Registration No. 333-106299
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2/a
REGISTRATION STATEMENT
(Amendment 1)
UNDER
THE SECURITIES ACT OF 1933
----------------------
ADVANCED SPORTS TECHNOLOGIES, INC.
(Name of Small Business Issuer in its Charter)
FLORIDA 3949 65-1139235
---------------- ------------------ ------------------
(State of Other Jurisdiction of (Primary Standard Industrial (IRS Employer
Incorporation or Organization) Classification Code Number) Identification No.)
9700 Via Emilie
Boca Raton, FL 33428
(561) 477-1567
(Address and telephone number of principal executive offices
and principal place of business)
Curtis Olschansky, President
9700 Via Emilie
Boca Raton, FL 33428
(561) 477-1567
(Name, address and telephone number of agent for service)
----------------------
Approximate date of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.
----------------------
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, check the following box.
(X)
If this Form is filed to register additional securities for
an offering pursuant to Rule 462 (b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of earlier effective registration statement for
the same offering. ( )
If this Form is a post-effective amendment filed pursuant
to Rule 462 (c) under the Securities Act, check the following box
and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. ( ).
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If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. ( ).
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
TITLE OF EACH CLASS MAXIMUM MAXIMUM
OF AMOUNT TO OFFERING AGGREGATE AMOUNT OF
SHARES TO BE BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED SHARE <F1> PRICE FEE
- ------------------- ---------- --------- --------- ------------
Common Stock,
$.0001 par value to be
sold by selling 1,548,750 $0.25 $387,187.50 $31.36
shareholders
Common Stock,
$.0001 par value to be
sold 2,000,000 $0.25 $500,000 $40.50
by the company
TOTAL 3,548,750 $887,187.50 $71.86
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<FN>
<F1>
(1) Estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457.
</FN>
-------------------------------------------
The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
Information contained herein is subject to completion or
amendment. A registration statement relating to these
securities has been filed with the Securities and Exchange
Commission. We may not sell these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to
sell these securities and it is not soliciting an offer to buy
these securities in any state in which the offer or sale is
not permitted.
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PROPECTUS
SUBJECT TO COMPLETION, DATED AUGUST 27, 2003
3,548,750 Shares of Common Stock
ADVANCED SPORTS TECHNOLOGIES, INC.
(A Florida Corporation)
This is our initial public offering. We are registering a
total of 3,548,750 shares of our common stock. All of the shares
being registered by us will be sold at a price per share of
$0.25. The selling shareholders will sell their shares at a
price per share of $0.25. Of the shares being registered:
1) 1,548,750 are being registered for sale by selling
shareholders and
2) 2,000,000 are being registered for sale by us
We will not receive any proceeds from the sale of any of
the shares by selling shareholders. We will be selling all of
the 2,000,000 shares of common stock we are offering on a "best
efforts basis" and will not use an underwriter or pay a
commission for the sale of the shares. No arrangements have been
made to place funds in escrow, trust or any similar account.
There is no minimum amount we are required to raise in this
offering and any funds received will be immediately available to
us. This offering will terminate on the earlier of the sale of
all of the shares or 60 days after the date of this prospectus.
There is no established public market for our common stock
and we have arbitrarily determined the offering price. Although
we hope to be quoted on the OTC Bulletin Board, our Common Stock
is not currently listed or quoted on any quotation service. There
can be no assurance that our common stock will ever be quoted on
any quotation service or that any market for our stock will ever
develop.
_________________________________
INVESTING IN OUR STOCK INVOLVES RISKS. YOU SHOULD CAREFULLY CONSIDER
THE RISK FACTORS BEGINNING ON PAGE 7 OF THIS PROSPECTUS.
Neither the Securities and Exchange Commission nor any
state securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
The information in this prospectus is not complete and may
be changed. None of these securities may be sold until a
registration statement filed with the Securities and Exchange
Commission is effective. The prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
The date of this Prospectus is August 27, 2003
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TABLE OF CONTENTS
Page
----
Prospectus Summary 3
The Offering 4
Summary Financial Information 6
Risk Factors 7
Forward Looking Statements 14
Use of Proceeds 15
Determination of Offering Price 17
Dividend Policy 17
Dilution 18
Management's Discussion and Analysis of Financial Condition
and Results of Operations 19
Business 23
Management 30
Principal Shareholders 32
Selling Shareholders 33
Description of Securities 35
Certain Relationships and Related Transactions 37
Indemnification 38
Plan of Distribution 39
Legal Matters 41
Experts 41
Where You Can Find More Information 42
Index to Financial Statements
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PROSPECTUS SUMMARY
Because this is a summary, it does not contain all of the
information that may be important to you. You should read the
entire prospectus. You should consider the information set forth
under "Risk Factors" and our financial statements and
accompanying notes that appear elsewhere in this prospectus.
We are a development stage company and were incorporated in
Florida on August 9, 2001. Our executive offices are located at
9700 Via Emilie, Boca Raton, FL 33428. Our telephone number is
(561) 477-1567. As of April 30, 2003 we had operating capital of
only $9,406 and a stockholders' deficiency of $41,128. Please
be aware that our independent auditor has expressed substantial
doubt about our ability to continue as a going concern and
believes that our ability to continue as such is dependent on our
ability to implement our business plan, raise capital and
generate revenues. The company does not consider itself to be
a blank check company as defined in Rule 419 of Regulation
C of the Securities Act of 1933 and, thus, does not intend
to seek a merger with any other entity in the foreseeable future.
We are led by, Curtis Olschansky, our President and Chief
Executive Officer. Mr. Olschansky has been involved and
consulted in the developing and/or direct marketing of fitness
equipment for 15 years. Mr. Olschansky has assisted
in the production of infomercials for fitness
products as well as the prototyping of the actual
products themselves. Our long- term objective is to build a
direct marketing company that develops and markets premium
quality, premium priced, branded fitness or exercise equipment.
We intend to market our products directly to consumers through a
variety of direct marketing channels, including spot television
commercials, infomercials, print media, direct response mailings
and the Internet. We intend to either develop internally, license
or acquire the rights to products to market in these manners. We
have already licensed the rights to a portable gym with
elastomer resistance and heel cup which is covered under U.S.which we
intend to be our first direct marketed product. The Better Buns patent
is owned by Exerciting, LLC, the entity with which we have entered
into our licensing agreement. We are searching for
other products to license or acquire for introduction.
We have achieved no revenues to date and our loss from
inception to April 30, 2003 totaled $92,253. Our officer has
agreed to defer all salaries until we have raised a minimum of
$250,000 in gross proceeds or generated $500,000 in sales.
Additionally, Our principal executive and administrative offices
are located in space that is owned by our President and Chief
Executive Officer. We are not presently incurring any rent
expenses associated with this space. We anticipate relocating
from this space to a leased space, which would also be in Boca
Raton, Florida within 90 days of our completion of raising
financing in a minimum amount of at least $250,000.
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The Offering
Securities Offered 3,548,750 shares of
common stock, 2,000,000
of which we are offering
and 1,548,750 of which
are being offered by the
selling shareholders.
All shares offered will
be offered at a price of
$0.25 per share and the
offering by the company
will terminate on the
earlier of the sale of
all of the shares or
sixty days after the date
of the prospectus.
Common Stock Outstanding, before offering 5,548,750
Common Stock Outstanding, after offering 7,548,750
Use of Proceeds We will not receive any
proceeds from the sale of
common stock by our
selling shareholders. If
we sell all 2,000,000
shares we are offering,
we will receive gross
proceeds of $500,000.
Any and all funds raised
from our sale of common
stock will be used for
marketing, inventory
production and working
capital purposes,
including funding efforts
to identify and test
products for
introduction by direct
marketing.
Dividend Policy We do not intend to pay
dividends on our common
stock. We plan to retain
any earnings for use in
the operation of our
business and to fund
future growth.
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Risk Factors
The securities offered by this prospectus are highly
speculative and very risky. We have described the material risks
that we face below. Before you buy, consider the risk factors
described and the rest of this prospectus. This prospectus also
contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from
those anticipated in these forward-looking statements as a result
of certain factors, including the risks faced by us described
below and elsewhere in this prospectus. Please refer to "Risks
Associated with Forward-looking Statements" on page 14.
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Summary Financial Information
The following is a summary of our Financial Statements, which are
included elsewhere in this prospectus. You should read the
following data together with the "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
section of this prospectus as well as with our Financial
Statements and the notes therewith.
For the Nine Months
period from Ended April
August 9, 30, 2003
2001 -----------
(inception)
to July
31, 2002
-----------
Statement of Operations Data:
Total Revenue $ 0 $ 0
========== ===========
Total Operating Expenses $ 34,438 $ 57,815
========== ===========
Net Loss $ (34,438) $ (57,815)
========== ===========
As of
April
30, 2003
--------
(unaudited)
Balance Sheet Data
Cash and cash equivalents $9,406
Total current assets $9,406
Total assets $24,872
Total liabilities $66,000
Total stockholders' deficiency $(41,128)
Total liabilities and stockholders' deficency $24,872
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RISK FACTORS
The securities offered are highly speculative. You should
purchase them only if you can afford to lose your entire
investment in us. You should carefully consider the following
risk factors, as well as all other information in this
prospectus.
Investors should assume that if any of the following risks
actually materialize, our business, financial condition or results
of future operations could be materially and adversely affected.
In that case, the trading price of our common stock could decline,
and you may lose all or part of your investment.
Risks related to our business:
- ------------------------------
Unless we raise at least $100,000 we will not be able to execute our business
plan in a meaningful way.
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The growth of our business will require significant
additional investment. We do not presently have adequate cash
from operations or financing activities to meet our long-term
needs. As of April 30, 2003 we had a total of $9,406 in capital
to use in executing our business plan. We are able to operate
going forward solely because our executive officer has agreed to
defer receipt of compensation until we have raised a minimum of
$500,000 in gross proceeds or achieved $500,000 in sales. We
anticipate that unless we are able to raise net proceeds of at
least $100,000 within the next twelve months that we will not be
able to execute our business plan in a meaningful way. However,
even if all shares offered through this prospectus are sold, and
we raise net proceeds of $500,000 there can be no assurance that
we will be successful in executing our plan or achieving
profitability.
Even if we successfully sell all shares offered through this
registration statement, we may need additional financing in the future
and if we are unable to raise such financing we may be forced to file
bankruptcy.
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Even if we sell all shares offered through this registration statement, we
expect that we will seek additional financing in the future. However,
we may not be able to obtain additional capital or generate
sufficient revenues to fund our operations. If we are
unsuccessful at raising sufficient funds, for whatever reason, to
fund our operations, we may be forced to seek a buyer for our
business or another entity with which we could create a joint
venture. If all of these alternatives fail, we expect that we
will be required to seek protection from creditors under
applicable bankruptcy laws.
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We have not commenced full operations and we may not be able to
achieve or maintain profitability.
- ---------------------------------------------------------------
We are a relatively young company and our proposed
operations are subject to all of the risks inherent in such a
business enterprise. The likelihood of our success must be
considered in light of the problems, expenses, difficulties,
complications, and delays frequently encountered in connection
with the development of a business in a competitive industry. As
with an investment in any emerging growth company, ownership of
common shares may involve a high degree of risk, and is not
recommended if you cannot reasonably bear the risk of a total
loss of your investment.
If we are unsuccessful in raising at least $250,000 we
expect to continue to incur operating losses in fiscal 2003,
which ends July 31, 2003. If we do not achieve revenue growth
sufficient to absorb our planned expenditures, we could
experience additional losses in future periods. These losses or
fluctuations in our operating results could cause the market
value of our common stock to decline.
We anticipate that in the future we will make significant
investments in our operations, particularly to support research
and development and marketing activities and, that as a result,
operating expenses are expected to continue to increase. We
intend to make such investments on an ongoing basis, primarily
from cash generated from operations and, to the extent necessary,
funds available from financing activities, as we develop and
introduce new products and expand into new markets. If net sales
do not increase with capital or other investments, we are likely
to continue to incur net losses and our financial condition could
be materially adversely affected. There can be no assurance that
we will achieve or sustain profitability on a quarterly or annual
basis.
We have a history of operating losses and limited funds.
- --------------------------------------------------------
We have a history of operating losses. If our business plan is
not fully executed as planned, we may continue to experience losses as
we continue to invest in our core businesses. As of July 31, 2003 we
had $7,009 in cash available for use in executing our business play,
which is insufficient for execution and expansion of our business
plan. Our ability to execute our business model will depend on our
ability to obtain additional financing and achieve a profitable level
of operations. The timing of the need and the amount needed will
depend on when or if we are able to either find additional products to
license or acquire or develop such products internally. We
anticipate that unless we are able to raise net proceeds of at least
$100,000 within the next twelve months that we will not be able to
execute our business plan in a meaningful way. There is no minimum
amount we are required to raise in order to close this offering and
there can be no assurance that any financing will be obtained. Nor can
we give any assurance that we will generate substantial revenues or
that our business operations will prove to be profitable. If we are
unsuccessful at raising sufficient funds, for whatever reason, to fund
our operations, we may be forced to seek a buyer for our business or
another entity with which we could create a joint venture. If all of
these alternatives fail, we expect that we will be required to seek
protection from creditors under applicable bankruptcy laws.
