UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO.2
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002.
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number: 33-42498
SUN NETWORK GROUP, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 65-024624
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1515 UNIVERSITY DRIVE, SUITE 111-C, CORAL SPRINGS, FL 33065
(Address of principal executive offices) (Zip Code)
(954) 360-4080
(Registrant's telephone number, including area code)
(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.
COMMON STOCK - 21,848,487 shares outstanding as of March 31, 2002.
EXPLANATORY NOTE
The purpose of this amendment to the company's quarterly report on Form
10-Q and 10-Q/A Amendment No. 1, is to incorporate certain certifications
pursuant to Section 906 and Section 302 of the Sarbanes-Oxley Act of 2002.
2
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements.
Financial Statements for the quarter ending March 31, 2002 are attached hereto
following the Signatures page.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. The Company acquired all of the assets of
RadioTV Network, Inc ("RTV") on July 16, 2001 in a transaction treated as a
recapitilization of RTV. RTV has been developing and operating, for the past few
years, a new television network that produces and distributes TV adaptations of
top rated radio programs. The Company intends to further develop and expand RTV
and is also planning on acquiring and affiliating with other media related
entities, which are presently being identified. The Company requires capital for
these purposes and anticipates completing several Private Placements of its
stock to raise equity capital in 2002. The Company completed its first Private
Placement in March 2002 resulting in new capital of $82,390 and anticipates
completing several additional ones this year. The Company believes that if it
successfully completes the Private Placements they will be sufficient to fund
its initial business plans. With the exclusion of $40,361 of compensation
expense pursuant to an employment agreement with our President, the RTV
operational expenses for the 1st Quarter 2002 reflect minimal operating expenses
pending funding.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
PART II--OTHER INFORMATION
Item 1. Legal Proceedings.
NONE.
Item 2. Changes in Securities and Use of Proceeds.
On March 28, 2002 the Company entered into a Subscription Agreement with an
Investor who purchased 183,088 restricted shares of the Company's common stock
at $.45 per share resulting in $82,390 in proceeds to the Company. The proceeds
shall be used for general corporate purposes.
Item 3. Defaults Upon Senior Securities.
NONE.
Item 4. Submission of Matters to a Vote of Security Holders.
NONE.
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Item 5. Other Information.
NONE.
Item 6. Exhibits and Reports on Form 8-K
Exhibit Description
------- -----------
99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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.
SUN EXPRESS GROUP, INC.
(Registrant)
Date: May 8, 2003 T. Joseph Coleman
/s/ T. Joseph Coleman
---------------------
T. Joseph Coleman,
President, Director and Ceo
Date: May 8, 2003 William H. Coleman
/s/ William H. Coleman
----------------------
William H. Coleman,
Secretary and Director
CERTIFICATION
I, T. Joseph Coleman, CEO and Acting CFO, certify that:
1. I have reviewed this quarterly report on Form 10-Q and Form 10-Q/A Amendment
No. 1 of Sun Network Group, Inc. (the "Report");
2. Based on my knowledge, this 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 Report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 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 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 Report (the "Evaluation Date"); and
c) presented in this 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
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.
May 8, 2003
/s/ T. Joseph Coleman
Chief Executive Officer
Sun Network Group, Inc.
and Subsidiary
Consolidated Financial Statements
March 31, 2002
Sun Network Group, Inc.
