UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 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)
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).* *The registrant has
not yet been phased into the interactive data requirements. Yes [ ] No [ ]
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]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distributions of securities under a plan
confirmed by a court. Yes [ ] No [ ] N/A [X]
APPLICABLE TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Class - Common Stock, 650,225
shares outstanding as of November 15, 2010.
AMERICAN TELSTAR, INC.
Index
Page
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PART I FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited) 3
Balance Sheets 4
Statements of Operations 5
Statements of Cash Flows 6
Notes to Financial Statements 7
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
Item 3 Quantitative and Qualitative Disclosures About Market Risk 11
Item 4T Controls and Procedures 11
PART II OTHER INFORMATION
Item 1 Legal Proceedings 12
Item 1A Risk Factors 12
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 12
Item 3 Defaults Upon Senior Securities 12
Item 4 Removed and Reserved 12
Item 5 Other Information 12
Item 6 Exhibits 12
SIGNATURES 13
2
PART I
FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS (UNAUDITED)
The accompanying unaudited financial statements of American Telstar, Inc.
("American Telstar" or the "Company") have been prepared in accordance with
generally accepted accounting principles in the United States for interim
financial reporting and pursuant to the rules and regulations of the Securities
and Exchange Commission (the "Commission" or the "SEC"). While these statements
reflect all normal recurring adjustments which are, in the opinion of
management, necessary in order to make the financial statements not misleading
and for fair presentation of the results of the interim period, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. For further
information, refer to the financial statements and footnotes thereto for the
fiscal year ended July 31, 2010 filed with the Commission which are included in
the Annual Report on Form 10-K filed on or about October 20, 2010.
3
AMERICAN TELSTAR, INC.
COMPARATIVE BALANCE SHEETS
(A DEVELOPMENT STAGE COMPANY)
October 31, July 31,
2010 2010
---------- ----------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 13,994 $ 9,053
---------- ----------
TOTAL CURRENT ASSETS 13,994 9,053
---------- ----------
TOTAL ASSETS $ 13,994 $ 9,053
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ 20,788 $ 14,788
Accounts payable, related party -- --
---------- ----------
TOTAL CURRENT LIABILITIES 20,788 14,788
---------- ----------
OTHER LIABILITIES
Loan payable - related party 30,140 20,140
---------- ----------
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 (103,434) (92,375)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (36,934) (25,875)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 13,994 $ 9,053
========== ==========
SEE NOTES TO FINANCIAL STATEMENTS
4
AMERICAN TELSTAR, INC.
STATEMENTS OF OPERATIONS
(A DEVELOPMENT STAGE COMPANY)
(UNAUDITED)
For the period from
March 25, 2005
Three Months Three Months (date of development
Ended Ended stage) through
October 31, October 31, October 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
Investment banking services -- 750 1,250
Professional fees 9,330 716 49,751
Other 10 -- 3,771
Stock Transfer Fees 1,719 -- 1,719
Forfeiture of mining property deposit -- -- 5,443
---------- ---------- ----------
TOTAL EXPENSE 11,059 1,466 103,434
---------- ---------- ----------
Net Loss $ (11,059) $ (1,466) $ (103,434)
========== ========== ==========
Net Income (Loss )Per Share $ (0.02) $ (0.00)
========== ==========
Weighted Average Shares Outstanding 650,225 650,225
========== ==========
SEE NOTES TO FINANCIAL STATEMENTS
5
AMERICAN TELSTAR, INC.
STATEMENTS OF CASH FLOWS
(A DEVELOPMENT STAGE COMPANY)
(UNAUDITED)
For the period from
March 25, 2005
Three Months Three Months (date of development
Ended Ended stage) through
October 31, October 31, October 31,
2010 2009 2010
---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (11,059) $ (1,466) $ (103,434)
Adjustment to reconcile net income (loss) to
net cash used in operating activities
Stock issued for services -- -- 36,500
Increase (decrease) in accounts payable 6,000 -- 6,000
and accrued expenses -- 1,466 14,788
---------- ---------- ----------
Net cash used in operating activities (5,059) -- (46,146)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of loan from related party 10,000 -- 30,140
Proceeds from issuance of common stock -- -- 30,000
---------- ---------- ----------
Net cash provided by financing activities 10,000 -- 60,140
---------- ---------- ----------
Cash at beginning of period 9,053 5,253 --
Net increase (decrease) in cash 4,941 -- 13,994
---------- ---------- ----------
CASH AT END OF PERIOD $ 13,994 $ 5,253 $ 13,994
========== ========== ==========
SEE NOTES TO FINANCIAL STATEMENTS
6
AMERICAN TELSTAR, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2010
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted for interim financial information
and with the instructions to Form 10-Q and Article 8 of Regulation S-X relating
to smaller reporting companies. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
("GAAP") for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three months
ended October 31, 2010 are not necessarily indicative of the results that may be
expected for the year ended July 31, 2011.
The balance sheet July 31, 2010 has been derived from the audited financial
statements at that date but does not include all of the information and
footnotes required by GAAP for complete financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in our Annual Report on Form 10-K for the year ended
July 31, 2010 filed with the Securities and Exchange Commission.
NOTE 2 - ORGANIZATION
(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. changed its name
to American Telstar, Inc. effective December 9, 1988.
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 the Company. The Company was previously engaged
in the music video business as well as a movie production business and 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.
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 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.
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(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.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
A. 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.
B. 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 quarters ended October 31, 2010 and 2009, there were no stock options
granted or outstanding.
C. 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.
NOTE 4 - 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 $266,434 as of October 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.
