As filed with the Securities and Exchange Commission on March 15, 2007.
Registration No. __________.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------------------
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ASPEN RACING STABLES
(Name of small business issuer in its charter)
Nevada 6531 98-0517550
(State or Other Jurisdiction (Primary Standard Industrial (IRS Employer
of Organization) Classification Code) Identification #)
ASPEN RACING STABLES DWIGHT McLELLAN
211 Misty Morning Drive 211 Misty Morning Drive
Calgary, Alberta T3Z 2Z8 Calgary, Alberta T3Z 2Z8
(403) 370-1176 (403) 370-1176
(Address and telephone number of (Name, address and telephone
registrant'sexecutive office) number of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional common stock for an offering under
Rule 462(b) of 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 under Rule 462(c) of 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 under Rule 462(d) of 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 under Rule 434, please
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Securities to be Amount to Be Offering Price Per Aggregate Offering
Registered Registered Share Price Registration Fee
Common Stock 1,000,000 $0.30 $300,000 $10.00
The Registrant hereby amends this registration statement on such 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 of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
DAL:638435.1
Preliminary PROSPECTUS
(subject to completion dated March 15, 2007)
ASPEN RACING STABLES
Shares of Common Stock
500,000 Minimum - 1,000,000 Maximum
Price per share: $0.30
Total proceeds to Aspen Racing Stables if maximum sold by us: $300,000.
This prospectus relates to the offer to sell from time to time of up to
1,000,000 shares of common stock offered by Aspen Racing Stables, a Nevada
corporation.
Because this is our initial public offering, there is no public market for our
shares. However, we will attempt to have prices for our shares quoted on the
Over-the-Counter Bulletin Board maintained by the National Association of
Securities Dealers, Inc. after we complete our offering.
Investment in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF OUR SHARES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Underwriting Discount
To be sold by the Company: Price to Public and Commissions Proceeds to Issuer
Per Share $0.30 None $0.30
Total Maximum $300,000.00 None $300,000.00
Total Minimum $150,000.00 None $150,000.00
We will sell the shares ourselves and do not plan to use underwriters or pay any
commissions. We will be selling our shares on a direct basis, and no one has
agreed to buy any of our shares. We expect to end our offering on the earlier of
the sale of all of the shares offered by us or 90 days after the date of this
prospectus. The information in this prospectus is not complete and may be
changed. Pending receipt of the minimum of 500,000 shares, sale proceeds will be
held in escrow at Securities Transfer Corporation and will be returned if such
minimum is not obtained by December 31, 2007. We may not sell our shares until
the registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell our shares and it is not
soliciting an offer to buy our shares in any state where the offer or sale is
not permitted.
_________________, 2007
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this
prospectus. This summary does not contain all of the information that you should
consider before investing in our common stock. You should read the entire
prospectus carefully, including the information under "Risk Factors" beginning
on page 4 and the financial statements, before making an investment decision.
Risk Factors Include:
o We are a development stage company that has generated no revenue and no
profits, and has an accumulated deficit of $10,313 through October 31,
2007.
o Competition in our industry is intense, and we may not be able to compete
effectively, in which case our business will not be developed in accordance
with our plan.
o We have no underwriters and offer no assurance that our stock will be sold.
o We determined the offering price of the shares arbitrarily.
o Our success depends greatly on our management, neither of which is employed
by us full time.
o Our management will have voting control of the company and will comprise of
the initial Board of Directors.
o Dilution will occur to purchasers of stock.
o A large amount of stock may be sold in the future, which could depress our
stock price and create more dilution.
o We do not expect to pay dividends on our common stock in the foreseeable
future.
o There is no public market for our shares and it is possible one will not
develop.
THE COMPANY
Aspen Racing Stables, a Nevada corporation, was incorporated under the laws of
the State of Nevada on March 10, 2006. We are a development stage company formed
to engage in the acquisition and sale of thoroughbred racing stock of every age
from broodmares, weanlings and yearlings to racehorses and stallions. Our
principal office is located at 211 Misty Morning Drive, Calgary, Alberta and our
telephone number is (403) 370-1176.
2
Securities Offered
We are offering a minimum of 500,000 and a maximum of 1,000,000 shares of common
stock, at $0.30 per share, for total gross offering proceeds of $300,000,
assuming the maximum amount is sold.
Shares of common stock outstanding
as of the date of this prospectus 5,000,000 shares
Shares of common stock outstanding
after offering, assuming maximum
amount sold: 6,000,000 shares
TERMS OF THE OFFERING
We are offering a minimum of 500,000 and a maximum of 1,000,000 shares of common
stock at a price of $0.30 per share. Pending receipt of the minimum subscription
amount, sale proceeds will be held in escrow at Securities Transfer Corporation,
and if such minimum is not obtained, will be returned to the subscribers without
interest or deduction. The offering will remain open until the earlier of 90
days from the date hereof or until closed after obtaining the minimum offering
amount.
USE OF PROCEEDS
If we sell all 1,000,000 shares we are offering, we will receive proceeds of
$250,000, net of offering costs of $50,000 which we will apply to working
capital. See "Use of Proceeds."
Plan of Distribution
This is a self-underwritten, direct public offering, with no commitment by
anyone to purchase any shares. The shares offered by us will be offered and sold
by our principal executive officers and directors, who will be considered to be
underwriters. The offering will be made only to accredited investors and only in
states in which there is an exemption for sales to accredited investors.
Financial Data
Summary Operations Data
March 10, 2006
(commencement)
to October 31, 2006
Revenues -
Expenses $10,313
Net income (loss) 10,313
Basic and diluted loss per share -
Balance Sheet Data
October 31, 2006
Current assets $47
Investment in horses 108,713
Total liabilities 113,823
Stockholders' deficit (5,063)
3
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING RISK
FACTORS SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN VALUATING THE COMPANY
AND ITS BUSINESS AND FUTURE PROSPECTS BEFORE PURCHASING ANY OF THE COMMON STOCK.
RISKS RELATED TO OUR BUSINESS
We have a limited operating history, and our business in unproven.
We are a development stage company, with no history of operations. We were
incorporated in the State of Nevada and commenced operations on March 10, 2006
and are a start-up company with no operating history or revenues. We have
depended upon limited investment in our securities to survive. We need to
receive substantially all of the maximum proceeds of the shares offered by us in
this offering to proceed with our business plan. Should we fail to raise
substantial funds, the business will expand more slowly, if at all. We expect to
become a reporting company following the closing of this offering, and our
general and administrative expenses related to public company reporting and
governance, together with other overhead costs, will be approximately $20,000
per month. Although management has agreed to fund working capital deficits for
12 months, if we cannot obtain additional funding from the offering or during
the next 12 months, we will eventually face insolvency and a cessation of
operations.
We will require additional capital beyond the proceeds of this offering.
Even if we sell all of the shares offered, we will not have significant funds
for further expansion and will likely need to obtain additional funding to
realize our full potential. We are only seeking to raise $300,000. As a result,
we will still be considered an extremely small company, even if we sell all of
the stock we are trying to sell. Because we will have so little money, any
negative financial event could totally deplete any reserve we had hoped to have.
Our auditors have questioned our ability to continue as a "going concern".
