UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 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 33-73004
HOSTING SITE NETWORK INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 13-4122844
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
32 Poplar Place
Fanwood, New Jersey 07023
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(Address of principal executive offices) (Zip Code)
(973) 652-6333
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(Registrant's telephone number, including area code)
Check whether the issuer (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, and (2) has been subject to such filing requirements for the past 90
days. Yes |X| No | |
As of February 18, 2003, there were 7,273,500 shares of the issuer's common
stock, par value $0.001, issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes | | No |X|
HOSTING SITE NETWORK INC.
DECEMBER 31, 2002 QUARTERLY REPORT ON FORM 10-QSB
TABLE OF CONTENTS
PAGE
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Special Note Regarding Forward Looking Information ...................................3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements .................................................................4
Item 2. Plan of Operation.................................................................. ..9
Item 3. Controls and Procedures............................................................ ..9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...................................................................10
Item 2. Changes in Securities and Use of Proceeds............................................10
Item 6. Exhibits and Reports on Form 8-K.....................................................10
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
To the extent that the information presented in this Quarterly Report on
Form 10-QSB for the quarter ended December 31, 2002 discusses financial
projections, information or expectations about our products or markets, or
otherwise makes statements about future events, such statements are
forward-looking. We are making these forward-looking statements in reliance on
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Although we believe that the expectations reflected in these
forward-looking statements are based on reasonable assumptions, there are a
number of risks and uncertainties that could cause actual results to differ
materially from such forward-looking statements. These risks and uncertainties
are described, among other places in this Quarterly Report, in "Plan of
Operation".
In addition, we disclaim any obligations to update any forward-looking
statements to reflect events or circumstances after the date of this Quarterly
Report. When considering such forward-looking statements, you should keep in
mind the risks referenced above and the other cautionary statements in this
Quarterly Report.
3
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PAGE
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Consolidated Balance Sheets as at December 31, 2002 (unaudited) and September 30, 2002....5
Consolidated Statements of Operations for the three months ended
December 31, 2002 and 2001 (unaudited)and for the period from May 31, 2000
(inception) to December 31, 2002 (unaudited).......................................6
Consolidated Statements of Cash Flows for the three months ended
December 31, 2002 and 2001 (Unaudited) and for the period from May 31, 2000
(inception ) to December 31,2002 (Unaudited).......................................7
Notes to Consolidated Financial Statements (unaudited)....................................8
4
HOSTING SITE NETWORK, INC. AND SUBSIDIARY
(A Developmental Stage Entity)
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, September 30,
2002 2002
------------------ ----------------
(Unaudited)
Current Assets:
Cash $ 286,842 $ 281,547
Loan receivable 185,864 200,000
Accrued interest receivable - 3,333
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Total current assets 472,706 484,880
Computer equipment, net of accumulated
depreciation of $7,084 and $5,667 21,252 22,669
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$ 493,958 $ 507,549
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 22,095 $ 9,163
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Total current liabilities 22,095 9,163
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Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.0001 par value, 5,000,000
shares authorized; none outstanding - -
Common stock, $.001 par value; 100,000,000
shares authorized; 7,273,500 shares issued
and outstanding 7,273 7,273
Additional paid in capital 758,259 758,259
Deferred stock based compensation (81,834) (92,387)
Accumulated deficit (211,835) (174,759)
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Total stockholders' equity 471,863 498,386
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$ 493,958 $ 507,549
================== ================
See Notes to Consolidated Financial Statements.
5
HOSTING SITE NETWORK, INC. AND SUBSIDIARY
(A Developmental Stage Entity)
CONSOLIDATED STATEMENTS OF OPERATIONS
Period From
May 31,2000
Three-months Ended (Inception)
December 31, Through
------------------------------
2002 2001 December 31,2002
------------- ------------- ------------------
(Unaudited) (Unaudited)
Revenues $ - $ - $ -
Operating expenses:
General and administrative (41,246) (28,949) (221,178)
Interest income 4,170 92 9,343
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Net loss $ (37,076) $ (28,857) $ (211,835)
============= ============= ==================
Basic loss per share $ (.01) $ (.01) $ (.05)
============= ============= ==================
Basic weighted average shares outstanding 7,023,500 3,025,500 4,140,093
============= ============= ==================
See Notes to Consolidated Financial Statements.
6
HOSTING SITE NETWORK, INC. AND SUBSIDIARY
(A Developmental Stage Entity)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Period From
May 31,2000
Three-months Ended (Inception)
December 31, Through
------------------------------
2002 2001 December 31, 2002
------------- ------------- -----------------
(Unaudited) (Unaudited)
Cash flow from operation activities:
Net loss $ (37,076) $ (28,857) $ (211,835)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation expense 1,417 1,417 7,084
Stock based compensation 10,553 10,090 68,166
Common stock issued for services - - 10,000
Change in operating assets and liabilities:
Accrued interest receivable 3,333 9,348 -
Accounts payable and accrued expenses 12,932 - 22,095
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Net cash used in operating activities (8,841) (8,002) (104,490)
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Cash flow from investing activities:
Advance of loan receivable - - (200,000)
Repayment of loan receivable 14,136 - 14,136
Purchase of computers and equipment - - (28,336)
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Net cash used in investing activities 14,136 - (214,200)
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Cash flow from financing activities:
Proceeds from private placement - - 605,532
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Increase (decrease) in cash 5,295 (8,002) 286,842
Cash, beginning of period 281,547 35,045 -
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Cash, end of period $ 286,842 $ 27,043 $ 286,842
============= ============= =================
Supplemental disclosure of non-cash
investing and financing activities:
Issuance of common stock for deferred
offering costs $ - $ - $ 150,000
============= ============= =================
Issuance of common stock for services $ - $ - $ 10,000
============= ============= =================
See Notes Consolidated Financial Statements.
