UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-Q SB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter report ended March 31, 2002 or ( ) TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to ___________
Commission File number 000-29595
MERCHANTPARK COMMUNICATIONS, INC.
(Exact name of small business issuer as registrant as specified in charter)
Nevada 88-0441332
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2921 N. Tenaya Way, Suite 216, Las Vegas, NV 89128
(Address of principal executive office)
Registrants telephone no., including area code (702) 947-4877
Westnet Communications Group, Inc.
(Former name, changed since last report)
Check whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), Yes [X] No [ ] and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the last practicable date.
Class Outstanding as of March 31, 2002
Common Stock, $0.001 18,767,876
Transition Small Business Disclosure Format: Yes [ ] No [X]
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TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION
Heading Page
Item 1. Consolidated Financial Statements 1
Consolidated Balance Sheets March 31, 2002
And December 31, 2001 2
Consolidated Statements of Operations three months
Ended March 31, 2002 and March 31, 2001 3
Consolidated Statement of Stockholders Equity 4
Consolidated Statements of Cash Flows three months
Ended March 31, 2002 and 2001 5
Notes to Consolidated Financial Statements 6-8
Item 2. Managements Discussion and Analysis and
Result of Operations 9-10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Security 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matter to a Vote of 10
Securities Holders
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 11
Signatures S-1
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PART 1 FINANCIAL INFORMATION
Item 1. Financial Statement
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10-Q pursuant to the rules and
regulations of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a complete presentation of
the financial position, results of operations, cash flows, and stockholders
equity in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature.
The unaudited balance sheet of the Company as of March 31, 2002, and the
balance sheet of the Company as of December 31, 2001 which is derived from the
Companys audited financial statements, the unaudited statement of operations
and cash flows for the three months ended March 31, 2002, and the statement of
stockholders equity from inception through March 31, 2002 are attached hereto
and incorporated herein by this reference.
Operating results for the quarters ended March 31, 2002 are not necessarily
indicative of the results that can be expected for the year ending December 31,
2002.
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MERCHANTPARK COMMUNICATIONS, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002 and December 31, 2001
MERCHANTPARK COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
ASSETS
March 31, December 31,
2002 2001
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 837 $ 2,335
Accounts receivable 200 -
Total Current Assets 1,037 2,335
PROPERTY AND EQUIPMENT, NET 250,521 282,206
TOTAL ASSETS $ 251,558 $ 284,541
LIABILITIES AND STOCKHOLDERs EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,684 $ 5,873
Loan from related party 6,500 22,488
Accrued interest 49 1,954
Total Current Liabilities 12,233 30,315
Total Liabilities 12,233 30,315
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS EQUITY
Common stock: 50,000,000
shares authorized of
$0.0001 par value,
18,767,876 and 18,160,400 shares
issued and outstanding,
respectively 18,768 18,160
Additional paid-in capital 838,297 661,929
Accumulated deficit (619,004) (426,774)
Other comprehensive income 1,264 911
Total Stockholders Equity 239,325 254,226
TOTAL LIABILITIES
AND STOCKHOLDERS
EQUITY $ 251,558 $ 284,541
The accompanying notes are an integral part of these consolidated financial
statements.
MERCHANTPARK COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Other Comprehensive Income
For the Three Months Ended
March 31,
2002 2001
(Unaudited)
GROSS SALES $ 29,8$ -
COST OF GOODS SOLD - -
NET SALES 29,829 -
EXPENSES
Depreciation and amortization 31,685 30,590
Consulting 176,985 -
General and administrative 12,682 132,914
Total Expenses 221,352 163,504
LOSS BEFORE OTHER INCOME (191,523) (163,504)
OTHER INCOME
Interest income - 106
Interest expense (707) -
Total Other Income (707) 106
NET LOSS (192,230) (163,398)
OTHER COMPREHENSIVE INCOME
Foreign currency translation 353 -
NET COMPREHENSIVE LOSS $ (191,877) $ (163,398)
BASIC LOSS PER SHARE $ (0.01) $ 0.00
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 18,567,150 11,652,328
The accompanying notes are an integral part of these consolidated financial
statements.
