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, 2008
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from:
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 (I.R.S. Employer Identification Number)
incorporation or organization)
444 Park Forest Way, Wellington, FL 33414
(Address of principal executive offices)
(561) 798-4294
(Issuer's telephone number)
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 whether 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 Section 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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
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, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
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 stock held by non- affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days. (See definition of affiliate in Rule 12b-2 of the Exchange Act): $ -0-
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
650,225 as of July 31, 2008.
INDEX
PART I Page
----
Item 1. Business 1
Item 1A. Risk Factors 1
Item 1B. Unresolved Staff Comments 4
Item 2. Properties 4
Item 3. Legal Proceedings 4
Item 4. Submission of Matters to a Vote of Security Holders 4
PART II
Item 5. Market for Common Equity and Related Stockholder Matters and
Small Business Issuer Purchases of Equity Securities 4
Item 6. Selected Financial Data 5
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5
Item 8. Financial Statements and Supplementary Data F-1
PART III
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 7
Item 9A. Controls and Procedures 7
Item 9B. Other Information 8
Item 10. Directors, Officers, and Corporate Governance 8
Item 11. Executive Compensation 9
Item 12. Equity Compensation Plan Information and Security Ownership
of Certain Beneficial Owners and Management and Related
Stockholder Matter 10
Item 13. Certain Relationships and Related Transactions, and
Director Independence 10
Item 14. Principal Accountant Fees and Services 11
Item 15. Exhibits and Financial Statement Schedules 11
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. In February 1995, the Company was dissolved, by administrative action
of the Colorado Secretary of State as a result of non-filing of required
documents with the State of Colorado. Effective June 21, 1996, the Company
reinstated its charter. In February 1999, the Company was dissolved, by
administrative action of the Colorado Secretary of State as a result of
non-filing of required documents with the State of Colorado.
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 September 7, 1999, the Company reinstated its charter. Effective March
25, 2005, the Company commenced activities to become reporting with the SEC with
the intention to become a publicly trading company. Its purpose 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". As such, the Company can 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.
Pursuant to the Articles of Incorporation, the Company is authorized to issue
500,000,000 shares of common stock with $0.0001 par value and 40,000,000 shares
of $0.10 par value Preferred Stock. As of July 31, 2008, 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.
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.
See Item 7. "FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA." 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.
The Company intends to advertise and promote the Company privately. The Company
has not yet prepared any notices or advertisement.
ITEM 1A. RISK FACTORS
The Company anticipates that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid technological advances being made in some industries and
1
shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable statutes), for all shareholders and other factors.
Potentially, available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex.
The Company has, and will continue to have, little or no capital with which to
provide the owners of business opportunities with any significant cash or other
assets. However, management believes the Company will be able to offer owners of
acquisition candidates the opportunity to acquire a controlling ownership
interest in a publicly registered company without incurring the cost and time
required to conduct an initial public offering. The owners of the business
opportunities will, however, incur significant legal and accounting costs in
connection with acquisition of a business opportunity, including the costs of
preparing Form 8-K's or 10-K's, agreements and related reports and documents.
The Securities Exchange Act of 1934 (the "34 Act"), specifically requires that
any merger or acquisition candidate comply with all applicable reporting
requirements, which include providing audited financial statements to be
included within the numerous filings relevant to complying with the 34 Act.
Nevertheless, the officers and directors of the Company have not conducted
market research and are not aware of statistical data which would support the
perceived benefits of a merger or acquisition transaction for the owners of a
business opportunity.