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Our independent auditor has expressed doubts about our ability to
continue as a going concern.
- -----------------------------------------------------------------
We are a development stage company as defined in Financial
Accounting Standards Board Statement No. 7. We are devoting
substantially all of our present efforts in establishing a new
business and, although planned principal operations have commenced, we
have not achieved any revenues. These factors have led our
independent auditor to express substantial doubt about our ability to
continue as a going concern. Accordingly, our independent auditor's
report states that it has been prepared assuming that we will continue
as a going concern. Management's plans regarding our ability to
continue as a going concern are disclosed in Note 5 to the financial
statements. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Despite our lack of experience, we do not plan to hire any
additional employees during at least our first six months of
operations, however we will need to hire additional qualified
personnel in the future and, we may not be able to successfully
attract such personnel or manage these employees or achieve our objectives.
- ---------------------------------------------------------------------------
We do not plan to hire any additional employees during at
least our first six months of operations. Our overall plan
anticipates primarily using independent contractors and joint
venture or outsourcing arrangements rather than hiring employees.
We believe that by doing so we will be able to partner with
individuals with greater expertise while simultaneously making
lower expenditures. We believe our future success will depend in
large part upon our ability to identify, attract and create such
relationships with individuals skilled in the areas of product
development, sales and marketing and operations personnel.
Competition for such personnel in the fitness industry is
relatively intense, and we compete for such personnel against
numerous companies, all of which are larger, more established
companies with significantly greater financial resources. There
can be no assurance we will be successful in identifying,
attracting, creating and maintaining relationships with such
personnel. Additionally, even if we are successful in attracting such
employees, our Chief Executive Officer is not experienced in managing
employees and may prove ineffective in such capacity.
We are dependent on introducing new products and failure to do so
would adversely affect our operating results.
- -----------------------------------------------------------------
We believe that the introduction of new, innovative
exercise equipment and or accessories will be crucial to our
future success. There is no assurance that we will be able to
license or develop any products or that any such products will be
accepted by consumers or preferred by consumers over other
companies' products. Failure to identify and develop products
that achieve widespread market acceptance would adversely affect
our future growth and profitability. Additionally, successful
technologies, designs and product concepts are likely to be
copied by competitors. Accordingly, our operating results could
fluctuate as a result of the amount, timing and market acceptance
of new product introductions by our competitors or us.
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Any products we sell could contain defects creating product
recalls and warranty claims that could materially adversely
affect our future sales and profitability.
- -----------------------------------------------------------
Any products we ultimately sell could contain unforeseen
defects. These defects could result in product recalls and
warranty claims. A product recall could delay or halt production
of the affected product until we are able to address the reasons
for any defects. Recalls may also have a materially negative
effect on our brand image and public perception of the affected
product. This could materially adversely affect our future
sales. Recalls or other defects would be costly and could require
substantial expenditures.
Due to the nature of the products we intend to
market, defects could also result in product liability litigation
against us. Given the nature of our anticipated products, it is
foreseeable to expect in the future to be subject to potential
product liability claims that, in the absence of sufficient
insurance coverage, could have a material adverse effect on us.
We do not currently maintain liability insurance coverage but
intend to acquire such coverage prior to beginning any marketing
campaigns. If we are unable to obtain such insurance prior to
distributing product, any large product liability claim could
materially adversely affect our ability to market our products or
our ability to continue operations.
We will face intense competition and may not be able to compete
effectively.
- ---------------------------------------------------------------
We will face intense competition for customers because the
exercise equipment direct marketing industry is highly
competitive and is characterized by the frequent introduction of
new products. Our anticipated future competitors consist of
several well established companies, the substantial majority of
which have significantly greater financial resources than we do,
longer operating histories, well established reputations, and
marketing, distribution and service networks, large product lines
and greater management and technical resources. Accordingly,
many of these anticipated future competitors will have greater
financial resources to devote to areas such as advertising,
marketing and product development, and consequently the cost of
entry into this market is higher than in many markets. Our
ability to compete is in part dependent upon our ability to
satisfy various subjective requirements of our desired customers,
including the equipment's "look" and the perceived benefit of
using the equipment.
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Our sole officer/director is not required to continue as a
shareholder and may not maintain an equity interest in the
company.
- -------------------------------------------------------------
There is no requirement that our current or any of our
future officers and/or directors retain any of their shares of
our common stock. Accordingly, there is no assurance that all or
any of our officers and/or directors will continue to maintain an
equity interest in the company.
We have arbitrarily determined the offering price. Accordingly
the price you pay may not accurately reflect the value of our common stock.
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We have arbitrarily determined the offering price of the
common stock because there is no market for any of our
securities. There can be no assurance that the offering price
accurately reflects the value of our common stock or that
investors will be able to sell the common stock for at least the
offering price or at any price at any time.
We are dependent on the services of our President and the loss of
those services would have a material adverse effect on our business.
- --------------------------------------------------------------------
We are highly dependent on the services of Curtis
Olschansky, our Chairman of the Board and President. Mr. Olschansky
maintains responsibility for our overall corporate strategy. Mr.
Olschansky has been involved with and consulted in the developing
and/or direct marketing of fitness equipment for over 15 years. Mr.
Olschansky has assisted in the production of infomercials for fitness
products as well as the prototyping of the actual products themselves.
The loss of the services of Mr. Olschansky would have a material
adverse effect upon our business and prospects. Specifically, it
would be difficult for us to locate and hire another executive with as
much business experience in the fitness industry as Mr. Olschansky.
Without an executive with experience in the fitness industry we would
be forced to learn much about the industry and create new
relationships in order to accomplish much of what Mr. Olschansky can
accomplish due to his preexisting knowledge and through his existing
relationships. Trying to acquire such knowledge and create such
relationships would likely take significant time and resources and
would necessitate raising substantial more funds than needed
otherwise, which we may be unable to do.
Our President has the voting power to control our affairs and may
make decisions that do not necessarily benefit all shareholders equally.
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As of the date of this prospectus, our President owns
approximately 63% of our outstanding Common Stock. Consequently,
Mr. Olschansky is in a position to control matters submitted for
shareholder votes, including the ability to elect a majority of
our Board of Directors and to exercise control over our affairs,
generally.
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Our management will have broad discretion to use any proceeds
from sales of the common stock and their uses may not yield a
favorable return.
- -------------------------------------------------------------
While we intend to use the net proceeds from any common
stock we are able to sell principally for working capital needs
and general corporate purposes, including product and market
development and searching for products to license, our management
will have broad discretion to spend the proceeds from this
offering in ways with which stockholders may not agree. The
failure of our management to use these funds effectively could
result in unfavorable returns. This could have significant
adverse effects on our financial condition and could cause the
price of our common stock to decline.
Future sales of our common stock may have a depressive effect
upon its price.
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All 5,548,750 of the currently outstanding shares of common
stock were issued at prices lower than the price of the shares of
common stock in this offering. With the exception of the shares
of common stock being registered in this Registration Statement
for our selling shareholders, these shares are "restricted
securities" as that term is defined by Rule 144 of the Securities
Act, and in the future, may be sold in compliance with Rule 144
or pursuant to an effective registration statement. In the future,
sales of presently restricted securities may have an adverse
effect on the market price of our common stock should a public
trading market develop for such shares.
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Risks related to this offering:
- -------------------------------
Our shares are "Penny Stocks" which are subject to certain
restrictions that could adversely affect the liquidity of an
investment in us.
- ------------------------------------------------------------
We are not listed on any stock exchange at this time. We hope to
become a bulletin board traded company. Such shares are referred to
as "penny stocks" within the definition of that term contained in
Rules 15g-1 through 15g-9 promulgated under the Securities Exchange
Act of 1934, as amended. These rules impose sales practices and
disclosure requirements on certain broker-dealers who engage in
certain transactions involving penny stocks. These additional sales
practices and disclosure requirements could impede the sale of our
securities, including securities purchased herein, in the secondary
market. In general, penny stocks are low priced securities that do
not have a very high trading volume. Consequently, the price of the
stock is volatile and you may not be able to buy or sell the stock
when you want. Accordingly, the liquidity for our securities may be
adversely affected, with related adverse effects on the price of our
securities.
Under the penny stock regulations, a broker-dealer selling
penny stocks to anyone other than an established customer or
"accredited investor" (generally, an individual with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 together with his or her spouse) must make a special
suitability determination for the purchaser and must receive the
purchaser's written consent to the transaction prior to the sale,
unless the broker-dealer is otherwise exempt. In addition,
unless the broker-dealer or the transaction is otherwise exempt,
the penny stock regulations require the broker-dealer to deliver,
prior to any transaction involving a penny stock, a disclosure
schedule prepared by the Securities and Exchange Commission
relating to the penny stock. A broker-dealer is also required to
disclose commissions payable to the broker-dealer and the
Registered Representative and current quotations for the
securities. A broker-dealer is additionally required to send
monthly statements disclosing recent price information with
respect to the penny stock held in a customer's account and
information with respect to the limited market in penny stocks.
There has never been a market for our common stock and one may never develop.
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Prior to this offering, there has been no public trading
market for our common stock and there can be no assurances that a
public trading market for the common stock will develop or, if
developed, will be sustained. Although we hope to be accepted
for quotations on the Over the Counter Bulletin Board, there can
be no assurance that a regular trading market will develop for
the common stock offered through this prospectus, or, if
developed, that it will be maintained.
There is no assurance of future dividends being paid.
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At this time we do not anticipate paying dividends in the
future, but instead plan to retain any earnings for use in the
operation of our business and to fund future growth. We are
under no legal or contractual obligation to declare or to pay
dividends, and the timing and amount of any future cash dividends
and distributions is at the discretion of our Board of Directors
and will depend, among other things, on our future after-tax
earnings, operations, capital requirements, borrowing capacity,
financial condition and general business conditions.
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FORWARD LOOKING STATEMENTS
--------------------------
This prospectus includes forward-looking statements that involve risks
and uncertainties. These forward-looking statements include statements
under the captions "Prospectus Summary," "Risk Factors," "Use of
Proceeds," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business" and elsewhere in this
prospectus. You should not rely on these forward-looking statements
which apply only as of the date of this prospectus. These statements
refer to our future plans, objectives, expectations and intentions. We
use words such as "believe," "anticipate," "expect," "will," "intend,"
"estimate" and similar expressions to identify forward-looking
statements. This prospectus also contains forward-looking statements
attributed to third parties relating to their estimates regarding the
growth of certain markets. You should not place undue reliance on
these forward-looking statements, which apply only as of the date of
this prospectus. Our actual results could differ materially from those
discussed in these forward-looking statements. Factors that could
contribute to these differences include those discussed in the
preceding pages and elsewhere in this prospectus.
Risks associated with forward-looking statements.
- -------------------------------------------------
This prospectus contains certain forward-looking statements
regarding management's plans and objectives for future operations,
including plans and objectives relating to our planned marketing
efforts and future economic performance. The forward-looking
statements and associated risks set forth in this prospectus
includes or relate to:
(1) Our ability to obtain a meaningful degree of consumer
acceptance for our products now and in the future,
(2) Our ability to market our products on a global basis at
competitive prices now and in the future,
(3) Our ability to maintain brand-name recognition for our
products now and in the future,
(4) Our ability to maintain an effective distributors network,
(5) Our success in forecasting demand for our products now
and in the future,
(6) Our ability to maintain pricing and thereby maintain
adequate profit margins,
(7) Our ability to achieve adequate intellectual property
protection and
(8) Our ability to obtain and retain sufficient capital for
future operations.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of
securities being offered by our selling shareholders.
Our proceeds from this offering will vary depending on how
many shares of our common stock we are able to sell. If we sell
all shares of common stock being registered in this offering, we
will receive proceeds of $500,000. A majority of any proceeds
received will be used for marketing of the product referred to
herein as the Better Buns and production of inventory. Any funds
not used for such marketing and production purposes will be used
for working capital and general corporate purposes. Working
capital expenses include expenses for product development,
travel, communications, office supplies, rent and utilities, and
other ongoing selling, general and administrative expenses and we
consider general corporate purposes to be expenses such as those
legal and accounting expenses typically incurred in connection
with being a publicly traded company.
We expect to incur expenses of approximately $14,000 in
connection with the registration of the shares.
The table below shows how proceeds from this offering would
be used for scenarios where we sell various amounts of the shares
and the priority of the use of net proceeds in the event actual
proceeds are not sufficient to accomplish the uses set forth.
While management has developed the following estimates to the
best of its ability, there can be no assurance that we will spend
the use of proceeds exactly as laid out in the table.
Total shares offered 2,000,000 2,000,000 2,000,000 2,000,000
Percent of total shares offered 25% 50% 75% 100%
Shares sold 500,000 1,000,000 1,500,000 2,000,000
Gross proceeds from offering 125,000 250,000 375,000 500,000
Less: offering expenses 14,000 14,000 14,000 14,000
------------- ------------ ------------ ------------
Net proceeds from offering 111,000 236,000 361,000 486,000
Use of net proceeds
Accounting & legal fees 10,000 12,500 15,000 20,000
Travel 5,000 10,000 15,000 15,000
Marketing 40,000 60,000 90,000 120,000
Purchase of Inventory 40,000 80,000 120,000 160,000
Compensation to Mr. Olschansky - 28,000 50,000 75,000
Operating expenses & working capital 16,000 45,500 71,000 96,000
It is possible that no proceeds may be raised from this
offering. It is also possible that some, but not all, of the
2,000,000 shares offered will be sold. If fewer than all of the
shares are sold, we may ultimately need to modify our business
plan and our plan of product development and introduction of
products into the market may be delayed. There can be no
assurance that any delay or modification will not adversely
affect our development and ultimately our chance of success.
