UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: MARCH 31, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________to________________
Commission file number 000-29595
AMERICAN STELLAR CORPORATION
(Formerly Merchant Park Communications, Inc.)
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 88-0441332
------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2162 Acorn Court, Wheaton Ill. 60187
---------------------------------------------------
(Address of principal executive offices)
(630) 462-2079
--------------------------
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [_] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practical date: March 31, 2003 - 35,146,724
Transitional Small Business Disclosure Format (check one). Yes [_] No [X]
-1-
FORM 10-QSB
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS ................................3
Condensed Consolidated Balance Sheets for March 31, 2003 and
December 31, 2002..............................................4
Condensed Consolidated Statements of Operations and Other
Comprehensive Income for the Three Months Ended March 31,
2003 and March 31, 2002........................................5
Condensed Consolidated Statements of Stockholders' Equity
as of March 31, 2003 and December 31, 2002.....................6
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2003 and December 31, 2002........7
Notes to Financial Statements..................................9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION OR PLAN OF OPERATION......................10
ITEM 3. CONTROLS AND PROCEDURES.......................................12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.............................................12
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS...12
ITEM 3. DEFAULTS IN SENIOR SECURITIES.................................13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........13
ITEM 5. OTHER INFORMATION ............................................13
ITEM 6. EXHIBITS......................................................13
SIGNATURES.............................................................14
-2-
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial information set forth below with respect to our Statements of
Operations for the three months ended March 31, 2003 are unaudited. This
financial information, in the opinion of management, includes all adjustments
consisting of normal recurring entries necessary for the fair presentation of
such data. The results of operations for the three months ended March 31,
2003 are not necessarily indicative of results to be expected for any
subsequent period.
AMERICAN STELLAR ENERGY, INC. AND SUBSIDIARIES
(Formerly Merchantpark Communications, Inc.)
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003 and December 31, 2002
-3-
AMERICAN STELLAR ENERGY, INC. AND SUBSIDIARIES
(Formerly Merchantpark Communications, Inc.)
Consolidated Balance Sheets
ASSETS
------
March 31, December 31,
2003 2002
------------- -------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 2,460 $ 2,441
------------- -------------
Total Current Assets 2,460 2,441
------------- -------------
PROPERTY AND EQUIPMENT, NET (Note 3) - -
------------- -------------
TOTAL ASSETS $ 2,460 $ 2,441
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 65,741 $ 22,720
Loan from related party 6,183 68,619
Accrued interest 2,941 2,941
------------- -------------
Total Current Liabilities 74,865 94,280
------------- -------------
Total Liabilities 74,865 94,280
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock: 50,000,000 shares authorized of
$0.001 par value, 35,146,724 and 32,341,876
shares issued and outstanding, respectively 35,146 32,341
Additional paid-in capital 1,021,538 978,693
Accumulated deficit (1,130,581) (1,104,365)
Other comprehensive income 1,492 1,492
------------- -------------
Total Stockholders' Equity (72,405) (91,839)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,460 $ 2,441
============= =============
The accompanying notes are an integral part of these
consolidated financial statements.
-4-
AMERICAN STELLAR ENERGY, INC. AND SUBSIDIARIES
(Formerly Merchantpark Communications, Inc.)
Consolidated Statements of Operations and Other Comprehensive Income
For the Three Months Ended
March 31,
---------------------------
2003 2002
------------- -------------
(Unaudited)
GROSS SALES $ - $ 14,452
COST OF GOODS SOLD - -
------------- -------------
NET SALES - 14,452
------------- -------------
EXPENSES
Depreciation and amortization - 31,685
Consulting 22,455 -
General and administrative 3,761 4,144
------------- -------------
Total Expenses 26,216 35,829
------------- -------------
LOSS BEFORE OTHER INCOME (26,216) (21,377)
------------- -------------
OTHER INCOME
Interest income - -
Interest expense - -
Loss on extinguishments of debt - (170,500)
------------- -------------
Total Other Income (Expense) - (170,500)
------------- -------------
NET LOSS $ (26,216) $ (191,877)
============= =============
BASIC LOSS PER SHARE $ (0.00) $ (0.01)
============= =============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 34,679,249 18,567,150
============= =============
The accompanying notes are an integral part of these
consolidated financial statements.
