SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For The Quarter Ended December 31, 1999 Commission File No.0-18224
TotalAxcess.com, Inc. (formerly, Group V Corp.)
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(Exact name of registrant as specified in its charter)
Delaware 95-4176781
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(State or other jurisdiction of (I.R.S.Employer Identification Number)
incorporation or organization)
201 Clay Street, Oakland, California 94103
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(Address of principal executive offices) (Zip Code)
(510) 286-8700
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(Registrant's telephone number, including area code)
N/A N/A
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(Former Address, if changed (Former Zip Code, if changed
since last report) since last report)
N/A
---
(Former telephone number, if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for 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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of capital stock, as of the latest practicable date.
Preferred Stock $.01 par value;170,000 shares outstanding as of December 31,1999
Preferred Stock Series B $2.00 par value; 35,193 shares
outstanding as of December 31, 1999
Common Stock $.01 par value; 10,646,213 shares as of December 31,1999
<PAGE>
TOTALAXCESS.COM, INC.
(formerly, GROUP V CORPORATION)
INDEX
PAGE
PART I
Item 1. Financial Statements
Consolidated Condensed Balance Sheet as of December 31,1999
(unaudited)................................................... 1
Consolidated Condensed Statements of Operations for the Three and
Six Months Ended
December 31, 1999 and 1998 (unaudited)........................ 2
Consolidated Condensed Statements of Cash Flows for the
Six Months Ended December 31, 1999 and 1998 (unaudited)....... 3
Notes to Consolidated Condensed Financial Statements............. 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................ 8
PART II
Item 1. Legal Proceedings................................................. 10
Item 2. Changes in Securities............................................. 11
Item 3. Defaults Upon Senior Securities................................... 11
Item 4. Submission of Matters to a Vote of Security Holders............... 11
Item 5. Other Information................................................. 11
Item 6. Exhibits and Reports on Form 8-K.................................. 12
Signatures................................................................ 13
<PAGE>
TOTALAXCESS.COM, INC.
(formerly, GROUP V CORPORATION)
Consolidated Condensed Balance Sheet
As of December 31, 1999 (Unaudited)
December 31,
1999
(Restated-Note 2)
Current Assets:
Cash and cash equivalents ..................................$ 262,526
Marketable securities ...................................... 30,176
Accounts receivable......................................... 396,624
Inventories................................................. 31,740
Prepaid expenses ........................................... 91,167
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Total Current Assets ............................ 812,233
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Fixed assets:
Furniture and equipment .................................... 174,065
Less accumulated depreciation ........................ (72,156)
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Total Fixed Assets, net .................................... 101,909
Other assets ..................................................... 7,200
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TOTAL ASSETS......................................................$ 921,342
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Current Liabilities:
Current portion of capital lease obligations ...............$ 14,817
Accounts payable............................................ 1,771,428
Accrued expenses............................................ 813,761
Notes payable............................................... 1,065,717
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Total Current Liabilities ........................... 3,665,723
Commitments and Contingencies
Stockholders' Equity (Deficit):
Preferred stock - par value $.01; authorized 1,000,000 shares;
14% cumulative convertible; issued and outstanding 170,000
shares (aggregate liquidation of $170,000)...................... 1,700
Preferred Stock Series B - par value $2.00; authorized,
issued and outstanding 35,193 shares (aggregate liquidation
of $300,000).................................................... 70,386
Common stock - par value $.15; authorized 22,200,000 shares;
10,646,213 shares issued and outstanding......................... 1,508,683
Additional paid-in capital........................................ 25,801,995
Common stock receivable............................................ (250,000)
Accumulated other comprehensive loss............................... (100,145)
Accumulated deficit...............................................(29,777,000)
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Total Stockholders' Equity (Deficit)........................... (2,744,381)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)..............$ 921,342
See accompanying notes to these consolidated condensed financial statements.
<PAGE>
TOTALAXCESS.COM, INC.
