Attached files
As
filed with the Securities and Exchange Commission on July 8, 2010
Registration
No. ___________
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_______________________
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
______________________
FOUR
STAR HOLDINGS, INC.
(Exact
name of registrant as specified in its charter)
________________________
|
FLORIDA
(State
or other jurisdiction of
incorporation
or organization)
|
1531
(Primary
Standard Industrial
Classification
Code Number)
|
26-1427633
(I.R.S.
Employer
Identification
No.)
|
100
Four Star Lane
Odenville
AL 35120
(205) 640-3726
(Address,
including zip code, and telephone number, including area code, of registrant's
principal executive offices)
Bobby
R. Smith, Jr.
Chairman
of the Board, Chief Executive Officer, and Treasurer
100
Four Star Lane
Odenville
AL 35120
(205) 640-3726
(Name,
address, including zip code, and telephone number including area code, of agent
for service)
__________________________
With
a copy to:
Law
Offices of Joseph L. Pittera
2214
Torrance Boulevard
Suite
101
Torrance,
California 90501
Telephone
(310) 328-3588
Facsimile
(310) 328-3063
Approximate
date of commencement of proposed sale to the public: From time to
time after this Registration Statement is declared effective.
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.
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 the 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.
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) 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.
If
delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer o Accelerated
filer
o
Non-accelerated
filer o Smaller
reporting company x
(Do not
check if a smaller reporting company)
CALCULATION
OF REGISTRATION FEE
|
|
|
Proposed
|
Proposed
Maximum
|
|
|
|
|
|
Maximum
|
Aggregate
|
Amount
of
|
|
| Title and Class of | Amount to |
Offering
Price
|
Offering
|
Registration
|
|
|
Securities
Registered
|
Be Registered |
per
Security (1)
|
Price
(1)
|
Fee | |
|
Common
Stock
|
|||||
|
No
Par Value
|
|||||
|
Prospectus
|
2,000,000
|
$5.00
|
$10,000,000
|
$7,130
|
|
|
Fran
Mize
|
3,000,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Bobby
R. Smith Jr.
|
3,000,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Superior
Hotels, Inc.
|
900,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Private
Resources, LLC
|
2,250,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Richard
Lee Barnes Esq
|
1,500,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Martin
W. Smith
|
1,500,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Joe
Pittera
|
200,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Al
Rhoney
|
590,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Doug
Drennen
|
590,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Laura
Shelton
|
590,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Kathy
Burttram
|
590,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Casie
New
|
590,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
GM
Holdings, Inc.
|
1,500,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Angelic
Holdings, LLC
|
300,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Issued
Shares
|
2,000,000
|
$5.00
|
$10,000,000
|
$7,130
|
|
| Issued Shares | 17,100,000 | $0.00 | $0.00 | $0.00 |
(1)
Estimated
solely for purposes of calculating the amount of the registration
fee.
(2) As
per officers compensation package
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 this registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The
information in this preliminary prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This preliminary prospectus is
not an offer to sell, and we are not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
P R O S P E C T U S
FOUR
STAR HOLDINGS, INC.
OFFERING
OF 2,000,000 SHARES OF COMMON STOCK
The name
of our Company is Four Star Holdings, Inc. We are offering from time
to time 2,000,000 shares of our Common Stock at $5.00 per share. No
additional payment is required in connection with a conversion. We
will not pay any dividends on the Common Stock unless otherwise stated in a
resolution executed by officers/directors.
The
shares are being offered through our executive officers pursuant to an exemption
as a broker/dealer under Rule 3a 4-1 of the Securities Exchange
Act. There is no minimum offering. Proceeds from the sale
of the shares, up to $10,000,000 if all the shares offered are sold, will not be
placed in an escrow account and may be used by us upon receipt. We
are offering the shares from time to time on a continuous basis, but we may
terminate the offering at any time.
Prior to
this offering, there has been no public market for our common stock and there
can be no assurance that any such market will develop.
|
|
|
Proposed
|
Proposed
Maximum
|
|
|
|
|
|
Maximum
|
Aggregate
|
Amount
of
|
|
| Title and Class of | Amount to |
Offering
Price
|
Offering
|
Registration
|
|
|
Securities
Registered
|
Be Registered |
per
Security (1)
|
Price
(1)
|
Fee | |
|
Common
Stock
|
|||||
|
No
Par Value
|
|||||
|
Prospectus
|
2,000,000
|
$5.00
|
$10,000,000
|
$7,130
|
|
|
Fran
Mize
|
3,000,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Bobby
R. Smith Jr.
|
3,000,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Superior
Hotels, Inc.
|
900,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Private
Resources, LLC
|
2,250,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Richard
Lee Barnes Esq
|
1,500,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Martin
W. Smith
|
1,500,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Joe
Pittera
|
200,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Al
Rhoney
|
590,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Doug
Drennen
|
590,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Laura
Shelton
|
590,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Kathy
Burttram
|
590,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Casie
New
|
590,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
GM
Holdings, Inc.
|
1,500,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Angelic
Holdings, LLC
|
300,000
|
$0.00
|
$0.00
|
$0.00
|
|
|
Issued
Shares
|
2,000,000
|
$5.00
|
$10,000,000
|
$7,130
|
|
| Issued Shares | 17,100,000 | $0.00 | $0.00 | $0.00 |
The
purchase of the securities offered through this prospectus involves a high
degree of risk. You should carefully read and consider the section of this
prospectus titled “Risk Factors” beginning on page 13 before buying any of our
securities.
The
information in this prospectus is not complete and may be changed. We may not
sell or offer 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 where the offer or sale is not permitted.
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.
Subject
to Completion, Dated __________, 20__
The
following table of contents has been designed to help you find important
information contained in this prospectus. We encourage you to read the entire
prospectus.
This
prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission. The registration statement containing this prospectus,
including the exhibits to the registration statement, also contains additional
information about Four Star Holdings, Inc. and the securities offered under this
prospectus. That registration statement can be read at the Securities and
Exchange Commission's website (located at www.sec.gov) or at
the Securities and Exchange Commission’s Public Reference Room mentioned under
the heading “Where You Can Find More Information” of this prospectus. This
document will also register all stock issued with evidence by a certified
shareholders list.
You
should rely only on the information contained in this document or to which we
have referred you. We have not authorized anyone to provide you with information
that is different. This document may only be used where it is legal to sell
these securities. The information in this document may only be accurate on the
date of this document. Our business, financial condition or results of
operations may have changed since that date.
Except as
otherwise indicated, market data and industry statistics used throughout this
prospectus are based on independent industry statistics or other publicly
available information. We do not guarantee, and we have not independently
verified this information. Accordingly, investors should not place undue
reliance on this information.
REFERENCES
As used
in this prospectus: (i) the terms “we”, “us”, “our”, and the “Company” mean Four
Star Holdings, Inc.; (ii) “SEC” refers to the Securities and Exchange
Commission; (iii) “Securities Act” refers to the United States Securities Act of 1933, as
amended; (iv) “Exchange Act” refers to the United States Securities Exchange Act of
1934, as amended; and (v) all dollar amounts refer to United States
dollars unless otherwise indicated.