The analysis of new business opportunities will be undertaken by, or under the
supervision of, the officers and directors of the Company. Management intends to
concentrate on identifying preliminary prospective business opportunities, which
may be brought to its attention through present associations of the Company's
officers and directors. In analyzing prospective business opportunities,
management will consider such matters as the available technical, financial and
managerial resources; working capital and other financial requirements; history
of operations, if any; prospects for the future; nature of present and expected
competition; the quality and experience of management services which may be
available and the depth of that management; the potential for further research,
development, or exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the Company; the
potential for growth or expansion; the potential for profit; the perceived
public recognition of acceptance of products, services, or trades; name
identification; and other relevant factors. Officers and directors of the
Company do expect to meet personally with management and key personnel of the
business opportunity as part of their investigation. To the extent possible, the
Company intends to utilize written reports and investigation to evaluate the
above factors. The Company will not acquire or merge with any company for which
audited financial statements cannot be obtained within a reasonable period of
time after closing of the proposed transaction.
The Officers of the Company have limited experience in managing companies
similar to the Company and shall rely upon their own efforts, in accomplishing
the business purposes of the Company. The Company may from time to time utilize
outside consultants or advisors to effectuate its business purposes described
herein. No policies have been adopted regarding use of such consultants or
advisors, the criteria to be used in selecting such consultants or advisors, the
services to be provided, the term of service, or regarding the total amount of
fees that may be paid. However, because of the limited resources of the Company,
it is likely that any such fee the Company agrees to pay would be paid in stock
and not in cash.
The Company will not restrict its search for any specific kind of firms, but may
acquire a venture that is in its preliminary or development stage, which is
already in operation, or in essentially any stage of its corporate life. It is
impossible to predict at this time the status of any business in which the
Company may become engaged, in that such business may need to seek additional
capital, may desire to have its shares publicly traded, or may seek other
perceived advantages which the Company may offer. However, the Company does not
intend to obtain funds in one or more private placements to finance the
operation of any acquired business opportunity until such time as the Company
has successfully consummated such a merger or acquisition.
It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan described herein. The Company has limited
capital with which to pay these anticipated expenses.
2
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. It may also acquire
stock or assets of an existing business. On the consummation of a transaction,
it is probable that the present management and shareholders of the Company will
no longer be in control of the Company. In addition, the Company's directors
may, as part of the terms of the acquisition transaction, resign and be replaced
by new directors without a vote of the Company's shareholders or may sell their
stock in the Company. Any and all such sales will only be made in compliance
with the securities laws of the United States and any applicable state.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon exemption from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of its transaction, the Company may agree to register all or a part of such
securities immediately after the transaction is consummated or at specified
times thereafter. If such registration occurs, of which there can be no
assurance, it will be undertaken by the surviving entity after the Company has
successfully consummated a merger or acquisition and the Company is no longer
considered a "shell" company. Until such time as this occurs, the Company does
not intend to register any additional securities. The issuance of substantial
additional securities and their potential sale into any trading market which may
develop in the Company's securities may have a depressive effect on the value of
the Company's securities in the future, if such a market develops, of which
there is no assurance.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax-free" reorganization under
Sections 368(a) (1) or 351 of the Internal Revenue Code (the "Code"). In order
to obtain tax-free treatment under the Code, it may be necessary for the owners
of the acquired business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of the Company would retain less than
20% of the issued and outstanding shares of the surviving entity, which would
result in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of the Company
may personally meet with management and key personnel, may visit and inspect
material facilities, obtain analysis of verification of certain information
provided, check references of management and key personnel, and take other
reasonable investigative measures, to the extent of the Company's limited
financial resources and management expertise. The manner in which the Company
participates in an opportunity will depend on the nature of the opportunity, the
respective needs and desires of the Company and other parties, the management of
the opportunity and the relative negotiation strength of the Company and such
other management.
With respect to any merger or acquisition, negotiations with target company
management is expected to focus on the percentage of the Company which the
target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in all
likelihood hold a substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage ownership may be
subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants, will set forth remedies
on default and will include miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge with any entity
which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. The Company
is subject to all of the reporting requirements included in the 1934 Act.
