company. Mr. Friel is Chairman of the Board of Directors of the Company but
is not an employee of the Company. Messrs. Sullivan and Weil are also non-
employee directors of the Company. The Voting Trustees have no current
intention to change the composition of the Board of Directors of the Company.
Except as set forth above, there are no arrangements or
understandings among Oce and the Voting Trustees with respect to the election
of directors or other matters.
(2) The address of the Voting Trustees, Mr. Baker and Mr. Watkins is:
Access Corporation, 4350 Glendale-Milford Road, Suite 250, Cincinnati, Ohio
45242.
(3) Includes 593,333 shares which all Directors and Officers as a
group have the right to acquire upon the exercise of immediately exercisable
stock options, including 313,333 exercisable by Mr. Watkins, 196,667
exercisable by Mr. Baker, 50,000 exercisable by Ms. Bollinger, and 33,333
exercisable by Mr. Baines.
(4) Does not include shares held by the Voting Trustees in their
capacity as such.
(5) Does not include shares held by Oce.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) At April 30, 1998, Oce held 10,000 shares of 7% Class One
Preferred Stock 2,500 shares of 9% Class One Preferred Stock, and 2,500
shares of variable rate Class One Preferred Stock.
Annual dividends on the Preferred Stock for any fiscal year are
cumulative to the extent of 50% of the Company's net after-tax earnings, as
defined, for such year. At April 30, 1997, no Preferred Stock dividends were
accrued. Annually, beginning in 1995, the Company is required to redeem the
Preferred Stock at a price of $100 per share plus accumulated dividends in an
amount equal to a specified portion of after-tax earnings, as defined. Unless
dividends on the Preferred Stock are current, the Company may not declare a
dividend on, or repurchase any of, the Common Stock. Under the Note Purchase
Agreement, Oce agreed to limitations on the voting and transfer of its stock
(including the transfer of such stock to a voting trust, the trustees of which
are four of the Company's directors) and Oce was released from its obligation
under certain circumstances to make a tender offer for the Company's common
stock. As of April 30, 1998, the Company had authorized and issued a total of
15,000 shares of Class One Preferred Stock. The Company was not required to
and did not redeem any Class One Preferred Stock in fiscal 1998.
Pursuant to the Note Purchase Agreement, upon the conversion of
the Class B Stock into Common Stock on April 27, 1992, Oce, the Company and
four directors elected by the holders of Common Stock, entered into the Voting
Trust Agreement. 2,180,854 shares of Common Stock held by Oce were
transferred to Kent P. Friel, Scott D. Watkins, John W. Weil, and Dennis J.
Sullivan, Jr., as Voting Trustees, by Oce. This Agreement is irrevocable for
a period of ten years, except for certain circumstances. (See Item 12.)
Pursuant to the Company's Plan of Liquidation and Complete
Dissolution, all of Oce's equity interest in the Company has been redeemed in
exchange for a payment of $1,500,000 plus accrued dividends, if any.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) (2) Exhibits: Refer to EXHIBIT INDEX on page X-l of
this Annual Report on Form 10-K.
(b) Reports on Form 8-K: None.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(D)
NONE
SIGNATURES
Pursuant to the requirements of the Section 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, there unto duly authorized, as of the 24th
day of July, 1998.
ACCESS CORPORATION
SCOTT D. WATKINS
_________________________________
Scott D. Watkins
President & Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities indicated as of the 24th day of
July, 1998.
SCOTT D. WATKINS President & Chief Executive Officer
____________________________
Scott D. Watkins
NEWTON D. BAKER Executive Vice President
____________________________ and Treasurer (Principal
Financial and Accounting
Newton D. Baker Officer), Director
___________________ Chairman of the Board
Kent P. Friel
/s/ James H. Hardie* Director
____________________
James H. Hardie
/s/ Robert J. Kalthoff* Director
____________________
Robert J. Kalthoff
/s/ John W. Weil* Director
____________________
John W. Weil
/s/ Dennis J. Sullivan, Jr.* Director
____________________
Dennis J. Sullivan, Jr.