PROSPECTUS
SUMMARY OF PROSPECTUS
The
following summary highlights selected information contained in this prospectus.
This summary does not contain all the information you should consider before
investing in the securities. Before making an investment decision, you should
read the entire prospectus carefully, including the “Risk Factors” section, the
financial statements and the notes to the financial statements.
Four Star
Holdings, Inc. hereinafter referred to as “The Company”, and the term
“Management” is hereinafter referred to Bobby R. Smith, Jr. and Fran Mize,
collectively. Management has operated as one of the largest
developing and homebuilding companies in the Birmingham Alabama area. The
Company operates in four segments, Land Development, Structural Community
Planning, Homebuilding, and Realty Brokerage Services. As of March
31, 2010 the Company acquired Ridgefield Development Corporation and Four Star
Realty, LLC, owned by Smith and Mize (Management).
Four Star
Holdings, Inc sells it properties under its subsidiary Four Star Realty,
LLC. Management has been operating as officers and directors in
various real estate brokerage and development ventures since 1992. To date
Management has built over 1,100 single family homes, over 30 commercial
properties, and currently has two multifamily projects and one town home complex
under development.
In
December 2009 Management acquired majority control of a public company known as
Dragons Lair Holdings, Inc. which was founded in 2007. The result of that
transaction was the purchase of 74% of the Company’s common stock through a
Stock Purchase Agreement for the consideration of $325,000. This gave
authoritative control to Fran Mize, as President and Director and Bobby R.
Smith, Jr. its Chairman and CEO, The Company is headquartered in the Birmingham,
Alabama area.
The
banking industry, as a result of the Credit Crisis in the United States during
the last two years, has limited and in some cases discontinued funding in the
real estate development sector. Management’s solid foundation with
its lenders for over the past 15 years has enabled them to borrow over $200
million with a stellar performance in servicing this debt. However, even with
positive equity on the balance sheet Management’s primary lending institutions
shut down the majority of its available line of credit. This affected the
Company as it experienced slowed performance but did not stop the progress in
sales and/or production. This did however, trigger the Company’s interest in
going public to procure alternative financing for its expansion from other than
traditional bank financing methods.
Over the
past 18 months they have seen many of their Home Building Competitors dwindle
due to over leveraging and higher than normal carrying cost of inventory. The
Company’s conservative inventory levels have given it the ability to sell homes
at a better than average sale price compared to its competitors. To
make it possible for purchasers of some of the Company’s homes to obtain 100%
financing thru Rural Housing Development Loans, FHA-insured or VA-guaranteed
mortgages, the Company must construct these homes in compliance with regulations
promulgated by these agencies.
Today,
Birmingham ranks as one of the most important business centers in the nation and
is also home of one of the largest banking centers in the U.S. In addition, the
Birmingham area serves as headquarters to one Fortune 500 company: Regions
Financial and five Fortune 1000 companies.
Corporate
Structure
The
Land Development Subsidiary
The
acquisition and development of land has always been a primary focus of
Management and its companies. The recent acquisition of Ridgefield
Development demonstrates that management’s current holdings are poised to become
subsidiaries of The Company. All references to “inventory” or “product” are
referring to the development and/or construction of single family residences or
commercial sites that management will book into Four Star Holdings, Inc. as
revenue and/or assets.
The
intimate knowledge of the local areas enabled them to acquire parcels of land at
outstanding values before these same parcels became known to other potential
purchasers in the area. This combined with excellent working relationships
maintained with local zoning boards and County Commissioners enabled them to
develop these properties in a more efficient manner than those unfamiliar with
any local or county regulations. Of equal or greater importance in
today’s market, is Managements outstanding relationship with banks and other
lenders in the Southeast. While there are numerous opportunities
available for the purchase of distressed properties, not every “bargain”
purchase will produce profits. The ability to sift through these
opportunities requires a firsthand knowledge of “working the dirt” to know which
properties can be developed into income producing developments and which ones
will still be growing weeds for the next three to five years. Bobby
R. Smith, Jr. Four Star’s CEO owns “B & B Smith Construction” an excavation
company complete with earth moving equipment and contacts for leasing
heavier equipment as needed. The Company, through its own efforts and its
partnership interests, is involved in all phases of planning and building in its
residential communities and commercial projects including land acquisition, site
planning, preparation and improvement of land, and design, construction and
marketing of homes. The CEO, Bobby R. Smith, Jr. holds the General Contractor
license enabling B&B Smith Construction Company, Inc. to do most of the
development work in-house.
Realty
Brokerage Subsidiary:
Four Star
Realty, LLC (REALTY) is a wholly owned subsidiary of Four Star Holdings.
REALTY’s primary focus is a residential real estate Brokerage Company, providing
brokerage services to home buyers and sellers in the Birmingham Alabama area.
The Company also markets and sells its homes as well as other homes through
commissioned agents and independent outside real estate
brokers. Realty offers locality data and targeted information on new
home listings, home sales comparables and local school information through its
website images and virtual tours. The Company’s President Fran Mize
has almost 20 years in listing, marketing properties on behalf of sellers, as
well as assisting in negotiating, advising, transaction processing, and closing
activities.
Our
corporate structure is as set forth in the following chart:
Our
executive offices are located at 100 Four Star Lane, Odenville Alabama, U.S.A.,
35120, and our telephone number is (205) 640-7821.
|
The
Issuer:
|
Four
Star Holdings, Inc.
|
|
Stock
Offered:
|
2,000,000
Common Stock
|
|
Offering
price:
|
$5.00
per share
|
|
Liquidation
Preference:
|
$5.00
per share
|
|
Dividends:
|
There
are no dividends at the time of this offering; however Management reserves
the right to declare such an action.
|
|
Optional
Conversion:
|
No
conversion is declared at this time
|
|
Voting
Rights:
|
The
Common Stock will vote, on pro-rata basis on an “as converted basis”,
based on the percentage of common stock.
|
| Adoption of Series A Super Preferred |
The
shares of such series shall be designated as the "Series A Super Preferred
Stock" and the number of shares initially constituting such series shall
be up to One Hundred (100) shares. The Series A Super Preferred
Stock shall be senior to the common stock and any other series or class of
the Company’s preferred stock. No conversion rights. Voting rights are if
at least one share of Series A Preferred Stock is issued and outstanding,
then the total aggregate issued shares of Series A Preferred Stock at any
given time, regardless of their number, shall have voting rights equal to
66.6% of the total number of shares of Common Stock, plus the total number
of shares of all other series of stock, issued and outstanding at the time
of any vote of shareholders.