7
HOSTING SITE NETWORK, INC. AND SUBSIDIARY
(A Developmental Stage Entity)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 1 - NATURE OF BUSINESS
Hosting Site Network, Inc. (the "Company") was incorporated in the
State of Delaware on May 31, 2000. The Company operates through its
wholly owned subsidiary HSN, Inc. which was incorporated in the State
of New Jersey on August 21, 2002. The Company is currently searching
for new business opportunities.
NOTE 2 - BASIS OF PRESENTATION AND CONSOLIDATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-QSB. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the three-months ended December 31, 2002 are not
necessarily indicative of the results that may be expected for the
fiscal year ending September 30, 2003. For further information, refer
to the financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 2002.
The consolidated financial statements include the accounts of Hosting
Site Network, Inc. and its wholly owned subsidiaries,
CreativeSites.com, Inc. for the period from September 14, 2000 through
April 30, 2001 and HSN, Inc. for the period from August 21, 2001
through December 31, 2002. All material intercompany accounts and
transactions have been eliminated in consolidation.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
New Accounting Pronouncements
Management does not believe that recently issued, but not yet
effective accounting pronouncements if currently adopted would have a
material effect on the accompanying financial statements.
NOTE 4 - LOAN RECEIVABLE
On July 17, 2002 the Company entered into a promissory note (the
"Note") for $200,000 with an unrelated third party, with interest
accruing at 8% per annum. This Note was in conjunction with a letter
of intent dated July 11, 2002 pursuant to which the parties expected
to enter into an acquisition agreement where the Company would acquire
the unrelated entity. The Note required repayment fifteen days after
termination of the letter of intent, which occurred on August 10,
2002. On November 15, 2002 the Company brought an action in the
Supreme Court of the State of New York against the unrelated third
party (the "Defendant") for all principal and interest due.
During December 2002 both parties entered into a Stipulation of
Settlement that requires the Defendant to repay a total of $210,864
including principal, interest and attorney fees. The Defendant paid an
initial $25,000 on December 31, 2002 and a certified check of $185,864
is due on or before March 15, 2003
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ITEM 2 PLAN OF OPERATION
We were incorporated on May 31, 2000 to provide businesses with a variety
of Internet services including web hosting, web consulting and electronic mail
services. Given the current Internet business environment, we have not commenced
material business operations, have not had any operating revenues, and have
concluded that our business model is not presently valid. Although we may
determine to engage in our intended Internet operations at a later date, we have
decided to look at other ventures of merit for corporate participation as a
means of enhancing shareholder value. This may involve sales of our equity or
debt securities in merger or acquisition transactions.
We have minimal operating costs and expenses at the present time due to our
limited business activities. Accordingly, absent changed circumstances, we will
not be required to raise additional capital over the next twelve months,
although we may do so in connection with or in anticipation of possible
acquisition transactions. We do not currently engage in any product research and
development and have no plans to do so in the foreseeable future. We have no
present plans to purchase or sell any plant or significant equipment. We also
have no present plans to add employees although we may do so in the future if we
engage in any merger or acquisition transactions.
ITEM 3. CONTROLS AND PROCEDURES
Our principal executive officer and principal financial officer evaluated
the effectiveness of our disclosure controls and procedures as of a date within
90 days prior to the filing of this report. Based on this evaluation, our
principal executive officer and principal financial officer have concluded that
our controls and procedures are effective in providing reasonable assurance that
the information required to be disclosed in this report is accurate and complete
and has been recorded, processed, summarized and reported within the time period
required for the filing of this report. Subsequent to the date of this
evaluation, there have not been any significant changes in our internal controls
or, to our knowledge, in other factors that could significantly affect our
internal controls.
9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On November 15, 2002 we filed a Summons and Complaint in the Supreme Court
of the State of New York, County of New York (Index No. 02604182) against 2
Chansis Inc., Ray Grimm Jr., and Alfred Hanser (collectively the "Defendants").
The suit seeks $200,000 together with interest, attorneys fees, and such other
relief as the court deems proper. The action is based upon a July 12, 2002 Loan
Agreement between us, 2 Chansis Inc., and Messrs. Grimm and Hanser pursuant to
which we loaned 2 Chansis Inc. $200,000 and a related $200,000 promissory note
(the "Note") dated July 17, 2002 issued to us by 2 Chansis Inc. and personally
guaranteed by Messrs. Grimm and Hanser. The Note became due and payable on
September 2, 2002 and, after several requests for payment thereon were ignored,
the present action was instituted. In December 2002 we entered into a Settlement
Agreement with Defendants whereby Defendants agreed to pay us the sum of
$210,864. This amount includes interest and attorney's fees. The Settlement
Agreement provides for the payment to us of $25,000 on or before December 31,
2002, which payment has been made, and the payment to us of $185,864 on or
before March 15, 2003. Subject to and upon timely receipt of the entire
settlement sum, there shall be filed with the court, a Stipulation of
Discontinuance with prejudice dismissing the action.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
No equity securities were sold by us during the period covered by this
Report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
99.1 Certificate of Chief Executive and Financial Officer.
(b) Reports on Form 8-K.
None.
10
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
HOSTING SITE NETWORK INC.
Dated: February 19, 2003 By: /s/ Scott Vicari
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Scott Vicari
President, Chief Executive and
Accounting Officer
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CERTIFICATIONS
I, Scott Vicari, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Hosting Site Network,
Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have;
(a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made know to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
(c) Presented in this quarterly report my conclusions about the effectiveness of
the disclosure controls and procedures based on my evaluation as of the
Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: February 19, 2003 /s/ Scott Vicari
-----------------------------------------
Scott Vicari
Principal Executive and Financial Officer
12