Since inception, we have incurred losses from operations and lack sufficient
liquidity to continue our operations without external financing. For the year
ended October 31, 2006, we had a net loss of $10,313. In our Auditor's Report
dated March 5, 2007 (except as to Note 8 which is as of March 12, 2007), our
auditors have stated that these factors raise substantial doubt about our
ability to continue as a going concern. Our financial statements do not include
any adjustments relating to the recoverability and classification of recorded
asset amounts or the amount liabilities that might be necessary should we be
unable to continue as a going concern.
Our continuation as a going concern is dependent upon achieving profitable
operations and related positive cash flow and satisfying our immediate cash
needs by external financing until we are profitable. Our plan to achieve
profitability include the purchase, development, and resale of horses. We seek
to raise additional capital through equity issuance, debt financing, and other
types of financing, but we cannot guarantee that sufficient capital will be
raised. No assurances can be given that we will be able to continue as a going
concern.
We must maintain our key managers.
Our success will depend greatly upon our President and Vice President. Dwight
McLellan serves as Chairman, President, CEO and Director, and Trixy
Sasyniuk-Walt serves at Vice President, Secretary, Treasurer and Director. The
loss of either of their services would hamper our ability to implement our
business plan, and could cause our stock to become worthless. We will be heavily
dependent upon their entrepreneurial skills and experience to implement our
business plan and to continue the development of our business. At present,
together they only contribute approximately 20 hours per week to the company,
and their inability to devote greater time and attention to the affairs of the
company could hinder our growth. We do not have an employment agreement with
either Mr. McLellan or Ms. Sasyniuk-Walt, and there is no assurance that either
will continue to manage our affairs in the future. We could lose the services of
either or both parties, and the services of either Mr. McLellan or Ms.
Sasyniuk-Walt would be difficult to replace. Both intend to work greater time
for the company if the offering is closed near the maximum, and our ability to
provide effective management also depends upon the success of the offering.
4
One shareholder controls the company and will effectively continue to do so
after the offering.
Ms. Sasyniuk-Walt currently owns 100% of shares outstanding and after the
offering will hold between 91% and 83 1/3% of shares outstanding. As such, she
will have a significant controlling influence on matters to come before a vote
of stockholders.
RISKS RELATED TO OUR INDUSTRY
Transactions may not be profitable.
Pinhooking is essentially the buying and reselling of horses, much like stocks
and commodities etc. Thus one of the inherent risks is the horses bought with
the intention of reselling them at higher prices will not necessarily translate
into a profitable transaction and we could end up losing money on the
transaction.
We cannot obtain injury insurance for our horses.
Thoroughbred horses can only be insured for mortality. We cannot insure our
horses in case of an injury, and in the event of an injury, we may not be able
to resell the horse and recover the costs incurred to acquire and develop the
horse.
RISKS RELATED TO OUR STOCK
We are controlled by our Management
Our management owns or controls a significant number of the outstanding shares
of our common stock and will continue to have significant ownership of our
voting securities for the foreseeable future.
We can close the offering with a minimum of $150,000 invested.
Because this is a self-underwritten offering, we offer no assurance that any of
our stock will be sold. This offering is being conducted on a direct basis by
our officers, who will be considered to be statutory underwriters. As such, no
assurance are given as to what level of proceeds, if any, will be obtained from
the sale of shares offered by us. In the event we fail to obtain all or
substantially all of the proceeds sought from the sales of shares by us in this
offering, our ability to implement our business plan will be materially and
adversely affected, and investors may lose all or substantially all of their
investment. We can provide no assurance that the subscription proceeds that may
be received by us will be sufficient to sustain our operations prior to the
receipt of enhanced revenues from our customers. Because this is a direct
offering, after a minimum of $150,000 has been deposited into escrow, we will be
able to use any funds received in this offering as soon as we receive the funds.
Accordingly, even if we sell only the minimum amount of shares in this offering,
we will be able to use those funds and the funds will not be returned to the
investor or investors. In this event, and if we are unable to raise funds from
another source, the investor or investors who purchase the minimum amount of
shares would likely lose their entire investment because we would have
insufficient funds to generate sustainable cash flow from operations. If we
receive less than the maximum amount of the offer, we will have fewer funds to
meet our business objectives and fewer shares will be available for the trading
market and float.
The offering price was established arbitrarily.
We determined the offering price for the shares being offered arbitrarily, and
the eventual market price, if any, may be much lower. We chose the offering
price for these shares without basing the price on our assets, book value, net
worth or any other recognized criteria of value. If a public market for our
common stock ever does develop, the value of our securities could be
substantially less than the $0.30 per share offering price. This could result in
an immediate and significant per-share reduction in the value of your
investment.
5
Shareholders will face immediate dilution in the book value of their shares.
The 5,000,000 outstanding shares of common stock were sold for an average of
$0.001 per share. If all 1,000,000 shares are sold in the offering for a price
of $0.30 per share, the new investors will realize an immediate dilution in the
book value of their shares in the amount of $0.25 per share, or 83% of the value
thereof. If only 50% of the number of shares being offered are sold (500,000
shares), the purchasers would realize an immediate dilution of their book value
per share of approximately $0.27 per share, or 90% of the value thereof. Thus,
the smaller the number of shares sold in the offering, the greater will be the
dilution to the investors' book value per share.
Selling shares of our stock could be difficult, making your investment in the
company illiquid.
There is no public market for our shares, and an investment in the company
should be considered an illiquid investment. There is currently no market for
any of our shares and no assurance are given that a public market for such
securities will develop or be sustained if developed. While we plan, in
connection with this offering, to take affirmative steps to request or encourage
one or more broker/dealers to act as market makers for our securities, and to
cause such stock to be traded on the OTCBB, no such efforts have yet been
undertaken and no assurance are given that any such efforts will prove
successful. As such, investors may not be able to readily dispose of any shares
purchased hereby.
We may not remain a reporting company upon the conclusion of the offering, and
your access to information about the company would be limited.
Upon conclusion of the offering, we will be required to file disclosure reports
with the Securities and Exchange Commission for a period of one year. At the end
of one year, we may discontinue such reports if there are not 300 stockholders
of record. If the company is not successful in executing its business plan, we
may choose to discontinue SEC reporting if there are fewer than 300 stockholders
as a measure to cut costs, in which case investors will have little or no
current information on which to make investment decisions, our securities would
be excluded from the OTCBB, and much of SEC Rule 144 would cease to be
available.
Our stock will be subject to the penny stock regulations, which will further
degrade the market for one stock.
Because our stock will be subject to the penny stock regulations and may be more
difficult to sell than other registered stock. Broker-dealer practices in
connection with transactions in "penny stocks" are regulated by certain penny
stock rules adopted by the Securities and Exchange Commission. Penny stocks
generally are equity securities with a price of less than $5.00. 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 risk disclosure document that
provides information about penny stocks and the 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. In addition,
the penny stock rules generally require that prior to a transaction in a penny
stock, the broker-dealer 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 a
stock that becomes subject to the penny stock rules. As our shares immediately
following this offering will be subject to these penny stock rules, investors in
this offering will in all likelihood find it more difficult to sell their
securities.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Prospectus Summary", "Risk Factors", "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
"Business", and elsewhere in this prospectus constitute forward-looking
statements. These statement involve known and unknown risks, uncertainties, and
other factors 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.
In some cases, you can identify forward-looking statements by terminology such
as "may", "will", "should", "expects", "plans", "anticipates", "believes",
"estimates", "predicts", "potential", "continue" or the negative of these terms
or other comparable terminology. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements.
