10QSB 1 reservenet1q04.txt 1ST QUARTER 2004 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (X) Quarterly report under section 13 or 15(d) of the Securities Exchange Act of 1934 for the three-month period ended March 31, 2004. Commission File No: 333-68312 RESERVENET, INC. (Name of small business in its charter) DELAWARE 94-3381088 (State or other jurisdiction of Incorporation) (IRS Employer Id. No.) 3701 Sacramento St. #323 San Francisco, CA 94118 (Address of Principal Office) (Zip Code) Issuer's telephone number: (415) 752-2578 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 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 Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes X No State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. At March 31, 2004, the following shares of common were outstanding: Common Stock, par value of $0.0001, 1,900,000 shares. Transitional Small Business Disclosure Format (Check one): Yes X No PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS The reviewed financial statements of registrant for the period ended March 31, 2004 follow. The financial statements reflect all adjustments, which are, in the opinion of management, necessary to present a fair statement of the results for the periods presented. ReserveNet, Inc. (A Development Stage Company) Balance Sheet as of March 31, 2004 and Statements of Operations for the Three Months Ended March 31, 2004 and 2003, and for the Period October 31, 2000 (Inception) to March 31, 2004 and Cash Flows for the Three Months Ending March 31, 2004 and 2003, and for the Period October 31, 2000 (Inception) to March 31, 2004 TABLE OF CONTENTS Page Independent Accountants' Review Report 1 Balance Sheet 2 Statements of Operations 3 Statements of Cash Flows 4 Footnotes 5 Beckstead and Watts, LLP Certified Public Accountants 3340 Wynn Road, Suite B Las Vegas, NV 89102 702.257.1984 702.362.0540 fax INDEPENDENT ACCOUNTANTS' REVIEW REPORT Board of Directors ReserveNet, Inc. (a Development Stage Company) Las Vegas, NV We have reviewed the accompanying balance sheet of ReserveNet, Inc. (a Nevada corporation) (a development stage company) as of March 31, 2004 and the related statements of operations for the three-months ended March 31, 2004 and 2003 and for the period October 31, 2000 (Inception) to March 31, 2004, and statements of cash flows for the three-months ended March 31, 2004 and 2003 and for the period October 31, 2000 (Inception) to March 31, 2004. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements referred to above for them to be in conformity with generally accepted accounting principles in the United States of America. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has had limited operations and has not commenced planned principal operations. This raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Beckstead and Watts, LLP has previously audited, in accordance with generally accepted auditing standards, the balance sheet of ReserveNet, Inc. (a development stage company) as of December 31, 2003, and the related statements of operations, stockholders' equity, and cash flows for the year then ended (not presented herein) and in our report dated April 6, 2004, we expressed an unqualified opinion on those financial statements. /s/ Beckstead and Watts, LLP ---------------------------- June 2, 2004 ReserveNet, Inc. (a Development Stage Company) Balance Sheet (unaudited) March 31, 2004 -------- Assets Current assets Cash and equivalents $ 789 Total current assets 789 -------- $ 789 ======== Liabilities and Stockholders' (Deficit) Current liabilities: Accounts payable $ 1,943 Due to shareholder 14,336 -------- Total current liabilities 16,279 -------- Stockholders' (deficit): Common stock, $0.0001 par value, 100,000,000 shares authorized, 1,900,000 shares issued and outstanding 190 Additional paid-in capital 28,310 (Deficit) accumulated during development stage (43,990) -------- (15,490) -------- $ 789 ======== The accompanying notes are an integral part of these financial statements. ReserveNet, Inc. (a Development Stage Company) Statements of Operations (unaudited) Three Months Ending October 31, 2000 March 31, (Inception) to 2004 2003 March 31, 2004 -------- --------- ---------------- Revenue $ - $ - $ - -------- --------- ---------------- Expenses: General and administrative expenses 5,705 113 43,190 General and administrative expenses - related party - - 800 -------- --------- ---------------- Total expenses 5,705 113 43,990 -------- --------- ---------------- Net (loss) $ (5,705) $ (113) $ (43,990) ======== ========= ================ Weighted average number of common shares outstanding - basic and fully diluted 1,900,000 1,900,000 Net (loss) per share - basic and fully diluted $ (0.00) $ (0.00) The accompanying notes are an integral part of these financial statements. ReserveNet, Inc. (a Development Stage Company) Statements of Cash Flows (unaudited) Three Months Ending October 31, 2000 March 31, (Inception) to 2004 2003 March 31, 2004 --------- -------- ---------------- Cash flows from operating activities Net (loss) $ (5,705) $ (113) $ (43,990) Increase in accounts payable 1,525 - 1,943 --------- -------- ---------------- Net cash (used) by operating activities (4,180) (113) (42,047) --------- -------- ---------------- Cash flows from financing activities Increase (decrease) in checks issued in excess of available cash (113) 113 - Increase in due to shareholder 5,082 - 14,336 Issuances of common stock - - 28,500 --------- -------- ---------------- Net cash provided by financing activities 4,969 113 42,836 --------- -------- ---------------- Net increase in cash 789 - 789 Cash - beginning - - - --------- -------- ---------------- Cash - ending $ 789 $ - $ 789 ========= ======== ================ Supplemental disclosures: Interest paid $ - $ - $ - ========= ======== ================ Income taxes paid $ - $ - $ - ========= ======== ================ The accompanying notes are an integral part of these financial statements. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Plan of Operation ReserveNet is a development stage company, whose business plan is to provide consumer reservation services to the restaurant industry. ReserveNet plans to develop a web-based reservation system that allows consumers to place reservations directly with restaurants through the www.ReserveNet.ws website. The company anticipates revenue will be generated through restaurant subscriptions and advertising through its website. Consumers will have the ability to search an interactive database of available restaurant reservations that may be refined to a particular geographic location convenient to the consumer. The search may also be further refined by type of cuisine, average price, and/or favorable restaurant reviews. ReserveNet currently relies solely upon its Founder to fund on-going operations and support product development. The company has not received any additional financing commitments. There can be no assurance that the founder will continue to provide the company with financial support. Should the founder cease to provide financial support and ReserveNet fails to secure other financing, the company may become dormant or face a significant probability of failure. Even if ReserveNet were to successfully secure developmental and working capital, the Company faces substantial risks and uncertainties in developing its product, business and establishing itself as a going concern Recently, ReserveNet was presented with an unsolicited offer calling for the potential acquisition by the Company of Gateway Entertainment Group Inc. ("GEG"). GEG Inc. is a private company that is seeking to develop a gaming lifestyle broadcasting business strategy and possibly enter the cable market. Because ReserveNet has not been successful to date in raising sufficient capital to take its business plan to an operational level, the Company believes that the GEG offer may provide the potential for ReserveNet to better establish itself as a going concern under an entirely new business plan. On April 30, 2004, the Board accepted the GEG proposal and is still working through the proposal. Under the proposed agreement, ReserveNet's founder will be required to cancel all but 600,000 shares held by him. The Company's shares would then be forward split on a 48:1 basis. The proposal then provides for the issuance of 26 million new shares to acquire all the outstanding shares of GEG if and when the transaction is completed. Additionally, ReserveNet will add one additional seat on its Board of Directors, from two to three directors. It is expected that existing Board member, Rick Collins, will resign and the two open director positions will be appointed to designees from GEG. As of the date of this filing, no date has been determined to finalize this merger's closing. Results of Operations The company has not begun its planned operations. Expenditures since inception and for the requisite reporting periods have been General and Administrative in nature. These represent the costs associated with professional fees, general and administrative expenses which include but are not limited to, phone expenses, small equipment, and expenses related to investor, engineering and strategic partnership meetings, amongst other categories. For the three months ended March 31, 2004 operating expenses were $5,705 compared to $113 for the comparable period in 2003. These amounts represent Net Losses for the company that will provide tax credits to offset Net Income in future periods. As a result of the lack of operating capital, efforts were made to decrease spending in all categories including travel, postage, communications, and other general and administrative expenses. The company had relied upon its founder to provide capital to fund its limited operations for at least the last twelve months. Liquidity ReserveNet's founder has provided financing for the short-term operating needs of the Company. The ability of the company to secure additional financing, however, will affect its status as a going concern. There can be no guarantee or assurance that the Company would be successful in securing development and working capital to fund the development of its products and operations. If additional financing cannot be secured, ReserveNet, Inc. would be unlikely to progress its business plan. The Company has and continues to rely on its founder to finance its limited operations. He has not provided any guarantees or assurances that he would continue to provide ReserveNet with additional financing. In the event that management anticipates a deficiency in working capital, the officers may elect to suspend its business until sufficient financing is secured, market its intellectual property, or cease operations entirely. STATEMENT REGARDING FORWARD-LOOKING INFORMATION This report contains various forward-looking statements that are based on the Company's beliefs as well as assumptions made by and information currently available to the Company. When used in this report, the words "believe," "expect," "anticipate," "estimate" and similar expressions are intended to identify forward-looking statements. Such statements may include statements regarding seeking business opportunities, payment of operating expenses, and the like, and are subject to certain risks, uncertainties and assumptions which could cause actual results to differ materially from projections or estimates contained herein. Factors which could cause actual results to differ materially include, among others, unanticipated, or unexpected costs and expenses, competition and changes in market conditions, lack of adequate management personnel and the like. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. The Company cautions against placing undue reliance on forward- looking statements. PART II 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 SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibit 99.1 - Certification of Chief Executive Officer. (b) Exhibit 99.2 - Certification of Chief Financial Officer. Signatures In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. RESERVENET, INC. (Registrant) Date: June 4, 2004 By: /s/ Daniel Regidor ---------------- Daniel Regidor President, CEO, Director Exhibit 99.1 RESERVENET, INC. CERTIFICATION PURSUANT TO SARBANES-OXLEY SECTION 1350, In connection with the Quarterly Report of ReserveNet, Incorporated (the "Company") on Form 10-QSB for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Daniel Regidor, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my 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. Date: June 4, 2004 ------------ /s/ Daniel Regidor ------------------ Daniel Regidor President, Chief Executive Officer, Chief Financial Officer, and Secretary Exhibit 99.2 RESERVENET, INC. CERTIFICATION PURSUANT TO SARBANES-OXLEY SECTION 302 In connection with the Quarterly Report of ReserveNet, Incorporated (the "Company") on Form 10-QSB for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Daniel Regidor, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.302, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, that to my knowledge: I, Daniel Regidor certify that: 1. I have reviewed this Quarterly Report on Form 10-QSB of ReserveNet 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 certifying officers are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we 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 function): 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 weakness 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: June 4, 2004 By: /s/ Daniel Regidor ------------------ Chief Executive Officer, Chief Financial Officer