(formerly, GROUP V CORPORATION)
Consolidated Condensed Statements of Operations
For the Three and Six Month Period Ended December 31, 1999 and 1998
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31
1999 1998 1999 1998
(Restated- (Restated-
Note 2) Note 2)
Revenues $(1,753,930)$ 238,855 $ 1,992,464 $ 511,431
Costs and expenses:
Operating costs (2,347,739) 88,543 3,259,597 375,568
General and
administrative 489,914 370,062 1,077,371 1,045,122
Professional services 129,500 28,574 181,819 161,317
Depreciation and
amortization 8,175 29,815 16,350 59,630
Interest expense, net 415,602 24,000 415,602 48,000
Stock based
compensation 3,352,077 - 3,679,197 -
Total costs and
expenses $ (2,047,529) $ 540,994 $8,629,936 $ 1,689,637
Net (loss) before
extraordinary
items $(3,801,459) $(302,139) $ (6,637,472) $(1,178,206)
Extraordinary items 769,394 - 769,394 -
Net (loss) $(3,032,065)$ (302,139) $(5,868,078) $ (1,178,206)
Net (loss) applicable
to common stock $(3,038,015)$ (308,089) $(5,874,028) $ (1,184,156)
Basic and diluted net
(loss)per common share $ (0.34)$ (0.09) $ (0.67) $ (0.35)
Weighted average common
shares outstanding 9,052,595 3,325,992 8,705,972 3,325,992
See accompanying notes to these consolidated condensed financial statements.
<PAGE>
TOTALAXCESS.COM, INC.
(formerly, GROUP V CORPORATION)
Consolidated Condensed Statements of Cash Flows
For the Six Month Period Ended December 31, 1999 and 1998 (Unaudited)
Six Months Ended
December 31,
1999 1998
(Restated-
Note 2)
Operating activities:
Net loss $(5,868,078)$(511,431)
Adjustments to reconcile net loss to net cash
used by operating activities:
Stock based compensation 3,679,197 -
Extraordinary items (769,394) -
Depreciation and amortization 16,350 59,630
Increase (decrease) from changes in:
Marketable securities 39,301 117,639
Accounts receivable 134,420 (13,374)
Inventories (31,979) (3,272)
Prepaid expenses (29,374) (9,620)
Other assets - -
Accounts payable and accrued expenses 467,765 (60,821)
Net cash used by operating activities (2,361,792) (421,249)
Investing activities:
Purchase of equipment (36,960) (104,943)
Net cash used by investing activities (36,960) (104,943)
Financing activities:
Proceeds from issuance of stock 2,088,327 449
Net cash provided by financing activities 2,088,327 449
Net (decrease) in cash (310,425) (525,743)
Cash and cash equivalents, beginning of period 572,951 533,538
Cash and cash equivalents, end of period $ 262,526 $ 7,795
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Income taxes $ - $ -
Interest $ - $ -
See accompanying notes to these consolidated condensed financial statements.
<PAGE>
NOTE 1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Description of Business
TotalAxcess.com, Inc. (formerly, Group V Corporation) (the "Company") was
originally incorporated in the State of Delaware in 1987 as NuOasis Gaming, Inc.
During the fiscal year ended June 30, 1997, and through May 1999, the Company's
name was Group V Corporation. During the year ended June 30, 1998, the Company
entered the one-plus long distance and pre-paid telecommunications industry as
its main focus of operations.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
TotalAxcess.com, Inc., National Pools Corporation ("NPC"), Lottery Publications
Corporation, Academy Network Services, Inc., and Premier Plus, Inc., and
Signature Communications Network, Inc.
As used herein, the above is collectively referred to as the "Company,"
unless the context indicates otherwise. All intercompany accounts and
transactions have been eliminated in consolidation.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for the
interim financial information and the instructions to Form 10-QSB. Accordingly,
they do not include all the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, the interim financial statements include all adjustments
considered necessary for a fair presentation of the Company's financial
position, results of operations and cash flows for the six months ended December
31, 1999. These statements are not necessarily indicative of the results to be
expected for the full fiscal year. These statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's annual report on Form 10-KSB for the fiscal year ended June 30, 1999
as filed with the U.S. Securities and Exchange Commission.
Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
<PAGE>
NOTE 1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
The Company's telecommunication services provide personal identification
numbers ("PIN") numbers for its customers, who are primarily distributors of
pre-paid phone cards. The PIN numbers are pre-numbered code combinations that
are imprinted on these cards by the customers/distributors. This allows for the
proper routing and time recording of minutes used on the calling cards. The
Company contracts with a provider of switching equipment that processes the
phone card calls when the end consumer ultimately uses them or utilizes its own
switching equipment in a similar manner. When cards are ready for distribution
to end consumers, customers/distributors authorize the Company to activate a
specific sequence of PIN's. The Company then notifies its switching equipment
contractor or switch room personnel to activate the related PIN's.
The Company recognizes revenue when the risks and rewards of the activated
PIN's are transferred to the customer, and when no right of return exists.
Typically, this occurs upon the first use of the related pre-paid card. However,
it may occur earlier when the Company has a contractual right to bill the
customer within sixty days after PIN activation regardless of when the related
card is used.
Cash Equivalents
Cash equivalents are highly liquid investments with maturities of three
months or less when acquired.
Fair Value of Marketable Securities
As of December 31, 1999, marketable equity securities consist of 650,292
shares of common stock of NuOasis Resorts, Inc., a stockholder. The Company has
classified these equity securities as available-for-sale and, accordingly, they
are presented in the accompanying consolidated balance sheet at their estimated
fair market value based on quoted market prices as of December 31, 1999.
Additionally, unrealized gains and losses on these securities are presented as a
component of other comprehensive loss in the accompanying consolidated
statements of operations and comprehensive loss.
Equipment
Equipment is recorded at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the related assets,
which are five to ten years. Maintenance and repairs are charged to operations
as incurred.
Income Taxes
The Company uses the "liability method" of accounting for income taxes.
Accordingly, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities, using enacted tax rates in effect for the year in which the
differences are expected to reverse. Current income taxes are based on the
year's taxable income for federal and state income tax reporting purposes.
<PAGE>
NOTE 1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reverse Stock Split
In February 2000, the Company effected a 1-for-15 reverse split of its
common stock. Accordingly, the authorized number of shares was reduced from
333,000,000 to 22,200,000. Related common stock share and per share amounts have
been retroactively adjusted in the accompanying consolidated financial
statements for this reverse stock split.
Accounting For Employee Stock Options
In October 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123, "Accounting for Stock-Based Compensation." In conformity with the
provisions of SFAS No. 123, the Company has determined that it will not change
to the fair value method prescribed by SFAS No. 123 and will continue to follow
Accounting Principles Board Opinion No. 25 for measurement and recognition of
employee stock-based transactions. There were no stock options granted to
employees during the year ended June 30, 1999, and during the six months ended
December 31, 1999.
Issuance of Stock for Services
Shares of the Company's common stock issued for services are recorded in
accordance with SFAS No. 123 at the fair market value of the stock issued or the
fair market value of the services provided whichever value is more reliably
measurable.
Loss Per Common Share
Loss per common share is computed based on the net loss for each period, as
adjusted for dividends required on preferred stock ($23,800 per annum) and the
weighted average number of common shares outstanding. Common stock equivalents
were not considered in the loss per share calculations, as the effect would have
been anti-dilutive.
