FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------------------------------------
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2003
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: 033-05384
GPN Network, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 13-3301899
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1901 Avenue of the Stars, Ste. 1950, Los Angeles, California 90067
------------------------------------------------------------- --------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (310) 286-2211
-----------------------------
Not Applicable
--------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether 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 twelve 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 outstanding of Registrant's common stock as of May
13, 2003 was 23,681,297.
GPN NETWORK, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page Number
-----------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheet as of March 31, 2003 (unaudited)........3
Consolidated Statements of Operations for the Three months ended
March 31, 2003 (unaudited) and March 31, 2002 (unaudited)...........4
Consolidated Statement of Cash Flows for the Three months ended
March 31, 2003 (unaudited) and March 31, 2002 (unaudited)...........5
Notes to Consolidated Financial Statements..........................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..........................................8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..................................................12
Item 2. Changes in Securities and Use of Proceeds..........................12
Item 3. Defaults Upon Senior Securities....................................12
Item 4. Submission of Matters to a Vote of Securities Holders..............12
Item 5. Other Information..................................................12
Item 6. Exhibits and Reports on Form 8-K...................................12
Signatures.........................................................13
2
ITEM 1. FINANCIAL STATEMENTS
GPN Network, Inc. and Subsidiaries
Consolidated Balance Sheet
March 31,
2003
-----------
Assets
Current assets
Cash and cash equivalents $ 19
-----------
Total current assets 19
-----------
Total assets $ 19
===========
Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable and accrued liabilities $ 143,404
Note payable to affiliate 54,987
Promissory note to shareholder 70,280
Net liabilities of discontinued operations 455,000
-----------
Total current liabilities 723,671
Commitments and Contingencies
Stockholders' deficit
Preferred stock, 0.001 par value:
10,000,000 shares authorized, no shares outstanding
Common stock, $0.001 par value; 50,000,000 shares authorized,
16,152,897 shares issued and outstanding 16,153
Additional paid-in capital 3,431,831
Accumulated deficit (4,171,636)
-----------
Total stockholders' deficit (723,652)
-----------
Total liabilities and stockholders' deficit $ 19
===========
See accompanying notes to consolidated financial statements.
3
GPN Network, Inc. and Subsidiaries
Consolidated Statements of Operations
For the Three For the Three
Months Ended Months Ended
March 31, March 31,
2003 2002
------------ ------------
Revenues $ -- $ --
Operating expenses:
Employee compensation -- --
Selling, general and
administrative expenses 3,792 50,489
------------ ------------
Total operating expenses 3,792 50,489
Operating loss (3,792) (50,489)
Other income (expense):
Interest income (expense) (1,820) (1,802)
------------ ------------
Total other income (expense) (1,820) (1,802)
Loss before income taxes (5,612) (52,291)
Provision for income taxes 800 1,600
------------ ------------
Net loss $ (6,412) $ (53,891)
============ ============
Basic and diluted loss per common share $ -- $ --
Basic and diluted weighted average
common shares outstanding 16,152,597 15,789,008
============ ============
See accompanying notes to consolidated financial statements
4
GPN Network, Inc and Subsidiaries
Consolidated Statements of Cash Flows
For the Three For the Three
Months Ended Months Ended
March 31, March 31,
2003 2002
------------- -------------
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net loss $ (6,412) $ (53,891)
Adjustments to reconcile net to net cash used
in operating activities:
Changes in operating assets and liabilities:
Accounts payable and accrued expenses 2,866 26,851
------------- -------------
Net cash provided by (used in) continuing
operating activities (3,546) (27,040)
Net cash provided by (used in) discontinued
operating activities -- (103,185)
------------- -------------
Total net cash provided by (used in)
operating activities (3,546) (130,225)
Cash flows from financing activities:
Proceeds from note payable - shareholder 3,550 --
Principal payment of note payable - shareholder -- (11,000)
Proceeds from note payable - affiliate -- --
Repurchase of common stock -- --
Proceeds from the sale of common stock,
net of offering costs -- 138,776
------------- -------------
Net cash provided by financing activities 3,550 127,776
Net increase (decrease) in cash 4 (2,449)
Cash at beginning of period 15 5,275
------------- -------------
Cash at end of period $ 19 $ 2,826
============= =============
See accompanying notes to consolidated financial statements.
