As filed with the Securities and Exchange Commission on May 21, 2007.
Registration No. 333-141324
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------------------
AMENDMENT NO. 3 T0
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ASPEN RACING STABLES, INC.
(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, INC. 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 number
registrant's executive office) 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. [ ]
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.
Preliminary PROSPECTUS
(subject to completion dated May 21, 2007)
ASPEN RACING STABLES, INC.
Shares of Common Stock
1,000,000 shares, price per share: $0.30
Total proceeds to Aspen Racing Stables: $300,000.
This prospectus relates to the offer to sell 1,000,000 shares of common stock
offered by Aspen Racing Stables, Inc., 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.
To be sold by the Company: Price to Public Underwriting Discount and Commissions Proceeds to Issuer
- -------------------------- --------------- ------------------------------------- ------------------
Per Share $0.30 None $0.30
Total $300,000.00 None $300,000.00
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 sale of
all of the shares offered by us. Pending receipt of the offering proceeds, sale
proceeds will be held in escrow at Securities Transfer Corporation and will be
returned if all offering proceeds are 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. The information in this prospectus is not
complete and may be changed. 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 $22,531 through January 31,
2007. The major components of our on-going expenses are management services
and horse boarding.
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, Inc., 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, Canada, and our telephone number is (403) 370-1176.
TERMS OF THE OFFERING
Securities Offered
We are offering 1,000,000 shares of common stock, at $0.30 per share, for total
gross offering proceeds of $300,000.
Shares of common stock outstanding
as of the date of this prospectus 5,000,000 shares
Shares of common stock outstanding
after offering: 6,000,000 shares
The offering will remain open until all shares are sold, but not later than
December 31, 2007. Pending receipt of the subscription amount, sale proceeds
will be held in escrow at Securities Transfer Corporation, and if all such
shares are not sold by December 31, 2007, such funds will be returned to the
subscribers without interest or deduction.
2
USE OF PROCEEDS
If we sell all 1,000,000 shares we are offering, we will receive proceeds of
$270,000, net of offering costs of $30,000 which we will apply to working
capital and purchase of additional horses. See "Use of Proceeds."
PLAN OF DISTRIBUTION
This is a self-underwritten, direct public offering, with no commitment by
anyone to purchase any shares. The shares offered by us will be offered and sold
by our principal executive officers and directors, who will be considered to be
underwriters. The offering will be made only to accredited investors and only in
states in which there is an exemption for sales to accredited investors.
FINANCIAL DATA
Summary Operations Data
March 10, 2006
(Date of Inception)
to January 31, 2007
Revenues ($ -- )
Expenses (22,531)
Net income (loss) (22,531)
Basic and diluted loss per share --
Balance Sheet Data
January 31, 2007 October 31, 2006
(unaudited) (audited)
Current assets $ 6,685 $ 47
Investment in horses 145,048 118,608
Total liabilities 161,764 128,547
Stockholders' equity (deficit) (10,031) (9,892)
3
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING RISK
FACTORS SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING 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 all of the 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 $10,000 per month.
Although management has agreed to fund working capital deficits for 12 months
following the closing of the offering, if we cannot obtain additional funding
from the offering or during such 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 $15,142 and for the three months
ended January 31, 2007, we had a net loss of $7,389. In our Auditor's Report
dated March 5, 2007 (except as to Note 7 which is as of April 20, 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, and our ability to provide effective
management also depends upon the success of the offering.
4
One stockholder 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 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. 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. Our plan is to buy and sell
thoroughbred race horses before they begin racing. The goal is to purchase young
horses based upon their pedigree and appearance, hoping to resell them to others
for a profit. Thus the ability to profit from operations will depend upon the
ability to buy at attractive prices, which will depend in large measure upon the
ability of the pinhooker to spot potential value in the horses it selects.
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.
This is a very small offering.
Because this is a self-underwritten offering, we offer no assurance that 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 whether any proceeds will be obtained from the sale of
shares offered by us. In the event we fail to obtain 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.
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.
We may not reach the offering proceeds.
We have established a suitability requirement for investors in the offering that
they be "accredited investors" as defined by the rules of the Securities and
Exchange Commission, or non-residents of the United States. Such requirement
will limit the possible number of investors in the offering and make more
difficult the ability to obtain the offering proceeds.
