UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10QSB
(X) Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended
JUNE 30, 1999
( ) Transition report pursuant of Section 13 or 15(d) of the
Securities Exchange Act of 1939 for the transition period ____
to______
COMMISSION FILE NUMBER 000-26157
---------
AMERISTAR NETWORK, INC.
------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-1370942
---------------------------------- --------------------
(State or other jurisdiction of (IRS Employer Id. No.)
incorporation or organization)
321 No. Mall Drive., K-102
St. George, UT 84790 Telephone: 435-656-3677
-----------------------------------------------------------------
(Address of Principal Executive Offices, including Registrant's
zip code and telephone number)
NONE
--------------------------------------------------------------
Former name, former address and former fiscal year, if changed.
Indicate by check mark 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,), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
The number of shares of the registrant's common stock as of
June 30, 2000: 19,531,446 shares.
Transitional Small Business Disclosure Format (check one):
Yes No X
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TABLE OF CONTENTS
-----------------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
(a) Balance Sheet
(b) Statement of Operations
(c) Statement of Changes in Financial Position
(d) Statement of Shareholders' Equity
(e) Notes to Financial Statements
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Item 3. Risks
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults On Senior Securities
Item 4. Submission of Items to a Vote
Item 5. Other Information
Item 6
(a) Exhibits
(b) Reports on Form 8K
NONE
SIGNATURES
FINANCIAL DATA SCHEDULE
<TABLE>
<CAPTION>
AMERISTAR NETWORK, INC.
(A Development Stage Company)
Consolidated Balance Sheets
<S> <C> <C>
June 30, 2000 December 31,
(Unaudited) 1999
------------- -----------
ASSETS
Current Assets:
Cash in banks $ 5,299 $ 5,176
Notes receivable 27,000 13,000
------------- -----------
Total Current Assets 32,299 18,176
Property & Equipment: ------------- -----------
Furnitures and equipment 22,269 22,269
Less: accumulated depreciation (5,559) (3,375)
------------- -----------
Total Fixed Assets 16,710 18,894
Other Assets: ------------- -----------
Investments 139,902
------------- -----------
Software distribution rights (net of amortization) 139,854
------------- -----------
Total Other Assets 139,902 139,854
TOTAL ASSETS $ 188,911 $ 176,924
============= ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 218,926 $ 152,948
Accrued expenses 316 15,316
Short term notes payable 1,300 1,000
------------- -----------
Total Current Liabilities 220,542 169,264
------------- -----------
Stockholders' Equity:
Preferred stocks, $.001 par value
Authorized shares - 10,000,000
Issued and oustanding shares- none - -
Common stocks , $.001 par value
Authorized shares - 90,000,000
Issued and outstanding shares - -
19,488,712 shares 19,449 10,199
Paid in capital 3,242,624 1,401,874
Subscriptions receivable (220,000) (249,400)
Deficit accumulated during the development stage (3,073,704) (1,155,013)
------------- -----------
Total Stockholders' Equity (31,631) 7,660
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 188,911 $ 176,924
============= ===========
See consolidated notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
AMERISTAR NETWORK, INC.