|
|
Adoption
of Series B:
|
Dividend
Shares: The attributes of this class of stock has no redemption and will
be issued to investors/shareholders that will have the right to a dividend
on the profitability of certain business transactions the Company
completes. Authorized 20 million. The attributes are dividend only with no
redemption into common and nonvoting
|
| Adoption of Series C: |
Convertible
Preferred. The attributes are 2:1 conversion with 2 year redemption into
common. Authorized 100 million
|
| Adoption of Series D: |
This
Series of stock will be for the purpose of getting trading authorization
on foreign exchanges and the stock will be used for that specific foreign
exchange. Total authorized will be 100 million. No conversion into common,
this series of stock will have no voting rights, no redemption into common
and will not trade in the United States.
|
|
Prior
to Offering:
Common
Stock Outstanding:
|
22,234,228
shares
|
|
Assuming
distribution and
sale
of all common stock.
|
39,384,228
shares
|
|
Estimated
Proceeds:
|
Because
this is a self underwritten offering with no minimum, we may receive up to
$10,000,000, if all 2,000,000 shares offered are sold.
|
|
Risk
Factors:
|
See
“Risk Factors” and the other information in this prospectus for a
discussion of the factors you should consider before deciding to invest in
our securities.
|
|
Use
of Proceeds:
|
We
intend to use the net proceeds of this offering for general corporate
purposes, including working capital. See “Use of Proceeds” for
additional information.
|
An
investment in our securities involves a number of very significant risks. You
should carefully consider the following risks and uncertainties in addition to
other information in this prospectus in evaluating our Company and its business
before purchasing our securities. Our business, operating results and financial
condition could be seriously harmed due to any of the following
risks. The risks described below may not be all of the risks facing
our Company. Additional risks not presently known to us or that we currently
consider immaterial may also impair our business operations. You could lose all
or part of your investment due to any of these risks.
Traditional
banking institutions are currently not funding development
properties. Available funding is currently equity or debenture
financing. We could face a high risk of business failure due to these
factors.
Four Star
Holdings, Inc sells it properties under its subsidiary Four Star Realty,
LLC Management has been operating as officers and directors in
various real estate brokerage and development ventures since 1992. To date
Management has built over 1,100 single family homes, over 30 commercial
properties, and currently have two multifamily projects and one town home
complex under development.
In
December 2009 Management acquired majority control of a public company known as
Dragons Lair Holdings, Inc. which was founded in 2007. The result of that
transaction was the purchase of 74% of the Company’s common stock through a
Stock Purchase Agreement for the consideration of $325,000. This gave
authoritative control to Fran Mize, as President and Director and Bobby R.
Smith, Jr. its Chairman and CEO, The Company is headquartered in the Birmingham,
Alabama area.
The
banking industry, as a result of the Credit Crisis in the United States during
the last two years, has limited and in some cases discontinued funding in the
real estate development sector. Management’s solid foundation with
its lenders for over the past 15 years has enabled them to borrow over $200
million with a stellar performance in servicing this debt. However, even with
positive equity on the balance sheet Management’s primary lending institutions
shut down the majority of its available line of credit. This affected the
Company as it experienced slowed performance but did not stop the progress in
sales and/or production. This did however, trigger the Company’s interest in
going public to procure alternative financing for its expansion from other than
traditional bank financing methods.
Over the
past 18 months they have seen many of their Home Building Competitors dwindle
due to over leveraging and higher than normal carrying cost of inventory. The
Company’s conservative inventory levels have given it the ability to sell homes
at a better than average sale price compared to its competitors. To
make it possible for purchasers of some of the Company’s homes to obtain 100%
financing through Rural Housing Development loans, FHA-insured or VA-guaranteed
mortgages, the Company must construct these homes in compliance with regulations
promulgated by these agencies.
Today,
Birmingham ranks as one of the most important business centers in the nation and
is also home of one of the largest banking centers in the U.S. In addition, the
Birmingham area serves as headquarters to one Fortune 500 company: Regions
Financial and five Fortune 1000 companies.
If
we experience unfavorable publicity or consumer perception of our development,
our operating results could fluctuate and our reputation could be adversely
affected, resulting in decreased sales.
We are
highly dependent upon consumer activity in the purchase of new homes and the
ability of the consumer to obtain adequate bank financing.
If
there is a shortage in the supply of key building materials, or drastic price
increases our business could be adversely affected.
If the
prices were to increase or availability of building materials to decrease
significantly, or our sub-contractors and suppliers relationships are terminated
it greatly put The Company in a jeopardous situation.
Material
prices may increase in the future and we may not be able to recoup from such
increases to our customers. A significant increase in the price of
materials that cannot be passed on to customers could have a material adverse
effect on our results of operations and financial condition. In
addition, if we no longer are able to obtain key materials from one or more of
our suppliers on terms reasonable to us or at all, our revenues could
suffer.
If
we fail to compete effectively, our sales and growth prospects could be
adversely affected.
The
housing market is highly sensitive to the shortage of bank funding and
foreclosed homes in the competing target area. Certain of our competitors may
have significantly greater financial, technical and marketing resources than we
do. In addition, our competitors may be more effective and efficient in
introducing newly constructed homes to the market. We may not be able to compete
effectively, and any of the factors listed above may cause price reductions,
reduced margins and losses of our market share.
If
we incur material liability claims, our costs could increase and our reputation,
sales and operating income could be adversely affected.
As a
developer and direct marketer of our homes, we are subject to liability claims
if the use of our construction is alleged to have resulted in injury, loss of
property or if disclosure warnings concerning warranties are deemed
inadequate.
Currently,
we do have liability insurance, even though the same insurance may be carried by
our suppliers and sub-contractors to cover certain liability claims against us,
such as, our newly constructed homes could contain contaminants.
Because
new legislation, including the Sarbanes-Oxley Act of 2002, increases the cost of
compliance with federal securities regulations as well as the risks of liability
to officers and directors, we may find it more difficult for us to retain or
attract officers and directors.
The
Sarbanes-Oxley Act of 2002 was enacted in response to public concerns regarding
corporate accountability in connection with recent accounting scandals. The
stated goals of the Sarbanes-Oxley Act are to increase corporate responsibility,
to provide for enhanced penalties for accounting and auditing improprieties at
publicly traded companies, and to protect investors by improving the accuracy
and reliability of corporate disclosures pursuant to the securities laws. The
Sarbanes-Oxley Act generally applies to all companies that file or are required
to file periodic reports with the Securities and Exchange Commission, under the
Securities Exchange Act of 1934, as amended. As a public company, we are
required to comply with the Sarbanes-Oxley Act of 2002 and it is costly to
remain in compliance with the federal securities
regulations. Additionally, we may be unable to attract and retain
qualified officers, directors and members of board committees required to
provide for our effective Management as a result of the Sarbanes-Oxley Act of
2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series
of rules and regulations by the SEC that increase responsibilities and
liabilities of directors and executive officers. The perceived increased
personal risk associated with these recent changes may make it more costly or
deter qualified individuals from accepting these roles. Significant costs
incurred as a result of becoming a public company could divert the use of
finances from our operations resulting in our inability to achieve
profitability.
We
may not receive enough capital from this offering to enable us to successfully
develop our properties and place newly constructed homes into the
marketplace, which means it could be difficult to continue operating our
business in a profitable manner.