5
GPN Network, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 1 - BASIS OF PRESENTATION
The financial statements of GPN Network, Inc. ("GPN" or the "Company") for the
three months ended March 31, 2003 are unaudited. Certain information and note
disclosures normally included in the financial statements prepared in accordance
with accounting principles generally accepted in the United States of America
have been omitted. These financial statements should be read in conjunction with
the audited financial statements and notes thereto included in GPN's Form 10-KSB
as of and for the period ended December 31, 2002. In the opinion of management,
the financial statements contain all adjustments, consisting of normal recurring
adjustments, necessary to present fairly the financial position of GPN for the
periods presented. The interim operating results may not be indicative of
operating results for the full year or for any other interim periods.
NOTE 2 - THE COMPANY
GPN Network, Inc. is a Delaware corporation and, until July 2001, was engaged in
the business, through its subsidiaries, affiliates and strategic alliances, of
assisting unaffiliated early-stage development and small to mid-sized emerging
growth companies with financial and business development services, including
raising capital in private and public offerings. During 2001, due in large part
to the decreased availability of investment capital to the Company's target
market of Internet related, small growth companies, GPN failed to meet its
revenue targets. On July 27, 2001, a majority interest in the Company was
acquired by a private investor, and the Company installed new management and
adopted a new business plan. The immediate action taken regarding this new
business plan was to discontinue the Company's current operations effective July
27, 2001. The Company's principal activities are directed to reducing its
liabilities and seeking possible acquisitions.
The shares of common Stock of the Company are traded on the NASD OTC Bulletin
Board under the symbol "GPNN". The Company is headquartered in Los Angeles,
California.
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of the Company and
its subsidiaries GPN Securities, Inc., and Dermedics, Inc. Both of these
subsidiaries are inactive. All significant intercompany balances and
transactions have been eliminated in consolidation.
Going Concern
-------------
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles which contemplate
continuation of the Company as a going concern. The Company had an accumulated
deficit of $4,171,636 as of March 31, 2003 and significant negative cash flows
from operations for the twelve months ended December 31, 2002. These factors,
along with the Company's lack of an operational history, among other matters,
raise substantial doubt about its ability to continue as a going concern. The
Company currently has no specific operational business plan and accordingly will
depend completely on additional funds to finance its short-term operations. The
successful outcome of future activities cannot be determined at this time and
there are no assurances that if achieved, the Company will have sufficient funds
to execute its intended business plan or generate positive operating results.
6
Lease Liability
---------------
At March 31, 2003, the Company was in default of the terms of the lease of its
corporate headquarters. The lease term ended March 31, 2002. The remaining
amount due under the term of the lease has been accrued under accounts payable
and accrued expenses.
Earnings Per Share
------------------
The Company calculates earnings per share in accordance with SFAS No. 128,
"Earnings Per Share." Basic earnings per share is computed by dividing income
available to common shareholders by the weighted-average number of common shares
assumed to be outstanding during the period of computation. Diluted earnings per
share is computed similar to basic earnings per share except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive.
The following potential common shares have been excluded from the computation of
diluted net loss per share for all periods presented because the effect would
have been anti-dilutive:
For the Periods Ended
March 31,
2003 2002
---------- ----------
Options outstanding under the Company's stock option plans 632,125 632,125
Warrants issued in conjunction with the sale of common stock 4,722,244 4,722,244
Warrants issued to consultants for services rendered 20,125 20,125
NOTE 3 - STOCKHOLDERS' DEFICIT
Preferred Stock
---------------
The Company's articles of incorporation authorize up to 10,000,000 shares of
$0.001 par value preferred stock. Shares of preferred stock may be issued in one
or more classes or series at such time the Board of Directors determine. All
shares of any series shall be equal in rank and identical in all respects. As of
March 31, 2003, no preferred shares have been designated or issued.
Common Stock
------------
At March 31, 2003, the Company's Chief Executive Officer beneficially owned
12,200,000 shares of common stock and warrants for the purchase of an additional
2,500,000 shares. Of these shares, GPN has entered into an Investor Rights
Agreement granting the Chief Executive Officer certain registration rights with
respect to 5,000,000 shares and the shares underlying the warrants.
NOTE 4 - CONTINGENCIES
At March 31, 2003, the Company was in default of the terms of the lease of its
corporate headquarters. The lease term ended March 31, 2002. At March 31, 2003,
the remaining amount due under the term of the lease of $123,492 has been
accrued under net liabilities from discontinued operations.
