UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |
(Exact name of registrant as specified in its charter) |
Nevada | 5812 | 20-2638087 | ||
State or jurisdiction of | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer |
10 Cedar Meadow Drive, Regina, Sask. S4X 3J6, Canada. Telephone 306.543.4162 |
(Address and telephone number of registrant's principal executive offices) |
Incorp Services, Inc. |
(Name, address and telephone number of agent for service) |
Approximate date of proposed sale to the public: From time to time after the effective date of this Registration Statement.
If any securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933. [X]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of each class | Amount to be | Proposed maximum | Proposed maximum | Amount of |
Common Stock to be offered for resale by selling stockholders | 9,150,000 | $0.05(2) | $457,500 | $53.85 |
Total Registration Fee |
| $53.85 | ||
(1) An indeterminate number of additional shares of common stock shall be issuable pursuant to Rule 416 to prevent dilution resulting from stock splits, stock dividends or similar transactions and in such an event the number of shares registered shall automatically be increased to cover the additional shares in accordance with Rule 416 under the Securities Act.
(2) Estimated in accordance with Rule 457(c) solely for the purpose of computing the amount of the registration fee based on a bona fide estimate of the maximum offering price.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON THE DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON THE DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
ALLSTAR RESTAURANTS, INC.
PROSPECTUS
ALLSTAR RESTAURANTS
A Nevada Corporation
9,150,000 Shares of Common Stock of Allstar Restaurants
_______________________________________________
This prospectus relates to 9,150,000 shares of common stock of Allstar Restaurants, a Nevada corporation, which may be resold by selling stockholders named in this prospectus. The shares were acquired by the selling shareholders directly from us in private offerings that were exempt from registration requirements of the Securities Act of 1933. The total shares to be registered in this prospectus include an amount of 4,300,000 common shares to be registered at this time that are issuable under warrants until August 1, 2007 (“Warrant shares”). We have been advised by the selling stockholders that they may offer to sell all or a portion of their shares of common stock being offered in this prospectus from time to time. The selling stockholders will sell their shares of our common stock at a price of $0.05 per share until shares of our common stock are quoted on the OTC Bulletin Board, or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The primary affiliate of our company, Terry G. Bowering, (our President, Chief Executive Officer, and Director), will not be selling his shares of our common stock in this offering. Our common stock is presently not traded on any market or securities exchange, and we have not applied for listing or quotation on any public market. We will not receive any proceeds from the resale of shares of common stock by the selling stockholders. We will pay for expenses of this offering.
Our business is subject to many risks and an investment in our common stock will also involve a high degree of risk. You should invest in our common stock only if you can afford to lose your entire investment. You should carefully consider the various Risk Factors described beginning on page 7 before investing in our common stock.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The information in this prospectus is not complete and may be changed. The selling stockholders may not sell or offer these securities until this registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
The date of this prospectus is October 31, 2005.
The following table of contents has been designed to help you find important information contained in this prospectus. We encourage you to read the entire prospectus.
I
ALLSTAR RESTAURANTS, INC.
TABLE OF CONTENTS
SECURITIES AND EXCHANGE COMMISSION'S PUBLIC REFERENCE................................... 10
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.................... 16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT........... 17
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS..................................... 32
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..................... 33
All dollar amounts refer to US dollars unless otherwise indicated.
PROSPECTUS SUMMARY
Our Business
We are a restaurant company with the objective of developing into a multi-unit restaurant and food services business. The company was established to pursue opportunities in the family style full-service casual dining segment of the restaurant industry. Allstar Restaurants, through a wholly owned subsidiary called Fastserve Foods Inc., acquired on July 1, 2005, currently owns and operates an established restaurant and sports lounge called China Doll Restaurant and Lounge (www.cdoll.ca). This restaurant is located in the city of Regina, in the province Saskatchewan, Canada. This subsidiary currently acts as the operating company for all business activities relating to the company’s restaurant business(s) in Canada.
Information contained on our website does not form part of this prospectus. We were incorporated on December 22, 2004 under the laws of the State of Nevada. Its United States registered office is located at 3155 East Patrick Lane, Suite 1, Las Vegas, Nevada 89120-3481. Our principal executive offices are located at 10 Cedar Meadow Drive, Regina, Saskatchewan S4X 3J6, Canada. The telephone number for our executive office is 306.543.4162.
Number of Shares Being Offered
This prospectus covers the resale by the selling stockholders named in this prospectus of up to 9,150,000 shares of our common stock. The offered shares were acquired by the selling stockholders in private placement transactions, which were exempt from the registration requirements of the Securities Act of 1933. The selling stockholders will sell their shares of our common stock at $0.05 per share until our common stock is quoted on the OTC Bulletin Board, or listed for trading or quotation on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The primary affiliate of our company, Terry G. Bowering, (our Chairman, President, CEO, and Secretary) who holds 5,100,000 common shares as of September 30, 2005, will not be selling his shares in this offering. Our common stock is presently not traded on any market or securities exchange and we have not applied for listing or quotation on any public market. Please see the Plan of Distribution section at page 17 of this prospectus for a detailed explanation of how the common shares may be sold.
Number of Shares Outstanding
There were a total of 9,950,000 shares of our common stock issued and outstanding as at September 30, 2005.
Use of Proceeds
We will not receive any of the proceeds from the sale of the shares of our common stock being offered for sale by the selling stockholders. We will incur all costs associated with this registration statement and prospectus.
Summary of Financial Data
The summarized consolidated financial data presented below is derived from and should be read in conjunction with our audited consolidated financial statements from December 22, 2004 (date of inception) to the fiscal year ended March 31, 2005 and our interim audited consolidated financial statements for the three-month period ended June 30, 2005 including the notes to those financial statements which are included elsewhere in this prospectus along with the section entitled "Management's Discussion and Analysis" beginning on page 26 of this prospectus.
|
|
|
Revenue | $-0 | $-0 |
Net Loss for the Period | $(1,280) | $(7,753) |
Loss Per Share - basic and diluted | $(0.0128) | $(0.0775) |
| As at | As at |
Working Capital (Deficiency) | $(1,180) | $(3,533) |
Total Assets | $100 | $100 |
Total Number of Issued Shares of Common Stock | 100,000 | 100,000 |
Weighted Average Shares Outstanding | 100,000 | 100,000 |
Deficit | $(1,280) | $(9,033) |
Total Stockholders' Deficit | $(1,180) | $(3,533) |
(1) Our company was incorporated on December 22, 2004 and as of the date of this prospectus has not completed a full financial fiscal year. Our fiscal year-end date is March 31.
RISK FACTORS
An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this prospectus in evaluating our company and its business before purchasing shares of our company's common stock. Our business, operating results and financial condition could be seriously harmed due to any of the following risks. You could lose all or part of your investment due to any of these risks.
Risks Related to Our Business
We have only commenced our business operations with our first restaurant acquisition as of July 1, 2005 and we have a limited operating history. If we cannot successfully manage the risks normally faced by start-up companies, our business may fail.
The Company was initially formed on December 22nd, 2004 and has only begun to commence operations with our first restaurant acquisition which took place on July 1, 2005. Therefore the company has a relatively limited operating history. There can be no assurance at this time that the Company will operate profitably or that it will have adequate working capital to meet its obligations as they become due. The Company believes that its success at this stage will depend in large part on its ability to (i) Successfully raise capital in future private placement share
offerings (ii) Identify and acquire established restaurant businesses that provide positive cash flow and present opportunities for value enhancement (iii) Manage daily operations of future acquisitions profitably, given all of the risks. The Company has incurred operating losses in the initial stages of its business which may continue into the foreseeable future. The Company may not be successful in addressing the aforementioned risks, which may have a substantial adverse affect upon the Company's business.
Our prospects are subject to the risks and expenses encountered by start up companies, such as uncertainty regarding level of future revenue and inability to budget expenses and manage growth accordingly, and inability to access sources of financing when required and at rates favorable to us. Our limited operating history and the highly competitive nature of the restaurant industry make it difficult or impossible to predict future results of our operations. We may not acquire or develop a restaurant business(s) that will make us profitable, which might result in the loss of some or all of your investment in our common stock.
The fact that we are in the early development of our company and that we have only generated limited revenue since our incorporation raises substantial doubt about our ability to continue as a going concern, as indicated in our independent auditors' opinion in connection with our audited financial statements.
We are in the development stage and have generated limited revenues since our inception on December 22, 2004. Since we are still in the early stages of developing our company and because of the lack of business operations as at June 30, 2005, our independent auditors' opinion includes an explanatory paragraph about our ability to continue as a going concern. We will, in all likelihood, continue to incur operating expenses without significant revenues until we become fully operational with our first restaurant acquisition. Between August 1, 2005 and September 30, 2005, we raised $ 24,250 through the sale of shares of our common stock. Our primary source of funds to date has been the sale of our common stock. If we cannot identify and execute profitable restaurant acquisitions in the near future, we will not be able to general any significant revenues or income. These circumstances raise substantial doubt about our ability to continue as a going concern as described in an explanatory paragraph to our inde pendent auditors' opinion on the financial statements for the period ended June 30, 2005.
No assurance of profitability.
The restaurant service industry is very competitive and dependent upon the acceptance of the Company's food service offerings and the effectiveness of its marketing program to maintain and attract customers. There can be no assurance that our business plan will be successful or result in earning substantial revenues or profit or that investors will not lose their entire investment.
We will need additional capital for expansion, which may or may not be available.
We will need additional funds to either acquire established restaurants or develop new restaurants, including funds for construction, tenant improvements, furniture, fixtures, equipment, training of employees, permits, and other expenditures.
In the future, we may seek additional equity or debt financing to provide funds so that we can develop or acquire additional restaurants and/or to pay down debt. Such financing may not be available or may not be available on satisfactory terms. If financing is not available on satisfactory terms, we may be unable to realize our business expansion plans. While debt financing will enable us to add more restaurants than we otherwise would be able to add, debt financing increases expenses and is limited as to availability due to our past financial results, and we must repay the debt regardless of our operating results. Future equity financings will likely result in dilution to our stockholders, and that dilution could be significant.
We face risks associated with the planned future expansion of our operations.
Management has determined that the success of our business strategy depends on our ability to expand the number of our restaurants on an ongoing basis, either by developing new restaurants or by acquiring established restaurants. Our success also depends on our ability to operate and successfully manage our daily operations. Our ability to expand successfully will depend upon a number of factors, including the following:
Increased construction costs and delays resulting from governmental regulatory approvals, strikes, or work stoppages, adverse weather conditions, and various acts of God may also affect the opening of new restaurants in the future. Newly opened restaurants may operate at a loss for a period following their initial opening. The length of this period will depend upon a number of factors, including the time of the year the restaurant is opened, the sales volume, and our ability to control costs.
We may not successfully achieve our expansion goals. Additional restaurants that we develop or acquire may not be profitable. In addition, the opening of additional restaurants in an existing market may have the effect of drawing customers from and reducing the sales volume of our existing restaurants in those markets.
We will be subject to the risks associated with franchising operations if we begin franchising our proposed brand-named restaurant concepts.
We do not have any immediate plans to begin franchising our restaurant brand names. To date, we have registered the name ‘China Doll Restaurant’ and the name ‘China Doll’ in general as it relates to the restaurant and food services business in the province of Saskatchewan, Canada. Our future plans may include the franchising option as a viable means of expansion. If so, we will be subject to the risks associated with franchising if we begin franchising activities in the future. If we develop a franchising program, our success as a franchisor will depend upon our ability to develop and implement a successful system of concepts and operating standards and to attract and identify suitable franchisees with adequate business experience and access to sufficient capital to enable them to open and operate restaurants in a manner consistent with our concepts and operating standards. We cannot provide assurance that we would be able to successfully meet these challenges as a f ranchisor. In addition, as a franchisor we would be subject to a variety of Federal and State and/or Provincial laws and regulations, including Federal Trade Commission regulations, governing the offer and sale of franchises. These laws and regulations could result in significant increased expenses and potential liabilities for our company in the event we engage in franchising activities in the future.
Failure to respond to change
If the Company fails to introduce new menu items in the restaurants we may own and operate in the future and streamline its services to coincide with customer demand and preferences, customers may forego the use of the Company's services and use those of competitors. To remain competitive, the Company must continue to enhance and improve its restaurants’ products and services offerings. If competitors introduce new products and services, or if new industry standards and practices emerge, there is a risk that the company may not successfully adapt accordingly to meet customer shifting demands.
Our target market (Regina, Canada), for our restaurant business in which the Company intends to compete is intensely competitive.
We compete with a variety of established competitors in this market. These competitors may have longer operating histories, greater name recognition, established customer bases, and substantially greater financial, technical and marketing resources than the Company. The Company believes that the principal factors affecting competition in its proposed market include degree of name recognition (goodwill), ability to differentiate its food service offerings, developing aesthetic and pleasing restaurant interiors and dining rooms, maintaining a high level of customer service and customer satisfaction, and the ability to effectively respond to changing customer needs and preferences. Currently, there are no significant proprietary or other barriers of entry that could keep potential competitors from developing or acquiring similar food service offerings and providing competing services in the Company's market.
The Company's ability to compete successfully in the full service restaurant industry will depend in large part on its ability to execute acquisitions of established restaurant businesses that have developed a core customer base as a result of developing a sustainable competitive advantage in the market place in which they compete by offering market-differentiated food services and products.
There can be no assurance that the Company will be able to compete successfully in the future, or that future competition will not have a material adverse effect on the business, operating results and financial condition of the Company.
Potential for indebtedness
There is no assurance that the Company will not incur debt in the future, that it will have sufficient funds to repay its indebtedness or that the Company will not default on its debt, jeopardizing its business viability. Furthermore, the Company may not be able to borrow or raise additional capital in the future to meet the Company's needs or to otherwise provide the capital necessary to conduct its business.
Our assets may become impaired due to changing and adverse economic conditions.
