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: September 30, 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: 000-49849
AMERICAN MARKET SUPPORT NETWORK, INC.
-------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 88-0483722
------------- ----------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
14090 Southwest Freeway, Suite 300 77478
Sugar Land, Texas ---------
- ----------------------------------- (Zip Code)
(Address of principal executive
offices)
(281) 340-2085
---------------------
(Registrant's telephone number, including area code)
N/A
------------
(Former name, former address and former fiscal year, if changed
since last report)
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
4,971,250
PAGE-1-
AMERICAN MARKET SUPPORT NETWORK, INC.
Table of Contents
Page
PART I - FINANCIAL INFORMATION 3
Item 1. Financial Statements
Balance Sheet 4
Statement of Operations 5
Statement of Cash Flows 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Plan of Operation 8
PART II - OTHER INFORMATION
Item 2. Changes in Securities 10
Item 4. Controls and Procedures 10
Item 6. Exhibits 10
SIGNATURES 11
CERTIFICATIONS 11
PAGE-2-
PART I - FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial reporting and pursuant to the
rules and regulations of the Securities and Exchange Commission
("Commission"). While these statements reflect all normal
recurring adjustments which are, in the opinion of management,
necessary for fair presentation of the results of the interim
period, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. For further information, refer to the
financial statements and footnotes thereto, which are included in
the Company's Registration Statement on Form 10-SB previously filed
with the Commission on June 6, 2002, and subsequent amendments made
thereto.
The accompanying notes are an integral part of these
consolidated financial statements.
PAGE-3-
AMERICAN MARKET SUPPORT NETWORK, INC.
BALANCE SHEET
September December
30, 31,
2002 2001
--------------------------
ASSETS (Unaudited)
Current assets
Cash $4,858 $4,158
Escrow receivable - 5,000
Investments, available for sale 406 5,325
--------------------------
Total current assets 5,264 14,483
Property and equipment, net 20,521 24,496
--------------------------
$25,785 $38,979
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable $79,408 $14,035
Accrued expenses 30,849 -
Shareholder advances - 8,672
Notes payable 6,000 6,000
--------------------------
Total current liabilities 116,257 28,707
--------------------------
Commitments
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.001 par vale, 5,000,000
shares authorized, no shares issued and
outstanding - -
Common stock, $.001 par value, 20,000,000
shares authorized, 4,971,250 shares
issued
and outstanding 4,971 4,971
Additional paid in capital 139,326 139,326
Accumulated deficit (223,000) (128,993)
Accumulated other comprehensive income (11,769) (5,032)
(loss) --------------------------
Total Stockholders' Equity (Deficit) (90,472) 10,272
--------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $25,785 $38,979
(DEFICIT) ==========================
See notes to interim condensed
financial statements.
PAGE-4-
AMERICAN MARKET SUPPORT NETWORK, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
----------------------------------------------
Revenues $29,225 $28,910 $146,556 $152,035
Cost of revenues 3,050 3,730 67,070 47,585
----------------------------------------------
Gross profit 26,175 25,180 79,486 104,450
----------------------------------------------
Cost and Expenses:
General and 29,490 15,725 113,010 71,821
administrative
Salary and benefits 3,288 7,603 42,390 56,518
Professional fees 2,797 200 17,667 16,316
Depreciation 1,325 501 3,975 1,002
----------------------------------------------
36,900 24,029 177,042 145,657
----------------------------------------------
Income (loss) from (10,725) 1,151 (97,556) (41,207)
operations
Other (expense) 6,573 (376) 3,549 2,727
income
Net income (loss) $(4,152) $775 $(94,007) $(38,480)
==============================================
Net income (loss) per
share:
Basic and diluted $(0.00) $0.00 $(0.02) $(0.01)
==============================================
Weighted average
shares outstanding:
Basic and diluted 4,971,250 4,110,000 4,971,250 4,110,000
==============================================
See notes to interim condensed
financial statements.
PAGE-5-
AMERICAN MARKET SUPPORT NETWORK, INC.
STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES -------------------------
Net loss $(94,007) $(38,480)
Adjustments to reconcile net deficit to
cash used
by operating activities:
Depreciation 3,975 1,002
Stock received for services (93,081) -
Loss on investments, net 8,344 -
Net change in:
Accounts and other receivable 5,000 (18,816)
Accounts payable and other accrued 96,222 40,694
expenses -------------------------
CASH FLOWS USED IN OPERATING ACTIVITIES (73,547) (15,600)
-------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of common stock, 82,919 -
net -------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable - 6,000
Shareholder advances (8,672) 2,000
-------------------------
CASH FLOWS PROVIDED BY FINANCING (8,672) 8,000
ACTIVITIES -------------------------
NET INCREASE (DECREASE) IN CASH 700 (7,600)
Cash, beg. of period 4,158 7,600
-------------------------
Cash, end of period $4,858 $-
=========================
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid - -
Income taxes paid - -
See notes to interim condensed
financial statements.
