-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, THMRByitFz/nEyBL2EvvQQwaPA7uG+E/cCh0IRZMWerMAVu8RLlaQ6m96Ft9kS4W dB8rZTy+Z7csDUKYdZpYGQ== 0001015402-01-001168.txt : 20010424 0001015402-01-001168.hdr.sgml : 20010424 ACCESSION NUMBER: 0001015402-01-001168 CONFORMED SUBMISSION TYPE: SB-2/A PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 20010423 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SINGLE SOURCE FINANCIAL SERVICES CORP CENTRAL INDEX KEY: 0001128581 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] FILING VALUES: FORM TYPE: SB-2/A SEC ACT: SEC FILE NUMBER: 333-50512 FILM NUMBER: 1608364 BUSINESS ADDRESS: STREET 1: 10780 SANTA MONICA BLVD STREET 2: SUITE 240 CITY: LOS ANGELES STATE: CA ZIP: 90025 MAIL ADDRESS: STREET 1: 10780 SANTA MONICA BLVD STREET 2: SUITE 240 CITY: LOS ANGELES STATE: CA ZIP: 90025 SB-2/A 1 0001.txt As filed with the Securities and Exchange Commission on January 25, 2001 Registration No. 333-50512 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________ AMENDMENT NUMBER 7 TO FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 _____________________ SINGLE SOURCE FINANCIAL SERVICES CORPORATION (Name of Small Business Issuer in its Charter) New York 6141 16-1576984 (State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer of incorporation or Classification Code Number) Identification No.) organization) _____________________ Single Source Financial Services Corporation Lawrence I. Washor 10780 Santa Monica Boulevard, Suite 240 Washor & Associates Los Angeles, California 90025 11150 West Olympic Blvd., Suite 980 (888) 262-1600 Los Angeles, California 90064 (Name, address and telephone number (310)479-2660 of registrant's principal executive (Name, address and telephone number offices and principal place of business) of agent for service) _____________________ Copies to: Lawrence I. Washor Washor & Associates 11150 West Olympic Blvd., Suite 980 Los Angeles, California 90064 Telephone: (310) 479-2660 Facsimile: (310) 479-1022 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------------------------------------------------- TITLE OF EACH CLASS OF SECURITIES TO AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF BE REGISTERED REGISTERED OFFERING PRICE PER UNIT AGGREGATE OFFERING PRICE REGISTRATION FEE - ------------------------------------ ------------ ------------------------ ------------------------- ---------------- Common Stock, $.001 par value - ------------------------------------ ------------ ------------------------ ------------------------- ---------------- Common Stock Offered by Selling 1,125,000 $ 2.00 $ 2,250,000 $ 550.00 Shareholders - ------------------------------------ ------------ ------------------------ ------------------------- ---------------- Total Registration Fee* $ 550.00 - ------------------------------------ ------------ ------------------------ ------------------------- ----------------
* $1,237.50 was initially paid. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Subject to Completion January 25, 2001 PROSPECTUS SINGLE SOURCE FINANCIAL SERVICES CORPORATION a New York corporation We are offering a maximum of 1,125,000 shares of common stock for sale by certain selling shareholders at $2.00 per share ($.001 par value) for their own accounts on a best-efforts basis for a maximum period of 120 days after the effective date of this prospectus unless extended by us for an additional 60 days at our sole discretion. The selling shareholders may sell the shares of common stock directly or through underwriters, dealers, or agents. They may also pledge some of the shares of common stock as security. More information about the way the selling shareholders may distribute the common stock is set forth under the "Plan of Distribution." The common stock is not listed on any national securities exchange or any NASDAQ stock market and there is no current underwriting arrangement in connection with this offering. There is no trading symbol for the common stock. Single Source Financial Services Corporation will not receive any proceeds from shares sold by the selling shareholders and shall bear all the expenses incurred in connection with registering this offering of common stock. There is no public market for our common stock and no assurance that a market will develop. THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK AND SUBSTANTIAL DILUTION. SEE "RISK FACTORS" BEGINNING ON PAGE 7 AND "DILUTION" BEGINNING ON PAGE 11. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This prospectus will not be used before the effective date of the registration statement. We are not a reporting company. Commissions Offering and Discounts Net Proceeds -------- ------------- ------------ Per Share $2.00 $0 $2.00 Total $2,250,000 $0 $2,250,000 The selling shareholders and any broker-dealers participating in the distribution of the common stock may be deemed to be "underwriters" within the meaning of the 1933 Act, and any commissions or discounts given to any broker-dealer may be regarded as underwriting commissions or discounts under the 1933 Act. The date of this prospectus is , 2001 1
TABLE OF CONTENTS Page ---- Item 3. Summary Information and Risk Factors . . . . . . . . . . . . . . . . . . .4 Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 1. Because We Have Limited Operating History, It Will Be Difficult To Gauge Our Future Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 2. We Have No Operating Profit To Date. If We Fail to Achieve Profitability, We May Have To Curtail Our Operations . . . . . . . . . . . 7 3. Since We Are Thinly Capitalized And Require Operating Capital, Our Inability To Raise Capital May Affect Our Ability To Continue Our Operations . . .7 4. Because The Company May Be Subject To The "Penny Stock" Rules, The Level Of Trading Activity In Our Stock May Be Reduced . . . . . . . . . . . . . 7 5. Since We Rely Heavily On Our Key Employees, The Loss Of Their Services Could Make It Impossible To Continue The Operations Of The Business . . . .8 6. Because Management's Determination of The Offering Price Was Arbitrarily Determined, It Bears No Relationship To Actual Valuation . . . . . . . . . 8 7. Our Failure To Manage Growth Effectively Could Impair Our Business . . . . . . . .8 8. Since There Is No Current Public Market For Our Securities, There Can Be No Assurance That An Investor Can Liquidate His/Her Investment . . . . . .9 9. Because Certain Directors and Officers Constitute A Control Group, They Could Direct The Company In Ways Which Investors May Not Perceive To Be In Their Best Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 10. Because of the Rapid Changes in Our Business, There Are No Guarantees That Our Products Will Not Become Obsolete or Regulated . . . . . . . . . 9 11. Should A Public Market Develop For Our Stock, It May Not Be Maintained And It May Be Subject To Significant Volatility, Which Could Result In Litigation Against Us . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 12. Because We Have No Liability or Other Insurance, We Are Subject To Liability For Any Potential Losses . . . . . . . . . . . . . . . . . . . . . 10 13. Management's Limited Experience Could Make It Difficult For Us To Compete With Companies Run By More Experienced Management . . . . . . . . 10 14. Because We Utilize A Sales Force of Independent Contractors, The Inability To Find And Properly Manage A Sales Force Nationwide May Effect Our Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 15. Any Inability To Raise Sufficient Capital May Make It Impossible To Compete With Better Capitalized Competitors . . . . . . . . . . . . . . . . .11 2 Item 4. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Item 5. Determination of Offering Price . . . . . . . . . . . . . . . . . . . . . 11 Item 6. Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 7. Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Item 8. Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Item 9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Item 10. Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Item 11. Security Ownership of Certain Beneficial Owners and Management . . . . . . . 17 Item 12. Description of Securities . . . . . . . . . . . . . . . . . . . . . . . . .19 Item 13. Interest of Named Experts and Counsel . . . . . . . . . . . . . . . . . 20 Item 14. Disclosure of Commission Position on Indemnification for Securities Act Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Item 15. Organization Within Last Five Years . . . . . . . . . . . . . . . . . . .21 Item 16. Description of Business . . . . . . . . . . . . . . . . . . . . . . . . . .22 Item 17. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . . . . . . .25 Item 18. Description of Property. . . . . . . . . . . . . . . . . . . . . . . . . . 28 Item 19. Certain Relationships and Related Transactions . . . . . . . . . . . . . 28 Item 20. Market for Common Equity and Related Stockholder Matters . . . . . . . .29 Item 21. Executive Compensation - Remuneration of Directors and Officers . . . . . . .29 Item 22. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 Item 23. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . 30 LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 PART II - INFORMATION NOT REQUIRED IN PROSPECTUS . . . . . . . . . . . . . . . . . .33 Item 24. Indemnification of Directors and Officers . . . . . . . . . . . . . . . .33 Item 25. Other Expenses of Issuance and Distribution . . . . . . . . . . . . . . 34 Item 26. Recent Sales of Unregistered Securities . . . . . . . . . . . . . . . . .34 Item 27. Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Item 28. Undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3 Item 3. Summary Information and Risk Factors. This summary is qualified in its entirety by reference to, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus, which contains more detailed information with respect to each of the matters summarized in this prospectus as well as other matters not covered in the summary. All prospective investors should carefully review the entire contents of the prospectus and the exhibits attached hereto, individually and with their own tax, legal and business advisors. This summary discusses all material factors necessary to make an informed investment decision. All share and per share information reflects a one share for every six share reverse stock split effective as of October 18, 2000. The Company: Single Source Financial Services Corporation is a New York corporation formed on September 19, 1994. Our principal business address is 10780 Santa Monica Boulevard, Suite 240, Los Angeles, California 90025. The telephone number is (888)262-1600. Business of the We intend to acquire several companies in the financial Company: services area. On November 7, 2000, we acquired Single Source Electronic Transactions, Inc., a Nevada corporation. Single Source Electronic Transactions, Inc. is our only acquisition to date and constitutes our only operating business. However, for accounting purposes, our acquisition of Single Source Electronic Transactions is viewed as a reverse acquisition of us by Single Source Electronic Transactions. Single Source Electronic Transactions, Inc. sells and Leases to merchants various types of equipment used to record and to facilitate electronic financial transactions, including credit and debit card purchases. 4 However, where the merchant elects to lease the equipment, Single Source Electronic Transactions, Inc. sells the lease to an outside equipment leasing company. We offer a wide range of electronic transaction equipment, including credit card processing equipment, debit card processing equipment, automated teller machines ("ATM") and smart cards. Additionally, we provide products which service the construction and maintenance of internet web sites, as well as electronic credit capabilities, and electronic check verification equipment. We attempt to offer access to the electronic processing of these transactions to our customers at the lowest available rate. For these reasons, we believe that our operation of Single Source Electronic Transactions, Inc. will become profitable over the next few months. However, there is no guarantee that we will become profitable over the next few months. State of Organization Our company was incorporated under the name Ream Printing of the Company: Paper Corp., pursuant to the laws of the State of New York, on September 19, 1994. In November, 2000, we changed its name to Single Source Financial Services Corporation. Common Stock Prior to the offering, there are 11,845,689 shares of the Outstanding Prior to common stock outstanding. 10,012,500 shares were used to Offering: acquire Single Source Electronic Transactions, Inc These 10,012,500 shares are currently restricted. The remaining 1,833,189 shares resulted from a 1994 exchange offer effected under Rule 504 and a subsequent six for one stock split. These 1,833,189 shares have no restrictions on transfer or resale. Securities Offered In the instant offering, the selling shareholders are Herein: offering 1,125,000 shares of common stock at $2.00 per share. These 1,125,000 shares are a portion of those received by the selling shareholders from their sale of Single Source Electronic Transactions, Inc. to Single Source Financial Services Corporation. Sales by Selling 1,125,000 shares of the common stock have been registered Shareholders: pursuant to the registration statement of which this Prospectus forms a part for sale by the selling shareholders. The selling shareholders may sell the common stock that is a part of this registration at prevailing prices or in transactions at negotiated prices or by gift or a combination of all three. No Proceeds to the We will not receive any of the proceeds from the sale of Company for the Sale the shares of common stock offered by the selling of the Stock: shareholders. 5 Common Stock Outstanding After Offering: After the offering is complete, we will have 11,845,689 shares of common stock which are issued and outstanding. 2,958,189 shares of the issued and outstanding stock shall be unrestricted with respect to transfer and resale. In effect, this stock will be "free-trading". Risk Factors: Investment in the common stock involves a high degree of Risk and immediate substantial dilution. See "Risks Factors" and "Dilution". Among the significant risk factors are (1) our lack of funds and our corresponding need to raise additional funds to carry out our plan of operations. In 2000, we lost approximately $416,000 in operations and we must raise a sufficient amount of funds to cover any 2001 losses to continue operations on a going-forward basis; (2) our limited, operating history of slightly more than one year is not long enough to permit meaningful evaluation of our business operations, (3) our lack of revenue and our large accumulated deficit of $417,180; and (4) the existence of a control block (approximately 95%) which has the ability to cause us to act in a fashion with which other minority shareholders may disagree. 6 RISK FACTORS In addition to the other information provided in this prospectus, the following risk factors should be considered carefully in evaluating our company and its business before purchasing any of the common stock. A purchase of the common stock is speculative in nature and involves numerous risks. No purchase of the common stock should be made by any person who cannot afford to lose the entire amount of this investment. 1. Because We Have Limited Operating History, It Will Be Difficult To -------------------------------------------------------------------- Gauge Our Future Performance. We have a limited operating history. Although - ------------------------------- the company was formed in 1994, it has not operated any business during the past five years and its operation of Single Source Electronic Transactions, Inc. did not commence until November 7, 2000. This makes it difficult to evaluate our future performance and prospects. Additionally, there is no history from which a prospective investor could determine management's ability to properly operate the business. Our prospects must be considered in light of the risks, unforeseen problems, expenses, delays, and difficulties frequently encountered in establishing a new business. 2. We Have No Operating Profit To Date. If We Fail to Achieve -------------------------------------------------------------------- Profitability, We May Have To Curtail Our Operations. To date, neither Single - ------------------------------------------------------- Source Electronic Transactions, Inc. nor we have ever generated a profit in our business operation. Although management believes that because of our acquisition of Single Source Electronic Transactions, Inc., which has provided the company with a wide range of electronic transaction equipment which it can offer at low rates, we will become profitable within the next 90 days, however, there can be no assurance that we will do so, or that we will ever make a profit for that matter. Our inability to obtain adequate capital would limit our ability to achieve the level of corporate growth that we believe to be necessary to succeed in our business. 3. Since We Are Thinly Capitalized And Require Operating Capital, Our -------------------------------------------------------------------- Inability To Raise Capital May Affect Our Ability To Continue Our Operations. - ------------------------------------------------------------------------------- Our plans for expansion require us to obtain significant operating capital over the next few years. We intend to acquire other companies similar to Single Source Electronic Transactions, Inc. and to acquire compatible financial services companies when, and if, these companies become available. As can be seen from the attached financials, both Single Source Electronic Transactions, Inc. and us have limited capital available to fund these anticipated transactions. Therefore, we will be dependent upon raising funds to accomplish these goals. In the event that we are able to increase Single Source Electronic Transactions, Inc.'s revenue as we anticipate we can, we will probably require additional funds to satisfy our capital needs over the next year. However, there can be no assurance that we will be able to raise the necessary funds or that we will be able to do so on terms acceptable to us. Likewise, many of our competitors are better financed and are in a better position to take advantage of acquisition opportunities than we are. Nonetheless, we believe that adequate financing may be available from our current major shareholders. 7 4. Because The Company May Be Subject To The "Penny Stock" Rules, The -------------------------------------------------------------------- Level Of Trading Activity In Our Stock May Be Reduced. The Securities and - ----------------------------------------------------------- Exchange Commission ("Commission") has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks". Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in these securities are provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the Commission, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. The broker-dealer also must provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. Penny stock disclosure requirements may have the effect of reducing the trading activity in the secondary market for any of our stock that becomes subject to the penny stock rules, which may result in our investor having more difficulty selling their shares. 5. Since We Rely Heavily On Our Key Employees, The Loss Of Their -------------------------------------------------------------------- Services Could Make It Impossible To Continue The Operations Of The Business. - ------------------------------------------------------------------------------- Our future success will depend in part on the services of our key personnel and, additionally, on our ability to identify, hire and retain additional qualified personnel. There is significant competition for qualified personnel in the areas of our activities, and there can be no assurance that we will be able to continue to attract and retain the personnel necessary for the development of our business. Because of the intense competition, there can be no assurance that we will be successful in adding personnel as needed to satisfy our staffing requirements. Failure to attract and retain key personnel could have a material adverse effect on our company. We do not maintain key person life insurance on any of our key personnel. 6. Because Management's Determination of The Offering Price Was ------------------------------------------------------------------- Arbitrarily Determined, It Bears No Relationship To Actual Valuation. - ---------------------------------------------------------------------------- Management has arbitrarily determined the offering price of the common stock. Among the factors considered in determining the price of the common stock were management's opinion of the prospects of the company, the background of the company and the results of its short operating history and current conditions affecting the business and operations. However, the offering price does not bear any relationship to our assets, earnings, book value, cash flow, or other generally accepted criteria of valuation. 7. Our Failure To Manage Growth Effectively Could Impair Our Business. ------------------------------------------------------------------- With every newly organized corporation, it is important that we manage our plans for growth. To date, we have required, and are expected to continue to require, the full utilization of our management, financial, and other resources, since we have not had adequate working capital. Our ability to expand our business effectively will depend on our ability to improve and expand our operations, including our financial and management information systems, and to recruit, train and manage executive staff and other employees. There can be no assurance that we will be able to manage our growth effectively, and the failure to effectively manage our growth may have a materially adverse effect on our results of operations. Furthermore, there can be no assurance that we will experience any growth. 8 8. Since There Is No Current Public Market For Our Securities, There -------------------------------------------------------------------- Can Be No Assurance That An Investor Can Liquidate His/Her Investment. Prior to - --------------------------------------------------------------------- this offering, there has been no public market for the common stock currently being offered. There can be no assurance that any public market will develop, even if this offering were to prove successful, or that if a public market were to develop it will continue to be maintained. Therefore, there can be no assurance that an investor will be able to liquidate his/her investment in our public stock if the investor should desire to do so. 9. Because Certain Directors and Officers Constitute A Control Group, -------------------------------------------------------------------- They Could Direct The Company In Ways Which Investors May Not Perceive To Be In - -------------------------------------------------------------------------------- Their Best Interest. Our directors, officers and principal (greater than 5%) - --------------------- shareholders, taken as a group, together with their affiliates, beneficially own, in the aggregate, a majority of our outstanding common stock. Certain principal shareholders are directors or executive officers of the company and certain other company principals are related by blood to each other. As a result of this ownership, these shareholders may be able to exert significant influence, or even control, over matters requiring approval by the shareholders of Single Source Financial Services Corporation, including the election of directors. The shareholders of Single Source Financial Services Corporation may not perceive the foregoing to be in their best interest. 