We are
dependent on the availability of capital from this offering to proceed with our
plan to offer newly constructed homes to the marketplace. We are
selling the shares directly to the public without the use of a registered
broker/dealer firm. There is no minimum amount of shares which we have to sell
in this offering so we may not sell a sufficient number of shares to
successfully implement our business plan. We have no current arrangements with
respect to, or sources of additional capital, and there can be no assurance that
such additional capital will be available to us when needed. If we
are unable to obtain additional capital this could have a material adverse
effect on us.
Management
believes that we will require a minimum of $1,250,000 of available capital to
enter the marketplace with new construction. If such capital does not
become available from the proceeds of this offering or other such sources, we
cannot continue operations for the next 12 months from available cash on
hand. We have no commitments for additional capital as of the date of
this prospectus. Accordingly, investors are advised that the proceeds
of this offering may not be sufficient to enable us to maintain the existing
level of production and, if additional capital is not received within 12 months
from the date of this prospectus, we may have to curtail certain
operations.
We
have no arrangement or resources of additional capital and may have to curtail
certain operations if additional capital is not available when we need
it.
If we
succeed in our offering by 10%, we anticipate sales will generate sufficient
cash flow to support our operations for the next 24-30
months. However, this is based on our assumption of achieving
significant sales and there can be no assurance that such sales levels will be
achieved. Therefore, we may require additional financing through
loans and other arrangements, including the sale of additional common stock.
There can be no assurance that such additional financing will be available, or
if available, can be obtained on satisfactory terms. To the extent that any such
financing involves the sale of our equity securities, the interests of our then
existing shareholders, including the investors in this offering, could be
substantially diluted.
This
is a risky investment because there is no minimum number of shares that must be
sold in this offering.
Our
business is subject to changing consumer trends and preferences as well as bank
funding for new home buyers. Our failure to accurately predict or react to these
trends could negatively impact consumer opinion of us as a source for the latest
developments, which in turn could harm our customer interest in purchasing our
homes and cause us to lose market share. The success of our new home
construction depends upon a number of factors, including our ability
to:
|
•
|
anticipate
customer needs;
|
|
•
|
construct and
develop new types of homes;
|
|
•
|
successfully
build homes in a timely manner;
|
|
•
|
price
our homes and lots competitively;
|
|
•
|
construct
homes in sufficient volumes and in a timely manner
and
|
|
•
|
differentiate
our constructed homes from those of our
competitors.
|
If
a market for our common stock does not develop, shareholders may be unable to
sell their shares.
There is
presently no public market for our shares of common stock. There is no assurance
that a trading market will develop or be sustained. Accordingly, you may have to
hold the shares of common stock indefinitely and may have difficulty selling
them if an active trading market does not develop. However, our
shares of common stock may be limited in tradability on the Over-The-Counter
Bulletin Board, or, public market may not be consistent in price
and/or volume. To date we have not solicited any securities brokers
to become market makers of our common stock. If our common stock does
not develop or the market price of the common stock declines below the initial
public trading price, investors may not be able to re-sell the shares of our
common stock that they have purchased and may lose all of their
investment. The initial public trading price will be determined by
market makers independent of us.
If
shareholders sell a large number of shares all at once or in blocks after this
offering, the market price of our shares would most likely decline.
We are
offering 2,000,000 shares of our Common Stock, through this prospectus. Our
common stock is traded on the Over-the-counter-bulletin-board and our newly
appointed preferred stock is presently not traded on any market or securities
exchange, but should a market develop, shares sold at a price below the current
market price at which the common stock or preferred stock is trading will cause
that market price to decline. Moreover, the offer or sale of a large number of
shares at any price may cause the market price to fall. If all of the shares
offered in the offering are sold, the outstanding shares of common stock covered
by this prospectus will represent approximately 5% of the outstanding shares of
common stock as of the date of this prospectus.
Because
we will be subject to the “Penny Stock” rules once our shares are quoted on the
over-the-counter bulletin board, the level of trading activity in our shares of
common stock may be reduced.
Broker-dealer
practices in connection with transactions in “penny stocks” are regulated by
penny stock rules adopted by the Securities and Exchange Commission. Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on some national securities exchanges or quoted on
Nasdaq). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document that provides information about penny stocks and the
nature and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction,
and, if the broker-dealer is the sole market maker, the broker-dealer must
disclose this fact and the broker-dealers presumed control over the market, and
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, broker-dealers who sell these securities to
persons other than established customers and “accredited investors” must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
Consequently, these requirements may have the effect of reducing the level of
trading activity, if any, in the secondary market for a security subject to the
penny stock rules, and investors in our common stock may find it difficult to
sell their shares.
If
our shares are quoted on the over-the-counter bulletin board, we will be
required to remain current in our filings with the SEC and our securities will
not be eligible for quotation if we are not current in our filings with the
SEC.
In the
event that our shares are quoted on the Over-The-Counter Bulletin Board, we will be required to
remain current in our filings with the Securities and Exchange Commission in
order for the shares of our common stock to be eligible for quotation on the
Over-The-Counter Bulletin Board. In the event that we become delinquent in our
required filings with the Securities and Exchange Commission, quotation of our
common stock will be terminated following a 30 or 60 day grace period if we do
not make our required filing during that time. If our shares are not eligible
for quotation on the Over-The-Counter Bulletin Board, investors in our common
stock may find it difficult to sell their shares.
State
blue sky laws may limit your ability to resell our stock.
The “blue
sky” laws of some states may impose restrictions upon the ability of investors
to resell our shares in those states without registration or an exemption from
the registration requirements. Accordingly, investors may have difficulty
selling our shares and should consider the secondary market for our shares to be
a limited one.
The
offering price of $5.00 per share is speculative.
The
offering price of $5.00 per share has been arbitrarily determined by our
Management and does not bear any relationship to the assets, net worth or actual
or projected earnings of the Company or any other generally accepted criteria of
value.
We
do not pay any cash dividends.
We have
not paid any cash dividends on our common stock nor do we presently contemplate
the payment of any cash dividends. Accordingly, there can be no
assurance that you will receive any return from an investment in our Common
Stock. In the absence of the payment of dividends, any return on your investment
would be realized only upon your sale of our stock. We are not making
any representations that an investment in our stock will be profitable or result
in a positive return.
FORWARD-LOOKING
STATEMENTS
This
prospectus includes forward-looking statements that reflect our expectations and
projections about our future results, performance, prospects and opportunities.
These statements can be identified by the fact that they do not relate strictly
to historical or current facts. We have tried to identify forward-looking
statements by using words such as “anticipate,” “believe,” “could,” “estimate,”
“expect,” “intend,” “may,” “plan,” “project,” “should,” “will,” “will be,”
“would” and similar expressions. Although we believe that our expectations are
based on reasonable assumptions, our actual results may differ materially from
those expressed in, or implied by, the forward-looking statements contained in
this prospectus as a result of various factors, including, but not limited to,
those described above under the heading "Risk Factors" and elsewhere in this
prospectus. Before you invest in the shares, you should read this prospectus
completely and with the understanding that our actual future results may be
materially different from what we expect.