On December 13, 2001, service of process was effectuated upon the Company with
regard to a fee agreement between the Company and Silver and Deboskey, a
Professional Corporation located in Denver, Colorado. On November 27, 2002,
judgment was entered in favor of Silver & Deboskey in the amount of $28,091.
NOTE 5 - SUBSEQUENT EVENT
The Company's principal stockholder had advanced the Company an aggregate of
$70,725 to finance the Company's working capital needs. As of May 12, 2003, said
sum had accrued an aggregate of $4,559 in interest. On May 12, 2003, the
principal stockholder transferred the right to receive such monies to a third
party. Concurrently with the transfer, the Company issued 7,528,400 shares of
its common stock to the third party in exchange for the cancellation of this
indebtedness.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with the financial
statements and the notes thereto. The analysis set forth below is provided
pursuant to applicable Securities and Exchange Commission regulations and is not
intended to serve as a basis for projections of future events.
EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS DISCUSSED IN
THIS FORM 10-QSB ARE FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO CERTAIN
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE SET FORTH IN SUCH FORWARD LOOKING STATEMENTS. SUCH FORWARD-LOOKING
STATEMENTS MAY BE IDENTIFIED BY THE USE OF CERTAIN FORWARD-LOOKING TERMINOLOGY,
SUCH AS "MAY," "WILL," "EXPECT," "ANTICIPATE," "INTEND," "ESTIMATE," "BELIEVE"
OR COMPARABLE TERMINOLOGY THAT INVOLVES RISKS OR UNCERTAINTIES. ACTUAL FUTURE
RESULTS AND TRENDS MAY DIFFER MATERIALLY FROM HISTORICAL AND ANTICIPATED
RESULTS, WHICH MAY OCCUR AS A RESULT OF A VARIETY OF FACTORS. SUCH RISKS AND
UNCERTAINTIES INCLUDE, WITHOUT LIMITATION, GPN NETWORK'S LIMITED OPERATING
HISTORY AND DOUBT ABOUT ITS ABILITY TO CONTINUE AS A GOING CONCERN, THE
UNPREDICTABILITY OF ITS FUTURE REVENUES AND LACK OF A BUSINESS PLAN, CONTINUED
DEPLETION OF ITS ASSETS, THE ABILITY TO OBTAIN ADDITIONAL FUNDS, AND LACK OF A
TRADING MARKET FOR ITS STOCK, . GPN NETWORK UNDERTAKES NO OBLIGATION TO UPDATE
ANY FORWARD-LOOKING STATEMENT, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE
EVENTS OR OTHERWISE. READERS SHOULD CAREFULLY REVIEW THE FACTORS SET FORTH IN
OTHER REPORTS OR DOCUMENTS THAT GPN NETWORK FILES FROM TIME-TO-TIME WITH THE
SEC.
Overview
--------
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THREE
MONTHS ENDED MARCH 31, 2002
Revenue
-------
Because the Company discontinued its only revenue producing activity during
2001, there is no revenue shown on the consolidated statement of operations for
the period ending March 31, 2003 or March 31, 2002. The Company is currently
seeking an acquisition candidate to enhance stockholder value. While preliminary
discussions are being held with one company, no agreement is in place and there
can be no assurance one will result. Any such acquisition will likely involve
substantial dilution to existing shareholders and/or a reverse stock split of
the Company's outstanding common stock.
Employee Compensation
---------------------
There was no employee compensation during the three months ended March 31, 2003
or March 31, 2002.
Selling, General and Administrative Expenses
--------------------------------------------
Selling, general, and administrative expenses from continuing operations were
$3,792 for the three months ended March 31, 2003, which is a 92% decrease from
selling, general and administrative expenses of $50,489 for the three months
ended March 31, 2002. The primary components of this amount for the three months
ended March 31, 2003 were legal and accounting fees. The decrease was caused by
decreased legal and accounting fees due to the Company's discontinuation of its
business activities.
8
Interest Income and Expense
---------------------------
Interest expense for the three months ended March 31, 2003 was $1,820. Interest
income for the three months ended March 31, 2002 was $1,802. The net difference
of $18 is due to higher balances during 2003 on the notes payable to shareholder
and affiliate.
