SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A No. 6
/X/ Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2000
/ / Transition Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Commission File Number ___-_____
ACCESS POWER, INC.
(Name of Small Business Issuer in its Charter)
Florida 59-3420985
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10033 Sawgrass Dr., W, Ponte Vedra Beach, FL 32082
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (904) 273-2980
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: None
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes /X/ No / /
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form 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-KSB or any amendment to
this Form 10-KSB. /X/
State issuer's revenues for its most recent fiscal year. $341,370
State the aggregate market value of the voting stock held by non-affiliates
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 the past 60
days: As of March 16, 2001 there were 74,358,413 shares of Common Stock
outstanding held by non-affiliates of the issuer, with an aggregate value of
$4,461,504.78 (based upon a value of $0.06 per share, the average of the high
and low bid price of the Common Stock on March 16, 2001)
At March 16, 2001, there were issued and outstanding 87,527,913
shares of Common Stock.
Transitional Small Business Disclosure Format (check one): Yes / / No /x/
DOCUMENTS INCORPORATED BY REFERENCE
None.
PART II
ITEM 7. FINANCIAL STATEMENTS
The revised financial statements and the independent auditor's report
are included in this report beginning at page F-1.
2
ACCESS POWER, INC.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000
Independent Auditors' Report................................................F-2
Independent Auditors' Report................................................F-3
Balance Sheets at December 31, 2000 and 1999................................F-4
Statements of Operations for the years ended
December 31, 2000 and 1999 and the cumulative
period from October 10, 1996
(date of inception) through December 31, 2000............................F-5
Statements of Stockholders' Equity for the years ended
December 31, 2000 and 1999 and the period from
October 10, 1996 (date of inception) through
December 31, 2000........................................................F-6
Statements of Cash Flows for the years ended
December 31, 2000 and 1999 and the cumulative period
from October 10, 1996 (date of inception) through
December 31, 2000........................................................F-7
Notes to Financial Statements...............................................F-8
F-1
Independent Auditors' Report
The Board of Directors
Access Power, Inc.:
We have audited the accompanying balance sheets of Access Power, Inc. (a
development stage company) as of December 31, 2000 and 1999, and the related
statements of operations, stockholders' equity, and cash flows for the years
then ended, and the cumulative period from October 10, 1996 (date of inception)
through December 31, 2000. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our 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 Power, Inc. (a
development stage company) as of December 31, 2000 and 1999, and the results of
its operations and its cash flows for the years then ended, and the cumulative
period from October 10, 1996 (date of inception) through December 31, 2000, in
conformity with generally accepted accounting principles.
The 1999 financial statements have been restated for a prior period adjustment
for the effect of the beneficial conversion feature of the convertible
debentures as disclosed in note 8.
/s/ PARKS, TSCHOPP, WHITCOMB & ORR, P.A.
March 13, 2001, except for note 8 which the date is November 12, 2001
Maitland, Florida
F-2
ACCESS POWER, INC.
(A Development Stage Company)
BALANCE SHEETS
December 31, 2000 and 1999
ASSETS
------
2000 1999
----------- -----------
Current assets:
Cash $ 15,452 $ 213,885
Certificate of deposit 100,000 -
Accounts receivable 56,312 179,410
Prepaid expenses 560,993 263,638
Inventory - 21,800
----------- -----------
Total current assets 732,757 678,733
----------- -----------
Property and equipment, net (note 2) 721,724 439,656
Other assets 8,000 12,000
----------- -----------
Total assets $ 1,462,481 $ 1,130,389
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable and accrued expenses 2,154,321 683,011
Current portion of long-term debt 112,576 168,956
----------- -----------
Total current liabilities 2,266,897 851,967
Long-term debt, less current portion (note 3) - 207,484
Convertible debentures (note 4) 210,000 750,000
----------- -----------
Total liabilities 2,476,897 1,809,451
----------- -----------
Stockholders' equity:
Common stock, $.001 par value, authorized 100,000,000 shares, issued and
outstanding 53,089,389 and 31,248,253 shares in 2000 and 1999 53,087 31,249
Notes receivable, stockholders (402,315) (456,000)
Preferred stock, $.001 par value, authorized 10,000,000 shares, issued and
outstanding none and 3,952 shares in 2000 and 1999 - 4
Additional paid in capital 12,000,011 5,101,109
Deficit accumulated during the development stage (12,665,199) (5,355,424)
----------- -----------
(1,014,416) (679,062)
----------- -----------
Commitments (notes 3 and 4)
Total liabilities and stockholders' equity $ 1,462,481 $ 1,130,389
=========== ===========
See accompanying notes to financial statements.