Forward-looking
statements speak only as of the date of this prospectus. Except as expressly
required under the federal securities laws and the rules and regulations of the
SEC, we do not have any intention, and do not undertake, to update any
forward-looking statements to reflect events or circumstances arising after the
date of this prospectus, whether as a result of new information or future events
or otherwise. You should not place undue reliance on the forward-looking
statements included in this prospectus or that may be made elsewhere from time
to time by us, or on our behalf. All forward-looking statements attributable to
us are expressly qualified by these cautionary statements.
We
estimate that our net proceeds from the sale of the shares by us in this
offering will be up to a maximum of $10,000,000 if all 2,000,000 shares offered
by this prospectus are sold and, before deducting estimated offering
expenses.
Our
principal reasons for conducting this offering at this time are to raise capital
to expand our operations and construct new homes in our corporate owned
developments, develop our brand through increased advertising and marketing
programs, investing further resources into developing our corporate
infrastructure and hiring employees and consultants.
In
addition, although we are currently not committed to do so, we expect to spend
approximately $50,000 in the next 12 months to further develop our brand
through new advertising and marketing programs, and the remaining portion of the
offering proceeds for working capital and general corporate purposes, including
the costs associated with being a public company. We are also
conducting this offering to create a public market for our common stock, to
facilitate our access to the public equity markets and to obtain additional
capital.
If the
opportunity arises, we may use a portion of the net proceeds from this offering
designated for expansion of operations to acquire or invest in distressed
properties and distressed builders that have adequate assets. We are not
currently a party to any agreements or commitments and we have no current
understandings with respect to any acquisitions.
Except as
provided above, we cannot specify with certainty the particular uses for the net
proceeds to be received upon completion of this offering and, at the date
hereof, cannot accurately predict the amounts that we may spend for any
particular purpose. The amounts of our actual expenditures will be influenced by
several factors, including the timing and extent of our growth opportunities,
the amount of cash used by our operations and the occurrence of unforeseen
opportunities and events. Our Management team will have broad
discretion in determining the uses of the net proceeds of this
offering. Pending the use of the net proceeds, we intend to invest
the net proceeds in short-term, investment-grade, interest-bearing
instruments.
In
determining the offering price Management considered the valuation of property
on an Appraised Value “Discounted To A Single Purchaser” divided into the amount
of shares based on the Price Earnings Growth of future properties
rolled in and our business potential, and market valuation of
competing developers.
Our net
tangible book value as of March 31, 2010 was approximately $ 4,439,304 or $.20
per share of common stock. Net tangible book value per share represents total
tangible assets less total liabilities, divided by the number of shares of
common stock outstanding.
|
Public
offering price per share
|
5.00 | |||||||
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Net
Tangible Book Value per share 3/31/2010
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0.20 | |||||||
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Increase
per share attributable to new investors
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0.16 | |||||||
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Adjusted
Net Tangible B/V after this offering
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0.36 | |||||||
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Dilution
per share to new investors
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4.64 | |||||||
The
following table set forth as of March 31, 2010, on a pro forma as adjusted
basis, the differences between: (1) the number of shares of common stock
purchased from us, the total consideration paid and the average price per share
paid, in each case by existing shareholders, and (2) the number of shares
of common stock purchased from us, the total consideration paid and the average
price per share paid, in each case by investors purchasing shares in this
offering, based on the initial public offering price of $5.00 per share and
before deducting our estimated offering expenses:
|
Shares
Purchased
|
Total
Consideration
|
Average
Price
|
||||||||||||||||||
|
Number
|
Percent
|
Amount
|
Percent
|
Per
Share
|
||||||||||||||||
|
Existing
shareholders
|
22,234,228 | 91.75 | % | $ | 0 | 0 | % | 0 | ||||||||||||
|
New
investors
|
2,000,000 | 8.25 | % | $ | 10,000,000 | 100 | % | $ | 5.00 | |||||||||||
|
Total
|
24,234,228 | 100 | % | $ | 10,000,000 | 100 | % | $ | 5.00 | |||||||||||
We are
offering from time to time 2,000,000 shares of Common Stock (as per Unit) at a
price of $5.00 per share. We are offering the shares directly to the public
until such shares are sold, however, we may terminate the offering prior to that
date. There is no minimum amount of shares that must be sold before we use the
proceeds. Proceeds will not be returned to investors if we sell less
than all of the 2,000,000 shares being offered in this
prospectus. The proceeds from the sales of the shares will be paid
directly to us promptly following each sale and will not be placed in an escrow
account.
The
offering will be conducted by Bobby R. Smith, Jr., our Chairman, and Chief
Executive. Under Rule 3a 4-1 of the Securities Exchange Act an issuer
may conduct a direct offering of its securities without registration as a
broker/dealer. Such offering may be conducted by officers who perform
substantial duties for or on behalf of the issuer otherwise then in connection
with securities transactions and who were not brokers or dealers or associated
persons of brokers or dealers within the preceding 12 months and who have not
participated in selling an offering of securities for any issuer more than once
every 12 months, with certain exceptions.
Furthermore,
such persons may not be subject to a statutory disqualification under Section
3(a) (39) of the Securities Exchange Act and may not be compensated in
connection with securities offerings by payment of commission or other
remuneration based either directly or indirectly on transactions in securities
and are not at the time of offering of shares associated persons of a broker or
dealer. Mr. Smith will meet these requirements.
Subscriptions
for purchase of shares offered by this prospectus can be made by completing,
signing and delivering to us, the following:
|
·
|
an
executed copy of the Subscription Agreement;
and
|
|
·
|
A
check payable to the order of Four Star Holdings, Inc. in the amount of
$5.00 for each share you want to
purchase.
|
Resale
of our Shares
There is
presently no public market for our shares of common stock or preferred stock.
There is no assurance that a trading market will develop or be sustained.
Accordingly, you may have to hold the shares indefinitely and may have
difficulty selling them if an active trading market does not
develop.
Management’s
strategy is to seek to have our common stock, but not our preferred stock, trade
on the over-the-counter market and quoted on the over-the-counter bulletin board
as soon as practicable after the termination of this
offering. However, to date, we have not solicited any securities
brokers to become market makers of our common stock. There can be no
assurance that an active trading market for the common stock will develop or be
sustained or that the market price of the common stock will not decline below
the initial public trading price. The initial public trading price
will be determined by market makers independent of
us.
Even if a
market develops for our common stock you may have difficulty selling our shares
due to the operation of the SEC’s penny stock rules. These rules regulate
broker-dealer practices in connection with transactions in “penny
stocks.” These requirements may have the effect of reducing the level
of trading activity in the secondary market for our stock.
We are
registering the Common Stock for sale only in the states that are covered by
Blue Sky. The “blue sky” laws of some states may impose restrictions upon the
ability of investors to resell our shares in those states without registration
or an exemption from the registration requirements. Accordingly,
investors may have difficulty selling our shares and should consider the
secondary market for our shares to be a limited one.
