In April 2000, Beach Access acquired the rights to provide Internet access
through May 2001 to approximately 1,300 customers. The cost for these rights was
3,200,000 shares of restricted common stock. Terms of the agreements provide for
monthly service revenues of $20,000.
On August 1, 2000, certain of the above agreements were modified whereby an
additional 180,000 shares of the Company's restricted common stock was issued
for the above customer rights.
In the accompanying financial statements, the purchase cost of these customers,
which amounted to $271,814, has been recorded at the stock's average simple
traded value over a defined period less a 15% discount because of its restricted
nature. The cost of the purchase, less the excess of the value of the restricted
stock over the services fee income arising from this transaction, which was
changed to expense, is being amortized on a straight-line basis over twelve
months through May 2001. For the year ended December 31, 2000, amortization of
the purchase price amounted to $146,669.
20
In late 2000, payment of the above monthly service fees was terminated. Through
February 28, 2001, management has attempted unsuccessfully to collect current
and past due amounts. Because of the unlikely possibility that past due amounts
will be collected and future benefits from this arrangement are uncertain,
management has made the following adjustments:
new.edgar-online.com |