6
USE OF PROCEEDS
Our net proceeds form this offering will vary depending upon the total number of
shares sold by us. Regardless of the number of shares sold, we expect to incur
offering expenses estimated at approximately $50,000 for legal, accounting,
printing and other costs in connection with the offering. We wish to remind
investors that there is no guarantee that we will fully complete this offering
or obtain the minimum amount, and that the actual proceeds we receive from the
offering could be substantially less than $300,000. Our receipt of only the
minimum proceeds will have a material adverse effect upon our investors and us
and require us to continue part-time operations and grow only very slowly, if at
all.
The table below shows how proceeds from this offering would be used for
scenarios where we sell various amounts of the shares and the priority of the
use of net proceeds in the event actual proceeds are not sufficient to
accomplish the uses set forth.
% of total shares offered 50% 75% 100%
---------- ---------- ----------
Shares sold 500,000 750,000 1,000,000
Gross Proceeds from offering $ 150,000 $ 225,000 $ 300,000
Less offering expenses 50,000 50,000 50,000
Net proceeds from offering 100,000 175,000 250,000
Use of net proceeds
Salaries 45,000 45,000 45,000
Working Capital 50,000 75,000 100,000
While management has developed the following estimates to the best of its
ability, there can be no assurance that we will spend the use of proceeds
exactly as laid out in the table. Accordingly, management will have significant
flexibility in applying the net proceeds of the offering. Proceeds not
immediately required for the foregoing purposes will be invested principally in
federal and/or state government securities, short-term certificates of deposit,
money market funds or other short-term interest-bearing investments.
DETERMINATION OF THE OFFERING PRICE
Prior to this offering, there has been no established public market for the
shares of our common stock. As a result, the offering price and other terms and
conditions relative to the shares of common stock offered hereby have been
arbitrarily determined by us and do not bear any relationship to assets,
earnings, book value, net worth, actual results of operations, or any other
established objective investment criteria. There is no relationship between the
offering price of the common stock and our assets, earnings, book value or any
other objective criteria of value. In addition, no investment banker, appraiser
or other independent, third party has been consulted concerning the offering
price for the shares or the fairness of the price for the shares.
MARKET FOR THE COMPANY'S COMMON STOCK
There is currently, no public market for the Company's common stock. The Company
at a future date and if it meets the requirements, will undertake to have its
common stock listed on the OTC Bulletin Board maintained by members of the
National Association of Securities Dealers, Inc.
SHARES ELIGIBLE FOR FUTURE SALE
As of March 10, 2007, 5,000,000 shares of common stock were outstanding. All of
these shares are "restricted securities" as such term is defined under Rule 144,
in that such shares were issued in private transactions not involving a public
offering and may not be sold in the absence of registration other than in
accordance with Rule 144 promulgated under the Securities Act of 1933 or another
exemption from registration.
7
In general, under Rule 144 as currently in effect, a person, including an
affiliate, who has beneficially owned shares for at least one year is entitled
to sell, within any three month period a number of shares that does not exceed
the greater of one percent of the then outstanding shares of our common stock or
the average weekly trading volume in our common stock during the four calendar
weeks preceding the date on which notice of such sales is filed, subject to
various restrictions. In addition, a person who is not deemed to have been an
affiliate of ours at any time during the 90 days preceding a sale and who has
beneficially owned the shares proposed to be sold for at least two years would
be entitled to sell those shares under Rule 144(k) without regard to the
requirements described above. To the extent that shares were acquired from an
affiliate, such person's holding period for the purpose of effecting a sale
under Rule 144 commences on the date of transfer from the affiliates.
DIVIDEND POLICY
The Company has never paid or declared a cash dividend on its common stock and
does not intend to pay cash dividends in the foreseeable future. The payment by
the Company of dividends, if any, on its common stock in the future is subject
to the discretion of the Board of Directors and will depend on the Company's
earnings, financial condition, capital requirements and other relevant factors.
DESCRIPTION OF THE BUSINESS
History of the Company
The Company was incorporated on March 10, 2006 under the laws of the State of
Nevada. The Company's business plan involves the acquisition and sale of
thoroughbred race horses of every age from broodmares, weanlings and yearlings
to racehorses and stallions. An area of particular concentration is the purchase
and sale of weanlings and yearlings at auctions, commonly referred to as
"pinhooking". The Company's principal office is located at 211 Misty Morning
Drive, Calgary, Alberta T3Z 2Z8. The telephone number is (403) 370-1176.
Industry Overview
Pinhooking is essentially the purchase of thoroughbred weanlings and yearlings
at various horse auctions with a view to resell them in the short term at
similar auctions.
All horses have common birthdays on January 1, regardless when they are born.
Thoroughbred horses are bred to be born anywhere from January to June. So if a
horse is born in June, it is considered a late foal. If it is born in January,
it is considered an early foal. An early foal is preferred over a late foal,
because a horse born in June will officially be one year old on January 1 when
in reality it is only six months old. Horses are called weanlings until they
reach the age of one and yearlings until they reach the age of two.
Thoroughbred racing is a high-risk investment, with limited returns for the
average horse owner. It is a high profile glamour sport, and the ultimate goal
is to own a "big" horse, winning a major sweepstakes such as the Kentucky Derby.
Statistically, the great majority of owners lose money in racing operations.
In contrast, pinhooking is a relatively conservative endeavor that can bring
financial rewards under the right circumstances. The great majority of racing
stock is bought at various auctions throughout the United States. These are
referred to as "Sales". The major and best-attended sales are in Kentucky,
Florida and California. The most acclaimed sale is the September Keeneland
Yearling Sale, held in Lexington, Kentucky. It is attended by thousands of
buyers from around the world.
8
Business Plan
In general, it is the Company's intent to operate profitably in a number of
areas, all involving the purchase and sale of thoroughbred horses.
The primary operations and their criteria is as follows:
(1) Purchase of weanlings in the fall, to be resold as yearlings in the spring.
(2) Purchase of yearlings in the fall, to be resold as two-year olds in the
spring.
(3) Purchase of broodmares in foal in the spring. The offsprings (to be born
within 30-60 days from purchase date) would be sold as weanlings in the
fall. After giving birth, the broodmares would immediately be bred to
selected stallions, thus giving the Company the option to:
a. sell the broodmares in foal during the fall (current year) or spring
(following year).
b. sell the foals in the spring of the following year.
All horses will be insured for mortality.
The Company seeks to acquire ownership of horses that, in the opinion of
management, have the greatest potential to represent profitable investment,
measured by the difference between the price paid for each animal at auction and
the sales price and the sales price subsequently received. The Company has no
contracts in place at this time to purchase any additional horse or horses.
While the Company's management is hopeful that purchases can be consummated in
the future on favorable terms, it can make no such representations.
In our pinhooking operations, we will seek to find undervalued horses that show
great promise and future race horses.
Maintenance of Horses
The horses that we purchase can be boarded and trained at numerous farms in many
parts of the United States. We currently board and train our horses at
Cloverleaf Farms in Ocala, Florida. To board a horse, we currently pay $25 per
day per horse. For training of horses we currently pay $45 per day per horse.
These charges include everything except veterinarian charges, if any.
Inventory
On August 22, 2006, we bought seven horses at the OBS (Ocala Breeders' Sales
Company) Sale in Ocala, Florida.