General
Matters
As of
March 31, 2010, our authorized capital stock consisted of
100,000,000 shares of common stock, no par value, and on July 1, 2010
Management adopted the Articles of Incorporation the following;
Series A Super
Preferred- Designation of Series and Rank, The shares of such series
shall be designated as the "Series A Super Preferred Stock" and the number of
shares initially constituting such series shall be up to One Hundred (100) and
on April 1, 2010 the Board of directors adopted and issued 2 shares, one share
to Bobby R. Smith, Jr. and one share to Fran Mize.
The
Series A Super Preferred Stock shall be senior to the common stock and any other
series or class of the Company’s preferred stock with no conversion rights. The
price of said shares will be $10,000,000 per share. The voting rights are if at
least one share of Series A Preferred Stock is issued and outstanding, then the
total aggregate issued shares of Series A Preferred Stock at any given time,
regardless of their number, shall have voting rights equal to 66.6%-(2/3) of the
total number of shares of Common Stock, plus the total number of shares of all
other series of stock, issued and outstanding at the time of any vote of
shareholders.
Series B: Dividend Shares: The
attributes of this class of stock has no redemption and will be issued to
investors/shareholders that will have the right to a dividend on the
profitability of certain business transactions the Company completes. Authorized
20 million. The attributes are dividend only with no redemption into common and
nonvoting, none have been issued
Series
C: Convertible Preferred. The attributes are 2:1
conversion with 2 year redemption into common. Authorized 100 million and none
have been issued
Series D: This Series of stock
will be for the purpose of getting trading authorization on foreign exchanges
and the stock will be used for that specific foreign exchange. Total authorized
will be 100 million. No conversion into common, this series of stock will have
no voting rights, no redemption into common and will not trade in the United
States. None have been issued
As of
March 31, 2010, we had outstanding 22,234,228 shares of common stock and no
shares of preferred stock. As of March 31, 2010, we had fifteen (15)
shareholders of record and 25 shareholders who hold stock in Cede and
Company.
Upon the
closing of this offering, our authorized capital stock will consist of
500,000,100 shares of common stock, 39,384,228 of which will be outstanding on
the assumption that all 2,000,000 shares of Common Stock offered will be
sold.
The
following summary describes the material provisions of our capital stock. We
urge you to read our articles of incorporation and our bylaws, which are
included as Exhibits 3.1 and 3.2 to the registration statement of which this
prospectus forms a part.
Our
amended articles of incorporation and amended bylaws contain provisions that are
intended to enhance the likelihood of continuity and stability in the
composition of the board of directors and which may have the effect of delaying,
deferring or preventing a future takeover or change in control of our Company
unless the takeover or change in control is approved by our board of
directors.
These
provisions include elimination of the ability of shareholders to call special
meetings and advance notice procedures for special meetings of shareholder
proposals.
Common
Stock
Voting
rights
Each
holder of common stock is entitled to one vote for each share held on all
matters submitted to a vote of the shareholders. The holders of common stock do
not have cumulative voting rights in the election of directors. Accordingly, the
holders of a majority of the outstanding shares of common stock entitled to vote
in any election of directors may elect all of the directors standing for
election.
Dividends
The
holders of common stock are entitled to receive ratably such dividends as may be
declared by our board of directors out of funds legally available
therefore.
Other
rights
In the
event of a liquidation, dissolution or winding up of us, holders of our common
stock are entitled to share ratably in all assets remaining after payment of
liabilities and the liquidation preference, if any, of any then outstanding
preferred stock. Holders of our common stock are not entitled to preemptive
rights and have no subscription, redemption or conversion privileges. All
outstanding shares of common stock are, and all shares of common stock issued by
us in the offering will be, fully paid and nonassessable. The rights,
preferences and privileges of holders of common stock are subject to, and may be
adversely affected by, the rights of the holders of shares of any series of
preferred stock which our board of directors may designate and that we issue in
the future.
Preferred
Stock
Our board
of directors as of July 1, 2010 have authorized issuance of preferred stock in
one or more series, with such designations, preferences and relative
participating, optional or other special rights, qualifications, limitations or
restrictions as determined by our board of directors, without any further vote
or action by our shareholders. We believe that the board of directors’ authority
to set the terms of, and our ability to issue, preferred stock will provide
flexibility in connection with possible financing transactions in the future.
The issuance of preferred stock, however, could adversely affect the voting
power of holders of common stock and the likelihood that such holders will
receive dividend payments or payments upon a liquidation, dissolution or winding
up of the Company.
Description
of Common Stock
The
shares of Common Stock, when issued and sold in the manner contemplated by this
prospectus, will be duly and validly issued, fully paid and
non-assessable. The Common Stock is not subject to any sinking
fund.
Dividends
In the
event any dividend or other distribution payable in cash or other property
(other than shares of our Common Stock) is declared on our Common Stock, each
holder of shares of Common Stock on the record date for such dividend or
distribution shall be entitled to receive per share on the date of payment or
distribution of such dividend or other distribution the amount of cash or
property equal to the cash or property which would be received by the holders of
the number of shares of Common Stock into which such share of Common Stock would
be converted pursuant immediately prior to such record date.
Conversion
into Common Stock
In the
event of a conversion from preferred Series C shares, the holder may convert the
common stock at a conversion rate that is applicable to the attributes of said
preferred share. The holder of converted shares shall pay in
connection with a conversion all Transfer Agent costs. We will not make any
adjustment to the conversion price for accrued or unpaid dividends upon
conversion. We will not issue fractional shares of common stock upon conversion.
However, we will instead pay cash for each fractional share based upon the
market price of the common stock on the last business day prior to the
conversion date.
In order
to convert your shares of Preferred Stock, you must deliver your Preferred Stock
certificate to us at our office or to the office of the transfer agent for our
common stock along with a duly signed and completed notice of
conversion.
The
conversion date will be the date you deliver your Preferred Stock certificate
and the duly signed and completed notice of conversion to us or our transfer
agent. You will not be required to pay any U.S. federal, state or local issuance
taxes or duties or costs incurred by us on conversion, but will be required to
pay any tax or duty payable as a result of the common stock upon conversion
being issued other than in your name. We will not issue common stock
certificates unless all taxes and duties, if any, have been paid by the
holder.
In the
event of a conversion, the remuneration will be considered from time to time by
management and will be paid by majority vote. The following types of
transactions, among others, would be covered by this:
(1) We
consolidate or merge into any other company, or any merger of another company
into us, except for a merger that does not result in a reclassification,
conversion, exchange or cancellation of common stock,
(2) We
sell, transfer or lease all or substantially all of our assets and holders of
our common stock become entitled to receive other securities, cash or other
property, or
(3) We
undertake any compulsory share exchange.
Ranking
Series
Preferred A, then the Common Stock will rank, with respect to dividend rights
and upon liquidation winding up.