5
Stockholders 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.
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
The table below shows how proceeds from this offering would be used and the
priority of the use of net proceeds in the event actual proceeds are not
sufficient to accomplish the uses set forth.
Shares sold 1,000,000
Gross proceeds from offering $300,000
Less offering expenses 30,000
Net proceeds from offering 270,000
Use of net proceeds
Salaries 45,000
Working capital 100,000
Horse purchases 125,000
While management has developed the foregoing estimates to the best of its
ability, there can be no assurance that we will spend the 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 April 25, 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.
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.
7
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 race such as the Kentucky Derby.
Statistically, the great majority of owners lose money in racing operations.
In contrast, pinhooking involves only the buying and selling of horses and does
not deal with the training, and racing of horses. To be successful in
pinhooking, one needs to be able to not only assess the current market correctly
but also assess what the market will be like within the next year for the
offsprings of various sires. In selecting horses for potential profit, one needs
to know the market for popular sires, be good in assessing pedigree and
conformation (i.e., the appearance of the horse in regard to its balance,
proportion, and lack of actual or potential physical defects) of horses, and
thereby have a feel for the potential increase in value of a horse from weanling
to yearling to two year olds. Pinhookers base their purchases on a variety of
speculative inputs - the commercial value of a sire, the growth potential of
each weanling, the racing success of the dam line and the potential market
place. Using these inputs, a pinhooker is looking to exploit the differences in
the two markets by assuming a risk position in the buy-sell transaction, also
known as speculative arbitrage.
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:
8
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.
Our strategy will be to emphasize the purchase of a number of modestly-priced
horses, generally with purchase prices less than $25,000, as opposed to a
smaller number of higher-priced horses. We believe this is a prudent business
model because:
o We can buy more horses and thereby diversify some of our risk;
o We expose ourselves to a greater chance of finding the horse that can
produce a significant profit because of the popularity of its bloodline
following the success of its siblings or the extraordinary development of a
horse as it grows.
o We will seek to avoid losing money on our acquisitions, returning modest
profits on the usual purchase, and exposing ourselves to one or more very
successful sale transactions.
The risk of this plan is that we may not find the extraordinary horse or horses
in each year's purchase, and that the modest gains and losses from the ordinary
purchases will be insufficient to cover operating costs.
All horses will be insured for mortality at the time of their purchase.
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 as future race horses, based upon pedigree and conformation.
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 Reddick, Florida. To board and train a horse, 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.
9
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.
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 Reddick, Florida.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
Revenues
The Company commenced operations on March 10, 2006 and has not generated
revenues. Our operating loss from March 10, 2006 (date of inception) until
October 31, 2006 was $15,142, consisting of donated rent and services of $5,250,
professional fees of $6,838, boarding and training fees of $2,450, and general
and administrative charges of $604.
For the three months ended January 31, 2007, our operating loss was $7,389,
consisting of $2,250 donated rent and services, $139 general and administrative
expense, and $5,000 in boarding and training fees.
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, a relative of a director of the Company. 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 first 12
months after the closing of the offering. As of January 31, 2007, we have a
working capital deficit of $10,031.
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.
10
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.
For the balance of our October 31, 2007 fiscal year operations, our plan is to
dispose of the seven horses we own, probably in June 2007, but in any event,
before October 31, 2007. We paid $96,845 for the horses, and boarding/training
expenses will be approximately $76,600 through time of sale. Thus, we will need
to realize approximately $175,000 for sales proceeds to break even. We will
apply the proceeds of the sales to the purchase of additional horses and working
capital. We will also apply the proceeds of this offering to working capital and
horse acquisition. Even if we are unsuccessful in selling our horses for a
profit, Ms. Sasyniuk has agreed to defer the due date of the loan and to fund
our operations for 12 months after closing the offering. After that we will need
to be self-sustaining or face the probability of closing the Company.
Obligations
We have no liabilities or other obligations other than the $100,200 loan from
Ms. Sasyniuk.
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, Canada (currently developing a racing entertainment
centre and track at Balzac, Alberta, Canada. 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 stockholders 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 April 14, 2007 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.
