________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2009
o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number: 000-52763
ALLSTAR RESTAURANTS
(Exact name of Small Business Issuer as Specified in its Charter)
|
Nevada
|
20-2638087
|
|
(State or Other Jurisdiction
of Incorporation or
Organization)
|
(I.R.S. Employer
Identification
Number)
|
1458 Broad Street, Regina, Sask. S4R 1Y9, Canada
(Address of registrant's principal executive offices)
306-529-2652
(Issuer’s Telephone Number, Including Area Code)
Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
x
No
o
Indicate by check mark whether the Issuer is a shell company (as defined by Rule 12b-2 of the Exchange Act).
Yes
o
No
x
State the number of shares outstanding of each of the Issuers classes of common equity, as of the latest practicable date:
Common, $.001 par value per share: 9,950,000 outstanding as of
February 5, 2010.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
ALLSTAR RESTAURANTS
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
|
ALLSTAR RESTAURANTS
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
March 31,
|
|
|
|
|
2009
|
|
|
2009
|
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
Cash
|
|
$
|
60,950
|
|
|
$
|
22,443
|
|
|
Accounts receivable - other
|
|
|
-
|
|
|
|
425
|
|
|
Inventory - total
|
|
|
19,242
|
|
|
|
15,980
|
|
|
Prepaids
|
|
|
8,709
|
|
|
|
9,334
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS
|
|
|
88,901
|
|
|
|
48,182
|
|
|
|
|
|
|
|
|
|
|
|
|
NET FIXED ASSETS
|
|
|
110,939
|
|
|
|
142,065
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
6,521
|
|
|
|
5,415
|
|
|
Debt offering costs
|
|
|
1,229
|
|
|
|
1,361
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OTHER ASSETS
|
|
|
7,750
|
|
|
|
6,776
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
207,590
|
|
|
$
|
197,023
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
74,164
|
|
|
$
|
47,471
|
|
|
SBL loan - current portion
|
|
|
31,970
|
|
|
|
25,335
|
|
|
Shareholder's loan
|
|
|
55,999
|
|
|
|
61,591
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
162,133
|
|
|
|
134,397
|
|
|
|
|
|
|
|
|
|
|
|
|
LONG TERM LIABILITIES
|
|
|
|
|
|
|
|
|
|
Long term debt - SBL loan
|
|
|
50,627
|
|
|
|
62,228
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
212,760
|
|
|
|
196,625
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDER'S EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
Common stock; 75,000,000 shares authorized at $0.001 par value,
|
|
|
|
|
|
|
|
|
|
9,950,000 and 9,950,000 shares issued and outstanding,
|
|
|
|
|
|
|
|
|
|
respectively (Note 3)
|
|
|
9,950
|
|
|
|
9,950
|
|
|
Additional paid-in capital
|
|
|
165,046
|
|
|
|
156,098
|
|
|
Currency Translation
|
|
|
2,148
|
|
|
|
(699
|
)
|
|
Retained Earnings (Deficit)
|
|
|
(182,314
|
)
|
|
|
(164,951
|
)
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
(5,170
|
)
|
|
|
398
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
$
|
207,590
|
|
|
$
|
197,023
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-1
|
ALLSTAR RESTAURANTS
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES
|
|
$
|
379,354
|
|
|
$
|
320,286
|
|
|
$
|
997,173
|
|
|
$
|
992,968
|
|
|
COST OF SALES
|
|
|
102,805
|
|
|
|
95,800
|
|
|
|
283,324
|
|
|
|
304,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
276,549
|
|
|
|
224,486
|
|
|
|
713,849
|
|
|
|
688,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payroll expenses & benefits
|
|
|
160,186
|
|
|
|
127,715
|
|
|
|
438,651
|
|
|
|
405,183
|
|
|
Professional fees
|
|
|
7,274
|
|
|
|
8,824
|
|
|
|
35,059
|
|
|
|
37,621
|
|
|
General administrative expenses
|
|
|
16,873
|
|
|
|
14,003
|
|
|
|
53,564
|
|
|
|
60,601
|
|
|
Marketing & advertising
|
|
|
20,665
|
|
|
|
14,165
|
|
|
|
40,685
|
|
|
|
38,954
|
|
|
Depreciation & amortization
|
|
|
22,588
|
|
|
|
20,621
|
|
|
|
64,415
|
|
|
|
67,624
|
|
|
Rent & utilities
|
|
|
28,403
|
|
|
|
24,958
|
|
|
|
79,569
|
|
|
|
79,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING EXPENSES
|
|
|
255,989
|
|
|
|
210,286
|
|
|
|
711,943
|
|
|
|
689,948
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS
|
|
|
20,560
|
|
|
|
14,200
|
|
|
|
1,906
|
|
|
|
(1,445
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
6,792
|
|
|
|
7,651
|
|
|
|
19,269
