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: JUNE 30, 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.)
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(Exact name of small business issuer as specified in its charter)
Nevada 88-0441332
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2162 Acorn Court, Wheaton Ill. 60187
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(Address of principal executive offices)
(630) 462-2079
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(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: June 30, 2003 - 38,146,724.
Transitional Small Business Disclosure Format (check one). Yes [_] No [X]
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FORM 10-QSB
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS ..................................3
Condensed Consolidated Balance Sheets for June 30, 2003 and
December 31, 2002................................................4
Condensed Consolidated Statements of Operations and Other
Comprehensive Income for the Three Months Ended June 30, 2003
and 2002, and for the Six Months Ended June 30, 2003 and 2002....5
Condensed Consolidated Statements of Stockholders' Equity
as of June 30, 2003 and December 31, 2002........................6
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 2003 and 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...............................................13
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.....13
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
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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 June 30, 2003 and the six months ended
June 30, 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 June 30, 2003 and the six months ended June 30,
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
June 30, 2003 and December 31, 2002
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AMERICAN STELLAR ENERGY, INC. AND SUBSIDIARIES
(Formerly Merchantpark Communications, Inc.)
Consolidated Balance Sheets
ASSETS
------
June 30, December 31,
2003 2002
------------- -------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 2,376 $ 2,441
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Total Current Assets 2,376 2,441
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PROPERTY AND EQUIPMENT, NET (Note 3) - -
------------- -------------
TOTAL ASSETS $ 2,376 $ 2,441
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------
CURRENT LIABILITIES
Accounts payable $ 36,446 $ 22,720
Loan from related party 28,177 68,619
Accrued interest 2,941 2,941
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Total Current Liabilities 67,564 94,280
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Total Liabilities 67,564 94,280
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock: 50,000,000 shares authorized of
$0.001 par value, 38,146,724 and 32,341,876
shares issued and outstanding, respectively 38,146 32,341
Additional paid-in capital 1,078,538 978,693
Accumulated deficit (1,183,364) (1,104,365)
Other comprehensive income 1,492 1,492
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Total Stockholders' Deficit (65,188) (91,839)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,376 $ 2,441
============= =============
The accompanying notes are an integral part of these
consolidated financial statements.
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AMERICAN STELLAR ENERGY, INC. AND SUBSIDIARIES
(Formerly Merchantpark Communciations, Inc.)
Consolidated Statements of Operations and Other Comprehensive Income
(Unaudited)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
GROSS SALES $ - $ 473 $ - $ 14,925
COST OF GOODS SOLD - - - -
------------- ------------- ------------- -------------
NET SALES - 473 - 14,925
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EXPENSES
Depreciation and
amortization - 31,685 - 63,370
Consulting 22,500 49,933 44,955 49,933
General and
administrative 283 28,289 4,044 32,433
------------- ------------- ------------- -------------
Total Expenses 22,783 109,907 48,999 145,736
------------- ------------- ------------- -------------
LOSS BEFORE OTHER
INCOME (EXPENSE) (22,783) (109,434) (48,999) (130,811)
------------- ------------- ------------- -------------
OTHER INCOME (EXPENSE)
Interest income - - - -
Interest expense - - - -
Loss on extinguishment
of debt (30,000) 35,000 (30,000) (135,500)
------------- ------------- ------------- -------------
Total Other Income
(Expense) (30,000) 35,000 (30,000) (135,500)
------------- ------------- ------------- -------------
NET LOSS $ (52,783) $ (74,434) $ (78,999) $ (266,311)
============= ============= ============= =============
BASIC LOSS PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.01)
============= ============= ============= =============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 35,509,361 18,668,018 35,095,597 18,668,068
============= ============= ============= =============
The accompanying notes are an integral part of these consolidated financial statements.
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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 - -
Stock issued for debt at
$0.02 per share 3,000,000 3,000 57,000 - -
Net loss for the six months
ended June 30, 2003 - - - - (78,999)
------------- ------------- ------------- ------------- -------------
Balance, June 30, 2003 38,146,724 $ 38,146 $ 1,078,538 $ 1,492 $ (1,183,364)
============= ============= ============= ============= =============
Accumulated deficit prior to the development stage $ (1,104,365)
Accumulated deficit during to the development stage (78,999)
-------------
$ (1,183,364)
=============
The accompanying notes are an integral part of these consolidated financial statements.
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AMERICAN STELLAR ENERGY, INC. AND SUBSIDIARIES
(Formerly Merchantpark Communications, Inc.)
Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended
June 30,
2003 2002
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (78,999) $ (266,311)
Adjustments to reconcile net loss to net cash flows
used by operating activities:
Depreciation and amortization - 63,370
Loss on extinguishment of debt 30,000 135,000
Common stock issued for services - 15,190
Changes in operating assets and liabilities:
Increase in prepaids and other assets - (1,087)
Increase in accounts payable and other debt 13,726 10,554
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Net Cash Flows Used by Operating Activities (35,273) (43,284)
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CASH FLOWS FROM INVESTING ACTIVITIES
Net Cash Flows Used by Investing Activities - -
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CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash 45,650 -
Repayment of loans from related party (14,045) -
Proceeds from loans from related party 3,603 43,155
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Net Cash Flows Provided by Financing Activities 35,208 43,155
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NET INCREASE (DECREASE) IN CASH (65) (129)
CASH AT BEGINNING OF PERIOD 2,441 2,335
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CASH AT END OF PERIOD $ 2,376 $ 2,206
============= ==============
The accompanying notes are an integral part of these consolidated financial statements.
