Item 1. BUSINESS
OVERVIEW OF THE COMPANY
Coinless Systems, Inc. (the Company) was formed as a Nevada Corporation by the merger of D&J Enterprises International, Inc., a Nevada Corporation and D.S.G., Inc., a California Corporation, with Medical Resources Technologies, Inc. a Nevada Corporation. This merger took place February 12, 1999. The corporate name was changed to Coinless Systems, Inc. on August 12, 1999.
Coinless Systems is a developer of Ticket based gaming devices, methods and systems.
The management team at CSI has amassed over 20 years of gaming industry experience and 30 years of bar code printing and recognition experience.
CSI has historically placed its primary focus on development of bar code printers for use in gaming devices.
By using the CSI patented "Scan After Print" technology it is possible to verify that critical printed information is accurate and recognizable by the various redemption and recognition systems deployed throughout the gaming environment.
This real-time quality assurance of the printing process is designed to prevent gaming devices from dispensing invalid payment tickets to patrons.
Operationally, the efficiency of the ticket printing process is increased significantly as a result of real-time quality maintenance.
One of the most significant issues facing gaming device manufacturers is the audit ability of the device itself.
In order to achieve reconciliation in a ticket printing process it is necessary to have checks and balances.
There is currently only one method to verify that a cash payment ticket was created that can be recognized by other cash redemption facilities.
The CSI patent affords CSI the right to provide the devices and methods needed to ensure the quality of the print reproduction on the ticket media.
In order to be truly auditable it is necessary to be certain that the printing devices that create payment tickets are accurate and verified.
CSI has patented methods and devices designed specifically for this purpose.
When a gaming device prints a ticket with a barcode representing either directly or indirectly, a payout amount, it is important that the barcode is readable as intended.
The only time it is possible to automate such a process is at the time of printing.
The only time it is possible to halt the ticket printing process and have assistance rendered to a failing gaming device printer is at the time of print.
Once the ticket is delivered to the outside world there is a procedure efficiency decline.
Coinless Systems patented rights to these methods and devices places CSI in the most appropriate position to assist game manufacturers, printer manufacturers, and gaming authorities in defining the minimum control standards for the ticket printing and reconciliation process.
In an effort to increase the reliability and efficiency of the ticket process, CSI has secured the rights to the UVA Shield patent.
The patented UVA Shield ticket coating process increases the durability of thermally printed tickets by protecting the paper from liquids and the detrimental effects of light on thermal paper.
The coating of tickets with the patented UVA Shield formula also reduces wear and tear on the thermal printer print head and minimizes paper dust deposits.
The UVA Shield coating has been specially designed to minimize the overall maintenance of printing hardware on the gaming floor while providing the best possible quality and most aesthetically pleasing ticket stock in the industry.
Clearly, anything less than CSI's patented ticket print and verify methods and devices is insufficient for an automated cash payment process.
Item 2.
Item 2. Properties
The Company's headquarters and its principal executive offices are located in Las Vegas, NV. The headquarters is made up of 4,000 sq. feet of Administrative Offices in one suite and 3,373 sq. feet of Engineering facilities and warehouse space in an adjoining suite. These facilities are leased for a five-year period.
Item 3.
Item 3. Legal Proceedings
There are no legal proceedings known or pending against the Registrant or its subsidiary.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
The following matters were submitted to a vote of the Company's Security holders during the second quarter of its year-ended December 31, 2000:
(a) To elect and ratify the Board of Directors date and type of Meeting May 19, 2000 Special Stockholders Meeting The matters were voted on during the second quarter of 2000.
PART II
Item 5
Item 5 Market for Registrant's Common Equity and Related Stockholder matters.
The Company is currently trading, OTC, on the National Association of Securities Dealers Exchange under the symbol "CLSY." The stock has traded with a high of $1.00 in June 2000 and a low of $.2656 in January 2000.
Additional information required by this item may be found in the Company's 2000 Financial Statements and is incorporated herein by reference.
Item 6
Item 6 Selected Financial Data
The table below sets forth a summary of selected financial data of the company for the two-years ended December 31:
Item 7
Item 7 Management's Discussion and Analysis of Financial Condition and Reports of Operation.