NOTE 2. RESTATEMENT OF AMOUNTS PREVIOUSLY REPORTED
During the course of the audit of the financial statements for the year
ended June 30, 2000, there were several transactions identified which required
adjustment to the consolidated financial statements. Certain of these
adjustments had a significant impact on previously reported quarterly financial
statements. Accordingly, the Company's quarterly consolidated financial
statements have been restated. The significant impact of such adjustments on the
Company's consolidated financial statements as of December 31, 1999, and for the
six months then ended are summarized as follows:
Reduction in accounts receivable and revenues $4,725,548
Reduction in accounts payable and accrued expenses 6,771,304
Increase in interest expenses 411,600
Increase in stock based compensation 3,352,077
Increase in extraordinary gains 769,394
Increase in common stock and APIC 5,328,663
Increase in common stock receivable 250,000
Reduction in capital lease obligations 655,768
NOTE 3. SIGNIFICANT QUARTERLY TRANSACTIONS
Extraordinary Items
During the year ended June 30, 1999, management determined that the
telephone switching and platform assets acquired from Ark-Tel, Inc. were not
year 2000 compliant and that significant equipment upgrades were required to
prepare the equipment to operate in the year 2000 and beyond. As a result, the
Company ceased payment of required rents, which resulted in an event of default
per the related equipment lease terms.
In December 1999, the lessor repossessed the related assets, and the
Company recognized an extraordinary gain of $769,394 related to the
extinguishment of the debt under the capital lease agreement. Such amount
represented all amounts due to the related lessor on the date of repossession.
Transactions with the Chief Executive Officer and Chairman
In December 1999, the Company's Chief Executive Officer and Chairman
converted $383,463 of accrued salary owed to him pursuant to his employment
agreement, and $76,837 of accrued expenses owed to his wife, into 666,667 shares
of the Company's restricted common stock. In connection with this conversion,
the Company recognized compensation expenses of $1,134,000. Such expenses were
determined by multiplying the number of shares issued to the Chief Executive
Officer and Chairman by the closing price of the Company's common stock on the
date of conversion, less a 15% discount factor based on the restricted nature of
the shares issued.
In December 1999, the Company's Chief Executive Officer and Chairman
deposited his personal shares of the Company's common stock as security for a
service agreement with a vendor. Additionally, the Chief Executive Officer and
Chairman executed a personal guarantee of the Company's obligations under the
related service agreement. As a result, the Company's Chief Executive Officer
and Chairman received 333,333 shares of the Company's restricted common stock,
and the Company recognized related compensation expenses of $1,100,000. Such
expenses were determined by multiplying the number of shares issued to the Chief
Executive Officer and Chairman by the closing price of the Company's common
stock on the date the issuance was approved by the Company's board of directors,
less a 15% discount factor based on the restricted nature of the shares issued.
Stock Transaction with Director's Wife
In December 1999, the wife of a director of the Company converted accrued
compensation and expenses aggregating $284,586 into 379,448 shares of the
Company's restricted common stock. In connection with this conversion, the
Company recognized a related stock compensation charge aggregating $863,347
during the year ended June 30, 2000. Such charge was determined as the amount by
which the estimated fair market value of the restricted common stock issued
exceeded the aggregate carrying amount of accrued compensation and expenses.
In December 1999, the Company and a note holder agreed to convert $35,000
of notes payable, and all accrued interest thereon, into an aggregate of 106,911
shares of the Company's restricted common stock. In connection with this note
payable conversion, the Company recognized a related effective interest charge
in the aggregate amount of $369,124. Such charge was determined as the amount by
which the estimated fair market value of the restricted common stock issued
exceeded the outstanding amount of the notes payable and accrued interest.
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Registrant has incurred net losses and experienced negative cash flows
from operating activities since its inception in 1987. The Registrant had cash
and cash equivalents of $262,526 as of December 31, 1999, and a working capital
deficit of ($2,853,490) as of December 31, 1999.
This Quarterly Report on Form 10-QSB for the quarter ended December 31,
1999 (the "Form 10-QSB") contains certain "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Forward-looking statements are statements other
than historical information or statements of current condition and relate to
future events or the future financial performance of the Company. Some
forward-looking statements may be identified by use of such terms as "expects,"
"anticipates," "intends," "estimates," "believes" and words of similar import.