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AMERICAN STELLAR ENERGY, INC. AND SUBSIDIARIES
(Formerly Merchantpark Communications, Inc.)
Consolidated Statements of Cash Flows (Continued)
For the Six Months Ended
June 30,
2003 2002
------------- --------------
CASH PAID DURING THE YEAR:
Interest $ - $ -
Income taxes $ - $ -
NON-CASH TRANSACTIONS
Common stock issued for debt $ 60,000 $ 276,488
Common stock issued for services $ - $ 15,190
The accompanying notes are an integral part of these consolidated financial statements.
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AMERICAN STELLAR ENERGY, INC. AND SUBSIDIARIES
(Formerly Merchantpark Communications, Inc.)
Notes to the Consolidated Financial Statements
June 30, 2003 and December 31, 2002
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying June 30, 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 June 30, 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 June 30, 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 accounting
principles generally accepted in the United States of America 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 June 30, 2003 that have resulted in an accumulated
deficit of approximately $1,183,000 at June 30, 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 loss of
$218,836.
NOTE 4 - SUBSEQUENT EVENTS
Subsequent to June 30, 2003 the Company issued 950,000 common shares in
exchange for $11,000 cash. The Company also retired $138,025 of debt through
the issuance of 6,019,445 common shares and incurred in the process a non-cash
loss of $32,025.
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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
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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
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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 Three Months Ended June 30, 2003 and 2002
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All years stated in this section refer to the second quarter of that year. For
2003, the company did not generate any revenues from any source. In 2002,
sales revenue of $ 473, was recorded from web hosting and related services
prior to the termination of this service and the lay off of all staff.
Consulting and General and administrative expense decreased from $78,222 in
2002 to $22,783 in 2003 due to reduced costs as a result of the company
restructure.
Depreciation and amortization for 2003 were recorded as zero due to the write
off of all company assets in that year. In 2002 depreciation of $31,685 was
recorded.
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The Company incurred a loss of $52,783 in 2003 due to restructuring efforts in
the absence of revenue. A loss of $74,434 was incurred in 2002 due to
remaining operating expenses before the restructure and almost zero revenue.
Results of Operations for the Six Months Ended June 30, 2003 and 2002
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All years stated in this section refer to the six months ended 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 termination of this service and the lay off of all staff.
Consulting and General and administrative expense decreased from $82,366 in
2002 to $48,999 in 2003 as software development and web hosting activities
ceased in March 2002 and the Company began a period of restructuring.
Depreciation and amortization for 2003 were recorded as zero due to the write
off of all company assets in that year. In 2002 depreciation of $63,370 was
recorded.
The Company incurred a loss of $78,999 in 2003 due to restructuring efforts in
the absence of revenue. A loss of $266,311 was incurred in 2002 as the Company
ceased software development and web hosting activities which failed to be
profitable.
The Company had a cash flow deficiency of $35,273 in 2003 and $43,284 in 2002.
Cash flow financing was provided to the Company by the sale of Company stock
and a small related party loan in 2003 and by related party loans exclusively
in 2002. These activities resulted in period end cash balances of $2,376 in
2003 and $2,206 in 2002.
Liquidity, Capital Resources and Financial Condition
----------------------------------------------------
As of the six month period ended June 30, 2003, the Company had $2,376 in
total assets consisting entirely of cash on hand. The Company also had
accounts payable of $36,446 consisting mostly of consulting and marketing
expenses, a related party payable of $28,177 and accrued interest of $2,941
for total liabilities of $67,564. The Company had no revenues during the
first six months in 2003 and did not have sufficient cash to satisfy its
operating requirements or service its debt. During the first 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 issued 3,000,000 shares of
common stock during the second quarter of 2003. This stock was used to satisfy
$60,000 in debt to a related party. 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 agreements with any
parties regarding advances, loans or purchases of stock.
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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, in March 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
associated services were discontinued with the layoff of all staff. This began
a 15 month restructuring period wherein the Company disposed of all remaining
assets and looked 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 had 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 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.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On June 19, 2003 the Company issued 3,000,000 shares of common stock at $0.02
per share to satisfy $60,000 of debt to a related party.
All of the above issued shares were issued under section 4(2) of the 1933
securities act and bear a restrictive legend.
As of June 30, 2003 the Company had 38,146,724 shares of common stock
issued and outstanding.
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
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31.1 Section 302 Certification - CEO
31.2 Section 302 Certification - CFO
32.1 Section 906 Certification - CEO
32.2 Section 906 Certification - CFO
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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 7, 2005
/s/ Francis R. Biscan Jr.
By:_________________________________________
Francis R. Biscan Jr.
President, Chief Executive
Officer and Director
DATE: March 7, 2005 By: /s/ Clifford Brown
_________________________________________
Clifford Brown
Chief Financial Officer
Secretary, Director
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