10. Because of the Rapid Changes in Our Business, There Are No ------------------------------------------------------------------- Guarantees That Our Products Will Not Become Obsolete or Regulated. At the - ----------------------------------------------------------------------- current time, there is substantial development in the manner in which consumers pay merchants for goods and services. In addition to credit cards, consumers use, inter alia, smart cards, debit cards, ATM machines, signature verification processes, and the internet. Our current business operations are based upon these changes in payment methodology. For this reason, we offer through purchase and lease a wide variety of equipment which a merchant can use to obtain virtually instantaneous electronic payment for products and services sold to a consumer. However, the industry is rapidly changing and developing and we must keep abreast of any developments and changes as they occur if we are to remain competitive. Furthermore, the rapid development of the industry may cause certain products or services to become obsolete. There can be no assurance as to which services, if any, may become obsolete and what effect obsolescence will have on us. Also, as the amount of national debt increases or decreases, federal and state governments may regulate this industry through the passage of new laws. Currently, only the banking aspects of this industry are regulated. There is no way to predict the effect that additional regulation would have upon the manner in which we do business. 11. Should A Public Market Develop For Our Stock, It May Not Be ------------------------------------------------------------------- Maintained And It May Be Subject To Significant Volatility, Which Could Result - -------------------------------------------------------------------------------- In Litigation Against Us. There is currently no public market for our common - --------------------------- stock. Should there develop a market for our common stock there is no assurance that any regular trading market will be sustained. The trading prices of our common stock could be subject to wide fluctuations in response to: (i) The company's financial results; (ii) The company's introduction of new services ; (iii) Competitive companies and products; and (iv) General economic conditions. 9 In addition, in recent years, the stock market as a whole has experienced a high level of price and volume volatility. During this period, market prices for many companies, particularly small and emerging growth companies, have experienced wide price fluctuations not necessarily related to the operating performance of these companies. The market price for our common stock may be affected by general stock market volatility. If a market does not develop for our common stock, new investors and the selling shareholders may be required to retain their stock position in the company for an indefinite period of time. Additionally, in the past, following periods of volatility in the market price of many company's securities, securities class action litigation has occurred against the issuing company. There can be no assurance that litigation will not occur in the future with respect to our company. Any litigation could result in substantial costs and a diversion of management's attention and resources, which could have a material adverse effect on our business, prospects, financial condition and results of operation. 12. Because We Have No Liability or Other Insurance, We Are Subject To ------------------------------------------------------------------- Liability For Any Potential Losses. Our business may expose us to potential - -------------------------------------- liability risks that are inherent in the marketing of products. However, we do not currently have any liability insurance. Since products liability insurance is expensive, there can be no assurance that we will be able to obtain or maintain any insurance on acceptable terms or, if obtained, that any liability insurance will provide adequate coverage against potential liabilities, including products liability claims. Although we are attempting to become additional insureds on the policies of the manufacturers from whom we purchase equipment, there can be no assurance that we will be able to do so. In addition, we intend to obtain general liability insurance to cover the day to day risks of operating a business. Notwithstanding the foregoing, we intend to attempt to avoid activities which contain unacceptable liability exposure. Nonetheless, management believes that the inability to obtain appropriate insurance could have a material adverse effect upon the business in operations and growth. Specifically, if we are unable to obtain adequate insurance, both general liability insurance, or products liability insurance, it may not be prudent to expand our product base or operations by hiring additional employees or opening additional offices. Any failure to expand our growth, or any impediment in our ability to invest in additional products or the marketing of its products would inevitably affect our revenues and profits. 13. Management's Limited Experience Could Make It Difficult For Us To ------------------------------------------------------------------- Compete With Companies Run By More Experienced Management. Except for Mr. - --------------------------------------------------------------- Graham and Mr. Gifis, our current management has only limited experience in the electronic reporting and processing of financial transactions. (See "Management"). This could prove to be detrimental to our growth and success. Since success or failure of our company depends to a large extent upon management, their lack of experience or the loss of Mr. Graham and/or Mr. Gifis, could substantially impair our ability to sell our products and services, or impair our ability to manage the day to day operations of the business. 14. Because We Utilize A Sales Force of Independent Contractors, The ------------------------------------------------------------------- Inability To Find And Properly Manage A Sales Force Nationwide May Effect Our - -------------------------------------------------------------------------------- Growth. We operate from offices located in California and in other States using independent contractors for our sales force. There can be no assurance that we will be able to find sufficient numbers of independent contractors to keep the 10 various offices operating or that we will be able to manage these independent contractors sufficiently to keep the offices operating at maximum efficiency and profitability. Therefore, our ability to successfully hire and manage our sales force in the various states may affect our ability to expand, affecting our financial success and growth. This is especially true as the number of offices in the various States increases. 15. Any Inability To Raise Sufficient Capital May Make It Impossible To ------------------------------------------------------------------- Compete With Better Capitalized Competitors. We will be competing with other - ---------------------------------------------- organizations which offer similar products many of which are better financed and have been in the business longer than we have. This competition in conjunction with any inability to raise capital could make it impossible to compete with them in the market and therefore carry out our plan of operations. SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS This prospectus contains certain forward looking statements and information relating to our company that are based on the beliefs of management as well as assumptions made by, and information currently available to, management. When used in this prospectus, the words "anticipate", "believe", "estimate", "expect", "will", "could", "may", and similar expressions are intended to identify forward looking statements but the absence of any word does not mean that the statement is not forward looking. These statements reflect the current views of management with respect to future events and are subject to certain risks, uncertainties, and assumptions, including those described under "Risks Factors" and elsewhere in this prospectus. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. In addition to the other information in this prospectus, the above factors should be carefully considered in evaluating our company and its business and before purchasing the securities offered hereby. Item 4. Use of Proceeds. We will receive no proceeds from the sale of the common stock by the selling shareholders. Item 5. Determination of Offering Price. Management has considered the following factors to determine the offering price of our common stock being offered through this registration. Our common stock is not yet quoted on the OTC Bulletin Board or any other national securities exchange or automated quotation system and therefore does not currently have an average bid or ask price. The offering price of the common stock was determined by our management based upon their own evaluation of operations and potential. However, this value has no relationship to any established criteria of value, such as book value or earnings per share. Additionally, because we have no significant operating history and we have not generated any significant earnings to date, the offering price of the common stock is not based on past earnings. Nor is the offering price of the common stock indicative of the current market value of our assets. Item 6. Dilution. As of December 31, 2000, we had 11,890,689 shares of common stock issued and outstanding with a net tangible book value of ($417,180) or a net tangible book value of ($0.04) per share. We are registering 1,125,000 shares of the common stock paid to acquire Single Source Electronic Transactions, Inc. at $2.00 per share. As of December 31, 2000, we had obtained all the assets of Single Source Electronic Transactions, Inc., there would be a total of 11,845,689 shares of common stock issued and outstanding with a net tangible book value of ($417,180) or a net tangible book value of ($0.04) per share. Assuming that all 1,125,000 shares registered in this offering were sold, the purchasing shareholders would own 9.49% of our issued and outstanding shares. The dilution to the purchasing stockholders would be $2.04 per share or (1.02%) per share based on a purchase price of $2.00 per share. 11 Net tangible book value per share is obtained by subtracting from the total tangible assets the total liabilities and then dividing the sum by the total number of outstanding shares. Dilution is the difference between the public offering price per share and the net tangible book value per share immediately after the offering. The following Chart sets forth dilution. Public Offering price per share $2.00 Net tangible book value per share as of December 31, 2000 ($.042) Pro forma net tangible book value per share after Offering ($.042) Dilution per share to stock purchasers $2.042 Gain per share to original shareholders $2.042 Item 7. Selling Shareholders. The following table sets forth the number of shares of common stock which may be offered for sale from time to time by the selling shareholders upon the effectiveness of this prospectus. To the extent that we are aware that the selling shareholders own any restricted common stock or any additional unrestricted common stock, it is also set forth below. None of the selling shareholders have held any position or office with us, except as specified in the following table. Other than the relationships described below, none of the selling shareholders had or have any material relationship with us.
Percentage Percentage of of common common stock stock held by Number of held by selling share- shares sought to share-holders olders after be registered in Additional before offering Positions Positions Held offering Name this offering shares held Held - SSFS - SSET completed - ----------------- ---------------- ------------ ---------------- -------------- -------------- -------------- Baki Arbria 20,487 479,513 - 4.20% N/A N/A 4.00% restricted - ----------------- ---------------- ------------ ---------------- -------------- -------------- -------------- Brandon Becker 663,539 2,271,875 - 22.90% Vice Director 21.20% restricted President and 236,342 - Director unrestricted - ----------------- ---------------- ------------ ---------------- -------------- -------------- -------------- Lorraine Dorsey 250,000 N/A 2.10% N/A N/A 0.00% 12 - ----------------- ---------------- ------------ ---------------- -------------- -------------- -------------- Arlene Rosenblatt 20,487 1,296,875 - 12.10% Director Director 11.90% restricted 118,171 - unrestricted - ----------------- ---------------- ------------ ---------------- -------------- -------------- -------------- Michael Sock 20,487 361,342 - 4.20% N/A N/A 4.00% restricted 118,171 - unrestricted - ----------------- ---------------- ------------ ---------------- -------------- -------------- -------------- Harry L. Wilson 25,000 225,000 - 2.10% Secretary, Director 1.90% restricted Treasurer and Director - ----------------- ---------------- ------------ ---------------- -------------- -------------- --------------
Item 8. Plan of Distribution. The shares covered by this prospectus may be distributed from time to time by the selling shareholders in one or more transactions that may take place on the over-the-counter market. These include ordinary broker's transactions, privately-negotiated transactions or through sales to one or more broker-dealers for resale of these shares as principals, at market prices existing at the time of sale, at prices related to existing market prices, through Rule 144 transactions or at negotiated prices. Usual and customary or specifically negotiated brokerage fees or commissions may be paid by the selling shareholders in connection with sales of securities. The selling shareholders may sell the securities in one or more of the following methods, which may include crosses or block transactions: * through the "pink sheets", on the over-the-counter Bulletin Board, or on any exchanges or over-the-counter markets on which our shares may be listed from time-to-time, in transactions which may include special offerings, exchange distributions and/or secondary distributions, pursuant to and in accordance with the rules of any exchanges, including sales to underwriters who acquire the shares for their own account and resell them in one or more transactions or through brokers, acting as principal or agent; * in transactions other than on these exchanges or in the over-the-counter market, or a combination of these transactions, including sales through brokers, acting as principal or agent, sales in privately negotiated transactions, or dispositions for value by any selling shareholder to its partners or members, subject to rules relating to sales by affiliates; or * through the writing of options on our shares, whether or not these options are listed on an exchange, or other transactions requiring delivery of our shares, or the delivery of our shares to close out a short position. Any of the foregoing transactions may be effected at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated prices or at fixed prices. In making sales, brokers or dealers used by the selling shareholders may arrange for other brokers or dealers to participate. The selling shareholders and others through whom these securities are sold may be "underwriters" within the meaning of the Securities Act for the securities offered, and any profits realized or commission received may be considered underwriting compensation. 13 At the time a particular offer of the securities is made by or on behalf of a selling shareholder, to the extent required, a prospectus is to be delivered. The prospectus will include the number of shares of common stock being offered and the terms of the offering, including the name or names of any underwriters, dealers or agents, the purchase price paid by any underwriter for the shares of common stock purchased from the selling shareholder, and any discounts, commissions or concessions allowed or reallowed or paid to dealers, and the proposed selling price to the public. We have told the selling shareholders that the anti-manipulative rules under the Securities Exchange Act of 1934, including Regulation M, may apply to their sales in the market. We have also told the selling shareholders of the need for delivery of copies of this prospectus in connection with any sale of securities that are registered by this prospectus. Sales of securities by us and the selling shareholders or even the potential of these sales may have a negative effect on the market price for shares of our common stock. Item 9. Legal Proceedings. There are no legal actions pending or threatened against us. Nor do we contemplate the filing of any legal action in the future. However, there is a lawsuit pending against Single Source Electronic Transactions, Inc. and Michael Veni, the Manager of Single Source Electronic Transactions, Inc.'s Los Angeles office. They are named as defendants in a lawsuit entitled E-Commerce Processing, a California corporation v. Michael ------------------------------------------------------------- Venni and Single Source Financial Services Corporation Electronics (sic) - -------------------------------------------------------------------------------- Transactions, Los Angeles Superior Court Case No. BC 237039. The case alleges - ------------ that Single Source Electronic Transactions, Inc. wrongfully hired E-Commerce Processing ("ECI") staff from ECI, that Single Source Electronic Transactions, Inc. took ECI trade secret information, leads, and customers, that Single Source Electronic Transactions, Inc. defamed ECI, and that Single Source Electronic Transactions, Inc. committed unfair competition. ECI seeks unspecified compensatory and punitive damages. Single Source Electronic Transactions, Inc. denies ECI's allegations and denies that it owes any amount to ECI. Single Source Electronic Transactions, Inc. also contends that ECI interferred with its business by calling its staff in order to threaten and harass them and by defaming Single Source Electronic Transactions, Inc. Single Source Electronic Transactions, Inc. has filed a cross-complaint against ECI for defamation, interference with prospective business advantage, and various other torts. This action is presently in the discovery stage and there is currently little ongoing activity in the action. Single Source Electronic Transactions, Inc. has no other actions pending. 14 Item 10. Management. Our directors and principal executive officers are as follows: Name Age Position ---- --- -------- Arnold F. Sock 46 President and Director Brandon Becker 29 Vice President and Director Name Age Position ---- --- -------- Harry L. Wilson 56 Secretary, Chief Financial Officer and Director Pamela Becker 54 Director Arlene Rosenblatt 66 Director Arnold F. Sock was elected a Director of Single Source Financial Services Corporation in July, 2000 and President in September, 2000. Since 1994 Mr. Sock has been a Consultant to various businesses regarding business, management, operations, accounting, financial and legal matters. He has also been an officer and/or director of various businesses. Mr. Sock currently serves in the following capacities with the following companies: Chairman of the Board and Secretary of Tax Debt Negotiators, Inc. (TDN) (a tax debt resolution firm) since December, 1998; President of Taxpayer Service Network, Inc. (TSN) (an EAP provider offering tax and credit debt resolutions) since October, 1999; and Director and Secretary of TDN Marketing Corporation (markets TDN and TSN products and services) since April, 2000. Prior to becoming President of Single Source Financial Services Corporation, Mr. Sock was a Director and President of Internet Business's International, Inc., a publicly traded company (OTC:BB: IBUI) from November, 1998 through August, 1999. Prior to that Mr. Sock was Director of Operations for Commercial Ventures, Inc., a real estate investment company from September, 1997 to September, 1998. For the four years prior to that Mr. Sock provided business consulting services to a wide variety of businesses. Mr. Sock teaches real estate law for the Construction management Certificate program at California State University at Dominquez Hills as an Adjunct Professor. Mr. Sock has an Associate in Science degree in Business Administration and a Bachelor of Science degree in Accounting from Roger Williams University, a Juris Doctorate degree from the University of West Los Angeles and a Master of Laws in Taxation from Golden Gate University Law School. Mr. Sock is a member of the California State Bar. 15 Brandon Becker was elected Vice President and a Director of Single Source Financial Services Corporation in September, 2000. Since 1998, Mr. Becker has been President of Los Angeles Commercial Investments, Inc., a business broker. Mr. Becker is also a Director of Tax Debt Negotiators, Inc., a corporation which provides assistance to persons with state and federal tax debt problems. From 1995 to 1998, Mr. Becker was the Manager of Venture Capital Investment Group, Inc., which assists businesses in resolving their debt problems. From 1991 to 1994, Mr. Becker was Executive Vice President for Concord Business Investments, a business broker. Mr. Becker attended Santa Monica City College. Brandon Becker is the son of Pamela Becker. Harry L. Wilson was elected a Director of Single Source Financial Services Corporation in July, 2000 and Secretary and Chief Financial Officer in September, 2000. Since 1998, Mr. Wilson has been President and a Director of Tax Debt Negotiators, Inc., a corporation which provides assistance to persons with state and federal tax debt payment problems. From 1997 to 1998, Mr. Wilson was Secretary/Treasurer of IRS Solutions, which provides assistance to persons with state and federal tax debt problems. From 1994 to 1997, Mr. Wilson was Director of Central Processing for Kaye Kotts, which negotiates the resolution of IRS collection matters. Mr. Wilson holds a Bachelor of Arts degree from the University of California at Santa Barbara and an MBA from Pepperdine University. Pamela Becker was elected a Director of Single Source Financial Services Corporation in July, 2000. Since 1991, Mrs. Becker has been the Escrow Officer/Manager of Vera's Escrow and its predecessor First City Escrow. Prior to 1991, Mrs. Becker owned and operated various businesses including a Burger King franchise and several hotels. Mrs. Becker attended the University of California at Berkeley and Boston University. Mrs. Becker is the mother of Brandon Becker. Arlene Rosenblatt was elected a Director of Single Source Financial Services Corporation in July, 2000. For the past four years, Mrs. Rosenblatt has acted as a Consultant to small businesses regarding computer-related problems. Prior to commencing her consulting practice, Mrs. Rosenblatt served for 31 years as a high school teacher in California with certification in business organizations, computers and math. Mrs. Rosenblatt is active with and has served as President of various community organizations which have an emphasis in business management and cost control. Mrs. Rosenblatt has a Bachelor of Science degree from the University of California at Los Angeles. With respect to Single Source Electronic Transactions, Inc., its principal executive officers are Messrs. William Graham and Arnold Sock. Mr. Graham is the president and Mr. Sock is the secretary/treasurer. William Graham, 58, was the President of Single Source Electronic Transactions, Inc. from its formation in 1998 until it was acquired by Single Source Financial Services Corporation. Mr. Graham currently holds the same position in Single Source Electronic Transactions, Inc. From 1995 until Single Source Electronic Transactions, Inc. began operating in January, 2000, Mr. Graham was an independent sales officer for 1st National Processing and 1st National Bankcard of Simi Valley, California, one of the largest independent processors for credit card transactions in the United States. Previous to that, Mr. Graham was Vice President and National Trainer for T.V. Fanfare, an advertising firm, for which Mr. Graham worked off and on for 22 years. Mr. Graham has been involved in direct sales for his entire career. 16 Arnold F. Sock, 46, is the Secretary and Treasurer of Single Source Electronic Transactions, Inc. For Mr. Sock's background, please turn to page 15 where the information appears. The directors of Single Source Electronic Transactions, Inc. are Mr. Arnold F. Sock, Mr. Brandon Becker, Ms. Pamela Becker, Mr. Harry Wilson and Ms. Arlene Rosenblatt. For their background, please turn to pages 15 and 16 where the information appears. Item 11. Security Ownership of Certain Beneficial Owners and Management. The following tables set forth certain information regarding the beneficial ownership of Single Source Financial Services Corporation's common stock as of November 7, 2000, by each person or entity known by Single Source Financial Services Corporation to be the beneficial owner of more than 5% of the outstanding shares of common stock, each of Single Source Financial Services Corporation's directors and named executive officers, and all directors and executive officers of Single Source Financial Services Corporation as a group. On November 7, 2000, there were 11,845,689 shares of common stock issued and outstanding. (a) Securities Ownership of Certain Beneficial Owners. ------------------------------------------------------ As of November 7, 2000, the following shareholders held more than 5% of the issued and outstanding common stock of Single Source Financial Services Corporation:
Name and Address of Amount and Nature of Percent of Title of Case Beneficial Owner Beneficial Ownership -- - ------------- ------------------------ -------------------- Class - --------- Common Brandon Becker 3,171,756 shares 22.90% 10780 Santa Monica Blvd. direct ownership Santa Monica, CA 90025 Common Kendra Becker 918,171 shares 6.63% 10780 Santa Monica Blvd. direct ownership Santa Monica, CA 90025 Common Pamela Becker 935,533 shares 6.75% 10780 Santa Monica Blvd. direct ownership Santa Monica, CA 90025 Common Arlene Rosenblatt 1,435,533 shares 10.36% 10780 Santa Monica Blvd. direct ownership Santa Monica, CA 90025 Common Julie Rosenblatt 918,171 shares 6.63% 10780 Santa Monica Blvd. direct ownership Santa Monica, CA 90025 17 Common Arnold F. Sock 1,421,875 shares 10.26% 10780 Santa Monica Blvd. direct ownership Santa Monica, CA 90025
(b) Securities Ownership by Management. ------------------------------------- As of November 7, 2000, the following table shows the amount of common stock beneficially held by our management:
Name and Address of Amount and Nature of Percent of Title of Case Beneficial Owner Beneficial Ownership -- - ------------- ------------------------ -------------------- Class - --------- Common Brandon Becker 3,171,756 shares 22.90% 10780 Santa Monica Blvd. direct ownership Santa Monica, CA 90025 Common Pamela Becker 935,533 shares 6.75% 10780 Santa Monica Blvd. direct ownership Santa Monica, CA 90025 Common Arlene Rosenblatt 1,435,533 shares 10.36% 10780 Santa Monica Blvd. direct ownership Santa Monica, CA 90025 Common Arnold F. Sock 1,421,875 shares 10.26% 10780 Santa Monica Blvd. direct ownership Santa Monica, CA 90025 Common Harry L. Wilson 250,000 shares 1.80% 10780 Santa Monica Blvd. direct ownership Santa Monica, CA 90025 Common Officers and Directors 7,214,697 shares 52.10% Taken as a Whole direct ownership
Beneficial Ownership. Beneficial ownership is determined in accordance with the rules of the Commission and generally includes voting or investment power with respect to securities. In accordance with Commission rules, shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the table are deemed beneficially owned by the optionees. Subject to community property laws, where applicable, the persons or entities named in the table above have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them. 18 (c) Changes in Control. -------------------- Management is not aware of any arrangements which may result in "changes in control" as that term is defined by the provisions of Section 228.403(c) of Regulation S-B. Item 12. Description of Securities. We are authorized to issue 100,000,000 shares of common stock, $.001 par value, with each share of common stock having equal rights, including voting privileges. The holders of our common stock are entitled to one vote for each share of record and each fractional share shall be entitled to a corresponding fractional vote, on all matters to be voted on by shareholders. There is no cumulative voting. The holders of our common stock are entitled to receive dividends when, as and if declared by our Board of Directors from funds legally available for distribution to shareholders. However, the determination as to whether cash dividends should issue is at the sole discretion of our Board of Directors. In the event of liquidation, dissolution or winding up of our company, the holders of common stock are entitled to share ratably in all assets remaining available for distribution to them after payment of our liabilities and after provision has been made for each class of stock, if any, having preference in relation to our common stock. Holders of the shares of our common stock have no preemptive rights. All of the outstanding shares of our common stock are duly authorized, validly issued, fully paid and non-assessable. Dividend Policy. Any payment of dividends will be at the sole and absolute discretion of our Board of Directors and will depend upon earnings, financial condition, capital requirements, amount of indebtedness, contractual restrictions with respect to payment of dividends, and other factors. Any dividends may be paid in cash, property or shares of our common stock. We have not paid any dividends since our formation, and it is not probable that any dividends on our common stock will be declared at any time in the foreseeable future. Any future dividends will be subject to the discretion of our Board of Directors, and will depend upon, among other things, the operating and financial condition of our company, our capital requirements and general business conditions. Therefore, there can be no assurance that any dividends on our common stock will be paid in the future. COMMON STOCK ELIGIBLE FOR FUTURE SALE. If our shareholders sell substantial amounts of the common stock in the public market following this offering, the prevailing market price of the common stock could decline, as well as our ability to raise equity capital in the future. Upon the closing of this offering and assuming all shares of common stock available for sale herein are sold, we will have outstanding an aggregate of 11,845,689 shares of common stock (including the common stock being offered herein). All of the common stock sold in this offering will be freely tradeable without restriction and other shares of our common stock will be eligible for sale in the public market as follows: 19
Number of Shares Nature of Shares When Available For Sale - ----------------- ---------------------------------------------- -------------------------- 1,833,189 On October 1994, Ream Paper Printing Stock is currently freely Corp. (now Single Source Financial tradeable without Services Corporation) in exchange for restriction on transfer or receiving certain assets from Active resale. Science Systems, Inc. issued 10,999,133 shares of our common stock directly to our shareholders as part of a 504 offering under Regulation "D". On September 19, 1994, Ream Paper Corporation (now Single Source Financial Services Corporation) was incorporated in New York. In October, 1994, in exchange for receiving certain assets from Active Science Systems, Inc., Ream issued 10,990,113 shares of its common stock to the shareholders of Active Science Systems, Inc., on a pro rata basis. The exchange was accomplished under Rule 504 of Regulation D which permitted the issuance the 10,990,113 shares without restriction on transfer or resale. Furthermore, the Ream Paper stock was spun off to all shareholders of Active Science Systems, Inc. on a pro rata basis. Pursuant to a reverse stock split in 2000, the remaining 1,833,189 shares of common stock from the spin-off are free trading. 8,887,500 Shares acquired on purchase of Single Restriction on Shares may Single Source Electronic Transactions, be removed in Inc. and not registered in this offering. accordance with the provisions of Rule 144.
Item 13. Interest of Named Experts and Counsel. No "expert", as that term is defined pursuant to Section 228.509(a) of Regulation S-B, or Single Source Financial Services Corporation's "counsel", as that term is defined pursuant to Section 228.509(b) of Regulation S-B, was hired on a contingent basis, or will receive a direct or indirect interest in our company, or was a promoter, underwriter, voting trustee, director, officer or employee of our company, at any time prior to the filing of this registration statement. Item 14. Disclosure of Commission Position on Indemnification for Securities Act Liabilities. Article VI of our Articles of Incorporation and Article IV of our Bylaws include provisions eliminating the personal liability of our directors and officers to us and to our shareholders for damages for breach of fiduciary duty as a director or officer. Accordingly, the Articles of Incorporation provide that our directors may have no liability to our shareholders for any mistakes or errors of judgment or for any act of omission, unless any act or omission involves intentional misconduct, bad faith, a knowing violation of law or a personal financial gain or other advantage. The Bylaws provide that the directors and officers may have no personal liability unless finally adjudicated to be liable for negligence or misconduct in the performance of duty. 20 It is the opinion of the Securities and Exchange Commission that corporate officers and directors may not be indemnified for liabilities arising from securities law violations. We have been informed of the position of the Securities and Exchange Commission that any indemnification is against public policy as expressed in the securities act of 1933 and is, therefore, unenforceable. Item 15. Organization Within Last Five Years. In October 1994, in exchange for receiving certain assets from Active Science Systems, Inc., we issued 10,990,133 shares of our common stock directly to our shareholders. Ream Paper Printing Corp. was spun off. The 10,999,133 shares of common stock was then exchanged on a pro rata basis with the shareholders for their stock in the parent company. The exchange was accomplished under Rule 504 of Regulation D promulgated under the Securities Act of 1933 and a Form D was filed with the Securities and Exchange Commission. Under the then effective law, this stock was issued without any restriction on resale or transfer. Pursuant to a reverse stock split in late 2000, the remaining 1,833,189 shares of common stock are free trading. On November 7, 2000, we purchased 100% of the issued and outstanding stock of Single Source Electronic Transactions, Inc. for 10,012,500 shares of our restricted common stock. The acquisition was made in order to permit us to acquire the financial electronic transaction business of Single Source Electronic Transactions, Inc. For accounting purposes, this transaction is viewed as a reverse acquisition of us by Single Source Electronic Transactions. After the reverse acquisition, our stock was distributed to the shareholders of Single Source Electronic Transactions, Inc. on a pro rata basis. For a breakdown of the stock, please see the chart contained below: Name of Shareholder Number of Shares of Single Source Financial Services ------------------- ---------------------------------------------------- Corporation Common Stock -------------------------- (a) Baki Arbria 500,000 (b) Brandon Becker 2,935,414 (c) Kendra Becker 800,000 (d) Martin Becker 200,000 (e) Pamela Becker 817,362 (f) Lorraine Dorsey 250,000 (g) Mara Gorodezky 125,000 (h) Arlene Rosenblatt 1,317,362 (i) Julie Rosenblatt 800,000 (j) Sid Rosenblatt 200,000 (k) Arnold F. Sock, Esq. 1,303,704 (l) Leona Sock 131,829 (m) Michael Sock 381,829 (n) Harry L. Wilson 250,000 ------------ 10,012,500 21 In this regard, it should be noted that Brandon Becker, Kendra Becker, Martin Becker, and Pamela Becker are immediate family members. It should also be noted that Sid Rosenblatt, Julie Rosenblatt and Arlene Rosenblatt are immediate family members. Arnold F. Sock, Michael Sock, and Leona Sock are also immediate family members. We have no parent companies and other than Single Source Electronic Transactions, Inc., we have no subsidiaries. Additional information about certain relationships and related transactions is provided more completely under the portion of this prospectus entitled "Certain Relationships and Related Transactions" at Item 19 below. Item 16. Description of Business. (a) Business Development. --------------------- We are a New York corporation which was incorporated on September 19, 1994 under the name Ream Printing Paper Corp. On October 18, 2000, the Board of Directors voted to change the name of our corporation to Single Source Financial Services Corporation which name change took place in late 2000. We have never been in bankruptcy, receivership, or any similar proceeding. On November 7, 2000, we acquired Single Source Electronic Transactions, Inc., a Nevada corporation for 10,012,500 shares of our common stock. Prior to the acquisition, we had not engaged in any business for a number of years. For accounting purposes, the transaction is viewed as a reverse acquisition of us by Single Source Electronic Transactions. Single Source Electronic Transactions, Inc. was formed in January, 1998, and commenced operation in California in January, 2000. Although we have operated at a loss to date, Single Source Electronic Transactions, Inc.'s business has expanded and management believes that Single Source Electronic Transactions, Inc. will become profitable after approximately three months due to the continued expansion of the business in sales volume and geographic coverage. However, there is no assurance that such profitability can be achieved. The purchase of Single Source Electronic Transactions, Inc. was our initial acquisition and we believe it to be a material acquisition. Single Source Electronic Transactions, Inc. is an independent sales organization which sells and leases electronic transaction equipment to merchants. These merchants have no direct relationships with any processors, which are in the business of processing credit card transactions for the merchants. Based upon our acquisition of Single Source Electronic Transactions, Inc., we, through Single Source Electronic Transactions, Inc., sell and lease all types of financial electronic transaction equipment to merchants and offer the merchants access to electronic processing of these transactions. In the event that the merchant elects to acquire the equipment through a lease transaction, Single Source 22 Electronic Transactions, Inc. sells the lease to an equipment leasing company at a discounted rate. The leases are generally four year leases which require the merchant to make a down payment and make monthly payments to the leasing company. At the end of the term, the merchant has the option to (a) return the equipment; (b) buy the equipment for 10% of the lease cost; or (c) continue to lease the equipment. Most merchants either purchase the equipment outright or return it at the end of the lease term. Although Single Source Electronic Transactions, Inc. has been operating since January, 2000, we have only been involved in the operation of the Single Source Electronic Transactions, Inc. for a relatively short period of time. During that period, we have attempted to improve profitability by (a) cutting back on overhead; (b) avoiding lease transactions to non-creditworthy merchants since the transactions cannot be completed; (c) locate the various compatible products for sale to the merchants; and (d) increase salesperson productivity. Salesperson productivity is being improved by cutting back on salesperson's draws and by terminating non-productive salesmen. We have also attempted to increase Single Source Electronic Transactions, Inc.'s sales products by adding offices and by acquiring other independent sales offices throughout the United States. Generally, the cost of the acquisition is minimal given many independent sales offices wish to work for larger organizations with better sales backup, sales volume, and benefits. Based upon the Single Source Electronic Transactions, Inc. acquisition, we have rented several offices located in Los Angeles, California, Mission Hills, California, Irvine, California, San Diego, California, Houston, Texas, Providence, Rhode Island, and Denver, Colorado. We have also acquired an independent contractor who is selling for us in Virginia. Thus, as a result of the acquisition, we currently have approximately twenty-five (25) employees who are managers and administrative personnel responsible for the individual offices and our company as a whole and approximately seventy (70) independent contractors who are responsible for selling our products directly to individual merchants. The independent contractors are commissioned while our employees are salaried. As of this time, we are considering closing the Mission Hills. We continue to operate as an independent sales organization in that we do not have a formal relationship with any specific processor. Single Source Electronic Transactions, Inc. is the first and only business which we have operated during the past three years. (b) Business of Issuer. -------------------- At the current time, our exclusive business is the sale and lease of various types of financial electronic transaction equipment to merchants and the offer to merchants of access to electronic processing of these transactions. However, in those cases where a merchant elects to lease equipment, Single Source Electronic Transactions, Inc. sells the lease to an equipment leasing company. We offer processing services through 1st National Processing, a third party processor and other processors depending on merchant type. With respect to those accounts which we refer to 1st National Processing and other processors, we receive a small residual stream of payments. These payments constitute a small percentage of the fees generated on the business sent to the processor by those customers we refer to the processor, and are called a "residual" portfolio. We operate by causing our independent contractors to contact merchants in order to sell or lease to the merchants equipment to perform financial electronic transactions including credit and debit card transactions. We carry a number of different brands of electronic transaction processing equipment and sell and lease the equipment at prices ranging from $500.00 to $2,500.00 depending on the price of equipment being sold or released. We also offer electronic transaction processing services to our equipment buyers or lessees through 1st National Processing and other processors in order to permit them to process the customer's electronic transactions. 23 We offer a wide variety of electronic transaction processing equipment to merchants including credit card processing equipment, debit card processing equipment, smart cards, ATMs, electronic check verification services, and internet web sites capable of taking credit cards, debit cards, and checks. In addition, we offer, through 1st National Processing and other processors, what we believe to be the lowest transaction processing fee available. Basically, a credit or debit card electronic transaction is done as follows: The card is swiped through a terminal at the merchant's facility and an amount of purchase is punched in. Thereafter the card and transaction information is electronically transmitted to a third party processor. The processor sends the information to a database network to verify that the card is not listed as stolen, lost, altered or otherwise invalid. If the card is valid, the third party processor then elects to process the transaction or forward it to a larger processor for processing. The election is made based on the transaction amount, type of merchant, and whether the card was used at the terminal or the card information was orally provided (e.g., telephone order). Next, the processor contacts the card issuer's bank (issuing bank) to see if there is sufficient credit available on the card account to allow the transaction to be approved. If the transaction is approved the issuing bank sends the funds due to the processor's bank (settlement bank). The settlement bank then deducts the processor's fees, placing them in the processor's account, and forwards the balance to the merchant's bank (receiving bank). These transactions are almost instantaneous and allow for the prompt exchange of funds. Additionally, after the transaction is completed, a portion of the funds collected by the processor are paid to the independent sales offices as a residual. Although the residual per transaction is very small, due to a large number of transactions, the residual can increase in value substantially. For example, Single Source Electronic Transactions, Inc.'s current residual for 1st National Processing is about 15% of the amount received by the processor. Since we have taken over the Single Source Electronic Transactions, Inc. business, there has been no publicly announced new product or service. Likewise, there is no major customer since the customer base is fairly broad. The business does not utilize raw materials. The business purchases equipment for resale and lease and this equipment is readily available. Our major suppliers are CrossCheck, Inc. for check guarantee equipment, Talento for EFT Terminals, MAGTEK for MICR Check Readers, TASQ for ATMs, and similar dealers for other related equipment. We have no patents, trademarks, licenses, franchises, concessions, royalties or labor contracts. However, we intend to develop and trademark an appropriate corporate logo over the next few months. Although electronic transaction processing is regulated through the banking industry, the independent sales office business is not currently regulated by any governmental entity. We are aware of no environmental law issues in connection with our company's operations. 