F-3
ACCESS POWER, INC.
(A Development Stage Company)
Statements of Operations
For the years ended December 31, 2000 and 1999 and the cumulative period
For the period
October 10, 1996
through
2000 1999 December 31, 2000
------------- ---------- -----------------
Revenue:
Product sales $ - 9,450 223,881
Services 341,370 170,601 565,490
------------- ---------- -----------
Total revenue 341,370 180,051 789,371
------------- ---------- -----------
Costs and expenses:
Cost of services 1,438,776 328,378 1,803,454
Cost of sales - 2,955 164,605
Product development and marketing 1,279,330 687,359 2,699,545
General and administrative 2,504,206 1,642,134 5,856,312
------------- ---------- -----------
Total costs and expenses 5,222,312 2,660,826 10,523,916
------------- ---------- -----------
Loss from operations (4,880,942) (2,480,775) (9,734,545)
Other income (expense):
Interest income 82 - 2,380
Interest expense (2,428,915) (370,690) (2,926,154)
Loss on disposal of equipment - (6,880) (6,880)
------------- ---------- -----------
Total other income (expense) (2,428,833) (377,570) (2,930,654)
Net loss $ (7,309,755) $(2,858,345) $(12,665,199)
============= ========== ============
Net loss per share $ (0.16) $ (0.11) $ (0.50)
============= ========== ============
Weighted average number of shares 46,408,006 25,174,029 25,139,875
============= ========== ===========
See accompanying notes to financial statements.
F-4
ACCESS POWER, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the years ended December 31, 2000 and 1999 and the period from October 10, 1996
(date of inception) through December 31, 2000
COMMON STOCK PREFERRED STOCK
-------------------------- --------------------
DATE SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------
Common stock issued to founding directors 8,000,000 8,000 -- --
Net loss -- -- -- --
----------- -------- ------- ------
Balances at December 31, 1996 8,000,000 8,000 -- --
Common stock issued for cash 5/23/97 750,000 750 -- --
Common stock issued for cash 6/30/97 1,000,000 1,000 -- --
Common stock issued for cash 7/97 - 10/97 1,734,000 1,734 -- --
Stock issuance cost -- -- -- --
Net loss -- -- -- --
----------- -------- ------- ------
Balances at December 31, 1997 11,484,000 11,484 -- --
----------- -------- ------- ------
Preferred stock issued for cash 5/98 -- -- 1,000 1
Common stock issued as additional interest 2/2/98 50,000 50 -- --
Common stock issued as additional interest 2/19/98 125,000 125 -- --
Common stock issued as finder's fee 2/19/98 75,000 75 -- --
Common stock issued for services 2/98 25,000 25 -- --
Common stock issued for cash 9/24/98 50,000 50 -- --
Preferred stock issued for cash 11/98 -- -- 100 --
Common stock issued for finder's fee 11/98 60,857 61 -- --
Preferred stock issued for cash 12/98 -- -- 25 --
Common stock issued for investment banking fee 12/98 30,000 30 -- --
Conversion of preferred stock to common stock 12/98 425,931 426 (75) --
Net loss -- -- -- --
----------- -------- ------- ------
Balances at December 31, 1998 12,325,788 12,326 1,050 1
----------- -------- ------- ------
Common stock issued for cash 6/99 3,745,000 3,745 -- --
Preferred stock issued for cash 1/99 -- -- 75 --
Common stock issued for finder's fee 1/99 25,777 26 -- --
Common stock issued for services 6/99 3,207,950 3,208 -- --
Common stock issued as additional interest 12/99 144,204 144 -- --
Common stock issued to retire debt 4/99 400,000 400 -- --
Common issued on convertible debentures 12/99 2,464,691 2,465 -- --
Common stock converted to preferred 9/99 (3,952,000) (3,952) 3,952 4
Preferred stock converted to common stock 1/99 - 4/99 12,886,843 12,887 (1,125) (1)
Net loss -- -- -- --
----------- -------- ------- ------
Balances at December 31, 1999 as previously reported 31,248,253 31,249 3,952 4
Prior period adjustment (note 8) -- -- -- --
----------- -------- ------- ------
Balances at December 31, 1999, as restated 31,248,253 31,249 3,952 4
----------- -------- ------- ------
Preferred stock converted to common stock 1/00 3,952,000 3,952 (3,952) (4)
Common stock issued on exercise of warrants 1/00-2/00 600,000 600 -- --
Common stock issued for cash 1/00-3/00 682,000 682 -- --
Common stock issued for services 9/00-11/00 670,000 670 -- --
Common stock issued on convertible debentures 1/00-12/00 15,540,325 15,540 -- --
Common stock issued as interest 1/00-12-00 396,811 394 -- --
Value of warrants in excess of exercise price 1/00 -- -- -- --
Value of beneficial conversion feature of 1/00-9/00
