UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended July 31, 2010
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 000-52387
AMERICAN TELSTAR, INC.
(Exact Name of Registrant as Specified in its Charter)
Colorado 84-1052279
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
36 Mclean Street, Red Bank, NJ 07701
(Address of Principal Executive Offices) (Zip Code)
201-970-4987
(Registrant's telephone number including area code)
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act: Common Stock, $.0001 par
value per share (Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).* Yes [ ] No [ ]
*The registrant has not yet been phased into the interactive data requirements.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statement incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definition of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrant's most recently completed second fiscal
quarter: $0.
Indicate the number of share outstanding of each of the registrant's classes of
common stock, as of the latest practicable date. 650,225 as of July 31, 2010.
TABLE OF CONTENTS
Part I
Page
----
Item 1 Business 3
Item 1A Risk Factors 4
Item 1B Unresolved Staff Comments 4
Item 2 Properties 4
Item 3 Legal Proceedings 4
Item 4 Removed and Reserved 4
Part II
Item 5 Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities 4
Item 6 Selected Financial Data 4
Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations 5
Item 8 Financial Statements 7
Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 17
Item 9A Controls and Procedures 17
Item 9B Other Information 18
Part III
Item 10 Directors, Executive Officers and Corporate Governance 18
Item 11 Executive Compensation 19
Item 12 Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 21
Item 13 Certain Relationships and Related Transactions and Director
Independence 21
Item 14 Principal Accounting Fees and Services 21
Part IV
Item 15 Exhibits, Financial Statement Schedules 22
Signatures 23
2
PART I
ITEM 1 BUSINESS
American Telstar, Inc. (the "Company") was incorporated on August 5, 1986, under
the laws of the State of Colorado. The Company was in the music distribution
business.
Since 1991, the Company has not engaged in any operations and has been dormant.
As such, the Company may presently be defined as a "shell" company, whose sole
purpose, at this time, is to locate and consummate a merger or acquisition with
a private entity.
Effective March 25, 2005, the Company commenced activities to become reporting
with the SEC with the intention to become a publicly trading company and on
January 3, 2007, filed a registration statement on Form 10-SB with the U. S.
Securities and Exchange Commission (the "SEC") registering its common stock
under Section 12(g) of the Securities and Exchange Act of 1934 (the "Exchange
Act"). The purpose of the Company is to engage in any lawful corporate
undertaking, including, but not limited to, selected mergers and acquisitions.
The Company has been in the developmental stage and has no operations since the
renewal of its charter. The Company has not commenced any operational
activities. The Board of Directors of the Company has elected to commence
implementation of the Company's principal business purpose, described below
under "General Business Plan".
Pursuant to the Articles of Incorporation, the Company is authorized to issue
500,000,000 shares of common stock, $0.0001 par value, and 40,000,000 shares of
Preferred Stock, $0.10 par value. As of July 31, 2010, there are 650,225 shares
of common stock outstanding.
The proposed business activities described herein classify the Company as a
"blank check" company. Many states have enacted statutes, rules and regulations
limiting the sale of securities of "blank check" companies in their respective
jurisdictions. Management does not intend to undertake any offering of the
Company's securities, either debt or equity, until such time as the Company has
successfully implemented its business plan herein.
On May 26, 2010, Lisa Guise, (the "Purchaser"), entered into a Stock Purchase
Agreement (the "Purchase") with Pride Equities, Inc. and Charles Calello
(collectively "Seller") pursuant to which the Seller sold an aggregate of
493,750 shares of Common Stock of the Company to Purchaser, representing
approximately 75.94% of the total issued and outstanding shares of Common Stock
of the Company, for a total purchase price of $175,000 and attained voting
control of the Company.
GENERAL BUSINESS PLAN
At this time, the Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business opportunities presented
to it by persons or firms who or which desire to seek the perceived advantages
of an Exchange Act registered corporation. The Company will not restrict its
search to any specific business, industry, or geographical location and the
Company may participate in a business venture of virtually any kind or nature.
This discussion of the proposed business is purposefully general and is not
meant to be restrictive of the Company's virtually unlimited discretion to
search for and enter into potential business opportunities. Management
anticipates that it may be able to participate in only one potential business
venture because the Company has nominal assets and limited financial resources.
This lack of diversification should be considered a substantial risk to
shareholders of the Company because it will not permit the Company to offset
potential losses from one venture against gains from another.
The Company may seek a business opportunity with entities which have recently
commenced operations, or which wish to utilize the public marketplace in order
to raise additional capital in order to expand into new products or markets, to
develop a new product or service, or for other corporate purposes. The Company
may acquire assets and establish wholly-owned subsidiaries in various businesses
or acquire existing businesses as subsidiaries.