(A Development Stage Company)
Consolidated Statement of Operations
For the six months ended June 30, 2000 and 1999 and
For the period September 23, 1996 (inception) through June 30, 2000
<S> <C> <C> <C> <C> <C>
Three Months Ended Six Months Ended Cumulative
June 30, June 30, June 30, June 30, During
2000 1999 2000 1999 Development
(Unaudited) (Unaudited)(Unaudited) (Unaudited) Stage
------------------------- --------------------- -----------
Sales $ 14,000 $ 34,595 $ 23,548 34,602 $ 63,643
Expenses
General and
administrative expenses 1,882,887 800,609 1,939,642 840,427 3,114,772
Depreciation and amortization 759 294 2,332 472 16,206
Interest expense 218 450 265 772 6,392
------------------------- --------------------- -----------
Total Expenses 1,883,864 801,353 1,942,239 841,671 3,137,370
------------------------- --------------------- -----------
Net Loss (1,869,864) (766,758)(1,918,691) (807,069) (3,073,727)
Other Income
Interest income - - - - 23
Total Other Income (Expenses) - - - - 23
Net loss $(1,869,864) (766,758)(1,918,691) (807,069) (3,073,704)
Basic loss per share (0.21) (0.20) (0.22) (0.21)
========== ======== =========== =========
Weighted average
shares outstanding 8,816,253 3,821,292 8,816,253 3,821,292
See consolidated notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
AMERISTAR NETWORK, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
For the six months ended June 30, 2000 and 1999 and
For the period September 23, 1996 (inception) through June 30, 2000
<S> <C> <C> <C>
Cumulative
June 30, June 30, During
2000 1999 Development
(Unaudited) (Unaudited) Stage
----------- ----------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (1,918,691) (807,069) (3,073,704)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation & amortization 2,332 472 16,206
Services paid by stocks 1,850,000 496,150 2,368,676
Stocks received from sales in lieu of cash 48 48
(Increase) decrease in accounts receivable (14,000) 2,265 (27,000)
Increase (decrease) in accounts payable 66,036 64,683 236,901
Increase (decrease) in in accrued expenses (15,000) 78 316
----------- ----------- ------------
NET CASH USED BY OPERATING ACTIVITIES (29,275) (243,421) (478,557)
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (3,791) (22,269)
Acquisition of software rights (150,000)
Write off organization cost
336
----------- ----------- ------------
NET CASH USED BY INVESTING ACTIVITIES - (3,791) (171,933)
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Notes and contract payable (151,500) 1,300
Cash received from subscription receivable 29,400 29,400
Proceeds from issuance of common stock 416,881 625,091
----------- ----------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 29,400 265,381 655,791
----------- ----------- ------------
INCREASE (DECREASE) IN CASH 125 21,960 5,301
BEGINNING CASH 5,176 332 -
ENDING CASH 5,301 22,292 5,301
=========== ========== ============
DISCLOSURE FROM OPERATING ACTIVITIES
Interest expense 265 772 6,392
NON CASH DISCLOSURE
1,075,000 shares issued for incorporation expenses 1,175
350,000 shares issued for marketing rights 350
10,838,846 shares issued for services 1,850,000 496,150 2,368,676
5,500,000 shares issued to acquire CVS Technologies 5,500
250,000 shares issued to acquire Ameristar Mortgage 250
255,500 shares of common stocks subscribed 249,400 249,400
5,816 shares issued for debt satisfaction 11,632
See consolidated notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
AMERISTAR NETWORK, INC.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
For the period September 23, 1996 (Inception) to June 30, 2000
<S> <C> <C> <C> <C> <C>
Deficit
Number Accumulated
of Common Additional Stock During the
Shares Stock Paid-In- Sub- development
Outstanding at Par Value Capital cription Stage
----------- ------------ ---------- ----------- -----------
Balance at September 23, 1996
(inception) $ - $ - $ - $ - $ -
Net loss for the period ended
December 31, 1996 (798)
Stocks issued for organization
costs at $.001 per share 1,175,000 1,175
Stocks issued for cash at
$.10 per share 50,000 50 4,950
Stocks issued for marketing rights 350,000 350
----------- ------------ ---------- ----------- -----------
Balance at December 31, 1996 1,575,000 1,575 4,950 (798)
Net loss for the period ended
December 31, 1997 (28,813)
Shares issued for professional
fees at $.001 per share 95,000 95
Share issued for cash at
$.001 per share 330,000 330
Shares issued for cash
at $2.00 per share 6,500 6 12,994
----------- ------------ ---------- ----------- -----------
Balance at December 31, 1997 2,006,500 2,006 17,944 (29,611)
Net loss for the period
ended December 31, 1998
(34,453)
Stocks issued for cash
at $2.00 per share 6,550 7 13,093
Stocks issued for debt
satisfaction at $2.00 per share 5,816 6 11,626
----------- ------------ ---------- ----------- -----------
Balance at December 31, 1998 2,018,866 2,019 42,663 (64,064)