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If we require additional funds to develop our plan, such funds may
not be available on terms acceptable to us, or at all.
It should be noted that we have an outstanding amount due of
$50,000 to the Law Office of James G. Dodrill II, PA for legal
services rendered. The Law Office of James G. Dodrill II, PA serves
as our corporate and securities counsel and is wholly owned by our
founder and second largest shareholder, Meredith S. Dodrill. Mr.
Dodrill has agreed to not seek repayment of this amount until we begin
generating revenues from sales of our product.
The amounts set forth above are estimates developed by our
management for allocation of net proceeds of this offering based
upon our current plans and prevailing economic and industry
conditions and assumes that we are able to sell the numbers of
the shares set forth in each column above. Although we do not
currently contemplate material changes in the proposed use of
proceeds set forth above, to the extent that our management finds
that adjustments are required, the amounts shown may be adjusted
among the uses indicated above. Our proposed use of proceeds is
subject to changes in general, economic and competitive
conditions, timing and management discretion, each of which may
change the amount of proceeds expended for the purposes intended.
The proposed application of proceeds is also subject to changes
in market conditions and our financial condition in general.
Changes in general, economic, competitive and market conditions
and our financial condition would include, without limitation,
the occurrence of a national economic slowdown or recession, a
significant change in the fitness equipment or accessories
industry and the environment in which we operate, and/or
regulatory changes in general. While our management is not
currently aware of the existence or pending threat of any of the
foregoing reasons, we provide you no assurance that one or more
of such events will not occur.
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DETERMINATION OF OFFERING PRICE
Prior to this offering, there has been no market for our
common stock. The offering price of the shares was arbitrarily
determined and bears no relationship to assets, book value, net
worth, earnings, actual results of operations, or any other
established investment criteria. Among the factors considered in
determining the price were our historical sales levels, estimates
of our prospects, the background and capital contributions of
management, the degree of control which the current shareholders
desired to retain, current conditions of the securities markets
and other information.
DIVIDEND POLICY
It is our present policy not to pay cash dividends and to
retain future earnings for use in the operations of the business
and to fund future growth. Any payment of cash dividends in the
future will be dependent upon the amount of funds legally
available, our earnings, financial condition, capital
requirements and other factors that the Board of Directors may
think are relevant.
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DILUTION
Net tangible book value per share represents the amount of
our total tangible assets less total liabilities, divided by the
total number of shares of common stock outstanding. Our net
tangible book value at April 30, 2003 was a deficiency of $0.01
or a de minimus amount per share of common stock. Dilution per
share represents the difference between the offering price of
$0.25 per share and the net tangible book value per share of
common stock, as adjusted, immediately after this offering.
After giving effect to the completion of the offering and
after deducting offering expenses estimated to be $14,000, our
pro forma net tangible book value will be $429,406 or $0.06 per
share. This represents an immediate increase in pro forma net
tangible book value of $0.07 per share to existing stockholders
and an immediate dilution of $0.19 per share, or approximately
77% of the offering price, to investors purchasing shares of
common stock in the offering.
Public offering Price per share $ 0.25
Net Tangible Book Value per share before offering ($56,594)
Increase Per Share attributable to sale of these shares $ 0.07
Pro-Forma Net Tangible Book Value after offering $ 429,406
Dilution per share to Public Investors $ 0.19
The following table summarizes as of April 30, 2003, the
number of shares purchased as a percentage of our total
outstanding shares, the aggregate amount paid for such shares,
the aggregate amount paid figured as a percentage of the total
amount paid, and the average amount paid per share for such
shares. For purposes of this table, the sale to the public of
these shares is assumed to have taken place on April 30, 2003.
Shares Purchased Total Consideration Paid Average Price
Number Percent Amount Percent per Share
---------- ---------- --------- --------- -------------
Existing Shareholders 5,548,750 73.5% $ 12,125 2.4% $0.0022
New Investors 2,000,000 26.5% $500,000 97.6% $0.25
---------- ---------- --------- --------- -------------
Total 7,548,750 100.0% $512,125 100.0% $0.0678
The following table sets forth the estimated net tangible
book value ("NTBV") per share after the offering and the dilution
to persons purchasing shares based upon various levels of sales
of the shares being achieved:
Shares outstanding prior to offering 5,548,750
Total shares offered 2,000,000 2,000,000 2,000,000 2,000,000
Shares sold 500,000 1,000,000 1,500,000 2,000,000
Public offering price $0.25 $0.25 $0.25 $0.25
Per share increase attributable to
new investors $ 0.02 $ 0.04 $ 0.05 $ 0.07
NTBV per share prior to offering $ (0.01) $ (0.01) $ (0.01) $(0.01)
------------ ------------- ------------ ------------
Post offering pro forma NTBV per share $ 0.01 $ 0.03 $ 0.04 $ 0.06
Dilution to new investors $ 0.24 $ 0.22 $ 0.21 $ 0.19
Percent of dilution of the offering price 96% 89% 83% 77%
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MANAGEMENT'S PLAN OF OPERATIONS
Results and Plan of Operations
- ------------------------------
For the period from inception through April 30, 2003 no
revenue was generated. Management has successfully licensed the
intellectual property rights to the portable gym with elastomer
resistance and heel cup which is covered under U.S. patents
#5,558,609 and U.S.#5,695,437 and may be marketed under the
trademark name Better Buns r U.S. #2,279,957 which we intend to
be our first direct marketed product. We intend to market our
products directly to consumers through a variety of direct
marketing channels, including spot television commercials,
infomercials, print media, direct response mailings and the
Internet. We intend to either develop internally, license or
acquire the rights to products to market in these manners. There
can be no assurance that we will find any other products, nor can
there be assurance that revenue will be generated, meet or exceed
expectations in the future.
Our President has been involved with and consulted in the
developing and/or direct marketing of fitness equipment for over
15 years. Mr. Olschansky has assisted in the
production of infomercials for fitness products as well as the
prototyping of the actual products themselves. Our President
intends to attempt to leverage relationships he has and identify
products that may be available for licensing or acquisition.
Once identified, we will attempt to negotiate a contract in order
to gain the rights to produce and/or market such products. We
also intend to eventually either hire designers or contract for
designers to produce products specifically for us.
We incurred expenses from inception to April 30, 2003 of
$92,253, which also equaled our loss during that period. This
amount was financed primarily through $12,126 of receipts from
equity subscriptions and $10,000 worth of restricted shares of
our common stock that were issued for services rendered. Our
loss per share through this date was de minimus. Our sole
current officer has agreed to defer all salaries until we raise a
minimum of $250,000 or achieve revenues of $500,000. Our
principal executive and administrative offices are located in
space that is owned by this officer. We are not presently
incurring any rent expenses associated with this space. We
anticipate relocating from this space to a leased space, which
would also be in Boca Raton, Florida within 90 days of our
completion of raising financing in a minimum amount of at least
$250,000.
The majority of our research and development has been and will
continue to be completed by having personal trainers and physical
therapist test and work with the "Better Buns" in the field to help us
design and perfect various workouts to be performed by the end user.
We also intend to interview such trainers and therapists regarding
what fitness products currently on the market are inadequate and work
with such individuals to design potential new products.
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Management believes that, even though our auditors have
expressed substantial doubt about our ability to continue as a
going concern, due to our low cash requirement and the
cooperation of our management in deferring salaries, even if we
are unsuccessful in selling any of the shares of common stock
offered by this prospectus, assuming that we do not commence our
anticipated operations, we will be able to satisfy our cash
requirements for at least the next 12 months.
Management bases this belief on the low cash flow requirement we are
currently experiencing as a result of our rent free office
arrangement, the agreement of officer to defer his salary as described
above and the agreement from our legal counsel to not seek payment for
services performed until we have begun generating revenues. We will
not, however, be able to commence marketing or production of any
products, including the product referred herein as the Better Buns,
unless and until we have raised additional funding. Fully executing
our business plan will significantly change our cash needs and monthly
burn rate and we will not be able to begin such execution until we
have raised substantial additional resources.
We do not anticipate that there will be any significant
changes in the number of employees or expenditures from what is
discussed in this prospectus. There can be no assurance,
however, that conditions will not change forcing us to make
changes to any of our plan of operations or business strategies.
Implementation of our business plan requires achieving specific
milestones. One of the most significant milestones that needed to be
achieved was acquisition of a patented, differentiable product. By
acquiring the rights to Better Buns we have achieved such milestone
already and have done so without the requirement of expending cash.
The next milestone we need to achieve is the production of a long
format infomercial to be aired on television. We hope to produce such
infomercial by December 31, 2003 and anticipate that such production
will cost approximately $70,000. Our President has worked on the
production of several infomercials and has relationships with
infomercial production companies.
Simultaneous with the infomercial being produced we need to order
Better Buns units in order to have inventory to sell. We intend to
order such units at least two weeks prior to the completion of the
infomercial. We anticipate placing an initial order for approximately
$15,000 worth of units. In order to keep our costs as low as possible
we intend to outsource the production of the units.
Once the infomercial is produced we will need to purchase media
time in order to achieve sales. We anticipate initial media buys of
approximately $10,000, which would occur beginning the month following
completion of the infomercial. The goal of the infomercial will be
for it to generate sufficient revenue to finance acquisition of
additional Better Buns units and to self perpetuate media buys.
We also intend to create a website that would be advertised in
the infomercial and which would allow potential customers to learn
more about the product and order the product if they did not order
using the 800 number in the infomercial. We anticipate an initial
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expenditure of $5,000 for production of the website and would hope to
complete the website by December 31, 2003.
The above description of milestones and expenditures assumes we
are able to raise funding of $100,000. In the event we raise a
greater or lesser amount adjustments in our expenditures would be
made. If we are able to raise a greater amount we would also use
funds to design and produce an instructional manual for inclusion with
the units sold. If we are unable to raise greater funding we intend
to initially create a simple word processing document describing the
exercises that can be done.
Liquidity and Capital Resources
- -------------------------------
We are currently insolvent, our current liabilities exceed our
current assets and may continue to do so in the future. As of July
31, 2003 we had $7,009 in cash available to execute our business plan.
As we anticipate needing a minimum of $100,000 in order to execute our
business plan in a meaningful way over the next year, the available
cash is not sufficient to allow us to commence full execution of our
business plan. Our business expansion will require significant
capital resources that may be funded through the issuance of notes
payable or other debt arrangements that may affect our debt structure.
Despite our current financial status we believe that we may be able to
issue notes payable or debt instruments in order to produce both our
infomercial and inventory. We anticipate that receipt of such
financing may require granting a security interest in the infomercial
or units we would produce, but are willing to grant such interest to
secure the necessary funding.
To date we have spent a total of $92,253 in general
operating expenses and expenses associated with searching for
products or brands to acquire or license. We raised the cash
amounts used in these activities from a Regulation D offering in
which we raised $12,125.
To date, we have managed to keep our monthly cash flow
requirement low for two reasons. First, our sole officer has
agreed not to draw a salary until a minimum of $250,000 in
funding is obtained or until we have achieved $500,000 in gross
revenues. Second, we have been able to keep our operating
expenses to a minimum by operating in space owned by our sole
officer and are only paying the direct expenses associated with
our business operations.
Given our low monthly cash flow requirement and the
agreement of our officer, management believes that, even though
our auditors have expressed substantial doubt about our ability
to continue as a going concern, and assuming that we do not
commence our anticipated operations it has sufficient financial
resources to meet its obligations for at least the next twelve
months.
In the early stages of our business plan, we will need cash
for marketing and production of products and for production and airing
of an infomercial. We anticipate that during the first year,
in order to execute our business plan to any meaningful degree,
we would need to spend a minimum of $100,000 on such endeavors.
We hope to raise these funds through this offering. If we
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are unable to raise the funds through this offering
we will seek alternative financing through means such as
borrowings from institutions or private individuals. There can
be no assurance that we will be able to keep costs from being
more than these estimated amounts or that we will be able to
raise such funds. Even if we sell all shares offered through
this registration statement, we expect that we will seek
additional financing in the future. However, we may not be able
to obtain additional capital or generate sufficient revenues to
fund our operations. If we are unsuccessful at raising
sufficient funds, for whatever reason, to fund our operations, we
may be forced to seek a buyer for our business or another entity
with which we could create a joint venture. If all of these
alternatives fail, we expect that we will be required to seek
protection from creditors under applicable bankruptcy laws.
Our independent auditor has expressed substantial doubt about our
ability to continue as a going concern and believes that our
ability is dependent on our ability to implement our business
plan, raise capital and generate revenues. See Note 5 of our
financial statements.
Uncertainties
- -------------
There is intense competition in the fitness equipment
industry with other companies that are much larger and both
national and international in scope and which have greater
financial resources than we have. At present, we require
additional capital to make our full entrance into the fitness
equipment industry.