3
The Company intends to advertise and promote the Company privately. The Company
has not yet prepared any notices or advertisement.
ITEM 1A RISK FACTORS
Not applicable.
ITEM 1B UNRESOLVED STAFF COMMENTS
None.
ITEM 2 PROPERTIES
The Company does not own or lease any property. Our sole officer and director
provides office space and related office services without charge. There is no
guarantee that this arrangement will continue in the future.
ITEM 3 LEGAL PROCEEDINGS
There are no known legal proceedings or outstanding judgments against the
Company, nor any pending litigation.
ITEM 4 REMOVED AND RESERVED
PART II
ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND REGISTRANT
PURCHASES OF EQUITY SECURITIES
(a) Market Information.
The Company's securities are listed for trading on the OTCBB, but there is no
active trading market.
(b) Holders.
As of July 31, 2010, there are approximately 28 holders of the Company's Common
Stock.
(c) Dividends.
The Company has never paid a cash dividend on its common stock and has no
present intention to declare or pay cash dividends on the common stock in the
foreseeable future. The Company intends to retain any earnings which it may
realize in the foreseeable future to finance its operations. Future dividends,
if any, will depend on earnings, financing requirements and other factors.
The transfer agent for the Company's common stock is Computershare, 350 Indiana
Street, Suite 750, Golden, CO 80401.
ITEM 6 SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with our
financial statements and related notes and "Management's Discussion and Analysis
of Financial Condition and Results of Operations". The statements o operations
data for the years ended July 31, 2010 and 2009 and the balance sheet data at
July 31, 2010 and 2009 are derived from our financial statements which are
included elsewhere in this Form 10-K. The historical results are not necessarily
indicative of results to be expected for future periods.
4
STATEMENTS OF OPERATIONS DATA:
For the Year Ended July 31,
2010 2009
-------- --------
Revenue $ -- $ --
Cost of goods sold -- --
-------- --------
Gross profit (loss) -- --
-------- --------
Total Operating Expenses 4,252 30,001
-------- --------
Net (Loss) (4,252) (30,001)
======== ========
Basic and diluted loss per share (0.01) (0.05)
======== ========
Shares used in calculation of loss per share:
Basic and Diluted 650,225 650,225
======== ========
BALANCE SHEET DATA:
For the Year Ended July 31,
2010 2009
-------- --------
Cash and Cash Equivalents $ 9,053 $ 5,253
Working Capital (25,875) (21,623)
Total Assets 9,053 5,253
Long Term Obligations 20,140 --
Total Shareholders' equity (deficit) (25,875) (21,623)
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements and notes thereto. Our fiscal year ends July 31. This document
contains certain forward-looking statements including, among others, anticipated
trends in our financial condition and results of operations and our business
strategy. These forward-looking statements are based largely on our current
expectations and are subject to a number of risks and uncertainties. Actual
results could differ materially from these forward-looking statements. Important
factors to consider in evaluating such forward-looking statements include (i)
changes in external factors or in our internal budgeting process which might
impact trends in our results of operations; (ii) unanticipated working capital
or other cash requirements; (iii) changes in our business strategy or an
inability to execute our strategy due to unanticipated changes in the industries
in which we operate; and (iv) various competitive market factors that may
prevent us from competing successfully in the marketplace.
RESULTS OF OPERATIONS
The Company incorporated in Colorado on August 5, 1986 as a music distribution
business. Since 1991, the Company has not engaged in any operations and has been
dormant. As such, the Company may presently be defined as a "shell" company,
whose sole purpose, at this time, is to locate and consummate a merger or
acquisition with a private entity.
Effective March 25, 2005, the Company commenced activities to become reporting
with the SEC with the intention to become a publicly trading company and on
January 3, 2007, filed a registration statement on Form 10-SB with the U. S.
Securities and Exchange Commission (the "SEC") registering its common stock
under Section 12(g) of the Securities and Exchange Act of 1934 (the "Exchange
Act"). The purpose of the Company is to engage in any lawful corporate
5
undertaking, including, but not limited to, selected mergers and acquisitions.
The Company has been in the developmental stage and has no operations since the
renewal of its charter. The Company has not commenced any operational
activities. The Board of Directors of the Company has elected to commence
implementation of the Company's principal business purpose, described below
under "General Business Plan".
For the year ended July 31, 2010 we incurred a net loss of ($4,252) or ($0.01)
per share compared to a net loss of ($30,001) or ($0.05) per share for the year
ended July 31, 2009. The change is primarily attributable to an increase in
professional and consulting fees and a reversal of a previously accrued
investment banking fee which was forgiven in connection with the stock purchase
agreement dated May 26, 2010.