Net loss for the period ended
December 31, 1999
(1,090,949)
Stocks issued for cash
at $.63 per share 32,000 32 20,128
Stocks issued for cash
at $.80 per share 562,500 563 449,438
Stocks issued for cash
at $1.00 per share 41,000 41 40,959
Stocks issued for cash at
$1.25 per share 10,000 10 12,490
Stocks issued for cash at
$2.00 per share 35,000 35 69,965
Stocks issued for services
at $1.50 per share 330,000 330 494,670
Stocks issued for services
at $1.62 per share 13,846 13 22,416
Stocks issued for services
at $.001 1,150,000 1,150
Common stocks subscribed
at $.80 per share 30,500 31 24,370 (24,400)
Common stocks subscribed
at $1.00 per share 225,000 225 224,775 (225,000)
Stocks issued to acquire
CVS Technologies 5,500,000 5,500
Stocks issued to acquiare
Ameristar Mortgage 250,000 250
----------- ------------ ---------- ----------- -----------
Balance at December 31, 1999 10,198,712 10,199 1,401,874 (249,400) (1,155,013)
Net loss for the six months
ended June 30, 2000 (1,918,691)
Stocks subscription - payment 3,000
Stocks issued for services 9,250,000 9,250 1,840,750
Stock subscription - payment 26,400
----------- ------------ ---------- ----------- -----------
Balance at June 30, 2000 19,448,712 19,449 3,242,624 (220,000) (3,073,704)
========== ============ =========== =========== ===========
See consolidated notes to financial statements.
</TABLE>
[CAPTION]
AMERISTAR NETWORK, INC.
(A Development Stage Company)
Consolidated Notes to Financial Statements
June 30, 2000
Note 1 - BUSINESS ACTIVITY
The Company was incorporated under the laws of the state of
Delaware on
September 23, 1996 using the name AMERISTAR NETWORK, INC.
The purpose for which the Corporation is organized is to engage
in any lawful act or activity for which a corporation may be
organized under the General Corporation Law of the State of
Delaware including, without limitation, to engage directly or
through a subsidiary or subsidiaries in the business of
acquiring, operate and or managing mortgage brokerage business
and to develop, research, design, produce, buy, sell, license or
otherwise deal in mortgage technology or related devises which
are necessary, useful and desirable in connection with said
business.
The Company has been in the development stage since its formation
on September23, 1996. The Company has not earned significant
revenue from planned principal operations. Accordingly, the
Company's activities have been accounted for as those of a
"Development Stage Enterprise" as set forth in Financial
Accounting Standards Board Statement No. 7 ("SFAS 7"). Among the
disclosures required by SFAS 7 are that the Company's financial
statements be identified as those of a development stage company,
and that the statements of operations, stockholders' equity
(deficit) and cash flows disclose activity since the date of the
Company's inception.
Note 2 - SIGNIFICANT ACCOUNTING POLICIES
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.
Basis of Consolidation
----------------------
The financial statements reflect the financial position and
results of operations of Ameristar Network, Inc. and its
subsidiaries on a consolidated basis. The Company's policy is to
consolidate all wholly owned subsidiaries. All inter-company
amounts have been eliminated in consolidation.
Cash and Cash Equivalents
-------------------------
The Company considers all investments purchased with an initial
maturity of three months or less to be cash equivalents. Cash and
cash equivalents are carried at cost, which approximates fair
value.
Property and Equipment
----------------------
Property and equipment are stated at cost less accumulated
depreciation and amortization. When such items are retired or
otherwise disposed of, the cost and related accumulated
depreciation and amortization are relieved from the accounts and
the resulting gain or loss is reflected in operations.
Depreciation and amortization are provided using the
straight-line method over the estimated useful lives of the
assets. The depreciation and amortization periods by asset
category are as follows:
Furniture and fixtures 7 years
Computer equipment 5 years
Maintenance and minor replacements are charged to expense as
incurred while renewals and improvements are capitalized.
Long-Lived Assets
-----------------
The carrying value of long-lived assets is periodically reviewed
by management and impairment losses, if any are recognized when
the expected nondiscounted future operating cash flows derived
from such assets are less than their carrying value. To date, no
such impairment has been recorded.
Fair Value of Financial Instruments
-----------------------------------
Cash and cash equivalents, accounts receivable, other assets,
accounts payable, deferred revenue, notes payable and accrued
expenses are carried at cost which approximates their fair value
because of the short-term maturity of these instruments.