Our assets may become impaired due to changing economic conditions. When we encounter a “triggering” event, decide to close a restaurant, or perform a periodic review of our marginally performing locations in the future, we may have to record appropriate asset impairment charges if necessary. The amount of impairment charges and the allocation of goodwill, if any, is based upon assessments of current and future economic conditions and their estimated impact on our ability to recover our investment in long-lived assets. Even in strong economic conditions, there can be conditions or local situations that might require the recording of asset impairment charges. In the future, we intend to perform periodic asset impairment tests and as a result, it is possible that we will record future asset impairment charges.
We anticipate that we may incur significant debt in the future, and we may be unable to meet the associated debt covenants over time.
We anticipate that we may incur significant indebtedness in the future in connection with our growth strategy. As of June 30, 2005, we had long-term debt of $3,633 including the current portion. However, in the process of financing future acquisitions, we may incur debt which may include financial covenants which may limit the amount we can further borrow. If we fail to meet any financial covenants, our lenders could call their loans immediately. There can be no assurance we will continuously meet these covenants in the future. We anticipate that the assets of all of the restaurants which we may acquire in the future will be pledged directly or indirectly to secure our debt obligations.
Our future borrowings may involve substantial interest expense.
Our borrowings may result in interest expense that may restrict our ability to operate profitably and increase financial risk. Additionally, current interest rates are at historically low levels. If interest rates were to increase, our interest costs would also increase, adding further risk and uncertainty. We must make these interest payments regardless of our operating results.
We may depend on key food product suppliers and be subject to fluctuating market prices of food product inputs.
The inability of any of our food suppliers to continuously provide us with a high level of quality and dependability in the receipt of our supplies at reasonable prices allowing us to operate at a profit, could have a material adverse impact on our business. In addition, most of the food inputs for restaurants are commodities which may fluctuate in price from time to time which may negatively impact our profit margins. We believe that all essential food product inputs for future proposed restaurant menu items are available from national suppliers as well as from local suppliers in the cities in which our proposed restaurant markets are located.
The Company's success is substantially dependent on the performance of its executive officers and key employees.
The immediate loss of the services of any members of our senior management team, without a reasonable period of transition, could have a material adverse effect on our business. We do not maintain any life insurance on these senior executives. Given the Company's early stage of development in the Restaurant industry, the Company is dependent on its ability to retain and motivate high quality personnel. Although the Company believes it will be able to attract, retain and motivate qualified personnel for such purposes, an inability to do so could materially adversely affect the Company's ability to market, sell, and enhance its food services. The loss of one or more of its employees or the Company's inability to hire and retain other qualified employees could have a material adverse effect on the Company.
Uninsured losses
There is no assurance that the Company will not incur uninsured liabilities and losses as a result of the conduct of its proposed business. The Company plans to maintain comprehensive liability and property insurance at customary levels. The Company will also evaluate the availability and cost of business interruption insurance when necessary. However, should uninsured losses occur, the shareholders could lose their invested capital.
The Company may have liabilities to affiliated or unaffiliated lenders.
These liabilities would represent fixed costs which would be required to be paid regardless of the level of profitability experienced by the Company. There is no assurance that the Company will be able to pay all of its liabilities. Furthermore, the Company is always subject to the risk of litigation from customers, employees, suppliers or others because of the nature of its business. Litigation could cause the Company to incur substantial expenses and, if cases are lost, judgments and awards could add to the Company's costs.
All of our assets and our Chief Executive Officer and Chairman are located outside the United States, with the result that it may be difficult for investors to enforce within the United States any judgments obtained against us or any of our directors or officers.
All of our assets, through our wholly-owned subsidiary, are located outside the United States and we do not currently maintain a permanent place of business within the United States. In addition, our Chairman and Chief Executive Officer is a resident and national of a country outside the United States, and all or a substantial portion of such persons' assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against us or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently, you may be effectively prevented from pursuing remedies under U.S. federal securities laws against them.
Our director and officer may not be able to devote sufficient time
Our director and officer may not be able to devote sufficient time to our business affairs, which may negatively affect our ability to conduct our ongoing operations and our ability to generate revenues. As a Director of Allstar Restaurants, the role of Mr. Terry Bowering is to ensure all private placement funding is conducted in accordance with all securities legislation; that all accounting functions in the parent and subsidiary are complete and accurate and prepared in a timely fashion; and, to ensure all Federal and State public filings are complete and accurate.
Because our officers, directors and principal shareholders control a majority of our common stock, investors will have little or no control over our management or other matters requiring shareholder approval.
Our officers and directors and their affiliates, in the aggregate, beneficially own 59% of issued and outstanding shares of our common stock. As a result, they have the ability to control matters affecting minority shareholders, including the election of our directors, the acquisition or disposition of our assets, and the future issuance of our shares. Because our officers, directors and principal shareholders control the company, investors will not be able to
replace our management if they disagree with the way our business is being run. Because control by these insiders could result in management making decisions that are in the best interest of those insiders and not in the best interest of the investors, you may lose some or all of the value of your investment in our common stock.
Because we can issue additional common shares, purchasers of our common stock may incur immediate dilution and may experience further dilution.
We are currently authorized to issue up to75,000,000 common shares, of which 9,950,000 are issued and outstanding at the time of this prospectus. Our board of directors has the authority to cause our company to issue additional shares of common stock without the consent of any of our shareholders. Consequently, our shareholders may experience more dilution in their ownership of our company in the future.
Risks Related to the Industry
Lack of Consumer Confidence
The Restaurant industry faces the daily risk that the quality of its food and service may not be 100% consistent and as a result customers may be lost. There can be no assurance that the Company will be able to consistently maintain customer confidence in its food services on a daily basis and entirely eliminate the risk of customer loss. If the Company's efforts are unsuccessful, it could have a material adverse effect on the Company's business, financial condition and the results of operations.
We face risks associated with changes in general economic and political conditions that affect consumer spending.
Adverse economic conditions and any related decrease in discretionary spending by our customers may have an adverse affect on our revenues and operating results. When the economy struggles, our customers may become more apprehensive about the economy and reduce their level of discretionary spending. We believe that a decrease in discretionary spending could impact the frequency with which our customers choose to dine out or the amount they spend on meals while dining out, thereby decreasing our revenues.
We face risks that affect the restaurant industry in general.
A variety of factors over which we have no control may affect the ownership and operation of restaurants. These factors include adverse changes in national, regional, or local economic or market conditions; increased costs of labor or food products; fuel, utility, and energy and other price increases; competitive factors; the number, density, and location of competitors; and changing demographics, traffic patterns, and consumer tastes, habits, and spending priorities.
Third parties may file lawsuits against us based on discrimination, personal injury, claims for injuries or damages caused by serving alcoholic beverages to an intoxicated person or to a minor, or other claims. Our business could be adversely affected by publicity about food quality, illness, injury, other health and safety concerns or operating issues at one restaurant or a limited number of restaurants operated under the same name, whether or not we actually own or manage the restaurants in question. We cannot predict any of these factors with any degree of certainty. Any one or more of these factors could have a material adverse effect on our business.
Employees may file claims or lawsuits against us based on discrimination or wrongful termination or based upon their rights created by the state laws wherein we do business. These claims or lawsuits could result in unfavorable publicity and could have a material adverse effect on our business.
We face rising insurance costs.
The cost of insurance (workers compensation insurance, general liability insurance, health insurance, and directors and officers liability insurance) has risen significantly in the past few years and is expected to continue to increase in
2005 and 2006. We may be unable to make the improvements in our operations to mitigate the effects of increased frequency and higher costs.
We face intense competition.
The restaurant industry in general is highly competitive with respect to price, service, and food type and quality. Restaurant operators also compete for attractive restaurant sites and qualified restaurant personnel and managers. Our restaurants will compete with a large number of other restaurants, including national and regional restaurant chains and franchised restaurant systems, as well as with locally owned, independent restaurants. Many of our competitors have greater financial resources, more experience, and longer operating histories than we possess.
We face risks associated with government regulation.
The restaurant industry is subject to extensive licensing and regulation by state and/or Provincial and local departments and bureaus of alcohol control, health, sanitation, and fire and to periodic review by the state and municipal authorities for areas in which the restaurants are located. Primarily, the company must comply with very stringent health regulations imposed on the business and its operations designed to protect the public or its ability to operate will be restricted. Some jurisdictions may impose restrictions, licensing requirements, or prohibitions on the company’s food services and products. In addition, we are subject to local land use, zoning, building, planning, and traffic ordinances and regulations in the selection and acquisition of suitable sites for constructing new restaurants. Delays in obtaining, or denials of, or revocation or temporary suspension of, necessary licenses or approvals could have a material adverse impact on our development of res taurants.
Various Federal, State and/or Provincial, and local laws affect our business. The development and operation of restaurants depend to a significant extent on the selection and acquisition of suitable sites. These sites are subject to zoning, land use, environmental, traffic, and other regulations of state and local governmental agencies. City ordinances or other regulations, or the application of such ordinances or regulations, could impair our ability to construct or acquire restaurants in desired locations and could result in costly delays.
The delay or failure to obtain or maintain any licenses or permits necessary for operations could have a material adverse effect on our business. In addition, an increase in the minimum wage rate, employee benefit costs, costs of installing fixtures or accommodations for handicapped individuals or other costs associated with employees could adversely affect our business. We also are subject laws and regulations that, among other things, may require us to install certain fixtures or accommodations in new restaurants or to renovate existing restaurants to meet federally mandated requirements.
We anticipate that sales of alcoholic beverages will represent an important source of revenue for our restaurants. The temporary suspension or permanent loss or the inability to maintain a liquor license for any restaurant would have an adverse effect on the operations of that restaurant. We do not plan to open a restaurant in any location for which we believe we cannot obtain or maintain a liquor license.
At present, the Company does not anticipate that any potential restrictions or licensing requirements in its target markets will hinder its ability to operate successfully. However, no assurance can be made that in the future new restrictions, prohibitions or licensing requirements will not arise which would materially adversely effect the Company's business, operating results, and financial condition of the Company.
Litigation could have a material adverse effect on our business.
Litigation is common in the restaurant industry. We may from time to time be the subject of complaints or litigation from guests alleging food-borne illness, injury, or other food quality, health, or operational concerns. We may be adversely affected by publicity resulting from such allegations regardless of whether such allegations are valid or whether we are liable. We are also subject to complaints or allegations from former or prospective employees from time to time. A lawsuit or claim could result in an adverse decision against us that could have a material adverse effect on our business.
We may be subject to State and/or Provincial laws and regulations, which generally provide that a person injured by an intoxicated person may seek to recover damages from an establishment that wrongfully served alcoholic beverages to such person. While we will carry liquor liability coverage as part of our existing comprehensive general liability insurance, we may still be subject to a judgment in excess of our insurance coverage and we may not be able to obtain or continue to maintain such insurance coverage at reasonable costs, or at all.
Risks Associated with Our Common Stock
There is no active trading market for our common stock and if a market for our common stock does not develop, our investors will be unable to sell their shares.
There is currently no active trading market for our common stock and such a market may not develop or be sustained. We currently plan to apply to have our common stock quoted on the National Association of Securities Dealers Inc.'s OTC Bulletin Board upon the effectiveness of this registration statement of which this prospectus forms a part. However, we cannot provide our investors with any assurance that our common stock will be traded on the OTC Bulletin Board or, if traded, that a public market will materialize. If our common stock is not quoted on the OTC Bulletin Board or if a public market for our common stock does not develop, then investors may not be able to resell the shares of our common stock that they have purchased and may lose all of heir investment. If we establish a trading market for our common stock, the market price of our common stock may be significantly affected by factors such as actual or anticipated fluctuations in our operation results, general market conditions and other fact ors. In addition, the stock market has from time to time experienced significant price and volume fluctuations that have particularly affected the market prices for the shares of developmental stage companies, which may materially adversely affect the market price of our common stock.
Because we do not intend to pay any dividends on our common shares, investors seeking dividend income or liquidity should not purchase shares in this offering.
We do not currently anticipate declaring and paying dividends to our shareholders in the near future. It is our current intention to apply net earnings, if any, in the foreseeable future to increasing our working capital. Prospective investors seeking or needing dividend income or liquidity should, therefore, not purchase our common stock. We currently have no revenues and a history of losses, so there can be no assurance that we will ever have sufficient earnings to declare and pay dividends to the holders of our shares, and in any event, a decision to declare and pay dividends is at the sole discretion of our board of directors, who currently do not intend to pay any dividends on our common shares for the foreseeable future.
Trading of our stock may be restricted by the SEC's penny stock regulations which may limit the development of a liquid public market for our stock and may limit a stockholder's ability to buy and sell our stock.
The Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. If we develop a public market for our shares, our shares would be covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". These additional requirements may have the effect of limiting the development of a public trading market, reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect our ability to develop a public trading market for our shares and may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest i n and may limit the marketability of our common stock.
NASD sales practice requirements may also limit a stockholder's ability to buy and sell our stock.
In addition to the "penny stock" rules promulgated by the Securities and Exchange Commission, the NASD has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low
priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the NASD believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The NASD requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
Please read this prospectus carefully. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" on pages 7 to 13, that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. The safe harbor for forward-looking statements provided in the Private Securities Litigation Reform Act of 1995 does not apply to the offering made in this prospectus.
SECURITIES AND EXCHANGE COMMISSION'S PUBLIC REFERENCE
Any member of the public may read and copy any materials filed by us with the Securities and Exchange Commission at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet website (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
THE OFFERING
This prospectus covers the resale by the selling stockholders named in this prospectus of up to a total of 9,150,000 shares of common stock which were issued pursuant to two private placement offerings. On September 30, 2005, pursuant to Rule 506 of Regulation “D” under the Securities Act, we issued a total of 4,300,000 ‘units’ consisting of 4,300,000 common shares plus 4,300,000 warrants exercisable at $0.05 per share until August 1, 2007. Also on September 30, 2005 we issued 550,000 shares pursuant to Rule 903 of Regulation S and/or Section 4(2) of the Securities Act of 1933. The selling stockholders will sell their shares of our common stock at $0.05 per share until our common stock is quoted on the OTC Bulletin Board, or listed for trading or quotation on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The only affiliate of our company owning shares is Terry G. Bowering, (our Chairman, President, Chief Executive Officer, and Secretary), with currently 5,100,000 common shares held. Mr. Bowering will not be selling these shares as part of this offering. We will not receive any proceeds from the resale of shares of our common stock by the selling stockholders.