Forward Looking Statements
Certain statements in this report are forward-looking statements
within the meaning of the federal securities laws. Although the
Company believes that the expectations reflected in its forward-
looking statements are based on reasonable assumptions, there are
risks and uncertainties that may cause actual results to differ
materially from expectations. These risks and uncertainties include,
but are not limited to, our ability to obtain a meaningful degree of
consumer acceptance for our products now and in the future, our ability
to market our products on a global basis at competitive prices now and
in the future, our ability to maintain brand-name recognition for our
products now and in the future, our ability to achieve adequate
intellectual property protection, our ability to obtain and retain
sufficient capital for future operations, competitive pricing pressures
at both the wholesale and retail levels, changes in market demand,
changing interest rates, adverse weather conditions that reduce sales
at distributors, the risk of assembly and manufacturing plant
shutdowns due to storms or other factors, and the impact of marketing
and cost-management programs.
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BUSINESS
GENERAL AND COMPANY HISTORY
Advanced Sports Technologies, Inc. was incorporated in the
state of Florida on August 9, 2001 as a C corporation.
We are attempting to become a direct marketing company that
develops and markets premium quality, premium priced, branded
fitness or exercise equipment. We intend to market our products
directly to consumers through a variety of direct marketing
channels, including spot television commercials, infomercials,
print media, direct response mailings and the Internet. We intend
to either develop internally, license or acquire the rights to
products to market in these manners. We have already licensed
the rights to the portable gym with elastomer resistance and heel
cup which is covered under U.S. patents #5,558,609 and
U.S.#5,695,437 and may be marketed under the trademark name
Better Buns r U.S. #2,279,957 which we intend to be our first
direct marketed product. We are searching for other products to
license or acquire for introduction. As of the date of this
prospectus we have not generated any revenues.
INDUSTRY OVERVIEW
We intend to market our home fitness equipment principally in the
United States, which we believe is a large and growing market. Based
upon sources such as Direct Response TV magazine, various fitness
industry websites and anecdotal evidence from other members of the
industry, we believe that fitness/exercise equipment is the largest
category of sporting goods equipment sales - $3.8 billion in 2002.
These sources also lead us to believe that number of individuals who
worked out 'frequently' (100+ days per year) with strength equipment
has increased 56% since 1990 and that there are nearly 35 million
members of health clubs in the U.S. Furthermore, these sources lead
us to believe that another beneficiary of the growing emphasis on
physical fitness is the exercise-equipment industry and that sales of
treadmills, exercise bicycles, weight benches and other apparatus to
households reached $5.8 billion in 2000 versus $1.9 billion in 1990.
We intend to target the following commercial customers, among others:
- - - Health clubs and gyms - Corporate fitness centers
- - - Rehabilitation clinics - Colleges and universities
- - - The military - Governmental agencies
- - - Hospitals - YMCA's and YWCA's
- - - Hotels and motels - Professional sports teams
In recent years, sales of fitness products have moved
noticeably from retail stores to infomercials. Infomercials
represent the most powerful sales medium for this type of product
because the infomercial allows the product to be demonstrated in
the privacy of a person's home. The customer does not travel to
the retail store to see the product in action and instead can
immediately pick up the phone and order the product with a 30-day
money back guarantee. It is our belief that infomercials are
especially powerful for a product like the Better Buns, which
must be demonstrated to induce a consumer to purchase.
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The success of an infomercial, dictates the television time and
life expectancy of the infomercial. We intend to handle Infomercial
sales through an outsourced, independent agency and are aware of
numerous that could be contracted for such service. These services
typically drop ship the product directly to the purchaser through a
service such as UPS, with the cost of shipping being paid by the
customer. Most fitness products start with an infomercial to drive
customer awareness of the product. Typically, before distribution of
the product to retail stores, the infomercial should run for a minimum
of six months or until sales dip below the break-even point.
Advertising awareness and building the eventual retail demand becomes
another benefit of an infomercial. It is management's belief that an
effective infomercial will lead retail outlets to seek purchase of the
product. Accordingly, management believes that once the infomercial
has created product awareness in consumers, a relatively small number
of salespeople could achieve significant sales directly to retailers
or to wholesalers who in turn would sell to retail establishments.
PRODUCT DEVELOPMENT
We will not limit our research efforts by trying to only
introduce products that duplicate designs that are traditional or
conventional. We intend to create an organization that values
and explores new ideas and looks for product ideas in
unconventional settings. We intend to
refine these ideas and work with outside firms to create
prototypes, masters and the necessary tooling. As of the date of this
prospectus we have not entered into any definitive discussions, negotiations,
contracts or other arrangements with any third party.
We intend to develop direct marketing products either from
internally generated ideas or, as with our Better Buns technology,
by acquiring or licensing patented technology from outside inventors.
During the evaluation phase of product development, we evaluate the
suitability of the product for direct marketing, whether the product can be
developed and manufactured in acceptable quantities and at an
acceptable cost, and whether it can be sold at a price that
satisfies our profitability goals. More specifically, we look
for high-quality consumer products that:
- Have patented or patentable features;
- Will have a retail price between $19.95 to $1,995.00;
- Can be marketed as a line of products with materially
different features that facilitate upselling (the attempts
by the sales agent ot induce a customer to purchase additional
related products); and
- Have the potential for mass consumer appeal,
particularly among members of the "baby-boom" generation, who are
accustomed to watching television and now have significant
disposable income.
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Once we determine that a product may satisfy our criteria, we
will further assess its direct marketing potential by continuing to
research the product and its probable market and by conducting product
and focus group studies. In focus group studies, we go to gyms and
have people try the product and give us their feedback on the design,
the name, the price, and if they like how the product works or what
they would like us to do to improve the product. If the results are
positive and we do not own the product, we will then attempt to
acquire the product outright or obtain rights to the product through a
licensing arrangement. If we develop the product internally, or if we
acquire or license the rights to the product, we will then proceed to
develop and test a direct marketing campaign for the product. In most
cases, our direct marketing campaigns will emphasize the use of spot
commercials and television infomercials.
The Better Buns product is a portable lightweight gym that weighs
less than a couple pounds. It is an ideal travel gym. It uses
elastomer resistance tubing of the highest quality that is used
in health clubs, rehabilitation and consumer use. The resistance
tubing is available in different tensions. The Better Buns has a
handgrip and an adjustable strap to allow different size people
to duplicate over 30 exercises. It has a special heel cup to put
your foot in to perform lower body exercises and to stabilize
yourself while performing upper body exercises.
We entered into a perpetual licensing agreement for all rights
associated with the Better Buns in January 2003. This means that
unless we default on the agreement we will hold such rights forever.
Among the rights acquired is the exclusive right to use all marketing
material developed by Exerciting, LLC for the Better Buns product. We
believe that by acquiring the right to these marketing materials we
will be able to commence marketing efforts of the Better Buns with
relatively little funding. The terms of the license agreement
provides that we are the exclusive licensees for the Better Buns
product and all related trademarks and patents in connection with the
sale of the Better Buns product in the United States and Canada. As
consideration for entering into the license agreement, we transferred
to the principals of Exerciting, LLC a total of 100,000 shares of our
common stock. Additionally, Exerciting, LLC will receive a royalty on
all Bunsilators we are able to sell equal to 8% of our gross revenues
of all Bunsilator's sold. Our license agreement furthermore provides
that we must achieve certain minimum sales figures on an annual basis
or pay a minimum quarterly royalty payment of $50,000 regardless of
sales achieved, beginning with the quarter ending December 31, 2003.
The License Agreement specifically permits the Company to develop,
manufacture and market products under other marks as well. The
Company may sell products it manufactures under other marks, in any
country and has no obligation to pay any royalty on such sales under
the license agreement.
Our Principal Executive Officer has maintained a
relationship with Exerciting, LLC since its inception. The principals
of Exerciting, LLC are our principal executive officer's brothers.
PATENTS AND TRADEMARKS
Where appropriate, we will seek patent or trademark
protection for the products or brands we develop or introduce.
However, there can be no assurance that patents or trademarks
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will issue from any of our future applications. As of the date
of this prospectus, we have not filed for any trademarks or
patents and do not own any trademarks or patents.
The Better Buns is covered under U.S. patents #5,558,609
and U.S.#5,695,437 and may be marketed under the trademark name
Better Buns r U.S. #2,279,957
SUPPLIERS
We intend to outsource the manufacturing of all of our products
through contract manufacturing facilities in order to keep our
manufacturing costs low. We anticipate that at least some of our
future products will be manufactured in Asia. Our principal executive
officer has a pre-existing relationship with CAPS, Inc., and has
produced product through such manufacturer in the past. CAPS, Inc. is
one of the largest manufacturers of fitness equipment, which is
located in Taiwan. Many companies in the fitness industry use
contract manufacturing facilities in Asia and there are several
potential manufacturers that we will be able to approach regarding
manufacturing our future products. Although we have not commenced
formal negotiations with CAPS, Inc. for the production of Better Buns,
our President has had preliminary discussions regarding our
anticipated needs.
MARKETING
We intend to directly market our fitness equipment principally
through 60-second or "spot" television commercials, television
infomercials, the Internet, response mailings and print media. In the
past, our management has had success with what we refer to as a "two-
step" marketing approach through website sales. In general, this
approach focuses first on spot commercials, which we air to generate
consumer interest in our products and requests for product
information. The second step focuses on converting inquiries into
sales, which we intend to accomplish through a combination of direct
response mailings (mailing out printed materials or sales brochures to
a targeted audience with the hope that such recipients will purchase
our product) and outbound telemarketing (telephone calls to a targeted
audience with the hope that the contacted individuals will listen to a
salesperson describe the product and purchase our product).. We intend
to supplement our two-step approach with infomercials, which generally
are designed to provide potential customers with sufficient product
information to stimulate an immediate purchase.
SPOT COMMERCIALS AND INFOMERCIALS. Use of spot television
commercials is a key element of our intended marketing strategy
for all of our directly marketed products. For direct marketed
products that may require further explanation and demonstration,
television infomercials are an important additional marketing
tool. Our principal executive officer has been involved in the
development of a variety of spot commercials and infomercials for
fitness equipment. We expect to use spot commercials and, where
appropriate, infomercials to market any products that we
determine are appropriate for direct marketing.
When we begin marketing a new product, we will test and
refine our marketing concepts and selling practices while
advertising the product in spot television commercials. We
anticipate that production costs for these commercials can range
from $25,000 to $50,000. Based on our future market research and viewer
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response to our future spot commercials, we will determine whether we
believe it is beneficial to produce additional spot commercials
for the product and, if appropriate for the product, an infomercial.
Production costs for infomercials can range from $100,000 to
$200,000, depending on the scope of the project. Generally, we
hope to film several infomercial and commercial concepts at the
same time in order to maximize production efficiencies. From this
footage we can then develop several varieties of spot commercials
and infomercials and introduce and refine them over time. We plan
to develop our own scripts for spot commercials and hire outside
writers to assist with infomercial scripts. We also plan to
contract with outside production companies to produce spot
commercials and infomercials.
Once produced, we will test spot commercials and
infomercials on a variety of cable television networks that have
a history of generating favorable responses for fitness equipment
infomercials. Our initial objective is to determine their
marketing appeal and what, if any, creative or product
modifications may be appropriate. If these initial tests are
successful, we will air the spot commercials and infomercials on
an accelerating schedule on additional cable networks.
MEDIA BUYING. An important component of achieving direct
marketing success is the ability to purchase quality media time
at an affordable price. The cost of airing spot commercials and
infomercials varies significantly, depending on the network, time
slot and, for spot commercials, programming. Each spot commercial
typically costs between $50 and $5,000 to air, and each
infomercial typically costs between $1,200 and $15,000 to air.
We intend to track the success of each of our spot commercials
and infomercials by determining how many viewers respond to each
airing of a spot commercial or infomercial. We will accumulate
this information in a database that we can use to evaluate the
cost-effectiveness of available media time. In addition, we
believe that the database will enable us to predict with
reasonable accuracy how many product sales and inquiries will
result from each spot commercial and infomercial that we air. We
also believe that we can effectively track changing viewer
patterns and adjust our advertising accordingly.
We do not intend to purchase media time under long-term
contracts. Instead, we will book most of our spot commercial time
on a quarterly basis and most of our infomercial time on a
monthly or quarterly basis, as networks make time available.
Networks typically allow advertisers to cancel booked time with
two weeks' advance notice, which will enable us to adjust our
advertising schedule if our statistical tracking indicates that a
particular network or time slot is no longer cost effective.
Generally, we believe we will be able to increase or decrease the
frequency of our spot commercial and infomercial airings at
almost any time.
INTERNET. We do not presently have an Internet site.
Additionally, as of the date of this prospectus no work has
commenced on the development of an Internet site.
However, we believe that internet-based inquiries are more likely
to be converted into sales than inquiries generated by other
media forms, such as television or print media. Consequently, we
intend to develop an e-commerce capable web site for each product
we introduce because we believe that consumers who will visit the
sites are more inclined to purchase our products than are the
consumers we target through other media. We intend to commence
development of the site after producing inventory and marketing
materials as well as packaging and instructional manuals for
delivery to customers. We hope to complete our internet site by
December 31, 2003.