The Company believes that while there is some doubt as to the Company's
continuation as a going concern, its success is dependent upon its ability to
meet its financing requirements and the success of its future operations or
completion of a successful business combination. Management believes that the
Company's operating and financial requirements provide the opportunity to the
Company to continue as a going concern. The opinion of the Company's auditor
(page 6) and the notes to the Company's financial statements (Note 3, page 13)
express substantial doubt as to the Company's ability to continue as a going
concern based upon the fact that the Company did not generate any revenues
during the year ended July 31, 2010, is unlikely to generate earnings in the
immediate or foreseeable future and has an accumulated deficit of $255,375 as of
July 31, 2010.
LIQUIDITY AND CAPITAL RESOURCES
On July 31, 2010 we had a negative working capital of ($25,875) and cash of
$9,053, compared to negative working capital of ($21,623) and cash of $5,253 at
July 31, 2009.
The Company has no operating history as a "blank check" company and no material
assets.
We presently do not have any available credit, bank financing or other external
sources of liquidity. We will need to obtain additional capital in order to
commence operations. We are currently investigating other financial
alternatives, including additional equity and/or debt financing. In order to
obtain capital, we may need to sell additional shares of our common stock or
borrow funds from private lenders. However, there can be no assurance that any
additional financing will become available to us, and if available, on terms
acceptable to us.
6
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
----
Report of Independent Registered Public Accounting Firm 8
Balance Sheets 9
Statements of Operations 10
Statements of Cash Flows 11
Statements of Changes in Stockholders' Equity 12
Notes to Financial Statements 13
7
Paritz & Company, P.A. 15 Warren Street, Suite 25
Hackensack, New Jersey 07601
Phone: (201) 342-7753
Fax: (201) 342-7598
E-Mail: paritz @paritz.com
- --------------------------------------------------------------------------------
Certified Public Accountants
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
American Telstar, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of American Telstar, Inc. (A
Development Stage Company) as of July 31, 2010 and 2009 and the related
statements of operations, changes in stockholders' equity and cash flows for the
years then ended and for the period from inception (March 25, 2005) to July 31,
2010. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Telstar, Inc. (A
Development Stage Company) as of July 31, 2010, and the results of its
operations and its cash flows for the year then ended and for the period from
inception (March 25, 2005) to July 31, 2010, in conformity with accounting
principles generally accepted in the United States of America.
As discussed in Note 3, the accompanying financial statements have been prepared
assuming the Company will continue as a going concern. The ability of the
Company to continue as a going concern and to emerge from the development stage
is dependent upon its successful execution of its plan of operations and ability
to raise additional financing. There is no guarantee that the Company will be
able to raise additional financing or sell any of its products or services at a
profit. The Company did not generate any revenue during the year ended July 31,
2010 and has an accumulated deficit of $255,375 as of that date. These factors,
among others, raise substantial doubt regarding the Company's ability to
continue as a going concern. The accompanying financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Paritz & Company, P.A.
- ------------------------------
Paritz & Company, P.A.
Hackensack, New Jersey
October 14, 2010
8
AMERICAN TELSTAR, INC.
BALANCE SHEETS
(A DEVELOPMENT STAGE COMPANY)
ASSETS
July 31, July 31,
2010 2009
---------- ----------
CURRENT ASSETS
Cash $ 9,053 $ 5,253
---------- ----------
TOTAL CURRENT ASSETS 9,053 5,253
---------- ----------
TOTAL ASSETS $ 9,053 $ 5,253
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ 14,788 $ 26,250
Accounts payable, related party -- 626
Loan payable - related party 20,140 --
---------- ----------
TOTAL CURRENT LIABILITIES 34,928 26,876
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock, $0.10 par value,
40,000,000 shares authorized,
none issued and outstanding -- --
Common stock, $0.0001 par value,
500,000,000 shares authorized,
650,225 issued & outstanding 65 65
Additional paid-in-capital 229,435 229,435
Accumulated deficit (163,000) (163,000)
Accumulated deficit during the development stage (92,375) (88,123)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (25,875) (21,623)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 9,053 $ 5,253
========== ==========
SEE NOTES TO FINANCIAL STATEMENTS
9
AMERICAN TELSTAR, INC.
STATEMENTS OF OPERATIONS
(A DEVELOPMENT STAGE COMPANY)
For the period
from March 25, 2005
(date of development
Year Ended Year Ended stage) through
July 31, July 31, July 31,
2010 2009 2010
-------- -------- --------
Revenue $ -- $ -- $ --
-------- -------- --------
EXPENSES
Stock issued for reorganization services -- -- 6,500
Consulting fees, related party -- -- 30,000
Consulting fees, unrelated party 5,000 -- 5,000
Investment banking services (25,000) 26,250 1,250
Professional fees 17,100 3,694 40,421
Other 1,709 57 3,761
Forfieture of mining property deposit 5,443 -- 5,443
-------- -------- --------
TOTAL EXPENSE 4,252 30,001 92,375
-------- -------- --------
Net Loss $ (4,252) $(30,001) $(92,375)
======== ======== ========
Net Income (Loss )Per Share $ (0.01) $ (0.05)
======== ========
Weighted Average Shares Outstanding 650,225 650,225
======== ========
SEE NOTES TO FINANCIAL STATEMENTS
10
AMERICAN TELSTAR, INC.