The following are the names, sex and the purchase amount of the horses we
purchased:
1 year old colt - Sire: Macho Uno - Dam: Kitty on the Track - $25,000
1 year old colt - Sire: Volponi - Dam: Mara Queen - $11,000
1 year old filly - Sire: Valid Wager - Dam: Onthewicket - $23,345
1 year old filly - Sire: Volponi - Dam: Que Cherie - $10,000
1 year old colt - Sire: Wekiva Springs - Dam: Double Dani - $10,000
1 year old filly - Sire: Volponi - Dam: Expect Anna - $15,000
1 year old filly - Sire: Impeachment - Dam: Fenter Given - $2,500
It is our current intent to resell the above horses at the OBS June 2007 sale
and/or in private transactions..
Employees
The Company has no employees. Dwight McLellan will act as advisor to all
prospective horse purchases, at no cost to the company.
Competition
The buying and selling of thoroughbred horses is highly competitive. A number of
companies and individuals with significantly greater resources than the Company
have greater ability to be the successful bidders for quality horses that the
Company might want to purchase. Due to our limited funds, we may have a
difficult time competing against larger and much better financed entities who
may outbid us in the auction arena on horses that we may be interested in
purchasing.
9
Environmental Matters
The Company is not aware of any environmental liability relating to its
facilities or operations that would have a material adverse affect on the
Company, its business, assets or results of operations.
Legal Proceedings
There are no legal proceedings of any kind pending involving the Company and, to
the knowledge of the management of the Company, no claims have been made nor any
litigation threatened against the Company.
Inflation
Inflation is not expected to have a material impact on the Company or its
operations in the future.
DESCRIPTION OF PROPERTY
The Company neither owns nor leases any physical properties. Our office is
located at 211 Misty Morning Drive, in Calgary, Alberta, Canada T3Z 2Z8. Our
phone number is 403-370-1176. Our horses are boarded and trained at Cloverleaf
Farms in Ocala, Florida.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
Revenues
The Company commenced operations in March, 2006 and has to date generated no
revenues. Our operating loss from inception until October 31, 2006 was $10,313,
consisting of donated rent and services of $5,250, professional fees of $2,460,
stable fees of $2,450, and general and administrative charges of $153.
Liquidity and Capital Resources
We acquired seven horses in August 2006 for an aggregate purchase price of
$96,845. Such funds were obtained from a loan of $100,200 from Ms. Tracy
Sasyniuk. The loan is unsecured, non-interest bearing and payable on demand. In
addition, Ms. Sasyniuk has agreed not to call the loan and to cover our
operating costs for at least the next 12 months. As of October 31, 2006, we have
a working capital deficit of $5,063.
Plan of Operations
The thoroughbred business is a capital intensive operation by virtue of the
investment of livestock. We anticipate the acquisition of additional horses
during our current fiscal year with the intention of selling them at various
auctions or in private transactions. In order to maintain cash flow to make
additional purchases. Accordingly our operations are limited by the amount of
funds we have to operate with.
The Company's continued existence is dependent upon its ability to generate
sufficient cash flows from operations to support its daily operations. The
Company remains dependent upon additional external sources of financing to
provide sufficient working capital to preserve the integrity of the corporate
entity.
Obligations
We have no liabilities or other obligations.
10
MANAGEMENT
The directors and officers of the Company are listed below with information
about their respective backgrounds.
Name Age Position
- -------------------- ---- ------------------------------------------------
Dwight McLellan 43 Chairman, President, CEO & Director
Trixy Sasyniuk-Walt 32 Vice President, Secretary, Treasurer & Director
Dwight McLellan has served as Chairman, President, CEO and a Director of the
Company since March 2006. Mr. McLellan has been the President since 2002 of the
United Horsemen of Alberta, currently developing a racing entertainment centre
and track at Balzac, Alberta. Mr. McLellan is a member of the Canadian
Thoroughbred Horse Society and a founding member of the United Horsemen of
Alberta.
Trixy Sasyniuk-Walt has served as Vice President, Secretary, Treasurer and a
Director of the Company since March 2006. Ms. Sasyniuk-Walt has been involved
since 2000 with management and administration of pensions at Standard Life as
Pensions Administrator and is completing her second SEEBS designation. Ms.
Sasyniuk-Walt will coordinate the day to day management of the company.
All directors hold office until the next annual meeting of the shareholders of
the Company or until their successors have been elected and qualified. Officers
serve at the discretion of the Board of Directors.
EXECUTIVE COMPENSATION
The Company pays no compensation to its officers and directors currently and has
paid no compensation in any amount or of any kind to its executive officers or
directors since inception.
PRINCIPAL STOCKHOLDERS
The following information table sets forth certain information regarding the
Company's common stock owned on March 10, 2006 by (1) any person (including any
"group") who is known by the Company to own beneficially more than 5% of its
outstanding Common Stock, (2) each director and executive officer, and (3) all
executive officers and directors as a group.
Name and Address(a) Shares Owned Percentage
- ------------------------------------ ----------------------- -------------------
Trixy Sasyniuk-Walt 5,000,000 100%
(a) The address is 211 Misty Morning Drive, Calgary, AB T3Z 2Z8
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In order to maintain liquidity, the Company has obtained non-interest bearing
advances from Ms. Tracy Sasyniuk, a relative of a director in the Company. These
advances are unsecured, non-interest bearing, and payable on demand. As of March
15, 2007 the Company owed $100,200.
Mr. McLellan and Ms. Sasyniuk-Walt may be considered to be promoters of the
Company. As such, Mr. Sasyniuk-Walt purchased 5,000,000 shares of common stock
in March, 2006, in exchange for $5,000.
During the period ended October 31, 2006, rent with a fair value of $250 per
month and management services with a fair value of $500 per month was provided
at no cost by the President of the Company. As at October 31, 2006, donated rent
and services of $1,750 and $3,500 respectively, were charged to operations and
treated as donated capital.
PLAN OF DISTRIBUTION
We are offering a minimum of 500,000 and a maximum of 1,000,000 shares at a
price of $0.30 per share to be sold by us through the efforts of our executive
officers. Since our shares are sold through our executive officers, no
compensation will be paid with respect to such sales. In addition, because the
offering is conducted on a "direct sale" basis, there is no assurance that any
of the shares offered hereby will be sold.
11
The offering will remain open until the earlier of the sale of all of the shares
offered by us or 90 days after the date of the prospectus, or unless we
determine, in our discretion, to cease the selling efforts. Our officers,
directors and stockholders and their affiliates may purchase shares in this
offering.
Pending receipt of the minimum amount of proceeds, amounts received will be held
in escrow at Security Transfer Corporation. Upon receiving the minimum, the
escrow will terminate and we will have use of such funds once we accept a
subscription and funds have cleared. Such funds shall be non-refundable, except
as may be required by applicable law.
Upon effectiveness of this registration statement, we will conduct the sale of
the shares we are offering on a self-underwritten, direct basis. This means that
we do not have an underwriter and that we will sell the shares directly to
investors. Participating on our behalf in the distribution are Mr. McLellan and
Ms. Sasyniuk-Walt, our principal executive officers, who are exempt from
registration as a broker-dealer under Rule 3a4-1 of the Securities Exchange Act
on the basis that they are not affiliated with a registered broker-dealer, they
will receive no compensation for their efforts, are not subject to any statutory
disqualification and primarily perform duties for the Company, other than
selling securities. All shares of our common stock that we are registering for
sale by the Company that we are able to sell will be sold at a price per share
of $0.30. There can be no assurance that we will sell all or any of the shares
offered. We have no arrangement or guarantee that we will sell any shares. All
subscription checks shall be made payable to the order of Security Transfer
Corporation Trust account for Aspen Racing Stables Inc.
