UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended January 31, 2008
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________________ to _________________
Commission file number 333-141384
Aspen Racing Stables, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 98-0517550
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
243 Cranfield Green SE, Calgary Alberta T3M 1C4
(Address of principal executive offices)
(403) 370-1176 (Issuer's telephone number)
211 Misty Morning Drive Calgary, Alberta, Canada T3Z 2Z8
(Former Address)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days: Yes [X] No [ ].
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act: Yes [ ] No [X ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act: Yes [ ] No [X ].
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports required to be
filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of March 11, 2008: 6,000,000 shares of common stock.
PART I - FINANCIAL STATEMENTS
Aspen Racing Stables Inc.
(A Development Stage Company)
Balance Sheets
(Expressed in US dollars)
January 31, October 31,
2008 2007
$ $
(Unaudited)
-------- --------
ASSETS
Current Assets
Cash 181,490 189,361
Prepaid expenses -- 139
-------- --------
Total Assets 181,490 189,500
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable 16,430 8,632
Due to related party (Note 3(b)) 3,684 3,684
-------- --------
Total Liabilities 20,114 12,316
-------- --------
Commitments and Contingencies (Note 1)
Stockholders' Equity
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
6,000,000 shares issued and outstanding 6,000 6,000
Additional Paid-in Capital 299,000 299,000
Donated Capital (Note 3(a)) 16,500 14,250
Deficit Accumulated During the Development Stage (160,124) (142,066)
-------- --------
Total Stockholders' Equity 161,376 177,184
-------- --------
Total Liabilities and Stockholders' Equity 181,490 189,500
======== ========
2
Aspen Racing Stables Inc.
(A Development Stage Company)
Statements of Operations
(Expressed in US dollars)
(Unaudited)
Accumulated from
March 10, 2006 Three Months Three Months
(Date of Inception) Ended Ended
to January 31, January 31, January 31,
2008 2008 2007
$ $ $
---------- ---------- ----------
Revenue 100,000 -- --
Cost of sales 100,929 -- --
---------- ---------- ----------
Gross Profit (929) -- --
---------- ---------- ----------
Expenses
Donated rent (Note 3(a)) 5,500 750 750
Donated services (Note 3(a)) 11,000 1,500 1,500
General and administrative 5,314 27 139
Professional fees 58,703 15,781 --
Stable fees 2,450 -- 5,000
Write down on investments in horses 76,228 -- --
---------- ---------- ----------
Total Expenses 159,195 18,058 7,389
---------- ---------- ----------
Net Loss For the Period (160,124) (18,058) (7,389)
========== ========== ==========
Net Loss Per Share - Basic and Diluted -- --
========== ========== ==========
Weighted Average Shares Outstanding 6,000,000 5,000,000
========== ========== ==========
3
Aspen Racing Stables Inc.
(A Development Stage Company)
Statements of Cash Flows
(Expressed in US dollars)
(Unaudited)
Accumulated From
March 10, 2006 Three Months Three Months
(Date of Inception) Ended Ended
to January 31, January 31, January 31,
2008 2008 2007
$ $ $
-------- -------- --------
Operating Activities
Net loss for the period (160,124) (18,058) (7,389)
Adjustments to reconcile net loss to net cash used
in operating activities:
Donated rent 5,500 750 750
Donated services 11,000 1,500 1,500
Write-off of investment in horses 76,228 -- --
Changes in operating assets and liabilities:
Prepaid expenses -- 139 --
Accounts Payable 16,430 7,798 (16,942)
-------- -------- --------
Net Cash Flows Used In Operating Activities (50,966) (7,871) (22,081)
======== ======== ========
Investing Activities
Expenditures on investment in horses (176,228) -- (26,440)
Proceeds from the sale of horses 100,000 -- --
-------- -------- --------
Net Cash Flows Used in Investing Activities (76,228) -- (26,440)
-------- -------- --------
Financing Activities
Advances from a related party 197,103 -- 50,159
Repayment to a related party (193,419) -- --
Proceeds from issuance of common stock 300,000 -- 5,000
Proceeds from stock subscriptions 5,000 -- --
-------- -------- --------
Net Cash Flows Provided By Financing Activities 308,684 -- 55,159
======== ======== ========
Increase (Decrease) in Cash 181,490 (7,871) 6,638
Cash - Beginning of Period -- 189,361 47
-------- -------- --------
Cash - End of Period 181,490 181,490 6,685
======== ======== ========
Supplemental Disclosures
Interest paid -- -- --
Income taxes paid -- -- --
======== ======== ========
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Aspen Racing Stables Inc.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)
(Unaudited)
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. On May 25, 2007, the Company sold the
horses.