|
|
|
|
29,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OTHER EXPENSES
|
|
|
6,792
|
|
|
|
7,651
|
|
|
|
19,269
|
|
|
|
29,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BEFORE INCOME TAXES
|
|
|
13,768
|
|
|
|
6,549
|
|
|
|
(17,363
|
)
|
|
|
(31,117
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME TAXES
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
13,768
|
|
|
$
|
6,549
|
|
|
$
|
(17,363
|
)
|
|
$
|
(31,117
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of common stock
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common shares outstanding
|
|
|
9,950,000
|
|
|
|
9,950,000
|
|
|
|
9,950,000
|
|
|
|
9,950,000
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-2
|
ALLSTAR RESTAURANTS
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Comprehensive
|
|
|
|
|
Common Stock
|
|
|
Paid In
|
|
|
Income
|
|
|
Accumulated
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
(Loss)
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, MARCH 31, 2009
|
|
|
9,950,000
|
|
|
$
|
9,950
|
|
|
$
|
156,098
|
|
|
$
|
(699
|
)
|
|
$
|
(164,951
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Imputed interest on shareholder loan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
credited to contributed capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
-
|
|
|
|
-
|
|
|
|
3,735
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
-
|
|
|
|
-
|
|
|
|
5,213
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on currency translation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,847
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss for the nine months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 (unaudited)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(17,363
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, DECEMBER 31, 2009
|
|
|
9,950,000
|
|
|
$
|
9,950
|
|
|
$
|
165,046
|
|
|
$
|
2,148
|
|
|
$
|
(182,314
|
)
|
The accompanying notes are an integral part of these consolidated financial statements.
F-3
|
ALLSTAR RESTAURANTS
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
(Unaudited)
|
|
|
|
|
For the Nine Months Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(17,363
|
)
|
|
$
|
(31,117
|
)
|
|
Adjustments to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
|
used by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation & Amortization
|
|
|
64,415
|
|
|
|
67,624
|
|
|
Contribution of Interest
|
|
|
3,735
|
|
|
|
10,460
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in accounts receivable - other
|
|
|
425
|
|
|
|
621
|
|
|
Increase in Inventory
|
|
|
-
|
|
|
|
-
|
|
|
Decrease (increase) in prepaids
|
|
|
2,532
|
|
|
|
-
|
|
|
(Increase) decrease in deposits
|
|
|
76
|
|
|
|
-
|
|
|
Decrease in debt offering costs
|
|
|
-
|
|
|
|
-
|
|
|
Increase (decrease) in accounts payable
|
|
|
26,692
|
|
|
|
(11,384
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
|
80,512
|
|
|
|
36,204
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Purchase of fixed assets
|
|
|
(6,209
|
)
|
|
|
(14,258
|
)
|
|
|
|
|
|
|
|
|
|
|
|
New Cash (Used) by Investing Activities
|
|
|
(6,209
|
)
|
|
|
(14,258
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Payments on SBL loan
|
|
|
(22,843
|
)
|
|
|
(16,623
|
)
|
|
Payments on Shareholder loan
|
|
|
(18,166
|
)
|
|
|
(19,762
|
)
|
|
Contributed Capital
|
|
|
5,213
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash (Used) by Financing Activities
|
|
|
(35,796
|
)
|
|
|
(36,385
|
)
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH
|
|
|
38,507
|
|
|
|
(14,439
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH, BEGINNING OF PERIOD
|
|
|
22,443
|
|
|
|
49,722
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH, END OF PERIOD
|
|
$
|
60,950
|
|
|
$
|
35,283
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH PAID FOR DURING THE PERIOD:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
15,534
|
|
|
$
|
19,212
|
|
|
Income Taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
NON CASH FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Interest contributed by stockholder
|
|
$
|
3,735
|
|
|
$
|
10,460
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-4
ALLSTAR RESTAURANTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009 and 2008
|
1.