We will pay all the expenses incident to the registration, offering and sale of
the shares to the public.
Under the penny stock regulations, a broker-dealer selling penny stocks to
anyone other than an established customer or "accredited investor" (generally,
an individual with a net worth in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000, together with his or her spouse) must make a
special suitability determination for the purchaser and must receive the
purchaser's written consent to the transaction prior to the sale, unless the
broker-dealer is otherwise exempt. In addition, unless the broker-dealer or the
transaction is otherwise exempt, the penny stock regulations require the
broker-dealer to deliver, prior to any transaction involving a penny stock, a
disclosure schedule prepared by the Securities and Exchange Commission relating
to the penny stock. A broker-dealer is also required to disclose commissions
payable to the broker-dealer and the Registered Representative and current
quotations for the securities. A broker-dealer is additionally required to send
monthly statements disclosing recent price information with respect to the penny
stock held in a customer's account and information with respect to the limited
market in penny stocks.
INVESTOR SUITABILITY REQUIREMENTS
This offering is limited to "accredited investors" who are high net worth and/or
sophisticated investors as more fully described below.
Accreditation Requirements
An investor is an "accredited investor" only if such investor meets one or more
of the following:
(i) the investor is a natural person who has a net worth, or joint
net worth with that person's spouse exceeding $1,000,000 at the
time of purchase;
(ii) the investor is a natural person who individually had income in
excess of $200,000 in each of the two most recent years, or joint
income with that person's spouse in excess of $300,000 in each of
those years, and who reasonably expects income in excess of those
levels in the current year;
(iii) the investor is a director or executive officer of the Company;
(iv) the investor is either (a) a bank defined in Section 3(a)(2) of
the Securities Act, or a savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities
Act, whether acting in its individual of fiduciary capacity; (b)
any broker or dealer registered pursuant to Section 15 of the
Securities Act of 1934, as amended; (c) an insurance company as
defined in Section 2(13) of the Securities Act; (d) an investment
company registered under the Investment Company Securities Act;
(e) a Small Business Investment Company licensed by the United
12
States Small Business Administration under Section 301(d) or (d)
of the Small Business Investment Securities Act of 1958; (f) a
plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such
a plan has total assets in excess of $7,000,000; (g) an employee
benefit plan within the meaning of Title 1 of the Employee
Retirement Income Security Act of 1974, as amended, if the
investment decision is made by a plan fiduciary, which is either
a bank, a savings and loan association, insurance company, or
registered investment advisor, or if the plan has assets in
excess of $7,000,000, or if a self-directed plan, with the
investment decisions made solely by persons that are accredited
investors;
(v)
the investor is a private business development company under
Section 202(a)(22) of the Investment Advisers Securities Act of
1940;
(vi) the investor is any organization described in Section 501(c)(3)
of the Internal Revenue Code and certain other corporations,
Massachusetts or similar business trust, or partnership, not
formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $7,000,000;
(vii) the investor is any trust with total assets in excess of
$7,000,000 not formed for the specific purpose of acquiring the
securities offered, whose purchase is directed by a sophisticated
person as defined in Section 230.506(b)(2)(ii) of Regulation D
promulgated under the Securities Act; or
(viii) the investor is any entity in which all of the equity owners are
accredited investors.
In the case if a husband and wife subscribing jointly, satisfaction of the net
worth standards must be determined by aggregating their net worth and
satisfaction of the income standards must be determined by joint or individual
tax returns, as the case may be. Any other persons subscribing for shares
jointly, including members of partnerships formed for the purpose of purchasing
shares, must each satisfy the applicable net worth and income standards without
regard to the other joint purchasers. In the case of a subscriber that is itself
a partnership (other than a partnership formed for the purpose of purchasing
shares) of a trust, the applicable net worth income standards must be satisfied
by the entity. In the case of a subscriber purchasing as custodian for a minor,
the applicable net worth standards must be satisfied by the custodian.
Each subscriber will be required to satisfy the investor suitability standards
set forth above. An investment in the shares is only suitable for those
investors who have adequate means to provide for their current needs and
personal contingencies and who have no need for liquidity in this investment.
Furthermore, investors must demonstrate an appropriate level of financial
sophistication. Investors should recognize that the suitability standards set
forth above are minimum requirements and that the satisfaction of these
standards does not necessarily mean that investment in the shares is suitable
for an investor meeting these standards. We reserve the right to reject any
subscription for any reason whatsoever.
We will require each investor to make representations and warranties relating to
the suitability of an investment in the shares for each investor as set forth in
the form of subscription agreement to accompany this prospectus. We may also
make or cause to be made such further inquiry as we deem appropriate. We may, in
our absolute discretion, reject subscriptions, in whole or in part, or allot to
a particular investor fewer than the number of shares for which the investor
subscribed. We reserve the right to modify or increase the suitability standards
with respect to certain investors, in order to comply with any applicable state
or local laws, rules or regulations or otherwise. Shares will be offered only to
accredited investors in states where an exemption from registration exists. In
addition, shares may be sold to foreign purchasers where permitted by law.
DESCRIPTION OF THE COMPANY'S SECURITIES
The authorized capital stock of the Company consists of 110,000,000 shares of
common stock with a par value of $0.001 per share and 110,000,000 shares of
preferred stock with a par value of $0.001 per share. The holders of common
stock: (1) are entitled to one non-cumulative vote per share on all matters that
the stockholders may vote on at meetings of stockholders; (2) do not have
pre-emptive, subscription or conversion rights, and there are no redemption of
sinking fund provisions applicable thereto; and (3) are entitled to share
13
ratably in the assets of the Company, after the payment of all debts and
liabilities, available for distribution to holders of common stock upon the
liquidation, dissolution or winding up of affairs of the Company. The Company
has no preferred stock, debentures, warrants, options or other instruments
outstanding or that could be converted into common stock of the Company.
Holders of shares of the common stock do not have cumulative voting rights,
which means that the holders of more than 50% of such outstanding shares (the
"majority shareholders"), when voting for the election of directors, can elect
all of the directors and, in such situations, the holders of the remaining
shares will not be able to elect as the Company's directors anyone other than
those candidates supported by the majority shareholders. The majority
shareholder at the present time is Trixy Sasyniuk-Walt. Holders of shares of the
common stock are entitled to receive dividends if and when declared by the Board
of Directors out of funds legally available therefore. See "Dividend Policy".
On March 10, 2006, the company's Board of Directors amended the Company's
Articles of Incorporation to modify the company's capital structure to allow for
the issuance of 110,000,000 total equity shares consisting of 100,000,000 shares
of common stock, with a par value of $0.001 per share and 10,000,000 shares of
preferred stock, with a par value of $0.001 per share. The effects of these
transactions are reflected in the accompanying financial statements as of the
first day of the first period presented.
LEGAL MATTERS
The validity of the common stock covered by this registration statement will be
passed upon for the Company by . , Nevada.
EXPERTS
The financial statements included in the registration statement on Form SB-2
have been audited by, Manning Elliott, LLP, Chartered Accountants, Vancouver,
BC, to the extent and for the periods set forth in its report, and are included
herein in reliance upon the authority of said firm as experts in auditing and
accounting.