debentures -- -- -- --
----------- -------- ------- --------
Balances at December 31, 2000 53,089,389 53,087 -- --
=========== ======== ======= ========
STATEMENT OF STOCKHOLDERS' EQUITY
For the years ended December 31, 2000 and 1999 and the period from October 10, 1996
(date of inception) through December 31, 2000
(continued)
ADDITIONAL TOTAL
PAID IN ACCUMULATED STOCKHOLDERS'
CAPITAL DEFICIT EQUITY
------- ------- ------
Common stock issued to founding directors (7,200) -- 800
Net loss -- (5,701) (5,701)
----------- ----------- -----------
Balances at December 31, 1996 (7,200) (5,701) (4,901)
Common stock issued for cash 35,000 -- 35,750
Common stock issued for cash 100,000 -- 101,000
Common stock issued for cash 854,573 -- 856,307
Stock issuance cost (75,000) -- (75,000)
Net loss -- (426,438) (426,438)
----------- ----------- -----------
Balances at December 31, 1997 907,373 (432,139) 486,718
Preferred stock issued for cash 999,999 -- 1,000,000
Common stock issued as additional interest 29,950 -- 30,000
Common stock issued as additional interest 84,250 -- 84,375
Common stock issued as finder's fee 24,925 -- 25,000
Common stock issued for services 27,163 -- 27,188
Common stock issued for cash 24,950 -- 25,000
Preferred stock issued for cash 100,000 -- 100,000
Common stock issued for finder's fee 19,817 -- 19,878
Preferred stock issued for cash 25,000 -- 25,000
Common stock issued for investment banking fee 9,970 -- 10,000
Conversion of preferred stock to common stock (426) -- --
Net loss -- (2,064,940) (2,064,940)
----------- ----------- -----------
Balances at December 31, 1998 2,252,971 (2,497,079) (231,781)
----------- ----------- -----------
Common stock issued for cash 1,282,455 -- 1,286,200
Preferred stock issued for cash 75,000 -- 75,000
Common stock issued for finder's fee 6,418 -- 6,444
Common stock issued for services 621,831 -- 625,039
Common stock issued as additional interest 19,837 -- 19,981
Common stock issued to retire debt 49,600 -- 50,000
Common issued on convertible debentures 447,535 -- 450,000
Common stock converted to preferred 3,948 -- --
Preferred stock converted to common stock (12,886) -- --
Net loss -- (2,503,945) (2,503,945)
----------- ----------- -----------
Balances at December 31, 1999, as previously 4,746,709 (5,001,024) (223,062)
reported
Prior period adjustment (note 8) 354,400 (354,400) --
----------- ----------- -----------
Balances at December 31, 1999, as restated 5,101,109 (5,355,424) (223,062)
----------- ----------- -----------
Preferred stock converted to common stock (3,948) -- --
Common stock issued on exercise of warrants 46,400 -- 47,000
Common stock issued for cash 146,538 -- 147,220
Common stock issued for services 165,530 -- 166,200
Common stock issued on convertible debentures 4,130,560 -- 4,146,100
Common stock issued as interest 91,102 -- 91,496
Value of warrants in excess of exercise price 322,720 -- 322,720
Value of beneficial conversion feature of
debentures 2,000,000 -- 2,000,000
Net loss -- (7,309,775) (7,309,775)
----------- ----------- -----------
Balances at December 31, 2000 12,000,011 (12,665,199) (612,101)
=========== =========== ===========
F-5
ACCESS POWER, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Forthe years ended December 31, 2000 and 1999 and the
cumulative period from October 10, 1996 (date of
inception) through December 31, 2000
FOR THE PERIOD OCTOBER
10, 1996 THROUGH
2000 1999 DECEMBER 31, 2000
--------------------------------------------------------
Cash flows from operating activities:
Net loss $(7,309,755) $(2,858,345) $(12,665,199)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 261,397 204,323 814,539
Loss on disposal of property and equipment - 6,880 33,341
Stock issued for services 166,200 631,483 994,124
Stock issued for interest 91,496 19,981 111,477
Value of beneficial conversion feature of
debentures 2,000,000 340,000 2,340,000
Value of warrants in excess of exercise price 322,720 14,400 337,120
Change in operating assets and liabilities:
Accounts receivable 15,772 (150,265) (163,638)
Accounts payable and accrued expenses 1,471,310 (173,025) 2,282,074
Other assets (185,939) (263,638) (472,744)
Inventory 21,800 (30) -
--------------------------------------------------------
Net cash used in operating activities (3,145,019) (2,228,236) (6,388,906)
--------------------------------------------------------
Cash flows from investing activities:
Purchase of certificate of deposit (100,000) - (100,000)