24 We are aware of no current attempts to impose governmental regulation on our current business. Therefore, we are unable to predict in any meaningful way what regulation, if any, would be imposed and what effect it would have upon us. However, management believes that it would be able to comply with all regulations and that to the extent these regulations cause certain companies to cease operations, it would improve our competitive position. Although the electronic financial transaction industry is relatively new, it has generated a good deal of interest since it permits merchants to obtain prompt payment for their sales of goods and services at a relatively small price. As a result thereof, the business is very competitive and there are thousands of companies seeking to sell these services or to process these transactions. We believe that we have an edge over many of our competitors because we have an extremely wide variety of electronic transaction methods available to our customers and because we offer what we believe to be the lowest transaction processing fees in the United States through 1st National Processing. The diversity in transaction processing methods is important since we carry a wide variety of equipment and we will generally carry all of the different types of equipment a customer desires. (c) Reports to Security Holders. ------------------------------ As of this time, we are not required to deliver any annual reports to our security holders. However, commencing on October 31, 2001, we intend to do so voluntarily. Management currently intends that these reports will include audited financial statements. We are not yet a reporting company. However, after this Registration becomes effective, we intend to file all of the required quarterly and annual reports. Our web site is located at www.ssetonline.com. This web site explains the services we currently offer. Our toll free telephone number is (888) 262-1600. Item 17. Management's Discussion and Analysis of Financial Condition and Results of Operations. (a) Plan of Operation. ------------------- During the next 12 months, we intend to expand the current operations of Single Source Electronic Transactions, Inc. by opening and developing new offices in various additional parts of the United States. In order to open a new office, Single Source Electronic Transactions, Inc., must lease space, hire and train management for the office and hire and train independent contractors to sell our products to merchants. We believe that the cost of opening an office is approximately $25,000 to $50,000. This includes maintaining a small inventory of equipment and waiting for the generation of sales after the office is opened. It is anticipated that as each office is open, Single Source Electronic Transactions, Inc. will add 2 to 5 management employees and 5 to 15 independent contractor salesmen. This cost can be minimized by hiring experienced management and sales staff in the various locations where Single Source Electronic Transactions, Inc. desires to open its offices. Historically, we have expanded the business and covered operating deficits by borrowing, and repaying, funds from existing major shareholders through shareholder affiliates. We anticipate that we will continue to borrow money from major shareholders over the next six (6) months. However, such shareholders have no legal obligation to lend us money and there is no assurance that they will, or will be able, to continue to do so. In the event that the shareholders do not continue to lend adequate capital to us and alternate funding sources are not obtained, we would need the cut back on our plan of operations or if the capital shortfall is extreme, we may be unable to continue operating our business. 25 We are always looking for compatible new equipment, new brands and types of electronic transaction materials to market to our customers. For example, we have recently located inexpensive flash web sites for sale to customers and Single Source Electronic Transactions, Inc. is currently offering them for sale. We do not anticipate adding any significant plant or equipment. Nor do we anticipate engaging in any product research and development. However, we are currently considering the possible acquisition of an electronic transaction processor. We believe that the acquisition of a processor will enable us to maximize the income from those merchants which it signs for processing. Management also believes that it can acquire a small to mid-size processor for our common stock and approximately $1,000,000 in cash depending upon the processor. This will enable us to obtain income from processing transactions, which can be referred to our processor by independent sales offices, in addition to those owned by Single Source Electronic Transactions, Inc. However, there can be no assurance that we will acquire a processor during the next 12 months, or at all. In addition, we would also consider the acquisition of any other complimentary financial services business which may be presented to us. However, there can be no assurance that any business opportunity will be presented to us, or that if any opportunity is presented to us, we will be able to acquire the business on terms acceptable to us. (b) Management's Discussion and Analysis of Financial Condition and ------------------------------------------------------------------- Results of Operations. - ----------------------- The following discussion of results of operations, capital resources, and liquidity pertains to our activities of the Company for the years ended December 31, 1999, and 2000. However, for accounting purposes, our acquisition of Single Source Electronic Transactions is treated as a reverse acquisition of us by Single Source Electronic Transactions, Inc. Results of Operations for Years Ended December 31, 1999 and 2000. - ---------------------------------------------------------------- Single Source Electronic Transactions is an Independent Sales Office, selling and leasing financial transaction reporting and processing equipment to merchants. The Independent Sales Office also sets up the merchant with a processor in order that the merchant can electronically process its customer transactions. When the merchant uses the equipment to process a transaction, the merchant pays a processing fee to the processor. A small percentage of the processing fee paid to the processor is then paid by the processor to the Independent Sales Office that signed up that particular merchant. That small percentage of the processing fee paid to the Independent Sales Office is a "residual". In 1999, Single Source Electronic Transactions received $61,016 from sales of credit and debit card processing equipment to merchants and $1,665.00 in residuals. Related costs of the equipment sold in 1999 amounted to $10,096. In 2000, Single Source Electronic Transactions received $735,560 in revenue from sales and rental of equipment and $63,724 in residual income. Related cost of equipment sold in 2000 totaled $200,670. Recognition of revenue on sales transactions is different from the recognition of revenue on lease transactions. All sales transactions are made subject to the merchant qualifying for, and obtaining, a MID (merchant identification number) and a TID (terminal identification number). Thus, revenue is recognized upon the merchant's receipt of a TID and MID. If a MID or a TID is not obtained, the transaction is canceled. Lease transactions are made subject to the merchant qualifying for, and obtaining, a TID and a MID and the merchant's acceptance for a loan by an equipment lender. If a TID or a MID is not obtained, the transaction is canceled. After a TID and MID is obtained, the transaction is submitted for approval to the equipment lender. The revenue for the transaction is recognized on loan approval and if the loan is not approved, the transaction is canceled. All residuals are recognized as revenue upon receipt. Operating Expenses. - ------------------- General and Administrative costs were $43,129 for 1999, and $1,398,216 in 2000. In 1999, the major costs were commissions totaling $25,310. In 2000, the major costs were commissions totaling $403,301, salaries amounting to $335,078, office rent of $118,442, and marketing and advertising costs of $83,782. Our sales agents are paid commission upon the receipt of good funds from an equipment lease or sales transaction. During 2000, commission rates have ranged between 30% and 48% depending upon the salesman. Each salesman has his own commission rate. No commission is paid on residuals. 26 Liquidity and Capital Resources. - ---------------------------------- Single Source Electronic Transactions has expanded its operations through the opening of new offices and hiring of marketing personal. This expansion has created a substantial negative cash flow that has been funded by advances made by Affiliates. Management expects that through its expansion efforts and the anticipated acquisition of on-going companies in its industry, Single Source Electronic Transactions will become profitable. However, there is no assurance that Single Source Electronic Transactions will be profitable. Cash and cash equivalents at December 31, 1999, were $4,607. During 1999, Single Source Electronic Transactions received $62,681 from its sales efforts of which $49,190 was used in its operations, and $16,000 was used to acquire an interest in merchant account residuals from two former employees. Cash and cash equivalents at December 31, 2000 were $662. During 2000, Single Source Electronic Transactions received $799,284 from sales of the merchant equipment and residuals, and $885,150 from advances made to Single Source Electronic Transactions by an affiliate. Of the $1,733,264 received, $1,624,626 was used in its operations, and $63,753 was used to acquire property and equipment. Sources of Liquidity. - ---------------------- Single Source Electronic Transactions, Inc., has been in operation since late 1999. Management currently believes that it will have four (4) distinct sources of funds available to it during the next twelve (12) months. First, Single Source Electronic Transactions, Inc. should generate profit from its sales and leasing of electronic transaction equipment to merchants. In 2000, such revenue averaged $61,296 per month. As time passes, Single Source Electronic Transactions, Inc. will continue to expand and the amount of revenue generated through its primary sales activities should also continue to expand. In addition, management believes that as Single Source Electronic Transactions, Inc. expands and its sales increase, its percentage overhead will correspondingly decrease. Over the next six months, Management believes that it will generate more than $100,000 per month from sale and lease revenue. On a long term basis, Management believes that this amount will continue to increase and within twelve months, will exceed $125,000 per month. Of course, there can be no assurance that these numbers can be achieved. Second, Single Source Electronic Transactions, Inc. should generate income from its residual stream. When an independent sales office, such as Single Source Electronic Transactions, Inc., refers a customer to a processor of electronic transactions and the customer uses that processing company to process its transactions, the independent sales office receives a certain minor portion of the processing fees which is called a "residual" portfolio. The residual is paid each month and is maintained as an off balance sheet item. Additionally, independent sales offices and processors periodically sell their residual portfolio to others. In January, 2001, Single Source Electronic Transactions, Inc. sold its residual portfolio for $426,000. Prior to the sale of its residual portfolio, Single Source Electronic Transactions was averaging $5,310 per month in residual revenue during 2000. As Single Source Electronic Transactions, Inc. continues to expand its business, its residual portfolio should increase correspondingly. Management believes that on a short term and long term basis the residual portfolio will increase in about the same percentage as the actual sales and leasing revenue. Third, we are continuing to look for additional products which can be sold by Single Source Electronic Transactions, Inc. One product which we recently discovered is flash web sites which are products that may be sold to merchants for a relatively small amount. However, there can be no assurance that we will be able to locate or obtain distribution for similar new products. Fourth, we believe that we should be able to continue to borrow funds from affiliates of our shareholders for our use. For instance, BAAMS, Inc., an affiliate of certain shareholders has loaned funds to the Company and there is no guarantee that additional funds be loaned in the future by any shareholder or any shareholder affiliate. However, we anticipate that the need for shareholder borrowing will decrease substantially over the next 12 months. Furthermore, neither we nor Single Source Electronic Transactions, Inc. have any material commitment. Although we anticipate expansion and acquisitions of other businesses, there are no existing commitments that require us to do so. Although our business is not seasonal in nature, the residuals tend to be larger during the holiday season because there are a greater number of consumer transactions on which a residual is paid. We are currently generating sufficient revenue to enable us to maintain and to expand our operations with relatively small amounts of affiliate borrowings. Thus, our current short term liquidity appears adequate to satisfy our current financial needs. In addition, as Management believes that as we continue to expand our operations and our need for expansion capital decreases, our liquidity should improve based upon our anticipated expanded revenue. 27 Item 18. Description of Property. We do not own any real estate or any other significant property. However, we do lease an office located at 10780 Santa Monica Blvd., Suite 240, Los Angeles, California 90025. Single Source Electronic Transactions, Inc. also uses a portion of the office. Furthermore, Single Source Electronic Transactions, Inc. does not own any real estate or any other significant property. However, Single Source Electronic Transactions, Inc. does lease the following offices: 1. San Diego Office, 11440 West Bernardo Court, Suite 30, San Diego, California 92127; 2. Mission Hills Office, 15545 Devonshire Street, Suite 200, Mission Hills, California 91345; 3. Orange County Office, 17900 Skypark Circle, Suite 230, Irvine, California 92614; 4. Rhode Island Office, One Davol Square, Suite 9, Providence, Rhode Island 02903; 5. Denver Office, 707 Seventeenth Street, Suite 2972, Denver, Colorado 80202; and 6. Houston Office, 1000 F.M. Road, Suite 206, Houston, Texas 77090. Item 19. Certain Relationships and Related Transactions. On November 7, 2000, we purchased 100% of the issued and outstanding stock of Single Source Electronic Transactions, Inc. for 10,012,500 shares of our restricted common stock. For accounting purposes, this transaction is viewed as a reverse acquisition of us by Single Source Electronic Transactions, Inc. The acquisition was made in order to permit us to acquire the business of Single Source Electronic Transactions, Inc. The 10,012,500 shares of our common stock was then distributed to the shareholders of Single Source Electronic Transactions, Inc. on a pro rata basis. For a breakdown of the stock distribution, please see the chart contained in response to Item 15. In this regard, it should be noted that Brandon Becker, Kendra Becker, Martin Becker, and Pamela Becker are immediate family members of each other. It should also be noted that Sid Rosenblatt, Julie Rosenblatt and Arlene Rosenblatt are immediate family members of each other. Finally, Arnold F. Sock, Esq., Michael Sock, and Leona Sock are also immediate family members of each other. In addition, we have experienced the following additional related party transactions: a) In 1999, Single Source Electronic Transactions acquired all of the interest in residuals due to Ron Thomas and Jocelyne Thomas, two of its former employees for $16,000. The purchase price was capitalized and amortized over a ten-year life using the straight-line method for financial reporting and income tax reporting purposes. Amortization expense charged to operations for the two years ended December 31, 2000 and 1999, were $2,667 and $400, respectively. b) On September 20, 2000, Single Source Electronic Transactions received two photocopiers, one from Tax Debt Negotiators, Inc. and one from Venture Capital Investments Group, Inc. by assuming the leases on the equipment. The first lease is payable in monthly installments of $152, with the final installment due in June 2005. The second lease is payable in monthly installments of $167, with the final installment due in April 2001. Both corporations are our affiliates. c) Single Source Electronic Transactions leases its Los Angeles office from Tax Debt Negotiators, Inc., one of our affiliates, on a month-to-month basis at a rate of $4,601 per month. Effective January 1, 2001, this monthly rate increased to $6,920 per month. d) During 2000, Single Source Electronic Transactions' operations were partially funded through advances made by BAAMS, Inc., a Nevada corporation, and an affiliate. The amounts advanced are evidenced by promissory notes and are assessed interest at an annual rate of 8%. The principal balance and accrued interest become payable in thirty-six equal monthly installments commencing on April 3, 2003. Any remaining principal and accrued interest becomes fully due and payable on April 5, 2006. On October 31, 2000, the Company sold to BAAMS, Inc., all of its interest in residuals earned currently and in the future on all customer accounts in existence at the time of sale for $426,000. Under the terms of the sale, the loan balance owed to BAAMS, Inc. was reduced by the sales price. The balance of the loan as of December 31, 2000, amounted to $472,557 which consisted of $846,000 in advances, $39,150 of residuals earned by Single Source Electronic Transactions, accrued interest earned of $13,407, less amount paid for the residual income of $426,000. e) Single Source Electronic Transactions has experienced a loss for the year ended December 31, 2000, of $400,149, and has liabilities in excess of assets at December 31, 2000, totaling $384,377. Certain Single Source Electronic Transactions shareholders have committed to fund any shortfalls necessary to meet Single Source Electronic Transactions' obligations for, at least, the next twelve months. Item 20. Market for Common Equity and Related Stockholder Matters. (a) Market Information. ------------------- 28 Our common stock is not currently being traded on any public trading market or markets. The common stock is our only class of security. At the current time, there are 1,833,189 issued and outstanding shares of common stock which have no restriction on transfer or resale in accordance with a Rule 504 reorganization. Through this offering, we propose to register 1,125,000 additional shares of common stock in the hands of certain shareholders. Subject to this offering becoming effective, there will be 2,958,189 shares of common stock eligible for trading. The remaining 8,932,500 shares of common stock issued to acquire Single Source Electronic Transactions, Inc. is restricted stock. The restriction on the transfer of this stock may be removed in accordance with the safe harbor contained in Rule 144. Rule 144 provides that after their stock is held for one year, the holding shareholder may sell the greater of 1% of the number of shares of our issued and outstanding stock or the average number of shares sold per week over the prior 3 weeks through a broker-assisted public transaction in each fiscal quarter. However, this requires that we be current in our required financial reporting and if we are not current in our financial reporting, the restriction on transfer on our common stock may not be removed under Rule 144. The same number of shares may be sold in each succession quarter until the holding shareholder has sold all his/her stock. Furthermore, after the stock has been held for 2 years, all remaining stock of the holding shareholder may be sold unless the shareholder is one of our officers, directors, or five percent (5%) shareholders. Thus, within the next year, all of the 8,932,500 restricted shares will be eligible for sale under Rule 144. (b) Holders. ------- At the current time, there are approximately 1,400 shareholders of our common stock. (c) Dividends. --------- To date, no cash dividends have been issued. It is not anticipated that any cash dividends will be issued in the foreseeable future. Management is aware of no restriction on its ability to pay dividends on the common stock. Item 21. Executive Compensation - Remuneration of Directors and Officers. During our last completed fiscal year, ended October 31, 2000, no compensation was awarded to, earned by or paid to any of our officers or directors, although compensation may be paid in the future. Monetary compensation of $150,000 per year is to be paid to William Graham, President of Single Source Electronic Transactions, Inc., the business acquired by us on November 7, 2000. Mr. Graham will also be paid the cost of leasing a 2000 Lincoln, the monthly cost of a cell phone and the cost of his health benefits. 29 We have not entered into any employment contracts or any compensatory plan or arrangement with any of our officers or directors or with any officer or director of Single Source Electronic Transactions, Inc. except for William Graham. Item 22. Financial Statements. Index to Financial Statements and Financial Statements appear hereinafter. Item 23. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Our former accountant, Rotenberg & Company, LLP, located in Rochester, New York, was dismissed in Fall of 2000, and replaced by Jonathon P. Reuben, C.P.A., an Accountancy Corporation, located in Torrance, California. This replacement was approved by the Board of Directors, and was solely due to our desire to employ and utilize an accounting firm closer to our main office geographically. As required to be disclosed pursuant to Section 228.304 of Regulation S-B, there have been no changes in, disagreements with, adverse opinions of, disclaimer of opinion, or modification by our former accountant, or with our former accountant's report, on our financial statements. However, the financial statements of Single Source Financial Services Corporation ("SSFSC") as of December 31, 2000, have been restated to properly reflect the treatment of the initial issuance of SSFSC's common stock to its founders. The restated financial statements properly reflect the issuance of these shares in exchange for shares in four privately held companies. The financial statements prior to reflect that the founders received their shares in exchange for paying the Company's organization costs. LEGAL MATTERS The validity of the issuance of the shares of common stock offered hereby has been passed upon by Washor & Associates, Los Angeles, California. EXPERTS The financial statements of Single Source Financial Services Corporation for the fiscal year ended October 31, 1999 appearing in this prospectus and registration statement have been included herein in reliance on the report of Rotenberg & Company, LLP, Certified Public Accountants, given on the authority of that firm as experts in accounting and auditing. Financial statements of Single Source Electronic Transactions, Inc. with a ten (10) month ending October 31, 2000 appearing in this prospectus and registration statement have been included herein in reliance on the report of Jonathon P. Reuben, C.P.A., an accountancy corporation, given on the authority of that firm as experts on accounting and auditing. ADDITIONAL INFORMATION We will be subject to certain informational requirements of the Exchange Act, and, in accordance therewith, will file reports and other information with the Securities and Exchange Commission. These reports and other information can be inspected and copied at the public reference facilities maintained by the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington D.C. 20549 or at regional offices of the Securities and Exchange Commission at Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661 and Seven World Trade Center, New York, New York 10048. Copies of these materials can be obtained at prescribed rates from the Public Reference Section of the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Securities and Exchange Commission maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission. The address of this site is http://www.sec.gov. The telephone ------------------- number for the Securities and Exchange Commission is 1-800-SEC-0330. 30 We have filed a registration statement on Form SB-2 relating to the securities offered in this offering with the Securities and Exchange Commission. The prospectus does not contain all of the information set forth in that registration statement. For further information with respect to us and to the securities offered in this offering, you may review that registration statement, including the exhibits thereto. Statements contained in this prospectus as to the content of any contract or other document referred to in this prospectus are not necessarily complete and in each instance reference is made to the copy of any contract or other document filed as an exhibit to the registration statement, each statement being qualified in all respects by reference thereto. 31 This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security offered by this Shares prospectus, or an offer to sell or a solicitation of an offer to buy any security, by any person in any jurisdiction in which any offer or solicitation would be unlawful. Neither the delivery of this prospectus nor any sale made hereunder shall under any circumstances, imply that the information in this prospectus is correct as of any time subsequent to the date of this prospectus. TABLE OF CONTENTS Page ---- Summary Information and Risk Factors . . . . . . . . . . . . . . . . . . . 4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Determination of Offering Price . . . . . . . . . . . . . . . . . . . . . .11 Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . . . . . . . .17 Description of Securities . . . . . . . . . . . . . . . . . . . . . . . . . 19 Interest of Named Experts and Counsel . . . . . . . . . . . . . . . . . .20 Disclosure of Commission Position on Indemnification for Securities Act Liabilities . . . . . . . . . . . . 20 Organization Within Last Five Years . . . . . . . . . . . . . . . . . . . 21 Description of Business . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Description of Property . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Certain Relationships and Related Transactions . . . . . . . . . . . . . .28 Market for Common Equity and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Executive Compensation - Remuneration of Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . 29 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . 30 Indemnification of Directors and Officers . . . . . . . . . . . . . . . . 33 Other Expenses of Issuance and Distribution . . . . . . . . . . . . . . .34 Recent Sales of Unregistered Securities . . . . . . . . . . . . . . . . . 34 Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 Undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Until _______, 2001 (___ days from the date of this prospectus), all persons effecting transactions in the registered securities, whether or not participating in this distribution, may be required to deliver a prospectus. SINGLE SOURCE FINANCIAL SERVICES CORPORATION 1,125,000 Shares of Common Stock _______________________ PROSPECTUS _______________________ ___________, 2001 32 PART II - INFORMATION NOT REQUIRED IN PROSPECTUS Item 24. Indemnification of Directors and Officers. Article Six of our Articles of Incorporation eliminates the personal liability of the directors to the company or the shareholders for damages for any breach of duty. Personal liability is not eliminated if a judgment or other final adjudication adverse to the director establishes that his acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of law or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled or that he violated certain provisions of New York law. The provisions of New York establish director liability for voting for or concurring in the declaration of improper dividends, improper purchases of our common stock, certain improper distributions of assets to shareholders and improper loans. Article Six of our Bylaws provide that the company will indemnify officers and directors except in relation to matters as to which they shall be finally adjudicated to be liable for negligence or misconduct in the performance of duty. Indemnification Agreements. We anticipate entering into indemnification agreements with each of our directors and executive officers pursuant to which we shall indemnify each director and officer for all expenses and liabilities, including criminal monetary judgments, penalties and fines, incurred by each director or officer in connection with any criminal or civil action brought or threatened against any director or officer for being or having been an executive officer or director of the company, to the extent allowed by applicable law and the charter documents. Director and Officer Liability Insurance. At some time in the future we may obtain director and officer liability insurance which could provide coverage against certain securities laws violations. Insofar as indemnification for liabilities arising under the 1933 Act may be permitted to directors, officers and controlling persons of the company pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission any indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable. In the event that a claim for indemnification against any liabilities (other than our payment of expenses incurred or paid by a director, officer or controlling person of the company in the successful defense of any action, suit or proceeding) is asserted by any director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether any indemnification by it is against public policy as expressed in the 1993 Act and will be governed by the final adjudication of any issue. 33 Item 25. Other Expenses of Issuance and Distribution. We will pay all expenses in connection with the registration of the common stock and no other expenses. The estimated expenses of issuance and distribution are set forth below. Registration Fee Approximately $ 1,237.50 Legal Fees Approximately $ 35,000.00 Accounting Fees Approximately $ 7,000.00 Administrative Expenses Approximately $ 6,762.50 ----------- Total $ 50,000.00 Item 26. Recent Sales of Unregistered Securities. During the past 3 years, we have only issued unregistered securities on one occasion. On November 7, 2000, we issued 10,012,500 shares of common stock for all of the issued and outstanding stock of Single Source Electronic Transactions, Inc., a Nevada corporation. Single Source Electronic Transactions is seeking to register 1,125,000 shares of that stock in this Offering. No other stock has been issued during the past 3 years. Item 27. Exhibit Index. Copies of the following documents are filed with this registration statement, Form SB-2, as exhibits: Exhibit No. - ----------- 1 Underwriting Agreement (Not Applicable) 2 Plan of Merger (Not Applicable) 3.1 Articles of Incorporation 3.2 Certificate of Amendment of the Certificate of Incorporation 3.3 Bylaws 4 Instruments Defining Rights (Not Applicable) 5.1 Securities Opinion of Washor & Associates Regarding Legality of Securities Being Registered 8 Opinion Re: Tax Matters (Not Applicable) 9 Voting Trust Agreement (Not Applicable) 34 10.1 Stock Purchase Agreement 11.1 Computation of Per Share Earnings 15 Letter on Unaudited Interim Financial Information (Not Applicable) 16 Letter on Change in Certifying Accountant (included as Exhibit 16) 21.1 List of the Registrant's Subsidiaries 23.1 Consent of Independent Certified Public Accountants 24.1 Powers of Attorney (appears on signature page in Part II of the registration statement) 25 Statement of Eligibility of Trustee (Not Applicable) 26 Invitations For Competitive Bids (Not Applicable) 35 Item 28. Undertakings. A. Insofar as indemnification for liabilities arising under the 1933 Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission any indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable. In the event that a claim for indemnification against any liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by any director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether any indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final adjudication of any issue. B. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) deemed to be the initial bona fide offering thereof. (2) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. SIGNATURES In accordance with the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and authorized this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Los Angeles, California on the 23rd day of January, 2001. SINGLE SOURCE FINANCIAL SERVICES CORPORATION By: /s/ Arnold F. Sock ------------------------------- Arnold F. Sock, President POWER OF ATTORNEY Each of the undersigned hereby authorizes Arnold F. Sock as his attorney-in-fact to execute in the name of each person and to file any amendments (including post-effective amendments) to this Registration Statement as the Registrant deems appropriate and appoints such person as attorney-in-fact to sign on his behalf individually and in each capacity stated below and to file all amendments, exhibits, supplements and post-effective amendments to this Registration Statement. 36 In accordance with the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates stated: Signature Title Date --------- ----- ---- /s/ Arnold F. Sock President and Director January 23rd, 2001 - ------------------------ (Principal Executive Officer) Arnold F. Sock /s/ Harry L. Wilson Chief Financial Officer January 23rd, 2001 - ------------------------ Secretary and Director Harry L. Wilson /s/ Brandon Becker Vice President and Director January 23rd, 2001 - ------------------------ Brandon Becker /s/ Pamela Becker Director January 23rd, 2001 - ------------------------ Pamela Becker /s/ Arlene Rosenblatt Director January 23rd, 2001 - ------------------------ Arlene Rosenblatt 37 SINGLE SOURCE ELECTRONIC TRANSACTIONS, INC. FISCAL YEAR ENDED DECEMBER 31, 1999 and FISCAL YEAR ENDED DECEMBER 31, 2000 Table of Contents For Audited Financial Audited Statements . . . . . . . . . . . . . . . . . . . . . . . . . F-1 Independent Auditors' Report . . . . . . . . . . . . . . . . F-2 Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . F-3 Statements of Operations . . . . . . . . . . . . . . . . . . F-4 Statement of Stockholders' Equity (Deficit). . . . . . . . . F-5 Statements of Cash Flows . . . . . . . . . . . . . . . . . . F-6 Notes to Financial Statements of Single Source Electronic Transactions, Inc.. . . . . . . . . . . . . . . . F-7 INDEX TO FINANCIAL STATEMENTS SINGLE SOURCE FINANCIAL SERVICES CORPORATION (formerly REAM PRINTING PAPER CORP.) FISCAL YEAR ENDED OCTOBER 31, 1999 and FISCAL YEAR ENDED OCTOBER 31, 2000 Page Table of Contents For Audited Financial Audited Statements . . . . . . . . . . . . . . . . . . . . . . . . . F-8 Independent Auditor's Report of Jonathon P. Reuben . . . . . F-9 Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . F-10 Statements of Operations . . . . . . . . . . . . . . . . . . F-11 Statement of Stockholders' Equity (Deficit). . . . . . . . . F-12 Statements of Cash Flows . . . . . . . . . . . . . . . . . . F-13 Notes to Financial Statements of Single Source Financial Services Corporation (Formerly Ream Printing Paper Corp.). . . . . . . . . . . . . . . . . . . . F-14 REAM PAPER PRINTING CORP. (A Development Stage Company) (A New York Corporation) Rochester, New York TABLE OF CONTENTS Independent Auditor's Report of Jonathon P. Reuben . . . . . F-3 Balance Sheet at October 31, 2000. . . . . . . . . . . . . . F-4 Statement of Operations and Deficit Accumulated During the Development Stage . . . . . . . . . . . . . . . . . . F-5 Statements of Stockholders' Deficit. . . . . . . . . . . . . F-6 Statement of Cash Flows. . . . . . . . . . . . . . . . . . . F-7 Notes to Financial Statements. . . . . . . . . . . . . . . . F-8 F-1 SINGLE SOURCE ELECTRONIC TRANSACTIONS, INC. FISCAL YEAR ENDED DECEMBER 31, 1999 and FISCAL YEAR ENDED DECEMBER 31, 2000 Table of Contents For Audited Financial Audited Statements . . . . . . . . . . . . . . . . . . . . . . . . . F-1 Independent Auditors' Report . . . . . . . . . . . . . . . . F-2 Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . F-3 Statements of Operations . . . . . . . . . . . . . . . . . . F-4 Statement of Stockholders' Equity (Deficit). . . . . . . . . F-5 Statements of Cash Flows . . . . . . . . . . . . . . . . . . F-6 Notes to Financial Statements of Single Source Electronic Transactions, Inc.. . . . . . . . . . . . . . . . F-7 INDEX TO FINANCIAL STATEMENTS SINGLE SOURCE FINANCIAL SERVICES CORPORATION (formerly REAM PRINTING PAPER CORP.) FISCAL YEAR ENDED OCTOBER 31, 1999 and FISCAL YEAR ENDED OCTOBER 31, 2000 Page Table of Contents For Audited Financial Audited Statements . . . . . . . . . . . . . . . . . . . . . . . . . F-12 Independent Auditor's Report of Jonathon P. Reuben . . . . . F-13 Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . F-14 Statements of Operations . . . . . . . . . . . . . . . . . . F-15 Statement of Stockholders' Equity (Deficit). . . . . . . . . F-16 Statements of Cash Flows . . . . . . . . . . . . . . . . . . F-17 Notes to Financial Statements of Single Source Financial Services Corporation (Formerly Ream Printing Paper Corp.). . . . . . . . . . . . . . . . . . . . F-18 REAM PAPER PRINTING CORP. (A Development Stage Company) (A New York Corporation) Rochester, New York TABLE OF CONTENTS Independent Auditor's Report of Jonathon P. Reuben . . . . . F-3 Balance Sheet at October 31, 2000. . . . . . . . . . . . . . F-4 Statement of Operations and Deficit Accumulated During the Development Stage . . . . . . . . . . . . . . . . . . F-5 Statements of Stockholders' Deficit. . . . . . . . . . . . . F-6 Statement of Cash Flows. . . . . . . . . . . . . . . . . . . F-7 Notes to Financial Statements. . . . . . . . . . . . . . . . F-8 SINGLE SOURCE ELECTRONIC TRANSACTIONS, INC. FINANCIAL STATEMENTS Contents Page Independent Auditors' Report . . . . . . . . . . . . . . . . F-2 Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . F-3 Statements of Operations . . . . . . . . . . . . . . . . . . F-4 Statement of Stockholders' Equity (Deficit). . . . . . . . . F-5 Statements of Cash Flows . . . . . . . . . . . . . . . . . . F-6 Notes to Financial Statements. . . . . . . . . . . . . . . . F-7 F-1 Independent Auditors' Report Board of Directors Single Source Electronic Transactions, Inc. Los Angeles, California We have audited the accompanying balance sheets of Single Source Electronic Transactions, Inc., as of December 31, 2000, and 1999, and the related statements of operations, cash flows, and stockholders' equity, for the two years then ended. 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. These standards require that we plan and perform the audits 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 Single Source Electronic Transactions, Inc as of December 31, 2000, and 1999, and the results of its operations and its cash flows for the two years then ended, in conformity with generally accepted accounting principles. /s/ Jonathon P. Reuben C.P.A. Jonathon P. Reuben, C.P.A. An Accountancy Corporation Torrance. California March 24,, 2001 F-2
SINGLE SOURCE ELECTRONIC TRANSACTIONS, INC. BALANCE SHEETS ============================================================================================================== DECEMBER 31, DECEMBER 31, 2000 1999 -------------------- ------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 662 $ 4,607 Loans receivable 17,557 - Inventories 64,257 - Prepaid expense 8,113 - -------------------- ------------------- TOTAL CURRENT ASSETS 90,589 4,607 -------------------- ------------------- PROPERTY AND EQUIPMENT Furniture 992 - Office equipment 13,531 - Leasehold improvements 6,673 -------------------- 21,196 - Accumulated depreciation (730) - -------------------- ------------------- 20,466 - -------------------- ------------------- OTHER ASSETS Note Receivable - Employee 25,714 - Deposits and other assets 6,938 - -------------------- ------------------- 32,652 - -------------------- ------------------- TOTAL ASSETS $ 143,707 $ 4,607 ==================== =================== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Income taxes payable $ 900 800 Accounts payable 54,023 - Legal fees payable 33,375 Other payables 32 3,635 -------------------- ------------------- TOTAL CURRENT LIABILITIES 88,330 4,435 LONG TERM DEBT 472,557 - -------------------- ------------------- TOTAL LIABILITIES 560,887 4,435 -------------------- ------------------- STOCKHOLDERS' EQUITY (DEFICIT) Common Stock, par value $.001, authorized 25,000,000 shares, issued and outstanding 11,890,689 shares at December 31, 2000 and 1999 11,891 11,891 Additional Paid in Capital - - Retained Earnings (Deficit) (429,071) (11,719) -------------------- ------------------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (417,180) 172 -------------------- ------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 143,707 $ 4,607 ==================== ===================
F-3
SINGLE SOURCE ELECTRONIC TRANSACTIONS, INC. STATEMENT OF OPERATIONS - ------------------------- FOR THE YEAR ENDED DECEMBER 31, 2000 1999 ----------------------------- -------------------------- Revenues $ 799,284 $ 62,681 Cost of revenues (200,670) (10,096) ----------------------------- -------------------------- Gross profit 598,614 52,585 Selling, general, and administative expenses (1,428,352) (58,729) ----------------------------- -------------------------- Net (Loss) from operations (829,738) (6,144) Other income (expense) Gain on sale of residual interest in merchant accounts 426,000 - Interest income 714 - Interest expense (13,428) - ----------------------------- -------------------------- Net (Loss) before income taxes (416,452) (6,144) Provision for income tax (900) (800) ----------------------------- -------------------------- Net (Loss) before income taxes (417,352) (6,944) ============================= ========================== Basic (Loss) Per Share (0.03) 0.00 ============================= ==========================
F-4
SINGLE SOURCE ELECTRONIC TRANSACTIONS, INC. STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) COMMON STOCK ADDITIONAL RETAINED ------------------- PAID-IN EARNINGS SHARES AMOUNT CAPITAL (DEFICIT) ---------- ------- ----------------------- ---------- BALANCE - DECEMBER 31, 1998 1,000 $ 1 $ 6,999 $ 116 Restatement for reverse acquisition of Single Source Financial Services, Inc, 11,889,689 11,890 (6,999) (4,891) Net income for the year ended December 31, 1999 - - - (6,944) ---------- ------- ----------------------- ---------- BALANCE - DECEMBER 31, 1999 11,890,689 $11,891 $ - $ (11,719) Net loss for the year ended December 31, 2000 - - - (417,352) ---------- ------- ----------------------- ---------- BALANCE - DECEMBER 31, 2000 11,890,689 $11,891 - $(429,071) ========== ======= ======================= ==========
F-5
SINGLE SOURCE ELECTRONIC TRANSACTIONS, INC. STATEMENTS OF CASH FLOWS =================================================================================================== FOR THE YEAR ENDED DECEMBER 31, 2000 1999 --------------- ----------------- CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) $ (417,352) $ (6,944) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 731 - Interest income (714) - Interest expense 13,407 - Gain on sale of interest in merchant account residuals (426,000) - (Increase) Decrease in Assets (Increase) decrease in inventories (64,257) - (Increase) decrease in deposits and other assets (15,052) - Increase (Decrease) in Liabilities Increase (decrease) in income tax payable 100 800 Increase (decrease) in accounts payable 87,398 - Increase (decrease) in accrued payroll (3,635) 3,635 Increase (decrease) in other payables 32 - --------------- ----------------- NET CASH USED IN OPERATING ACTIVITIES (825,342) (2,509) --------------- ----------------- CASH FLOWS FROM INVESTING ACTIVITIES Advances to employees (42,557) - Equipment acquisition (21,196) - --------------- ----------------- NET CASH USED IN INVESTING ACTIVITIES (63,753) - --------------- ----------------- CASH FLOWS FROM FINANCING ACTIVITIES Advances from affiliates 885,150 - --------------- ----------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 885,150 - --------------- ----------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,945) (2,509) BEGINNING BALANCE - CASH AND CASH EQUIVALENTS 4,607 7,116 --------------- ----------------- ENDING BALANCE - CASH AND CASH EQUIVALENTS $ 662 $ 4,607 =============== =================