-5-
AMERICAN STELLAR ENERGY, INC. AND SUBSIDIARIES
(Formerly Merchantpark Communications, Inc.)
Consolidated Statements of Stockholders' Equity
Additional Other
Common Stock Paid in Comprehensive Accumulated
Shares Amount Capital Income Deficit
------------- ------------- ------------- ------------- -------------
Balance, December 31, 2001 18,160,400 $ 18,160 $ 661,929 $ 911 $ (426,774)
Stock issued for services
at $0.027 per share 562,500 565 14,625 - -
Stock issued for debt at
$0.50 per share 44,976 45 22,443 - -
Stock issued for debt at
$0.25 per share 900,000 900 224,100 - -
Stock issued for cash at
$0.005 per share 5,750,000 5,750 23,000 - -
Stock issued for cash at
$0.001 per share 250,000 250 - - -
Stock issued for debt at
$0.007 per share 1,000,000 1,000 6,000 - -
Stock issued for debt at
$0.006 per share 3,900,000 3,900 19,500 - -
Stock issued for services at
$0.027 per share 1,774,000 1,771 7,096 - -
Currency translation
adjustment - - - 581 -
Net loss for the year ended
December 31, 2002 - - - - (677,591)
------------- ------------- ------------- ------------- -------------
Balance, December 31, 2002 32,341,876 32,341 978,693 1,492 (1,104,365)
Stock issued for cash at
$0.005 per share 1,131,208 1,131 4,519 - -
Stock issued for cash at
$0.024 per share 1,673,640 1,674 38,326 - -
Net loss for the three months
ended March 31, 2003 - - - - (26,216)
------------- ------------- ------------- ------------- -------------
Balance, March 31, 2003 35,146,724 $ 35,146 $ 1,021,538 $ 1,492 $ (1,130,581)
============= ============= ============= ============= =============
Accumulated deficit prior to the development stage $ (1,104,365)
Accumulated deficit during to the development stage (26,216)
-------------
$ (1,130,581)
=============
The accompanying notes are an integral part of these consolidated financial statements.
-6-
AMERICAN STELLAR ENERGY, INC. AND SUBSIDIARIES
(Formerly Merchantpark Communications, Inc.)
Consolidated Statements of Cash Flows
For the Three Months Ended
March 31,
2003 2002
------------- -------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (26,216) $ (192,230)
Adjustments to reconcile net loss to net cash flows
used by operating activities:
Depreciation and amortization - 31,685
Loss on the extinguishment of debt - 170,500
Common stock issued for services - 15,190
Changes in operating assets and liabilities:
Decrease (increase) in prepaids and other assets - (200)
Increase (decrease) in accounts payable and other debt 43,021 (32,943)
------------- -------------
Net Cash Flows Provided (Used) by Operating Activities 16,805 (7,998)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES - -
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash 45,650 -
Repayment of related party loans (62,436) 6,500
------------- -------------
Net Cash Flows Provided (Used) by Financing Activities (16,786) 6,500
------------- -------------
NET INCREASE (DECREASE) IN CASH 19 (1,498)
CASH AT BEGINNING OF PERIOD 2,441 2,335
------------- -------------
CASH AT END OF PERIOD $ 2,460 $ 837
============= =============
The accompanying notes are an integral part of these consolidated financial statements.
-7-
AMERICAN STELLAR ENERGY, INC. AND SUBSIDIARIES
(Formerly Merchantpark Communications, Inc.)
Consolidated Statements of Cash Flows (Continued)
For the Three Months Ended
March 31,
---------------------------
2003 2002
------------- -------------
(Unaudited)
CASH PAID DURING THE YEAR:
Interest $ - $ -
Income taxes $ - $ -
NON-CASH TRANSACTIONS
Common stock issued for debt $ - $ 247,488
Common stock issued for services $ - $ 15,190
The accompanying notes are an integral part of these consolidated financial statements.
-8-
AMERICAN STELLAR ENERGY, INC. AND SUBSIDIARIES
(Formerly Merchantpark Communications, Inc.)
Notes to the Consolidated Financial Statements
March 31, 2003 and December 31, 2002
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying March 31, 2003 financial statements have been prepared by the
Company without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at March 31, 2003 and
2002 and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted. It
is suggested that these condensed financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's
December 31, 2002 audited financial statements. The results of operations for
period ended March 31, 2003 are not necessarily indicative of the operating
results for the full year.