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,
2008, the Company has accumulated losses of $160,124 since inception and a
working capital of $161,376. 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.
On March 16, 2007, the Company filed an SB-2 Registration Statement with
the United States Securities and Exchange Commission that was declared
effective on June 12, 2007, to issue 1,000,000 shares of common stock at
$0.30 per share for gross proceeds of $300,000. Refer to Note 5(b).
In August 2007, the Company issued 1,000,000 shares of common stock,
pursuant to the SB-2, for cash proceeds of $300,000. The proceeds were used
to repay the initial cash financing of the Company's operations and
outstanding amounts owing to creditors. The remaining proceeds will be used
to purchase additional horses.
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) Interim Financial Statements
The interim unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States for interim financial information and with the instructions for
Securities and Exchange Commission ("SEC") Form 10-QSB. They do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
Therefore, these financial statements should be read in conjunction
with the Company's audited financial statements and notes thereto for
the year ended October 31, 2007, included in the Company's Form 10KSB
filed on February 15, 2008 with the SEC.
The financial statements included herein are unaudited; however, they
contain all normal recurring accruals and adjustments that, in the
opinion of management, are necessary to present fairly the Company's
financial position at January 31, 2008, and the results of its
operations and cash flows for the three months ended January 31, 2008
and 2007. The results of operations for the three months ended January
31, 2008 are not necessarily indicative of the results to be expected
for future quarters or the full year.
5
Aspen Racing Stables Inc.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)
(Unaudited)
2. Summary of Significant Accounting Policies (Continued) c) 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 useful life and recoverability of
investment in horses, 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.
d) 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. As at January 31, 2008, and
2007 there are no dilutive potential common shares.
e) 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, 2008, the Company has
no items that represent a comprehensive loss and, therefore, has not
included a schedule of comprehensive loss in the financial statements.
f) 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.
g) 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. During the year
ended October 31, 2007, the Company recognized a writedown of the
carrying costs of $76,228 as a charge to operations, and sold the
investment in horses for proceeds of $100,000.
h) 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.
6
Aspen Racing Stables Inc.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)
(Unaudited)
2. Summary of Significant Accounting Policies (continued) i) 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.
j) 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.
k) Revenue Recognition
The Company recognizes revenue from the sale of its' horses in
accordance with Securities and Exchange Commission Staff Bulletin No.
104, "Revenue Recognition in Financial Statements". Revenue is
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. On May 25, 2007,
the Company disposed of its entire horse inventory for total revenue
of $100,000.
l) Recently Issued Accounting Pronouncements
In December 2007, the Financial Accounting Standards Board (FASB)
issued SFAS No. 141R, "Business Combinations". This statement replaces
SFAS 141 and defines the acquirer in a business combination as the
entity that obtains control of one or more businesses in a business
combination and establishes the acquisition date as the date that the
acquirer achieves control. SFAS 141R requires an acquirer to recognize
the assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree at the acquisition date, measured at their
fair values as of that date. SFAS 141R also requires the acquirer to
recognize contingent consideration at the acquisition date, measured
at its fair value at that date. This statement is effective for fiscal
years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 and earlier adoption is prohibited. The
adoption of this statement is not expected to have a material effect
on the Company's financial statements.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling
Interests in Consolidated Financial Statements Liabilities -an
Amendment of ARB No. 51". This statement amends ARB 51 to establish
accounting and reporting standards for the Noncontrolling interest in
a subsidiary and for the deconsolidation of a subsidiary. This
statement is effective for fiscal years, and interim periods within
those fiscal years, beginning on or after December 15, 2008 and
earlier adoption is prohibited. The adoption of this statement is not
expected to have a material effect on the Company's financial
statements.