F-6 SINGLE SOURCE ELECTRONIC TRANSACTIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 1 - ORGANIZATION Single Source Electronic Transactions, Inc. (the "Company") was incorporated in Nevada on January 5, 1998. The Company is in the business of selling credit and debit card processing equipment to retailers. The Company also offers electronic transaction processing services to its customers through a third party processor. The Company receives residuals on each transaction processed through the processor for the Company's customers. The Company acts as a facilitator to its' customers in obtaining lease financing of the equipment. In these arrangements the leasing company pays full sales price of the equipment to the Company without recourse. On November 3, 2000, the Company was acquired by Single Source Financial Services Corporation (formerly Ream Paper Printing Corporation). For financial reporting purposes, the acquisition was treated as a reverse merger whereby the Company's operations continue to be reported as if it had actually been the acquirer. Assets and liabilities of the Company continue to be reported at historical cost. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. PROPERTY AND EQUIPMENT The cost of property and equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed on the straight-line method for financial reporting and income tax reporting purposes. b. NET LOSS PER SHARE The Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" ("EPS") that established standards for the computation, presentation and disclosure of earnings per share, replacing the presentation of Primary EPS with a presentation of Basic EPS. Basic weighted average shares outstanding as of December 31, 2000, and December 31, 1999, were 11,890,689 shares. c. CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers cash and cash equivalents to include all stable, highly liquid investments with maturities of three months or less. F-7 SINGLE SOURCE ELECTRONIC TRANSACTIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- d. PERVASIVENESS OF 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. e. INCOME TAXES The Company accounts for its income taxes under the provisions of Statement of Financial Accounting Standards 109 ("SFAS 109"). The method of accounting for income taxes under SFAS 109 is an asset and liability method. The asset and liability method requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between tax bases and financial reporting bases of other assets and liabilities. f. FAIR VALUE OF FINANCIAL INSTRUMENTS Pursuant to SFAS No. 107, "Disclosures About Fair Value of Financial Instruments", the Company is required to estimate the fair value of all financial instruments included on its balance sheets as of December 31, 2000, and December 31, 1999. The Company considers the carrying value of such amounts in the financial statements to approximate their face value. g. REVENUE AND COMMISSION EXPENSE RECOGNITION Income from equipment sales is recognized after the buyer receives its merchant and terminal identification numbers and is approved for any applicable financing. Income from residuals is recognized when the residual payment is actually received. The Company recognizes commissions owed upon the actual receipt of payment on the related sale. NOTE 3 - NOTE RECEIVABLE - EMPLOYEE In August 2000, The Company advanced to an employee $25,000, which is evidenced by a promissory note. The loan is assessed interest at an annual rate of 7%. The loan matures in July 2003, when the principal balance and accrued interest become fully and due and payable. Interest accrued on this loan for the year ended December 31, 2000 was $714, which was credited to operations. F-8 SINGLE SOURCE ELECTRONIC TRANSACTIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 4 - INVENTORIES Inventories at December 31, 2000, consisted of equipment held for sale to the Company's customers. Inventories are valued at the lower of cost determined by the FIFO method or market. NOTE 5 - PROPERTY AND EQUIPMENT Depreciation charged to operations for the year ended December 31, 2000 amounted to $731. The Company useful lives of furniture and office equipment for purposes of computing depreciation is five years. NOTE 6 - RELATED PARTY TRANSACTIONS a) On September 20, 2000, the Company received two copiers from an affiliate by assuming the leases on the equipment. The first lease is payable in monthly installments of $152, with the final installment due in June 2005. The second lease is payable in monthly installments of $167, with the final installment due in April 2001. The Company has accounted for the assumption of these leases as operating leases. b) The Company leases its Los Angeles office from an affiliate on a month-to-month basis at a rate of $4,601.per month. Effective January 1, 2001, the monthly rate increased to $6,920 per month. c) During 2000, the Company's operations were partially funded through advances made by B.A.A.M.S., Inc., a corporation wholly owned by two shareholders. The amounts advanced are evidenced by a promissory note and are assessed interest at an annual rate of 8%. The principal balance and accrued interest become payable in thirty-six equal monthly installments commencing on April 3, 2003. Any remaining principal and accrued interest becomes fully due and payable on April 5, 2006. On October 31, 2000, the Company sold to B.A.A.M.S. all of its interest in residuals earned currently and in the future on all customer accounts in existence at the time of sale for $426,000. Under the terms of the sale, the balance owed the affiliate was reduced by the sales price. The balance of the loan as of December 31, 2000, amounted to $472,557 which consisted of $846,000 in advances, $39,150 of residuals earned by the affiliate, accrued interest earned of $13,407, less amount paid for the residual income of $426,000. The two shareholders of B.A.A.M.S. and their immediate family owned approximately 70% of the Company's outstanding common stock. d) The Company has experienced a loss for the year ended December 31, 2000 of $417,353, and has liabilities in excess of assets at December 31, 2000, totaling $417,181. Certain shareholders of the Company have committed to fund any shortfalls necessary to meet the Company's obligations for at least the next twelve months. F-9 SINGLE SOURCE ELECTRONIC TRANSACTIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 7 - INCOME TAXES Deferred income taxes arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of the assets and liabilities to which they relate. The Company did not calculate a provision for deferred taxes for the two years ended December 31, 2000, as any timing differences between financial statement and income tax reporting purposes were immaterial. The Company has available at December 31, 2000 approximately $429,000 of unused operating loss carryforwards that may be applied against future taxable income and that expires in 2020. An allowance has been provided for by the Company which reduced the tax benefits accrued by the Company for its net operating losses to zero, as it cannot be determined when, or if, the tax benefits derived from these operating losses will materialize. NOTE 8 - LEASES As of December 31, 2000, the Company leases 6 offices that are located in California, Colorado, Rhode Island, Texas, and Florida, under non-cancelable leases under terms of one year or less. In addition, as discussed further in Note 6, the Company assumed leases on copier equipment, which expire in various years through 2005. Rental expense charged to operations for the two years ended December 31, 2000, were $119,590, and $0, respectively, consisting solely of minimum rental payments. F-10 SINGLE SOURCE ELECTRONIC TRANSACTIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Minimum rental commitments under the noncancelable equipment lease expire as follows: 2001 $ 1,824 2002 $ 1,824 2003 $ 1,824 2004 $ 1,824 2005 $ 1,216 ------- Total minimum lease payments $ 8,512 ======= NOTE 9 - SEGMENT INFORMATION The Company currently operates in only one reportable segment, which conducts business throughout five States. The Company principally operated during 1999 and 2000, in California where significantly all of the Company's sales were generated. The Company receives significantly all of its inventories from two suppliers. However, Management believes that there is no shortage of inventory available from other suppliers and the Company's operations would not be affected by the inability of its current providers to meet its inventory needs. F-11 INDEX TO FINANCIAL STATEMENTS SINGLE SOURCE FINANCIAL SERVICES CORPORATION (formerly REAM PRINTING PAPER CORP.) FISCAL YEAR ENDED OCTOBER 31, 1999 and FISCAL YEAR ENDED OCTOBER 31, 2000 Page Table of Contents For Audited Financial Audited Statements . . . . . . . . . . . . . . . . . . . . . . . . . F-12 Independent Auditor's Report of Jonathon P. Reuben . . . . . F-13 Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . F-14 Statements of Operations . . . . . . . . . . . . . . . . . . F-15 Statement of Stockholders' Equity (Deficit). . . . . . . . . F-16 Statements of Cash Flows . . . . . . . . . . . . . . . . . . F-17 Notes to Financial Statements of Single Source Financial Services Corporation (Formerly Ream Printing Paper Corp.). . . . . . . . . . . . . . . . . . . . F-18 F-12 Independent Auditors' Report Board of Directors Single Source Financial Services Corporation Los Angeles, California We have audited the accompanying balance sheets of Single Source Financial Services Corporation, formerly Ream Printing Paper Corp., (A Development Stage Company) as of October 31, 2000 and 1999, and the related statements of operations and deficit accumulated during the development stage, stockholders' deficit., and cash flows for the two years ended and for the period from inception (September 19, 1994) through October 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. These standards require that we plan and perform the audits 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 Single Source Financial Services Corporation as of October 31, 2000 and 1999, and the results of its operations and its cash flows for the two years ended and for the period from inception (September 19, 1994) through October 31, 2000. /s/ Jonathon P. Reuben C.P.A. Jonathon P. Reuben, C.P.A. An Accountancy Corporation Torrance. California January 31, 2001 F-13
SINGLE SOURCE FINANCIAL SERVICES CORPORATION FORMERLY REAM PRINTING PAPER CORP. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS-Restated OCTOBER 31, -------------------- 2000 1999 --------- --------- Restated Restated ASSETS Current Assets $ - $ - Other Assets Investment in marketable securities, at cost 10,999 --------- --------- TOTAL ASSETS $ - $ 10,999 ========= ========= LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES Franchise taxes payable $ 100 $ 1,515 Accrued expenses - 1,170 --------- --------- TOTAL CURRENT LIABILITIES 100 2,685 --------- --------- STOCKHOLDERS' DEFICIT Common Stock, $.001 par value, 100,000,000 shares authorized, 1,833,189 shares issued and outstanding October 31, 2000 and 1999 1,833 1,833 Additional Paid-in Capital 12,298 20,165 Deficit Accumulated During the Development Stage (14,231) (13,684) --------- --------- TOTAL STOCKHOLDERS' DEFICIT (100) 8,314 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ - $ 10,999 ========= =========
F-14
SINGLE SOURCE FINANCIAL SERVICES CORPORATION FORMERLY REAM PRINTING PAPER CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATION AND DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE DEFICIT FOR THE YEAR ENDED ACCUMULATED OCTOBER 31, DURING THE 2000 1999 DEVELOPMENT STAGE ----------- ----------- ------------------- Restated Restated Restated REVENUE $ - $ - $ - OPERATING EXPENSES General and administrative expenses (547) (55) (14,231) ----------- ----------- ------------------- NET LOSS $ (547) $ (55) $ (14,231) =========== =========== =================== BASIC LOSS PER SHARE $ (0.0003) $ (0.0000) =========== =========== WEIGHTED AVERAGE SHARES OUTSTANDING 1,833,189 1,833,189 =========== ===========
F-15
SINGLE SOURCE FINANCIAL SERVICES CORPORATION FORMERLY REAM PRINTING PAPER CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF STOCKHOLDERS' DEFICIT - Restated DEFICIT ACCUMULATED COMMON STOCK ADDITIONAL DURING THE ----------------- PAID-IN DEVELOPMENT SHARES AMOUNT CAPITAL STAGE --------- ------- --------- --------- BALANCE - SEPTEMBER 19, 1994 - $ - $ - $ - Adjustment to Give Effect to Recapitlization - October 3, 1994 1,833,189 1,833 9,166 - Donated Capital - - 10,999 - Net loss from inception (September 19, 1994) through October 31, 1994 - - - (10,999) --------- ------- --------- --------- Balance - October 31, 1994 1,833,189 1,833 20,165 (10,999) Distribution to shareholders of securities in closely held companies - - - - Net Loss for the Year Ended October 31, 1995 - - - (349) --------- ------- --------- --------- Balance - October 31, 1995 1,833,189 1,833 20,165 (11,348) Net Loss for the Year Ended October 31, 1996 - - - (333) --------- ------- --------- --------- Balance - October 31, 1996 1,833,189 1,833 20,165 (11,681) Net Loss for the Year Ended October 31, 1997 - - - (325) --------- ------- --------- --------- Balance - October 31, 1997 1,833,189 1,833 20,165 (12,006) Net Loss for the Year Ended October 31, 1998 - - - (1,623) --------- ------- --------- --------- Balance - October 31, 1998 1,833,189 1,833 20,165 (13,629) Net loss for the year ended October 31, 1999 - - - (55) --------- ------- --------- --------- BALANCE - OCTOBER 31, 1999 1,833,189 1,833 20,165 (13,684) Donated Capital - - 3,132 0 Property distributed to shareholders - - (10,999) Net loss for the year ended October 31, 2000 - - - (547) BALANCE - OCTOBER 31, 2000 1,833,189 $ 1,833 $ 12,298 ($14,231) ========= ======= ========= =========
F-16
SINGLE SOURCE FINANCIAL SERVICES CORPORATION FORMERLY REAM PRINTING PAPER CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS ACCUMULATED FOR THE YEAR ENDED DEFICIT OCTOBER 31, DURING THE 2000 1999 DEVELOPMENT STAGE --------- ------ ------------------- Restated Restated Restated CASH FLOWS FROM OPERATING ACTIVITIES $ (547) $ (55) $ (14,231) Net income (loss) Adjustments to reconcile net loss to net cash provided by operating activities: Increase (Decrease) in Liabilities Increase (decrease) in franchise tax payable (1,415) - (100) Increase (decrease) in accrued expenses (1,170) - - -------- ------ ------------------- NET CASH USED IN OPERATING ACTIVITIES (3,132) (55) (14,331) -------- ------ ------------------- CASH FLOWS FROM FINANCING ACTIVITIES Expenses paid by shareholders' 3,132 55 14,331 -------- ------ ------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 3,132 55 14,331 -------- ------ ------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS - - - BEGINNING BALANCE - CASH AND CASH EQUIVALENTS - - - -------- ------ ------------------- ENDING BALANCE - CASH AND CASH EQUIVALENTS $ - $ - - ======== ====== =================== SUPPLEMENTAL INFORMATION: CASH PAID FOR: Interest Expense $ - $ - ======== ====== Income Taxes $ - $ - ======== ======
F-17 NOTES TO FINANCIAL STATEMENTS OF SINGLE SOURCE FINANCIAL SERVICES CORPORATION (Formerly Ream Printing Paper Corp.) NOTE 1 - ORGANIZATION Ream Printing Paper Corp. (the "Company") was incorporated in New York on September 19, 1994. In October 1994, in exchange for receiving certain assets from Active Science Systems, Inc., the Company issued 10,990,133 shares of its common stock directly to its shareholders. The Company was formed for the purpose of acquiring the operations of a printing supply company. This transaction was not consummated and the Company has remained dormant until November 2000, when the Company acquired Single Source Electronic Transactions, Inc. ("SSET"), and changed its name to Single Source Financial Services Corporation. The Company is in the development stage as defined in FASB Statement 7. The Company has not paid any dividends and dividends, which may be paid in the future, will depend on the financial requirements of the Company and other relevant factors. Prior to the acquisition of SSET, the Company was actively seeking and attempting to acquire on-going businesses. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. INVESTMENTS Investments in companies in which the Company has less than a 20% interest are carried at cost. Dividends received from those companies are included in other income. Dividends received in excess of the Company's proportionate share of accumulated earnings are applied as a reduction of the cost of the investment. b. NET LOSS PER SHARE The Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" ("EPS") that established standards for the computation, presentation and disclosure of earnings per share, replacing the presentation of Primary EPS with a presentation of Basic EPS. c. PERVASIVENESS OF 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. d. INCOME TAXES The Company accounts for its income taxes under the provisions of Statement of Financial Accounting Standards 109 ("SFAS 109"). The method of accounting for income taxes under SFAS 109 is an asset and liability method. The asset and liability method requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between tax bases and financial reporting bases of other assets and liabilities. e. FAIR VALUE OF FINANCIAL INSTRUMENTS Pursuant to SFAS No. 107, "Disclosures About Fair Value of Financial Instruments", the Company is required to estimate the fair value of all financial instruments included on its balance sheets as of June 30, 2000 and December 31, 1999. The Company considers the carrying value of such amounts in the financial statements to approximate their face value. NOTE 3 - ISSUANCE OF COMMON STOCK The Company issued 10,999,133 shares of its common stock in exchange for shares of common stock in privately held companies. In October 2000, the Company authorized a 6:1 reverse stock split thereby reducing the total number of shares outstanding to 1,833,189. The Company's financial statements have been prepared as if the reverse stock split occurred at the Company's inception. Each share outstanding is entitled to one vote. NOTE 4 - INVESTMENTS As discussed in Note 3, the Company received shares of common stock in four closely held companies, in exchange for the issuance of 10,999,133 of the Company's common stock. The securities received have no readably determinable value, and the Company valued these securities at the par value of the common stock exchanged In July 2000, the Company distributed to a entity wholly owned by the Company's shareholders the stock in the four private companies. NOTE 5 - PERIOD ADJUSTMENTS The financial statements as previously prepared failed to include the acquisition of common stock in four privately held companies. The accompanying financial statements have been prepared to include the transactions relating to these acquisitions. NOTE 6 - INCOME TAXES Deferred income taxes arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of the assets and liabilities to which they relate. The Company did not calculate a provision for deferred taxes for the years ended December 31, 1999 and 2000, as any timing differences between financial statement and income tax reporting purposes were immaterial. The Company has available at December 31, 2000, approximately $15,000 of unused operating loss carryforwards that may be applied against future taxable income and that expire in various years through out 2020. An allowance has been provided for by the Company which reduced the tax benefits accrued by the Company for these start up costs to zero, as it cannot be determined when, or if, the tax benefits derived from these losses will materialize. NOTE 7 - RELATED PARTY TRANSACTIONS The Company's shareholders have personally paid expenses incurred by the Company. The Shareholder's have made these advances without expectation of reimbursement. The Company has treated these advances as contributions to capital. NOTE 8 - SUBSEQUENT EVENTS a) On November 7, 2000, the Company acquired 100% of the outstanding stock of Single Source Electronic Transactions, Inc. in exchange for issuing 10,012,500 shares of its common stock. F-18 EX-3.1 2 0002.txt Exhibit 3.1 ARTICLES OF INCORPORATION OF REAM PRINTING PAPER CORP. Under Section 402 of the Business Corporation Law. KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, for the purpose of forming a corporation pursuant to Section 402 of the Business Corporation Law of the State of New York, does hereby certify and set forth: ARTICLE I Name The name of this corporation is Ream Printing Paper Corp. ARTICLE II Purposes and Powers Section 1. Purposes. The purpose(s) for which the corporation is formed are: To engage in any lawful act or activity for which corporation may be organized under the business corporation law, provided that the corporation is not formed to engage in any act or activity which requires the act or approval of any state official, department, board, agency or other body without such approval or consent first being obtained. To carry on a general mercantile, industrial, investing and trading business in all its branches; to devise, invent, manufacture, fabricate, assemble, install, service, maintain, alter, buy, sell, import, export, license as licence or licensee, leases lessor or lessee, distribute, job, enter into, negotiate, execute, acquire, and assign contracts in respect of, acquire, receive, grant, and assign licensing arrangements, portions, franchises, and other rights in respect of and generally deal in and with at wholesale and retail, as principal, and as sales, business, special, or general agent, representative, broker, factor, merchant, distributor, jobber, advisor, or in any other lawful capacity, goods, wares, merchandise, commodities, and unimproved, improved, finished, processed and other real, personal and mixed property of any and all kinds, together with the components, resultants, and by-products thereof. To create, manufacture, contract for, sell, import, export, distribute, job and generally deal in and with, whether at wholesale or retail, and as principal, agent, broker, factor, commission merchant, licence, licensee or otherwise, any and all kinds of goods, wares, and merchandise, and in connection therewith or independent thereof, to establish and maintain, by any manner or means, buying offices, distribution centers, specialty and other shops, stores, mail-order establishments, concessions, leased departments, and any and all other departments, sites and locations necessary, convenient or useful in the furtherance of any business of the corporation. To acquire by purchase, subscription, underwriting or otherwise, and to own, hold for investment, or otherwise, and to use, sell, assign, transfer, mortgage, pledge, exchange or otherwise dispose of real and personal property of every sort and description and wheresoever situated, including shares of stock, bonds, debentures, notes, scrip, securities, evidences of indebtedness, contracts or obligations of any corporation or association, whether domestic or foreign, or of any firm or individual or of the United States or any state, territory or dependency of the United States or any foreign country, or any municipality or local authority within or without the United States, and also to issue in exchange therefore, stocks, binds or other securities or evidences of indebtedness of this corporation and, while