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PRINT MEDIA. We may advertise our directly marketed
products in various print media when we believe that such
advertising will effectively supplement our direct marketing
campaigns. As an example, we may advertise our home fitness
equipment in health and fitness-related consumer magazines and,
to a limited extent, in entertainment, leisure and specialty
magazines. We believe that television advertising and the
Internet generate more immediate consumer responses at a lower
cost per inquiry than print media and therefore do not plan to
incur print media advertising expenditures until we have achieved
substantial sales.
COMPETITION
The fitness equipment market in which we plan to do
business is highly competitive, and is served by a number of
well-established and well-financed companies with recognized
brand names, as well as new companies with popular products. We
believe that at this time virtually all of our competitors have
significantly greater financial and marketing resources than we
have. This will give them and their products an advantage in the
marketplace. Typically when companies introduce new and/or
improved products such introductions are often accompanied by
major advertising and promotional campaigns.
We believe that the principal competitive factors affecting
our business are price, quality, brand name recognition, product
innovation and customer service.
We will be competing directly with a large number of
companies that manufacture, market and distribute home fitness
equipment, and with the many health clubs that offer exercise and
recreational facilities. We also compete indirectly with outdoor
fitness, sporting goods and other recreational products. Our
principal direct competitors include Nautilus Group, Inc.
(through its Nautilus and Bowflex brands), ICON Health & Fitness,
Inc. (through its Health Rider, NordicTrack, Image, Proform,
Weider and Weslo brands), Schwinn Fitness, Precor and Total Gym.
The home fitness product industry is generally
characterized by rapid and widespread imitation of popular
technologies, designs and product concepts. If we are able to
produce a successful product, we expect that one or more
competitors may introduce products similar to such product. The
buying decisions of many purchasers of fitness equipment are
often the result of highly subjective preferences that can be
influenced by many factors, including, among others, advertising
media, promotions and product endorsements. We may face
competition from manufacturers introducing other new or
innovative fitness equipment or successfully promoting fitness
equipment that achieves market acceptance. The failure to
compete successfully in the future could result in a material
deterioration of any customer loyalty we establish and could have
a material adverse effect of our business, operating results or
financial condition.
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LEGAL PROCEEDINGS
We are not party to any legal proceedings as of the date of
this prospectus.
EMPLOYEES
As of the date of this prospectus we have 1 employee, our
sole officer.
DESCRIPTION OF PROPERTY
Our principal office facility is presently located in space
owned by our sole officer. We are not presently incurring any
rent expenses associated with this space.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND/FINANCIAL DISCLOSURE.
We have had no disagreements with our accountants on
accounting and financial disclosure.
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MANAGEMENT
Directors and Executive Officers
Our sole director and executive officer is:
Director
Name Age Position Since
- ---- --- -------- --------
Curtis Olschansky 41 President, principal executive officer, 2002
Interim principal financial officer,
general counsel and Director
Curtis Olschansky served as the Vice President of Exerfun Inc.
from its inception in December 1994 through Spring 2002. He is also a
licensed real estate broker and has worked since January 1996 as a
sole proprietor commercial real estate broker. Simultaneously, Mr.
Olschansky devotes approximately twenty-five percent of his business
efforts to furthering our business plan, primarily by searching for
and testing products for potential acquisition or license by the
company and by meeting with prospective investors. Mr. Olschansky has
indicated that if we secure financing in excess of $250,000 he would
devote the majority of his business efforts to our operations.
Additionally, Mr. Olschansky has been involved in direct
marketing of fitness equipment for 15 years. Mr. Olschansky has
assisted in developing the products and/or marketing strategies for
several direct marketed fitness equipment products, including the Ab-
Isolator, the Ab-Revolutionizer, the -Isolator and a home gym
technology, which was licensed to several companies including
Stairmaster, etc. Mr. Olschansky assisted in the production of the Ab
Revolutionizer and Isolator infomercials for these products as well as
the prototyping of the actual products themselves.
Directors' Remuneration
Our directors are presently not compensated for serving on
the board of directors.
Executive Compensation
Employment Agreements
We have not entered into any employment agreements.
Summary Compensation Table
The following table sets forth the total compensation paid
to or accrued for the year ended July 31, 2002 to our then
interim President, who was our sole executive officer at the end
of our last fiscal year and for the year ended July 31, 2003 to our
President.
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Annual Compensation
Other Restricted Securities All
Name and Annual Stock Underlying LTIP Other
Principal Position Year Salary Bonus Compensation Awards Options Payouts Compensation
- ------------------ ---- ------ ----- ------------ ---------- ---------- ------- ------------
James Dodrill, 2002 $0 0 0 0 0 0 0
interim President
<F1>
Curtis Olschansky, 2002 $0 0 0 0 0 0 0
President
2003 $0 0 0 0 0 0 0
<FN>
<F1>
(1) Mr. Dodrill, our founder, served as our President on an
unpaid, interim basis from inception through September 30, 2002 at
which point Mr. Olschansky began serving as our President.
</FN>
Stock Option Grants in the past fiscal year
We have not issued any grants of stock options in the past fiscal year.
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33
PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding
beneficial ownership of our common stock as of the date of this
prospectus and as adjusted to reflect the sale of all shares
which may potentially be sold in connection with this
registration statement, by (i) those shareholders known to be the
beneficial owners of more than five percent of the voting power
of our outstanding capital stock, (ii) each director, and (iii)
all executive officers and directors as a group:
Number of Percent Number of
Shares Owned Owned Shares Owned Percent
Name and Address of Before Before After After
Beneficial Owner Offering Offering Offering Offering <F1>
- ------------------- ------------ ---------- ----------- ---------
Curtis Olschansky, 3,500,000 63.08% 3,000,000 39.74%
9700 Via Emilie
Boca Raton, FL 33428
Meredith Dodrill<F2> 1,500,000 27.03% 1,000,000 13.25%
5800 Hamilton Way
Boca Raton, FL 33496
All Directors and Officers as
A Group (1 person) 3,500,000 63.08% 3,000,000 39.74%
_____________
<FN>
<F1>
(1) Assumes the sale of all
shares offered hereunder by the Company and the selling shareholders.
</FN>
<FN>
(2) Meredith Dodrill is the wife of James Dodrill, our legal counsel.
</FN>
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34
SELLING SHAREHOLDERS
The following table sets forth certain information with respect
to the ownership of our common stock by selling shareholders as
of August 25, 2003. Unless otherwise indicated, none of the selling
shareholders has or had a position, office or other material
relationship with us within the past three years.
Ownership of Ownership of
Common Stock Number of Common Stock
Prior to Offering Shares offered After Offering
Selling Shareholder Shares Percent Hereby Shares Percent<F1>
- ----------------------------------------------------------------------------------------------
Curtis Olschansky<F2> 3,500,000 63.08% 500,000 3,000,000 39.74%
Scott Berger 5,000 * 5,000 0 *
Dean Borg 5,000 * 5,000 0 *
Phil Dee 12,500 * 12,500 0 *
Sandra Dee 12,500 * 12,500 0 *
Carol Dodrill<F3> 75,000 1.35% 75,000 0 *
Meredith Dodrill<F4> 1,500,000 27.03% 500,000 1,000,000 13.25%
Seth Ellis 5,000 * 5,000 0 *
Tristina Elmes 5,000 * 5,000 0 *
Michael Feldman 5,000 * 5,000 0 *
Paula Goldberg 5,000 * 5,000 0 *
Ira Goldberg 5,000 * 5,000 0 *
Andrew Graham 6,250 * 6,250 0 *
David Graham 25,000 * 25,000 0 *
Todd Graham 6,250 * 6,250 0 *
William Gross 5,000 * 5,000 0 *
Norm Hope 25,000 * 25,000 0 *
Brian Lipshy 5,000 * 5,000 0 *
Robert Listokin 5,000 * 5,000 0 *
Joseph Maguire 5,000 * 5,000 0 *
Brad Olschansky<F5> 50,000 * 50,000 0 *
Scott Olschansky<F5> 50,000 * 50,000 0 *
Adam Palmer 10,000 * 10,000 0 *
Edward Renzulli 5,000 * 5,000 0 *
Beverly Roberts 25,000 * 25,000 0 *
Lou Rosati 5,000 * 5,000 0 *
Terese Rosati 6,250 * 6,250 0 *
Adam Runsdorf 25,000 * 25,000 0 *
Chris Sawchuk 12,500 * 12,500 0 *
Diane Sawchuk 15,000 * 15,000 0 *
Kim Sawchuk 12,500 * 12,500 0 *
Ron Sawchuk 25,000 * 25,000 0 *
Paul Schattner 5,000 * 5,000 0 *
Brad Shraiberg 5,000 * 5,000 0 *
Jeffrey Siegal 5,000 * 5,000 0 *
Jay Soffin 5,000 * 5,000 0 *
Greg Stein 30,000 * 30,000 0 *
Gina Stelluti 15,000 * 15,000 0 *
Haley Stelluti 15,000 * 15,000 0 *
Allen Tate 5,000 * 5,000 0 *
Lisa Wendell 5,000 * 5,000 0 *
Total 5,548,750 1,548,750
* Indicates less than 1%
1) Assumes that all shares are sold pursuant to this offering and
that no other shares of common stock are acquired or disposed
of by the selling shareholders prior to the termination of
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35
this offering. Because the selling shareholders may sell all,
some or none of their shares or may acquire or dispose of
other shares of common stock, no reliable estimate can be made
of the aggregate number of shares that will be sold pursuant
to this offering or the number or percentage of shares of
common stock that each shareholder will own upon completion of
this offering.
2) Mr. Olschansky is our President, principal executive officer,
interim principal accounting officer and sole Director.
3) Ms. Dodrill is the mother of James Dodrill, our legal counsel and
former President.
4) Mrs. Dodrill is the wife of James Dodrill, our legal counsel and
former President.
5) Messers. Olschansky are both brothers of Mr. Curtis Olschansky, our
President, principal executive officer and sole director.
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36
DESCRIPTION OF SECURITIES
General
Our authorized capital stock consists of 100,000,000 shares
of common stock, par value $0.0001 per share, and 20,000,000
shares of preferred stock, par value $.0001 per share. As of the
date of this prospectus, 5,548,750 shares of common stock and no
shares of preferred stock were outstanding. We presently act as
the transfer agent for our common stock but, prior to an active
trading market developing, will hire a professional transfer
agent service to serve as our transfer agent.
Common Stock
We are authorized to issue 100,000,000 shares of our common
stock, $0.0001 par value, of which 5,548,750 shares are issued
and outstanding as of the date of this prospectus. The issued
and outstanding shares of common stock are fully paid and non-
assessable. Except as provided by law or our certificate of
incorporation with respect to voting by class or series, holders
of common stock are entitled to one vote on each matter submitted
to a vote at a meeting of shareholders.
Subject to any prior rights to receive dividends to which
the holders of shares of any series of the preferred stock may be
entitled, the holders of shares of common stock will be entitled
to receive dividends, if and when declared payable from time to
time by the board of directors, from funds legally available for
payment of dividends. Upon our liquidation or dissolution,
holders of shares of common stock will be entitled to share
proportionally in all assets available for distribution to such
holders. None of our common stock holders have any preemptive rights.
Preferred Stock
The board of directors has the authority, without further
action by our shareholders, to issue up to 20,000,000 shares of
preferred stock, par value $.0001 per share, in one or more
series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation
preferences and the number of shares constituting any series or
the designation of such series. No shares of preferred stock are
currently issued and outstanding. The issuance of preferred
stock could adversely affect the voting power of holders of
common stock and could have the effect of delaying, deferring or
preventing a change of our control.
Market for Common Equity and Related Stockholder Matters
There is no established public market for our common stock
and we have arbitrarily determined the offering price. Although
we hope to be quoted on the OTC Bulletin Board, our common stock
is not currently listed or quoted on any quotation service. There
can be no assurance that our common stock will ever be quoted on
any quotation service or that any market for our stock will ever
develop or, if developed, will be sustained.
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37
As of August 25, 2003, there were 41 shareholders of record of
our common stock and a total of 5,548,750 shares outstanding. Of
the 5,548,750 shares of common stock outstanding, 5,000,000
shares of common stock are beneficially held by "affiliates" of
the company. All shares of common stock registered pursuant to
this Registration Statement will be freely transferable without
restriction or registration under the Securities Act, except to
the extent purchased or owned by our "affiliates" as defined for
purposes of the Securities Act.
There are currently no outstanding options or warrants to purchase
or any securities that are convertible into our common stock.
Under certain circumstances, restricted shares may be sold
without registration, pursuant to the provisions of rule 144. In
general, under rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one-year holding period may,
under certain circumstances, sell within any three-month period a
number of restricted securities which does not exceed the greater
of one percent of the shares outstanding or the average weekly
trading volume during the four calendar weeks preceding the
notice of sale required by rule 144. In addition, rule 144
permits, under certain circumstances, the sale of restricted
securities without any quantity limitations by a person who is
not an affiliate of ours and has satisfied a two-year holding
period. Any sales of shares by shareholders pursuant to rule 144
may have a depressive effect on the price of our common stock.