Included in these requirements is the affirmative duty of the Company to file
independent audited financial statements as part of its Form 8-K to be filed
with the Securities and Exchange Commission upon consummation of a merger or
acquisition, as well as the Company's financial statements included in its
3
annual report on Form 10-K . If such audited financial statements are not
available at closing, or within time parameters necessary to insure the
Company's compliance with the requirements of the 1934 Act, or if the audited
financial statements provided do not conform to the representations made by the
candidate to be acquired in the closing documents, the closing documents will
provide that the proposed transaction will be voidable, at the discretion of the
present management of the Company. If such transaction is voided, the agreement
will also contain a provision providing for the acquisition entity to reimburse
the Company for all costs associated with the proposed transaction.
The Company does not intend to provide the Company's security holders with any
complete disclosure documents, including financial statements, concerning an
acquisition or merger candidate and its business prior to the consummation of
any acquisition or merger transaction.
COMPETITION
The Company will remain an insignificant participant among the firms that engage
in the acquisition of business opportunities. There are many established venture
capital and financial concerns which have significantly greater financial and
personnel resources and technical expertise than the Company. In view of the
Company's combined extremely limited financial resources and limited management
availability, the Company will continue to be at a significant competitive
disadvantage compared to the Company's competitors.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
The Company currently maintains a mailing address at 444 Park Forest Way,
Wellington, FL 33414, which is the address of its Vice-President. The Company
pays no rent for the use of this mailing address. The Company does not believe
that it will need to maintain an office at any time in the foreseeable future in
order to carry out its plan of operations described herein.
ITEM 3. LEGAL PROCEEDINGS.
There are no known legal proceedings or outstanding judgments against the
Company, nor any pending litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of the security holders of the Company
during the year ended July 31, 2008.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL
BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.
(a) Market Information.
There is not a market for the Company's securities.
(b) Holders.
As of July 31, 2008, there are approximately 41 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.
4
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, 2008 and 2007 and the balance sheet data at
July 31, 2008 and 2007 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.
Statements of Operations Data:
For the Year Ended July 31,
---------------------------
2008 2007
----------- -----------
Revenue $ -- $ --
Costs of goods sold -- --
----------- -----------
Gross profit (loss) -- --
----------- -----------
Total operating expenses (5,410) (41,171)
----------- -----------
Net (Loss) $ (5,410) $ (41,171)
=========== ===========
Basic and diluted loss per share $ (.01) $ (0.06)
=========== ===========
Shares used in calculation of loss per share:
Basic and diluted 650,225 650,225
=========== ===========
Balance Sheet Data:
July 31,
---------------------------
2008 2007
----------- -----------
Cash and cash equivalents $ 13,321 $ 25,049
Working capital $ 8,378 $ 13,788
Total Assets $ 13,321 $ 25,049
Long-term obligations $ -- $ --
Total Shareholders' equity $ 8,378 $ 13,788
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. (See Part I, Item 1A, "Risk Factors"). 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.
5
Results of Operations
The Company incorporated in Colorado. The Company was dissolved by the Colorado
Secretary of State effective November 27, 1989, and the small business issuer
has been dormant since then. The Company was reinstated by the Secretary of
State of Colorado effective February 1995. Effective June 21, 1996, the Company
reinstated its charter. In February 1999, the Company was dissolved, by
administrative action of the Colorado Secretary of State as a result of
non-filing of required documents with the State of Colorado. Since 1991, the
Company has not engaged in any operations and has been dormant. Effective
September 7, 1999, the Company reinstated its charter.
Effective March 25, 2005, the Company commenced activities to become reporting
with the SEC with the intention to become a publicly trading company. Its
purpose 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.
For the year ended July 31, 2008 we incurred a net loss of ($5,410) or ($.01)
per share compared to a net loss of ($41,171) or ($.06) per share for the year
ended July 31, 2007. The decrease in net loss is primarily attributable to a
decrease in consulting and professional fees.
The Company believes that while there is some doubt as to the Company's
continuance 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
actions planned and presently being taken to revise the Company's operating and
financial requirements provide the opportunity to the Company to continue as a
going concern.