DETERMINATION OF OFFERING PRICE
The selling stockholders will sell their shares of our common stock at a price of $0.05 per share until shares of our common stock are quoted on the OTC Bulletin Board, or listed for trading or quoted on any other public market, and
thereafter at prevailing market prices or privately negotiated prices. The offering price of $0.05 per share has been determined arbitrarily and does not have any relationship to any established criteria of value, such as book value or earning per share. Additionally, because we have no significant operating history and have not generated any material revenue to date, the price of the common stock is not based on past earnings, nor is the price of the common stock indicative of the current market value of the assets owned by us. No valuation or appraisal has been prepared for our business and potential business expansion. Our common stock is presently not traded on any market or securities exchange and we have not applied for listing or quotation on any public market.
USE OF PROCEEDS
The shares of common stock offered by this prospectus are being registered for the account of the selling stockholders named in this prospectus. As a result, all proceeds from the sales of the common stock will go to the selling stockholders and we will not receive any proceeds from the resale of the common stock by the selling stockholders. We will, however, incur all costs associated with this registration statement and prospectus.
DILUTION
The common stock to be sold by the selling stockholders is 9,150,000 common shares, of which 4,850.000 shares of common stock is currently issued and outstanding. Accordingly, there will be no dilution to our existing stockholders. However, 4,300,000 warrants were issued to shareholders in the Rule 506 Share Offering exercisable at $0.05 per share until August 1, 2007.
DIVIDEND POLICY
We have not declared or paid any cash dividends since inception. We intend to retain future earnings, if any, for use in the operation and expansion of our business and do not intend to pay any cash dividends in the foreseeable future. Although there are no restrictions that limit our ability to pay dividends on our common stock, we intend to retain future earnings for use in our operations and the expansion of our business.
SELLING STOCKHOLDERS
The selling stockholders may offer and sell, from time to time, any or all of the common stock issued. Because the selling stockholders may offer all or only some portion of the total 9,150,000 shares of common stock to be registered, no estimate can be given as to the amount or percentage of these shares of common stock that will be held by the selling stockholders upon termination of the offering. As of September 30, 2005 there were a total of 9,950,000 shares of common stock outstanding. The selling shareholders in this prospectus were a result of two private common stock offerings (detailed in the two tables below), both of which closed September 30, 2005.
The table immediately below sets forth certain information regarding the beneficial ownership of shares of common stock by the selling stockholders as of September 30, 2005, and the number of shares of common stock covered by this prospectus. This selling stockholders' table consists of shareholders that purchased 4,300,000 shares of our common stock as well as 4,300,000 warrants exercisable at $0.05 per share until August 1, 2007, pursuant to a private offering dated August 1, 2005 which satisfied the requirements of Rule 506 of Regulation D. This offering was sold at $0.005 per share and was closed on September 30, 2005. The sale price of our common stock was the result of negotiations between the respective purchasers and the company, and was not based on book value or our assets.
Other than the relationships described below, none of the selling stockholders had or have any material relationship with us. None of the selling stockholders is a broker-dealer or an affiliate of a broker-dealer to our knowledge. None of these selling security holders have been a Director or officer of the company since its formation on December 22, 2004.
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|
| Number of Shares Owned | ||
Additional Shares issuable under Warrants held (1) | # of | % of | |||
Jon J. Priesler | 100,000 | 100,000 | 200,000 | Nil | 0% |
Douglas W. Peterson | 100,000 | 100,000 | 200,000 | Nil | 0% |
Dona Gialketsis | 100,000 | 100,000 | 200,000 | Nil | 0% |
Damon Curran | 100,000 | 100,000 | 200,000 | Nil | 0% |
Pacific Realty Management | 400,000 | 400,000 | 800,000 | Nil | 0% |
Christopher A. Keiser | 100,000 | 100,000 | 200,000 | Nil | 0% |
Henry L. Rivera | 100,000 | 100,000 | 200,000 | Nil | 0% |
Daniel Justin | 400,000 | 400,000 | 800,000 | Nil | 0% |
Richard Minutella | 100,000 | 100,000 | 200,000 | Nil | 0% |
Steven M. Kordak | 100,000 | 100,000 | 200,000 | Nil | 0% |
Valerie Sherriee Harrison | 100,000 | 100,000 | 200,000 | Nil | 0% |
Stephen J. Becker | 100,000 | 100,000 | 200,000 | Nil | 0% |
Kristina Brichta | 100,000 | 100,000 | 200,000 | Nil | 0% |
Thomas P. Ackerman | 100,000 | 100,000 | 200,000 | Nil | 0% |
William B. Lysaught Jr | 100,000 | 100,000 | 200,000 | Nil | 0% |
Richard G. Miller | 100,000 | 100,000 | 200,000 | Nil | 0% |
DNA4B | 100,000 | 100,000 | 200,000 | Nil | 0% |
W. Lance Coultrap | 100,000 | 100,000 | 200,000 | Nil | 0% |
T. Wheatcraft | 400,000 | 400,000 | 800,000 | Nil | 0% |
J. Grant Parsons | 100,000 | 100,000 | 200,000 | Nil | 0% |
Gracemary Avino | 100,000 | 100,000 | 200,000 | Nil | 0% |
Ron Bassler | 100,000 | 100,000 | 200,000 | Nil | 0% |
John K. Tholen | 100,000 | 100,000 | 200,000 | Nil | 0% |
Stephen Ingrassia | 100,000 | 100,000 | 200,000 | Nil | 0% |
Carla King | 100,000 | 100,000 | 200,000 | Nil | 0% |
David Dubois | 100,000 | 100,000 | 200,000 | Nil | 0% |
Mark Marsillo | 100,000 | 100,000 | 200,000 | Nil | 0% |
Frank Aguilera | 100,000 | 100,000 | 200,000 | Nil | 0% |
Ray Coultrap | 100,000 | 100,000 | 200,000 | Nil | 0% |
Dorothy E. Halloran | 100,000 | 100,000 | 200,000 | Nil | 0% |
Thomas L. McDermott | 100,000 | 100,000 | 200,000 | Nil | 0% |
Donald C. Jones | 200,000 | 200,00 | 400,000 | Nil | 0% |
Ronald Darvin Jones | 100,000 | 100,000 | 200,000 | Nil | 0% |
Total: | 4,300,000 | 4,300,000 | 8,600, 000 |
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The following table sets forth certain information regarding the beneficial ownership of shares of common stock by the selling stockholders as of September 30, 2005, and the number of shares of common stock covered by this prospectus. This selling stockholders' table (see below) consists of shareholders that purchased an aggregate of 550,000 shares of our common stock pursuant to pursuant to Rule 903 of Regulation S and/or Section 4(2) of the Securities Act of 1933. None of the individuals listed in the table below are U.S. persons as that term is defined in Regulation S. We are subject to Category 3 of Rule 903 of Regulation S and accordingly we implemented the offering restrictions required by Category 3 of Rule 903 of Regulation S by including a legend on all offering materials and documents which stated that the shares have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States or to U.S. persons unless the shares are registered under the Securities Act of 1933, or an exemption from the registration requirements of the Securities Act of 1933 is available. The offering materials and documents also contained a statement that hedging transactions involving the shares may not be conducted unless in compliance with the Securities Act of 1933.
This offering was sold at $0.005 per share and was closed on September 30, 2005. The sale price of our common stock was the result of negotiations between the respective purchasers and the company, and was not based on book value or our assets.
Other than the relationships described below, none of the selling stockholders had or have any material relationship with us. None of the selling stockholders is a broker-dealer or an affiliate of a broker-dealer to our knowledge. None of these selling security holders have been a Director or officer of the company since its formation on December 22, 2004.
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|
| Number of Shares Owned | |
# of | % of | |||
Cathie Vossen | 100,000 | 100,000 | Nil | 0% |
Darcy Skwara | 100,000 | 100,000 | Nil | 0% |
Robyn Szilagyi | 100,000 | 100,000 | Nil | 0% |
Tracy Herauf | 50,000 | 50,000 | Nil | 0% |
Trent Taylor | 50,000 | 50,000 | Nil | 0% |
Shirley Katchuck | 50,000 | 50,000 | Nil | 0% |
Charles Truman | 50,000 | 50,000 | Nil | 0% |
Jennifer Adams | 50,000 | 50,000 | Nil | 0% |
Total: | 550,000 | 550, 000 |
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(2) Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. Shares of common stock subject to options, warrants and convertible preferred stock currently exercisable or convertible, or exercisable or convertible within sixty (60) days, are counted as outstanding for computing the percentage of the person holding such options or warrants but are not counted as outstanding for computing the percentage of any other person.
We may require the selling security holder to suspend the sales of the securities offered by this prospectus upon the occurrence of any event that makes any statement in this prospectus or the related registration statement untrue in any material respect or that requires the changing of statements in these documents in order to make statements in those documents not misleading.
We issued an aggregate of 5,100,000 shares to our primary affiliate Mr. Terry G. Bowering, (our President, Chief Executive Officer, Secretary, and Director), in March (100,000 shares), and July (5,000,000 shares) of 2005, respectively. These affiliate shares will not be sold as part of this offering.
The selling stockholders may, from time to time, sell all or a portion of the shares of common stock on any market upon which the common stock may be quoted, in privately negotiated transactions or otherwise. Our common stock is not currently listed on any national exchange or electronic quotation system. To date, no actions have been taken to list our shares on any national exchange or electronic quotation system. Because there is currently no public market for our common stock, the selling stockholders will sell their shares of our common stock at a price of $0.05 per share until shares of our common stock are quoted on the OTC Bulletin Board, or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. Terry G. Bowering, the primary affiliate of our company, will not be selling his shares as part of this offering. The shares of common stock may be sold by the selling stockholders by one or more of the following methods, without limitation:
(a) block trades in which the broker or dealer so engaged will attempt to sell the shares of common stock as agent but may position and resell a portion of the block as principal to facilitate the transaction;
(b) purchases by broker or dealer as principal and resale by the broker or dealer for its account pursuant to this prospectus;
(c) an exchange distribution in accordance with the rules of the exchange;
(d) ordinary brokerage transactions and transactions in which the broker solicits purchasers;
(e) privately negotiated transactions; and
(f) a combination of any aforementioned methods of sale.
The shares may also be sold in compliance with the Securities and Exchange Commission's Rule 144.
In the event of the transfer by any selling stockholder of his or her shares to any pledgee, donee or other transferee, we will amend this prospectus and the registration statement of which this prospectus forms a part by the filing of a post-effective amendment in order to have the pledgee, donee or other transferee in place of the selling stockholder who has transferred his or her shares.
In effecting sales, brokers and dealers engaged by the selling stockholders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions or discounts from the selling stockholders or, if any of the broker-dealers act as an agent for the purchaser of such shares, from the purchaser in amounts to be negotiated which are not expected to exceed those customary in the types of transactions involved. Broker-dealers may agree with the selling stockholders to sell a specified number of the shares of common stock at a stipulated price per share. Such an agreement may also require the broker-dealer to purchase as principal any unsold shares of common stock at the price required to fulfill the broker-dealer commitment to the selling stockholders if such broker-dealer is unable to sell the shares on behalf of the selling stockholders. Broker-dealers who acquire shares of common stock as principal may thereafter resell the shares of common stock from time to time in transaction s which may involve block transactions and sales to and through other broker-dealers, including transactions of the nature described above. Such sales by a broker-dealer could be at prices and on terms then prevailing at the time of sale, at prices related to the then-current market price or in negotiated transactions. In connection with such resales, the broker-dealer may pay to or receive from the purchasers of the shares, commissions as described above.
The selling stockholders and any broker-dealers or agents that participate with the selling stockholders in the sale of the shares of common stock may be deemed to be "underwriters" within the meaning of the Securities Act in connection with these sales. In that event, any commissions received by the broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
From time to time, the selling stockholders may pledge their shares of common stock pursuant to the margin provisions of their customer agreements with their brokers. Upon a default by a selling stockholder, the broker may offer and sell the pledged shares of common stock from time to time. Upon a sale of the shares of common stock, the selling stockholders intend to comply with the prospectus delivery requirements, under the Securities Act, by delivering a prospectus to each purchaser in the transaction. We intend to file any amendments or other necessary documents in compliance with the Securities Act which may be required in the event any selling stockholder defaults under any customer agreement with brokers.
To the extent required under the Securities Act, a post effective amendment to this registration statement will be filed, disclosing, the name of any broker-dealers, the number of shares of common stock involved, the price at which the common stock is to be sold, the commissions paid or discounts or concessions allowed to such broker-dealers, where applicable, that such broker-dealers did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus and other facts material to the transaction.
We and the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations under it, including, without limitation, Rule 10b-5 and, insofar as the selling stockholders are distribution participants and we, under certain circumstances, may be a distribution participant, under Regulation M. All of the foregoing may affect the marketability of the common stock.
All expenses of the registration statement including, but not limited to, legal, accounting, printing and mailing fees are and will be borne by us. Any commissions, discounts or other fees payable to brokers or dealers in connection with any sale of the shares of common stock will be borne by the selling stockholders, the purchasers participating in such transaction, or both.
Any shares of common stock covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act, as amended, may be sold under Rule 144 rather than pursuant to this prospectus.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is Pacific Stock Transfer (Suite 240, 500 East Warm Springs Road, Las Vegas, Nevada 89119, telephone: 702.361.3303).
LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
All directors of our company hold office until the next annual meeting of the stockholders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:
Name | Position Held with the Company | Age | Date First Elected or Appointed |
Terry G. Bowering | President, Secretary, Treasurer & Director | 45 | December 22, 2004 |
Business Experience
The following is a brief account of the education and business experience of each director and executive officer during at least the past five years, indicating each person's business experience, principal occupation during the period, and the name and principal business of the organization by which he was employed.