Revenue Recognition
-------------------
The Company recognizes revenue upon closing and sale of a
mortgage note in the secondary market. Processing fees are
recognized ratably over the period to which they relate.
Income Taxes
------------
The Company utilizes the liability method of accounting for
income taxes. Under this method, deferred tax liabilities and
assets are determined based on the difference between the
financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the period in which the
differences are expected to reverse. Valuation allowances are
established, when necessary, to reduce the deferred tax assets to
the amounts expected to be realized.
Advertising Costs
-----------------
The Company expenses the costs of advertising in the periods in
which those costs are incurred. Advertising expense was
approximately $3,596 for the year ended December 31, 1999.
Earnings (Loss) Per Share
-------------------------
Basic earnings (loss) per share is computed by dividing the net
income (loss) by the weighted average number of shares of common
stock outstanding during the period. Diluted earnings (loss) per
share is computed by dividing the net income (loss) by the
weighted average number of common shares outstanding plus the
number of additional common shares that would have been
outstanding if all dilutive potential common shares had been
issued, using the treasury stock method. Potential common shares
are excluded from the computation when their effect is
antidilutive.
Note 3 - STOCK SUBSCRIPTION RECEIVABLES
In April 1999, the Company sold 400,000 shares of common stock
for aggregate consideration of $275,000 by issuance of a note
receivable non-bearing interest. The Company expects to received
full payment in August of 2000.
Note 4 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at June 30,
2000 and December 31, 1999.
<TABLE>
<S> <C> <C>
June 30, December 31,
2000 1999
---- ----
Furniture and equipment $ 22,269 $ 22,269
Less: Accumulated depreciation and amortization ( 5,559) ( 3,375)
------- --------
Net property and equipment $ 16,710 $ 18,894
======== ========
Note 5 - SOFTWARE LICENSING AGREEMENT
On June 6, 1998, the Company purchased at cost an exclusive license agreement from
Wholesale Network Center portion of the Virtual Lender Software System and Intellectual
Property. The agreement grants the Company perpetual usage of the license and technology
for the United States of America, Mexico and Canada. The Company paid a total cost of
$150,000, which is being amortized over an estimated useful life of 30 years. During the
year 2000, the Company cancelled the Software License Agreement with Mortgage Internet
Techonologies, Inc. (MIT). As per agreement, the Company received 1,521,805 shares of
MIT.
June December
30, 2000 31, 1999
Software distribution rights $ 0 $150,000
Less: Accumulated amortization (0) (10,146)
------- -------
$ 0 $139,854
======= =======
</TABLE>
Note 6 - INVESTMENTS
The Company acquired the following equity investments during the
year 2000:
Intechnologies, Inc. - carrying value at cost of $ 48. (Note 9)
Mortgage Internet Technologies, Inc. - carrying value cost of
$139,854.(Note 5)
NOTE 7 - GOING CONCERN
The Company has nominal assets and no current operations with
which to create operating capital. The Company seeks to raise
operating capital with which to seek business opportunities to
utilize the technology it has acquired via placements of its
common stock. However, there can be no assurance that such
offering or negotiations for private capital will be successful.
Management plans to raise additional working capital in
subsequent private offerings of its common stock. The Company
will initially seek to raise up to at least $5,000,000 in a
private placement of it's common stock, and continues to
negotiate for private capital. However, there can be no assurance
that any such offering or negotiations for private capital will
be successful if the Company is unable to regain its position on
the NASD Bulletin Board.
NOTE 8 - INCOME TAXES
The Company has adopted the provisions of SFAS No. 109
"Accounting for Income Taxes". SFAS 109 requires recognition of
deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the differences
between the financial statement and tax basis of assets and
liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse. The Company has
incurred losses that can be carried forward to offset future
earnings if conditions of the Internal Revenue Codes are met.
These losses are as follows:
Year of Loss Amount Expiration Date
1996 $ 798 2011
1997 28,813 2012
1998 34,453 2013
1999 1,088,695 2014
NOTE 9. RELATED PARTY TRANSACTIONS
The Company issued 350,000 shares of its common stock to an
officer of the Company to acquire marketing rights.