Liquidity and Capital Resources
On July 31, 2008 we had working capital of $8,378 and cash of $13,321, compared
to working capital of $13,788 and cash of $25,049 at July 31, 2007.
On March 25, 2005, the date of commencement of the development stage, the
Company had 251,475 common shares issued and outstanding. Effective May 23,
2005, the Company issued 65,750,000, pre-split, (328,750 post-split) shares of
common stock to Pride Equities, Inc. (Pride) for $30,000 services to assist the
Company in becoming fully reporting with the Securities & Exchange Commission
and $30,000 cash. It is the opinion of the Company's management that the fair
value of stock issued under this arrangement is $60,000. The measurement date
for the issuance of stock was May 23, 2005. Also on May 23, 2005, the Company
effected a one for two hundred reverse stock split which resulted in Pride
owning 328,750 post split shares of common stock.
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.
INDEX TO FINANCIAL STATEMENTS
AMERICAN TELSTAR, INC.
----------------------
(A Development Stage Company)
FINANCIAL STATEMENTS
(UNAUDITED)
Financial Statements:
Balance Sheets F-2
Statements of Operations F-3
Statement of Changes in Stockholders' Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 to F-9
F-1
AMERICAN TELSTAR, INC.
----------------------
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
July 31, July 31,
2008 2007
---------- ----------
ASSETS
Current Assets:
Cash $ 13,321 $ 25,049
---------- ----------
Total Current Assets 13,321 25,049
---------- ----------
TOTAL ASSETS $ 13,321 $ 25,049
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable, related party $ 4,943 $ 11,261
---------- ----------
Total Current Liabilities 4,943 11,261
---------- ----------
TOTAL LIABILITIES 4,943 11,261
---------- ----------
Commitments and contingencies (Notes 1, 2 and 4)
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 and outstanding 65 65
Additional paid-in capital 229,435 229,435
Accumulated (deficit) (163,000) (163,000)
Accumulated (deficit) during the
development stage (58,122) (52,712)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 8,378 13,788
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 13,321 $ 25,049
========== ==========
The accompanying notes are an integral part of the financial statements.
F-2
AMERICAN TELSTAR, INC.
----------------------
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
For the
period from
March 25,
2005
(date of
development
stage)
For the Year Ended through
July 31, July 31,
2008 2007 2008
----------- ----------- -----------
Revenue $ -- $ -- $ --
----------- ----------- -----------
Expenses:
Stock issued for reorganization
services -- -- 6,500
Consulting fees, related party -- 30,000 30,000
Professional fees 4,900 10,693 19,627
Other 510 478 1,995
----------- ----------- -----------
5,410 41,171 58,122
----------- ----------- -----------
Net (Loss) $ (5,410) $ (41,171) $ (58,122)
=========== =========== ===========
Per Share $ (.01) $ (.06) $ (.09)
=========== =========== ===========
Weighted Average Shares Outstanding 650,225 650,225 631,004
=========== =========== ===========
The accompanying notes are an integral part of the financial statements.
F-3
AMERICAN TELSTAR, INC.
----------------------
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from August 1, 2004 through July 31, 2008
(Unaudited)
Accumulated
(Deficit)
Additional during the
Preferred Stock Common Stock Paid in Accumulated Development
No./Shares Amount No./Shares Amount Capital (Deficit) Stage Total
---------- ------ ---------- ------ ---------- ----------- ----------- --------
Balance at August 1, 2004 -- $ -- 251,475 $ 25 $ 162,975 $ (163,000) $ -- $ --
Issuance of stock for services at -- -- 70,000 7 6,493 -- -- 6,500
$.0928 May 23, 2005
Issuance of stock for $30,000 -- -- 328,750 33 59,967 -- -- 60,000
services and $30,000 cash at
$.1825, May 23, 2005
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
========== ====== ========== ====== ========== =========== =========== ========
The accompanying notes are an integral part of the financial statements.