PAGE-6-
AMERICAN MARKET SUPPORT NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of American
Market Support Network, Inc. have been prepared in accordance with
accounting principles generally accepted in the United States of
America and the rules of the Securities and Exchange Commission
("SEC"), and should be read in conjunction with the audited
financial statements and notes thereto contained in the Company's
registration statement filed with the SEC on Form 10-SB. In the
opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim
periods presented have been reflected herein. The results of
operations for interim periods are not necessarily indicative of
the results to be expected for the full year. Notes to the
financial statements which would substantially duplicate the
disclosure contained in the audited financial statements for the
most recent fiscal year 2001 as reported in Form 10-SB, have been
omitted.
Note 2 - INVESTMENTS
American Market holds minority equity investments in companies and
classifies these investments as available for sale. Certain
investments carry restrictions on immediate disposition.
Investments in public companies with restrictions of less than one
year are classified as available-for-sale and are adjusted to their
fair market value with unrealized gains and losses, net of tax,
recorded as a component of accumulated other comprehensive income.
Upon disposition of these investments, the specific identification
method is used to determine the cost basis in computing realized
gains or losses, which are reported in other income and expense.
Declines in value that are judged to be other than temporary are
reported in other income and expense. Common stock received by
American Market for services are recognized at its quoted market
price or at the fair value of the services rendered, which ever is
more readily determinable.
A summary of investments, available for sale held as of September
30, 2002 is as follows:
Equity securities:
Cost $ 12,175
Gross unrealized loss (11,769)
Estimated fair value $ 406
PAGE-7-
Item 2. Management's Discussion and Plan of Operation
Forward-Looking Statements
This Quarterly Report contains forward-looking statements
about American Market Support Network, Inc.'s business, financial
condition and prospects that reflect management's assumptions and
beliefs based on information currently available. We can give no
assurance that the expectations indicated by such forward-looking
statements will be realized. If any of our management's
assumptions should prove incorrect, or if any of the risks and
uncertainties underlying such expectations should materialize,
AMSN's actual results may differ materially from those indicated by
the forward-looking statements.
The key factors that are not within our control and that may
have a direct bearing on operating results include, but are not
limited to, acceptance of our services, our ability to expand our
customer base, managements' ability to raise capital in the future,
the retention of key employees and changes in the regulation of our
industry.
There may be other risks and circumstances that management may
be unable to predict. When used in this Quarterly Report, words
such as, "believes," "expects," "intends," "plans,"
"anticipates," "estimates" and similar expressions are intended to
identify forward-looking statements, as defined in Section 21E of
the Securities Exchange Act of 1934, although there may be certain
forward-looking statements not accompanied by such expressions.
The safe harbors of forward-looking statements provided by
Section 21E of the Exchange Act are unavailable to issuers of penny
stock. As we issued securities at a price below $5.00 per share,
our shares are considered penny stock and such safe harbors set
forth under the Reform Act are unavailable to us.
General
Media Relations
We provide our clients with a comprehensive range of media
relations services. We write media material, including but not
limited to press releases, media alerts, article ideas, articles
and any other written material that is required to produce media
coverage for our clients. We market our clients' ideas to media
representatives. We also design media relations programs that our
clients can execute internally, with or without our help. Our
media relations services are priced either hourly or on a fixed
monthly fee basis. Our hourly rates range from $80 to $400,
depending on task and the nature of the project. With our fixed
monthly fee, our clients know exactly what their monthly cost will
be. These fees may range from as little as $1,500 to as much as
$15,000 per month, a typical campaign estimated to cost
approximately $5,000 per month.
We provide our clients with media monitoring programs by
subcontracting with a press clipping or video monitoring services
and then analyzing the media coverage our clients receive. Basic
press clipping or video monitoring programs are billed directly to
our clients by the subcontractors and we do not receive any
revenues, commissions or fees from those subcontractors. We may
provide a written report or analysis of the media coverage, and
invoice those services separately or as a part of a larger services
package. For those services, we charge either a fixed project fee,
a monthly fee or hourly rates of $80 to $400. Project fees and
monthly fees billed at our usual hourly rates and are based on the
amount of time we intend to spend on each project we anticipate
doing on a monthly basis.
Public Relations
We provide our clients with various public relations services.
Our clients use our services to build customer awareness as well as
demand for their products, services or brands. Our public
relations services include graphic design services, design and
production of marketing material, Internet/web design, creating
graphic identities and brands, reputation management and crisis
communications programs.
PAGE-8-
Our public relations consulting rates range from $80-
$400/hour, depending on the assignment. Our graphic design and
marketing material projects start at $1,500 per project and go up
from there depending on the scope of the project. Internet/web
design services are priced either on a per project or hourly basis.