These forward-looking statements relate to plans, objectives and expectations
for future operations. In light of the risks and uncertainties inherent in all
such projected operation matters, the inclusion of forward-looking statements in
this Form 10-QSB should not be regarded as a representation by the Company or
any other person that the objectives or plans of the Company will be achieved or
that any of the Company's operating expectations will be realized. Revenues and
results of operations are difficult to forecast and could differ materially from
those projected in the forward-looking statements contained in this Form 10-QSB.
The Company expects to increase revenues and cash flow through the
wholesale distribution and sale of pre-paid calling cards by expanding its
in-house sales force and adding more independent distributors to its network.
The Company's One Plus long distance service, which the Company is revamping to
provide more competitive rates, and additional services will be included as a
product for this sales force to market.
RESULTS OF OPERATIONS
Comparison of the Three Months Ended December 31, 1999 (restated-Note 2)and 1998
During the quarter ended December 31, 1999, the Company recorded revenues
of ($1,753,930). During the quarter, the Company continued to receive PIN
activation requests from its customers, and activated PIN's continued to be used
by end customers. However, during the quarter, the Company experienced
significant service issues at two of the Company's debit platform providers.
These issues caused connectivity problems with the Company's "Gateway
International" and "America Calling the World" prepaid phone cards. As a result,
the Company and the related customer, Blackstone Calling Cards, Inc., mutually
decided to discontinue marketing the related products for a period of at least
one year. This decision resulted in the Company reversing previously recorded
revenues and accounts receivables in the aggregate amount of $4.7 million, and
reversing previously recorded operating costs and accrued expenses in the
aggregate amount of $6.7 million during the quarter ended December 31, 1999.
Total general and administrative expenses increased by $119,852 or 32%
during the quarter ended December 31, 1999, compared to the same period last
fiscal year, as the Company expanded its operations, staffing and facilities to
support its continuing growth. Professional services increased by $100,926
during the quarter ended December 31, 1999, compared to the same period last
fiscal year, as the Company retained the services of telecommunication business
and engineering consultants that were not retained in the prior year.
The Company also recognized stock compensation charges aggregating
$3,352,077 during the quarter ended December 31, 1999. Such amounts were
recorded when the Company issued shares of its restricted common stock, and
received consideration in an amount less than the estimated fair market value of
the common stock issued. Stock based compensation charges were comprised of the
following during the quarter ended December 31, 1999: $1,134,000 related to an
officer's conversion of accrued salaries and expenses into restricted common
stock, $863,347 related to a consultant's conversion of accrued fees and
expenses into restricted common stock, $1,100,000 related to shares of
restricted common stock issued to an officer for the pledging of his personal
assets and personal guarantee, and $254,730 related to the sale of restricted
common stock.
Additionally, the Company recognized an effective interest charge
aggregating $369,124 upon the conversion of $35,000 of notes payable, and
related accrued interest, into shares of the Company's restricted common stock.
The effective interest charge is equal to the amount by which the estimated fair
market value of the restricted common stock issued upon conversion exceeded the
carrying amount of the related notes payable and accrued interest.
In December 1999, the Company recognized an extraordinary gain of $769,394
related to the extinguishment of the debt under capital lease agreements. Such
amount represented all amounts due to the related lessor on the date that
certain assets leased by the Company was repossessed by the lessor.
As a result of the above, the Company incurred a net loss of $3,032,065
during the quarter ended December 31, 1999 versus a net loss of $302,139 during
the quarter ended December 31, 1998.
The Company's revenues increased from $511,431 to $1,992,464 between the
six months ended December 31, 1998 and 1999, respectively. This represents an
increase of 290% in revenues. This increase occurred primarily as the result of
on-going and new telecommunication services contracts secured by the Company in
fiscal 1999 and 2000. Further, the Company increased its internal sales force
and independent distributor network during the six months ended December 31,
1999. Operating costs also increased significantly as a result of increased
revenues.