Net Loss
--------
For the reasons stated above, the Company had a net loss of $6,412 for the three
months ended March 31, 2003 which is an 88% decrease from the net loss of
$53,891 for the three months ended March 31, 2002.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2003, the Company had $19 in current assets, all of which was cash.
Also at March 31, 2003 current liabilities were $723,671 resulting in negative
working capital of ($723,652). During the three months ended March 31, 2003, the
Company used cash in its operating activities of $3,546. During the three months
ended March 31, 2002, the Company used cash in its operating activities of
$130,225.
The Company is currently inactive. There is no guarantee that the Company will
locate or develop a viable business model, and there is no guarantee that the
Company will be able to generate sufficient revenue to fund future operations.
As a result, the Company expects its operations to continue to use net cash, and
the Company may be required to seek additional debt or equity financings during
the coming quarters. There can be no assurance that the Company will be able to
consummate debt or equity financings in a timely manner on a basis favorable to
the Company, or at all. The Company is currently engaged in preliminary
discussions regarding possible business combinations or asset acquisitions but
no definitive arrangements are yet in place and there can be no assurance that
any transaction will be consummated.
The Company's principal stockholder had advanced the Company an aggregate of
$70,725 to finance the Company's working capital needs. As of May 12, 2003, said
sum had accrued an aggregate of $4,559 in interest. On May 12, 2003, the
principal shareholder transferred the right to receive such monies to a third
party. Concurrently with the transfer, the Company issued 7,528,400 shares of
its common stock to the third party in exchange for the cancellation of this
indebtedness.
Risk Factors
------------
Because the Company is currently inactive and has no business plan, industry
specific business risks and uncertainties cannot be ascertained.
The Company's securities involve a high degree of risk. Please carefully read
this Annual Report for the Company's fiscal year ended December 31, 2002 in its
entirety and seriously consider all of the factors and financial data that are
herein disclosed, in particular, the specific risk factors described below.
THE AUDITOR'S REPORT CONTAINS A STATEMENT THAT THE COMPANY'S NET LOSS AND
NEGATIVE CASH FLOWS RAISE SUBSTANTIAL DOUBT ABOUT ITS ABILITY TO CONTINUE AS A
GOING CONCERN.
GPN has incurred losses and experienced negative operating cash flow since its
formation. For the three months ended March 31, 2003 and the year ended December
31, 2002, GPN had a net loss of approximately $6,400 and $222,000, respectively,
and negative cash flow from operations of approximately $3,500 and $153,000,
respectively. GPN also had an accumulated deficit of approximately $4.2 million
as of March 31, 2003. The Company expects to continue to incur operating and net
losses and negative operating cash flow for the foreseeable future, and there is
no assurance that the Company will ever achieve profitability or generate
positive cash flow.
9
THE COMPANY HAS A LIMITED OPERATING HISTORY, IT CURRENTLY DOES NOT HAVE A
BUSINESS PLAN AND IT MAY NEVER BE PROFITABLE.
GPN was incorporated in December 1999 and began generating revenue in the third
quarter of 2000. As of July 2001, GPN discontinued its current operations. GPN
currently does not have a business plan and there is no assurance that it will
develop a business plan that will be successful. If the Company seeks to grow
its business, then it expects that its operating expenses will increase. As a
result, the Company will need to increase its revenue to become profitable, and
if its revenue does not grow as expected, or increases in its expenses
appreciably exceed its expectations, the Company may never achieve profitability
or positive cash flow. If GPN does achieve profitability and/or positive cash
flow, there can be no assurance that GPN will be able to sustain it or improve
upon it on a quarterly or annual basis for future periods.
THE COMPANY HAS NO INCOME-PRODUCING OPERATIONS OR ASSETS, WHICH, AS A RESULT,
WILL CAUSE A CONTINUING DEPLETION OF ITS ASSETS.
GPN presently has no income-producing operations or assets. Unless the Company
develops a business plan that results in income-producing operations or assets
or the Company enters into a business combination or acquisition of assets
resulting in operational income, its assets will continue to be depleted.
THE COMPANY HAS NO PRESENT ARRANGEMENTS FOR A BUSINESS COMBINATION OR ASSET
ACQUISITION.