This past year has been a very beneficial year for this company's progress for the future.
Initially, we moved the Corporate offices from Los Angeles to Nevada and our facilities on Wynn into the new Corporate and Engineering offices at 3720 West Oquendo Road, Suite 101, Las Vegas, Nevada 89118.
50% of this approximate 8,000 square foot facility is used for corporate offices, sales and accounting and the balance has been set up as a combination engineering lab, a modified assembly area and warehouse.
We have applied for two additional patents, which will help to strengthen our position in the Scan After Print area, which is a key point of our patent and our foothold in the market.
Toward the latter part of the year, we were able to secure financing from Spirit Mountain Investment Group which gave us the ability to complete the design and begin production of TickeTrak(R) Internal Mount units which were shipped to Infinity Group in Albuquerque, NM who in turn successfully installed the units in a Guatemala casino.
On October 18, 19 and 20th, the World Gaming Conference was held at the Las Vegas Convention Center and Coinless Systems, Inc. had a tremendous response.
We were able to demonstrate functional units to people from all areas of the gaming industry and multi-countries. This, to date had to be the best show ever for Coinless Systems, Inc.
We have also done some more work perfecting the UVASHIELD ticketing process and are planning, in the 1st or 2nd quarter of 2001 to set up a facility in Las Vegas to do the final fan-folding and packaging of the tickets for several accounts.
Last but not least, one of the most significant things that happened during the year 2000 was that International Gaming Technologies (IGT) demonstrated and installed approximately 8,000 units throughout the US, using their Easy-Pay coinless approach to gaming. Although this unit does not have Scan After Print as is available through TickeTrak, it has made a favorable impact on the marketplace. Casino operators and players are indicating an overall overwhelming acceptance of the coinless operation using bar coded tickets.
We see this as an affirmation of our thinking over the past few years that coinless gaming is and will continue to be one of the most sought after and profitable additions to the gaming industry.
This can only mean more sales than we had anticipated. With greater industry acceptance, we will see greater profitability to our company and to you, our shareholders.
Additional information provided by this item is set forth in the Company's 2000. Financial statements and is incorporated herein by reference.
Item 8
Item 8 Consolidated Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2000 and 1999
Page # Independent Auditors Report........................................ 13
Consolidated Balance Sheets as of December 31, 2000 and 1999...... 14
Consolidated Statements of Operation for the years ended December 31, 2000 and 1999........................................ 16
Consolidated Statements of changes in Stockholders' Equity for years ended December 31, 2000 and 1999............................ 17
Consolidated Statements of Cash Flows for the years ended December 31, 2000 and 1999.................................. 19
Notes to Consolidated Financial Statements........................ 21
[LETTERHEAD OF HAROLD Y. SPECTOR APPEARS HERE]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of Coinless Systems, Inc and subsidiary.
I have audited the accompanying consolidated balance sheet of Coinless Systems, Inc. (a Nevada corporation) and its wholly-owned subsidiary, D.S.G., Inc. (a California corporation) as of December 31, 2000, and the related consolidated statements of operations and accumulated deficit, changes in stockholders' equity, and cash flows for the years ended December 31, 2000 and 1999. These consolidated financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these consolidated financial statements based on my audit.
I conducted this audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provided a reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial positions of Coinless Systems, Inc. and its subsidiary as of December 31, 2000, and the results of their operations and their cash flows for the years ended December 31, 2000 and 1999, in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 18 to the consolidated financial statements, the Company's net operating loss raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also described in Note 18. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Pasadena, CA April 13, 2001
/s/ Harold Y. Spector
COINLESS SYSTEMS, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET December 31, 2000
ASSETS
The accompanying notes are an integral part of these financial statements
COINLESS SYSTEMS, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET December 31, 2000
LIABILITIES & STOCKHOLDERS' EQUITY
COINLESS SYSTEMS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS For the Years ended December 31, 2000 and 1999
COINLESS SYSTEMS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY For Years ended December 31, 2000 and 1999
COINLESS SYSTEMS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Continued) For Years ended December 31, 2000 and 1999
COINLESS SYSTEMS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years ended December 31, 2000 and 1999
COINLESS SYSTEMS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) For the Years ended December 31, 2000 and 1999
Note receivable of $125,000 and an escrow deposit of $50,000 were incurred for sales of assets.