|
BASIS OF FINANCIAL STATEMENT PRESENTATION
|
The accompanying unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim consolidated
financial statements be read in conjunction with the Company’s most recent audited consolidated financial statements and notes thereto as of March 31, 2009. Operating results for the nine months ended December 31, 2009 are not necessarily indicative of the results that may be expected for the year ending March 31, 2010.
|
2.
|
DESCRIPTION OF THE BUSINESS
|
The company was incorporated December 22, 2004 under the laws of the state of Nevada as Nexstar Properties Inc. The company name was changed to Allstar Restaurants on March 30, 2005. Allstar Restaurants was established to pursue opportunities in the full-service segment of the restaurant and food services industry
with the objective of developing into a multi-unit restaurant and food services operation.
The company commenced operations with its first restaurant acquisition as of July 1, 2005. On July 1, 2005, a wholly owned subsidiary, Fastserve Foods Inc., incorporated under the laws of the province of Saskatchewan, Canada, in the City of Regina, was acquired. Fastserve Foods Inc., which changed its name to China Doll Foods Ltd. during
the previous fiscal period, operates an established restaurant and sports lounge called China Doll Restaurant and Lounge, located in the City of Regina, in the province of Saskatchewan, Canada. This subsidiary acts as an operating company for all business activities relating to the company’s restaurant businesses in Canada.
As of December 31, 2009, the company has authorized 75,000,000 common voting shares each with a par value of $0.001. As of the period ended December 31, 2009, the company had 9,950,000 common shares outstanding.
|
4.
|
RELATED PARTY TRANSACTIONS
|
The total outstanding balance of the shareholder loan as at December 31, 2009 is $55,999. This shareholder loan carries no set terms of principal repayment. The shareholder does not expect to make a specific claim on the interest for this loan during the current year or foreseeable future. Imputed Interest for the most recent six months
period ended has been recorded on the balance sheet at the rate of 9.00 % on the outstanding loan balance. Additional Paid-In Capital in the form of imputed interest on the shareholder loan was recorded. The total of this cost is shown on the balance sheet as Additional Paid-In Capital of $3,735 and in the income statement as interest expense.
On July 1, 2005, a wholly owned subsidiary, Fastserve Foods Inc., incorporated under the laws of the province of Saskatchewan, Canada, in the City of Regina, was acquired. Fastserve Foods Inc. operates an established restaurant and sports lounge called China Doll Restaurant and Lounge, located in the City of Regina, in the province
of Saskatchewan, Canada. This subsidiary, now known as China Doll Foods Ltd., currently acts as the operating entity for all business activities relating to the company’s restaurant businesses in Canada. The acquisition was executed by exchanging all (100%) of the issued and outstanding common shares (100) of Fastserve Foods Inc., for 5,000,000 common shares issued by Allstar Restaurants. As stated, the majority shareholder is currently the Chairman of the Board and Chief Executive Officer of
Allstar Restaurants. As of the date of this filing, the shareholder holds a total of 5,100,000 common shares of Allstar Restaurants.
F-5
ALLSTAR RESTAURANTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009 and 2008
|
5.
|
FOREIGN CURRENCY TRANSLATIONS
|
The Company’s functional currency is the Canadian dollar. The Company’s reporting currency is the U.S. dollar. All transactions initiated in other currencies are re-measured into the functional currency as follows:
Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date,
ii) Non-monetary assets and liabilities, and equity at historical rates, and
iii) Revenue and expense items at the average rate of exchange prevailing during the period.