Liquidation
Preference
Upon any
voluntary or involuntary liquidation, dissolution or winding up of our Company
or a reduction or decrease in our capital stock resulting in a distribution of
assets to the holders of any class or series of our capital stock, each holder
of shares of Common Stock will be entitled to payment out of our assets
available for distribution of an amount equal to any strike price or market
price per share of the Common Stock held by that holder, plus all accumulated
and unpaid dividends on those shares to the date of that liquidation,
dissolution, winding up or reduction or decrease in capital stock, before any
distribution is made on any junior stock, including our common stock, but after
any distributions on any of our indebtedness or shares of our senior stock.
After payment in full of the liquidation preference and all accumulated and
unpaid dividends to which holders of shares of Common Stock are entitled, the
holders will not be entitled to any further participation in any distribution of
our assets. If, upon any voluntary or involuntary liquidation, dissolution or
winding up of our Company, or a reduction or decrease in our capital stock, the
amounts payable with respect to shares of Common Stock and all other parity
stock are not paid in full, the holders of shares of Common Stock and the
holders of the parity stock will share equally and ratably in any distribution
of our assets in proportion to the full liquidation preference and all
accumulated and unpaid dividends to which each such holder is
entitled.
Neither
the voluntary sale, conveyance, exchange or transfer, for cash, shares of stock,
securities or other consideration, of all or substantially all of our property
or assets nor the consolidation, merger or amalgamation of our Company with or
into any corporation or the consolidation, merger or amalgamation of any
corporation with or into our Company will be deemed to be a voluntary or
involuntary liquidation, dissolution or winding up of our Company or a reduction
or decrease in our capital stock.
Anti-Takeover
Effects of Our Articles of Incorporation, Our Bylaws and Florida
Law
Authorized
but unissued shares
The
authorized but unissued shares of our common stock and our preferred stock will
be available for future issuance without any further vote or action by our
shareholders. These additional shares may be utilized for a variety of corporate
purposes, including future public offerings to raise additional capital,
corporate acquisitions and employee benefit plans.
The
existence of authorized but unissued shares of our common stock and our
preferred stock could render more difficult or discourage an attempt to obtain
control over us by means of a proxy contest, tender offer or merger, or
otherwise.
Shareholder
action; advance notification of shareholder nominations and
proposals
Our
articles of incorporation and bylaws provide that any action required or
permitted to be taken by our shareholders will have to be effected at a duly
called annual or special meeting of shareholders and may be effected by consent
in writing. Our articles of incorporation also require that special meetings of
shareholders be called only by our board of directors, our Chairman, our Chief
Executive Officer or our President. In addition, our bylaws generally
provide that candidates for director may be nominated and other business brought
before an annual meeting only by the board of directors or by a shareholder who
gives written notice, including certain information, to us no later than
90 days and not earlier than 120 days, prior to the first anniversary
of the date on which we first mailed our proxy materials for the preceding
year's annual meeting of shareholders. These provisions may have the effect of
deterring hostile takeovers or delaying changes in control of our Management,
which could depress the market price of our common stock.
Number,
election and removal of the board of directors
Upon the
closing of the offering, our board of directors will consist of four directors.
Our articles of incorporation authorize a board of directors consisting of at
least four, but no more than eleven, members, with the number of directors to be
fixed from time to time by our board of directors. At each annual
meeting of shareholders, directors will be elected for a one-year term to
succeed the directors whose terms are then expiring. As a result, our board of
directors will be elected each year. Between shareholder meetings,
directors may be removed by our shareholders only for cause, and the board of
directors may appoint new directors to fill vacancies or newly created
directorships. These provisions may deter a shareholder from removing incumbent
directors and from simultaneously gaining control of the board of directors by
filling the resulting vacancies with its own nominees. Consequently, the
existence of these provisions may have the effect of deterring hostile
takeovers.
Florida
Anti-Takeover Law
We are
not subject to (i) the Florida Control Share Act, which generally provides that
shares acquired in excess of thresholds equaling 20%, 33% and more than 50% of a
corporation's voting power will not possess any voting rights unless such voting
rights are approved by a majority vote of the corporation's disinterested
shareholders, and (ii) the Florida Fair Price Act, which generally requires
approval by disinterested directors or supermajority approval by shareholders
for certain specified transactions between a corporation and a holder of more
than 10% of the outstanding shares of the corporation (or its
affiliates).
No expert
or counsel named in this prospectus as having prepared or certified any part of
this prospectus or having given an opinion upon the validity of the securities
being registered or upon other legal matters in connection with the registration
or offering of the common stock offered hereby was employed on a contingency
basis, or had, or is to receive, in connection with such offering, a substantial
interest, direct or indirect, in the Company, nor was any such person connected
with the Company as a promoter, managing or principal underwriter, voting
trustee, director, officer, or employee.
We were
incorporated on October 4, 2007 under the laws of the State of
Florida.
The
Company operates in four segments, Land Development, Structural Community
Planning, Homebuilding, and Realty Brokerage Services. Four Star Holdings, Inc
sells it properties under its subsidiary, Four Star Realty,
LLC. Management has been operating as officers and directors in
various real estate brokerage and land development ventures since 1992. As our
financials indicate as March 31, 2010 we have no going concern
issues.
Our
principal offices are located at 100 Four Star Lane, Odenville, Alabama,
35120.
Our
fiscal year end is December 31.
The
Company operates in four segments, Land Development, Structural Community
Planning, Homebuilding, and Realty Brokerage Services. Four Star Holdings, Inc
sells it properties under its subsidiary, Four Star Realty,
LLC. Management has been operating as officers and directors in
various real estate brokerage and land development ventures since 1992. To date
Management has built over 1,100 single family homes, over 30 commercial
properties, and currently have two multifamily projects and one town home
complex under development.
In
December 2009 Management acquired majority control of a public company known as
Dragons Lair Holdings, Inc. which was founded in 2007. The result of that
transaction was the purchase of 74% of the Company’s common stock through a
Stock Purchase Agreement for the consideration of $325,000. This gave
authoritative control to Fran Mize, as President and Director and Bobby R.
Smith, Jr. its Chairman and CEO.
The
banking industry, as a result of the Credit Crisis in the United States during
the last two years, has limited and in some cases discontinued funding in the
real estate development sector. Management’s solid foundation with
its lenders for over the past 15 years has enabled them to borrow over $200
million with a stellar performance in servicing this debt. However, even with
positive equity on the balance sheet Management’s primary lending institutions
shut down the majority of its available line of credit. This affected the
Company as it experienced slowed performance but did not stop the progress in
sales and/or production. This did however, trigger the Company’s interest in
going public to procure alternative financing for its expansion from other than
traditional bank financing methods.
Alabama
ranks low for the percentage of homeowners who owe more on their mortgages that
their house is worth. The negative equity mortgages are below 7% of the entire
state total mortgage portfolio.
|
The
top 5 states are: Top States Negative Equity Mortgages
|
By
Percentage
|
|
Nevada
|
48%
|
|
Florida
|
39%
|
|
Arizona
|
29%
|
|
California
|
27%
|
Markets
indicated show that Birmingham’s real estate brokerage firms are
reporting that the city’s housing market has not experienced peaks and valleys
compared to the rest of the country, primarily due to the state builders
conservative approach to housing starts and relatively low inventory levels,
meaning that new home construction is not implemented until there are identified
buyers.