There are 1,000,000 shares of our common stock that are not being offered
by this registration statement that could in the future be sold pursuant to
Rule 144.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 2003 we entered into a licensing agreement with
Exerciting, LLC to acguire the exclusive rights associated with a
product known as Better Buns. The terms of the licensing agreement
provide that we will pay Exerciting a royalty of eight percent (8%) of
gross revenues derived from our sales of the product and that we must
achieve certain minimum sales figures on an annual basis or pay
minimum royalty payments of fifty thousand dollars ($50,000) per
quarter regardless of sales achieved. Curtis Olschansky, our Chief
Executive Officer is the brother of Brad Olschansky and Scott
Olschansky, who are the owners of Exerciting, LLC, which is the owner
of the Better Buns product.
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DISCLOSURE OF SEC POSITION
ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Articles of Incorporation, as well as our By-Laws provide
for the indemnification of directors, officers, employees and
agents of the corporation to the fullest extent provided by the
Corporate Law of the State of Florida, as well as is described in
the Articles of Incorporation and the By-Laws. These sections
generally provide that the Company may indemnify any person who
was or is a party to any threatened, pending or completed action,
suit or proceeding whether civil, criminal, administrative or
investigative except for an action by or in right of the
corporation by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation.
Generally, no indemnification may be made where the person has
been determined to be negligent or guilty of misconduct in the
performance of his or her duties to the Company.
Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to our directors, officers or
controlling persons, pursuant to the foregoing provisions, or
otherwise, we have been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933,
and is, therefore, unenforceable.
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PLAN OF DISTRIBUTION
Upon effectiveness of this registration statement, we will
conduct the sale of the shares we are offering on a
self-underwritten, best-efforts basis. This means that we do not
have an underwriter and that we will sell the shares directly to
investors. Participating on our behalf in the distribution is
Curtis Olschansky, our Principal Executive Officer, who is exempt
from registration as a broker dealer under Rule 3a4-1 of the
Securities Exchange Act. All shares of our common stock that we
are registering for sale by the company that we are able to sell
will be sold at a price per share of $0.25. There can be no
assurance that we will sell all or any of the shares offered. We
have no arrangement or guarantee that we will sell any shares.
All subscription checks shall be made to the order of Advanced
Sports Technologies, Inc. Our offering will terminate on the
earlier of the sale of all of the shares or 60 days after the
date of the prospectus.
While we do not anticipate utilizing any registered
securities broker-dealers in connection with any sales of the
shares and have no arrangements to use any broker-dealers, we
may, in our discretion, accept subscriptions for shares through
broker-dealers that are members of the National Association of
Securities Dealers, Inc. and are willing to, in connection with
such sales, pay a commission of up to 10% of the price of each
share sold. No officers or directors shall receive any
commissions or compensation for their sale of the shares pursuant
to the terms hereof.
The selling shareholders will sell their shares at a price
per share of $0.25 until our shares are quoted on the Over The
Counter Bulletin Board and thereafter at prevailing market prices
or in privately negotiated transactions. The selling
shareholders may sell or distribute their common stock from time
to time themselves, or by donees or transferees of, or other
successors in interests to, the selling shareholders, directly to
one or more purchasers or through brokers, dealers or
underwriters who may act solely as agents or may acquire such
common stock as principals, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices,
at negotiated prices, or at fixed prices, which may be changed.
Accordingly, the prices at which the selling shareholder's shares
are sold may be different than the price of shares that we sell.
These sales by Selling Shareholders may occur contemporaneously
with sales by us. The sale of the common stock offered by the
selling shareholders through this prospectus may be affected in
one or more of the following:
* Ordinary brokers' transactions;
* Transactions involving cross or block trades or otherwise
* Purchases by brokers, dealers or underwriters as principal and
resale by such purchasers for their own accounts pursuant to
this prospectus;
* "at the market" to or through market makers or into any market
for the common stock which may develop;
* in other ways not involving market makers or established
trading markets, including direct sales to purchasers or sales
effected through agents;
* in privately negotiated transactions; or
* any combination of the foregoing.
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41
Brokers, dealers, underwriters or agents participating in
the distribution of the shares as agents may receive compensation
in the form of commissions, discounts or concessions from the
selling shareholders and/or purchasers of the common stock for
whom such broker-dealers may act as agent, or to whom they may
sell as principal, or both. The compensation paid to a
particular broker-dealer may be less than or in excess of
customary commissions.
Neither we nor any selling shareholder can presently
estimate the amount of compensation that any agent will receive.
We know of no existing arrangements between any selling
shareholder, any other shareholder, broker, dealer, underwriter
or agent relating to the sale or distribution of the shares. In
the event that we use an underwriter or a broker-dealer to
consummate the sale of the shares we are registering for sale by
the company, we will file a post-effective amendment to this
registration statement setting forth the name of such entity and
the terms under which such entity is participating in this
offering.
In the event that the selling shareholders enter into an
agreement, after the date of this prospectus, with any broker dealer
or underwriter for such broker, dealer or underwriter to act as
principal and such entity is acting as an underwriter, we will file a
post-effective amendment to this prospectus identifying such entity,
providing the required information in this plan of distribution and
revising the disclosures in this prospectus and the related
registration statement. Additionally, in such event we will file any
such agreement as an exhibit to the registration statement.
We will pay all of the expenses incident to the
registration, offering and sale of the shares to the public, but
will not pay commissions and discounts, if any, of underwriters,
broker-dealers or agents, or counsel fees or other expenses of
the selling shareholders. We have also agreed to indemnify the
selling shareholders and related persons against specified
liabilities, including liabilities under the Securities Act.
We have advised the selling shareholders that while they
are engaged in a distribution of the shares included in this
prospectus they are required to comply with Regulation M
promulgated under the Securities Exchange Act of 1934, as
amended. With certain exceptions, Regulation M precludes the
selling shareholders, any affiliated purchasers, and any
broker-dealer or other person who participates in such
distribution from bidding for or purchasing, or attempting to
induce any person to bid for or purchase any security which is
the subject of the distribution until the entire distribution is
complete. Regulation M also prohibits any bids or purchases make
in order to stabilize the price of a security in connection with
the distribution of that security. All of the foregoing may
affect the marketability of the shares offered hereby in this
prospectus.
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LEGAL MATTERS
The Law Office of James G. Dodrill II, PA, of Delray Beach,
Florida will give an opinion for us regarding the validity of the
common stock offered in this prospectus.
EXPERTS
The financial statements as of July 31, 2002 and for the
period from August 9, 2001 (inception) to July 31, 2002 included
in this prospectus have been so included in reliance on the
report of Salberg & Company, P.A., independent certified public
accountants, given on the authority of said firm as experts in
auditing and accounting.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement under the Securities
Act with respect to the securities offered hereby with the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
This prospectus, which is a part of the registration statement,
does not contain all of the information contained in the
registration statement and the exhibits and schedules thereto,
certain items of which are omitted in accordance with the rules
and regulations of the Commission. For further information with
respect to Advanced Sports Technologies, Inc. and the securities
offered hereby, reference is made to the registration statement,
including all exhibits and schedules thereto, which may be
inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N. W., Room
1024, Washington, D. C. 20549, at prescribed rates during regular
business hours. You may obtain information on the operation of
the public reference facilities by calling the Commission at 1-
800-SEC-0330. Also, the SEC maintains an Internet site that
contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the
Commission at http://www.sec.gov. Statements contained in this
prospectus as to the contents of any contract or other document
are not necessarily complete, and in each instance reference is
made to the copy of such contract or document filed as an exhibit
to the registration statement, each such statement being
qualified in its entirety by such reference. We will provide,
without charge upon oral or written request of any person, a copy
of any information incorporated by reference herein. Such
request should be directed to us at Advanced Sports Technologies,
Inc., 9700 Via Emilie, Boca Raton, Florida 33496 Attention:
Curtis Olschansky, President.
Following the effectiveness of this registration statement,
we will file reports and other information with the Commission.
All of such reports and other information may be inspected and
copied at the Commission's public reference facilities described
above. The Commission maintains a web site that contains reports,
proxy and information statements and other information regarding
issuers that file electronically with the Commission. The address
of such site is http://www.sec.gov. In addition, we intend to
make available to our shareholders annual reports, including
audited financial statements, unaudited quarterly reports and such
other reports as we may determine.
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44
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Financial Statements
(Unaudited)
April 30, 2003
45
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Contents
Page(s)
Balance Sheets 1
Statements of Operations 2
Statements of Cash Flows 3
Notes to Financial Statements 4-5
46
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Balance Sheet
-------------
Assets
------
April 30, 2003
(unaudited) July 31, 2002
------------ -------------
Current assets:
Cash $ 9,406 $ 6,437
----------- -----------
Total current assets 9,406 6,437
----------- -----------
Other assets
Deferred offering costs 11,000 -
License, net 4,466
----------- -----------
Total Other Assets 15,466 -
----------- -----------
Total Assets $ 24,872 $ 6,437
=========== ===========
Liabilities and Stockholders' Deficiency
----------------------------------------
Current liabilities:
Accounts payable $ 50,000 $ -
Accrued compensation, related party 16,000 -
----------- -----------
Total Current Liabilities $ 66,000 $ -
----------- -----------
Stockholders' Deficiency
Preferred stock, $0.0001 par value,
20,000,000 shares authorized,
no shares issued and outstanding - -
Common stock, $0.0001 par value,
100,000,000 shares authorized.
5,548,750 and 5,343,750
shares issued and outstanding 555 534
Additional paid-in capital 50,570 40,341
Deficit accumulated during development stage (92,253) (34,438)
----------- -----------
Total Stockholders' Deficency (41,128) 6,437
----------- -----------
Total Liabilities and Stockholders' Deficency $ 24,872 $ 6,437
==========+ ===========
See accompanying notes to financial statements.
1
47
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Statements of Operations
----------------------
(Unaudited)
From From
Nine Months August 9, 2001 August 9, 2001
Ended (Inception) to (Inception) to
April 30, 2003 April 30, 2002 April 30, 2003
-------------- -------------- --------------
Operating Expenses
Compensation $ 16,000 $ 17,798 $ 40,000
General and Administrative 221 288 659
Professional Fees 41,060 10,000 51,060
Amortization 534 - 534
------------ ------------ -----------
Total Operating Expenses 57,815 28,086 92,253
------------ ------------ -----------
Loss from Operations (57,815) (28,086) (92,253)
------------ ------------ -----------
Net Loss $ (57,815) $ (28,086) $ (92,253)
============ ============ ===========
Net Loss Per Share - Basic and Diluted $ (0.01) $ (0.01) $ (0.02)
============ ============ ===========
Weighted average number of shares
outstanding during the year -
basic and diluted 5,431,662 5,237,647 5,337,373
============ ============ ===========
See accompanying notes to financial statements.
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Advanced Sports Technologies, Inc.
(A Development Stage Company)
Statements of Cash Flows
----------------------
(Unaudited)
From From
Nine Months August 9, 2001 August 9, 2001
Ended (Inception) to (Inception) to
April 30, 2003 April 30, 2002 April 30, 2003
-------------- -------------- --------------
Cash flows from operating activities:
Net loss $ (57,815) $ (28,086) $ (92,253)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Stock issued for expense reimbursement - 10,000 10,000
Contributed services - 17,798 24,000
Amortization 534 - 534
Changes in operating liabilities:
Increase (decrease) in:
Acounts payable 39,000 - 39,000
Accrued compensation, related party 16,000 - 16,000
----------- ----------- -----------
Net Cash Used in Operating Activities (2,281) (288) (2,719)
----------- ----------- -----------
Cash flows from Financing Activities:
Proceeds from sale of stock 5,250 6,875 12,125
----------- ----------- -----------
Net Cash Provided by Financing Activities 5,250 6,875 12,125
----------- ----------- -----------
Net Increase in Cash $ 2,969 $ 6,587 9,406
Cash at Beginning of Year 6,437 - -
----------- ----------- -----------
Cash at End of Year $ 9,406 $ 6,587 9,406
=========== =========== ===========
Supplemental Schedule of Non-Cash Investing and Financing Activities
- --------------------------------------------------------------------
At inception, the Company issued 5,000,000 common sthares to founder with
a par value of $500, which was settled by forgiveness of accrued expense
reimbursement of $10,000.
From inception to July 31, 2002, the President contributed services worth $24,000.
In January 2003, the Company issued 100,000 shares of its common stock as
consideration for entering into a license agreement (see Note 3).
In 2003, the Company deferred costs of $11,000 related to an SB-2 offering.
See accompanying notes to financial statements.
3
49
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Notes to Financial Statements
April 30, 2003
(Unaudited)
Note 1 Basis of Presentation
- ------------------------------
The accompanying unaudited financial statements have been prepared
in accordance with accounting principles generally accepted in the
United States of America and the rules and regulations of the United
States Securities and Exchange Commission for interim financial
information. Accordingly, they do not include all the information
and footnotes necessary for a comprehensive presentation of
financial position and results of operations.
It is management's opinion, however, that all material adjustments
(consisting of normal recurring adjustments) have been made which
are necessary for a fair financial statement presentation. The
results for the interim period are not necessarily indicative of the
results to be expected for the year.
For further information, refer to the audited financial statements
and footnotes from August 9, 2001 (inception) to July 31, 2002
included in the Company's Form SB-2
Note 2 Recent Accounting Pronouncements
- ---------------------------------------
In May 2003, the FASB issued SFAS No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities" ("SFAS 149").