F-4
AMERICAN TELSTAR, INC.
----------------------
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the
period from
March 25,
2005
(date of
development
stage)
For the Year Ended through
December 31, July 31,
2008 2007 2008
----------- ----------- -----------
Cash Flows from Operating Activities:
Net (Loss) $ (5,410) $ (41,171) $ (58,122)
Adjustment to reconcile net (loss)
to net cash (used in) operating activities:
Stock issued for reorganization services -- -- 6,500
Decrease in prepaid expense -- 30,000 30,000
Increase (decrease) in accounts payable and
accrued expenses (6,318) 9,128 4,943
----------- ----------- -----------
Net Cash (Used in) Operating Activities (11,728) (2,043) (16,679)
----------- ----------- -----------
Cash Flows from Investing Activities -- -- --
----------- ----------- -----------
Cash Flows from Financing Activities:
Common stock issued for cash -- -- 30,000
----------- ----------- -----------
Net Cash Provided by Financing Activities -- -- 30,000
Increase (decrease) in Cash (11,728) (2,043) 13,321
Cash, Beginning of Period 25,049 27,092 --
----------- ----------- -----------
Cash, End of Period $ 13,321 $ 25,049 $ 13,321
=========== =========== ===========
Interest Paid $ -- $ -- $ --
=========== =========== ===========
Income Taxes Paid $ -- $ -- $ --
=========== =========== ===========
The accompanying notes are an integral part of the financial statements.
F-5
AMERICAN TELSTAR, INC.
----------------------
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
July 31, 2008
(Unaudited)
Note 1 - Organization and Summary of Significant Accounting Policies
This summary of significant accounting policies of American Telstar, Inc.
(Company) is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of the
Company's management who is responsible for their integrity and objectivity.
These accounting policies conform to generally accepted accounting principles in
the United States of America and have been consistently applied in the
preparation of the financial statements.
(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.
(c) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America 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 revenue and expenses during
the reporting period. Actual results could differ from those estimates.
F-6
(d) Basic and Diluted Loss Per Share
In accordance with SFAS No. 128 - "Earnings Per Share", the basic loss per
common share is computed by dividing net loss available to common stockholders
by the weighted average number of common shares outstanding. Diluted loss per
common share is computed similar to basic loss per common share except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. At July 31, 2008, the Company had
no stock equivalents that were anti-dilutive and excluded in the earnings per
share computation.
(e) Basis of Presentation - Going Concern
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America, which
contemplates continuation of the Company as a going concern. However, the
Company has limited working capital and no active business operations, which
raises substantial doubt about its ability to continue as a going concern.
In view of these matters, realization of certain of the assets in the
accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financial requirements, raise additional capital, and the success of its future
operations.
Management intends to resume the filing of Securities and Exchange Commission
(SEC) reporting documentation and then to seek a business combination.
Management believes that this plan provides an opportunity for the Company to
continue as a going concern.
(f) Estimated Fair Value of Financial Instruments
The carrying value of the Company's financial instruments, consisting of cash,
cash equivalents, accounts payable and accrued liabilities approximate their
fair value due to the short-term maturity of such instruments. Unless otherwise
noted, it is management's opinion that the Company is not exposed to significant
interest, currency or credit risks arising from these financial statements.
(g) Concentrations
Financial instruments that potentially subject the company to concentrations of
credit risk consist principally of cash and cash equivalents. At July 31, 2008,
the Company had no amounts of cash or cash equivalents in financial institutions
in excess of amounts insured by agencies of the U.S. Government.
(h) Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with an
original maturity of three months or less to be cash equivalents.
(i) Recent Accounting Pronouncements
There were various accounting standards and interpretations issued during 2008
and 2007, none of which are expected to have a material impact on the Company's
consolidated financial position, operations or cash flows.