STATEMENTS OF CASH FLOWS
(A DEVELOPMENT STAGE COMPANY)
For the period
from March 25, 2005
(date of development
Year Ended Year Ended stage) through
July 31, July 31, July 31,
2010 2009 2010
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (4,252) $(30,001) $(92,375)
Adjustment to reconcile net income (loss) to
net cash used in operating activities
Stock issued for services -- -- 36,500
Increase (decrease) in accounts
payable and accrued expenses (12,088) 21,933 14,788
-------- -------- --------
Net cash used in operating activities (16,340) (8,068) (41,087)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of loan from related party 20,140 -- 20,140
Proceeds from issuance of common stock -- -- 30,000
-------- -------- --------
Net cash provided by financing activities 20,140 -- 50,140
-------- -------- --------
Cash at beginning of period 5,253 13,321 --
Net increase (decrease) in cash 3,800 (8,068) 9,053
-------- -------- --------
CASH AT END OF PERIOD $ 9,053 $ 5,253 $ 9,053
======== ======== ========
SEE NOTES TO FINANCIAL STATEMENTS
11
AMERICAN TELSTAR, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(A DEVELOPMENT STAGE COMPANY)
FOR THE PERIOD FROM MARCH 25, 2005 (DATE OF DEVELOPMENT STAGE)
THROUGH JULY 31, 2010
Accumulated
(Deficit)
Additional During the
Preferred Stock Common Stock Paid-In Accumulated Development
# Shares Amount # Shares Amount Capital (Deficit) Stage Total
-------- ------ -------- ------ ------- --------- ----- -----
Balance at August 1, 2004 -- $ -- 251,475 $ 25 $162,975 $(163,000) $ -- $ --
Issuance of stock for
services at $0.0928 on
May 23, 2005 -- -- 70,000 7 6,493 -- -- 6,500
Issuance of stock for $30,000
services and $30,000 cash at
$0.1825 on May 23, 2005 -- -- 328,750 33 59,967 -- -- 60,000
Net loss - year ended
July 31, 2005 -- -- -- -- -- -- (9,019) (9,019)
----- ----- -------- ------ -------- --------- -------- --------
Balance at July 31, 2005 -- -- 650,225 65 229,435 (163,000) (9,019) 57,481
Net loss - year ended
July 31, 2006 -- -- -- -- -- -- (2,522) (2,522)
----- ----- -------- ------ -------- --------- -------- --------
Balance at July 31, 2006 -- -- 650,225 65 229,435 (163,000) (11,541) 54,959
Net loss - year ended
July 31, 2007 -- -- -- -- -- -- (41,171) (41,171)
----- ----- -------- ------ -------- --------- -------- --------
Balance at July 31, 2007 -- -- 650,225 65 229,435 (163,000) (52,712) 13,788
Net loss - year ended
July 31, 2008 -- -- -- -- -- -- (5,410) (5,410)
----- ----- -------- ------ -------- --------- -------- --------
Balance at July 31, 2008 -- -- 650,225 65 229,435 (163,000) (58,122) 8,378
Net loss - year ended
July 31, 2009 -- -- -- -- -- -- (30,001) (30,001)
----- ----- -------- ------ -------- --------- -------- --------
Balance at July 31, 2009 -- -- 650,225 65 229,435 (163,000) (88,123) (21,623)
Net loss - year ended
July 31, 2010 -- -- -- -- -- -- (4,252) (4,252)
----- ----- -------- ------ -------- --------- -------- --------
Balance at July 31, 2010 -- $ -- 650,225 65 $229,435 (163,000) $(92,375) $(25,875)
===== ===== ======== ====== ======== ========= ======== ========
SEE NOTES TO FINANCIAL STATEMENTS
12
AMERICAN TELSTAR, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2010
NOTE 1 - ORGANIZATION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Description of Business
The Company (formerly Heritage Funding, Ltd.) was originally incorporated as a
Colorado corporation on August 5, 1986.
Heritage Funding, Ltd. successfully completed a public offering of securities
during the year ended July 31, 1988. On November 28, 1988, the Company issued
185,000 (post reverse-split) shares of its $.0001 par value common stock in
exchange for 100% ownership of American Telstar, Inc. American Telstar, Inc. was
established as a California corporation in 1986. The Company was engaged in the
music video business as well as a movie production business. American Telstar in
1988 became engaged in acquiring music through lease agreements for various
record labels. Since 1991, the Company has not engaged in any operations and has
been dormant.