MERCHANTPARK COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders Equity
Additional
Paid
Common Stock Capital
Shares Amount (Deficit)
Balance, December
5, 2000 (Inception) -$ -$ -
Common stock issued to founders
for cash at $0.001
per share 4,000,000 4,000 -
Net loss for the period ended
December 31, 2000 - - -
Balance, December
31, 2000 4,000,000 4,000 -
Common stock issued in exchange
for 100% of shares of
Merchantpark.com 1,500,000 1,500 (1,500)
Common stock issued
for cash 2,671,000 2,671 162,829
Common stock issued
for services 1,030,400 1,030 257,570
Common stock issued in exchange
for 100% of shares of
Caged Iron
Technologies 2,000,000 2,000 100,472
Common stock issued
for debt 459,000 459 45,441
Common stock issued
for assets 3,000,000 3,000 297,000
Stock offering costs - - (12,600)
Recapitalization 3,500,000 3,500 (187,283)
Cash received for payment of stock
subscription
receivable - - -
Services rendered for payment of
stock subscription
receivable - - -
Assets received for payment of
stock subscription
receivable - - -
Currency translation
adjustment - - -
Net loss for the year ended
December 31, 2001 - - -
Balance, December
31, 2001 18,160,400 $ 18,160 $ 661,929
Stock Other
Subscription Comprehensive Accumulated
Receivable Income Deficit
Balance, December 5,
2000 (Inception) $ - $ -$ -
Common stock issued to founders
for cash at $0.001
per share - - -
Net loss for the period ended
December
31, 2000 - - (8,901)
Balance, December 31, 2000 - - (8,901)
Common stock issued in exchange
for 100% of shares of
Merchantpark.com - - -
Common stock issued
for cash (34,634) - -
Common stock issued
for services - - -
Common stock issued in exchange
for 100% of shares of
Caged Iron Technologies - - -
Common stock issued
for debt - - -
Common stock issued
for assets - - -
Stock offering costs - - -
Recapitalization - - -
Cash received for payment of stock
subscription
receivable 23,517 - -
Services rendered for payment of
stock subscription
receivable 7,117 - -
Assets received for payment of
stock subscription
receivable 4,000 - -
Currency translation adjustment - 911 -
Net loss for the year ended
December 31, 2001 - - (417,873)
Balance, December
31, 2001 $ - $ 911 $(426,774)
The accompanying notes are an integral part of these consolidated financial
statements.
MERCHANTPARK COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders Equity (Continued)
Additional
Paid
Common Stock Capital
Shares Amount (Deficit)
Balance, December
31, 2001 18,160,400 $ 18,160 $ 661,929
Common stock issued for services
(unaudited) 562,500 563 151,313
Common stock issued for debt
(unaudited) 44,976 45 22,443
Accrued interest contributed by
Shareholder
(unaudited) - - 2,612
Currency translation adjustment
(unaudited) - - -
Net loss for the three months ended
March 31, 2002
(unaudited) - - -
Balance, March
31, 2002 (unaudited) 18,767,876 $ 18,768 $ 838,297
Stock Other
Subscription Comprehensive Accumulated
Receivable Income Deficit
Balance, December 31, 2001 $ - $ 911 $(426,774)
Common stock issued for services
(unaudited) - - -
Common stock issued for debt
(unaudited) - - -
Accrued interest contributed by
Shareholder (unaudited) - - -
Currency translation adjustment
(unaudited) - 353 -
Net loss for the three months ended
March 31, 2002
(unaudited) - - (192,230)
Balance, March 31,
2002 (unaudited) $ - $ 1,264 $(619,004)
The accompanying notes are an integral part of these consolidated financial
statements.
MERCHANTPARK COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended
March 31,
2002 2001
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (192,230) $ (163,398)
Adjustments to reconcile
net loss to net cash flows
used by operating activities:
Depreciation and amortization 31,685 30,590
Common stock issued for services 151,876 71,100
Foreign Currency Translation
Adjustment 353 -
Changes in operating assets
and liabilities:
Decrease (Increase) in
prepaids and other assets (200) 11,475
Increase in accrued
interest 707 -
Increase in accounts
payable (189) (5,000)
Net Cash Flows provided
(Used) by Operating Activities (7,998) 55,233
CASH FLOWS FROM INVESTING
ACTIVITIES - -
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued
for cash - 165,500
Stock offering costs - (12,600)
Stock subscription
receivable - (34,634)
Proceeds from loans from related party 6,500 14,988
Net Cash Flows Provided
by Financing Activities 6,500 133,254
NET INCREASE (DECREASE)
IN CASH (1,498) 78,021
CASH AT BEGINNING OF PERIOD 2,335 99
CASH AT END OF PERIOD $ 837 $ 78,120
The accompanying notes are an integral part of these consolidated financial
statements.
MERCHANTPARK COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
For the Three Months Ended
March 31,
2002 2001
CASH PAID DURING THE YEAR:
Interest $ - $ -
Income taxes $ - $ -
NON-CASH TRANSACTIONS
Common stock issued
for debt $ 22,488 $ -
Common stock issued
for assets $ - $ 402,472
Common stock issued
for services $ 151,876 $ 71,100
Common stock issued
for prepaid expenses $ - $ 45,900
Capital contributed
from interest on shareholder loan $ 2,612 $ -
The accompanying notes are an integral part of these consolidated financial
statements.