Proceeds from sale of property and equipment - 12,050 52,320
Purchase of property and equipment (543,555) (50,864) (1,744,084)
Note receivable, stockholders 53,685 (425,209) (402,315)
--------------------------------------------------------
Net cash used in investing activities (589,870) (464,023) (2,194,079)
--------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of stock 194,220 1,411,200 3,674,277
Proceeds from issuance of notes payable 3,712,576 1,575,000 5,417,601
Principal payments on notes payable (370,340) (113,112) (493,441)
--------------------------------------------------------
Net cash provided by financing activities 3,536,456 2,872,988 8,598,437
--------------------------------------------------------
Net change in cash (198,433) 180,729 15,452
Cash, at beginning of period 213,885 33,156 -
--------------------------------------------------------
Cash at end of period $ 15,452 $213,885 $15,452
========================================================
See accompanying notes to financial statements.
F-6
ACCESS POWER, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
(a) NATURE OF DEVELOPMENT STAGE OPERATIONS
Access Power, Inc., (API or the Company) was formed on October 10,
1996. The Company offers Internet Telephony (IT) which will provide
advanced computer telephony solutions to the global consumer market
place, with an emphasis on marketing to consumers.
Operations of the Company through the date of these financial
statements have been devoted primarily to product development and
marketing, raising capital, and administrative activities.
(b) PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated over the
estimated useful lives of the assets which range from three to five
years, using the straight-line method.
The Company reviews the carrying value of property and equipment for
impairment whenever events and circumstances indicate that the carrying
value of an asset may not be recoverable from the estimated future cash
flows expected to result from its use and eventual disposition. In
cases where undiscounted expected future cash flows are less than the
carrying value, an impairment loss is recognized equal to an amount by
which the carrying value exceeds the fair value of assets.
(c) INTANGIBLE ASSETS
Organization costs are amortized over a five-year period using the
straight-line method and are included in other assets in the
accompanying balance sheet.
(d) INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. Changes in tax rates are recognized in the period that
includes the enactment date.
F-7
ACCESS POWER, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
(1), Continued
Development stage operations for the period ended December 31, 2000
resulted in a net operating loss. It is uncertain whether any tax
benefit of net operating loss will be realized in future periods.
Accordingly, no income tax provision has been recognized in the
accompanying financial statements. At December 31, 2000, the Company
has net operating loss carryforwards of approximately $9,988,000 which
will expire in years beginning in 2011. A valuation allowance equal to
the tax benefit of the net operating loss has been established, since
it is uncertain that future taxable income will be realized during the
carryforward period. Accordingly, no income tax provision has been
recognized in the accompanying financial statements.
(e) FINANCIAL INSTRUMENTS FAIR VALUE, CONCENTRATION OF BUSINESS
AND CREDIT RISKS
The carrying amount reported in the balance sheet for cash, accounts
and notes receivable, accounts payable and accrued expenses
approximates fair value because of the immediate or short-term maturity
of these financial instruments. The carrying amount reported in the
accompanying balance sheet for notes payable approximates fair value
because the actual interest rates do not significantly differ from
current rates offered for instruments with similar characteristics.
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of accounts and
notes receivable which amounts to approximately $539,000. The Company
performs periodic credit evaluations of its trade customers and
generally does not require collateral. The notes receivable consist
primarily of amounts due from employees from the exercise of stock
options. The notes are due no later than May 1, 2001. Currently, all of
the Company's hardware and software is purchased from one supplier,
however, management believes there are other alternatives to this
supplier.