COINLESS SYSTEMS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS
Coinless Systems, Inc. formerly known as Medical Resources Technologies, Ltd., (the "Company") was incorporated under the laws of the state of Nevada on March 1, 1983. The Company is also a California foreign corporation.
The Company has patented a product called "TickeTrak(R)" that is designed to replace the need for coins in casino gaming machines. The replacement product is a bar coded ticket device that identifies a given transaction on the casinos' host computer.
NOTE 2 - SUMMARY of SIGNIFICANT ACCOUNTING POLICIES
Principal of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, D.S.G., Inc. (a California corporation), after elimination of all material intercompany accounts and transactions.
Use of Estimate
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Revenue Recognition
Revenue is recognized when the products are shipped.
Cash Equivalents
For purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.
Fair Value of Financial Instruments
The carrying amounts of the financial instruments have been estimated by management to approximate fair value.
COINLESS SYSTEMS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SUMMARY of SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable
Management of the Company considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. If amounts become uncollectible, they will be charged to operations when that determination is made. Bad debt expense for years ended December 31, 2000 and 1999 was $0 and $2,185, respectively.
Inventory
Costs incurred for materials, technology and shipping are capitalized as inventory and charged to cost of sales when revenue is recognized.
Inventory consists of finished goods and is stated at the lower of cost or market, using the first-in, first-out method.
Property and Equipment
Property and Equipment are recorded at costs, and depreciated over their useful lives, using the straight-line methods. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred.
Depreciation for years ended December 31, 2000 and 1999 was $30,361 and $18,949, respectively.
Patent Rights
Patent Rights is capitalized and amortized on a straight-line basis over 180 months.
Income Taxes
The Company accounts income taxes in accordance with Financial Accounting standards Board Statement No. 109 "Accounting For Income Taxes" (SFAS No. 109). SFAS No. 109 requires a company to recognize deferred tax liabilities and assets for the expected future income tax consequences of events that have been recognized in the Company's financial statements. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial carrying amounts and the tax bases of assets and liabilities using the enacted tax rates in effect in the years in which the temporary differences are expected to reverse.
COINLESS SYSTEMS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SUMMARY of SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reclassification
Certain reclassifications have been made to the 1999 consolidated financial statements to conform with the 2000 consolidated financial statement presentation. Such reclassification had no effect on net loss as previously reported.
Recent Accounting Pronouncement
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended by SFAS No. 138, which was issued in June 2000. SFAS No. 133 establishes accounting and reporting standards for derivative instruments. The Company currently does not use derivative financial products for hedging or speculative purposes and as a result, does not anticipate any impact on the Company's consolidated financial statements.
In September 2000, the Emerging Issues Task Force (EITF) reached a final consensus on EITF Issue 00-10, "Accounting for Shipping and Handling Fees and Costs." This consensus requires that all amounts billed to a customer in a sale transaction related to shipping and handling, if any, represent revenue and should be classified as revenue. The Company historically has classified shipping charges to customers as revenue. With respect to the classification of costs related to the shipping and handling incurred by the seller, the EITF determined that the classification of such costs is an accounting policy decision that should be disclosed. It also determined that if shipping costs or handling costs are significant and are not included in cost of sales, a company should disclose both the amount(s) of such costs and the line item(s) on the income statement that include them. The Company historically has included both inbound and outbound shipping charges in cost of sales.
NOTE 3 - MERGER
On February 9, 1999, the Company merged with D & J Enterprises International, Inc. ("D&J", a Nevada corporation), and changed name to Coinless Systems, Inc. The Company issued 3,551,608 shares of its common stock in exchange for all the issued and outstanding shares of D&J. The combination was accounted for as a pooling of interest under which the net assets was combined at book value and no gain or loss was recognized.
The Company has reported its operations for 1999 as if the combination occurred at the beginning of the year.