Gains and losses on re-measurement are included in determining net income for the period
Translation of balances from the functional currency into the reporting currency is conducted as follows:
Assets and liabilities at the rate of exchange in effect at the balance sheet date,
ii) Equity at historical rates, and
iii) Revenue and expense items at the average rate of exchange prevailing during the period.
Translation adjustments resulting from translation of balances from functional to reporting currency are accumulated as a separate component of shareholders’ equity as a component of comprehensive income or loss.
The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. For the nine months period ended December 31, 2009 the Company has incurred
a net loss of $(17,363) and losses from operations in recent prior periods. The company’s current liabilities exceed its current assets by $73,232. These factors may create uncertainty about the Company's ability to continue as a going concern. In order to continue as a going concern and achieve a profitable level of operations, the Company will require, among other things, additional capital resources. Management's plans to obtain such resources for the Company include (1) Issuing promissory notes in exchange
for additional shareholder loans; (2) conversion of existing promissory notes into common stock; (3) the company will actively seek to execute additional acquisitions of established restaurant businesses that present opportunities for additional cash flow and value creation via marketing and operational enhancements. However, at this time it is anticipated that any future acquisition(s) will not be executed prior to the end of the fiscal year ended 2010.
Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable
operations.
Management has evaluated subsequent events as of February 5, 2010 and has determined there are no subsequent events to be reported.
F-6
Item 2. Management’s
Discussion and Analysis or Plan of Operation.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto contained elsewhere in this Form 10-Q.
Forward-Looking Statements
This discussion contains forward-looking statements that involve risks and uncertainties. All statements regarding future events, our future financial performance and operating results, our business strategy and our financing plans are forward-looking statements. In many cases, you can identify forward-looking statements by terminology,
such as “may”, “should”, “expects”, “intends”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology. These statements are only predictions. Known and unknown risks, uncertainties and other factors could cause our actual results to differ materially from those projected in
any forward-looking statements. We do not intend to update these forward-looking statements.
Overview
Allstar Restaurants
,
(referred to herein as the “Company”, “Allstar”, “we”, “us” and “our”) is primarily engaged in the restaurant business located in the city of Regina, in the province of Saskatchewan, Western Canada.
We were incorporated on December 22, 2004 under the laws of the State of Nevada originally under the name Nexstar Properties, Inc. By Director’s resolution, on March 30, 2005, the company’s name was changed to Allstar Restaurants. The company’s United States registered office is located at 3155 East Patrick Lane, Suite 1,
Las Vegas, Nevada 89120-3481. Our principal executive offices are located at 1458 Broad Street, Regina, Saskatchewan, S4R 1Y9, Canada. The telephone number for our executive office is 306.529.2652. The fax number is 306.352.1597.
We are a restaurant company with the objective of developing into a multi-unit full-service restaurant and food services business. The company was established to pursue opportunities in the family style full-service casual dining segment of the restaurant industry. Allstar Restaurants, through a wholly owned subsidiary called Fastserve Foods
Inc., acquired on July 1, 2005, currently owns and operates an established restaurant and licensed lounge called China Doll Restaurant and Lounge. This restaurant is located in the city of Regina, in the province Saskatchewan, Canada. This subsidiary, which recently changed its name to China Doll Foods Ltd., currently acts as the operating company for all business activities relating to the company’s restaurant business(s) in Western Canada. The China Doll Restaurant is currently the only restaurant location
operated and wholly-owned by Allstar Restaurants.
We have received a going concern opinion from our auditors which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. For the nine months period ended December 31, 2009, the Company had a net loss of $(17,363) and an accumulated retained earnings deficit as at December
31, 2009 of $(182,314). The Company intends to fund operations over the next nine to twelve months through improved cash flow generated from operations as well as equity financing arrangements, both of which may be insufficient to fund its capital expenditures, working capital and other cash requirements over the next three months to the year ending March 31, 2010. Please refer to Note 6, “Going Concern”, accompanying the financial statements.
The discussion below provides an overview of our operations, discusses our results of operations, our plan of operations and our liquidity and capital resources.