Terry G. Bowering, Director, President, Secretary, and Treasurer
Currently, Mr. Bowering is employed as Managing Director and General Manager of Fastserve Foods Inc., in Regina, Saskatchewan, Canada. Mr. Bowering oversees the daily business operations of Fastserve Foods Inc.’s restaurants as well the corporate development and administrative duties for Allstar Restaurants. Mr. Bowering also acts as an independent Management Consultant offering consultation to private companies on a variety of financial and administrative issues. From 1999 to 2003 Mr. Bowering was a Director and Chief Executive Officer of Netforce Systems Inc., an Internet Gaming Services company, based in Antigua, West Indies. Mr. Bowering holds a Bachelor of Administration in Finance from the University of Regina, and a Master of Business Administration degree from the University of Saskatchewan.
Mr. Bowering was appointed to the position of Director on December 22nd, 2004, to serve until his successor has been elected and qualifies.
Committees of the Board
We do not have a separate audit committee at this time. Our entire board of directors acts as our audit committee.
Family Relationships
There are no family relationships among our directors or officers.
Involvement in Certain Legal Proceedings
Our directors, executive officers and control persons have not been involved in any of the following events during the past five years:
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 15, 2005, certain information with respect to the beneficial ownership of our common stock by each stockholder known by us to be the beneficial owner of more than 5% of our common stock and of our current director and executive officer. Each person has sole voting and investment power with
respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
Name and Address of | Amount and Nature of | Percentage |
Terry G. Bowering | 5,100,000 | 51.26 % |
Directors and Officers | 5,100,000 | 51.26 % |
We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change of control of our company.
Description of Common Stock
Our Corporate Resolution dated July 5th, 2005 served to increase our authorized common stock from 5,500,000 authorized common shares as of June 30, 2005 to the current 75,000,000 authorized shares of common stock with a par value of $0.001. As at September 30, 2005, we had a total of 9,950,000 common shares outstanding. Upon liquidation, dissolution or winding up of the corporation, the holders of common stock are entitled to share ratably in all net assets available for distribution to stockholders after payment to creditors. The common stock is not convertible or redeemable and has no preemptive, subscription or conversion rights. There are no conversion, redemption, sinking fund or similar provisions regarding the common stock. Each outstanding share of common stock is entitled to one vote on all matters submitted to a vote of stockholders. There are no cumulative voting rights.
Each stockholder is entitled to receive the dividends as may be declared by our board of directors out of funds legally available for dividends and, in the event of liquidation, to share pro rata in any distribution of our assets after payment of liabilities. Our board of directors is not obligated to declare a dividend. Any future dividends will be subject to the discretion of our board of directors and will depend upon, among other things, future earnings, the operating and financial condition of our company, its capital requirements, general business conditions and other pertinent factors. It is not anticipated that dividends will be paid in the foreseeable future.
There are no provisions in our articles of incorporation or our bylaws that would delay, defer or prevent a change in control of our company.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
We engaged the firm of HJ & associates, LLC, Certified Public Accountants, in March 2005 to audit our financial statements for the annual fiscal period ended March 31, 2005 and also to audit our interim financial statements for the period ending June 30, 2005. There has been no change in the accountants and no disagreements with HJ & Associates, LLC, Certified Public Accountants, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope procedure.
INTEREST OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents, subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer or employee.
EXPERTS
The financial statements of Allstar Restaurants, included in this registration statement have been audited (March 31, 2005) by HJ & Associates, LLC, Certified Public Accountants, 50 South Main Street, Suite 1450, Salt Lake City, Utah, 84144, to the extent and for the period set forth in their report (which contains an explanatory paragraph regarding our company's ability to continue as a going concern) appearing elsewhere in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
DISCLOSURE OF SEC POSITION OF INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Our Articles of Incorporation provide that no director or officer shall be personally liable to our company or any of its stockholders for damages for breach of fiduciary duty as a director or officer involving any act or omission of such director or officer unless such acts or omissions involve: (i) a breach of the director's duty of loyalty to our company and our stock holders, (ii) bad faith, intentional misconduct or a knowing violation of law, (iii) the payment of dividends in violation of the General Corporate Law of Nevada, or (iv) any transaction from which the director derived an improper personal benefit.
Our Bylaws provide we have the power to indemnify, to the greatest allowable extent permitted under the General Corporate Laws of Nevada, directors or officers of our company for any duties or obligations arising out of any acts or conduct of the officer or director performed for or on behalf of our company. We will reimburse each such person for all legal and other expenses reasonably incurred by him in connection with any such claim or liability, including power to defend such persons from all suits or claims as provided for under the provisions of the General Corporate Law of Nevada.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of our company under Nevada law or otherwise, our company has been advised that the opinion of the Securities and Exchange Commission is that such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
DESCRIPTION OF PROPERTY
Our executive and head office is located at 10 Cedar Meadow Drive, Regina Saskatchewan, Canada, S4X 3J6. The office is provided to us at no charge by Mr. Terry G. Bowering, (our President, Chief Executive Officer, Secretary, and Director) and is located in his residence. This office functions as our main office administrative operating facility. We believe our current premises are adequate for our current administrative operations and we do not anticipate that we will require any additional premises in the foreseeable future.
As of July 1, 2005, through our newly acquired subsidiary Fastserve Foods Inc., we currently lease space for our restaurant operation (trading as China Doll Restaurant and Lounge). The restaurant is located in a multi-tenant strip mall, originally constructed in 1986, on a major thoroughfare and traffic corner near to the city center of Regina, in the Province of Saskatchewan, Canada. The traffic count per day is in access of 30,000, considered to be high volume for the market. The restaurant occupies a total of 5,562 square feet of space allowing for a maximum seating capacity in the dining room and lounge of approximately 200 people. The restaurant has a reception/waiting area, a dining room where lunch and dinner is served daily, a fully equipped kitchen and preparation area, dry goods
inventory storage area, three large walk-in storage coolers and freezers, and a large sports bar and lounge with multiple big screen Plasma TVs equipped with the latest satellite TV technology. The restaurant is open for business seven days per week.
Our subsidiary, (after July 1st, 2005 acquisition and vend-in) Fastserve Foods Inc., which operates the China Doll Restaurant and Lounge, was assigned the balance of an existing 5 year lease in April 1, 2005. The balance of the term was approximately 2 years, expiring on January 31, 2007. Also on April 1, 2005, a 5 year term option commencing at the expiry of the existing lease was executed. This lease term will expire on January 31, 2012, at which time the company can re-negotiate at prevailing market rents for an additional 5 year option if so desired. The lease provides for a fixed net rental payment plus a percentage, based on square feet occupied, of the property taxes, common area, and maintenance expenses of the building. Net rent combined with common area maintenance and other building expense recoveries amount to approximately CDN$ 81,540 per year for the balance of the existing lease term (2006, 2007). Upon expiry of the balance of the current lease term, the net rent co mbined with common area maintenance expense recoveries will increase to CDN$ 84,315 per year for the first three years (2008, 2009, 2010), then increases to CDN$ 87,108 for years four and five (2011, 2012). The company also maintains an administrative office in the same restaurant space.
The China Doll Restaurant building is regularly maintained by outside contractors who are on call 24 hours per day in most cases. Management believes that this property is in good condition and that there will not be any immediate or medium term need for any significant repairs, maintenance expenditures or leasehold improvements to maintain the operational and aesthetic integrity of the occupied premises for the foreseeable future. At a minimum, only routine recurring maintenance and periodic minor capital leasehold improvements will be necessary. The property and business is insured up to replacement cost as determined by management with consultation from insurance experts. Business interruption insurance is also in place under its current insurance policy. In the opinion of management there is currently adequate total insurance coverage in place.
DESCRIPTION OF BUSINESS
Our Current Business
Allstar Restaurants was originally incorporated in the state of Nevada on December 22, 2004. We are a restaurant company with the objective of developing into a multi-unit full service restaurant and food services business. We had no revenue from the date of our inception up to the period ending June 30, 2005. We commenced operations of our restaurant business with the acquisition of our wholly-owned subsidiary, Fastserve Foods Inc., on July 1, 2005. Fastserve Foods Inc., currently owns and operates a restaurant and lounge called the China Doll Restaurant and Lounge in the provincial capital city of Regina, Saskatchewan, Canada. The acquisition of this privately-owned business is the first step in fulfilling the Company's business objective of developing a profitable multi-unit restaurant business. The China Doll Restaurant and Lounge is a full-service, family-style dining establishment featuring a wide selection of freshly prepared, popular Chinese and Canadian foods and beverages served by well-traine d, friendly employees in a relaxed setting. This restaurant is a single unit, medium-size full service restaurant primarily serving healthy, contemporary style Chinese and Canadian Cuisine. The restaurant features a high volume delivery and takeout component along with the dining room and a licensed sports lounge. The China Doll Restaurant had been previously operating successfully for over 20 years. Our wholly-owned subsidiary, Fastserve Foods Inc. was originally incorporated on February 15, 2005 in the province of Saskatchewan, Canada. The restaurant, (www.cdoll.ca), is located at 1458 Broad Street, Regina, Saskatchewan, S4R 1Y9, Canada.
The Company, through Fastserve Foods Inc., its wholly-owned subsidiary, currently employs 25 full-time persons. The majority of these individuals are employed in the daily operation of the restaurant business. Mr. Terry G. Bowering, Director and President and Chief Executive Officer, also is employed as General Manager of the company’s restaurant subsidiary. We intend to continue to capitalize on the evolving opportunities in the restaurant industry in the future by acquiring and developing established restaurant businesses and further utilize our registered brand and trading name “China Doll Restaurant”. We are particularly focused on acquiring and investing in restaurants that have multiple revenue sources. This would include restaurants that combine a family-style dine-in service with a viable delivery and takeout service, and that also feature licensed lounges.
Restaurant Industry Overview
There are about 8 million restaurants in the world and some 300,000 restaurant companies. The restaurant industry divides itself into full-service and fast-food restaurants. Full-service restaurants include family restaurants (such as Denny's), dinner houses (Darden Restaurants' Red Lobster), and grill/buffet type eateries (Metromedia's Ponderosa). The fast-food sector includes sandwich shops, which means hamburgers and Mexican food, as well as pizza and chicken joints. Companies in this sector include giants such as Kahala (Great Steak & Potato, Frullati Cafe), Texas Pacific Group (Burger King), YUM! Brands (Taco Bell, KFC, Pizza Hut), and of course, McDonald's. In a weak economy, the full service category's stock suffers as people with less disposable income settle for cheaper fare.
Overall restaurant sales have been rising just over 5% annually. However, the supply of workers age 16 to 24, the primary pool for restaurant employees, has been declining. To solve the problem, companies are hiring more retirees and immigrants, and are increasingly making use of automation. A slowing economy should help offset a shrinking labor force by keeping wages (often minimum) stable, thus posing less threat to profits.
The restaurant industry is a classic mature market. Companies face stiff competition and low profit margins. Given this scenario, companies tend to grow through acquisition rather than through building new units, which cost upwards of $1 million even for a fast-food unit. Making acquisitions gives companies a larger revenue base over which to spread costs, and it also gives them more leverage with suppliers to keep costs down. With the rise of two-working adult families since the 1980s, Americans have less time and energy to prepare their own meals and have been eating out more frequently resulting in a trend towards increasing the demand for fast and efficient quality food delivery and takeout services.
Canada Food Service Industry Facts
There are 63,517 commercial foodservice units in Canada, or 20.1 units per 10,000 Canadians. By segment, there are:
28,794 full-service restaurants,
25,094 limited-service restaurants,
4,035 contract and social caterers,
5,595 taverns, bars and nightclubs
Source: CRFA's Provincial InfoStats and Statistics Canada
Canadian households averaged 11.5 visits to restaurants for meals or snacks over a two-week period in 2004, one more visit every two weeks than in 1999. Quick-service restaurants account for more visits than family/mid-scale, casual dining and fine dining restaurants combined.
Although the majority of visits are to quick-service restaurants, a higher average check size means full-service restaurants account for the biggest share of the food dollar. Full-service restaurants claim 50.1 % of restaurant dollars, while quick-service restaurants have a 43.6 % dollar share. More than 60% of restaurant meals are eaten off-premise- an increase of seven percentage points since 1996.
Market Share Definitions
Commercial Foodservice (78% Market Share) Operations whose primary business is food and beverage service.
The Current Target Market
Currently, our core market focus for our restaurant business is the city of Regina, in the province of Saskatchewan, Canada. Saskatchewan's capital City, Regina is the heartbeat of the province. Located in the heart of Western Canada, Regina is the center of a multi-billion dollar agricultural economy. With a population of over 200,000, and a direct trading area of 500,000, Regina is a vibrant, highly productive city, offering an outstanding business environment. Regina is the center of the Provincial Government where most government departments and crown corporations of the Province are headquartered. Regina is located on the TransCanada Highway, only a half day drive from the cities of Calgary, Edmonton, Winnipeg, and the U.S. Border. Regina is consistently one of North America's most economical locations to conduct business and is one of Canada's most stable economies. Regina has the sixth lowest overall business costs of 64 cities in eight countries (Canada, United States, Austria, France, Germany , Italy, Japan and the United Kingdom) and the lowest in mid-western North America. Regina is a knowledge-based economy: the public and private sectors are investing in agri-business, information and communications technology, petroleum technology and resource management. Other industry includes steel production with Regina being the home of IPSCO, western Canada's largest steel producer, a buoyant provincial energy sector, fueled by oil and gas production, and the home base of Saskatchewan Wheat Pool, the world's largest grain handling co-operative.