11
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
January 31, 2007 the Company owed $150,359 to Ms. Sasyniuk, for working capital
purposes. Ms. Sasyniuk has agreed not to call the loan and to cover our
operating costs for at least the first 12 months after the closing of the
offering.
Mr. McLellan and Ms. Sasyniuk-Walt may be considered to be promoters of the
Company. As such, Ms. Sasyniuk-Walt purchased 5,000,000 shares of common stock
in March, 2006, in exchange for $5,000, which was paid on January 10, 2007.
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 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. Because of
such selling method, the Company believes the person selling the shares will not
be considered to be "securities brokers" due to the exemption from the
definition of a broker under SEC Rule 3a4-1
The offering will remain open until the sale of all of the shares offered by us
December 31, 2007, 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 offering proceeds, amounts received will be held in
escrow at Securities Transfer Corporation. Upon receiving the full offering
proceeds, 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 will be sold at a price per share of $0.30. There can be no
assurance that we will sell 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 Securities 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
12
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, and persons who are not residents of the United States,
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
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.
13
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.
We will sell shares of our common stock to foreign investors pursuant to
exemptions from U.S. law and the laws of the jurisdictions in which sales occur.
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 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 holders of common
stock: (1) are entitled to one 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
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 stockholders"), 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 stockholders. The only stockholder 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 approved an amendment to 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.
14
LEGAL MATTERS
The validity of the common stock covered by this registration statement will be
passed upon for the Company by Lionel Sawyer & Collins, Reno, 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 will become subject to the reporting requirements of the Securities
and Exchange Act of 1934, as amended, and in the future will file, periodic
reports 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 Stockholders have authorized anyone else to provide you with different
information. Neither the Company nor the Selling Stockholders 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.
15
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 Stockholders 11
Plan of Distribution 12
Investor Suitability Requirement 13
Legal Matters 15
Index to Financial Statements 16
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.
Aspen Racing Stables Inc.
(A Development Stage Company)
January 31, 2007
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
CHARTERED ACCOUNTANTS
Vancouver, Canada
March 5, 2007, except as to Note 7 which is as of April 20, 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,
January 31, 2006
2007 $
$ Restated
(Unaudited) (Note 7)
----------- --------
ASSETS
Current Assets
Cash 6,685 47
Investment in Horses (Note 3) 145,048 118,608
- --------------------------------------------------------------------------------------
Total Assets 151,733 118,655
- --------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable 11,405 28,347
Due to related party (Note 4(b)) 150,359 100,200
- --------------------------------------------------------------------------------------
Total Liabilities 161,764 128,547
- --------------------------------------------------------------------------------------
Commitments and Contingencies (Note 1)
Stockholders' Deficit
Preferred Stock, 10,000,000 shares authorized, $0.001 par value
None issued and outstanding -- --
Common Stock, 100,000,000 shares authorized, $0.001 par value
5,000,000 shares issued and outstanding 5,000 5,000
Stock subscriptions receivable (Note 5) -- (5,000)
Donated Capital (Note 4(a)) 7,500 5,250
Deficit Accumulated During the Development Stage (22,531) (15,142)
- --------------------------------------------------------------------------------------
Total Stockholders' Deficit (10,031) (9,892)
- --------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficit 151,733 118,655
- --------------------------------------------------------------------------------------
(The accompanying notes are an integral part of these financial statements)
F-2
Aspen Racing Stables Inc.
(A Development Stage Company)
Statement of Operations
(Expressed in US dollars)
Accumulated from For the period from
March 10, 2006 Three Months March 10, 2006
(Date of Inception) Ended (Date of Inception)
to January 31, January 31, to October 31,
2007 2007 2006
(Unaudited) (Unaudited) Restated (Note 7)
$ $ $
--------------- --------------- ---------------
Revenue -
- -----------------------------------------------------------------------------------------------------------------
Expenses
Donated rent (Note 4(a)) 2,500 750 1,750
Donated services (Note 4(a)) 5,000 1,500 3,500
General and administrative 743 139 604
Professional fees 6,838 -- 6,838
Stable fees 7,450 5,000 2,450
- -----------------------------------------------------------------------------------------------------------------
Total Expenses 22,531 7,389 15,142
- -----------------------------------------------------------------------------------------------------------------
Net Loss For the Period (22,531) (7,389) (15,142)
- -----------------------------------------------------------------------------------------------------------------
Net Loss Per Share - Basic and Diluted -- --
- -----------------------------------------------------------------------------------------------------------------
Weighted Average Shares Outstanding 5,000,000 5,000,000
- -----------------------------------------------------------------------------------------------------------------
(The accompanying notes are an integral part of these financial statements)
F-3
Aspen Racing Stables Inc.