Heritage Funding, Ltd. changed its name to American Telstar, Inc. effective
December 9, 1988.
The business combination was accounted for as a reverse purchase since the
controlling shareholders of the acquired company control the acquiring company
after the transaction. The stockholders' (deficit) section of the financial
statements has been retroactively adjusted to give effect to the reorganization
as of the date the original shares were issued by American Telstar, Inc., the
California corporation. The net monetary assets of Heritage Funding, Ltd. at the
time of the transaction have been treated as consideration for the new shares at
that time.
Effective March 25, 2005, the Company commenced activities to become reporting
with the SEC with the intention to become a publicly trading company.
(b) Development Stage Activities
Based upon the Company's business plan, it is a development stage enterprise
since planned principal operations have not yet commenced. Accordingly, the
Company presents its financial statements in conformity with the accounting
principles generally accepted in the United States of America that apply in
establishing operating enterprises. As a development stage enterprise, the
Company discloses the deficit accumulated during the development stage and the
cumulative statements of operations and cash flows from commencement of
development stage to the current balance sheet date. The development stage began
March 25, 2005 when the Company commenced activities to become reporting with
the SEC with the intention to become a publicly trading company.
13
AMERICAN TELSTAR, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
A. USE OF ESTIMATES
The preparation of financial statements in conformity with 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.
B. DEVELOPMENT STAGE
The Company continues to devote substantially all of its efforts to exploring
potential targets for a business combination through the purchase of assets,
share purchase or exchange, merger or similar type of transaction.
C. INCOME TAXES
Deferred tax assets and liabilities are recognized for future tax consequences
attributable to differences between financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. In addition, the
recognition of future tax benefits, such as carry-forwards, to the extent that
realization of such benefits is more likely than not and that a valuation
allowance be provided when it is more likely than not that some portion of the
deferred tax asset will not be realized.
D. SHARE-BASED COMPENSATION
Share-based compensation cost is measured at the grant date based on the fair
value of the award and is recognized as expense over the requisite service
period. The Company's policy is to recognize compensation cost for awards with
only service conditions and a graded vesting schedule on a straight-line basis
over the requisite service period for the entire award.
During the years ended July 31, 2010 and 2009, there were no stock options
granted or outstanding.
E. RECENT ACCOUNTING PRONOUNCEMENTS
There were various accounting standards and interpretations issued during 2010
and 2009, none of which are expected to have a material impact on the Company's
financial position, operations or cash flows.
14
AMERICAN TELSTAR, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONT'D)
F. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company adopted the provisions of Accounting Standards Codification ("ASC")
820, Fair Value Measurements and Disclosures. ASC 820 clarifies the definition
of fair value, prescribes methods for measuring fair value, and establishes a
fair value hierarchy to classify the inputs used in measuring fair value as
follows:
Level 1-Inputs are unadjusted quoted prices in active markets for identical
assets or liabilities available at the measurement date.
Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar assets and liabilities
in markets that are not active, inputs other then quoted prices that are
observable, and inputs derived from or corroborated by observable market data.
Level 3-Inputs are unobservable inputs which reflect the reporting entity's own
assumptions on what assumptions the market participants would use in pricing the
asset or liability based on the best available information.
The Company's financial instruments primarily consist of cash and related party
borrowings. As of the balance sheet dates, the estimated fair values of
financial instruments were not materially different from their carrying values
as presented on the balance sheet.
NOTE 3 - GOING CONCERN
The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the Company will continue to realize its
assets and discharge its liabilities in the normal course of business. The
Company has not generated any revenues since inception, has an accumulated loss
of $255,375 as of July 31, 2010, and is unlikely to generate earnings in the
immediate or foreseeable future. The continuation of the Company as a going
concern is dependent upon, among other things, the continued financial support
from its shareholders, the ability of the Company to obtain necessary equity or
debt financing, and the attainment of profitable operations. These factors,
among others, raise substantial doubt regarding the Company's ability to
continue as a going concern. There is no assurance that the Company will be able
to generate revenues in the future. These financial statements do not give any
effect to any adjustments that would be necessary should the Company be unable
to continue as a going concern.
15
AMERICAN TELSTAR, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - STOCKHOLDERS' EQUITY
The Company's Articles of Incorporation authorize the issuance of up to
500,000,000 shares of $0.0001 par value common stock and up to 40,000,000 shares
of $0.10 par value preferred stock. As of July 31, 2010, there were 650,225
shares of common stock issued and outstanding and there were no preferred shares
issued or outstanding. The terms and preferences of the authorized preferred
stock may be determined at the discretion of the Company's board of directors.