Products and Services
Menu
The China Doll Restaurant is categorized as a full service family-style restaurant. The menu (for both dine-in and takeout) of the China Doll Restaurant consists primarily of a wide variety of Chinese Cuisine including various seafood, beef, chicken, pork, rice, vegetable, and combination dishes. The moderate-low priced menu attracts a wide range of customers in the target market area. The restaurant also serves Canadian Cuisine such as hamburgers, steaks, sandwiches, soups and salads. Each menu item is made to order at the time the customer places the order and is not pre-prepared. The restaurant features a popular luncheon menu featuring a number of daily “Wok”
combination specials prepared quickly and efficiently (i.e. Combo #1.: special fried rice, honey garlic dry ribs, and sweet and sour chicken balls or, Combo #2.: deep fried shrimp, chicken chow mein, and chicken fried rice, etc.) from Monday to Saturday. The dining room is opened seven days per week and features more specialized dishes of a wide variety such as Lemon Seu Gai, Ginger Beef, Almond Shrimp, Egg Foo Yong, or a complete selection of Sechuan-type dishes (spicy), as well as a full beverage, liquor and wine selection. All of the menu items can be prepared for both dine-in at the restaurant and lounge as well as for pickup and delivery anywhere in the city (see www.cdoll.ca for detailed menu selection). Information on this website does not form part of this prospectus.
Production
Food preparation and production takes place in the kitchen of the restaurant. Fresh vegetables, meat, poultry, and seafood products are used daily to create the dishes from scratch. The experienced chef and kitchen staff exercise strict standards of sanitation, quality production, presentation, and packaging in daily operations. Catering can be produced on location at customers’ facilities, depending on menu items desired as well as equipment and facilities available, but is predominantly prepared in the restaurant kitchen and then transported to the catering site to be set up and served.
Service
There are three ways a customer can purchase our food at the China Doll Restaurant and Lounge. They may sit down at one of the 200 total seats in the dining room and/or lounge and receive full service for lunch or dinner from a waitperson. A separate take-out counter services those who wish to pick up their food. Our take-out food is prepared to order with orders coming from either the telephone or fax. Delivery (an indirect form of take-out) is available at all business hours and we deliver city-wide. For delivery and takeout orders, we primarily use a multi-line Centrex telephone system with caller identification to assist in verifying the customer order information. We utilize three trained delivery drivers for complete coverage of the target market area. These delivery drivers utilize the latest technology for accepting payment as a result of the trend towards a preference for and the convenience of non-cash payment. Each driver is supplied with a mobile hand-held wireless unit that accepts credit card and automatic debit cards as payment. For customer convenience, the restaurant has the capability of accepting automatic bank card debit, American Express, Visa, and MasterCard right at the customers’ door (incl. residence and office/business).
Sports Lounge
The restaurant also features a separate licensed sports lounge which allows for larger group seating and seats a total of approximately 100 people. The lounge is equipped with 5 big-screen Plasma TVs and the latest technology in Satellite TV which provides for a multitude of sports channels and pay-per-view events. A weekly schedule of TV sports events is provided on the restaurant and lounge website (www.cdoll.ca). The lounge can be reserved for special group events such as sports teams, company staff parties, or large family events. The full lunch and dinner menu can be served in the lounge including daily drink and cocktail specials. The bar features a large walk-in cooler and is fully stocked. We offer a variety of brands of draught on tap, domestic and import beers, liquors, and a wide range of cocktails. The décor consists of popular sports memorabilia (autographed photos, posters, sports team jerseys, etc.) of local sports teams and individuals as well as the typical professio nal sports heroes and teams. We also feature games of chance in the form of five Video Lottery Terminals (“VLTs”) which the Government of Saskatchewan both supplies and regulates. As the ‘operator’, we receive a commission of 15% of the net win on a weekly basis (total cash deposited less cash paid out) from these machines.
MARKETING
We plan to promote the awareness of our restaurant business through a marketing plan that consists of six major advertising components: print, direct mail, online (internet), radio, and TV.
We have registered the website of our restaurant, www.cdoll.ca , on as many Internet search engines as is practical. We believe this to be a key competitive advantage as our informal research indicates that our competitors currently either do not focus on this type of marketing or do not engage in it all. An Internet user is able to conduct a search by entering key words such as the type of restaurant and market/trading area to obtain a desired listing of specific restaurant websites (i.e. Chinese + Restaurants + Regina). Our website, www.cdoll.ca, should appear on this list. A
key factor is that we are able to display our takeout and delivery menus as well as daily menu specials on our website online where they can be reviewed and then a hard copy can be printed by the customer in the comfort of his/her home or office. We believe that the most important Internet search engine onto which we have registered our website is the Google search engine because many other search engines, such as Lycos and Excite, use it a primary source for their search results. To date we have registered our website in several search engines, including Google, Yahoo, Lycos, Alta Vista, Excite, Infoseek, Hotbot, and Webcrawler.
To date our primary method of marketing has been print media. We advertise in the Regina market trading area print media such as the local newspapers with established circulation. We currently advertise our restaurant in the “Leader Post”, the Regina market’s premiere daily newspaper in terms of readership circulation. We plan to also advertise in various tourism information booklets such as “Tourism Regina”, and “Tourism Saskatchewan” where local restaurants are featured and promoted. These booklets are distributed by the Province and the city and are free of charge for persons interested in obtaining them.
Direct mail is most cost effective and we will be utilizing this form of advertising to promote our takeout and delivery component of our restaurant business extensively. Direct mail, currently via Canada Post, allows us to directly deliver our full regular takeout menus with prices, including current menu promotions and specials, and full contact information on one or two-sided paper sheets of less than 8.5” by 11“ in size directly to a potential customer’s residence or office. We are able to reach a wide audience and can target particular areas of the target market by postal code (Canada) and/or zip code (U.S.) selection. We believe that these menus tend not to be readily discarded as “junk mail” and so a relatively large percentage of mailings will be in fact retained by the recipient for future reference for placing delivery and takeout orders, hence their effectiveness as an advertising and promotion tool.
As we move in to the busier fall season, we will also advertise on radio with planned exposure on the popular local AM and FM radio stations. Television is the most costly form of advertising that we will use in the future to enhance the branding of our current restaurant concept. We will advertise on TV on a seasonal basis only or to promote special events and days such as Christmas, Thanksgiving, New Year’s, Mothers’ Day, etc. As of this date, we do not advertise on radio or television.
GOVERNMENT REGULATION
The restaurant industry is subject to extensive licensing and regulation by state and/or Provincial and local departments and bureaus of alcohol control, health, sanitation, and fire and to periodic review by the state and municipal authorities for areas in which the restaurants are located. Primarily, the company must comply with very stringent health regulations imposed on the business and its operations designed to protect the public or its ability to operate will be restricted. Some jurisdictions may impose restrictions, licensing requirements, or prohibitions on the company’s food services and products. In addition, we are subject to local land use, zoning, building, planning, and traffic ordinances and regulations in the selection and acquisition of suitable sites for constructing new restaurants. Delays in obtaining, or denials of, or revocation or temporary suspension of, necessary licenses or approvals could have a material adverse impact on our development of restaurant s.
Various Federal, State and/or Provincial, and local laws affect our business. The development and operation of restaurants depend to a significant extent on the selection and acquisition of suitable sites. These sites are subject to zoning, land use, environmental, traffic, and other regulations of state and local governmental agencies. City ordinances or other regulations, or the application of such ordinances or regulations, could impair our ability to construct or acquire restaurants in desired locations and could result in costly delays.
The delay or failure to obtain or maintain any licenses or permits necessary for operations could have a material adverse effect on our business. In addition, an increase in the minimum wage rate, employee benefit costs, costs of installing fixtures or accommodations for handicapped individuals or other costs associated with employees could adversely affect our business. We also are subject laws and regulations that, among other things, may require us to
install certain fixtures or accommodations in new restaurants or to renovate existing restaurants to meet federally mandated requirements.
We anticipate that sales of alcoholic beverages will represent an important source of revenue for our restaurants. The temporary suspension or permanent loss or the inability to maintain a liquor license for any restaurant would have an adverse effect on the operations of that restaurant. We do not plan to open a restaurant in the future in any location for which we believe we cannot obtain or maintain a liquor license.
COMPETITION
The restaurant business is highly competitive with respect to price, service, and food type and quality. Restaurant operators also compete for attractive restaurant sites and qualified restaurant personnel and managers. Our restaurants will compete with a large number of other restaurants in our target market, including national and regional restaurant chains and franchised restaurant systems, as well as with locally owned, independent restaurants.
We intend to compete with a variety of restaurant companies in our local market. Our principal competitors in our market include casual full service dine-in restaurants combined that also have delivery and takeout services and licensed lounges. Most of these types of businesses are long established and privately-owned restaurants. Our primary competitors in the business include (but not limited to) Houston Pizza (5 locations), Western Pizza (10 locations), Trifon’s Pizza (8 locations), Lee’s Chop Suey (3 locations), Regency Palace Restaurant, O.B. Kitchen (2 locations), Angkor Southeast Asian Delight, 4 Seasons Palace and Sports Bar, Thomas Cook Restaurants (3 locations), etc. We will also compete with large National family restaurant chains and franchises such as Pizza Hut (5 locations), East Side Mario’s (2 locations), Boston Pizza (5 locations), and Smitty’s Restaurants (6 locations).
Many of these competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than the Company. The Company is aware that certain of its proposed competitors have and may continue to adopt more aggressive pricing or marketing policies. Increased competition may result in reduced operating margins, loss of market share and a diminished brand franchise. The Company believes that the principal competitive factors in its market are brand recognition, location, variety and quality of menu and food services offered, value-added services, management, and quality of staff and service provided.
There can be no assurance that the Company will be able to compete successfully against intended and future competitors. New restaurant and food service product concepts, changing customer tastes and preferences combined with new restaurant openings of existing competitors, as well as large national franchised competitors moving into the market, may increase the competitive pressures on the Company.
EMPLOYEES
Currently, our president, secretary, treasurer and sole director, Mr. Terry G. Bowering, currently handles all of the major responsibilities in the area of corporate administration, business development and research. We did not fully commence business operations until July 1, 2005 with our first restaurant acquisition. Consequently, we had no employees until after this date. As at August 15, 2005, through our wholly-owned subsidiary, Fastserve Foods Inc., the Company had approximately 25 employees of which 7 are part time employees and 18 are full-time employees employed through our subsidiary, Fastserve Foods Inc., at the China Doll Restaurant and Lounge. The Company considers its employee relations to be good and to date we have experienced no work stoppages, strikes, or labor disputes. None of the company’s employees are covered by a collective bargaining agreement.
Currently, we have registered the trading name “China Doll Restaurant” , and “China Doll” in general as it relates to the restaurant and food services business in the province of Saskatchewan, Canada. We intend to register this trademark in the rest of Canada in the future as well, if possible. The registration rights to this trading name were acquired through the acquisition of Fastserve Foods Inc., our wholly owned subsidiary as of July 1, 2005.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with our consolidated audited financial statements and the related notes that appear elsewhere in this registration statement. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this registration statement, particularly in the section entitled "Risk Factors" beginning on page 7 of this registration statement.
Our consolidated audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
RESULTS OF OPERATIONS
Overview – December 22, 2004 (date of inception) to March 31, 2005
From the date of our incorporation on December 22, 2004 to March 31, 2005, we had not generated any revenues. Subsequent to the fiscal year ended March 31, 2005, we still had not begun generating revenues as we did not yet consummate an acquisition of an established restaurant operation, as planned. Our operating activities during this period consisted primarily of incorporating the company in the state of Nevada.
The first period covered by our audited financial statements is from our incorporation date at December 22, 2004 to March 31, 2005 (our fiscal year-end date) during which we had no operations and generated no revenue. For this period our operating expenses are classified into two categories:
- organizational fees, which consisted primarily of organizational costs for incorporating our company and our subsidiary. The amount incurred by us during the period from December 22, 2004 to March 31, 2005 was $ 1,280 (estimated to be $nil for the 12 months ending March 31, 2006); and
- professional fees, which consist primarily of accounting and auditing fees for the year end audit. The amount incurred by our company during the period from December 22, 2004 to March 31, 2005 was $Nil (estimated to be approximately $10,000 for the 12 months ending March 31, 2006).
Overview – First quarter ended June 30, 2005
The second period covered by our audited financial statements is for the period ending June 30, 2005 during which we had no operations and generated no revenue. For the quarter ending June 30, 2005, we generated $Nil in revenue compared to $Nil for the previous period of December 22, 2004 to March 31, 2005. Management expects the vast majority of our revenue to be generated from operations from future restaurant acquisitions.
Total expenses for the quarter ending June 30, 2005 were $ 7,753, compared to $ 1,280 for the previous period of December 22, 2004 to March 31, 2005. Out of these total expenses, $ 4,800 represented Director’s fees and $600 was allocated to office rent. Professional fees for the quarter were $2,352 compared to $ Nil for the period of
December 22, 2004 to March 31, 2005. These expenses related primarily to legal and accounting costs associated with the preparation and filing of this registration statement.
Management services for the first quarter ending June 30, 2005 were $Nil compared to $Nil for the previous period of December 22, 2004 to March 31, 2005. As a result of our restaurant acquisition dated July 1, 2005 (acquired wholly-owned subsidiary Fastserve Foods Inc.) and anticipated revenue thereof, we expect to commence reporting paying Mr. Bowering a total of CDN $ 3,000 per month commencing July 1, 2005 for management services.
Amortization expense was $Nil , and transfer agent and filing fees were $Nil for the quarter ended June 30, 2005. We did not incur any expense for any of these items during the previous period of December 22, 2004 to March 31, 2005.
Advertising expense for the quarter ended June 30, 2005 was $Nil. Advertising expense was $Nil for the previous period of December 22, 2004 to March 31, 2005.
Please see Note 7 in Notes to the Audited Financial Statements for the period ending June 30, 2005 for Significant Event as of July 1, 2005. This will materially impact results of our operations in future reporting periods.
Liquidity and Capital Resources
For the quarter ended June 30, 2005, cash used by operating activities was $Nil , compared to $Nil for the previous period of December 22, 2004 to March 31, 2005 and consisted primarily of management services, legal and accounting expenses.
Cash used by investing activities during the quarter was $Nil. Cash used by investing activities for the previous period was $Nil.
At June 30, 2005 we had $100 in cash, compared to $100 as at March 31, 2005.