Results of Operations
Overview - Quarter ended December 31, 2009
Total sales
for the three months ended December 31, 2009 were $379,354 compared to $320,286 in sales for the three months ended December 31, 2008, representing an 18.4 % increase in period-over-period sales. Gross profit, herein defined as sales less cost of sales, was $276,549 for
the three months ended December 31, 2009, compared to $224,486 in gross profit for the three months ended December 31, 2009. Our gross profit margin improved slightly to 72.9 %
for the three months ended December 31, 2009 from 70% for the three months ended December 31, 2008. Our operating expenses were $255,989 for the three months ended December 31, 2009 compared to operating expenses of $210,286 for the three months ended December 31, 2008. Operating expenses increased primarily as a result of a 25% increase
in payroll expenses for the period. Our more aggressive marketing campaign for the period resulted in a 45 % increase in marketing and advertising expenses.
We realized a net gain of $13,768, for the three months ended December 31, 2009 compared to a net gain of $6,549 for the three months period ended December 31, 2008.
Overview – Nine months ended December 31, 2009
Total sales
for the nine months ended December 31, 2009 were $997,173 compared to $992,968 in sales for the nine months ended December 31, 2008. Gross Profit, defined as sales less cost of sales, was $713,849 for the nine months ended December 31, 2009, compared to $688,503 in gross
profit for the nine months ended December 31, 2008.
Our operating expenses were $711,943 for the nine months ended December 31, 2009 compared to operating expenses of $689,948 for the nine months ended December 31, 2008. Operating expenses increased during the nine months ended December 31, 2009 primarily due to an 8.3 % increase in payroll expenses and benefits. Depreciation and amortization
expense had decreased from $67,624 for the nine months ended December 31, 2008 to $64,415 for the nine months ended December 31, 2009 due to reduced fixed asset additions during the period. Our general administrative expenses for the nine months period ended December 31, 2009 decreased to $53,564 as compared to $60,601 for the same period in 2008. Interest expense for the nine months ended December 31, 2009 decreased to $19,269 from $29,672 for the nine months ended December 31, 2008 due to continued debt reduction
payments on both the small business loan and shareholder loans.
We realized a total net loss of $(17,363) for the nine months ended December 31, 2009 compared to a net loss of $(31,117) for the nine months period ended December 31, 2008.
Operations Outlook
The Company's plan of operations and primary objective for the next three months to the fiscal period ending March 31, 2010 is to increase its existing restaurant location sales while continuing to control costs. We will also begin to analyze prospects for acquiring additional restaurant locations to either extend our existing brand concept
or look to acquire other existing established restaurant operations.
For our existing restaurant operation, the company intends to reach its sales objectives as follows:
|
|
●
|
Continue to maintain our marketing expenditures moving in to the fourth quarter (January) of our fiscal year. We will continue to focus our marketing efforts on continuing to position our restaurant business based on the quality of our core Chinese food menu items as well as our superior customer service both for the dine-in and takeout segments of our business. We will accomplish this by emphasizing the
message of “quality with great service” in our ongoing radio, on-line, and direct mail campaigns.
|
|
|
●
|
Continue to focus on improving overall customer satisfaction measures through enhanced management and customer service training processes,
|
|
|
●
|
Focus on continuing to expand our city-wide delivery and takeout service concept by improving efficiency and utilizing creative and aggressive marketing initiatives,
|
|
|
●
|
Continue to streamline and standardize our cost and accounting controls systems and procedures.
|
Allstar Restaurants’ objective and plan for our existing restaurant operation, the China Doll Restaurant, is to continue to strive to increase restaurant sales through increased customer counts in each primary day-part (lunch, dinner and late-night, takeout), selective menu and price promotions and effective marketing of China Doll Restaurant’s
competitive attributes of high quality food products, superior taste and value pricing. Management will continue to
standardize and document operations procedures with the objective of extending the China Doll Restaurant brand in the future to either additional corporate-owned locations or explore the feasibility of future franchise offerings. We believe that we will have sufficient revenue and cash flow to pay our operating expenses for the next twelve
months. We anticipate that we may have an opportunity to raise additional capital to expand our operations through equity financings. However, we cannot guarantee that we will be able to raise that capital, in which case some of our operational plans may be required to be altered or even curtailed.