(f) USE OF ESTIMATES
Management of the Company has made certain estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure
of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
F-8
(1), Continued
(g) CASH FLOWS
For purposes of cash flows, the Company considers all highly liquid
debt instruments with original maturities of three months or less to be
cash equivalents.
(h) PREPAID OFFERING COSTS
Prepaid offering costs represent direct costs and expenses incurred in
connection with the offering of securities. Upon completion of the
offering, such amounts are offset against the proceeds from the
offering, in the event of an offering of equity securities, and
capitalized and amortized using the interest method in the event of an
offering of debt securities.
(i) REVENUE RECOGNITION
The Company has earned revenues and plans to earn revenue by providing
access to its internet telephony system (access revenue) for long
distance calls placed by the Company's customers and those of other
carriers within the Company's service area (long distance). Access
revenue is billed one month in advance and is recognized when earned.
Long distance revenue is recognized when the service is rendered.
Equipment sales were recognized on delivery of the equipment to the
customer.
The Company also earns revenue from business services and electronic
commerce transactions. Business services revenues include fees. License
revenues for enterprise services are recognized under Statement of
Position No. 97-2, "Software Revenue Recognition" (SOP 97-2) when
persuasive evidence of an arrangement exists and delivery has occurred,
provided the fee is fixed and determinable, collectibility is probable
and the arrangement does not require significant customization of the
software. For contracts with multiple elements, and for which
vendor-specific objective evidence of fair value for the undelivered
elements exists, revenue is recognized for the delivered elements based
upon the residual contract value as prescribed by Statement of Position
No. 98-4, "Modification of SOP No. 97-2 with Respect to Certain
Transactions." Revenues from enterprise services were not significant
for all periods presented. Maintenance revenues for enterprise services
are recognized ratably over the term of the contract. Revenues from
advertising are recognized by the Company during the period the
advertising occurs.
The Company is presently operating in this one business segment and
only in the United States.
F-9
ACCESS POWER, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
(1), Continued
(j) LOSS PER COMMON SHARE
Earnings per common share have been computed based upon the weighted
average number of common shares outstanding during the years presented.
Common stock equivalents resulting from the issuance of the stock
options have not been included in the per share calculations because
such inclusion would be anti-dilutive.
(k) SOFTWARE AND DEVELOPMENT COSTS
The Company capitalizes purchased software which is ready for service
and software development costs incurred from the time technological
feasibility of the software is established until the software is ready
for use to provide services to customers. Research and development
costs and other computer software maintenance costs related to software
development are expensed as incurred. Software cost capitalized through
December 31, 2000 amounts to $403,257 and is depreciated over three
years.
The carrying value of software and development costs that have been
capitalized is regularly reviewed by the Company, and a loss is
recognized when the net realizable value falls below the unamortized
cost.
(l) STOCK-BASED COMPENSATION
During 1997, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation".
This pronouncement establishes financial accounting and reporting
standards for stock-based compensation. It encourages, but does not
require, companies to recognize compensation expense for grants of
stock, stock options and other equity instruments to employees based on
new fair value accounting rules. Such treatment is required for
non-employee stock-based compensation. The Company has chosen to
continue to account for employee stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board
Opinion No.25, "Accounting for Stock Issued to Employees". Accordingly,
compensation expense for employee stock options or warrants is measured
as the difference between the quoted market price of the Company's
stock at the date of grant and the amount the employee must pay to
require the stock. SFAS 123 requires companies electing to continue
using the intrinsic value method to make certain pro forma disclosures
(see Note 6).
F-10
(1), Continued
(m) COMPREHENSIVE INCOME
In 1998, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." For the
years ended December 31, 2000 and 1999, the Company has no items of
comprehensive income.
(n) RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin No. (SAB 101), "Revenue Recognition in
Financial Statements." SAB 101 summarizes the SEC's views in applying
generally accepted accounting principles to revenue recognition in
financial statements. The Company adopted SAB 101 in the fourth quarter
of fiscal 2000. The adoption of SAB 101 did not have a material effect
on the Company's operations or financial position.