Net cash provided by financing activities for the quarter ended June 30, 2005 was $ Nil, compared to $100 for the previous period of December 22, 2004 to March 31, 2005. Non-cash financing activities for the period were $Nil compared to $Nil for the previous period of December 22, 2004 to March 31, 2005.
PLAN OF OPERATIONS
We have only recently commenced operations with our first restaurant business acquisition (July 1, 2005), the China Doll Restaurant and Lounge, and consequently have no recorded revenue to report as of the period ending June 30, 2005. Our plan of operations going forward, therefore, relates to the period after July 1, 2005 assuming full operations of our first restaurant acquisition.
The Company's primary objective for fiscal period ending March 31, 2006 is to increase its existing restaurant sales while controlling costs. We will focus our marketing efforts on positioning our restaurant business based on the highly differentiated quality of our core Chinese food menu items both for dine-in and takeout. This positioning is intended to build on the substantial brand equity that China Doll Restaurant has in product quality and taste in its core menu of Chinese food offerings and to more definitively differentiate and integrate the China Doll Restaurant brand experience.
The Company's other objectives for fiscal 2005/2006 are as follows:
November 2005 SB-2 Registration Statement Page 27
ALLSTAR RESTAURANTS, INC.
China Doll Restaurant’s ongoing objective is to increase average restaurant sales through increased customer counts in each primary daypart (lunch, dinner and late-night), selective menu and price promotions and effective marketing of China Doll Restaurant’s competitive attributes of high quality food products, superior taste and value pricing. The Company expects modest food menu price increases in 2005/2006 due to anticipated higher commodity costs.
The Company has plans to fully develop the Regina market area in terms of additional China Doll Restaurant locations that will focus primarily on delivery and takeout service. Management estimates that the Regina area market will support 2-3 additional locations focusing on delivery and takeout service utilizing the China Doll Restaurant brand name recognition for quality and service. Media advertising is important to effectively build brand awareness and enhance the positioning of the China Doll Restaurant as the premiere restaurant for Chinese cuisine in the Regina area market. All of our growth for fiscal 2005 and 2006 will be focused in the Regina area core market. These development plans are highly dependent on the availability of potential sites, lease terms, financing availability and cost, and availability and quality of management and staff personnel.
Growth Strategy
We are incorporating the following strategy to our future objectives:
- the addition and development of additional China Doll Restaurants with a target of three (3) additional locations in our existing market by 2007;
- the possible acquisition or development of restaurants operating under other restaurant concepts;
Competitive Strategy
There are three major ways in which we will create an advantage over our competitors over the next twelve months;
Operations
Allstar Restaurants commenced daily business operations on July 1, 2005 with our first restaurant acquisition. This restaurant is an established business so management expects to see significant revenue recorded over the next quarter following the acquisition date, as compared to previously reported quarters.
Promotion
We expect to significantly increase our planned expenditures for marketing and promotion over the next twelve month period. This is essential to increase awareness and to position our existing restaurant operation as a solid leader in the market and as a result we expect to aggressively grow sales over the period. We expect that promotion expenses will average $ 5,000 to $ 6,000 per month over the next twelve-month period ending March 31, 2006.
Research and Development
We have acquired the domain names “www.cdoll.ca, www.chinadollregina.com, and www.chinadollrestaurant.ca” for our website. The website is now fully operational. The website’s primary purpose to date is to display our contact information, allow us to inform online customers who we are and what we offer and, of course, to display our menus in detail. Currently, we display our takeout and delivery menus in full detail in PDF format making it relatively easy for customers to either download/save the menus to their personal computers or alternatively to print them directly from the website in hard copy. To date we have spent approximately $2,500 designing and implementing this website. We expect to spend a further $2,500 developing the website between now and the end of the annual fiscal year ending March 31, 2006. We expect the useful life of the website to be three years. We intend to continue construction and development of our website to incorporate other features such as daily menu spe cials, menu items features, a gift certificates program, customer Interactive e-mail feedback section, news and info, and upcoming schedule of events in the sports lounge, etc. All of our printing, packaging materials, direct mail advertising, and other advertising programs will display and/or feature the “url” of the website thereby increasing traffic to our website and establishing a ‘captive’ audience. We will use the website to advertise online and open another avenue to target customers that perhaps the traditional forms of advertising do not reach as effectively. We believe the website to be another facet of our overall marketing plan that is somewhat unique or is otherwise not utilized fully as yet by our competitors in our market.
Purchase or Sale of Equipment
In our efforts to upgrade the accounting and management systems in our current and future restaurants, and as part of our strategic plan, we do anticipate that we will expend funds on attaining the latest technology in point-of-sale (“POS”) computerized electronic cashier terminals. These POS systems will allow management to remotely “poll” for sales and cost data on an as-needed basis, which is likely to be on a weekly basis. The POS terminals are placed in various locations in the restaurant and feature touch-screen technology increasing speed, efficiency, and reducing errors by restaurant service personnel. Orders are entered into a pre-programmed terminal that immediately sends the order electronically to the kitchen for preparation via a thermal printer printout placed directly in the kitchen order area. Orders can be entered directly into the terminal or via hand-held wireless device (i.e. Palm Pilot) right at the customers’ table by the server, eliminating the need f or any manual order taking via paper and dramatically enhancing speed and efficiency. The order is recorded in the terminal database. Once the customer closes his bill, a receipt is printed and payment is received. Management can immediately poll the terminal to check real-time sales, inventory, and server personnel ID data.
We may also purchase additional computer hardware and software for our ongoing accounting and administrative operations. We also anticipate that we will install a security system featuring day and “night-vision” cameras with full recording and database capability in our current and future restaurants facilities. These cameras are non-intrusive by design and are strategically placed to monitor key locations around the restaurant. These systems monitor employees and customers during the day and record any motion activity at night after business hours.
The estimated total expenditure for the equipment detailed above for our existing restaurant is approximately $ 20,000. We do not anticipate expending any significant amount on purchasing any major kitchen and restaurant food preparation equipment or fixtures in the near future other than aforementioned items.
Personnel
As of September 30, 2005, our management personnel include our president, Terry G. Bowering. Mr. Bowering handles all of the responsibilities in the area of corporate administration, business development and research. In addition, our president also provides us with capital raising services. In the twelve months ending March 31, 2006, we plan to raise our total number of permanent employees to approximately 30: we will add one in management, one in sales and marketing, and one in computer systems administration. The balance of our personnel, since July 1, 2005 restaurant business operations acquisition, are currently employed in the day-to-day operations of the restaurant business. We anticipate the cost of each employee to be added will average approximately $ 2,500 per month and we may choose to compensate our employees with consideration other than cash, such as shares of our common stock or option to purchase shares of our common stock as incentives.
If our sales and marketing program is successful in growing our sales beyond our current expectations, we may be required to hire new personnel to meet the demand and maintain a high level of customer service. We anticipate that we may need to hire additional wait server personnel (2-3 full time) and additional kitchen personnel (3 full time), particularly in the preparation (kitchen ‘prep’) area over the next twelve months.
Other Expenses
We also incurred expenses unrelated to the business operations including auditing and legal expenses relating to the preparation of this registration statement. We expect to incur a total of $7,500 in legal expenses related to the preparation and filing of this registration statement. After the effectiveness of this registration statement, we expect our ongoing legal expenses to be significantly reduced, averaging less than $500 per month.
Future Operations
We have incurred operating losses since inception, and it is possible that this may continue into the period ending September 30, 2005. Management projects that we may require an additional $25,000 to $50,000 to fund some of our non-operating expenditures such as legal and auditing, website, and marketing expenses, etc., for the year ended March 31, 2006, broken down as follows:
Estimated Funding Required During the Year Ended March 31, 2006 | |
Non-operating expenditures: |
|
Marketing | $ 15,000 - $ 40,000 |
General and Administrative | $ 10,000 - $ 15,000 |
Website development costs | $ 2,000 - $ 2,500 |
Total | $27,000 - $57,500 |
Due to our lack of business operations and resulting operating deficit, in their report on our audited consolidated financial statements for the period ended June 30, 2005, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our audited consolidated financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors. With our recent restaurant business acquisition as at July 1, 2005, we expect this situation to change over future operating quarters. However, we may still incur losses as we will be expending funds for expenses unrelated to the operation of the restaurant business such as auditing and legal expenses necessary to file this registration statement and to raise capital in the future as needed.
As detailed elsewhere in this prospectus, we effected two equity private placements that closed September 30, 2005, resulting in gross proceeds of $ 24,250. These funds will enable us to address our expenses initially incurred in filing
this registration statement. We anticipate that these funds will be sufficient to satisfy our cash requirements for the year ended March 31, 2006. If we require any additional monies during fiscal 2006, we plan to raise any such additional capital primarily through the private placement of our securities.
The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further funds required for our continued operations and expansion plans. We are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we may not be able to execute our acquisition and expansion plans as detailed.
In our management's opinion, we need to achieve the following events or milestones in order for us to become a profitable organization over the next twelve month period ending March 31, 2006:
-we must increase sales of our existing restaurant by 25 %
-we must develop a uniform professional system of standards, operating procedures, and management training programs so that we may maximize the efficiency and effectiveness of the management and staff personnel of each of our restaurants going in to the future
-we must raise capital to fund one additional acquisition or develop one additional location by the end of the next fiscal year-end March 31, 2006
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). The requirements of SFAS No. 150 apply to issuers' classification and measurement of freestanding financial instruments, including those that comprise more than one option or forward contract. SFAS No. 150 does not apply to features that are embedded in a financial instrument that is not a derivative in its entirety. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instru ments of nonpublic entities. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of SFAS No. 150 and still existing at the beginning of the interim period of adoption. Restatement is not permitted. The adoption of this standard is not expected to have a material effect on our company's results of operations or financial position.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," which amends SFAS No. 123 to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 expands the disclosure requirements of SFAS No. 123 to require more prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The transition provisions of SFAS No. 148 are effective for fiscal years ended after December 15, 2002. The transition provisions do not currently have an impact on our company's financial position and results of operations as our company has no stock-based employee compensation. Our company will adopt the disclosure requirements of SFAS No. 148 if stock-based compensation is awarded to employees.
In June 2002, FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". The provisions of this Statement are effective for exit or disposal activities that are initiated after December 31, 2002,
with early application encouraged. This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)". This Statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Our company adopted SFAS No. 146 on April 18, 2003. The effect of adoption of this standard does not currently have an impact on our company's results of operations and financial position.
FASB has also issued SFAS No. 145, 147 and 149 but they will not have any relationship to the operations of our company and therefore a description of each and their respective impact on our company's operations have not been disclosed.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Our consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles used in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our consolidated financial statements is critical to an understanding of our financials.
GOING CONCERN
The consolidated audited financial statements included with this prospectus have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business. Accordingly, the consolidated audited financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.
In order to continue as a going concern, we require additional financing. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to continue as a going concern, we would likely be unable to realize the carrying value of our assets reflected in the balances set out in the preparation of the audited consolidated financial statements.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Other than as listed below, we have not been a party to any transaction, proposed transaction, or series of transactions in which the amount involved exceeds $60,000, and in which, to our knowledge, any of our directors, officers, five percent beneficial security holder, or any member of the immediate family of the foregoing persons has had or will have a direct or indirect material interest.
The promoters of our company are our president, secretary, treasurer, and director, Terry G. Bowering director as at October 31, 2005.
As of March 31, 2005, one related party transaction has been recorded. This related party transaction consisted of a shareholder’s loan of $1,280 for initial incorporation costs to incorporate the company in the state of Nevada. The company was incorporated by Incorp Services Inc., of Las Vegas, Nevada. This expense was paid by the company’s Director and President, Mr. Terry G. Bowering. The loan is a demand loan carrying no interest and no set terms of repayment.
On March 29, 2005, we issued 100,000 shares of our common stock at $0.001 per share to Terry G. Bowering, our president, secretary, treasurer and our sole director, in a private placement transaction.
In the period April 1, 2005 to the period ending June 30, 2005, we expensed $ 4,800 for Director’s fees and management services for Terry G. Bowering, our president, secretary, treasurer, and our sole director.
On July 1, 2005, we issued 5,000,000 shares of common stock to Terry G. Bowering, our president, secretary, treasurer and director, in acquiring all of the outstanding common shares of Fastserve Foods Inc., of which Mr. Bowering was sole shareholder. This share issuance satisfied the requirements pursuant to Rule 903 of Regulation S and/or Section 4(2) of the Securities Act of 1933. Mr. Bowering will not be selling the total 5,100,000 common shares that he is currently holding as part of this offering.
Our president, Terry G. Bowering, provides management services and office premises to our company. Prior to June 30, 2005, the services were provided at no charge to our company. Subsequent to July 1, 2005, we have paid and will continue to pay our president CDN$ 3,000 per month for these services.
Other than the CDN $ 3,000 per month to be paid to Terry G. Bowering for management services to commence July 1, 2005, our director and officer have received no compensation for their time, effort and attention that they give to the affairs of our company.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is currently no trading market for our common stock. We do not have any common stock subject to outstanding options or warrants and there are no securities outstanding that are convertible into our common stock. None of our issued and outstanding common stock is eligible for sale pursuant to Rule 144 under the Securities Act of 1933. Rule 144, as currently in effect, allows a person who has beneficially owned shares of a company's common stock for at least one year to sell within any three month period a number of shares that does not exceed the greater of:
(1) 1% of the number of shares of the subject company's common stock then outstanding which, in our case, will equal approximately 100,000 shares as of the date of this prospectus; or
(2) the average weekly trading volume of the subject company's common stock during the four calendar weeks preceding the filing of a notice on form 144 with respect to the sale.
Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about the subject company.
Under Rule 144(k), a person who is not one of the subject company's affiliates at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, is entitled to sell shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.