On May 23, 2005, the Company effected a one for 200 reverse stock split. All
references in the accompanying financial statements to the number of common
shares and per share amounts have been retroactively restated to reflect the
reverse stock split.
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company uses the offices of its Chief Executive Officer for its minimal
office facility needs for no consideration. No provision for these costs has
been provided since it has been determined they are immaterial.
During the year ended July 31, 2010, the Company's majority shareholder advanced
$20,140 to fund the Company's expenses. This loan is non-interest bearing with
no stated maturity date.
In connection with a stock purchase agreement, the former majority shareholders
of the company forgave $25,000 of investment services due to them. This amount
is shown as a reduction of expenses in the accompanying statement of operations
for the year ended July 31, 2010.
NOTE 6 - INCOME TAXES
At July 31, 2010 and 2009, the Company had net operating loss carry forwards of
approximately $92,000 and $88,000 which expire through 2030. Pursuant to Section
382 of the Internal Revenue Code regarding substantial changes in ownership,
utilization of these losses may be limited. Due to the fact that the Company has
not generated any taxable income through July 31, 2010 except for income from
the cancellation of investment banking fees, it was determined that it was more
likely than not that the Company's deferred tax asset will not be realized. As
such, the deferred tax asset of approximately $37,000 and $35,000 at July 31,
2010 and 2009, respectively, has been offset by a full valuation allowance of
$37,000 and $35,000, respectively.
16
PART III
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures (as defined in the
Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) designed to ensure
that information required to be disclosed in reports filed or submitted under
the Securities Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed by
the Company in its reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company's management, including its
principal executive and principal financial officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure.
The Company's management, with the participation of its chief executive and
chief financial officer, evaluated the effectiveness of our disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) or 15d-15(e)) as of
July 31, 2010. Based on that evaluation, the Company's chief executive officer
concluded that, as of that date, the Company's disclosure controls and
procedures were not effective at a reasonable assurance level, due to the
identification of a material weakness, as discussed further below under
Management's Report on Internal Control over Financial Reporting.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act). Our internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Therefore, even those systems
determined to be effective can provide only reasonable assurance of achieving
their control objectives. Furthermore, smaller reporting companies face
additional limitations. Smaller reporting companies employ fewer individuals and
find it difficult to properly segregate duties. Additionally, smaller reporting
companies tend to utilize general accounting software packages that lack a
rigorous set of software controls.
Our management, with the participation of the President, evaluated the
effectiveness of the Company's internal control over financial reporting as of
July 31, 2010. In making this assessment, our management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control -- Integrated Framework. Based on that evaluation,
our management concluded that, as of July 31, 2010, our internal control over
financial reporting was not effective due to material weaknesses in the system
of internal control. Specifically, management identified the following control
deficiencies. (1) The Company has not properly segregated duties as one or two
individuals initiate, authorize, and complete all transactions. The Company has
not implemented measures that would prevent the individuals from overriding the
internal control system. The Company does not believe that this control
deficiency has resulted in deficient financial reporting because the Chief
Financial Officer is aware of his responsibilities under the SEC's reporting
requirements and personally certifies the financial reports. (2) The Company has
installed accounting software that does not prevent erroneous or unauthorized
changes to previous reporting periods and does not provide an adequate audit
trail of entries made in the accounting software.
17
Accordingly, while the Company has identified certain material weaknesses in its
system of internal control over financial reporting, it believes that it has
taken reasonable steps to ascertain that the financial information contained in
this report is in accordance with generally accepted accounting principles.
Management has determined that current resources would be appropriately applied
elsewhere and when resources permit, they will alleviate material weaknesses
through various steps.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting, as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most
recently completed fiscal year that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
ITEM 9B OTHER INFORMATION
On May 26, 2010, Lisa Guise, (the "Purchaser"), entered into a Stock Purchase
Agreement (the "Purchase") with Pride Equities, Inc. and Charles Calello
(collectively "Seller") pursuant to which the Seller sold an aggregate of
493,750 shares of Common Stock of the Company to Purchaser, representing
approximately 75.94% of the total issued and outstanding shares of Common Stock
of the Company, for a total purchase price of $175,000 and attained voting
control of the Company. The Company reported the Purchase on a Current Report on
Form 8-K which was filed with the SEC on May 27, 2010.
On August 4, 2010, the Company retained Paritz & Company, P.A. as its
independent registered public accounting firm for the fiscal year ended July 31,
2010. The Company did not use an independent auditor in the prior fiscal year
because the Company was an inactive company as defined by Regulation S-X ss.210.
3-11 and audited financial statements were not required to be presented.