COINLESS SYSTEMS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - ACQUISITION OF A SUBSIDIARY
On February 9, 1999, the Company acquired 100% of the issued and outstanding stock of D.S.G., Inc. ("DSG", a California corporation) from a related party, in exchange for 1,183,869 shares of the Company's common stock. The acquisition of D.S.G., Inc. was accounted for as a pooling of interests under which the net assets were combined at book value. The results of operations of D.S.G., Inc. were included in the historical financial statements from the beginning of the year.
NOTE 5 - NOTES RECEIVABLE
In February 2000, the Company incurred a note receivable of $742,501 from a shareholder for purchasing 1,856,253 shares of the Company's stock. The note bears interest at 7.5% per annum and is payable monthly, commencing March 2000. The note is due on July 1, 2001. The balance of the note and accrued interest income as of December 31, 2000 was $644,723 and $5,100, respectively.
In August 2000, the Company sold 625,000 shares of common stock in exchange for a note receivable of $250,000. The note bears interest at 10% per annum and is paid in five instalments of $35,000, commencing October 1, 2000, and $33,000 due on March 1, 2001. As of December 31, 2000, the balance of the note and accrued interest income was $68,000 and $10,787, respectively.
In December 1999, the Subsidiary sold certain assets and inventories to an unrelated party ("ADT") for $325,000. ADT paid $200,000 in cash, of which $50,000 was deposited into an escrow account against any sales tax liability borne by the Subsidiary. The balance of $125,000 will be paid in twelve(12) calendar quarter installments of $10,417 commencing June 30, 2000 until paid. As of December 31, 2000 and 1999, the balance of the note was $93,750 and $31,250, respectively.
In 1999, the Company converted officer's advances of $68,284 into a note receivable. The note bears interest at 10% per annum and is due on demand. Interest income incurred on the note during 2000 and 1999 was $7,838 and $5,690, respectively. As of December 31, 2000, the balance of the note was $0.
The Company had a note receivable from a related party. The note bears interest at 10% per annum and is payable on demand. Interest income accrued on the note during 2000 and 1999 was $5,483 and $16,145, respectively. As of December 31, 2000 and 1999, the balance of the note was $0 and $147,962, respectively.
COINLESS SYSTEMS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - LOAN AND SECURITY AGREEMENT
On December 18, 2000, the Company entered into a Loan and Security agreement with Spirit Mountain Development Corporation ("Spirit") to borrow funds up to $1,000,000. All proceeds of the loan shall be used solely to pay for supplies of materials and services used in the development and manufacture of a fully functioning barcode printer unit for use in TickeTrak gaming devices. Interest is accrued at 9% per annum. The loan is evidenced by a convertible promissory note. The note and accrued interest is convertible into the Company's common stock at the lesser of $0.30 per share or the price results in Holder holding that number of shares equal to 20% of the number of shares of common stock, as calculated on a fully diluted basis. Interest is accrued at 9% per annum.
As of December 31, 2000, the balance of note payable was $250,000 and accrued interest was $1,188. (See Note 7j)
NOTE 7 - NOTES PAYABLE
As of December 31, 2000 and 1999, notes payable consist of following:
COINLESS SYSTEMS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - NOTES PAYABLE (Continued)
Maturities on notes payable are as follows:
December 31, ------------ 2000 $ 419,800 2001 2,342 --------- $ 422,142 =========
NOTE 8 - CAPITAL LEASE OBLIGATIONS
The Company is obligated under four capital leases. The total cost and accumulated depreciation of equipment under capital lease was $116,117 and $15,338, respectively. The Company entered into a five year lease for telephone system with monthly payments of $485 expiring in February 2005. The Company entered into a three year lease for computer software with monthly payments of $573 expiring in August 2002. The Company entered into a five year lease for computers with monthly payments of $1,632 expiring in September 2004. The Company entered into a four year lease for computers with monthly payments of $549 expiring in February 2004.
Total Capital Lease Payable $ 95,010 Less: current portion (22,649) --------
Total Capital Lease Payable - Long-Term $ 72,361 ========
Aggregate maturities under these capital leases for the five years subsequent to December 31, 2000 as follows:
COINLESS SYSTEMS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - CAPITAL LEASE OBLIGATIONS (Continued)
NOTE 9- INVESTMENT LOSS
In November 1996, the Company entered to an agreement to loan to Medical Resources Clinics, Inc., $150,000 for the purchase of certain assets of Facet, Inc., a Washington corporation, which owns and manages medical clinics in the Seattle area. After then, the clinics went out of business in March 1997 and the Company is liable for its debt. As of December 31, 2000 and 1999, the balance of the debt was $95,000 and $105,964, respectively.