As of the date of this prospectus, persons who are our affiliates hold all of the 5,100,000 shares that may be sold pursuant to Rule 144 after July 1, 2006. Accordingly, Rule 144 applies to the 5,100,000 shares except for subparagraph (k) of Rule 144 which does not apply to affiliate shares as described in the preceding paragraph. All shares owned by affiliates will continue to be subject to the resale limitations imposed by Rule 144 for so long as the shareholder remains an affiliate of our company. Three months after such persons cease to be affiliates of our company. Sales may be made after the two year period from the issue date without 144 limitations under Rule 144(k).
We are registering 9,150,000 shares of our common stock under the Securities Act of 1933 for sale by the selling securities holders named in this prospectus. Mr. Terry G. Bowering, an affiliate of our company (our Chairman, President, Secretary, Treasurer), currently owns 5,100,000 common shares. As stated, Mr. Bowering is not registering these shares for sale in this offering. There are currently 42 shareholders of record of our common stock.
We have not declared any dividends on our common stock since the inception of our company on December 22, 2004. There is no restriction in our Articles of Incorporation and Bylaws that will limit our ability to pay dividends on our common stock. However, we do not anticipate declaring and paying dividends to our shareholders in the near future.
Shares of our common stock are subject to rules adopted by the Securities and Exchange Commission that regulate broker-dealer practices in connection with transactions in "penny stocks". "Penny stock" is defined to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. If we establish a trading market for our common stock, our common stock will most likely be covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors." The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities.
EXECUTIVE COMPENSATION
No executive officer of our company received an annual salary and bonus that exceeded $100,000 during the period from inception (December 22, 2004) to the fiscal year ended March 31, 2005. The following table shows the compensation received by our president for the period from inception (December 22, 2004) to the period ending June 30, 2005.
SUMMARY COMPENSATION TABLE | ||||||||
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| Annual Compensation | Long Term Compensation (1) |
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|
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| Awards | Payouts |
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Name and Principal | Year | Salary | Bonus | Other | Securities | Restricted | LTIP | All Other |
Terry G. Bowering | 2005 | Nil | Nil | Nil | Nil | Nil | Nil | Nil |
(1) The value of perquisites and other personal benefits, securities and property for the executive officers that do not exceed the lesser of $50,000 or 10% of the total of the annual salary and bonus is not reported herein.
(2) Terry G. Bowering became our President, Chief Executive Officer, Secretary, and Treasurer on December 22, 2004.
Stock Options and Stock Appreciation Rights
From the date of inception (December 22, 2004) to the fiscal year ended March 31, 2005 and subsequent to March 31, 2005 up to October 15, 2005, we did not grant any stock options or stock appreciation rights to any of our directors or officers and there were no stock options or stock appreciation rights outstanding on March 31, 2005.
Compensation of Directors
We reimburse our directors for expenses incurred in connection with attending board meetings. We did not pay any other director's fees or other cash compensation for services rendered as a director for the fiscal year ended March 31, 2005. For the subsequent period ended June 30, 2005, we expensed $4,800 for Director’s fees and management services for Director, Terry G. Bowering.
We have no formal plan for compensating our directors for their service in their capacity as directors, although such directors are expected in the future to receive stock options to purchase common shares as awarded by our board of directors or (as to future stock options) a compensation committee which may be established. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director. No director received and/or accrued any compensation for their services as a director, including committee participation and/or special assignments.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
Other than as set out below, we have not entered into any employment agreement or consulting agreement with our directors and executive officers.
Our president, Terry G. Bowering provides management services and office premises to our company. Pursuant to a verbal agreement, we have agreed to pay our president CDN$ 3,000 per month for these services commencing July 1, 2005.
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors.
We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.
We are not required to deliver an annual report to our stockholders but will voluntarily send an annual report, together with our annual audited financial statements. We are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. Our Securities and Exchange Commission filings are available to the public over the Internet at the SEC's website at http://www.sec.gov.
The public may read and copy any materials filed by us with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. We are an electronic filer. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The Internet address of the site is http://www.sec.gov.
FINANCIAL STATEMENTS
Our consolidated financial statements are stated in United States Dollars (US$) and are prepared in conformity with generally accepted accounting principles of the United States of America. The following financial statements pertaining to Allstar Restaurants, are filed as part of this registration statement:
Audited Financial Statements
- Consolidated Balance Sheet as at June 30, 2005 (audited) and March 31, 2005 (audited).
- Consolidated Statement of Operations for the three month period ended June 30, 2005 (audited), and for the period from December 22, 2004 (Date of Inception) to June 30, 2005 (audited).
- Consolidated Statement of Cash Flows for the three month period ended June 30, 2005 (audited) and for the period from December 22, 2004 (Date of Inception) to June 30, 2005, 2005 (audited).
- Consolidated Statement of Stockholders' Deficit for the three month period ended June 30, 2005 (audited) and for the period from December 22, 2004 (Date of Inception) to March 31, 2005 (audited).
- Notes to the Consolidated Financial Statements.
ALLSTAR RESTAURANTS
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
JUNE 30, 2005
ALLSTAR RESTAURANTS
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
Balance Sheets 2
Statements of Operations 3
Statements of Stockholder's Equity (Deficit) 4
Statements of Cash Flows 5
Notes to the Financial Statements 6 - 10
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Allstar Restaurants (a development stage company)
Regina, Sk. Canada
We have audited the accompanying balance sheets of Allstar Restaurants (a development stage company) as of June 30, 2005 and March 31, 2005, and the statements of operations, stockholder's equity (deficit) and cash flows for the period from inception on December 22, 2004 through June 30, 2005. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, these financial statements referred to above present fairly, in all material respects, the financial position of Allstar Restaurants (a development stage company) as of June 30, 2005 and March 31, 2005, and the results of its operations and its cash flows for the period from inception on December 22, 2004 through June 30, 2005 in conformity with United States generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 6 to the financial statements, the Company has sustained recent losses from operations, has a deficit in working capital and a stockholders’ deficit. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
HJ & Associates, LLC
Salt Lake City, Utah
October 6, 2005
ALLSTAR RESTAURANTS
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
2005 2005
June 30 March 31
CURRENT ASSETS
Cash $ 100 $ 100
========= ========
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 2,353 $ -
Shareholder's loan 1,280 1,280
&nb sp; 3,633 1,280
STOCKHOLDER'S EQUITY
Common stock; 75,000,000 shares authorized at
$0.001 par value, 100,000 shares issued and
outstanding (Note 3) 100 100
Additional paid-in capital 5,400 -
Deficit accumulated during the development stage �� (9,033) (1,280)
&nb sp; (3,533) (1,180)
&nb sp; $ 100 $ 100
========= ========
Please note: The accompanying notes are an integral part of the financial statements.
ALLSTAR RESTAURANTS
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
From inception on
December 22, 2004
through
2005 2005
June 30 June 30
(3 months)
REVENUE $ - $ -
EXPENSES
Director's fees 4,800 4,800
Incorporation costs - 1,280
Professional fees 2,353 2,353
Rent 600 600
NET LOSS $ (7,753) $ (9,033)
========= ===========
Basic loss per share of common stock ($ 0.078)
=========
Weighted average number of common shares outstanding 100,000
=========
Please note: The accompanying notes are an integral part of the financial statements.
ALLSTAR RESTAURANTS
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
Deficit
Accumulated
During the
Common Stock Additional Development
Shares Amount Paid in Capital Stage
BALANCE ON INCEPTION
December 22, 2004 - $ - $ - $ -
Common stock issued for cash
March 30, 2005 100,000 100 - -
Net loss from inception on
December 22, 2004 through
March 31, 2005 - - - (1,280)
Balance, March 31, 2005 100,000 100 - (1,280)
Capital contributed by services
on through June 30, 2005 - - 5,400 -
Net loss for three months ended
June 30, 2005 - - - (7,753)
BALANCE, JUNE 30, 2005 100,000 $ 100 $ 5,400 $ (9,033)
========== ========= ========== ============
Please note: The accompanying notes are an integral part of the financial statements.
ALLSTAR RESTAURANTS
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
From inception on
December 22, 2004
&nbs p; through
2005 & nbsp; 2005
June 30 June 30
(3 months) & nbsp;
OPERATING ACTIVITIES
Net loss $ (7,753) $ (9,033)
Items not requiring an outlay of cash
Services contributed by officers, directors and stockholders 5,400 5,400
(2,353) (3,633)
Change in non cash working capital items:
Accounts payable and accrued liabilities 2,353 2,353
- (1,280)
FINANCING ACTIVITIES
Share capital issued - 100
Loan received from shareholder - 1,280
&nb sp; - 1,380
NET INCREASE IN CASH - 100
CASH POSITION, BEGINNING OF PERIOD 100 -
CASH POSITION, END OF PERIOD $ 100 $ 100
============ ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
NON CASH FINANCING ACTIVITIES
Services contributed by officials, directors and stockholders $ 5,400 $ 5,400
============ ===========
Please note: The accompanying notes are an integral part of the financial statements.
The company was incorporated December 22, 2004 under the laws of the state of the Nevada as Nexstar Properties Inc. The company name was changed to Allstar Restaurants on March 30, 2005. Allstar Restaurants was established to pursue opportunities in the family style full‑service segment of the restaurant and food services industry with the objective of developing into a multi‑unit restaurant and food services operation. The company has not commenced operations as of June 30, 2005.
2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance with Generally Accepted Accounting Principles followed in the United States of America and reflect the following significant accounting policies.
(a) Financial InstrumentsIt is management's opinion that the company is not exposed to significant interest, currency or credit risks arising from its financial instruments.
(b) Use of Estimates
The preparation of financial statements in accordance with generally accepted accounting principles used in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from management's best estimates, as additional information becomes available in the future. As adjustments become necessary, they are reported in income in the period in which they become known
3. CAPITAL STOCK
The company has authorized 75,000,000 common voting shares each with a par value of $0.001.
2005 2005
Issued and outstanding:
100,000 common shares $ 100 $ 100
Contributed capital 5,400 -
&n bsp; $ 5,500 $ 100
=========== ============
4. RELATED PARTY TRANSACTIONS
The shareholder's loan consists of $1,280 paid by the sole shareholder, director and president Mr. Terry G. Bowering, for the costs to incorporate the company in the state of Nevada. The company was incorporated by Incorp Services Inc. of Las Vegas, Nevada. The loan, is payable on demand, has no set terms of repayment and carries no interest.
The shareholder contributed capital to the company in the form of office rental and foregone director's fees. The shareholder does not expect reimbursement for these items nor does he make a specific claim on the capital of the company. The total of these costs are shown on the balance sheet as contributed capital of $5,400 and in the income statement as rent of $600 and director's fees $4,800.
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment
Net deferred tax assets consist of the following components:
June 30 March 31
2005 2005
Deferred tax assets:
Net operating loss carryover $ 1,417 500
Related Party - -
Deferred tax liabilities:
Depreciation - -
Valuation allowance (1,417) (500)
Net deferred tax asset $ - -
=========== =========
The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 39% to pretax income from continuing operations for the three months ended June 30, 2005 due to the following:
June 30 March 31
2005 2005
Book Income $ (3,024) (500)
Related Party Accruals - -
Depreciation - -
Deferred Compensation - -
Contributed capital 2,106 -
Stock for Services/ Options Expense - -
Valuation allowance 918 500
$ - -
============ ============
At June 30, 2005, the Company had net operating losses carried forward of approximately $3,633 that may be offset against future taxable income from the year 2006 through 2025. No tax benefit has been reported in the June 30, 2005 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.
The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. At June 30, 2005, the Company has an accumulated deficit of $9,033 and has incurred a loss from operations for the three months then ended. The Company's shareholders' deficit is $3,533 and its current liabilities exceed its current assets by $3,533. These factors create uncertainty about the Company's ability to continue as a going concern.
In order to continue as a going concern and achieve a profitable level of operations, the Company will require, among other things, additional capital resources. Management's plans to obtain such resources for the Company include (1) raising additional capital through sale of common stock in a private placement share offering expected to commence in July 2005; (2) possibility of converting existing promissory notes into common stock; (3) Upon completion of the initial private placement share offering, the company will actively seek to execute an acquisition of an established restaurant business that presents opportunities for additional cash flow and value creation via marketing and operational enhancements. It is anticipated that the first acquisition will be executed prior to the end of the third quarter; (4) The company ultimately intends to file an SB‑2 Registration statement to the United States Securities and Exchange Commission with the intention of becoming a fully reporting publicly trad ed entity. The company anticipates that the SB‑2 Registration Statement will be filed by the end of the fourth quarter. This will provide additional opportunities for the company to raise capital via stock offerings in the future.
Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
7. SUBSEQUENT EVENTS
On July 1, 2005, a wholly owned subsidiary, Fastserve Foods Inc., incorporated under the laws of the province of Saskatchewan, Canada, in the City of Regina, was acquired. Fastserve Foods Inc. operates an established restaurant and sports lounge called China Doll Restaurant and Lounge (www.cdoll.ca), located in the City of Regina, in the province of Saskatchewan, Canada. This subsidiary acts as an operating company for all business activities relating to the companys restaurant businesses in Canada.
The acquisition was executed by exchanging all (100%) of the issued and outstanding common shares of Fastserve Foods Inc. owned by the shareholder, Mr. Terry Bowering, for 5,000,000 common shares issued by Allstar Restaurants. Mr. Bowering is also currently the Chairman of the Board and Cheif Executive Officer of Allstar Restaurants.
The following condensed pro‑forma information is presented to illustrate the effect of the acquisition on the consolidated financial statements of Allstar Restaurants.