* Pursuant to Power of Attorney
NEWTON D. BAKER
_____________________
Newton D. Baker
Attorney-In-Fact
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<CASH> 1033091
<SECURITIES> 0
<RECEIVABLES> 2234927
<ALLOWANCES> 18438
<INVENTORY> 140951
<CURRENT-ASSETS> 3511713
<PP&E> 1987892
<DEPRECIATION> 1804559
<TOTAL-ASSETS> 4410089
<CURRENT-LIABILITIES> 1265933
<BONDS> 0
1500000
0
<COMMON> 488183
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4410089
<SALES> 8873887
<TOTAL-REVENUES> 8873887
<CGS> 6864579
<TOTAL-COSTS> 2865833
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 891
<INCOME-PRETAX> (811986)
<INCOME-TAX> 0
<INCOME-CONTINUING> (811986)
<DISCONTINUED> (811986)
<EXTRAORDINARY> (811986)
<CHANGES> 0
<NET-INCOME> (811986)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> (.17)
</TABLE>
<TABLE>
ACCESS CORPORATION
CALCULATION OF NET EARNINGS (LOSS) PER COMMON SHARE
<CAPTION>
YEAR ENDED APRIL 30
<S> <C> <C> <C> <C> <C>
__________________________________________________________
1994 1995 1996 1997 1998
__________________________________________________________
Net earnings (loss) applicable to
Basic and Dilutive Common Shares
Net earnings (loss) ($615,239) $129,370 $205,021 ($1,050,732) ($811,985)
Preferred Dividend ($ 64,685) ($102,510)
Net earnings (loss) applicable to
Basic and Dilutive Common Shares
After Preferred Dividend ($615,239) $ 64,685 $102,511 ($1,050,732) ($811,985)
_________ _______ _______ __________ _________
Calculation of Basic and Dilutive
net earnings (loss) per Common Share:
Average number of Common Shares
outstanding; 4,865,559 4,865,559 4,865,559 4,865,559 4,865,559
_________ _________ __________ _________ __________
Net earnings (loss) per Basic
And Dilutive Common Shares ( $0.13) $0.01 $0.02 ($0.22) ($0.17)
</TABLE>
Exhibit 24(i)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, officer
and/or director of ACCESS Corporation, an Ohio Corporation, which is
about to file with the Securities and Exchange Commission, Washington,
DC, under the provisions of the Securities Exchange Act of 1934, as
amended, a 1998 Annual Report, hereby constitutes Mr. Newton D. Baker,
his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign such 1998 Annual Report and
any or all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact
and agent, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
16th day of July, 1998.
JAMES H. HARDIE
____________________
James H. Hardie
Exhibit 24(ii)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, officer
and/or director of ACCESS Corporation, an Ohio Corporation, which is
about to file with the Securities and Exchange Commission, Washington,
DC, under the provisions of the Securities Exchange Act of 1934, as
amended, a 1998 Annual Report, hereby constitutes Mr. Newton D. Baker,
his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign such 1998 Annual Report and
any or all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact
and agent, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
16 day of July, 1998.
ROBERT J. KALTHOFF
_____________________
Robert J. Kalthoff
Exhibit 24(iii)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, officer
and/or director of ACCESS Corporation, an Ohio Corporation, which is
about to file with the Securities and Exchange Commission, Washington,
DC, under the provisions of the Securities Exchange Act of 1934, as
amended, a 1998 Annual Report, hereby constitutes Mr. Newton D. Baker,
his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign such 1998 Annual Report and
any or all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact
and agent, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
16 th day of July, 1998.
JOHN W. WEIL
______________
John W. Weil
Exhibit 24(iv)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, officer
and/or director of ACCESS Corporation, an Ohio Corporation, which is
about to file with the Securities and Exchange Commission, Washington,
DC, under the provisions of the Securities Exchange Act of 1934, as
amended, a 1998 Annual Report, hereby constitutes Mr. Newton D. Baker,
his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign such 1998 Annual Report and
any or all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact
and agent, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
16th day of July, 1998.