Our hourly rates for Internet/web design services range from $40
per hour for basic database entry work and $80 per hour for content
production, to as much as $400 per hour for consulting services.
Our graphic identity, branding, reputation management and crisis
communications programs are priced based on the scope of the
project we work on, but most often billed at our customary hourly
rates of $80-$400 per hour.
Reputation management involves advising clients how they can
increase their reputation, such as by becoming active in the local
community, sponsoring sports and art events, joining trade
associations, issuing news releases more actively than before, or
becoming contributing writers for trade magazines.
Crisis communications programs consist of a written plan that
identifies worst case scenarios or threats for a company's public
image and then aims at either eliminating those threats in a
preemptive manner or by creating a plan that describes what to do
when that worst-case scenario actually comes through. For example,
many energy companies have a crisis publicly relations plans in
place for unlikely events such as a terrorist attack in a refinery
or an oil tanker accidentally losing its cargo and causing an
environmental catastrophe. Other examples include a loss of a
company CFO for a competitor or a public company becoming a subject
of a negative media coverage alleging the company for fraud.
Our reputation management and crisis communications services
are available and a part of our existing service offerings, but we
haven't actively marketed them as of yet and we haven't sold any of
them.
Investor Relations
We provide our clients with various investor relations
programs, including design and distribution of investor information
kits, drafting and distribution of corporate press releases, design
and content production for investor relations sections of corporate
web sites. Our basic program, which includes creation of a press
release strategy, drafting of 4-8 press releases and advising our
clients on other investor relations activities is priced between
$2,000 and $15,000 per month, depending on various factors such as
length of contract and the time we estimate we will spend on
servicing each client.
We also provide services individually as opposed to bundling
them in a complete program. In these instances, we charge between
$3,000 to $8,000 for the design of investor information kits, $500
to $2,500 for the drafting of press releases, $80 to $400 per hour
for the design of complete investor relations websites, and $40 to
$200 per hour for the production of content for investor relations
sites or investor relations sections of corporate websites.
We distribute out clients' investor relations material to our
own internal database consisting of 6,000 recipients, and may on
our clients' request, have our clients' materials distributed to
other databases that are provided by other companies in the
industry. Means of distribution include direct mail, newspaper
advertisements, e-mail and fax distribution and online sites.
Our internal database consists of recipients who have
requested to receive information on publicly traded companies. No
subscription fee is charged. This database was collected by OTC
News Network, Inc. - a company at which our current chairman of the
board and largest shareholder - was also a shareholder. Shortly
before that company ceased its operations, Mr. Luhanto purchased
the database from the company and transferred that to American
Market Support Network. The original database was 11,000, but
since our inception 5,000 recipients have chosen to opt-out, making
the current amount of recipients 6,000.
We charge a fee of $1,000 to $5,000 per incident for materials
to be distributed to our own database - the exact price is
determined by market conditions and the total number of
distributions our clients are able to commit to. There are also
multitude of other service providers who own databases consisting
of recipients who have expressed their interest in receiving
information on publicly traded companies. Because our database
only has 6,000 recipients, we occasionally recommend that those
clients who want to increase the number of people that their
investor relations messages reach should use services of other
distribution providers as well.
PAGE-9-
If our clients decide to utilize those other services,
distribution service providers usually bill our client directly. We
may receive a sales commission from the service provider. These
commissions are typically agreed on a case-by-case basis and
typically represent 10-15% of the total amount of the distribution
cost our clients pay.
In some instances, we may re-sell another distribution service
provider's services. In that case, we would enter into an
agreement providing that the database distribution provider charges
us, and we then invoice our client that fee plus an appropriate
consulting fee for advising our clients in the use of those
services.
We provide consulting services to determine which investor
relations activities best reach our clients' specific goals. We
may not produce all of our services in-house, preferring to either
subcontract or refer our clients to service providers that we
believe represent the best fit for our clients. Our consulting
services are priced at $200 to $400 per hour, but may also be
provided at a fixed, predetermined monthly fee, which would be
calculated based on the amount of time we estimate we will spend
for the client in question.
Results of Operations
Our total revenue for the year to date ended September 30,
2002 was $146,556, which decreased $5,479 from $152,035 for the
year ago period ended September 30, 2001, or a decrease of
approximately 4%. We generated revenues of $29,225 for the three
months ended September 30, 2002, which was a 1% increase over the
same period last year, when we generated $28,910 in revenues. We
anticipate that revenues will increase as our products gain
acceptance; however, our future profitability is uncertain.
Cost of revenues for the three-month period ended September
30, 2002 was $3,050compared to $3,730 for the period ended
September 30, 2001. For the year to date 2002, our cost of
revenues was $67,070, while for the nine months ended September 30,
2001, cost of revenues amounted to $47,585. Our management
believes that our operational expenses will increase according to
the implementation of our growth plans.