the owner or holder of any such property, to receive, collect and dispose of the interest, dividends and income on or from such property and to possess and exercise in respect thereto all of the rights, powers and privileges of ownership, including all voting powers thereon. To construct, build, purchase, lease or otherwise acquire, equip, hold, own, improve, develop, manage, maintain, control, operate, lease, mortgage, create liens upon, sell, convey or otherwise dispose of and turn to account, any and all plants, machinery, works, implements and things or property, real and personal, of every kind and description, incidental to, connected with, or suitable, necessary or convenient for any of the purposes enumerated herein, including all or any part or parts of the properties, assets, business and good will of any persons, firms, associations or corporations. The powers, rights and privileges provided in this certificate are not to be deemed to be in limitation of similar, other or additional powers, rights and privileges granted or permitted to a corporation by the Business Corporation Law, it being intended that this corporation shall have all the rights, powers and privileges granted or permitted to a corporation by such statute. ARTICLE III Corporation Office The office of the corporation is to be located in the County of Monroe, State of New York. ARTICLE IV Number of Shares The aggregate number of shares which the corporation shall have the authority to issue is Twenty Million (20,000,000), all of which shall have a par value of One ($.001) Mill. ARTICLE V Agent for the Corporation The Secretary of State is designated as agent of the corporation upon whom process against it may be served. The post office address to which the Secretary of State shall mail a copy of any process against the corporation served upon him is: 2541 Monroe Avenue, Suite 301 Rochester, New York 14618 ARTICLE VI Directors Liability The personal liability of directors to the corporation or its shareholders for damages for any breach of duty in such capacity is hereby eliminated except that such personal liability shall not be eliminated if a judgment or other final adjudication adverse to such director establishes that his acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of law or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled or that his acts violated Section 719 of the Business Corporation Law. No shareholder of this corporation shall have a preemptive right because of his shareholdings to have first offered to him any part of any of the presently authorized shares of this corporation hereafter issued, optioned or sold, or any part of any debentures, bonds, notes or securities of this corporation convertible into shares hereafter issued, optioned or sold by the corporation. This provision shall operate to defeat rights in all shares and classes of shares now authorized and in all debentures, bonds, notes or securities of the corporation which may be convertible into shares and classes of shares and also to defeat preemptive rights in any and all shares and classes of shares and securities convertible into shares which this corporation may be hereafter authorized to issue by any amended certificate duly filed. IN WITNESS WHEREOF, this certificate has been subscribed to this 12th day of September 1994 by the undersigned, who affirms that the statements made herein are true under the penalties of perjury. MORRIS DIAMOND 105 SOUTHERN PARKWAY ROCHESTER, NEW YORK 14618 EX-3.2 3 0003.txt Exhibit 3.2 Certificate of Amendment of the Certificate of Incorporation of Ream Printing Paper Corp. Under Section 805 of the Business Corporation Laws _____________________ FIRST: The name of the corporation is Single Source Financial Services Corporation. The name under which the corporation was formed is Ream Printing Paper Corp. SECOND: The Certificate of Incorporation of the Corporation was filed by the Department of State on September 19, 1994. THIRD: The Amendments of the Certificate of Incorporation effected by this Certificate of Amendment are as follows: 1. To change the name of the Corporation from Ream Printing Paper Corp. to Single Source Financial Services Corporation; and 2. To increase the authorized number of shares in the Corporation from 20,000,000 to 100,000,000. FOURTH: To accomplish the foregoing amendments, Article 1 of the Certificate of Incorporation relating to the name of the Corporation is hereby stricken out in its entirety and the following new article is substituted in lieu thereof: Article 1 Name The name of this Corporation is Single Source Financial Services Corporation. To accomplish the foregoing amendment, Article 4 of the Articles of Incorporation relating to the number of authorized shares is hereby stricken out in its entirety and the following new article is substituted in lieu thereof: Article 4 Number of Shares The aggregate number of shares which the Corporation shall have the authority to issue is one hundred million (100,000,000), all of which shall have a par value of one mill ($.001). FIFTH: The manner in which the foregoing amendments of the Certificate of Incorporation were authorized is as follows: The foregoing amendments were approved by a vote of the majority of the Board of Directors and by the vote of a greater number or proportion of the holders of securities required to approve such amendments. Signed on November 6, 2000 _______________________________ Arnold F. Sock, President of Ream Printing Paper Corp. EX-3.3 4 0004.txt Exhibit 3.3 BYLAWS OF REAM PRINTING PAPER CORP. ARTICLE I Offices The principal office of the corporation shall be located in the State of New York in the County of Monroe. The corporation may have such other offices, either within or outside the state, as the Board of Directors may designate or as the business of the corporation may require from time to time. The registered office of the corporation may be, but need not be, identical with the principal office, and the address of the registered office may be changed from time to time by the Board of Directors. ARTICLE II Shareholders Section 1. Annual Meeting. the annual meeting of the shareholders shall be held at 4:00 PM on the Third Tuesday in the month of February in each year, beginning with the year 1995. If the day fixed for the annual meeting shall be a legal holiday, such meeting shall be held on the next succeeding business day. Section 2. Special Meetings. Special meetings of the shareholders, for any purpose, unless otherwise prescribed by statute, may be called by the president or by the Board of Directors, and shall be called by the president at the request of the holders of not less than one-tenth of all the outstanding shares of the corporation entitled to vote at the meeting. Section 3. Place of Meeting. The Board of Directors may designate any place as the place for any annual meeting or for any special meeting called by the Board of Directors. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any place as the place for such meeting. If no designation is made, or if a special meeting shall be called otherwise than by the Board, the place of meeting shall be the registered office of the corporation. Section 4. Notice of Meeting. Written or printed notice stating the place, day and hour of the meeting, and, in case of a special meeting, the purposes for which the meeting is called, shall be delivered not less than ten nor more than fifty days before the date of the meeting, either personally or by mail, by or at the direction of the president, or the secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting, except that if the authorized capital stock is to be increased at least thirty days notice shall be given. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock transfer books of the corporation, with postage thereon prepaid. If requested by the person or persons lawfully calling such meeting, the secretary shall give notice thereof at corporate expense. Section 5. Closing of Transfer Books or Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for any stated period not exceeding fifty days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the stock transfer books the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty days, and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof except where the determination has been made through the closing of this stock transfer books and the stated period of the closing has expired. Section 6. Voting Lists. The officer or agent having charge of the stock transfer books for shares of the corporation shall make, at least ten days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each. For a period of ten days prior to such meeting, this list shall be kept on file at the principal office of the corporation and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original stock transfer books shall be prima facie evidence as to who are the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders. Section 7. Quorum. Fifty One Percent (51%) of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If less than a quorum of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. If a quorum is present, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by law or the articles of incorporation. Section 8. Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or his or her duly authorized attorney-in-fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution , unless otherwise provided in the proxy. Section 9. Voting of Shares. Each outstanding share, regardless of class, shall be entitled to one vote, and each fractional share shall be entitled to a corresponding fractional vote on each matter submitted to a vote at a meeting of shareholders. Cumulative voting shall not be allowed. Section 10. Voting of Shares by Certain Holders. Neither treasury shares, nor shares of its own stock held by the corporation in a fiduciary capacity, nor shares held by another corporation if a majority of the shares entitled to vote for the election of Directors of such other corporation is held by this corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time. Shares standing in the name of another corporation may be voted by such officer, agent or proxy as the bylaws of such corporation may prescribe or, in the absence of such provision, as the Board of Directors of such corporation may determine. Shares held by an administrator, executor, guardian or conservator may be voted by him or her, either in person or by proxy, without a transfer of such shares into his or her name. Shares standing in the name of a trustee may be voted by him or her, either in person or by proxy, but not trustee shall be entitled to vote shares held by him or her without a transfer of such shares into his or her name. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his or her name if authority to do so be contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. Section 11. Informal Action by Shareholders. Any action required to be taken at a meeting of the shareholders, or any other action which may be taken without a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of the shareholders. ARTICLE III Board of Directors Section 1. General Powers. The business and affairs of the corporation shall be managed by its Board of Directors, except as otherwise provided by statute or the articles of incorporation. Section 2. Number, Tenure and Qualifications. The number of Directors of the corporation shall be not less than three nor more than five, unless a lesser number is allowed by statute. Directors shall be elected at each annual meeting of shareholders. Each director shall hold office until the next annual meeting of shareholders and thereafter until his or her successor shall have been elected and qualified. Directors need not be residents of this state or shareholders of the corporation. Directors shall be removable in the manner provided by statute. Section 3. Vacancies. Any director may resign at any time by giving written notice to the president or to the secretary of the corporation. Any vacancy occurring in the Board of Directors may be filled by the affirmative vote of a majority of the remaining Directors though not less than a quorum. A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office. Any Directorship to be filled by the affirmative vote of a majority of the Directors then in office or by an election at an annual meeting or at a special meeting of shareholders called for that purpose, and a director so chosen shall hold office for the term specified in Section 2 above. Section 4. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this bylaw immediately after and at the same place as the annual meeting of shareholders. The Board of Directors shall be held without other notice than this bylaw immediately after and at the same place as the annual meeting of shareholders. The Board of Directors may provide by resolution the time and place for the holding of additional regular meetings without other notice than such resolution. Section 5. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the president or any two Directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place as the place for holding any special meeting of the Board of Directors called by them. Section 6. Notice. Notice of any special meeting shall be given at least seven days previous thereto by written notice delivered personally or mailed to each director at his or her business address, or by notice given at least two days previously by telegraph. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Any director may waive notice of any meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of waiver of notice of such meeting. Section 7. Quorum. A majority of the number of Directors fixed by Section 2 shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such majority is present at a meeting, a majority of the Directors present may adjourn the meeting from time to time without further notice. Section 8. Manner of Acting. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 9. Compensation. By resolution of the Board of Directors, any director may be paid any one or more of the following: expenses, if any, of attendance at meetings; a fixed sum for attendance at each meeting; or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Section 10. Information Action by Directors. Any action required or permitted to be taken at a meeting of the Directors may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of the Directors. ARTICLE IV Officers and Agents Section 1. General. The officers of the corporation shall be a president, one or more vice presidents, a secretary and a treasurer. The salaries of all the officers of the corporation shall be fixed by the Board of Directors. One person may hold any two offices, except that no person may simultaneously hold the offices of president and secretary. Section 2. Election and Term of Office. The officers of the corporation shall be elected by the Board of Directors annually at the first meeting of the Board held after each annual meeting of the shareholders. Section 3. Removal. Any officer or agent may be removed by the Board of Directors whenever in its judgment the best interests of the corporation will be served thereby. Section 4. Vacancies. A vacancy in any office, however, occurring, may be filled by the Board of Directors for the unexpired portion of the term. Section 5. President. The president shall: (a) subject to the direction and supervision of the Board of Directors, be the chief executive officer of the corporation; (b) shall have general and active control of its affairs and business and general supervision of its officers, agents and employees; and (c) the president shall have custody of the treasurer's bond, if any. Section 6. Vice Presidents. The vice presidents shall: (a) assist the president; and (b) shall perform such duties as may be assigned to them by the president or by the Board of Directors. Section 7. Secretary. The secretary shall: (a) keep the minutes of the proceedings of the shareholders and the Board of Directors; (b) see that all notices are duly given in accordance with the provisions of these bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and affix the seal to all documents when authorized by the Board of Directors; (d) keep at its registered office or principal place of business a record containing the names and addresses of all shareholders and the number and class of shares held by each, unless such a record shall be kept at the office of the corporation's transfer agent or registrar; (e) sign with the president, or a vice president, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation, unless the corporation has a transfer agent; and (g) in general, perform all duties incident to the office as secretary and such other duties as from time to time may be assigned to him or her by the president or by the Board of Directors. Section 8. Treasurer. The treasurer shall: (a) be the principal financial officer of the corporation; (b) perform all other duties incident to the office of the treasurer and, upon request of the Board, shall make such reports to it as may be required at any time; (c) be the principal accounting officer of the corporation; and (d) have such other powers and perform such other duties as may be from time to time prescribed by the Board of Directors or the president; ARTICLE V Stock Section 1. Certificates. The shares of stock shall be represented by consecutively numbered certificates signed in the name of the corporation by its president or a vice president and the secretary, and shall be sealed with the seal of the corporation, or with a facsimile thereof. No certificate shall be issued until the shares represented thereby are fully paid. Section 2. Consideration for Shares. Shares shall be issued for such consideration, expressed in dollars (but not less than the par value thereof, if any) as shall be fixed from time to time by the Board of Directors. Such consideration may consist, in whole or in part of money, other property, tangible or intangible, or in labor or services actually performed for the corporation, but neither promissory notes nor future services shall constitute payment or part payment for shares. Section 3. Transfer of Shares. Upon surrender to the corporation or to a transfer agent of the corporation of a certificate of stock duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, and such documentary stamps as may be required by law, it shall be the duty of the corporation to issue a new certificates to the person entitled thereto, and cancel the old certificate. Every such transfer of stock shall be entered on the stock book of the corporation which shall be kept at its principal office, or by its registrar duly appointed. Section 4. Transfer Agents, Registrars and Paying Agents. The Board may at its discretion appoint one or more transfer agents, registrars and agents for making payment upon any class of stock, bond, debenture or other security of the corporation. ARTICLE VI Indemnification of Officers and Directors Each director and officer of this corporation shall be indemnified by the corporation against all costs and expenses actually and necessarily incurred by him or her in connection with the defense of any action, suit or proceeding in which he or she may be involved or to which he or she may be made a party by reason of his or her being or having been such director or officer, except in relation to matters as to which he or she shall be finally adjudged in such action, suit or proceeding to be liable for negligence or misconduct in the performance of duty. ARTICLE VII Miscellaneous Section 1. Waivers of Notice. Whenever notice is required by law, by the articles of incorporation or by these bylaws, a waiver thereof in writing signed by the director, shareholder or other person entitled to said notice, whether before or after the time stated therein, or his or her appearance at such meeting in person or (in the case of a shareholders' meeting) by proxy, shall be equivalent to such notice. Section 2. Seal. The corporate seal of the corporation shall be in the form impressed on the margin hereof. Section 3. Fiscal Year. The fiscal year of the corporation shall be as established by the Board of Directors. Section 4. Amendments. The Board of Directors shall have power to make, amend and repeal the bylaws of the corporation at any regular meeting of the Board or at any special meeting called for the purpose. APPROVED: DATED: September 21, 1994 ______________________________ Director: ______________________________ Director: ______________________________ Director: EX-5.1 5 0005.txt Exhibit 5.1 WASHOR & ASSOCIATES 11150 WEST OLYMPIC BOULEVARD SUITE 980 LOS ANGELES, CALIFORNIA 90064 TELEPHONE (310) 479-2660 TELECOPIER (310) 479-1022 November 21, 2000 Single Source Financial Services Corporation 10780 Santa Monica Boulevard, Suite 240 Los Angeles, California 90025 Re: Opinion Regarding Legality of Common Stock Ladies and Gentlemen: We have examined the Registration Statement on Form SB-2 (the "Registration Statement") to be filed by Single Source Financial Services Corporation (formerly Ream Printing Paper Corp.), a New York corporation (the "Company"), with the Securities and Exchange Commission ("Commission"). It is our understanding that the Registration Statement is to be filed in connection with the registration under the Securities Act of 1933, as amended (the "1933 Act"), of shares of common stock ("Common Stock") to be sold by the Company and by certain selling shareholders. We have examined original or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary for the purposes of this opinion. For the purposes of this opinion, we have assumed the authenticity of all documents submitted to us and the genuineness of the signatures of persons signing all documents in connection with which this opinion is rendered, the authority of such persons signing on behalf of the parties thereto, and the due authorization, execution and delivery of all documents by the parties thereto. Based upon the foregoing, we are of the opinion that: when, as and if (i) the Registration Statement shall have become effective pursuant to the provisions of the 1933 Act, (ii) the Company or the selling shareholders shall have received payment in full for their Common Stock; (iii) the Common Stock shall have been issued in the form and containing the terms described in the Registration Statement, and (iv) any legally required consents, approvals, authorizations or other orders of the Commission and any other regulatory authority shall have been obtained, the Common Stock, when sold, will be legally issued, fully paid and nonassessable. We consent to the use of this opinion as an exhibit to the Form SB-2 Registration Statement and to the use of our name under the heading "Legal Matters" in the Form SB-2 Registration Statement. We do not find it necessary for the purposes of this opinion, and accordingly we do not purport to cover herein, the application of the securities or "Blue Sky" laws of the various states to the sale of the Common Stock. This opinion is furnished to you and to purchasers in this offering in connection with the filing of the Form SB-2 Registration Statement, and is not to be used, circulated, quoted or otherwise relied upon for any other purpose. Very truly yours, Lawrence I. Washor LIW:ah EX-10.1 6 0006.txt Exhibit 10.1 STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT ("Agreement") is made, and entered into, effective as of the 7th day of November, 2000, by, and between, Single Source Electronic Transactions, Inc., a Nevada corporation ("SSET"), and its shareholders (hereinafter referred to collectively with SSET as "Sellers") and Single Source Financial Services Corporation, previously known as Ream Printing Paper Corp., a New York corporation ("SSFS"), as follows: RECITALS WHEREFORE, SSET has developed an independent sales organization over the past nine (9) months which sells and leases electronic financial transaction equipment to merchants and signs such merchants up with a processor in order to permit the processing of such electronic financial transactions. WHEREFORE, SSFS desires to develop its business as an independent sales organization and, ultimately, to become a processor. WHEREFORE, the parties believe that as an initial step in the development of its business, SSFS should acquire SSET. WHEREFORE, SSET desires to be acquired by SSFS, and SSFS desires to acquire SSET, under the terms and conditions set forth herein. AGREEMENT In consideration of the mutual covenants and conditions contained herein, SSET and SSFS agree, as follows: SECTION 1. STOCK PURCHASE 1.1 Purchase and Sale. Each of the shareholders in SSET hereby transfers and sells all of the issued and outstanding stock of SSET to SSFS in exchange for 10,012,500 shares of restricted stock in SSFS and SSFS hereby purchases all of the issued and outstanding stock of SSET in exchange for 10,012,500 shares of its restricted stock under the terms and conditions set forth herein. 