NOTE 10 - PROVISION FOR INCOME TAXES
The Company files consolidated federal income tax returns with its subsidiary.
Provision for income taxes in the consolidated statements of operations for years ended December 31, 2000 and 1999 consist of state tax only of $800 and $7,900, respectively.
As of December 31, 2000, the Company has net operating loss carryforwards, approximately, of $1,389,122 to reduce future taxable income. To the extent not utilized, the NOL carryforwards will begin to expire through 2000. The Company's ability to utilize its net operating loss carryforwards is uncertain and thus a valuation reserve has been provided against the Company's net deferred tax assets.
The deferred net tax assets consist of the following at December 31:
COINLESS SYSTEMS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - COMMON STOCK TRANSACTIONS
In 2000, the Company issued 1,476,900 shares of common stock at fair value to various consultants and public relation agents for their services rendered. The total cost of $472,863 was capitalized and amortized over a twelve-month period. For year ended December 31, 2000, $289,364 was charged to operations, and as of that date, the balance of unamortized expense was $183,499. The Company also issued 100,000 warrants to a consultant as an additional compensation. (See Note 13)
In February 2000, the Company issued 2,658,499 shares of common stock to the shareholders of D&J and DSG to equate to 60% control of the Company per the merger and acquisition agreement.
During 2000, the Company issued 2,375,459 shares of common stock to reduce notes payable of $327,810, accrued interest of $46,701, accounts payable and accrued expenses of $125,681.
During 1999, the Company converted $23,000 notes payable into 46,000 shares of its common stock.
The Company assumed and converted the subsidiary's notes payable and accrued interest of $51,987 into 93,173 shares of common stock.
The Company issued 50,000 shares of common stock for legal fee of $10,000.
The Company issued 260,000 shares of common stock for stock promotion and offering, in the amount of $100,000.
The Company issued 461,000 and 305,000 shares of common stock in 2000 and 1999, respectively, for employee incentives.
NOTE 12 - PRIVATE OFFERING
In 2000, the Company sold 3,809,191 shares of common stock in the amount of $1,165,723; $173,222 in cash and $992,501 in notes receivable (See Note 3). In 1999, the Company completed a private placement offering of 315,850 shares, in the amount of $230,796.
NOTE 13 - WARRANTS
As of December 31, 2000, the Company issued 100,000 stock warrants at exercise prices range from $1.00 to $10.00 per share to a consultant for his service rendered. These warrants will begin to expire in July 2002 through April 2003.
COINLESS SYSTEMS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 - WARRANTS (Continued)
A summary of the status of the Company's warrants as of December 31, 2000, and changes during the year then ended is presented below:
The following table sets forth additional information about stock warrants outstanding at December 31, 2000:
There were no outstanding warrants as of December 31, 1999.
NOTE 14 - NET LOSS PER SHARE
Net loss per share is computed based on the weighted average number of shares of common stock outstanding during the period. Basic net loss per share for years ended December 31, 2000 and 1999 was $0.08 in each year. Net loss per share does not include options and warrants as they would be anti-dilutive in 2000 and 1999 due to the net loss in those years.
NOTE 15 - SEGMENT INFORMATION
SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information" requires that a publicly traded company must disclose information about its operating segments when it presents a complete set of financial statements. Since the subsidiary did not have any operations in 2000 or 1999, and the Company has only one segment; accordingly, detailed information of the reportable segment is not presented.
COINLESS SYSTEMS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 - RELATED PARTY TRANSACTIONS
During 1999, the Company disposed certain fixed assets to a related party at book value of $7,960, which was treated as his advances.
NOTE 17 - COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company operates its facilities under an operating lease agreement with an unrelated party. The base rent is $7,500 per month and the lease expires on March 1, 2005.
Rent expense was $65,162 in 2000 and $62,990 in 1999.