Total expenses for the current three month period ended
September 30, 2002 was $36,900, a $12,871 increase over total
expenses of $24,029 during the same period in 2001. Total expenses
for the year to date September 30, 2002 was $177,042, an increase
of 22% over the year to date September 30, 2001.
As a result of elevated expenses, we experienced a net loss of
$94,007 for the nine months ended September 30, 2002 compared to a
net loss $38,480 for the same period in 2001. Our net loss for the
three month period ended September 30, 2002 was $4,152, an increase
of 636% from our net income for the period ended September 30, 2001
of $775.
Liquidity and Capital Resources
Cash flow used in operating activities during the nine months
ended September 30, 2002 was $73,547. Net investing activities
provided $85,919 from sales of securities investments received for
services.
Cash and cash equivalents, marketable securities, accounts
receivable and other current assets at the period ended of
September 30, 2002 amounted to $4,858. Our current liabilities of
$116,257 as of September 30, 2002 are higher than our current
assets of $5,264 by $110,993. Our management believes that without
additional funds, we may be unable to meet our financial
obligations. We have no commitments for capital expenditures as of
the period ended of September 30, 2002.
We have a note payable with Bulldog Capital, an unrelated
entity, for $5,000. The note is unsecured and bears interest at
10%. The note was due on September 30, 2001Currently, there is no
threat of litigation on Bulldog Capital's part. We are engaged in
discussions with Bulldog Capital to work out a payment plan for the
note.
In order to become profitable, we may still need to secure
additional debt or equity funding. We hope to be able to raise
additional funds from an offering of our stock in the future.
However, this offering may not occur, or if it occurs, may not
raise the required funding. There are no preliminary or definitive
agreements or understandings with any party for such financing.
PAGE-10-
Plan of Operation
For the next 12 months our plan of operation calls for
continued focus on business development and expanding our client
and products/services base, as follows:
Expand Marketing Program
Add 1-2 Additional Business Development Employees,
Commission-only
Expand Database Consisting of Full Contact Information
of Potential Clients
Train New and Existing Business Development Employees
Hire a full-time Chief Financial Officer (CFO)
Create Referral Network and Referral Compensation
Program to Expand Marketing Efforts
Increase Account Billing
PART II - OTHER INFORMATION
Item 4. Controls and Procedures
Within 90 days prior to the date of filing of this report, we
carried out an evaluation, under the supervision and with the
participation of our management, including the Chief Executive
Officer (who also effectively serves as the Chief Financial
Officer), of the design and operation of our disclosure controls
and procedures. Based on this evaluation, our Chief Executive
Officer concluded that our disclosure controls and procedures are
effective for gathering, analyzing and disclosing the information
we are required to disclose in the reports we file under the
Securities Exchange Act of 1934, within the time periods specified
in the SEC's rules and forms. There have been no significant
changes in our internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
this evaluation.
Item 6. Exhibits
Exhibit Name and/or Identification of Exhibit
Number
3 Articles of Incorporation & By-Laws
(a) Articles of Incorporation of the Company.*
(b) By-Laws of the Company.*
99 Certification Pursuant to Section 906 of the Sarbanes-
Oxley Act pf 2002
* Incorporated by reference to the exhibits to the Company's General
Form for Registration of Securities of Small Business Issuers on Form 10-
SB, and amendments thereto, previously filed with the Commission.
PAGE-11-
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this Report to be
signed on its behalf by the undersigned hereunto duly authorized.
American Market Support Network, Inc.
(Registrant)
By: /s/ Alvie T. Merrill
----------------------
Alvie T. Merrill
President
CERTIFICATIONS
I, Alvie T. Merrill, certify that:
1.I have reviewed this quarterly report on Form 10-QSB of
American Market Support 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; and
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
position, results of operations, and cash flows of the issuer
as of, and for, the periods presented in this quarterly
report.
4.I am responsible for establishing and maintaining disclosure
controls and procedures for the issuer and have:
(i) Designed such disclosure controls and procedures to
ensure that material information relating to the issuer is
made known to me, particularly during the period in which
the periodic reports are being prepared;
(ii) Evaluated the effectiveness of the issuer's disclosure
controls and procedures as of September 30, 2002; and
(iii) Presented in the report our 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
issuer's auditors and the audit committee of the board of
directors (or persons fulfilling the equivalent function):
(i) All significant deficiencies in the design or
operation of internal controls which could adversely affect
the issuer's ability to record, process, summarize and
report financial data and have identified for the issuer's
auditors any material weaknesses in internal controls (none
were so noted); and
(ii) Any fraud, whether or not material, that involves
management or other employees who have a significant role
in the issuer's internal controls (none were so noted); and
6.I have indicated in the 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: November 14, 2002
/s/ Alvie T. Merrill
- -------------------------
President and CEO
PAGE-12-