1.2 Compensation. The shareholders of SSET shall be compensated by the delivery to each of them one (1) share of restricted stock in SSFS for each one (1) share of stock in SSET which they deliver to SSFS. 1.3 Operation of Business. Until the close of this transaction, SSET shall continue to operate its day to day business as it has for the past six (6) months and SSET shall not engage in any transaction which materially affects its financial condition or the business pending the completion of the transaction. 1.4 Excluded Assets. Except in the ordinary course of business, no asset of SSET shall be removed from SSET pending the completion of this transaction. SECTION 2. STOCK CONSIDERATION THE COMMON STOCK IN SSFS TO BE ISSUED PURSUANT TO THIS AGREEMENT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE COMMON STOCK ISSUED PURSUANT HERETO MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. 2.1 Shares to Be Issued. On November 7, 2000, SSFS shall cause 10,012,500 shares of restricted common stock to be delivered to the shareholders of SSET as follows: Number of Shares of SSFS Name of Shareholder Common Stock (a) Baki Arbria 500,000 (b) Brandon Becker 2,935,414 (c) Kendra Becker 800,000 (d) Martin Becker 200,000 (e) Pamela Becker 817,362 (f) Lorraine Dorsey 250,000 (g) Mara Gorodezky 125,000 (h) Arlene Rosenblatt 1,317,362 (i) Julie Rosenblatt 800,000 (j) Sid Rosenblatt 200,000 (k) Arnold F. Sock, Esq. 1,303,704 (l) Leona Sock 131,829 (m) Michael Sock 381,829 (n) Harry L. Wilson 250,000 The SSFS stock, when issued, shall be fully paid, validly issued and non-assessable. In exchange, each listed shareholder shall deliver the same number of shares of stock in SSFS which shall contribute all of the SSFS stock held by such shareholder. 2.2 Registration Rights. It is anticipated that SSFS will shortly be filing an SB-2 with the SEC. If, and when, such an SB-2 is filed, SSFS shall register the following number of shares of SSFS common stock which have issued to the following: Name of Shareholder (a) Baki Arbria 20,487 (b) Brandon Becker 663,539 (c) Lorraine Dorsey 250,000 (d) Mara Gorodezky 125,000 (e) Arlene Rosenblatt 20,487 (f) Michael Sock 20,487 (j) Harry L. Wilson 25,000 1,125,000 2.3 Legends and Restrictions. (a) Legend. Sellers acknowledge, understand, and agree that the certificate(s) representing the stock consideration shall bear legends in substantially the following form: "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT THE PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. ANY INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME." (b) Stop Transfer Instructions. Stop transfer instructions in respect of the Stock Consideration may be issued, at any time, to any transfer agent, transfer clerk or other agent acting for the Issuer. SECTION 3. SSET STOCK THE COMMON STOCK IN SSET TO BE SOLD PURSUANT TO THIS AGREEMENT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE COMMON STOCK ISSUED PURSUANT HERETO MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. 3.1 Shares to Be Issued. On November 7, 2000, Sellers shall cause all of the issued and outstanding common stock to be delivered to SSFS. When transferred, the SSET stock shall be duly issued, validly paid, and non-assessable. 3.2 Legends and Restrictions. (a) Legend. SSFS agrees that the certificate(s) representing the SSET stock being transferred to it shall bear legends in substantially the following form: "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT THE PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. ANY INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME." (b) Stop Transfer Instructions. Stop transfer instructions in respect of the Stock Consideration may be issued, at any time, to any transfer agent, transfer clerk or other agent acting for the Issuer. SECTION 4. REPRESENTATIONS AND WARRANTIES 4.1 SSET Representations and Warranties. In order to induce SSFS to accept this Agreement, SSET, and its shareholders, and each of them (hereinafter referred to collectively as "Sellers"), hereby represents and warrants to SSFS, as follows: (a) Opportunity to Investigate. Sellers or their Investment Advisor (if any) have been given a full opportunity to ask questions of and to receive answers from the officers, agents and representatives of SSFS concerning the terms and conditions of this Agreement and the business and status of SSFS and to obtain such other information that Sellers or their Investment Advisor (if any) desires in order to evaluate an investment in SSFS, and all such questions have been answered to the full satisfaction of Sellers. Sellers acknowledge that Sellers or their Investment Advisor (if any) have had access to the same kind of information concerning Ream that is required by Schedule A of the Securities Act of 1933, as amended, to the extent that SSFS possesses such information. (b) Reviewed Merits With Investments Advisor. Sellers have reviewed the merits of an investment in SSFS with tax and legal counsel and an investment advisor to the extent deemed advisable by Sellers. (c) Acknowledgment of Risks. Sellers acknowledge and understand that I) SSFS is in a very competitive field, and expects to encounter competition from other companies which have substantially more resources and experience, and are better known, than SSFS; ii) SSFS's future is dependent upon its acceptance in the marketplace, and there can be no assurances that acceptance will be achieved; iii) although SSFS cannot accurately predict its future operating results, it will incur losses from operations subsequent to the date hereof and extending into an indeterminable time in the future and there can be no assurances that it will ever achieve profitability; iv) the aggregate number of capital shares sold by SSFS, from time to time, and the price at which such shares are sold, will be determined by the Board of Directors of SSFS, in its discretion, giving consideration to the needs of SSFS to obtain financing, and there can be no assurance as to the price(s) for which SSFS will sell its capital shares in the future and no assurance can be given that SSFS will be able to obtain such financing, on terms acceptable to Ream, at the time it is required; and v) in purchasing the SSFS Shares, Sellers are making a highly speculative investment. (d) Shares Not Registered. Sellers understand that the SSFS Shares being acquired by Sellers have not been registered under the Act, or the securities laws of any state, in reliance upon specific exemptions from registration thereunder, and Sellers agrees that the SSFS Shares may not be sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed of except pursuant to a registration in compliance with the Act and applicable state securities laws or pursuant to an exemption from registration. (e) No Federal or State Endorsement. Sellers understand that no federal or state agency has made any finding or determination as to the fairness of an investment in, or any recommendation or endorsement of, the SSFS Shares or SSFS. (f) Additional Financing. Sellers understand that SSFS will require additional financing in the future, that SSFS has no commitments for such financing at this time and has no assurances that it will be able to obtain additional financing, or if obtained what price, terms and conditions will be attached to such financing. Sellers acknowledge that SSFS presently intends to issue substantial shares in several rounds of future financings and reorganizations, and that in the course of such issuances, Sellers' percentage ownership in SSFS will be substantially diluted. (g) Independent Investigation. In making its decision to purchase the Ream Shares, Sellers have relied solely upon independent investigations made by them or their Investment Advisor (if any). Sellers have received no representation or warranty from SSFS or any of its affiliates, employees or agents or any of its subsidiaries, employees or agents, except as set forth herein. (h) Authority. Sellers represent that they have the requisite authority to enter into this Agreement, that its entry into this Agreement will not violate any agreement of Sellers, or any of them, any applicable law, or any judicial order, decree, or writ. (i) Sellers' Intent. Sellers are acquiring the SSFS Securities solely for their own account as principal, for investment purposes only, and except as provided herein, not with a view to the resale or distribution thereof, in whole or in part. (j) Existence and Good Standing. SSET is a Nevada corporation, duly, fully, and validly formed and existing, under, and by virtue of, the laws of the State of California. SSET is in good standing as a limited liability company under the laws of the State of California. (k) Legal Authorization. Sellers are legally authorized to enter into this Agreement and Sellers' entry into this Agreement will not violate any other agreement, covenant, and condition to which Sellers, or any of them, are a party. (l) Accuracy and Survival of Representations. Each representation and warranty of Sellers contained herein and all information furnished by Sellers to SSFS is true, correct and complete in all respects. All representations and warranties set forth above or in any other written statement or document delivered by Sellers in connection with the transaction contemplated hereby will be true, correct and complete in all respects on and as of the date of the closing, as if made on, and as of, such date and shall survive such closing. 4.2 SSFS Representations and Warranties. In order to induce Sellers to enter into this Agreement, SSFS hereby represents and warrants to Sellers, as follows: (a) Opportunity to Investigate. SSFS has been given a full opportunity to ask questions of and to receive answers from the officers, agents and representatives of Sellers concerning the terms and conditions of this Agreement and to obtain such other information from Sellers, or any of them, that SSFS desires in order to evaluate an acquisition of SSFS and all of such questions have been answered to the full satisfaction of SSFS. (b) Independent Investigation. In making its decision to acquire SSET, SSFS has relied solely upon independent investigations made by it. SSFS has received no current representation or warranty from Sellers or any of their current affiliates, employees or agents, except as set forth herein. (c) Corporate Status. SSFS is a corporation, duly, fully, and validly formed and existing, under, and by virtue of, the laws of the State of New York. SSFS is in good standing as a corporation under the laws of the State of New York; (d) SSFS Authority. SSFS is legally authorized to enter into this Agreement and SSFS's entry into this Agreement will not violate any other agreement, covenant, and condition to which SSFS is a party; and (e) Accuracy and Survival of Representations. Each representation and warranty of SSFS contained herein and all information furnished to Sellers by SSFS is true, correct and complete in all respects. All representations and warranties set forth above or in any other written statement or document delivered by SSFS in connection with the transaction contemplated hereby will be true, correct and complete in all respects on and as of the date of closing, as if made on, and as of, such date and shall survive such closing. 4.3 Representations of Arnold F. Sock. Arnold F. Sock represents that he is authorized to sign this Agreement on behalf of each of the selling shareholders. SECTION 5. GENERAL PROVISIONS 5.1 Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, return receipt requested, telegraphed, or sent by facsimile transmission and shall be deemed received upon the earlier of (i) if personally delivered, the date of delivery to the address of the person to receive such notice; (ii) if sent by certified or registered mail, three (3) business days after the date of mailing; (iii) if given by telegraph, one (1) business day after the date delivered to the telegraph company, with charges prepaid; or (iv) if given by facsimile transmission, the date transmitted. Any notice, request, demand, direction or other communication sent by telegraph or facsimile transmission must be perfected within forty-eight (48) hours by mailing a copy in the United States Mail, first class, postage prepaid. To SSET: Mr. William Graham Single Source Electronic Transactions, Inc. 10780 Santa Monica Blvd., Suite 240 Los Angeles, California 90025 To SSFS: Arnold F. Sock, Esq. Single Source Financial Services Corporation 10780 Santa Monica Blvd., Suite 240 Los Angeles, California 90025 Notice of change of address shall be given by written notice in the manner detailed in this paragraph. Rejection or other refusal to accept or the failure to deliver due to any change of address of which no notice was given shall not effect the time at which such notice shall be deemed to have been given and shall constitute receipt of such communication. 5.2 Severability. Each and every provision of this Agreement is severable from each and all of the other provisions of this Agreement. In the event that any provision of this Agreement is for any reason unenforceable, the balance of the Agreement shall nonetheless remain in full force and effect. 5.3 Entire Agreement. This Agreement constitutes the entire understanding and agreement of the parties with respect to the subject matters referred to herein. No representation, covenant, undertaking, promise, or other prior or contemporary agreement, whether oral or written, respecting such subject matters, which is not specifically contained herein, shall be deemed in any way to exist or bind any of the parties hereto. The parties hereto acknowledge that each party has not executed this Agreement in reliance on any promise, representation, or warranty, which is not contained herein. 5.4 Construction. This Agreement shall not be construed against the party preparing it, but shall be construed as if all parties jointly prepared this Agreement, and any uncertainty or ambiguity shall not be interpreted against any one party. The Agreement is to be performed in the County of Los Angeles, State of California, and shall be interpreted, enforced and governed by, and under, the laws of the State of California. Any action with respect to or relating to the subject matter of this Agreement shall only be filed in the County of Los Angeles, State of California and any arbitration proceeding with respect to or relating to the subject matter of this Agreement shall only be heard in the County of Los Angeles, State of California. 5.5 Modification. This Agreement shall not be modified by either party by any oral representation or agreement made before, or after, the execution of this Agreement. All modifications to this Agreement must be in writing and signed by each party hereto. 5.6 Attorney's Fees. In any court action arising out of, or relating to, this Agreement, or the breach thereof, the prevailing party shall be awarded his reasonable attorney's fees against the non-prevailing party. 5.7 Waiver. The waiver of any provision or breach of this Agreement in any instance or instances shall not constitute a waiver of, or a release of, any other provision or breach of this Agreement in any other instance or instances. 5.8 Binding on Successors and Assigns. This Agreement shall be binding on, and shall inure to the benefit of, the parties and to their respective heirs and legal representatives, successors, and assignees. 5.9 Cooperation. The parties agree to perform any and all acts and to execute and deliver, upon request, any and all documents reasonably necessary or convenient to carry out the terms of this agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. Date: November 7, 2000 Single Source Financial Services Corporation, A New York corporation By:______________________________ Arnold F. Sock, Secretary Date: November 7, 2000 Single Source Electronic Transactions, Inc., A Nevada corporation By:______________________________ William Graham, Secretary EX-11.1 7 0007.txt Exhibit 11.1 SINGLE SOURCE FINANCIAL SERVICES CORPORATION COMPUTATION OF LOSS PER COMMON SHARE The Company has generated no revenue from which a calculation of loss per share can be determined. The Company has only incurred expenses of organization and taxes, has had no income from operations and has no securities outstanding except for the $.001 par value Common Stock. EX-16 8 0008.txt Exhibit 16 [COMPANY LOGO OMITTED] Rotenberg & Co., LLP strategy@rotenbergllp.com Securities and Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549 Gentlemen: We have read Item 23 of Form SB-2/A dated March 6, 2001 of Single Source Financial Services Corporation (formerly Ream Printing Paper Corp.) and are in agreement with the statements contained therein regarding the reasons for the change in accountants. /s/ Rotenberg & Company, LLP Rochester, New York March 26, 2001 1870 Winton Road South - Rochester, NY 14618 - 716-295-2400 - Fax 716-295-2150 EX-21.1 9 0009.txt Exhibit 21.1 LIST OF THE REGISTRANT'S SUBSIDIARIES Name Jurisdiction of Incorporation Single Source Electronic Transactions, Inc. Nevada EX-23.1 10 0010.txt Exhibit 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Single Source Financial Services Corporation 10780 Santa Monica Blvd., Suite 240 Los Angeles, California 90025 We consent to the use in this Registration Statement on Form SB-2 of our report dated March 24, 2001, relating to the financial statements of Single Source Electronic Transactions, Inc. and of our report dated January 17, 2001, relating to the financial statements of Single Source Financial Services Corporation, and to the reference of our firm under the headings "Experts." ss/ Jonathon P. Reuben C.P.A. Jonathon P. Reuben, C.P.A. An Accountancy Corporation Torrance, CA 90505 April 23, 2001 EX-24.1 11 0011.txt Exhibit 24.1 RESOLUTIONS ADOPTED BY UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF SINGLE SOURCE FINANCIAL SERVICES CORPORATION (a New York corporation) In accordance with the provisions of the New York Business Corporation Law and the By-Laws of the Corporation, the undersigned, being all of the Directors ("Directors") of Single Source Financial Services Corporation, a New York corporation ("Corporation"), do hereby adopt the following preambles and resolutions by their unanimous written consent: WHEREAS, this Corporation is in the process of filing a Form SB-2 Registration Statement with the Securities and Exchange Commission ("Commission") in connection with the registration by certain of its shareholders of shares of its common stock for sale by such selling shareholders; WHEREAS, the Board of Directors has reviewed the draft SB-2 Registration Statement provided to them and has determined that such draft SB-2 appears to be true and accurate in all regards; WHEREAS, in connection with such filing with the Commission, it is desired to provide authority to the President, Arnold F. Sock, to execute the Form SB-2 Registration Statement and any amendments, including post-effective amendments thereto, in the name of and on behalf of the Corporation. NOW, THEREFORE, BE IT RESOLVED, that this Corporation caused the Form SB-2 Registration Statement to be filed with the Securities and Exchange Commission as soon as possible. RESOLVED FURTHER, that each of the undersigned hereby authorizes and appoints Arnold F. Sock, Esq. as his attorney-in-fact to execute in the name of each such person and to file such amendments (including post-effective amendments) to this Registration Statement as the Registrant deems appropriate and appoints such person as attorney-in-fact to sign on his behalf individually and in each capacity stated below and to file all amendments, exhibits, supplements and post-effective amendments to this Registration Statement. RESOLVED FURTHER, that the officers of this Corporation, and each of them, shall perform such acts, and shall execute and file such additional documents, as are necessary to carry out the terms of this Written Consent. RESOLVED FURTHER, that the Secretary of the Corporation be, and he hereby is, authorized, directed, and empowered to file this Unanimous Written Consent in the Minute Book of the Corporation, as part of the official records of the Corporation. November 16, 2000 s/Brandon Becker Director BRANDON BECKER November 16, 2000 s/Pamela Becker Director PAMELA BECKER November 16, 2000 s/Arlene Rosenblatt Director ARLENE ROSENBLATT November 16, 2000 s/Arnold F. Sock Director ARNOLD F. SOCK November 16, 2000 s/Harry L. Wilson Director HARRY L. WILSON SINGLE SOURCE FINANCIAL SERVICES CORPORATION CERTIFICATE OF SECRETARY The undersigned, Arnold F. Sock, the duly elected and incumbent Secretary of Single Source Financial Services Corporation, a New York corporation (the "Corporation"), hereby certifies that the foregoing is a true and correct copy of the Resolutions Adopted by Unanimous Written Consent of the Board of Directors of the Corporation effective as of November 16, 2000, and that the foregoing resolutions have not been changed and remain in full force and effect. Dated: November 16, 2000. s/Arnold F. Sock Arnold F. Sock, Secretary EX-27.1 12 0012.txt
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 YEAR DEC-31-2000 JAN-01-2000 DEC-31-2000 662 0 0 0 64,257 90,589 21,196 (730) 176,510 88,330 0 0 0 11,891 396,268 176,510 799,284 799,284 (200,670) 1,398,216 0 0 13,428 (399,249) (800) (400,149) 0 0 0 (439,149) (.030) 0
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