In April 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving
Stock Compensation, an interpretation of APB Opinion No. 25." Among
other issues, that interpretation clarifies the definition of employees
for purposes of applying Opinion No. 25, the criteria for determining
whether a plan qualifies as a non-compensatory plan, the accounting
consequence of various modifications to the terms of a previously fixed
stock option or award and the accounting for an exchange of stock
compensation awards in a business combination. This interpretation is
effective July 1, 2000, but certain conclusions in the interpretation
cover specific events that occur after either December 15, 1998 or
January 12, 2000. To the extent that this interpretation covers events
occurring during the period after December 15, 1998, or January 12,
2000, but before the effective date of July 1, 2000, the effect of
applying this interpretation is recognized on a prospective basis from
July 1, 2000. The implementation of this interpretation does not have a
material impact on the Company's financial statements.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," is required to be adopted in years beginning after June
15, 2000. The Company does not hold derivative instruments or engage in
hedging activities. The Company implemented Statement 133 beginning in
the first quarter of its fiscal year ending December 31, 2001, with no
effect on its financial position, results of operations or cash flows.
F-11
ACCESS POWER, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
(2) PROPERTY AND EQUIPMENT
----------------------
Property and equipment consist of the following at December 31:
2000 1999
------------ ------------
Office furniture and equipment $ 101,667 $ 59,908
Computer hardware 861,821 485,007
Computer software 403,257 278,769
------------ ------------
1,366,745 823,684
Less accumulated depreciation and amortization 645,021 384,028
------------ ------------
$ 721,724 $ 439,656
============ ============
(3) NOTES PAYABLE
-------------
Notes payable consist of the following at December 31,:
2000 1999
------------- -------------
Promissory notes to stockholders bearing interest at 6% - 8% payable on
demand. Unsecured. $ 112,576 $ 26,440
Note payable to vendor bearing interest at 10%, payable in monthly
installments of $18,236 through December, 2001. Note is a result of the
settlement of litigation in which the vendor agreed to reduce the price
of purchased computer hardware by
approximately $636,000. - 350,000
------------- -------------
112,576 376,440
Less current portion 112,576 168,956
------------- -------------
Long-term debt, less current portion - $ 207,484
============= =============
(4) 6% CONVERTIBLE DEBENTURE
-----------------------
$1,000,000, $200,000, and $800,000 6% Convertible Debentures were sold
on September 30, 1999, December 30, 1999, and January 18, 2000,
respectively. They are convertible into common stock by dividing each
$100,000 debenture by the lower of 75% of the average of the three
lowest closing bid prices during the preceding 22 trading days or 110%
of such average price on September 30, 1999 ($0.42), subject to certain
adjustments. $2,500,000, $100,000, $100,000, $100,000 6% Convertible
Debentures were sold on February 29, 2000, August 14,
F-12
ACCESS POWER, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
(4) 6% CONVERTIBLE DEBENTURE (Continued)
-----------------------
August 30 and September 15, 2000, respectively. They are convertible
into common stock by dividing each $100,000 debenture by the lower of
80% of the average of the three lowest closing bid prices during the
preceding 22 trading days or 110% of such average price on February 28,
2000 ($2.20), subject to certain adjustments. As of December 31, 2000,
$4,590,000 of the Convertible Debentures had been converted into
18,005,016 common shares including shares converted representing
accrued interest to the conversion dates.
Accordingly, the Company recorded $2,322,720 and $354,400 non-cash
expense during the years ended December 31, 2000 and 1999,
respectively, to account for a beneficial conversion feature associated
with the Debentures. The Company has presented the charge as interest
expense in the accompanying consolidated statements of operations.
(5) COMMITMENTS
-----------
The Company leases its office space under a non-cancellable operating
lease with a remaining term of one year. Future minimum payments under
this lease are as follows:
Year Amount
---- ------
2001 $ 61,700
2002 $ 43,300
Rent expense for the years ended December 31, 2000 and 1999 amounted to
$53,064 and $48,982, respectively.
(6) STOCK OPTIONS
-------------
In 1997, the Company established an incentive stock option plan (the
Plan) to provide an incentive to key employees of the Company who are
in a position to contribute materially to expanding and improving the
Company's profits, to aid in attracting and retaining employees of
outstanding ability and to encourage ownership of shares by employees.
F-13
ACCESS POWER, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
(6) STOCK OPTIONS (Continued)
-------------
The Plan was amended in March, 1998 to increase the number of shares
available for issuance thereunder from 1,000,000 to 2,500,000 shares. Total
options granted through December 31, 2000 amounted to 2,100,500 at an average
price of $.33. There were no incentive stock options granted during 2000.