(A Development Stage Company)
Statement of Cash Flows
(Expressed in US dollars)
Accumulated from For the period from
March 10, 2006 Three Months March 10, 2006
(Date of Inception) Ended (Date of Inception
to January 31, January 31, to October 31,
2007 2007 2006
(Unaudited) (Unaudited) Restated (Note 7)
$ $ $
--------------- --------------- ---------------
Operating Activities
Net loss for the period (22,531) (7,389) (15,142)
Adjustments to reconcile net loss to net cash used in operating activities:
Donated services 7,500 2,250 5,250
Changes in operating assets and liabilities:
Accounts Payable 11,405 (16,942) 28,347
- -----------------------------------------------------------------------------------------------------------------------------------
Net Cash Flows Provided By (Used In) Operating Activities (3,626) (22,081) 18,455
- -----------------------------------------------------------------------------------------------------------------------------------
Investing Activities
Investment in horses (145,048) (26,440) (118,608)
---------------------------------------------------------------------------------------------------------------------------------
Net Cash Flows Used In Investing Activities (145,048) (26,440) (118,608)
- -----------------------------------------------------------------------------------------------------------------------------------
Financing Activities
Advances from a related party 150,359 50,159 100,200
Proceeds from issuance of common shares 5,000 5,000 --
- -----------------------------------------------------------------------------------------------------------------------------------
Net Cash Flows Provided By Financing Activities 155,359 55,159 100,200
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in Cash 6,685 6,638 47
Cash - Beginning of Period -- 47 --
---------------------------------------------------------------------------------------------------------------------------------
Cash - End of Period 6,685 6,685 47
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures
Interest paid -- -- --
Income taxes paid -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
(The accompanying notes are an integral part of these financial statements)
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 January 31, 2007
(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 -- -- -- -- (15,142) (15,142)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance - October 31, 2006 5,000,000 5,000 (5,000) 5,250 (15,142) (9,892)
Subscriptions received -- -- 5,000 -- -- 5,000
Donated rent and services -- -- -- 2,250 -- 2,250
Net loss for the period -- -- -- -- (7,389) (7,389)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance - January 31, 2007 5,000,000 5,000 -- 7,500 (22,531) (10,031)
- -----------------------------------------------------------------------------------------------------------------------------------
(The accompanying notes are an integral part of these financial statements)
F-5
Aspen Racing Stables Inc.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)
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 January 31,
2007, the Company has never generated any revenues and has accumulated
losses of $22,531 since inception and a working capital deficit of $10,031.
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 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.
F-6
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 January 31, 2007, and 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, insurance, 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.
F-7
2. Summary of Significant Accounting Policies (continued) k) Recent Accounting
Pronouncements
In February 2007, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 159, "The Fair Value Option for Financial Assets and Financial
Liabilities - Including an Amendment of FASB Statement No. 115". This
statement permits entities to choose to measure many financial instruments
and certain other items at fair value. Most of the provisions of SFAS No.
159 apply only to entities that elect the fair value option. However, the
amendment to SFAS No. 115 "Accounting for Certain Investments in Debt and
Equity Securities" applies to all entities with available-for-sale and
trading securities. SFAS No. 159 is effective as of the beginning of an
entity's first fiscal year that begins after November 15, 2007. Early
adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provision of SFAS No. 157, "Fair Value Measurements". The adoption of this
statement is not expected to have a material effect on the Company's
financial statements.
In September 2006, the SEC issued Staff Accounting Bulletin ("SAB") No.