On September 28, 2010, the Company changed the location of its principal
executive offices from 730 W. Randolph Street, Suite 600, Chicago, IL 60661 to
36 Mclean Street, Red Bank, NJ 07701 and changed its telephone number from
312-454-0015 to 201-970-4987.
PART III
ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The directors of the Company hold office for annual terms and will remain in
their positions until successors have been elected and qualified. The officers
are appointed by the board of directors of the Company and hold office until
their death, resignation or removal from office. The ages, positions held, and
duration of terms of the directors and executive officers are as follows as of
the date of this report:
Name Age Position
---- --- --------
Lisa Guise 42 President, Chief Executive Officer and Director
LISA GUISE
Lisa Guise is a director of the Company. Ms. Guise graduated Syracuse
University. Ms. Guise received her Bachelor's of science degree in speech
communications in 1991. Over the past few years Ms. Guise has been an
independent business consultant. Her experience includes working with management
of privately-held companies to maximize productivity as well as general
corporate matters. Ms. Guise has experience in various industries including
fitness and transportation.
18
SIGNIFICANT EMPLOYEES
The Company has no regular employees. Lisa Guise devotes approximately 5% of her
time to the Company's business.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
None
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires any person who
is our director or executive officer or who beneficially holds more than ten
percent (10%) of any class of our securities which have been registered with the
Securities and Exchange Commission. These persons are also required under the
regulations of the Securities and Exchange Commission to furnish us with copies
of all Section 16(a) reports they file. To the Company's knowledge, all Section
16(a) reports were timely filed except that (1) during the fiscal year ended
July 31, 2010, one person, Charles Calello, filed a late Form 4 reporting one
transaction; and (2) during the fiscal years ended July 31, 2010 and prior
fiscal years, no beneficial ownership reports have been filed by Peter Porath or
Ranji Bedi.
CODE OF ETHICS
We have not prepared a written code of ethics and employment standards for our
company.
CORPORATE GOVERNANCE; AUDIT COMMITTEE FINANCIAL EXPERT
We currently do not have an audit committee financial expert or an independent
audit committee expert due to the fact that our Board of Directors currently
does not have an independent audit committee.
ITEM 11 EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long-term
compensation earned by the Company's principal executive officer, each of our
two most highly compensated executive officers who were serving as executive
officers at any time during the fiscal year.
Change in
Pension Value
and
Non-Equity Nonqualified
Incentive Deferred
Stock Option Plan Compensation All Other
Name and Salary Bonus Awards Awards Compensation Earnings Compensation Total
Principal Position Year ($) ($) ($) ($) ($) ($) ($) ($)
- ------------------ ---- --- --- --- --- --- --- --- ---
Lisa Guise 2009 Nil Nil Nil Nil Nil Nil Nil Nil
President, Chief
Executive Officer
and Director (1)
Charles Calello, 2009 Nil Nil Nil Nil Nil Nil Nil Nil
former President 2008 Nil Nil Nil Nil Nil Nil Nil Nil
and Chief
Executive (2)
19
Change in
Pension Value
and
Non-Equity Nonqualified
Incentive Deferred
Stock Option Plan Compensation All Other
Name and Salary Bonus Awards Awards Compensation Earnings Compensation Total
Principal Position Year ($) ($) ($) ($) ($) ($) ($) ($)
- ------------------ ---- --- --- --- --- --- --- --- ---
Peter Porath, 2009 Nil Nil Nil Nil Nil Nil Nil Nil
former Vice 2008 Nil Nil Nil Nil Nil Nil Nil Nil
President, Chief
Financial Officer,
Secretary,
Treasurer and
Director (2)
- ----------
(1) Elected May 26, 2010
(2) Resigned May 26, 2010
There are no employment agreements or consulting agreements with our current
sole director and executive officer. There are no arrangements or plans in which
we provide pension, retirement or similar benefits for directors or executive
officers. We do not have any material bonus or profit sharing plans pursuant to
which cash or non-cash compensation is or may be paid to our directors or
executive officers, except that stock options may be granted at the discretion
of our board of directors from time to time. We have no plans or arrangements in
respect of remuneration received or that may be received by our executive
officers to compensate such officers in the event of termination of employment
(as a result of resignation, retirement, change of control) or a change of
responsibilities following a change of control.
None of the Company's current officers or directors received any compensation
for their respective services rendered to the Company during the last two fiscal
years. They all agreed to act without compensation until authorized by the Board
of Directors. Such authorization is not expected to occur until the Company has
generated revenues from operations after consummation of a merger or
acquisition. The Company currently has no funds available to pay our sole
officers and director. Further, our sole officers and director is not accruing
any compensation pursuant to any agreement with the Company.