ADDITIONAL INFORMATION
The Company is currently subject to the reporting requirements of the Securities
and Exchange Act of 1934, as amended, and has in the past filed, and will
continue in the future to file, periodic reports, proxy statements and other
information with the Securities and Exchange Commission ("Commission"). You may
read and copy any of these reports at the following public reference rooms
maintained by the Commission at 100 First Street, N.E., Washington, D.C. 20549.
The Commission also maintains an internet website that contains these reports
and information about issuers such as the Company that file electronically with
the Commission. The address of that site is: http://www.sec.gov.
The Company has filed with the Commission a registration statement (including
exhibits and information which the Commission permits the registrant to omit
from the prospectus) on Form SB-2 under the Securities Act of 1933, as amended,
with respect to the common stock covered by this prospectus. Statements
contained in this prospectus as to the contents of any contract, agreement or
other document referred to are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the registration statement. You may obtain copies of the registration
statement, including exhibits and other information about the Company, by
contacting the Commission in the manner and at the addresses referenced above.
You should rely only on the information incorporated by reference or provided in
this prospectus or any prospectus supplement. Neither the Company nor the
Selling Shareholders have authorized anyone else to provide you with different
information. Neither the Company nor the Selling Shareholders are making an
offer to sell, nor soliciting an offer to buy, these securities in any
jurisdiction where that would not be permitted or legal. Neither the delivery of
this prospectus nor any sales made hereunder after the date of this prospectus
shall create an implication that the information contained herein or our affairs
have not changed since the date hereof.
14
INDEX TO FINANCIAL STATEMENTS
Aspen Racing Stables Inc.
(A Development Stage Company)
October 31, 2006
Index
Report of Independent Registered Public Accounting Firm.....................F-1
Balance Sheet...............................................................F-2
Statement of Operations.....................................................F-3
Statement of Cash Flows.....................................................F-4
Statement of Stockholders' Deficit..........................................F-5
Notes to the Financial Statements...........................................F-6
Report of Independent Registered Public Accounting Firm
-------------------------------------------------------
To the Directors and Stockholders
Aspen Racing Stables Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Aspen Racing Stables Inc. (A
Development Stage Company) as of October 31, 2006, and the related statement of
operations, cash flows and stockholders' deficit from March 10, 2006 (Date of
Inception) to October 31, 2006. 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 audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Aspen Racing Stables Inc. (A
Development Stage Company) as of October 31, 2006, and the results of its
operations and its cash flows from March 10, 2006 (Date of Inception) to October
31, 2006 in conformity with accounting principles generally accepted in the
United States.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has not generated any revenues and has incurred
operating losses since inception. These factors raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans in
regard to these matters are also discussed in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Manning Elliott LLP
- -----------------------
MANNING ELLIOTT LLP
CHARTERED ACCOUNTANTS
Vancouver, Canada
March 5, 2007, except as to Note 7 which is as of March 12, 2007
(The accompanying notes are an integral part of these financial statements)
F-1
Aspen Racing Stables Inc.
(A Development Stage Company)
Balance Sheet
(Expressed in US dollars)
October 31,
2006
$
ASSETS
Current Assets
Cash 47
Investment in Horses (Note 3) 108,713
- --------------------------------------------------------------------------------
Total Assets 108,760
================================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable 13,623
Due to related party (Note 4(b)) 100,200
- --------------------------------------------------------------------------------
Total Liabilities 113,823
- --------------------------------------------------------------------------------
Commitments and Contingencies (Note 1)
Stockholders' Deficit
Preferred Stock, 110,000,000 shares authorized, $0.001 par value
None issued and outstanding --
Common Stock, 110,000,000 shares authorized, $0.001 par value
5,000,000 shares issued and outstanding 5,000
Stock subscriptions receivable (Note 5) (5,000)
Donated Capital (Note 4(a)) 5,250
Deficit Accumulated During the Development Stage (10,313)
- --------------------------------------------------------------------------------
Total Stockholders' Deficit (5,063)
- --------------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficit 108,760
================================================================================
F-2
Aspen Racing Stables Inc.
(A Development Stage Company)
Statement of Operations
(Expressed in US dollars)
Accumulated from
March 10, 2006
(Date of Inception)
to October 31,
2006
$
Revenue --
- --------------------------------------------------------------------------------
Expenses
Donated rent (Note 4(a)) 1,750
Donated services (Note 4(a)) 3,500
General and administrative 153
Professional fees 2,460
Stable fees 2,450
- --------------------------------------------------------------------------------
Total Expenses 10,313
- --------------------------------------------------------------------------------
Net Loss For the Period (10,313)
================================================================================
Net Loss Per Share - Basic and Diluted --
================================================================================
Weighted Average Shares Outstanding 5,000,000
================================================================================
F-3
Aspen Racing Stables Inc.
(A Development Stage Company)
Statement of Cash Flows
(Expressed in US dollars)
Accumulated From
March 10, 2006
(Date of Inception)
to October 31,
2006
$
Operating Activities
Net loss for the period (10,313)
Adjustments to reconcile net loss to net cash used in
operating activities:
Donated services 5,250
Changes in operating assets and liabilities:
Accounts Payable 13,623
- -------------------------------------------------------------------------------
Net Cash Flows Provided By (Used In) Operating Activities 8,560
- -------------------------------------------------------------------------------
Investing Activities
Investment in horses (108,713)
- -------------------------------------------------------------------------------
Net Cash Flows Used In Investing Activities (108,713)
- -------------------------------------------------------------------------------
Financing Activities
Advances from a related party 100,200
- -------------------------------------------------------------------------------
Net Cash Flows Provided By Financing Activities 100,200
- -------------------------------------------------------------------------------
Increase in Cash 47
Cash - Beginning of Period --
- -------------------------------------------------------------------------------
Cash - End of Period 47
Supplemental Disclosures
Interest paid --
Income taxes paid --
===============================================================================
F-4
Aspen Racing Stables Inc.
(A Development Stage Company)
Statement of Stockholders' Deficit
For the Period from March 10, 2006 (Date of Inception) to October 31, 2006
(Expressed in US dollars)
Deficit
Accumulated
Stock During the
Common Stock subscriptions Donated Development
Shares Par Value receivable Capital Stage Total
# $ $ $ $ $
Balance - March 10, 2006 (Date of
Inception) -- -- -- -- -- --
Common stock issued for cash at
$0.001 per share 5,000,000 5,000 (5,000) -- -- --
Donated rent and services -- -- -- 5,250 -- 5,250
Net loss for the period -- -- -- -- (10,313) (10,313)
- -----------------------------------------------------------------------------------------------------------
Balance - February 28, 2006 5,000,000 5,000 (5,000) 5,250 (10,313) (5,063)
===========================================================================================================
F-5
1. Development Stage Company
Aspen Racing Stables Inc. (the "Company") was incorporated in the State of
Nevada on March 10, 2006. The Company is a Development Stage Company, as
defined by Statement of Financial Accounting Standard ("SFAS") No.7
"Accounting and Reporting by Development Stage Enterprises". The Company's
principal business is the purchase, breeding, training, and resale of
horses. During the year ended October 31, 2006, the Company purchased seven
foals and commenced breeding and training of the foals with the intention
of reselling the horses as yearlings.