108, "Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements." SAB No. 108 addresses
how the effects of prior year uncorrected misstatements should be
considered when quantifying misstatements in current year financial
statements. SAB No. 108 requires companies to quantify misstatements using
a balance sheet and income statement approach and to evaluate whether
either approach results in quantifying an error that is material in light
of relevant quantitative an qualitative factors. SAB No. 108 is effective
for fiscal years ending after November 15, 2006. The Company is currently
evaluating the impact of adopting SAB No. 108 but does not expect that it
will have a material effect on its financial statements.
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 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.
F-8
3. Investment in Horses
For the period ended January 31, 2007, the Company incurred $nil (October
31, 2006 - $96,845) of direct acquisition costs and $26,440 (October 31,
2006 - $21,763) of indirect development costs related to breeding,
insurance, and training of seven horses.
4. Related Party Transactions
a) Rent with a fair value of $250 per month and management services with
a fair value of $500 per month were provided at no cost by the
President of the Company. For the three month period ended January 31,
2007, donated rent and services of $750 and $1,500, respectively, were
charged to operations and treated as donated capital. For the period
ended 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. During the three
months ended January 31, 2007, a relative of a director of the Company
advanced a further $50,159 to the Company for working capital
purposes. At January 31, 2007, $150,359 is owed by the Company. These
advances are unsecured, non-interest bearing, and are due on demand.
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. On January 10, 2007, the Company received the proceeds of
$5,000.
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 $9,892, 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 $3,462.
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 9,892
Statutory Tax Rate 35%
Effective Tax Rate -
Deferred Tax Asset 3,462
Valuation Allowance (3,462)
- ------------------------------------------------
Net Deferred Tax Asset -
- ------------------------------------------------
F-9
7. Restatement
The Company has restated its financial statements as at October 31, 2006
and for the period from March 10, 2006 (date of inception) to October 31,
2006. The financial statements have been restating to reflect previously
unrecorded liabilities. The effect of the restatement is to increase net
loss by $4,829 for the period from March 10, 2006 (date of inception) to
October 31, 2006. Net loss per share was unchanged.
a) Balance Sheet
As At October 31, 2006
As Reported Adjustment As Restated
$ $ $
----------- ----------- -----------
Current Assets
Investment in Horses 108,713 9,895 118,608
Current Liabilities
Accounts payable 13,623 14,724 28,347
Stockholder's Equity (Deficit)
Deficit accumulated during the development stage (10,313) (4,829) (15,142)
b) Statement of Operations
Accumulated from March 10, 2006
(Date of Inception) to October 31, 2006
As Reported Adjustment As Restated
$ $ $
----------- ----------- -----------
Other Expenses
General and administrative 153 451 604
Professional fees 2,460 4,378 6,838
Net loss for the period (10,313) 4,829 (15,142)
c) Statement of Cash Flows
Accumulated from March 10, 2006
(Date of Inception) to October 31, 2006
As Reported Adjustment As Restated
$ $ $
----------- ----------- -----------
Operating Activities
Net loss for the period (10,313) 4,829 (15,142)
Adjustments to reconcile net loss to
net cash used in operating activities:
Accounts payable 13,623 14,724 28,347
Investing Activities
Investment in horses (108,713) (9,895) (118,608)
F-10
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 15,000.00
- ----------------------------------- ---------------
Blue Sky Fees and Expenses 1,200.00
- ----------------------------------- ---------------
Transfer Agent Fee 1,800.00
- ----------------------------------- ---------------
- ----------------------------------- ---------------
TOTAL $30,010.00
- ----------------------------------- ---------------
- ----------------------------------- ---------------
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 January
10, 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 pursuant to another applicable
exemption.
II-1
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.*
10.1 Commitment Agreement**
23.1 Consent of Manning Elliott, C.P.A.*
23.2 Consent of Counsel, included in Exhibit 5.1*
* filed herewith
** Previously filed
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.
II-2
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.
II-3
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 21st day of
May, 2007.
ASPEN RACING STABLES
/s/ Dwight McLellan May 21, 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 May 21, 2007
- -------------------
Dwight McLellan, Chairman, President,
Chief Executive Officer and Director
(Principal Executive, Financial and Accounting Officer)
/s/ Trixy Sasyniuk-Walt May 21, 2007
- -----------------------
Vice President, Secretary, Treasurer and Director