DENNIS P. SULLIVAN
____________________
Dennis P. Sullivan
Exhibit 24(v)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, officer
and/or director of ACCESS Corporation, an Ohio Corporation, which is
about to file with the Securities and Exchange Commission, Washington,
DC, under the provisions of the Securities Exchange Act of 1934, as
amended, a 1998 Annual Report, hereby constitutes Mr. Newton D. Baker,
his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign such 1998 Annual Report and
any or all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact
and agent, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
16th day of July, 1998.
JAMES M. ANDERSON
____________________
James M. Anderson
INDEPENDENT AUTITORS' CONSENT
We consent to the incorporation by reference in Registration Statements
Nos. 2-67785, 2-91016, 33-00158, 33-48194 and 33-48195 of ACCESS
Corporation on Forms S-8 of our report dated June 9, 1998 (June 30,
1998 as to Note 10), appearing in this Annual Report on Form 10-K of
ACCESS Corporation for the year ended April 30, 1998.
Deloitte & Touche LLP
Cincinnati, Ohio
July 24, 1998
<TABLE>
ACCESS CORPORATION
SCHEDULE II- Valuation and Qualifiying Accounts
<CAPTION>
<S> <C> <C> <C> <C>
Column A Column B Column C Column D Column E
Balance Charged to Charged to Balance
Beginning Costs and Other End of
Description of Period Expenses Accounts Period
- ------------------------------------------------------------------------
Year Ended
April 30, 1998
Deferred Income
Tax Benefit
Valuation
Allowance ($2,949,018) 163,300 ($3,112,318)
Allowance for
Doubtful Accounts $12,000 ($6,438) $18,438
- ---------------------------------------------------------------------------
Year Ended
April 30, 1997
Deferred Income
Tax Benefit
Valuation
Allowance ($2,539,700) ($3,182) $412,500 ($2,949,018)
Allowance for
Doubtful Accounts $189,685 (1) ($12,000) $189,685 $12,000
- --------------------------------------------------------------------------
Year Ended
April 30, 1996
Deferred Income
Tax Benefit
Valuation
Allowance ($2,539,700) $0 $0 ($2,539,700)
Allowance for
Doubtful Accounts $18,100 (1) ($39,000)(2) ($132,585) $189,685
<FN>
(1) Net change in reserve.
(2) Net increase as a result of acquisition in FY 96
</TABLE>
EXHIBIT INDEX
(3) Articles of Incorporation and by-laws.
(i)(a) Articles of Incorporation, as amended, of the Company,
filed previously with the Company's Annual Report on Form 10-K for
year ended April 30, 1989, is incorporated herein by reference.
(i)(b) Amendment to Article FOURTH of the Articles of
Incorporation, as amended, of the Company, filed previously with
the Company's Quarterly Report on Form 10-Q for quarter ended
October 31, 1992, is incorporated herein by reference.
(ii) Amended and Restated Code of Regulations of the Company,
filed previously with the Company's Annual Report on Form 10-K for
year ended April 30, 1990 is incorporated herein by reference.
(4) Instruments defining the rights of security holders, including
indentures.
(i) Those documents listed in Item (3) above.
(ii) Stock Purchase Agreement dated as of February 28, 1989,
between Oce-van der Grinten, N.V. and the Company, filed
previously with the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1989, is incorporated herein by
reference.
(iii) Stock Purchase Agreement, dated as of April 21, 1987,
between Oce-van der Grinten, N.V. and the Company, filed
previously with the Company's Annual Report on Form 10-K for the
year ended April 30, 1987, is incorporated herein by reference.
(iv) Registration Rights Agreement, dated as of April 24, 1987,
by and among the Company, The Prudential Insurance Company of
America, Oce-van der Grinten, N.V., Lazard Brothers & Company
Limited, Coutts & Company Corporate Trust, Kent P. Friel, David
McL. Hillman, Robert J.
Kalthoff, Philip M. Meyers, Jr., Paul H. Ornstein, George
Rieveschl, Jr., Charles Westheimer and Robert Westheimer, filed
previously with the Company's Annual Report on Form 10-K for the
year ended April 30, 1987, is incorporated herein by reference.
X-1
(v) Note Purchase Agreement, dated October 28, 1991, between Oce
van-der Grinten and the Company, filed previously with the
Company's Quarterly Report on Form 10-Q for the quarter ended
January 31, 1992, is incorporated herein by reference.