It is possible that, after the Company successfully consummates a merger or
acquisition with an unaffiliated entity, that entity may desire to employ or
retain one or a number of members of the Company's management for the purposes
of providing services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a policy whereby
the offer of any post-transaction remuneration to members of management will not
be a consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Company's
Board of Directors any discussions concerning possible compensation to be paid
to them by any entity that proposes to undertake a transaction with the Company
and further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors is offered
compensation in any form from any prospective merger or acquisition candidate,
the proposed transaction will not be approved by the Company's Board of
Directors as a result of the inability of the Board to affirmatively approve
such a transaction.
It is possible that persons associated with management may refer a prospective
merger or acquisition candidate to the Company. In the event the Company
consummates a transaction with any entity referred by associates of management,
it is possible that such an associate will be compensated for their referral in
20
the form of a finder's fee. It is anticipated that this fee will be either in
the form of restricted common stock issued by the Company as part of the terms
of the proposed transaction, or will be in the form of cash consideration.
However, if such compensation is in the form of cash, such payment will be
tendered by the acquisition or merger candidate, because the Company has
insufficient cash available. The amount of such finder's fee cannot be
determined as of the date of this registration statement, but is expected to be
comparable to consideration normally paid in like transactions. No member of
management of the Company will receive any finder's fee, either directly or
indirectly, as a result of their respective efforts to implement the Company's
business plan outlined herein.
No retirement, pension, profit sharing, stock option or insurance programs or
other similar programs have been adopted by the Company for the benefit of its
employees.
As of July 31, 2010, there were no equity compensation plans in effect.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth certain information as of the date of this Report
with respect to the beneficial ownership of the outstanding common stock of the
Company by (i) any holder of more than five (5%) percent; (ii) each of the
Company's executive officers and directors; and (iii) the Company's directors
and executive officers as a group. Unless otherwise indicated below, the persons
and entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned. The percentage of class is based on
650,225 shares of common stock issued and outstanding as of the date of this
Report.
Amount of Beneficial Percentage of
Name and Address of Beneficial Owner Ownership Class
- ------------------------------------ --------- -----
Lisa Guise 493,750 75.94%
c/o American Telstar, Inc.
36 Mclean Street, Red Bank, NJ 07701
Ranji Bedi 95,000 14.61%
9889 Santa Monica Boulevard, Suite 205
Beverly Hills, CA 90210
Officers and Directors as a group (1 person) 493,750 75.94%
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
The Board of Directors has passed a resolution which contains a policy that the
Company will not seek an acquisition or merger with any entity in which any of
the Company's Officers, Directors, principal shareholders or their affiliates or
associates serve as officer or director or hold any ownership interest.
Management is not aware of any circumstances under which this policy, through
their own initiative may be changed.
The proposed business activities described herein classify the Company as a
"blank check" company. Many states have enacted statutes, rules and regulations
limiting the sale of securities of "blank check" companies in their respective
jurisdictions. Management does not intend at this time to undertake any efforts
to cause a market to develop in the Company's securities until such time as the
Company has successfully implemented its business plan described herein.
ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES
On August 4, 2010, the Company retained Paritz & Company, P. A. as its
independent registered public accounting firm for the fiscal year ended July 31,
2010. The Company did not use an independent auditor in the prior fiscal year
because the Company was an inactive company as defined by Regulation S-Xss.210.
3-11 and audited financial statements were not required to be presented. During
21
the year ended July 31, 2009, the total fees billed for audit-related services
was $0, for tax services was $0 and for other services was $0. During the year
ended July 31, 2010, the total fees billed for audit-related services was
$6,000.00, for tax services was $0 and for all other services was $0.
PART IV
ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibit No. Description
- ----------- -----------
3.1 Articles of Incorporation (1)
3.2 Certificate of Amendment of Articles of Incorporation dated
December 16, 1988 (1)
3.3 Articles of Reinstatement dated June 21, 1996 (1)
3.4 Articles of Reinstatement dated September 7, 1999 (1)
3.5 By-Laws (1)
31 Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
32 Certification of Principal Executive Officer and Principal
Financial Officer to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
- ----------
(1) Incorporated herein by reference from the Company's Registration Statement
on Form 10-SB filed with the Securities and Exchange Commission on January
3, 2007.
22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMERICAN TELSTAR, INC.
Date: October 20, 2010 By /s/Lisa Guise
-------------------------------------
Lisa Guise
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:
/s/ Lisa Guise President, Chief Executive October 20, 2010
- ---------------------------- Officer and Director
Lisa Guise (Principal Executive Officer)
(Principal Financial and
Accounting Officer)
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT
TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT
The registrant has not furnished to its security holders an annual report
covering its fiscal year ended July 31, 2010 or any proxy material with respect
to any annual or other meeting of security holders, nor will the registrant
furnish such material to its security holders subsequent to the filing of its
annual report on this Form 10-K.
23