(j) Risks and Uncertainties
The Company is subject to substantial business risks and uncertainties inherent
in starting a new business. There is no assurance that the Company will be able
to complete a business combination.
(k) Revenue Recognition
The Company has had no revenue during its development stage.
F-7
(l) Income taxes
The Company records deferred taxes in accordance with Statement of Financial
Accounting Standards (SFAS) 109, "Accounting for Income Taxes." The statement
requires recognition of deferred tax assets and liabilities for temporary
differences between the tax bases of assets and liabilities and the amounts at
which they are carried in the financial statements, the effect of net operating
losses, based upon the enacted tax rates in effect for the year in which the
differences are expected to reverse. A valuation allowance is established when
necessary to reduce deferred tax assets to the amount expected to be realized.
(m) Unaudited Financial Statements
The balance sheet as of July 31, 2008, the statements of operations, changes in
stockholders' equity and cash flows for the year ended July 31, 2008, have been
prepared by the Company without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Since the Company is an inactive company
as defined by Regulation S-X, 210, 3-11, audited financial statements are not
required to be presented. In the opinion of management, all adjustments
necessary to present fairly the financial position, results of operations and
changes in financial position at July 31, 2008 and for all periods presented,
have been made.
(n) Other
The Company has selected July 31 as its fiscal year end.
The Company has paid no dividends.
The Company consists of one reportable business segment.
The Company has not entered into any leases.
Note 2 - Income Taxes
Deferred income taxes arise from temporary timing differences in the recognition
of income and expenses for financial reporting and tax purposes. The Company's
deferred tax assets consist entirely of the benefit from net operating loss
(NOL) carryforwards. The net operating loss carry forwards expire in various
years through 2026. The Company's deferred tax assets are offset by a valuation
allowance due to the uncertainty of the realization of the net operating loss
carryforwards. Net operating loss carryforwards may be further limited by a
change in company ownership and other provisions of the tax laws.
The Company's deferred tax assets, valuation allowance, and change in valuation
allowance are as follows:
Estimated Change in
Estimated NOL NOL Tax Benefit Valuation Valuation Net Tax
Period Ending Carry-forward Expires from NOL Allowance Allowance Benefit
- ------------- ------------- ------- ----------- --------- --------- -------
July 31, 2007 52,712 Various 9,752 (9,752) (7,617) --
July 31, 2008 58,122 2028 10,753 (10,753) (1,001) --
Income taxes at the statutory rate are reconciled to the Company's actual income
taxes as follows:
Income tax benefit at statutory rate resulting from net operating
loss carryforward (15.0%)
State tax benefit, net of federal benefit (3.5%)
-------
Deferred income tax valuation allowance 18.5%
-------
Actual tax rate 0%
=======
F-8
Note 3 - Common and Preferred Stock
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, 2008, 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 issued 70,000 shares of its common stock to its
President for reorganization services valued by the Board of Directors at
$6,500, resulting in a price per share of $.0928.
Also on May 23, 2005, the Company issued 328,750 shares of its common stock to
Pride Equities, Inc. (Pride), representing approximately 51% of its common stock
outstanding, in exchange for future services valued at $30,000 and a cash
contribution of $30,000, resulting in a price per share of $.1825. The services
provided by Pride consisted principally of services related to the Company's
reorganization. Determination of this price per share by the Board of Directors
was based on the fact that the shares issued to Pride were majority control
shares. This transaction resulted in a change in control of the Company.
Also 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 4 - Commitments and Contingencies
On November 1, 2007, VenturaCapital Partners entered into a stock purchase
agreement with Pride Equities, Inc. and Mr. Charles Calello to acquire all of
the shares of the Small business issuer owned by them representing approximately
76% of the ownership of the Company. Mr. Schumacher is President and the
beneficial controlling shareholder of Pride Equities, Inc. Mr. Calello is a
director and President of the Company.