NOTE 2 - GOING CONCERN
The Company's consolidated financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The Company has incurred losses for the period
ended March 31, 2003 that have resulted in an accumulated deficit of
approximately $1,130,000 at March 31, 2003, which raises substantial doubt
about the Company's ability to continue as a going concern. The accompanying
consolidated financial statements do not include any adjustments relating to
the recoverability and classification of liabilities that might result from
the outcome of this uncertainty. It is management's intent to seek additional
financing through new stock issuances and lines of credit. The Company plans
to continue generating revenues through sales of dedicated servers and
professional services that include consulting web design, system architecture
and server management.
NOTE 3 - PROPERTY AND EQUIPMENT
During the year ended December 31, 2002 the Company elected to discontinue a
software development project begun in a prior year. The Company expensed all
previously capitalized amounts related to this project and incurred a non-cash
loss of $218,836.
NOTE 4 - SUBSEQUENT EVENTS
Subsequent to the period ended March 31, 2003, the Company issued 3 million
shares of common stock at an average price of $0.02 per share to repay $30,000
of debt. The Company incurred a non-cash loss of $30,000 on the transaction.
-9-
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
In this report, references to "American Stellar," "Merchant Park," "we," "us,"
and "our" refer to American Stellar Corporation (formerly Merchant Park
Communications, Inc.).
Safe Harbor for Forward-Looking Statements
------------------------------------------
When used in this report, the words "may," "will," "expect," "anticipate,"
"continue," "estimate," "project," "intend," and similar expressions are
intended to identify forward-looking statements within the meaning of Section
27a of the Securities Act of 1933 and Section 21e of the Securities Exchange
Act of 1934 regarding events, conditions, and financial trends that may affect
the Company's future plans of operations, business strategy, operating
results, and financial position. Persons reviewing this report are cautioned
that any forward-looking statements are not guarantees of future performance
and are subject to risks and uncertainties and that actual results may differ
materially from those included within the forward-looking statements as a
result of various factors. Such factors are discussed under the "Item 2.
Management's Discussion and Analysis of Financial Condition or Plan of
Operations," and also include general economic factors and conditions that may
directly or indirectly impact the Company's financial condition or results of
operations.
General
-------
The Company was incorporated on October 14, 1999 in the State of Nevada as
Westnet Communications Group, Inc., for the purpose of developing a special
interest worldwide web site. In March 2001, the Company acquired Merchant
Park Communications, changed its name to Merchant Park Communications, Inc.,
and changed its business direction to that of the developing proprietary 2nd
generation E-business software for licensing to end users and web hosting. In
March 2002, the Company discontinued the development of the software due to
lack of operating capital and assigned all software and assets to a subsidiary
company in exchange for a royalty fee; in September 2004, the assignee
abandoned the project due to lack of revenues. Also subsequent to this
report, in July 2003, Mr. Peter Matousek resigned as President and CEO and was
succeeded Mr. Francis R. Biscan, Jr. At this time the Company elected to
pursue a new business direction and entered into an agreement with Armen
Energy LLC, whereby it obtained an undivided 45% working interest by way of a
"Farm Out Agreement" on acreage that will be held-by-production. In November
2003, the Company amended its Articles to reflect a name change to American
Stellar Corporation. As of February 2005, three productive wells have been
drilled with one additional well in the development stage. Exact flow rates
and costs are not yet available.
Results of Operations for the Quarters Ended March 31, 2003 and 2002
---------------------------------------------------------------------
All years stated in this section refer to the first quarter of that year. For
2003, the company did not generate any revenues from any source. In 2002,
sales revenue of $14,925 was recorded from web hosting and related services
prior to the closing of this service and the laying off of all staff.
-10-
General and administrative expense remained virtually the same in both years:
$3,761 in 2003 compared to $4,144 in 2002. Consulting expense of $22,455 was
incurred in 2003 for marketing efforts compared to zero in 2002.
Depreciation and amortization for 2003 was recorded as zero due to the write
off of all company assets in that year. In 2002 depreciation of $31,685 was
recorded.
The Company incurred a loss of $26,216 in 2003 which was the total of general,
administrative and consulting expenses, compared to a loss of $191,877 in 2002
due primarily to a loss of $170,500 on extinguishment of debt.