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.
m) Reclassification
Certain items within the financial statements have been reclassified
for presentation purposes.
7
Aspen Racing Stables Inc.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)
(Unaudited)
3. Related Party Transactions
a) During the period ended January 31, 2008, the Company recognized a
total of $750 (2007 - $750) of donated rent at $250 per month and
$1,500 (2007 - $1,500) of donated management services at $500 per
month provided by the President of the Company.
b) At January 31, 2008, the Company owes $3,684 (October 31, 2007 -
$3,684) for shareholder advances. These advances are unsecured,
non-interest bearing, and are due on demand.
8
PART II
Item 2. Management's Discussion and Analysis and Plan of Operations
General
The Company's principal business in the purchase, breeding, training and
resale of thoroughbred race horses. In 2006 we purchased seven horses with the
intention of reselling them as two year olds. As of January 31, 2008 we have
generated $100,000 in revenues from the sale of our horses.
Three Months Ended January 31, 2008 Compared to 2007.
Revenues. We have generated zero revenues for the three months ended
January 31, 2008, versus zero revenues for the same period in 2007.
Expenses. During the three-months ended January 31, 2008, we incurred
$18,058 of expenses, consisting mainly of $15,781 of professional (legal and
accounting) fees. For the comparable period in 2007, our total expenses were
$7,389 consisting mainly of $5,000 for boarding fees.
Net Loss. For the three months ended January 31, 2008 our net loss was
$18,058 compared to $7,389 for the comparable period in 2007.
Proceeds From Initial Public Offering
The initial public offering of the Company's Common Stock closed on August
24, 2007, and has resulted in the sale of 1,000,000 shares at $0.30 per shares,
for gross proceeds of $300,000. The proceeds were used to repay the initial cash
financing of the Company's operations and outstanding amounts owing to
creditors. The remaining proceeds will be used to purchase additional horses.
We will incur continued reporting costs to the SEC, and proceeds from the
offering will be used as required to pay for the legal and accounting costs
related to the filings.
Liquidity
As of January 2008, our cash balance was $181,490 and we had a working
capital of $160,124. We did not generate any revenues for the three months ended
January 31, 2008. All of our cash needs have been met from the sale of our
equity securities.
With the completion of our initial public offering, we believe that, even
though our auditors have expressed substantial doubt about our ability to
continue as a going concern, we will have sufficient financial resources to meet
our obligations for at least the next twelve months and beyond. Assuming that we
do not increase our current capacity to provide services, our primary cash
requirements would be those associated with maintaining our horses and
maintaining our status as a reporting entity. We believe that on an annual basis
those costs would not exceed $100,000. Based on this belief, we believe we will
have adequate financial resources to meet our financial obligations as we
currently conduct business for at least 12 months.
Item 3. Controls and Procedures
(a) Within the 90-day period prior to the date of this report, we carried
out an evaluation, under the supervision and with the participation of
our management, including the Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures pursuant to Rule 13a-14 of the
Securities Exchange Act of 1934 (the "Exchange Act"). Based upon that
evaluation, the Chief Executive officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective in
timely alerting them to material information relating to the Company
required to be included in our Exchange Act filings. The Executive
Officer responsible for the financial reporting and disclosure are in
direct control of the books and records of the Company and are
involved first-hand in the decision making process for material
transactions.
9
(b) There have been no significant changes in our internal controls or in
other factors, which could significantly affect internal controls
subsequent to the date we carried out our evaluation.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits.
31.1 Certification by CEO/CFO pursuant to 18 USC Section 1350 as
adopted by Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification by CEO/CFO pursuant to 18 USC Section 1350 as
adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: March 13, 2008
ASPEN RACING STABLES, INC.
By: /s/ Trixy Sasnyiuk-Walt
--------------------------
President
10