These financial statements have been prepared on a going concern basis,
which implies the Company will continue to realize its assets and discharge
its liabilities in the normal course of business. The Company has never
generated revenues since inception and has never paid any dividends and is
unlikely to pay dividends or generate earnings in the immediate or
foreseeable future. The continuation of the Company as a going concern is
dependent upon the continued financial support from its shareholders, the
ability of the Company to obtain necessary equity financing to continue
operations, and the attainment of profitable operations. As at October 31,
2006, the Company has never generated any revenues and has accumulated
losses of $10,313 since inception. These factors raise substantial doubt
regarding the Company's ability to continue as a going concern. These
financial statements do not include any adjustments to the recoverability
and classification of recorded asset amounts and classification of
liabilities that might be necessary should the Company be unable to
continue as a going concern.
The Company is planning to file an SB-2 Registration Statement with the
United States Securities and Exchange Commission to issue 1,000,000 shares
of common stock at $0.30 per share for gross proceeds of $300,000.
2. Summary of Significant Accounting Policies
a) Basis of Presentation
These financial statements and related notes have been prepared by the
Company in accordance with accounting principles generally accepted in
the United States, and are expressed in US dollars. The Company's
fiscal year-end is October 31.
b) Use of Estimates
The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent 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 those estimates. The Company regularly evaluates
estimates and assumptions related to donated expenses, stock-based
compensation expense and deferred income tax asset valuations. The
Company bases its estimates and assumptions on current facts,
historical experience and various other factors that it believes to be
reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and
liabilities and the accrual of costs and expenses that are not readily
apparent from other sources. The actual results experienced by the
Company may differ materially and adversely from the Company's
estimates. To the extent there are material differences between the
estimates and the actual results, future results of operations will be
affected.
c) Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with
SFAS No. 128, "Earnings per Share". SFAS No. 128 requires presentation
of both basic and diluted earnings per share (EPS) on the face of the
income statement. Basic EPS is computed by dividing net income (loss)
available to common shareholders (numerator) by the weighted average
number of shares outstanding (denominator) during the period. Diluted
EPS gives effect to all dilutive potential common shares outstanding
during the period using the treasury stock method and convertible
preferred stock using the if-converted method. In computing Diluted
EPS, the average stock price for the period is used in determining the
number of shares assumed to be purchased from the exercise of stock
options or warrants. Diluted EPS excludes all dilutive potential
shares if their effect is anti dilutive.
21
2. Summary of Significant Accounting Policies
d) Comprehensive Loss
SFAS No. 130, "Reporting Comprehensive Income," establishes standards
for the reporting and display of comprehensive loss and its components
in the financial statements. As at October 31, 2006, the Company has
no items that represent a comprehensive loss and, therefore, has not
included a schedule of comprehensive loss in the financial statements.
e) Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of
three months or less at the time of issuance to be cash equivalents.
f) Investment in Horses
The value of the horses include all direct acquisition costs incurred
and are recorded at the lower of cost or market until they are
available for sale. As the Company purchases the horses as foals with
the intention of breeding, training, and selling the horses as
yearlings (one-year olds), all costs associated with the acquisition,
breeding, and training of the horses are capitalized.
g) Financial Instruments
Financial instruments, which include cash, accounts payable, and
amounts due to a related party, were estimated to approximate their
carrying values due to the immediate or short-term maturity of these
financial instruments. The Company's operations are in Canada which
results in exposure to market risks from changes in foreign currency
rates. The financial risk is the risk to the Company's operations that
arise from fluctuations in foreign exchange rates and the degree of
volatility of these rates. Currently, the Company does not use
derivative instruments to reduce its exposure to foreign currency
risk.
h) Income Taxes
Potential benefits of income tax losses are not recognized in the
accounts until realization is more likely than not. The Company has
adopted SFAS No. 109 "Accounting for Income Taxes" as of its
inception. Pursuant to SFAS No. 109 the Company is required to compute
tax asset benefits for net operating losses carried forward. Potential
benefit of net operating losses have not been recognized in these
financial statements because the Company cannot be assured it is more
likely than not it will utilize the net operating losses carried
forward in future years.
i) Foreign Currency Translation
The Company's functional and reporting currency is the United States
dollar. Monetary assets and liabilities denominated in foreign
currencies are translated in accordance with SFAS No. 52 "Foreign
Currency Translation", using the exchange rate prevailing at the
balance sheet date. Gains and losses arising on settlement of foreign
currency denominated transactions or balances are included in the
determination of income. Foreign currency transactions are primarily
undertaken in Canadian dollars. The Company has not, to the date of
these financials statements, entered into derivative instruments to
offset the impact of foreign currency fluctuations.
j) Revenue Recognition
The Company will recognize revenue from the sale of its' horses in
accordance with Securities and Exchange Commission Staff Bulletin No.
104, "Revenue Recognition in Financial Statements". Revenue will be
recognized only when the price is fixed or determinable, persuasive
evidence of an arrangement exists, the horses are available for
immediate delivery, and collectibility is assured. The Company has not
generated any revenue since inception on March 10, 2006.
22
2. Summary of Significant Accounting Policies (continued)
k) Recent Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 158, "Employers'
Accounting for Defined Benefit Pension and Other Postretirement Plans
- an amendment of FASB Statements No. 87, 88, 106, and 132(R)". This
statement requires employers to recognize the overfunded or
underfunded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its statement
of financial position and to recognize changes in that funded status
in the year in which the changes occur through comprehensive income of
a business entity or changes in unrestricted net assets of a
not-for-profit organization. This statement also requires an employer
to measure the funded status of a plan as of the date of its year-end
statement of financial position, with limited exceptions. The
provisions of SFAS No. 158 are effective for employers with publicly
traded equity securities as of the end of the fiscal year ending after
December 15, 2006. The adoption of this statement is not expected to
have a material effect on the Company's future reported financial
position or results of operations.
In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements". The objective of SFAS No. 157 is to increase
consistency and comparability in fair value measurements and to expand
disclosures about fair value measurements. SFAS No. 157 defines fair
value, establishes a framework for measuring fair value in generally
accepted accounting principles, and expands disclosures about fair
value measurements. SFAS No. 157 applies under other accounting
pronouncements that require or permit fair value measurements and does
not require any new fair value measurements. The provisions of SFAS
No. 157 are effective for fair value measurements made in fiscal years
beginning after November 15, 2007. The adoption of this statement is
not expected to have a material effect on the Company's future
reported financial position or results of operations.
In June 2006, the Financial Accounting Standards Board (FASB) issued
FASB Integration No. 48, "Accounting for Uncertainty in Income Taxes,
an interpretation of FASB Statements No. 109" (FIN 48). FIN 48
clarifies the accounting for uncertainty in income taxes by
prescribing a two-step method of first evaluating whether a tax
position has met a more likely than not recognition threshold and
second, measuring that tax position to determine the amount of benefit
to be recognized in the financial statements. FIN 48 provides guidance
on the presentation of such positions within a classified statement of
financial position as well as on derecognition, interest and
penalties, accounting in interim periods, disclosure, and transition.
FIN 48 is effective for fiscal years beginning after December 15,
2006. The adoption of this standard is not expected to have a material
effect on the Company's results of operations or financial position.
3. Investment in Horses
For the period ended October 31, 2006, the Company incurred $96,845 of
direct acquisition costs and $11,868 of indirect development costs related
to breeding and training of seven horses.
4. Related Party Transactions
a) During the period ended October 31, 2006, rent with a fair value of
$250 per month and management services with a fair value of $500 per
month was provided at no cost by the President of the Company. As at
October 31, 2006, donated rent and services of $1,750 and $3,500
respectively, were charged to operations and treated as donated
capital.
b) In August 2006, a relative of a director of the Company advanced
$100,200 to the Company for working capital purposes. The advance is
unsecured, non-interest bearing, and is due on demand.
c) Refer to Note 5.