Liquidity and Capital Resources
Overview – Nine Months Ended December 31, 2009
For the nine months period ended December 31, 2009, net cash balance was $60,950. Net cash provided by operating activities for the nine months period ended December 31, 2009 was $80,512. The increase in cash provided by operating activities for the nine months period ended December 31, 2009 was due to increased sales and net gain in the most
recent three months of operations combined with a relative decrease in payments on accounts payable as compared to the nine months ended December 31, 2008.
Cash (used) by investing activities during the nine months ended December 31, 2009 was $(6,209). Net cash (used) by investing activities for the nine months ended December 31, 2008 was $(14,258).
Net cash (used) by financing activities for the nine months ended December 31, 2009 was $(35,796). Net cash (used) by financing activities for the period ending December 31, 2008 was $(36,385). For the nine months period ended December 31, 2009 we continued to make payments to reduce both the small business loan (SBL) as well as the outstanding
shareholder loan while receiving $5,213 in cash proceeds from contributed capital.
As at December 31, 2009 we had $60,950 in cash, compared to $35,283 in cash as at December 31, 2008. We had a negative working capital of $(73,232) as at December 31, 2009 compared to a negative working capital of $(120,923) as at December 31, 2008.
.
We will continue to have professional fees which include accounting, auditing, legal, and statutory filing fees, and those fees may increase because of our reporting status and the required filings for requisite quarterly and annual reports with the Securities and Exchange Commission. We expect
that we will have additional filings whereby our auditors may be required to prepare further financial reports. We are aware that audit fees have generally increased as a function of the increased reporting requirements mandated by the Sarbanes-Oxley Act. We are optimistic that our business activities will increase, which will require auditing procedures over a greater transaction base. We expect our other administrative expenses to increase in the next quarter as our legal fees may increase as we
further our strategic goals and additional advice and/or opinions may be required.
Other Information - Certain Relationships and Related Transactions
We intend that any transactions
between us and our officers, directors, principal stockholders, affiliates or advisors will be on terms no less favorable to us than those reasonably obtainable from third parties. To date, the following related
party
transactions have taken place.
As noted in Note 4 of the Consolidated Financial Statements of December 31, 2009: During the nine months ended December 31, 2009, the principal shareholder provided no additional loans to the company. The total outstanding balance of the shareholder loans as at December 31, 2009 is $55,999 and the full amount is shown as a current liability
on the balance sheet. This shareholder loan carries interest but has no set terms of principal repayment. The shareholder does not expect to make a specific claim on the interest for this loan during the current year or foreseeable future. Imputed Interest on the shareholder loan for the three months period ended has been recorded on the income statement as interest expense at the rate of 9.00 % on the outstanding loan balance for the nine months ended December 31, 2009. This imputed interest in the amount of
$3,735 was recorded on the balance sheet in the form of Additional Paid-In Capital.
On October 4
th
, 2007, we received clearance from the NASD to have our securities trade publicly on the Over-the-Counter Bulletin Board exchange under the symbol AREN.OB. There is no assurance that a liquid trading market will develop, or, if developed, that it will
be sustained. A purchaser of our shares may, therefore, find it difficult to resell our shares publicly should he or she desire to do so. Furthermore, our shares are not marginal and it is unlikely that a lending institution would accept our common stock as collateral for a loan.
Item 3. Controls and Procedures.
Management has evaluated, with the participation of our Principal Executive Officer and Principal Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) as of the end of the period covered by this report. Based upon this evaluation, our Principal Executive
Officer and Principal Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. There have been no significant changes in our internal controls over financial reporting that occurred during
the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material pending legal proceedings to which the Company is a party or to which any of its property is subject.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security-Holders
.
None.
Item 5. Other Information.
None.
Item 6. Exhibits.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
ALLSTAR RESTAURANTS
(Registrant)
Dated: February 5, 2010
By:
/s/
Terry G. Bowering
Terry G. Bowering, Chief Executive Officer
(Principal Executive Officer) Chief Financial Officer,
Chief Accounting Officer (Principal Financial Officer)
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