8
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company uses the offices of its Chief Financial 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 quarter ended October 31, 2010, the Company's majority shareholder
advanced $10,000 to fund the Company's expenses. This loan is non-interest
bearing with no stated maturity date.
NOTE 6 - INCOME TAXES
At October 31, 2010 the Company had a net operating loss carry forward of
approximately $103,000 which expires 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 October 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 $41,000 at October 31, 2010 has
been offset by a full valuation allowance of $41,000.
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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW
The following discussion updates our plan of operation for the next twelve
months. It also analyzes our financial condition at October 31, 2010 and
compares it to our financial condition at July 31, 2010. Finally, the discussion
summarizes the results of our operations for the three months ended October 31,
2010 and 2009. This discussion and analysis should be read in conjunction with
our audited financial statements for the year ended July 31, 2010, including
footnotes, and the discussion and analysis included in our Form 10-K filed with
the Commission on or about October 20, 2010.
PLAN OF OPERATION
American Telstar, Inc., (the "registrant" or "Company") was incorporated under
the laws of the state of Colorado on August 5, 1986. The registrant was
originally organized to engage in the music video business as well as a movie
production business. Since 1991, the Company has not engaged in any operations
and has been dormant. The Company may seek to acquire a controlling interest in
such entities in contemplation of later completing an acquisition. The Company
is not limited to any operation or geographic area in seeking out opportunities.
RESULTS OF OPERATIONS
For the quarter ended October 31, 2010 we incurred a net loss of ($11,059) or
($0.02) per share compared to a net loss of ($1,466) or ($0.00) per share for
the quarter ended October 31, 2009. The change is primarily attributable to
further general and administrative expenses incurred by the Company.
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 notes to the Company's financial
statements (Note 4, page 8) express substantial doubt as to the Company's
ability to continue as a going concern based upon the fact that the Company has
not generated any revenues since inception, has an accumulated loss of $266,434
as of October 31, 2010 and is unlikely to generate earnings in the immediate or
foreseeable future.
LIQUIDITY AND CAPITAL RESOURCES
On October 31, 2010 we had a negative working capital of ($36,934) and cash of
$13,994, compared to negative working capital of ($25,875) and cash of $5,253 at
October 31, 2009.
The Company has no operating history, is a development stage company and has 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.
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains or incorporates by reference "forward-looking
statements," as that term is used in federal securities laws, about our
financial condition, results of operations and business. These statements
include, among others:
* statements concerning the benefits that we expect will result from our
business activities and that we contemplate or have completed; and
10
* statements of our expectations, beliefs, future plans and strategies,
anticipated developments and other matters that are not historical
facts.
These statements may be made expressly in this document or may be incorporated
by reference to other documents that we will file with the SEC. You can find
many of these statements by looking for words such as "believes," "expects,"
"anticipates," "estimates" or similar expressions used in this report or
incorporated by reference in this report.
These forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause our actual results to be materially different from
any future results expressed or implied in those statements. Because the
statements are subject to risks and uncertainties, actual results may differ
materially from those expressed or implied. We caution you not to put undue
reliance on these statements, which speak only as of the date of this report.
Further, the information contained in this document or incorporated herein by
reference is a statement of our present intention and is based on present facts
and assumptions, and may change at any time and without notice, based on changes
in such facts or assumptions.
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The important factors that could prevent us from achieving our stated goals and
objectives include, but are not limited to, those set forth in our annual report
on Form 10-K, other reports filed with the SEC and the following:
* The worldwide economic situation;
* Any change in interest rates or inflation;
* The willingness and ability of third parties to honor their
contractual commitments;
* Our ability to raise additional capital, as it may be affected by
current conditions in the stock market and competition for risk
capital; and o Environmental and other regulations, as the same
presently exist and may hereafter be amended.
We undertake no responsibility or obligation to update publicly these
forward-looking statements, but may do so in the future in written or oral
statements. Investors should take note of any future statements made by or on
our behalf.
ITEM 4T CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures. We maintain a system of controls and
procedures designed to ensure that information required to be disclosed by us in
reports that we file or submit under the Securities Exchange Act of 1934, as
amended, is recorded, processed, summarized and reported, within time periods
specified in the SEC's rules and forms and to ensure that information required
to be disclosed by us in the reports that we file or submit under the Securities
Exchange Act of 1934, as amended, is accumulated and communicated to our
management, including our Chief Executive Officer and Principal Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.
As of October 31, 2010, under the supervision and with the participation of our
Principal Executive and Financial Officer, management has evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on that evaluation, the Principal Executive and Financial
Officer concluded that our disclosure controls and procedures were effective.
(b) Changes in Internal Controls. There were no changes in our internal control
over financial reporting during the quarter ended October 31, 2010 that
materially affected, or is reasonably likely to materially affect, our internal
controls over financial reporting.
11
PART II
OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 1A RISK FACTORS
Not Applicable
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 REMOVED AND RESERVED
None
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS
Exhibits required by Item 601 of Regulation S-K:
Exhibit
Number Description of Exhibit
- ------ ----------------------
3.1 Articles of Incorporation (*)
3.2 Bylaws (*)
31 Certification of Principal Executive and Principal Financial Officer
filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 Certification of Principal Executive and Principal Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
- ----------
* Incorporated by reference herein from the Company's Registration Statement
on Form 10-SB filed on January 3, 2007 with the SEC.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this quarterly report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Date: November 15, 2010 AMERICAN TELSTAR, INC.
By: /s/ Lisa Guise
-----------------------------------------
Lisa Guise
Principal Executive Officer
Principal Financial Officer and Director
13