While the Company is currently seeking an acquisition candidate, it has no
present arrangements for a business combination or asset acquisition. While
preliminary discussions are being held with one company, no agreement is in
place and there is no assurance one will result. A business combination or asset
acquisition will likely involve substantial dilution to existing stockholders
and /or a reverse stock split of the company's outstanding common stock. Unless
the Company can enter into such an arrangement, it will have to acquire
additional capital to maintain its operations. Even if the Company were to enter
into a business combination or asset acquisition, there is no assurance that the
transaction will result in successful income-producing operations.
THERE IS NO ASSURANCE THAT GPN WILL BE ABLE TO OBTAIN ADDITIONAL FUNDS TO
MAINTAIN OUR OPERATIONS.
To date, GPN has not generated significant revenue and it has limited cash
liquidity and capital resources. GPN does not offer any products or services
from which it can derive revenue. The Company currently does not have a business
plan for its operations. GPN's future capital requirements will depend, in the
near-term, completely on obtaining additional debt or equity funding from new or
existing investors, which management believes may be insufficient to fund its
capital expenditures, working capital and other cash requirements for the fiscal
year ending December 31, 2003. Any equity financings would result in dilution to
our then-existing stockholders. Furthermore, the possible sale of restricted
shares issued and outstanding may, in the future, dilute the percentage of
free-trading shares held by a stockholder or subsequent purchaser of GPN's
securities in the market, and may have a depressive effect on the price of GPN's
securities. Further, such sales, if substantial, might also adversely affect
GPN's ability to raise additional equity capital in the future. Sources of debt
financing may result in higher interest expense. There can be no assurance that
these fund raising efforts will be successful. Any financing, if available, may
be on terms unfavorable to us. The successful outcome of future activities
cannot be determined at this time and there are no assurances that, if it can be
achieved, the Company will have sufficient funds to execute a business plan or
generate positive operating results. If adequate funds are not obtained, we may
not be able to continue our operations.
10
SALES OF ADDITIONAL COMMON STOCK MAY ADVERSELY AFFECT ITS MARKET PRICE.
The sale or the proposed sale of substantial amounts of GPN's common stock in
the public market could materially adversely affect the market price of its
common stock or other outstanding securities. As of March 3, 2003, Todd Ficeto
beneficially owned 12,200,000 shares of common stock and warrants for the
purchase of an additional 2,500,000 shares. Of these shares, GPN has entered
into an Investor Rights Agreement with respect to 5,000,000 shares and the
shares underlying the warrants. The sale of a large amount of shares by Mr.
Ficeto, or the perception that such sales may occur, could adversely affect the
market price for GPN's common stock or other outstanding securities.
THE COST OF MAINTAINING THE REGISTRATION OF OUR STOCK UNDER SECTION 12(G) OF THE
EXCHANGE ACT WILL CONTINUE TO DEPLETE THE COMPANY'S OVERHEAD AND ASSETS.
The cost of complying with the reporting requirements created by the
registration of its common stock has been fairly substantial and the cost of
continuing to file all necessary reports with the Securities and Exchange
Commission and obtain the necessary accountings will continue to drain our
capital reserves. These costs will continue to materially increase GPN's
administrative overhead and accelerate the depletion of its assets.
THE REGISTRATION OF ADDITIONAL SHARES OF COMMON STOCK UNDER THE SECURITIES ACT
WILL CAUSE FURTHER LOSSES.
In January 2002, GPN entered into an Investor Rights Agreement granting Todd
Ficeto certain registration rights with respect to 5,000,000 shares of common
stock and 2,500,000 shares of common stock underlying warrants. The Company
expects that the legal, accounting, and other costs associated with the
registration of those shares will be substantial and cause further losses.
THE COMPANY HAS NO PRESENT ARRANGEMENTS TO ACQUIRE ANY ADDITIONAL CAPITAL NEEDED
TO CONTINUE OUR EXISTENCE.
The Company has no present arrangement under which it might acquire any
additional capital needed to continue its existence. There is no assurance that
it will be able to develop any such capital source.
THE MARKET PRICE FOR THE COMPANY'S COMMON STOCK MAY CONTINUE TO BE VOLATILE.
The market price for the Company's common stock reached a high of $3.50 per
share during the first quarter of 2001 and a low of $0.01 per share during the
fourth quarter of 2002. In addition, the Company's common stock has experienced
volume fluctuations. These market fluctuations have adversely affected and may
continue to adversely affect the market price of the Company's common stock. If
the Company is unable to develop a business plan, the market price and volume of
its common stock may also be materially adversely affected and the Company may
experience difficulty in raising capital.