Total general and administrative expenses increased by $32,249 or 3% during
the six months ended December 31, 1999, compared to the same period last fiscal
year. Although the Company expanded its operations, staffing and facilities to
support its continuing growth, the Company was also able to streamline and
centralize certain administrative functions. Professional services increased by
$20,502, or 13%, during the six months ended December 31, 1999, compared to the
same period last fiscal year, as the Company retained the services of
telecommunication business and engineering consultants. These costs more than
offset a decrease in legal fees that occurred as the Company settled numerous
legal actions that it was involved in.
Stock based compensation charges aggregated $3,679,197 during the six
months ended December 31, 1999, and such amounts related to the following:
$1,134,000 related to an officer's conversion of accrued salaries and expenses
into restricted common stock, $863,347 related to a consultant's conversion of
accrued fees and expenses into restricted common stock, $1,100,000 related to
shares of restricted common stock issued to an officer for the pledging of his
personal assets and personal guarantee, and $581,850 related to the sale of
restricted common stock. Interest expense increased significantly relative to
the prior year, primarily because of an effective interest charge aggregating
$369,124 related to the conversion of $35,000 of notes payable, and related
accrued interest, into shares of the Company's restricted common stock. The
effective interest charge is equal to the amount by which the estimated fair
market value of the restricted common stock issued upon conversion exceeded the
carrying amount of the related notes payable and accrued interest.
In December 1999, the Company recognized an extraordinary gain of $769,394
related to the extinguishment of the debt under capital lease agreements. Such
amount represented all amounts due to the related lessor on the date that
certain assets leased by the Company was repossessed by the lessor.
As a result of the above, the Company incurred a net loss of $5,868,078
during the six-month period ended December 31, 1999, versus a net loss of
$1,178,206 during the six-month period ended December 31, 1998.
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
On November 10, 1998, the Company filed legal action (TotalAxcess, Inc. v.
NuOasis Resorts, Inc; Nona Morelli's II, Inc.; NuOasis International, Inc.; Fred
Luke, Jr.; Rocci Howe; Steven H. Dong; John D. Desbrow; Archer & Weed; Richard
Weed) in San Francisco Superior Court, Case No. 999131. The suit alleges fraud
and misrepresentation in the sale of securities, which were not qualified for
sale and professional malpractice against legal counsel representing the
Defendants in this transaction. On July 26, 1999, NuOasis Resorts, Inc. and Nona
Morelli's II, Inc. filed a cross complaint against the Company alleging claims
for breach of contract, fraud, material misrepresentation in the purchase of
securities and libel, and seeks rescission of certain contracts and the
imposition of a constructive trust over certain securities. Also on July 26,
1999, Rocci Howe, Fred Luke, Jr. and Steven Dong filed cross complaints against
the Company alleging claims for breach of contract, indemnity and libel. All
counsel have stipulated to a change in venue from San Francisco to Orange County
Superior Court, and the San Francisco Court has transferred the file to the
Orange County Court. The Court ordered that all claims the Company has against
Richard Weed are to be arbitrated and that this arbitration will not take place
until after the trial. Management plans to vigorously pursue its complaint and
defend each cross complaint, which it believes lack substantial merit. A trial
is presently scheduled for March 2001.
On January 6, 1999, the Company filed a lawsuit (TotalAxcess.com, Inc. v.
Dennis Houston, Orange County Superior Court Case No. 809248). This complaint
alleges breach of fiduciary duty by Mr. Houston as one of the Company' directors
for failing to disclose material facts in the Ark-Tel Asset Purchase Agreement
which have resulted in the Company's being sued by Worldcom Network Services,
Inc. (see above). On June 29, 1999, Mr. Houston filed a cross complaint alleging
claims for breach of contract, breach of the implied covenant of good faith and
fair dealing, misrepresentation, fraud and embezzlement. The Company is
vigorously pursuing the matter against Mr. Houston and plans to vigorously
defend the cross complaint. This matter will be tried in October 2000.
On June 26, 1997, the Company filed a lawsuit (TotalAxcess.com, Inc. v.