MERCHANTPARK COMMUNICATIONS, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 2002 and December 31, 2001
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying March 31, 2002 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, 2002 and
2001 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 Companys December 31, 2001 audited financial
statements. The results of operations for periods ended March 31, 2002 and 2001
are not necessarily indicative of the operating results for the full years.
NOTE 2 - GOING CONCERN
The Companys 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 periods ended March 31, 2002
and 2001 which has resulted in an accumulated deficit of approximately $619,000
at March 31, 2002 which raises substantial doubt about the Companys 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
managements 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 - MATERIAL EVENTS
During the period ended March 31, 2002, the Company issued 562,500 shares
of common stock at an average price of $0.27 per share to the Directors of the
Company for services performed during the first quarter. The Company also issued
44,976 shares of common stock at $0.50 per share to a shareholder for repayment
of a related-party note.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Going Concern and Ability of the Company to Continue
The Company has a net operating loss carry forward of $ 619,004 since
inception through March 31, 2002.
The Companys 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 not established revenues sufficient to cover its
operating costs and allow it to continue as a going concern. Management believes
that the Company will soon be able to generate revenues sufficient to cover its
operating costs. In the interim, the Company is involved in a best efforts
financing to raise additional capital to cover its operating costs.
It should be noted that the Companys auditor H.J. & Associates in Note 2
of the financial statements references the issue of the Company being considered
a going concern.
Liquidity and Capital Resources
As of March 31, 2002 the Company had $1,037 in current assets compared to
$2,335 as of December 31, 2001. The current assets are comprised of
$837 in cash and $200 in accounts receivable. As of March 31, 2002 the Company
had $12,233 in current liabilities compared to $30,315 as of Dece,ber 31,
2001. The current liabilities are comprised of $5,684 in accounts payable
and $ 6,549 which is due to a related party. Management recognizes that there is
a severe impairment to liquidity and therefore is involved in a best efforts
financing. The Company currently has a .08 to 1 current ratio.
Results of Operations
For the three months ending March 31, 2002 the Company had a net loss of
$192,230 compared to a net operating loss of $163,398 as of March 31, 2001. The
Company had revenues of $29,829 in the three months ended March 31, 2002
compared to revenues of $0 in three months ended March 31, 2000. For the three
months ended March 31, 2002 consulting expenses increased $176,985, this can
largely be attributed to the Company further developing their software platform.
General and Administrative costs decreased $120,232 for the first 3 months of
2002 compared to the first three months the year before. A major portion of this
decrease can be attributed to the Company downsizing to address their liquidity
and capital resources deficit.
Net Operating Loss
The Company has accumulated approximately $616,004 in net operating losses
carryforwards as of March 31, 2002, which maybe offset against taxable income
and income taxes in future years. The use of these losses to reduce future
income taxes will depend on the generation of sufficient taxable income prior to
the expiration of the net loss carryforwards. The carryforwards expire in the
year 2022. In the event of certain changes in control of the Company, there will
be an annual limitation on the amount of carryforwards, which can be used.
Sale of Common Stock
There were no sales of common stock in the quarter.
Risk Factors and Cautionary Statements
Forward looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
Company wished to advise readers that the actual results may differ
substantially from such forward looking statements. Forward looking statements
involve risks and uncertainties that could cause actual results to differ
materially from those expressed on or implied by the statements, including, but
not limited to, the following: the ability of the Company to successfully meet
its cash and working capital needs, the ability of the Company to successfully
market its product, and other risks detailed in the Companys periodic report
filings with the Securities and Exchange Commission.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
On January 25, 2002 the Company issued 112,500 shares of common stock to
each of its five directors for services rendered. A total of 562,500 shares were
issued at $.27 per share for total consideration of $151,876.
On March 30, 2002 the Company issued 44,976 shares of common stock to a
related party for the cancellation of debt. The shares were issued at $.50 per
share for total consideration of $22,488
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, 2002 the Company has 18,767,876 shares of common stock
issued and outstanding.
ITEM 3. DEFAULTS UPON SENIOR SECURITES
None.
ITEM 4. SUBMISSION OF MATTERS TO BE A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON 8-K
a. 10SB12GA filed by reference on January 1, 2002
b. 10SB12GA filed by reference on January 24, 2002
c. 10QSBA filed by reference on January 24, 20023
d. 10QSBA filed by reference on January 25, 2002
e. 10kSB filed by reference on March 29, 2002.
Report on 8K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed in its behalf by the
undersigned hereto duly authorized.
MERCHANTPARK COMMUNICATIONS, INC.
Dated: May 15, 2002
By: /S/ Scott Thomasson
Scott Thomasson
President, Director
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