SFAS 149 provides for certain changes in the accounting treatment of
derivative contracts. SFAS 149 is effective for contracts entered
into or modified after June 30, 2003, except for certain provisions
that relate to SFAS 133 Implementation Issues that have been
effective for fiscal quarters that began prior to June 15, 2003,
which should continue to be applied in accordance with their
respective effective dates. The guidance should be applied
prospectively. The adoption of SFAS 149 is not expected to have a
material impact on the Company's consolidated financial statements.
Also in May 2003, the FASB issued SFAS No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both
Liabilities and Equity" ("SFAS 150"). This new statement changes the
accounting for certain financial instruments that, under previous
guidance, issuers could account for as equity. It requires that
those instruments be classified as liabilities in balance sheets.
Most of the guidance in SFAS 150 is effective for all financial
instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. The adoption of SFAS 150 is not
expected to have a material impact on the Company's consolidated
financial statements.
Note 3 License
- ----------------
On January 3, 2003, the Company executed a license agreement with
Exerciting, LLC ("Exerciting"). As consideration for entering into
the agreement, the Company issued 100,000 shares of its common stock
having a fair value $5,000, based on the contemporaneous sale price
of $0.05 per share, to the principal officers of Exerciting. The
licensing agreement gives the Company all rights associated with the
Better Buns product, which is a portable gym. The Company also
acquired the exclusive right to use all marketing material developed
by Exerciting. The terms of the license agreement require the
Company to achieve certain minimum sales figures on an annual basis
or pay minimum royalty payments regardless of sales achieved. The
Company agrees to pay royalties equal to eight percent of gross
4
50
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Notes to Financial Statements
April 30, 2003
(Unaudited)
revenues received in any quarter to be payable within forty-five
days of the end of each quarter. Beginning with fiscal quarter
ending January 31, 2004 and each quarter thereafter the quarterly
minimum royalty payable will be $50,000 to be paid within forty-five
days after each quarter end.
In connection with the license agreement above, the principals of
Exerciting are brothers of the Company's President, and thus are
considered related parties.
Management believes the license has an estimated life of three
years. The amortization recorded for the nine month period ended
April 30, 2003 was $534.
Note 4 Related Party Transactions
- ----------------------------------
The Company entered into a license agreement with Exerciting. The
principals of Exerciting are brothers of the Company's President
(see Note 3).
At April 30, 2003, legal expenses in the amount of $50,000 are
payable to the husband of the founder and significant shareholder of
the Company. Of this amount payable, $10,000 is recorded as deferred offering
costs, and $40,000, relating to the license agreement preparation and
ongoing corporate legal services, is expensed as professional fees for the
nine months ended April 30, 2003.
Note 5 Stockholders' Equity
- -----------------------------
At inception, the Company issued 5,000,000 common shares with a par
value of $500 to its founder which was settled by foregiveness of
an accrued expense reimbursement of $10,000.
In 2002 the Company issued 343,750 common shares pursuant to a Rule
504 offering at $0.02 per share. The Company received cash of $6,875.
From inception to July 31, 2002 the President contributed services
worth $24,000.
In December 2002, the Company issued 105,000 common shares pursuant
to a Rule 504 offering at $0.05 per share. The Company received
cash of $5,250.
In January 2003, the Company issued 100,000 common shares as
consideration for entering a licensing agreement. The Company
valued the shares at $5,000.
Note 6 Going Concern
- ----------------------
As reflected in the accompanying financial statements, the Company
has operating losses of $ 57,815 for the nine months ended April 30,
2003, a deficit accumulated during the development stage of $ 92,253
at April 30, 2003, cash used in operations of $2,281 for the nine
months ended April 30, 2003, and is a development stage company with
no revenues. The ability of the Company to continue as a going
concern is dependent on the Company's ability to further implement
its business plan, raise capital, and generate revenues. The
financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
The Company is negotiating with capital funding sources, and service
providers to implement its business plan, and searching for other
products to license or acquire for introduction. Management
believes that the actions presently being taken to raise capital,
implement its business plan, and generate revenues provide the
opportunity for the Company to continue as a going concern.
5
51
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Financial Statements
July 31, 2002
52
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Contents
--------
Page(s)
Independent Auditors' Report 1
Balance Sheet 2
Statements of Operations 3
Statements of Changes in Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6-10
53
Independent Auditors' Report
----------------------------
To the Board of Directors of:
Advanced Sports Technologies, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Advanced Sports
Technologies, Inc. (a development stage company) as of July 31, 2002
and the related statements of operations, changes in stockholders'
equity, and cash flows for the period from August 9, 2001
(inception) to July 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audit.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly in all material respects, the financial position of Advanced
Sports Technologies, Inc. (a development stage company) as of July
31, 2002, and the results of its operations and its cash flows for
the period from August 9, 2001 (inception) to July 31, 2002, in
conformity with accounting principles generally accepted in the
United States of America.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 5 to the financial statements, the Company's net loss of
$34,438, a deficit accumulated during development stage at July 31,
2002 of $34,438, cash used in operations of $438, and its status as
a development stage company with no revenues raise substantial doubt
about its ability to continue as a going concern. Management's Plan
in regards to these matters is also described in Note 5. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Salberg & Company, P.A.
SALBERG & COMPANY, P.A.
Boca Raton, Florida
May 16, 2003
54
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Balance Sheet
July 31, 2002
-------------
Assets
------
Current assets:
Cash $ 6,437
-----------
Total current assets $ 6,437
===========
Liabilities and Stockholders' Equity
------------------------------------
Total Liabilities $ -
-----------
Stockholders' Equity
Preferred stock, $0.0001 par value,
20,000,000 shares authorized,
no shares issued and outstanding -
Common stock, $0.0001 par value,
100,000,000 shares authorized.
5,343,750 shares issued and
outstanding 534
Additional paid-in capital 40,341
Deficit accumulated during development stage (34,438)
-----------
Total Stockholders' Equity 6,437
-----------
Total Liabilities and Stockholders' Equity $ 6,437
===========
See accompanying notes to financial statements.
2
55
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Statements of Operations
For the Period from August 9, 2001 (Inception) to July 31, 2002
---------------------------------------------------------------
Operating Expenses
Compensation $ 24,000
General and Administrative 438
Professional Fees 10,000
------------
Total Operating Expenses 34,438
------------
Loss from Operations (34,438)
------------
Net Loss $ (34,438)
============
Net Loss Per Share - Basic and Diluted $ (0.01)
============
Weighted average number of shares
outstanding during the year -
basic and diluted 5,265,067
============
See accompanying notes to financial statements.
3
56
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Statements of Changes in Stockholders' Equity
For the Period from August 9, 2001 (Inception) to July 31, 2002
---------------------------------------------------------------
Common Stock Additional
------------ Paid-in Accumulated
Shares Amount Capital Deficit Total
------ ------ ------- ------- -----
Common stock issued to founder 5,000,000 $ 500 $ 9,500 $ - $ 10,000
Common stock issued for cash 343,750 34 6,841 - 6,875
Contributed services 24,000
Net loss from August 9, 2001
(inception) to July 31, 2002 - - - (34,438) (34,438)
----------- -------- ---------- ---------- ------------
Balance, July 31, 2002 5,343,750 534 40,341 (34,438) 6,437
=========== ======== ========== ========== ============
See accompanying notes to financial statements.
4
57
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the Period from August 9, 2001 (Inception) to July 31, 2002
---------------------------------------------------------------
Cash flows from operating activities:
Net loss $ (34,438)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Stock issued for expense reimbursement 10,000
Contributed services 24,000
-----------
Net Cash Used in Operating Activities (438)
-----------
Cash flows from Financing Activities:
Proceeds from sale of stock 6,875
-----------
Net Cash Provided by Financing Activities 6,875
-----------
Net Decrease in Cash $ 6,437
Cash at Beginning of Year -
-----------
Cash at End of Year $ 6,437
===========
Supplemental Schedule of Non-Cash Investing and Financing Activities
- --------------------------------------------------------------------
At inception, the Company issued 5,000,000 common sthares to founder with
a par value of $500, which was settled by forgiveness of accrued expense
reimbursement of $10,000 (See Notes 2 and 3).
From inception to July 31, 2002, the President contributed services
worth $24,000 (See Notes 2 and 3).
See accompanying notes to financial statements.
5
58
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2002
-------------
Note 1 Significant Accounting Policies
- ----------------------------------------
(A) Organization and Nature of Business
Advanced Sports Technologies, Inc. (a development stage
company) (the "Company") was incorporated in Florida on August
9, 2001, and has elected a fiscal year end of July 31.
The Company plans to build a direct marketing company that
develops and markets premium quality, premium priced, branded
fitness or exercise equipment. The Company intends to market
its products directly to consumers through a variety of direct
marketing channels, including spot television commercials,
infomercials, print media, direct response mailings and the
Internet.
Activities during the development stage include developing the
corporate infrastructure, implementing the business plan and
raising capital.
(B) Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted 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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(C) Cash Equivalents
For the purpose of the cash flow statement, the Company
considers all highly liquid investments with original
maturities of three months or less at the time of purchase to
be cash equivalents.
(D) Income Taxes
The Company accounts for income taxes under the Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes" ("Statement
109"). Under Statement 109, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period, which includes
the enactment date.
(E) Net Loss Per Common Share
Basic net income (loss) per common share (Basic EPS) excludes
dilution and is computed by dividing net income (loss)
6
59
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2002
-------------
available to common stockholder by the weighted-average number
of common shares outstanding for the period. Diluted net
income (loss) per share (Diluted EPS) reflects the potential
dilution that could occur if stock options or other contracts
to issue common stock were exercised or converted into common
stock or resulted in the issuance of common stock that then
shared in the earnings of the Company. At July 31, 2002, there
were no common stock equivalents outstanding, which may dilute
future earnings per share.
(F) Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments,"
requires disclosures of information about the fair value of
certain financial instruments for which it is practicable to
estimate that value. For purposes of this disclosure, the fair
value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between
willing parties, other than in a forced sale or liquidation.
The Company has no short-term financial instruments.
(G) New Accounting Pronouncements
Statement No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets" supercedes Statement No. 121 "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of" ("SFAS 121"). Though it retains the basic
requirements of SFAS 121 regarding when and how to measure an
impairment loss, SFAS 144 provides additional implementation
guidance. SFAS 144 excludes goodwill and intangibles not being
amortized among other exclusions. SFAS 144 also supercedes the
provisions of APB 30, "Reporting the Results of Operations,"
pertaining to discontinued operations. Separate reporting of a
discontinued operation is still required, but SFAS 144 expands
the presentation to include a component of an entity, rather
than strictly a business segment as defined in SFAS 131,
Disclosures about Segments of an Enterprise and Related
Information. SFAS 144 also eliminates the current exemption to
consolidation when control over a subsidiary is likely to be
temporary. This statement is effective for all fiscal years
beginning after December 15, 2001. The implementation of SFAS
144 on August 1, 2002 is not expected to have a material
effect on the Company's financial position, results of
operations or liquidity.
Statement No. 145, "Rescission of FASB Statements No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical
Corrections," ("SFAS 145") updates, clarifies, and simplifies
existing accounting pronouncements. Statement No. 145 rescinds
Statement 4, which required all gains and losses from
extinguishment of debt to be aggregated and, if material,
classified as an extraordinary item, net of related income tax
effect. As a result, the criteria in Opinion 30 will now be
used to classify those gains and losses. Statement 64 amended
Statement 4, and is no longer necessary because Statement 4 has
been rescinded. Statement 44 was issued to establish
accounting requirements for the effects of transition to the
provisions of the Motor Carrier Act of 1980. Because the
transition has been completed, Statement 44 is no longer
necessary. Statement 145 amends Statement 13 to require that
certain lease modifications that have economic effects similar
to sale-leaseback transactions be accounted for in the same
manner as sale-leaseback transactions. This amendment is
consistent with FASB's goal requiring similar accounting
treatment for transactions that have similar economic effects.
7
60
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2002
-------------
This statement is effective for fiscal years beginning after
May 15, 2002. The adoption of SFAS 145 on August 1, 2002 did
not have a material impact on the Company's financial position,
results of operations or liquidity.
Statement No. 146, "Accounting for Exit or Disposal Activities"
("SFAS 146") addresses the recognition, measurement, and
reporting of costs that are associated with exit and disposal
activities that are currently accounted for pursuant to the
guidelines set forth in EITF 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to exit
an Activity (including Certain Cost Incurred in a
Restructuring)," cost related to terminating a contract that is
not a capital lease and one-time benefit arrangements received
by employees who are involuntarily terminated-nullifying the
guidance under EITF 94-3. Under SFAS 146, the cost associated
with an exit or disposal activity is recognized in the periods
in which it is incurred rather than at the date the Company
committed to the exit plan. This statement is effective for
exit or disposal activities initiated after December 31, 2002
with earlier application encouraged. The adoption of SFAS 146
is not expected to have a material impact on the Company's
financial position, results of operations or liquidity.
Statement No. 148, "Accounting for Stock-Based Compensation-
Transition and Disclosure", amends FASB Statement No. 123,
"Accounting for Stock-Based Compensation." In response to a
growing number of companies announcing plans to record expenses
for the fair value of stock options, Statement 148 provides
alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee
compensation. In addition, Statement 148 amends the disclosure
requirements of Statement 123 to require more prominent and
more frequent disclosures in financial statements about the
effects of stock-based compensation. The Statement also
improves the timeliness of those disclosures by requiring that
this information be included in interim as well as annual
financial statements. In the past, companies were required to
make pro forma disclosures only in annual financial statements.