The Plan is designed to serve as an incentive for retaining qualified
and competent employees. The Company's Board of Directors, or a committee
thereof, administers and interprets the Plan and is authorized, in its
discretion, to grant options thereunder to all eligible employees of the
Company, including officers and directors (whether or not employees) of the
Company. The per share exercise price of options granted under the Plan will not
be less than the fair market value of the common stock on the date of grant.
Options granted under the Plan will be exercisable after the period or periods
specified in the option agreement. The Board may, in its sole discretion,
accelerate the date on which any option may be exercised. Options granted under
the Plan are not exercisable after the expiration of ten years from the date of
grant and are nontransferable other than by will or by the laws of descent and
distribution. The Company recognizes compensation expense for options granted
under the Plans based on the difference between the quoted market price of the
Company's stock at the date of grant and the amount the employee must pay to
acquire the stock. No compensation cost has been recognized for employee stock
options which had been granted to date. Had compensation cost for the Plans been
determined based on the fair value at the date of grant for awards under those
Plans, consistent with the method prescribed by SFAS 123, the Company's net loss
and net loss per share would have been increased to the pro forma amounts
indicated below:
For the period
October 10, 1996
Year ended Year ended through
December 31, December 31, December 31,
2000 1999 2000
------------------ ------------------ --------------------
Pro forma net loss:
As reported $ (7,309,775) $ (2,858,345) $ (12,665,199)
Pro forma (7,309,775) (2,913,334) (12,787,960)
Pro forma net loss per share
As reported (0.16) (0.11) (0.50)
Pro forma (0.16) (0.11) (0.50)
The fair value of each option granted under the Plans is estimated on
the date of grant using the Black-Scholes option-pricing model with the
following weighted average assumptions used for grants in 1999 and 1998: no
dividend yield; expected volatility of the underlying stock of 90%, risk-free
interest rate of 4.98% and 5.27%, respectively, covering the related option
period; and expected lives of the options of 10 years based on the related
option period.
F-14
ACCESS POWER, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
(7) SELECTED FINANCIAL DATA (UNAUDITED)
The following is a summary of the quarterly results of operations for
the years ended December 31, 2000 and 1999, respectively:
QUARTER QUARTER QUARTER QUARTER YEAR
ENDED ENDED ENDED ENDED ENDED-
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
--------- -------- ------------- ------------ ------------
2000
----
Net revenues $ 145,611 108,556 66,709 20,494 341,370
Gross profit 145,611 108,556 66,709 20,494 341,370
Net earnings from operations (1,150,839) (1,154,414) (1,227,805) (1,347,884) (4,880,942)
Basic and fully diluted
earnings per share (0.04) (0.03) (0.03) (0.07) (0.16)
Weighted-average number of
shares issued and outstanding 31,688,258 39,189,807 43,971,501 50,292,651 46,408,006
1999
----
Revenues $ 14,550 13,250 51,649 100,602 180,051
Gross profit 12,495 12,665 51,334 100,602 177,096
Net earnings from operations (476,138) (690,578) (545,969) (768,090) (2,480,775)
Basic and fully diluted
earnings per share (0.03) (0.03) (0.02) (0.02) (0.10)
Weighted-average number of
shares issued and outstanding 16,979,668 25,825,159 31,386,691 28,639,358 25,174,029
F-15
(8) PRIOR PERIOD ADJUSTMENT
The balance of accumulated deficit at December 31, 1999 has been
restated from amounts previously reported to reflect a retroactive charge of
$354,400 for additional interest expense related to the benefitial conversion
feature of convertible debentrues as required under Emerging Issues Task Force
98-5.
F-16
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Company
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on December 3, 2001.
ACCESS POWER, INC.
By: *
-------------------------------------
Glenn A. Smith, Chief Executive Officer
Signature Position
--------- --------
/s/ Glenn A. Smith President and Chief
---------------------------- Executive Officer and Director
Glenn A. Smith (principal executive officer)
*
---------------------------- Chief Financial Officer
Howard Kaskel (principal financial and accounting officer)
* Director
----------------------------
Tod R. Smith
* Director
----------------------------
Maurice J. Matovich
*By: /s/ Glenn A. Smith
------------------------------
Glenn A. Smith
Attorney-in-Fact