and Subsidiary
Contents
Page
----
Consolidated Balance Sheets .................................................F-1
Consolidated Statements of Operations .......................................F-2
Consolidated Statements of Cash Flows .......................................F-3
Notes to Consolidated Financial Statements ..................................F-4
Sun Network Group, Inc. and Subsidiary
Consolidated Balance Sheets
Assets
March 31,
2002 December
(Unaudited) 31, 2001
--------- ---------
Restated
(Note4)
---------
Current Assets
Cash ............................................... $ 82,766 $ 5,321
--------- ---------
Total Current Assets ............................... 82,766 5,321
--------- ---------
Other Assets
Prepaid advertising ................................ 35,200 35,200
--------- ---------
Total Other Assets ................................. 35,200 35,200
--------- ---------
Total Assets ....................................... $ 117,966 $ 40,521
========= =========
Liabilities and Stockholders' Deficiency
Current Liabilities
Accounts payable ................................... $ 6,186 $ 9,937
Accrued compensation, related party ................ 106,250 68,750
Due to stockholders' ............................... 40,607 29,263
--------- ---------
Total Current Liabilities .......................... 153,043 107,950
--------- ---------
Stockholders' Deficiency
Common stock, $0.001 par value,
100,000,000 shares authorized,
21,848,487 and 21,665,399 issued
and outstanding, respectively ................... 21,848 21,665
Additional paid-in capital ......................... 568,941 486,734
Accumulated deficit ................................ (625,866) (575,828)
--------- ---------
Total Stockholders' Deficiency ..................... (35,077) (67,429)
--------- ---------
Total Liabilities and Stockholders' Deficiency ..... $ 117,966 $ 40,521
========= =========
See accompanying notes to consolidated financial statements
F-1
Sun Network Group, Inc. and Subsidiary
Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31,
-----------------------------
2002 2001
------------ ------------
Restated
(Note4)
------------
Operating Expenses
Compensation ................................. $ 40,361 $ 8,000
Consulting ................................... - 33,395
General and administrative ................... 8,127 10,082
Professional fees ............................ 1,550 11,500
------------ ------------
Total Operating Expenses ..................... 50,038 62,977
------------ ------------
Loss from Operations ......................... (50,038) (62,977)
Net Loss ..................................... $ (50,038) $ (62,977)
============ ============
Net Loss Per Share - Basic and Diluted ....... $ - $ (0.01)
============ ============
Weighted Average Shares Outstanding
- Basic and Diluted ......................... 21,671,571 12,525,407
============ ============
See accompanying notes to consolidated financial statements
F-2
Sun Network Group, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
---------------------
2002 2001
-------- --------
Restated
(Note4)
--------
Cash Flows from Operating Activities:
Net loss ............................................. $(50,038) $(62,977)
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock based consulting expense ....................... - 33,395
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable .................................. - 301
Increase (decrease) in:
Accounts payable ..................................... (3,751) -
Accrued compensation, related party .................. 37,500 -
-------- --------
Total Adjustments .................................... (3,751) 33,696
-------- --------
Net Cash Used in Operating Activities ................ (16,289) (29,281)
-------- --------
Cash Flows from Financing Activities:
Equity proceeds from stockholders .................... 82,390 60,000
Loan proceeds from stockholders ...................... 11,344 -
-------- --------
Net Cash Provided by Financing Activities ............ 93,734 60,000
-------- --------
Net Increase in Cash ................................. 77,445 30,719
Cash at Beginning of Period .......................... 5,321 3,088
-------- --------
Cash at End of Period ................................ $ 82,766 $ 33,807
======== ========
See accompanying notes to consolidated financial statements
F-3
Sun Network Group, Inc. and Subsidiary
Notes to Consolidated Financial Statements
March 31, 2002
(Unaudited)
Note 1 Basis of Presentation
The accompanying unaudited consolidated financial statements of Sun Network
Group, Inc. and Subsidiary (the "Company") have been prepared in accordance with
accounting principles generally accepted in the United States of America and the
rules and regulations of the Securities and Exchange Commission for interim
financial information. Accordingly, they do not include all the information and
footnotes necessary for a comprehensive presentation of consolidated financial
position and results of operations.
It is management's opinion, however, that all material adjustments (consisting
of normal recurring adjustments) have been made which are necessary for a fair
consolidated financial statements presentation. The results for the interim
period are not necessarily indicative of the results to be expected for the
year.
For further information, refer to the audited financial statements and footnotes
of RadioTV Network, LLC for the years ended December 31, 2001, 2000 and 1999
included in the Current Report on Form 8-K on Sun Express Group, Inc. (See Note
2)
Note 2 Common Stock Issuances
In March 2002, the Company issued 183,088 common shares to an investor for
$82,390.
Note 3 Going Concern
As reflected in the accompanying consolidated financial statements, the Company
had an accumulated deficit of $625,866 through March 31, 2002, net losses for
the three months ended March 31, 2002 of $50,038 and cash used in operations for
the three months ended March 31, 2002 of $16,289. The ability of the Company to
continue as a going concern is dependent on the Company's ability to further
implement its business plan and generate revenues. The consolidated financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.
Management is currently seeking additional financing. Management believes that
the actions presently being taken to further implement its business plan and
generate additional revenues provide the opportunity for the Company to continue
as a going concern.
Note 4 Restatement
Subsequent to the filing of the Company's Form 10-QSB for the quarter ended
March 31, 2002 management became aware that those consolidated financial
statements as of March 31, 2002 did not include $37,500 of accrued compensation
expense pursuant to a July 16, 2001 employment agreement with the Company's
chief executive officer. The inclusion of this item and a restatement of the
December 31, 2001 consolidated financial statements in the revised consolidated
financial statements at March 31, 2002 has the effect of increasing current
liabilities by $106,250 and increasing expenses and net loss by $37,500 with no
material effect on net loss per shares.
F-4