23
5. Common Stock
On March 14, 2006, the Company issued 5,000,000 shares of common stock at a
price of $0.001 per share to a director of the Company for gross proceeds
of $5,000, which remain outstanding as at October 31, 2006.
6. Income Taxes
Potential benefits of income tax losses are not recognized in the accounts
until realization is more likely than not. The Company has net operating
losses of $5,063, which commence expiring in 2026. Pursuant to SFAS No.
109, the Company is required to compute tax asset benefits for net
operating losses carried forward. Potential benefit of net operating losses
have not been recognized in these financial statements because the Company
cannot be assured it is more likely than not it will utilize the net
operating losses carried forward in future years. For the period ended
October 31, 2006, the valuation allowance established against the deferred
tax assets increased by $1,772.
The components of the net deferred tax asset at October 31, 2006 and the
statutory tax rate, the effective tax rate and the elected amount of the
valuation allowance are listed below:
October 31,
2006
$
Net Operating Losses 5,063
Statutory Tax Rate 35%
Effective Tax Rate --
Deferred Tax Asset 1,772
Valuation Allowance (1,772)
- --------------------------------------------------------------------------------
Net Deferred Tax Asset --
================================================================================
7. Subsequent Event
On March 12, 2007, the Company received $5,000 from a relative of a
director of the Company for the issuance of 5,000,000 common shares of the
Company as described in Note 5.
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TABLE OF CONTENTS
You may rely on the information contained in this prospectus. We have not
authorized anyone to provide information different from that contained in this
prospectus. Neither the delivery of this prospectus nor the sale of common
shares means that information contained in this prospectus is correct after the
date of this prospectus. This prospectus is not an offer to sell or solicitation
of an offer to buy our common shares in any circumstances under which the offer
or solicitation is unlawful.
Heading Page
- ------- ----
Prospectus Summary 2
Risk Factors 4
Use of Proceeds 7
Business and Properties 8
Management 10
Principal Shareholders 11
Plan of Distribution 11
Investor Suitability Requirement 12
Legal Matters 14
Index to Financial Statements 15
Until __________, 2007 (90 days from the date of this Prospectus), all dealers
effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
25
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 24. Indemnification
The Articles of Incorporation of the Company provide that no director or officer
of the Company shall be directly liable for damages incurred in connection with
legal proceedings brought about by reason of being an officer or director if the
person is not ultimately adjudged liable for negligence or misconduct in the
action.
The Nevada Revised Statutes contain provisions relating to indemnification of
officers and directors. Generally, this section provides that a corporation may
indemnify any person who was or is a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative
or investigative, except an action by or in right of the corporation by reason
of the fact that he was a director, officer, employee or agent of the
corporation. It must be shown that he acted in good faith and in a manner he
reasonably believed to be in the best interest of the corporation. Generally, no
indemnification may be made where the person has been determined to be negligent
or guilty of misconduct in the performance of his duty to the corporation.
As to indemnification for liabilities arising under the Securities Act of 1933
for directors, officers and controlling persons of the Company, the registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy and unenforceable. In the event
that a claim for indemnification against such liabilities (other than payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person in connection with the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant 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 as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
Item 24. Other Expenses of Issuance and Distribution.
The estimated expenses of the registration, all of which will be paid by the
Company, are as follows:
- ------------------------------------------------------------ ----------
SEC Filing Fee $ 10.00
- ------------------------------------------------------------ ----------
Printing Expense $ 2,000.00
- ------------------------------------------------------------ ----------
Accounting Fees and Expenses $10,000.00
- ------------------------------------------------------------ ----------
Legal Fees and Expenses $25,000.00
- ------------------------------------------------------------ ----------
Blue Sky Fees and Expenses $ 1,200.00
- ------------------------------------------------------------ ----------
Transfer Agent Fee $ 1,800.00
- ------------------------------------------------------------ ----------
- ------------------------------------------------------------ ----------
TOTAL $40,010.00
- ------------------------------------------------------------ ----------
Item 26. Recent Sales of Unregistered Securities
The following information is furnished with regard to all securities sold by us
within the past three years that were not registered under the Securities Act.
The issuances described hereunder were made in reliance upon the exemptions from
registration set forth in Section 4(2) and Regulation D of the Securities Act
relating to sales by an issuer not involving any public offering. None of the
foregoing transactions involved a distribution or public offering.
The offering of 5,000,000 shares to Trixy Sasyniuk-Walt was completed on March
5, 2007. The federal exemption we relied upon in issuing these securities was
Rule 506 under of the Securities Act. The Rule 506 exemption was available to us
because we did not publicly solicit any investment in the Company. We also gave
all of these investors the opportunity to review documents, ask questions of and
receive answers from us as to all aspects of our business as well as access to
such information as they deemed necessary to fully evaluate an investment in our
company. All shares issued to Ms. Sasyniuk-Walt have been and will remain
restricted and may not be transferred unless and until the effectiveness of this
registration statement or pursuant to another applicable exemption.
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Item 27. Exhibits.
1.1 Subscription Agreement**
3.1 Articles of Incorporation of Aspen Racing Stables.*
3.2 Bylaws of Aspen Racing Stables.*
4.1 Specimen Stock Certificate for Common Shares*
5.1 Opinion of Counsel.**
23.1 Consent of Manning Elliott, C.P.A.*
23.2 Consent of Counsel, included in Exhibit 5.1**
* filed herewith
** to be filed by Commandant
Item 28. Undertakings.
The Company does not presently anticipate using an underwriter in conducting
this offering; if the company changes its plan and utilizes an underwriter, the
Company will provide to the underwriter, at the closing specified in any
underwriting agreement, certificates in such denominations and registered in
such names as required by the underwriter to permit prompt delivery to each
purchaser.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act') may be permitted to directors, officers and controlling persons
of the Company pursuant to the Company's Articles of Incorporation, Bylaws,
Nevada law or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company and the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by a controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue. The
undersigned registrant hereby undertakes that it will:
1. File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(a) Include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(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 the volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and include any additional
or changed material information on the plan of distribution.
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2. For determining any liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
3. File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Aspen Racing
Stables., certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and had duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of Calgary, Alberta, Canada, on the ___ day of
November, 2006.
ASPEN RACING STABLES
/s/ Dwight McLellan March 14, 2007
- ------------------------------------------------------
Dwight McLellan, President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
Aspen Racing Stables and each person whose signature appears below hereby
designates and appoints Tracy Sasyniuk as his attorney-in-fact
("Attorney-in-Fact") with full power to act alone, and to execute and in the
name and on behalf of Aspen Racing Stables and each person, individually and in
the capacity stated below, any amendments (including post-effective amendments)
to this Registration Statement, which amendments may make such changes in this
Registration Statement as the Attorney-in-Fact deems appropriate, and to file
each such amendment to this Registration Statement together will all exhibits
thereto and any and all documents in connection therewith.
Pursuant to the requirements of the Securities Act of 1933, as amend, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/s/ Dwight McLellan March 14, 2007
- -------------------------------------------------------
Dwight McLellan, Chairman, President,
Chief Executive Officer and Director
(Principal Executive, Financial and Accounting Officer)
/s/ Trixy Sasyniuk-Walt March 14, 2007
- -------------------------------------------------------
Vice President, Secretary, Treasurer and Director
II-4