The Company had a cash flow deficiency of $16,786 in 2003 compared to a
positive cash flow $6,500 in 2002. Cash in the amount of $45,650 was raised in
exchange for company stock in 2003, the proceeds of which were used to settle
company debts and obligations.
Liquidity, Capital Resources and Financial Condition
-----------------------------------------------------
As of the three month period ended March 31, 2003 (the "2003 first quarter")
the Company had $2,460 in total assets consisting entirely of cash on hand.
The Company also had accounts payable of $65,741 consisting mostly of
consulting and marketing expenses, a related party payable of $6,183, and
accrued interest of $2,941 for total liabilities of $74,865. The Company had
no revenues during its 2003 first quarter and did not have sufficient cash to
satisfy its operating requirements or service its debt. During the fourth
quarter of 2002 the Company had already discontinued its software development
project due to this lack of capital.
Financing
---------
Historically, the Company has funded acquisitions and satisfaction of debt
through the sale of common stock. The Company sold 2,804,848 shares of common
stock for $45,651 during its 2003 first quarter; the shares were utilized to
satisfy debt. Management anticipates that net losses will continue for the
foreseeable future and expects that any additional capital will likely be
provided by possible advances from related parties or private placements of
our common stock; there are no agreement with any parties regarding advances,
loans or purchases of stock.
If the Company decides to complete a private placement of stock, it will
likely rely on exemptions from the registration requirements provided by
federal and state securities laws. The purchasers and manner of issuance will
be determined according to the Company's financial needs and the available
exemptions. The Company does not currently intend to make a public offering
of its common stock. It should also be noted that if the Company issues more
shares of our common stock then shareholders may experience dilution in the
value per share of their common stock.
Subsequent Events
-----------------
As discussed above, late 2002 the Company ceased its development of propriety
technology and the associated business plan to license this software and
technology to small business end users. Further, web development and
-11-
associated services were discontinued with the layoff of all staff. Subsequent
to the date of this report, in mid-2003 the Company disposed of all remaining
assets and restructured to look for new business opportunities in the energy
sector. In October 2003 the Company identified a suitable property in
Corsicana, Texas, and entered into a Farm Out Agreement with Armen Energy LLC,
whereby it obtained an undivided 45% working interest on a 1,000 acre proprety
that will be held-by-production. As of February 2005, three producing wells
have been drilled with one additional well in the development stage. Exact
flow rates and costs are not yet available.
The Company plans to drill 10 additional wells in 2005 and intends to raise
the necessary capital from the sale of its securities and the oil production
revenues from the three producing wells.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. Based on the evaluation
of our disclosure controls and procedures (as defined in Securities Exchange
Act of 1934 Rules 13a-15(e) and 15d-15(e)) required by Securities Exchange Act
Rules 13a-15(b) or 15d-15(b), our Chief Executive Officer/Chief Financial
Officer has concluded that as of the end of the period covered by this report,
our disclosure controls and procedures were effective.
(b) Changes in internal controls. There were no changes in our internal
control over financial reporting that occurred during our most recent fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On January 15, 2003 the Company issued 1,131,208 shares of common stock at
$0.005 per share for cash. The proceeds of $5,651 were used to settle Company
debts and obligations.
On January 15, 2003 the Company issued 1,673,640 shares of common stock at
$0.024 per share for cash. The proceeds of $40,000 were used to settle Company
debts and obligations.
All of the above issued shares were issued under section 4(2) of the 1933
securities act and bear a restrictive legend.
As of March 31, 2003 the Company had 35,146,724 shares of common stock
issued and outstanding.
-12-
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibit
Number Title
31.1 Section 302 Certification - CEO
31.2 Section 302 Certification - CFO
32.1 Section 906 Certification - CEO
32.2 Section 906 Certification - CFO
-13-
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMERICAN STELLAR CORPORATION
(Registrant)
DATE: March 1, 2005
/s/ Francis R. Biscan Jr.
By:_________________________________________
Francis R. Biscan Jr.
President, Chief Executive
Officer and Director
DATE: March 1, 2005 By: /s/ Clifford Brown
_________________________________________
Clifford Brown
Chief Financial Officer
Secretary, Director
-14-