The Company purchased furniture and fixtures and computer
equipment for $2,524 from an officer of the Company.
The Company received 12,000,000 shares of Intechnologies, Inc. as
fee for services provided. The Chief Executive Officer of the
Intechnologies, Inc. is also Chief Executive Officer of Ameristar
Network, Inc. (Note 6)
NOTE 10. NEW TECHNICAL PRONOUNCEMENTS
In February 1997, SFAS No. 129, "Disclosure of Information about
Capital Structure was issued effective for periods ending after
December 15, 1997. The Company has adopted the disclosure
provisions of SFAS No. 129, effective with the fiscal year ended
December 31, 1997. Adoption of SFAS 129.
In June 1997, SFAS 130, "Reporting Comprehensive Income" was
issued effective for fiscal years beginning after December 31,
1997, with earlier application permitted. The Company has
elected to adopt SFAS No.130, with the fiscal year ended December
31, 1998. Adoption of SFAS 130 is not expected to have a
material impact on the Company's financial statements.
NOTE 11. ACQUISITION OF SUBSIDIARIES
On April 26, 1999, the Company issued 5,500,000 shares of its
common stock in exchanged for 100% CVS Technologies, Inc. common
stock shares issued and outstanding. CVS incorporated on March
23, 1999 in the state of Delaware. This combination is accounted
for as a pooling of interest as per APB Opinion No. 16
On May 13, 1999, the Company issued 250,000 shares of its common
stock in exchanged for 100% of the shares issued and outstanding
of AmeriStar Mortgage, Inc. AmeriStar Mortgage, Inc.
incorporated March 18, 1999 in the state of Delaware. This
combination will be accounted for as a pooling of interest as per
APB Opinion No. 16.
Results of Operations
Six months ended June 30, 2000 compared to six months ended June
30, 1999. The net loss for the six months ended June 30, 2000
was $1,869,864 compared with $766,758 for the three months ended
June 30, 1999. The primary reason for the increase in the net
loss was an increase in operating expenses.
The company overall generated $14,000 in revenues in the six
months ended June 30, 2000 compared to revenues of $34,545 in the
fiscal year ended September 30, 1998. Management attributes this
decline to the commencement of operations.
Liquidity and Capital Resources
At June 30, 2000, the Company had a working capital deficit of
$188,243 as compared to a working capital deficit on December 31,
1999 of $151,088. The increase is not significant.
Net cash used in operating activities was $29,275 for the three
months ended June 30, 2000 compared to the utilization of
$243,421 of cash for the same period loast year.
The Company does not anticipate that it will have any problems in
meeting its obligations for continuing fixed expenses, materials,
procurement or operating labor.
PART II. OTHER INFORMATION
Item 1. Legal proceedings NONE
Item 2. Changes in securities and use of proceeds NONE
Item 3. Defaults on senior securities NONE
Item 4. Submission of items to a vote NONE
Item 5. Other information NONE
Item 6.
a) Exhibits NONE
b) Reports on 8K
[CAPTION]
SIGNATURES
In accordance with the requirements of the Securities and
Exchange Act of 1934, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
Ameristar Network, Inc.
Dated: September 14, 2000 By: O. Russell Crandall
------------------------------
O. Russell Crandall, President
[CAPTION]
[TYPE]EX-27
2
[DESCRIPTION]FINANCIAL DATA SCHEDULE
[ARTICLE] 5
[MULTIPLIER] 1
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-START] JAN-31-2000
[PERIOD-END] JUN-30-2000
[CASH] 5299
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 32,299
[PP&E] 0
[DEPRECIATION] 0
[TOTAL-ASSETS] 188,191
[CURRENT-LIABILITIES] 220,542
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 19,499
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 188,911
[SALES] 14,000
[TOTAL-REVENUES] 0
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 1,883,864
[LOSS-PROVISION] (1,889,864)
[INTEREST-EXPENSE] 78
[INCOME-PRETAX] (40,477)
[INCOME-TAX] 0
[INCOME-CONTINUING] (49,477)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (1,889,864)
[EPS-BASIC] (.21)
[EPS-DILUTED] (.21)