Network Long Distance, Inc.) filed in the District Court, City and County of
Denver, Case No. 97 CV 4131, Division 7. The complaint was filed against Network
Long Distance, Inc. and their transfer agent to compel them to release shares of
Network Long Distance, Inc.'s common stock (the "Shares") that was received by
the Company in connection with a release of liability granted to NuOasis
Resorts, Inc. Once the Shares were properly transferred to the Company, the
Company dismissed its claims as moot. However, Network Long Distance, Inc.
(currently known as Eclipse Communications, Inc. or "Eclipse") continues to
pursue the Shares through its counterclaims. Eclipse is claiming that it owns
some or all of the Shares and is seeking damages and an injunction prohibiting
the transfer of the Shares. In response to Eclipse's allegations, management has
indicated that it will vigorously contest the litigation, as it believes the
case to be groundless and without merit. The Company has received a summary
judgment in this matter, but Eclipse has filed a notice of appeal. Should
Eclipse prevail in this matter, it may be in a position to recover a significant
portion of the stock at issue, or the value thereof, plus 8% interest per annum
from 1997 through trial.
PART II: OTHER INFORMATION (continued)
Item 1. Legal Proceedings (continued)
On or about December 20, 1999 in the Superior Court in and for the County
of San Francisco, California, Comms People, Inc. ("CPI") filed and served a
complaint for Breach of Contract and several Common Counts against the Company,
alleging damages in the amount of $17,050. The claim arose out of a personal
services contract. The matter was referred by the court to non-binding judicial
arbitration to be heard in August 2000. In order to avoid the uncertainties of
arbitration and subsequent trial, and the inherent legal fees and costs
attendant thereto, a settlement agreement was reached in August 2000, whereby
the Company agreed to pay the aggregate amount of $14,000 to CPI, in three
monthly installments commencing September 1, 2000. In consideration thereof, CPI
agreed to release all claims it might have against the Company, which might
arise out of the personal service contract.
On October 27, 1999 in the Superior Court in and for the County of Los
Angeles, California, Cross Communications ("CCI") filed and served a complaint
for Breach of Contract and several Common Counts against the Company. CCI claims
it entered into a valid oral agreement with the Company whereby it would provide
telecommunications services using its switch for routing the Company's pre-paid
calling cards. It claimed approximately $655,000 in damages on unpaid invoices
for its services. The Company filed a cross-complaint against CCI seeking
unspecified damages arising from the inability of CCI equipment to adequately
support and route the volume of traffic delivered by pre-paid calling cards. In
order to avoid the uncertainties of trial and the potential enforcement of a
judgment, as well as the inherent legal fees and costs attendant thereto, a
settlement agreement was reached in September 2000, whereby CCI and the Company
will enter into a mutual release in full and final settlement of any and all
claims that might arise out of their relationship. No other consideration is
involved in the settlement agreement.
M.H. Meyerson & Co. ("Meyerson") claims that it is entitled to 717,898
warrants to purchase common stock of the Company pursuant to a December 12, 1997
Investment Banking Agreement. The Company contends that Meyerson is not entitled
to the warrants because it failed to fulfill its obligations under the
Investment Banking Agreement. The Company settled this matter in September 2000
and issued 20,000 shares of restricted common stock.
From time to time, the Company is involved in various lawsuits generally
incidental to its business operations, primarily consisting of collection
actions and vendor disputes. The Company does not believe that such claims and
lawsuits, either individually or in the aggregate, will have an adverse effect
on it operations of financial condition.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to A Vote of Security Holders
None.
Item 5. Other Information
None.
PART II: OTHER INFORMATION (continued)
Item 6. Exhibits and Reports on Form 8-K
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedule
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
TOTALAXCESS.COM, INC. (formerly, GROUP V CORPORATION.)
Date:October 23, 2000 By:/s/ Joseph Monterosso
Joseph Monterosso,
Chief Executive Officer & Director
Date:October 23, 2000 By:/s/ Russell F. McCann, Jr.
Russell F. McCann, Jr., Director