The stock purchase agreement was subject to a significant contingency. The
transaction never closed, and effective August 1, 2008, the stock purchase
agreement was terminated.
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.
F-9
PART III
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUTNING 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 officer
and its chief financial officer, evaluated the effectiveness of our disclosure
controls and procedures (as defined in the Securities Exchange Act of 1934 Rules
13a-15(e) or 15d-15(e)) as of April 30, 2008. 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, 2008. 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, 2008, 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.
7
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.
This Annual Report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this Annual Report.
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
None
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Directors and Executive Officers
The following table sets forth certain information concerning each of the
Company's directors and executive officers:
NAME AGE POSITION
Charles Calello 70 President, Chief Executive
Officer and Director
Peter Porath 77 Vice-President, Chief Financial Officer,
Secretary, Treasurer and Director
CHARLES CALELLO. Charles Calello is President and a Director of American Telstar
since 1986. Mr. Calello was President and Chairman of the Board of Cardiff
Financial until November 15, 2005. Mr. Calello is currently on the Board of
Directors of the Florida Sunshine Pops Orchestra, Inc. since its inception in
1999. Mr Calello is currently on the Board of Directors of The Gold Cost Opera
since 2004. Mr. Calello is a music arranger and producer and has had over 100
songs on the Billboard magazine top 100 with 38 of them being top ten. Mr.
Calello started his musical career in 1962 with the 4 Seasons as their music
arranger. For the years 1965 and 1966 Mr. Calello was one of the 4 Seasons
touring the United States. From 1966 thru 1968, Mr. Calello worked as a "Record
Producer" for the CBS company, Colombia Records. Mr. Calello has been President
of Charles Calello Productions, Inc., a music production company for the past 40
years. The company is currently located in Boca Raton, Florida and provides
musical arrangements and productions for Symphonic Pops Orchestras, singers and
musicians throughout the United States. Mr. Calello was educated at the
Manhattan School of Music in New York City, New York.
PETER PORATH. Peter Porath has been Vice-President and a director of the Company
since March 2005. Since January 2003, Mr. Porath has been President and a
Director of Federal Mortgage Corporation of Puerto Rico (Federal), which was an
inactive company until March 31, 2005. Effective March 31, 2005, Federal
acquired 100% ownership of Pride Lending, Inc. from a related party. Pride
Lending, Inc. principally invests in mortgage loans. He has also, since June
2003, been a President and Director of National Superstars, Inc, an inactive
pubic company until May 31, 2005. Effective May 31, 2005, National Superstars,
Inc. completed a business combination with MSO Holdings, Inc. resulting in a
change in control of National Superstars, Inc. Since January 2005, he has been
Vice-President and a director of Springfield Financial, Inc., an inactive
company. Mr. Porath was a director of Sun Vacation Properties Corporation
(formerly Commonwealth Equities, Inc.), a public company, and was President from
November 2000 until February 2001. Mr. Porath was a director and president of
Vacation Ownership Marketing, Inc., (a public company) from May 2000 until
August 2001. Mr. Porath was a director for Plants For Tomorrow, an environmental
mitigation concern through the years from 1989-1991. From 1990 through 2001, Mr.
Porath, semi-retired operated a retail magic supply store in Fort Lauderdale,
Florida, Merlin's Festival of Magic. From 1978 to 1979, Mr. Porath was executive
vice-president and director of International Resort Properties, Inc., a
8
timesharing company in Hillsboro Beach, Florida where he was responsible for the
development of a 20-unit project. Prior to 1978, Mr. Porath was Vice President
of Investment Corporation of Florida, a public company on the American Stock
Exchange, and developer of Wellington and Palm Beach Polo, now a city of 40,000
people. Prior to this, Mr. Porath was President of San Andros, Inc., doing real
estate workouts for the Bank of Virginia; Vice-President of Magnuson Corp., a
real estate developer; Supervisor of Customer Service for General Development
Corp., a New York Stock Exchange Company; and Assistant to the Vice-President of
Moody's Investors Service, Chicago, now a New York Stock Exchange Company. Mr.