The Company also leases two autos. The leases have monthly payments of $580 and $168. Lease payments totaled $7759 and $2,461 for years ended December 31, 2000 and 1999.
Minimum lease payments, by year, and in aggregate at December 31, 2000 are as follows:
Delinquent Sales Tax and Payroll Taxes
The Subsidiary has delinquent sales tax liability of $150,618 and $157,955 as of December 31, 2000 and 1999, respectively. The Company is negotiating the balance and expects to have a settlement in April 2001. The Subsidiary also has delinquent payroll tax liability of $21,991 and $69,472 in 2000 and 1999, respectively. The balance was paid in full in March 2001.
NOTE 18 - GOING CONCERN
The accompanying consolidated financial statements are presented on the basis that the Company will continue as a going concern. Going concern contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. As shown in the accompanying consolidated financial statements, the Company incurred a net loss of $1,303,782 and $730,049, excluding capital gain on sales of assets for the years ended December 31, 2000 and 1999, respectively. As of December 31, 2000, the Company has an accumulated deficit of $3,333,716.
COINLESS SYSTEMS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18 - GOING CONCERN (Continued)
Management negotiated with creditors to convert the notes payable into common stock (See Note 11) and to settle the delinquent sales and payroll taxes (See Note 17). Management is currently involved in active negotiations to obtain additional financing and actively increasing marketing efforts to increase revenues. The Company continued existence depends on its ability to meet its financing requirements and the success of its future operations. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Item 9
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
NOT APPLICABLE
PART III
Item 10
Item 10 Directors and Executive Officers of the Registrant
PRESIDENT/C.E.O./DIRECTOR Dennis W. Sorenson, age 59, residing in Las Vegas, Nevada is married. He began his career in marketing with Pitney Bowes in 1972. He advanced to Western Regional Manager for Monarch Marketing (a Division of Pitney Bowes). In 1982 he moved to Data Specialties, Inc. as Western Regional Manager. In 1987 he and two associates formed Data Recall as Vice President of sales. He remained with Data Recall until 1992, when he formed D.S.G., Inc., a full-line distributor of bar coding products and supplies. In 1996 he formed D&J Enterprises Int'l., Inc., a producer of TickeTrak(R) Gaming Devices.
TREASURER/CORPORATE SECRETARY Darryl D. Dorsett, Age 66, residing in Canyon Lake, California is single. A graduate of the University of North Carolina and American University from 1960 through 1992 held progressive positions in the Corporate Financial Community including Private Tax and Financial Consulting. In 1992 joined with Dennis Sorenson to form D.S.G., Inc., a California Corporation, and in 1996 to form D&J Enterprises Int'l., Inc., Functioning Financial Consultant
DIRECTOR Daniel Weyker, age 59, residing in San Diego, California is married. A graduate of Saint Michaels College and the University of Southern California. From 1965 through 1993, he held progressive management positions until he became Vice-President of manufacturing for Raichem, San Diego, California
DIRECTOR Alfred K. Doi, residing in California is married. He is Chairman of the Board of East West Marketing, Tipp City, OH; Board of Director of American Coating Tech of Minneapolis; President of Package Sales Company, Irvine, CA He introduced Thermal Label Stock to the industry in the United States Has patents on coatings to protect the Digital Thermal Image and is a contributor to the Non-impact Printing Group of America.
Item 11
Item 11 Executive Compensation
Other than information provided in the Company's 2000 Financial Statements incorporated herein, executive officers and directors have received no other compensation.
Item 12
Item 12 Security Ownership of certain beneficial owners and management
Item 13
Item 13 Certain Relationships and related Transactions
There have been no transactions which would be affected by this section.
PART IV
Item 14
Item 14 Exhibits, Financial Statements, Schedules and Reports on Form 8-K. The following documentation are filed as part of this Form 10-K Annual Report:
Financial Statements
SIGNATURES
Pursuant to the requirements of Section 13 or 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, thereunto duly authorized.
COINLESS SYSTEMS, INC.
April 13, 2001 By: /s/ Dennis Soresonon -------------------- Dennis W. Sorenson Chairman of the Board, President and Chief Executive Officer