THERE IS NO ASSURANCE OF AN ESTABLISHED PUBLIC TRADING MARKET.
Although GPN's common stock trades on the NASD OTC Bulletin Board, a regular
trading market for the securities may not be sustained in the future. The NASD
has enacted recent changes that limit quotations on the OTC Bulletin Board to
securities of issuers that are current in their reports filed with the
Securities and Exchange Commission. The effect on the OTC Bulletin Board of
these rule changes and other proposed changes cannot be determined at this time.
the OTC Bulletin Board is an inter-dealer, over-the-counter market which
provides significantly less liquidity than the NASD's automated quotation system
(the "NASDAQ Stock Market"). Quotes for stocks included on the OTC Bulletin
Board are not listed in the financial sections of newspapers as are those for
the NASDAQ Stock Market. Therefore, prices for securities traded solely on the
OTC Bulletin Board may be difficult to obtain and holders of common stock may be
unable to resell their securities at or near their original offering price or at
any price.
In the event that GPN's common stock is not included on the OTC Bulletin Board
and does not qualify for the NASDAQ Stock Market, quotes for the securities may
be included in the "pink sheets" for the over-the-counter market, which provides
even less liquidity than the OTC Bulletin Board.
11
GPN'S COMMON STOCK IS CONSIDERED A "PENNY STOCK."
The Company's common stock is considered to be a "penny stock" because it meets
one or more of the definitions in Securities and Exchange Commission Rules 15g-2
through 15g-6, Rules made effective on July 15, 1992. These include but are not
limited to the following: (i) the stock trades at a price less than five dollars
($5.00) per share; (ii) it is NOT traded on a "recognized" national exchange;
(iii) it is NOT quoted on the NASDAQ Stock Market, or even if so, has a price
less than five dollars (5.00) per share; or (iv) is issued by a company with net
tangible assets less than $2,000,000, if in business more than a continuous
three years, or with average revenues of less than $6,000,000 for the past three
years. The principal result or effect of being designated a "penny stock" is
that securities broker-dealers cannot recommend the stock but must trade in it
on an unsolicited basis.
BROKER-DEALER REQUIREMENTS MAY AFFECT TRADING AND LIQUIDITY.
Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2
promulgated thereunder by the SEC require broker-dealers dealing in penny stocks
to provide potential investors with a document disclosing the risks of penny
stocks and to obtain a manually signed and dated written receipt of the document
before effecting any transaction in a penny stock for the investor's account.
Potential investors in the Company's common stock are urged to obtain and read
such disclosure carefully before purchasing any shares that are deemed to be
"penny stock." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to
approve the account of any investor for transactions in such stocks before
selling any penny stock to that investor. This procedure requires the
broker-dealer to (i) obtain from the investor information concerning his or her
financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Compliance with
these requirements may make it more difficult for investors in the Company's
common stock to resell their shares to third parties or to otherwise dispose of
them in the market or otherwise.
PART II - OTHER INFORMATION
GPN NETWORK, INC. AND SUBSIDIARIES
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4: Submission of Matters to a Vote of Securities Holders'
None.
Item 5: Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on May 13, 2003
GPN Network, Inc.
By: /s/ Todd M. Ficeto
-------------------------
Todd M. Ficeto
President, Chief Executive Officer
13
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
I, Todd M. Ficeto, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of GPN 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. The registrant's other certifying officers and I are 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 known 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 our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
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. The registrant's other certifying officers and 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: May 13, 2003
/s/ TODD M. FICETO
-------------------
Todd M. Ficeto
Chief Executive Officer
14
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
I, Todd M. Ficeto, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of GPN 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. The registrant's other certifying officers and I are 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 known 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 our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
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. The registrant's other certifying officers and 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: May 13, 2003
/s/ TODD M. FICETO
------------------
Todd M. Ficeto
Chief Financial Officer
15
Exhibit 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of GPN Network, Inc. (the "Company") on
Form 10-QSB for the period ending March 31, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned, in the capacities and on the date indicated below, hereby
certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
the Company.
/S/ TODD M. FICETO
-------------------------------
Todd M. Ficeto
Chief Executive Officer and Chief Financial Officer
(Principal Executive Officer and
Principal Financial and Accounting Officer)
May 13, 2003