Porath attended Syracuse University in the U.S. Air Force Security Service and
holds a Bachelor of the Arts Degree in English from Ripon College and a Juris
Doctor from De Paul University in Chicago.
Significant Employees
- ---------------------
The Company has no regular employees. Charles Calello and Peter Porath each
devote approximately 5% of their 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.
Code of Ethics
- --------------
We have not prepared 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.
Presently, none of the Company's current officers or directors received any
compensation for their respective services rendered unto the Company. They all
have agreed to act without compensation until authorized by the Board of
Directors, which 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 officers or directors. Further,
none of the officers or directors are 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,
9
it is possible that such an associate will be compensated for their referral in
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.
ITEM 12. EQUITY COMPENSATION PLAN INFORMATION AND SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
As of July 31, 2008, there were no equity compensation plans in effect.
Security Ownership of Certain Beneficial Owners and Management and Related
- --------------------------------------------------------------------------
Stockholder Matters
- -------------------
The following table sets forth certain information as of July 31, 2008 regarding
the beneficial ownership of the Company's Common Stock by (i) each stockholder
known by the Company to be the beneficial owner of more than 5% of the Company's
Common Stock, (ii) by each Director and executive officer of the Company and
(iii) by all executive officer and Directors of the Company as a group. Unless
otherwise indicated, the stockholders listed in the table have sole voting and
investment power with respect to Common Stock beneficially owned.
Common Stock Percentage of
Name of Beneficial Owner Beneficially Owned Common Stock
- ------------------------------------- ------------------ -------------
Pride Equities, Inc. 328,750 50.56%
Charles Calello 165,000 25.38%
Ranji Bedi 95,000 14.61%
All Officers and Directors as a Group 165,000 25.38%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
On November 1, 2007, VenturaCapital Partners entered into a stock purchase
agreement with Pride Equities, Inc. and Mr. Charles Calello to acquire all of
the shares of the Small business issuer owned by them representing approximately
76% of the ownership of the Company. Mr. Schumacher is President and the
beneficial controlling shareholder of Pride Equities, Inc. Mr. Calello is a
director and President of the Company.
The stock purchase agreement was subject to a significant contingency. The
transaction never closed, and effective August 1, 2008, the stock purchase
agreement was terminated.
Effective May 23, 2005, Pride Equities, Inc. agreed to provide services valued
at $30,000 and to fund the Company with $30,000 in exchange for 328,750 (post
reverse-split) shares of the Company's common stock. Securities issued by blank
check companies cannot be resold under Rule 144, but must be registered under
the Securities Act of 1933. Pride Equities, Inc. is a related party since Mr.
Schumacher was formerly a director and officer of the Company, and is the
President and Director of Pride, Inc., the parent company of Pride Equities,
Inc., and an officer and director of Pride Equities, Inc.
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.
10
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
The Company has not used an independent auditor in the two most recent fiscal
years. Since the Company is an inactive company as defined by Regulation S-X,
210, 3-11, audited financial statements are not required to be presented.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
*2.1 Stock Purchase Agreement by and between Pride Equities, Inc., Charles
Calello, Ventana Capital Partners, and Securities Law Institute, dated
November 1, 2007.
31.1 Section 302 Certification -- Chief Executive Officer
31.2 Section 302 Certification-- Chief Financial Officer
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Executive Officer.
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer.
* These documents are rendered as previously filed and incorporated by reference
to the Company's previous filings with the Securities and Exchange Commission.
11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Small business issuer has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
American Telstar, Inc.
Date: October 31, 2008
By:
/s/ Charles Calello
- -------------------------------------
Charles Calello
President, Chief Executive Officer
and Director
By:
/s/ Peter Porath
- -------------------------------------
Peter Porath
Vice-President, Secretary, Treasurer,
Chief Financial Officer and Director
12