CONSOLIDATED PRO‑FORMA BALANCE SHEET (UNAUDITED)
AS AT JUNE 30, 2005
Allstar Fast Serve
Restaurants Foods Inc Consolidation Total
CURRENT ASSETS
Cash $ 100 $ 63,818 $ - $ 63,918
Accounts receivable - 482 - 482
Inventories - 16,224 - 16,224
Prepaid expenses - 11,486 - 11,486
100 92,010 - 92,110
PROPERTY AND EQUIPMENT - 226,753 - 226,753
INVESTMENT - - - -
$ 100 $ 318,763 $ - $ 318,863
============ ========== =========== ========
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 2,353 $ 26,017 $ - $ 28,370
Income taxes payable - 1,478 - 1,478
Current portion of long term debt - 19,155 - 19,155
Payable to shareholder 1,280 122,251 - 123,531
3,633 168,901 - 172,534
LONG TERM DEBT - 144,271 - 144,271
3,633 313,172 - 316,805
STOCKHOLDER'S EQUITY
Share capital - Issued 5,100,000
common shares 100 82 4,918 5,100
Contributed capital (deficit) 5,400 - (13,951) (8,551)
Retained earnings (9,033) 5,509 9,033 5,509
(3,533) 5,591 - 2,058
$ 100 $ 318,763 $ - $ 318,863
7. SUBSEQUENT EVENTS continued
CONSOLIDATED PRO-FORMA STATEMENTOF OPERATIONS (UINAUDITED)
FROM INCEPTION ON DECEMBER 22, 2004 THROUGH JUNE 30, 2005 INCLUDING THE OPERATIONS
OF FAST SERVE FOODS INC. FROM INCEPTION ON FEBRUARY 15, 2005 THROUGH JUNE 30, 2005
Allstar Fast Serve
Restaurants Foods Inc Consolidation Total
SALES $ - $ 200,792 $ - $ 200,792
COST OF SALES - 64,191 - 64,191
GROSS PROFIT - 136,601 - 136,601
EXPENSES
Salaries and benefits 4,800 77,582 (4,800) 77,582
Rent and utilities 600 23,126 (600) 23,126
Amortization - 10,009 - 10,009
Marketing - 9,359 - 9,359
Interest and bank charges - 3,545 - 3,545
Supplies - 2,172 - 2,172
Administration 3,633 3,811 (3,633) 3,811
9,033 129,604 (9,033) 129,604
INCOME BEFORE INCOME TAXES (9,033) 6,997 9,033 6,997
PROVISION FOR INCOME TAXES - 1,488 - 1,488
NET INCOME (9,033) 5,509 9,033 5,509
DEFICIT, BEGINNING OF YEAR - - - -
RETAINED EARNINGS, END $ (9,033) $ 5,509 $ 9,033 $ 5,509
Sales of Units:On September 30, 2005, the Company issued 4,850,000 ‘units’ to 41 subscribers at an offering price of $0.005 per unit for gross proceeds of $24,250. Each unit consists of 1 common share and 1 warrant exercisable at $0.05 per share until August 1, 2007.
WHERE YOU CAN FIND MORE INFORMATION
We are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. Our Securities and Exchange Commission filings are available to the public over the Internet at the SEC's website at http://www.sec.gov.
You may also read and copy any materials we file with the Securities and Exchange Commission at the SEC's public reference room at 450 Fifth Street N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms.
We have filed with the Securities and Exchange Commission a registration statement on Form SB-2 under the Securities Act with respect to the securities offered under this prospectus. This prospectus, which forms a part of that registration statement, does not contain all information included in the registration statement. Certain information is omitted and you should refer to the registration statement and its exhibits. You may review a copy of the registration statement at the SEC's public reference room. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Our filings and the registration statement can also be reviewed by accessing the SEC's website at http://www.sec.gov.
You should rely only on the information contained in this prospectus. No finder, dealer, sales person or other person has been authorized to give any information or to make any representation in connection with this offering other
than those contained in this prospectus and, if given or made, such information or representation must not be relied upon as having been authorized by Allstar Restaurants . This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby by anyone in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common shares.
DEALER PROSPECTUS DELIVERY OBLIGATION
Until a date, which is 90 days after the date of this prospectus, all dealers that effect transactions in these securities whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24 INDEMNIFICATION OF DIRECTORS AND OFFICERS
Nevada corporation law provides that:
- a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful;
- a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys' fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be lia ble to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper; and
- to the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding, or in defense of any claim, issue or matter therein, the corporation shall indemnify him against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense.
We may make any discretionary indemnification only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made:
- by our stockholders;
- by our board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding;
- if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion;
- if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion; or
November 2005 SB-2 Registration Statement Page 38
ALLSTAR RESTAURANTS, INC.
- by court order.
Our Articles of Incorporation provide that no director or officer shall be personally liable to our company or any of its stockholders for damages for breach of fiduciary duty as a director or officer involving any act or omission of such director or officer unless such acts or omissions involve: (i) a breach of the director's duty of loyalty to our company and our stock holders, (ii) bad faith, intentional misconduct or a knowing violation of law, (iii) the payment of dividends in violation of the General Corporate Law of Nevada, or (iv) any transaction from which the director derived an improper personal benefit.
Our Bylaws provide we have the power to indemnify, to the greatest allowable extent permitted under the General Corporate Laws of Nevada, directors or officers of our company for any duties or obligations arising out of any acts or conduct of the officer or director performed for or on behalf of our company. We will reimburse each such person for all legal and other expenses reasonably incurred by him in connection with any such claim or liability, including power to defend such persons from all suits or claims as provided for under the provisions of the General Corporate Law of Nevada.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of our company under Nevada law or otherwise, we have been advised the opinion of the Securities and Exchange Commission is that such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event a claim for indemnification against such liabilities (other than payment by us for expenses incurred or paid by a director, officer or controlling person of our company in successful defense of any action, suit, or proceeding) is asserted by a director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction, the question of whether such indemnification by it is against public policy in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
Item 25 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by us in connection with the issuance and distribution of the securities being registered hereunder. No expenses shall be borne by the selling stockholder. All of the amounts shown are estimates, except for the SEC Registration Fees.
SEC registration fees | $100.00 |
Printing and engraving expenses | $1,000(1) |
Accounting fees and expenses | $5,000(1) |
Legal fees and expenses | $10,000(1) |
Transfer agent and registrar fees | $1,000(1) |
Fees and expenses for qualification under state securities laws | $0 |
Miscellaneous | $1,000(1) |
Total | $18,100.00 |
(1) We have estimated these amounts
Item 26 RECENT SALES OF UNREGISTERED SECURITIES
On March 29, 2005, we issued 100,000 common shares to Terry G. Bowering at an offering price of $0.001 per share for gross offering proceeds of $100 in an offshore transaction pursuant to Rule 903 of Regulation S and/or Section 4(2) of the Securities Act of 1933. Terry G. Bowering is not a U.S. person as that term is defined in Regulation S. No directed selling efforts were made in the United States by Allstar Restaurants, any distributor, any of their respective affiliates or any person acting on behalf of any of the foregoing. We are subject to Category 3 of Rule 903 of Regulation S and accordingly we implemented the offering restrictions required by Category 3 of Rule 903 of Regulation S by including a legend on all offering materials and documents which stated that the shares have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States or to U.S. persons unless the shares are registered under the Securities Act of 1933, or an exemption from the regist ration requirements of the Securities Act of 1933 is available. The offering materials and documents also contained a statement that hedging transactions involving the shares may not be conducted unless in compliance with the Securities Act of 1933.
On July 1, 2005, we issued 5,000,000 common shares to Terry G. Bowering at a negotiated price of $0.005 per share in an offshore transaction pursuant to Rule 903 of Regulation S and/or Section 4(2) of the Securities Act of 1933. These shares were issued in an acquisition share exchange in which no cash proceeds were realized. Terry G. Bowering is not a U.S. person as that term is defined in Regulation S. No directed selling efforts were made in the United States by Allstar Restaurants, any distributor, any of their respective affiliates or any person acting on behalf of any of the foregoing. We are subject to Category 3 of Rule 903 of Regulation S and accordingly we implemented the offering restrictions required by Category 3 of Rule 903 of Regulation S by including a legend on all offering materials and documents which stated that the shares have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States or to U.S. persons unless the shares are registered u nder the Securities Act of 1933, or an exemption from the registration requirements of the Securities Act of 1933 is available. The offering materials and documents also contained a statement that hedging transactions involving the shares may not be conducted unless in compliance with the Securities Act of 1933.
On September 30, 2005, we issued 4,300,000 ‘units’ to 33 subscribers at an offering price of $0.005 per unit share for gross offering proceeds of $ 21,500 pursuant to Rule 506 of Regulation "D". Each ‘unit’ consisted of 1 common share and 1 warrant exercisable at $0.05 per share until August 1, 2007. The sale price of our common stock was the result of negotiations between the respective purchasers and the company, and was not based on book value or our assets.
On September 30, 2005, we issued 550,000 common shares to 8 subscribers at an offering price of $0.005 per share for gross offering proceeds of $2,750 in an offshore transaction pursuant to Rule 903 of Regulation S and/or Section 4(2) of the Securities Act of 1933. Terry G. Bowering is not a U.S. person as that term is defined in Regulation S. No directed selling efforts were made in the United States by Allstar Restaurants, any distributor, any of their respective affiliates or any person acting on behalf of any of the foregoing. We are subject to Category 3 of Rule 903 of Regulation S and accordingly we implemented the offering restrictions required by Category 3 of Rule 903 of Regulation S by including a legend on all offering materials and documents which stated that the shares have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States or to U.S. persons unless the shares are registered under the Securities Act of 1933, or an exemption from the regi stration requirements of the Securities Act of 1933 is available. The offering materials and documents also contained a statement that hedging transactions involving the shares may not be conducted unless in compliance with the Securities Act of 1933.
As of September 30, 2005 there were a total of 9,950,000 shares of common stock outstanding. None of our selling stockholders in this prospectus are broker-dealer or affiliates of broker-dealers.
Name of Stockholder | Number of Common | Number of Common Shares Issuable under Warrants held |
Douglas W. Peterson | 100,000 | 100,000 |
Dona Gialketsis | 100,000 | 100,000 |
Damon Curran | 100,000 | 100,000 |
Pacific Realty Management | 400,000 | 400,000 |
Christopher A. Keiser | 100,000 | 100,000 |
Henry L. Rivera | 100,000 | 100,000 |
Daniel Justin | 400,000 | 400,000 |
Richard Minutella | 100,000 | 100,000 |
Steven M. Kordak | 100,000 | 100,000 |
Valerie Sherriee Harrison | 100,000 | 100,000 |
Stephen J. Becker | 100,000 | 100,000 |
Kristina Brichta | 100,000 | 100,000 |
Thomas P. Ackerman | 100,000 | 100,000 |
William B. Lysaught Jr | 100,000 | 100,000 |
Richard G. Miller | 100,000 | 100,000 |
DNA4B | 100,000 | 100,000 |
W. Lance Coultrap | 100,000 | 100,000 |
T. Wheatcraft | 400,000 | 400,000 |
J. Grant Parsons | 100,000 | 100,000 |
Gracemary Avino | 100,000 | 100,000 |
Ron Bassler | 100,000 | 100,000 |
John K. Tholen | 100,000 | 100,000 |
Stephen Ingrassia | 100,000 | 100,000 |
Carla King | 100,000 | 100,000 |
David Dubois | 100,000 | 100,000 |
Mark Marsillo | 100,000 | 100,000 |
Frank Aguilera | 100,000 | 100,000 |
Ray Coultrap | 100,000 | 100,000 |
Dorothy E. Halloran | 100,000 | 100,000 |
Thomas L. McDermott | 100,000 | 100,000 |
Donald C. Jones | 200,000 | 200,000 |
Ronald Darvin Jones | 100,000 | 100,000 |
Total common shares issued pursuant to Rule 506 Offering including Warrants (1) | 4,300,000 | 4,300,000 |
Cathie Vossen | 100,000 |
Darcy Skwara | 100,000 |
Robyn Szilagyi | 100,000 |
Tracy Herauf | 50,000 |
Trent Taylor | 50,000 |
Shirley Katchuck | 50,000 |
Charles Truman | 50,000 |
Jennifer Adams | 50,000 |
Total common shares issued pursuant to Regulation S Offering: | 550,000 |
Terry G. Bowering (2) | 5,100,000 |
Total Common shares issued and outstanding (3) | 9,950,000 |
(1) 4,300,000 Units subscribed by shareholders in Rule 506 private placement offering consisted of 1 common share plus 1 warrant exercisable until August 1, 2007.
(2) Affiliate common shares issued as follows: 100,000 @ $0.001, and 5,000,000 @ $0.005 = 5,100,000 common shares. These shares are not offered for sale under this prospectus.
(3) Total common shares issued and outstanding as of September 30, 2005. Gross offering proceeds combined from all of the above private placement share offerings as of September 30, 2005 = $24,350
The following Exhibits are filed with this Prospectus:
Exhibit | Description |
3.1* | Articles of Incorporation |
3.2* | Bylaws |
5.1* | Opinion of Clark, Wilson, LLP, regarding the legality of the securities being registered. |
* | Audited Financial Statements for the period |
23.1 * | Consent of HJ & Associates, LLC, Certified Public Accountants |
24.1* | Power of Attorney |
3.6 * | Audited Financial Statements for the period |
99.1 * | Subsidiary of Allstar Restaurants: Fastserve Foods Inc. (Saskatchewan, Canada) |
* Filed herewith
Item 28 UNDERTAKINGS
The undersigned company hereby undertakes that it will:
(1) file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to include:
(a) any prospectus required by Section 10(a)(3) of the Securities Act;
(b) reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and
(c) any additional or changed material information with respect to the plan of distribution not previously disclosed in the registration statement;(2) for the purpose of determining any liability under the Securities Act, each of the post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof; and
(3) remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of our company pursuant to the foregoing provisions, or otherwise, our company has been advised that in the opinion of the Commission that type of indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against said liabilities (other than the payment by our company of expenses incurred or paid by a director, officer or controlling person of our company in the successful defense of any action, suit or proceeding) is asserted by the director, officer or controlling person in connection with the securities being registered, our company will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Se curities Act and will be governed by the final adjudication of the issue.
SIGNATURES
In accordance with the requirements of the Securities Act, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in the City of Regina, in the Province of Saskatchewan, Canada, on October 31, 2005.
ALLSTAR RESTAURANTS:
/s/ Terry G. Bowering
By: Terry G. Bowering, President, Secretary, Treasure, and Director
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
Dated: October 31, 2005.