The disclosure provisions of Statement 148 did not have a
material impact on the Company's financial position, results of
operations or liquidity.
In November 2002, the FASB issued FASB Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of
Others" (FIN 45). FIN 45 requires that upon issuance of a
guarantee, a guarantor must recognize a liability for the fair
value of an obligation assumed under a guarantee. FIN 45 also
requires additional disclosures by a guarantor in its interim
and annual financial statements about the obligations
associated with guarantees issued. The recognition provisions
of FIN 45 are effective for any guarantees issued or modified
after December 31, 2002. The disclosure requirements are
effective for financial statements of interim or annual periods
ending after December 15, 2002. The adoption of this
pronouncement is not expected to have a material effect on the
earnings or financial position of the Company.
In January 2003, the FASB issued Interpretation No. 46 ("FIN
46"), "Consolidation of Variable Interest Entities." FIN 46
requires that if an entity has a controlling financial interest
in a variable interest entity, the assets, liabilities and
results of activities of the variable interest entity should be
included in the consolidated financial statements of the
entity. FIN 46 requires that its provisions are effective
immediately for all arrangements entered into after January 31,
2003. The Company does not have any variable interest entities
8
61
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2002
-------------
created after January 31, 2003. For those arrangements entered
into prior to January 31, 2003, the FIN 46 provisions are
required to be adopted at the beginning of the first interim or
annual period beginning after June 15, 2003. The Company has
not identified any variable interest entities to date and will
continue to evaluate whether it has variable interest entities
that will have a significant impact on its balance sheet and
results of operations.
Note 2 Related Party Transactions
- -----------------------------------
The Company's founder and principal stockholder paid for a
subscription to 5,000,000 shares of common stock in 2001 with
$10,000 of reimbursable expense (See Note 3).
From inception to July 31, 2002, the President, who is the husband
of the founder, contributed services worth $24,000 (See Note 3).
Note 3 Stockholders' Equity
- -----------------------------
At inception, the Company issued 5,000,000 common shares with a par
value of $500 to its founder, which was settled by forgiveness of an
accrued expense reimbursement of $10,000 (See Note 2).
In 2002, the Company issued 343,750 common shares pursuant to a Rule
504 offering at $0.02 per share. The Company received cash of
$6,875.
From inception to July 31, 2002, the President contributed services
worth $24,000 (See Note 2).
Note 4 Income Taxes
- ---------------------
There was no income tax expense for the period from August 9,
2001(inception) to July 31, 2002 due to the Company's net losses.
The Company's tax expense differs from the "expected" tax expense
(benefit) for the period ended July 31, 2002, (computed by applying
the Federal Corporate tax rate of 34% to loss before taxes), as
follows:
Computed "expected" tax expense (benefit) $ (11,709)
Change in valuation allowance 11,709
----------
$ -
==========
The effects of temporary differences that gave rise to significant
portions of deferred tax assets and liabilities at July 31, 2002 are
as follows:
9
62
Advanced Sports Technologies, Inc.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2002
-------------
Deferred tax assets:
Net operating loss carryforward $ 11,709
---------
Total gross deferred tax assets 11,709
Less valuation allowance (11,709)
---------
Net deferred tax assets $ -
=========
The Company has a net operating loss carryforward of approximately
$34,000 available to offset future taxable income through 2022.
The valuation allowance at August 9, 2001 (inception) was $0, the
net change in the valuation allowance for the period ended July 31,
2002 was an increase of $11,709.
Note 5 Going Concern
- ----------------------
As reflected in the accompanying financial statements, the Company
has operating losses of $ 34,438, a deficit accumulated during the
development stage of $ 34,438 at July 31, 2002, cash used in
operations of $438 through July 31, 2002, and is a development stage
company with no revenues. The ability of the Company to continue as
a going concern is dependent on the Company's ability to further
implement its business plan, raise capital, and generate revenues.
The financial statements do not include any adjustments that might
be necessary if the Company is unable to continue as a going
concern.
The Company is negotiating with capital funding sources, and service
providers to implement its business plan, and searching for other
products to license or acquire for introduction. Management
believes that the actions presently being taken to raise capital,
implement its business plan, and generate revenues provide the
opportunity for the Company to continue as a going concern.
Note 6 Subsequent Events
- --------------------------
On September 30, 2002, the Company appointed a new President who
also holds the roles of Chief Financial Officer, Treasurer and
Secretary.
On January 3, 2003, the Company executed a license agreement with
Exerciting, LLC ("Exerciting"). As consideration for entering into
the agreement, the Company issued 100,000 shares of its common stock
having a fair value $5,000, based on the contemporaneous sale price
of $0.05 per share, to the principal officers of Exerciting. The
licensing agreement gives the Company all rights associated with the
Better Buns product, which is a portable gym. The Company also
acquired the exclusive right to use all marketing material developed
by Exerciting. The terms of the license agreement require the
Company to achieve certain minimum sales figures on an annual basis
or pay minimum royalty payments regardless of sales achieved. The
Company agrees to pay royalties equal to eight percent of gross
revenues received in any quarter to be payable within forty-five
days of the end of each quarter. Beginning with fiscal quarter
ending January 31, 2004 and each quarter thereafter the quarterly
minimum royalty payable will be $50,000 to be paid within forty-five
days after each quarter end.
In connection with the license agreement above, the principals of
Exerciting are brothers of the Company's new President, and thus are
considered related parties.
In December 2002, the Company issued 105,000 common shares pursuant
to a Rule 504 offering at $0.05 per share. The Company received
cash of $5,250.
10
63
No dealer, salesman or other
person is authorized to give any
information or to make any
representations not contained in
this prospectus in connection with
the offer made hereby, and, if
given or made, such information or
representations must not be relied
upon as having been authorized by
Advanced Sports Technologies, Inc.
This prospectus does not constitute
an offer to sell or a solicitation
to an offer to buy the securities
offered hereby to any person in any
state or other jurisdiction in
which such offer or solicitation
would be unlawful. Neither the
delivery of this prospectus nor any
sale made hereunder shall, under
any circumstances, create any
implication that the information
contained herein is correct as of
any time subsequent to the date
hereof.
Until _________ __, 2003 (90 days
after the date of this prospectus)
all dealers that effect
transactions in these securities,
whether or not participating in
this offering, may be required to
deliver a prospectus. This is in
addition to the dealer's obligation
to deliver a prospectus when acting
as underwriters and with respect to
their unsold allotments or
subscriptions.
TABLE OF CONTENTS
Page
----
Prospectus Summary............... 3 Advanced Sports Technologies, Inc.
The Offering..................... 4
Summary Financial Data........... 6
Risk Factors..................... 7
Forward Looking Statements.......14
Use of Proceeds..................15
Determination of Offering Price..17
Dividend Policy..................17
Dilution.........................18 3,548,750 SHARES
Management's Discussion and
Analysis........................ 19
Business ....................... 23
Management ..................... 30
Principal Shareholders.......... 32
Selling Shareholders............ 33
Description of Securities ...... 35 ----------
Certain Transactions............ 37 PROSPECTUS
Indemnification................. 38 ----------
Plan of Distribution............ 39
Legal Matters................... 41
Experts......................... 41
Where You Can Find More
Information......................42
Financial Statements
- ------------------------------------
August 27, 2003
64
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation, as well as our By-Laws provide for
the indemnification of directors, officers, employees and agents of the
corporation to the fullest extent provided by the Corporate Law of the
State of Florida, as well as is described in the Articles of
Incorporation and the By-Laws. These sections generally provide that
the Company may indemnify any person who was or is a party to any
threatened, pending or completed action, suit or proceeding whether
civil, criminal, administrative or investigative except for an action by
or in right of the corporation by reason of the fact that he or she is
or was a director, officer, employee or agent of the corporation.
Generally, no indemnification may be made where the person has been
determined to be negligent or guilty of misconduct in the performance of
his or her duties to the Company.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers or
controlling persons, pursuant to the foregoing provisions, or
otherwise, we have been advised that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy
as expressed in the Securities Act of 1933, and is, therefore,
unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We estimate that expenses in connection with this registration
statement will be as follows:
SEC registration fee* $ 72
Accounting fees and expenses $ 1,500
Legal $ 10,000
Miscellaneous* $ 2,428
Total $ 14,000
* estimates
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ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The following information is furnished with regard to all securities
sold by us within the past three years that were not registered under
the Securities Act. The issuances described hereunder were made in
reliance upon the exemptions from registration set forth in Section 4(2)
of the Securities Act or Regulation D, Rule 504 of the Securities Act.
None of the foregoing transactions involved a distribution or public
offering.
Date Name # of Shares Total Price
- ----------------------------------------------------------------------
8/9/01 Meredith Dodrill 5,000,000 *
9/10/01 Carol Dodrill 75,000 $1,500
9/10/01 Gina Stelluti 15,000 $300
9/10/01 Diane Sawchuk 15,000 $300
9/10/01 Haley Stelluti 15,000 $300
9/10/01 Ron Sawchuk 25,000 $500
9/9/01 Terese Rosati 6,250 $125
9/10/01 Lou Rosati 5,000 $100
10/15/01 Phil Dee 12,500 $250
10/15/01 Sandra Dee 12,500 $250
10/19/01 Greg Stein 25,000 $500
10/19/01 Chris Sawchuk 12,500 $250
10/19/01 Kim Sawchuk 12,500 $250
10/17/01 Beverly Roberts 25,000 $500
10/31/01 Norm Hope 25,000 $500
11/21/01 David Graham 25,000 $500
12/17/01 Adam Runsdorf 25,000 $500
12/28/01 Todd Graham 6,250 $125
12/28/01 Andrew Graham 6,250 $125
12/31/02 Adam Palmer 10,000 $500
12/31/02 Jay Soffin 5,000 $250
12/31/02 Edward Renzulli 5,000 $250
12/31/02 Tristina Elmes 5,000 $250
12/31/02 Brian Lipshy 5,000 $250
12/31/02 William Gross 5,000 $250
12/31/02 Greg Stein 5,000 $250
12/31/02 Joseph Maguire 5,000 $250
12/31/02 Paula Goldberg 5,000 $250
12/31/02 Seth Ellis 5,000 $250
12/31/02 Lisa Wendell 5,000 $250
12/31/02 Allen Tate 5,000 $250
12/31/02 Scott Berger 5,000 $250
12/31/02 Dean Borg 5,000 $250
12/31/02 Brad Shraiberg 5,000 $250
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12/31/02 Paul Schattner 5,000 $250
12/31/02 Jeffrey Siegal 5,000 $250
12/31/02 Michael Feldman 5,000 $250
12/31/02 Ira Goldberg 5,000 $250
12/31/02 Robert Listokin 5,000 $250
1/06/03 Brad Olschansky 50,000 **
1/06/03 Scott Olschansky 50,000 **
* issued in exchange for payment of expenses totaling $10,000
** issued in connection with licensing agreement
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ITEM 27. EXHIBITS
Exhibit Number Description
- -------------- -----------
3.1 Articles of Incorporation of Advanced Sports
Technologies, Inc.
3.2 Bylaws of Advanced Sports Technologies, Inc.
3.3 Specimen certificate of the Common Stock of
Advanced Sports Technologies, Inc.
5.1 Opinion of Law Office of James G. Dodrill II, PA
as to legality of securities being registered
10.1 Licensing Agreement between the company and
Exerciting
23.1 Consent of Salberg & Company, PA
23.2 Consent of James G. Dodrill II, PA (included in
Exhibit 5.1)
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ITEM 28. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the Company pursuant to the
foregoing provisions, or otherwise, the Company has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy and as expressed in the Act
and is, therefore, unenforceable.
The Company hereby undertakes to:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
i. Include any prospectus required by Section 10(a)(3) of
the Securities Act;
ii. Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information in the registration
statement.
iii. Include any additional or changed material information
on the plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at
that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
(4) For determining any liability under the Securities Act,
treat the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the Company under
Rule 424(b)(1) or (4) or 497(h) under the Securities Act as part
of this registration statement as of the time the Commission
declared it effective.
(5) For determining any liability under the Securities Act,
treat each post-effective amendment that contains a form of
prospectus as a new registration statement for the securities
offered in the registration statement, and that offering of the
securities at that time as the initial bona fide offering of
those securities.
(6) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Act") may be permitted to our
directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised by the
Securities and Exchange Commission that such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by us of expenses incurred or paid by one of
our directors, officers or controlling persons in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
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Signatures
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable ground to believe that it
meets all of the requirements for filing on Form SB-2 and authorized
this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boca Raton
state of Florida, on August 27, 2003.
ADVANCED SPORTS TECHNOLOGIES, INC.
By: /s/ Curtis Olschansky
----------------------
Curtis Olschansky
Principal Executive Officer,
President, Principal Financial
Officer, Principal Accounting
Officer and Director
In accordance with the requirements of the Securities Act of 1933,
this registration statement has been signed by the following person in
the capacities indicated on August 27, 2003.
/s/ Curtis Olschansky Principal Executive Officer, President,
---------------------- Principal Financial Officer, Principal
Curtis Olschansky Accounting Officer and Director
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