(vi) Amendment to Note Purchase Agreement, dated August 26, 1992,
between Oce van-der Grinten N.V. and the Company, filed previously
with the Company's Quarterly Report on Form 10-Q for the quarter
ended October 31, 1992, is incorporated herein by reference.
(9) Voting Trust Agreement.
(i) Voting Trust Agreement, dated April 27, 1992, between Oce
van-der Grinten, Kent P. Friel, Dennis J. Sullivan, Jr., John W.
Weil, Scott D. Watkins, The Fifth Third Bank and the Company filed
previously with the Company's current report on Form 8-K, dated
April 27, 1992, and filed May 5, 1992, is incorporated by
reference.
(10) Material Contracts.
(i) Executive Compensation Plans and Arrangements.
(a) 1979 Stock Option Plan (As Amended and Restated in
1988), filed previously with the Company's Annual Report on
Form 10-K for the year ended April 30, 1988, is incorporated
herein by reference.
(b) 1983 Stock Option Plan (As Amended and Restated in
1990 and further amended in 1991 and 1993) filed previously
with the Company's Quarterly Report on Form 10-Q for the
quarter ended April 30, 1993, is incorporated herein by
reference.
(c) 1985 Incentive Stock Option Plan (As Amended and
Restated in 1988 and 1993) filed previously with the
Company's Annual Report on Form 10-K for the year ended
April 30, 1993, is incorporated herein by reference.
(d) 1991 Stock Option Plan (as Amended and Restated in
1993), filed previously with the Company's Quarterly Report
on Form 10-Q for the quarter ended April 30, 1993, is
incorporated herein by reference.
X-2
(e) 1993 Stock Incentive Plan, filed previously with the
Company's Annual Report on Form 10-K for the year
ended April
April 30, 1993, is incorporated herein by reference.
(ii) Lease, dated December 23, 1993, between the Company and
Phoenix Home Life Mutual Insurance, together with the First
Amendment thereto dated February 23, 1994, filed previously with
the Company's Annual Report on Form 10-K for the year ended April
30, 1994, is incorporated herein by reference.
(iii) Loan Agreement, dated April 7, 1994, between Fifth Third
Bank and the Company, filed previously with the Company's Annual
Report on Form 10-K for the year ended April 30, 1994, is
incorporated herein by reference.
(iv) Retention Agreement between the Company and Scott D.
Watkins,
President, filed previously with the Company's Quarterly Report on
Form 10-Q for the quarter ended July 31, 1994, is incorporated
herein by reference.
(v) Retention Agreement between the Company and Newton D. Baker,
Executive Vice President, filed previously with the Company's
Quarterly Report on Form 10-Q for the quarter ended July 31, 1994,
is incorporated herein by reference.
(vi) Lease, dated June 13, 1997, between the Company and Duke
Realty Limited Partnership, filed previously with the Company's
Annual Report on Form 10-K for the year ended April 30, 1997.
(11) Statement recomputation of per share earnings. The calculation of
net earnings (loss) per common share is attached hereto as Exhibit
11.
(23) Consents of experts and counsel. The consent of Deloitte &
Touche, independent certified public accountants, is attached
hereto as Exhibit 23.
X-3
(24) Powers of Attorney.
(i) A manually signed copy of a Power of Attorney for James H.
Hardie is attached hereto as Exhibit 24(i).
(ii) A manually signed copy of a Power of Attorney for Robert J.
Kalthoff is attached hereto as Exhibit 24(ii).
(iii) A manually signed copy of a Power of Attorney for John W.
Weil is attached hereto as Exhibit 24(iii).
(iv) A manually signed copy of a Power of Attorney for Dennis P.
Sullivan is attached hereto as Exhibit 24(iv).
(v) A manually signed copy of a Power of Attorney for James M.
Anderson is attached hereto as Exhibit 24(v).
(27) The following financial statement schedules for ACCESS Corporation
are filed herewith:
(i) Independent Auditors' Report on Schedules;
(ii) Schedule II-Valuation and qualifying accounts
Ex-In X-4