The
National Home Builders Association reported that the hard hit areas were the
Sunbelt/coastal states which disrupted the real estate boom. During the subprime
crisis, Birmingham home pricing experienced a moderate decrease of 5% to an
average home price of $145,000, reported on May 14, 2009. However, ahead of the
rest of the country, Birmingham recorded an early recovery in the onset of
October 2009 with area home sales rising 13% and stabilizing.
Metropolitan
Birmingham has consistently been rated as one of America's best places to work
and earn a living based on the area's competitive salary rates and relatively
low cost of living expenses. One 2006 study published at Salary.com determined
that Birmingham was second in the nation for building personal net worth, based
on local salary rates, living expenses, and unemployment rates.
The
Top 5
Fastest Growing Markets For Real Estate according to Money Magazine;
reports that despite a poor real estate market and the housing crisis certain
markets are expected to show price gains in the following months and
years. These cities and towns have been virtually uninjured by the
economy, seemingly immune to the foreclosures that have plagued the rest of the
nation. Multifamily Starts dramatically on the rise in Birmingham, compared to
the rest of the country.
|
1.)
McAllen, TX
12-month
forecast: 4%
Median
home price: $109,000
One
year price change: 2.1%
Five
year price change: 23.3%
Change
in foreclosure rate: 23%
|
2.)
Rochester, NY
12-month
forecast: 2.7%
Median
home price: $121,000
One
year price change: 3.4%
Five
year price change: 20.1%
Change
in foreclosure rate: 5%
|
|
3.)
Birmingham, AL
12-month
forecast: 2.7%
Median
home price: $156,000
One
year price change: 2.9%
Five
year price change: 29.4%
Change
in foreclosure rate: 20%
|
4.)
Syracuse, NY
12-month
forecast: 2.6%
Median
home price: $126,000
One
year price change: 0.8%
Five
year price change: 29.5%
Change
in foreclosure rate: 27%
|
|
5.)
Buffalo/Niagara Falls, NY
12-month
forecast: 2.4%
Median
home price: $105,000
One
year price change: 1.6%
Five
year price change: 24.5%
Change
in foreclosure rate: 14%
|
Source: Real
Estate Opportunity
Housing
Market
Real
Estate News
May
2009
|
On
January 7, 2010 Chief Economist Dr. David Crowe of the National Association of
Home Builders, stated in his report the real GDP Growth for Birmingham
experienced growth of negative 5% in the 3rd
quarter of 2009 to an increase of positive growth of 5%, in the 4th
quarter of 2009, making Birmingham housing market the 3rd
fastest growth in the country.
Local
Industry Advancement over the course of the 20th century, the city's economy
diversified. Though the manufacturing industry maintains a strong presence in
Birmingham, other industries such as banking, insurance, medicine, publishing,
and biotechnology have risen in stature. Birmingham has
been recognized as one of the top cities for income growth in the United States
South with a significant increase in per capita income since
1990.
The
industry advancement and economic development in Alabama is
unprecedented. The Economic Development Board has attracted new
industries that will bring an annual $60 million to Personal Income, Increases
to bank deposits by $86M after 5 years, boost Sales of Goods & Services by
$108 million and create 10 New Retail Establishments adding 620 support jobs
which will increase Family Units by 1,000 and increase housing demand by $87
million in the next 12 months.
These
new industries are:
Rain Bird
Steele has built a new $40 million dollar plant in the area for which
will bring 250 new jobs to the area, of which 100 will be absorbed by existing
residents and attracting an additional 100-150 residents who will migrate from
other states.
VA Nursing Home,
St. Vincent and Jefferson States Nursing Programs have selected a site
which will bring another $40 million project to the area and which will create
200 new jobs of which less than 100 will be absorbed by existing residents and
attract an additional 100-residents who will migrate from other states with
skilled nursing experience or seeking to be educated in the skilled nursing
sector.
Cogswell,
Industrial Technology Park; a more economical equivalent to the
Raleigh-Durham Research Triangle.
Grand River
Retail & Residential Development will cover a 6,000 acre parcel that
will bring in retail, offices, hotels and residential.
Industry
Overview
Major
Industries and Commercial Activity
According
to City data; for many years Birmingham was a one-industry town dependent on the
iron and steel industry. Today, Birmingham's economy relies more heavily on the
medical industry as well as trade, finance, research and government. The major
industrial investments in Birmingham have been in automotive components
manufacturing and distribution, machinery, and the metals industries fueled by
the new Honda Plant.
At the
base of the expanding telecommunications industry is one of two regional
corporate headquarters of BellSouth Telephone Company. Birmingham is
headquarters for the engineering and technical services of several power
companies, including Alabama Power Company, ENERGEN Corporation, and SONAT.
Metro Birmingham is a leading retail and wholesale trade center for Alabama and
parts of Florida, Georgia, Tennessee, and Mississippi. According to the Alabama
Department of Industrial Relations, projections for the fastest-growing
occupations in Birmingham through 2012 include jobs in medical
services.
Birmingham
boasts the University of Alabama Medical Center, known throughout the world for
its research on the treatment of cardiovascular disease, diabetes, cancer, AIDS,
and arthritis. Birmingham's Southern Research Institute, the largest nonprofit
independent research laboratory in the southeast, has gained national
prominence.
With a
plethora of Birmingham businesses working in international trade and warehousing
and with the city's nearby waterways, Birmingham is a major distribution center.
The city's proximity to the Warrior-Tombigbee River System, which connects to
the Tennessee-Tombigbee Waterway, enables Birmingham to be a major shipper of
general commodities. Birmingham has also experienced significant growth as a
transportation hub because of its central southeast location, and the fact that
it is served by eight airlines, five air cargo services, approximately 100 truck
lines, four railroads, and more than ten barge lines. Multimillion-dollar runway
and cargo facility expansions at Birmingham International Airport took place in
2004 as part of the city's efforts to encourage further growth in the
transportation and distribution industries.
Items and
goods produced in the Birmingham area are cast iron pipe, transportation
equipment (automotive, rail, and aircraft equipment), fabricated metal products,
electronics, plastic products, office furniture, containers, paper products, and
fire extinguishers.
In
private developments, so many auto-related companies have located in greater
Birmingham that residents call the area "little Detroit." A half hour southwest
of Birmingham, in the tiny town of Vance in Tuscaloosa County, a new road called
Mercedes Drive leads to the first Mercedes-Benz (a division of Daimler-Chrysler)
auto plant ever built in North America. The Mercedes-Benz Vance plant, built in
1993, is also the first Mercedes-Benz passenger-car assembly plant outside
Germany. Alabama offered $80 million in incentives to entice Mercedes-Benz to
set up shop in the state; by 2000 Mercedes had invested $380 million in
Alabama.
In 2001
Mercedes-Benz began construction on a $600 million expansion that is estimated
to double production. State investments in auto production have led several auto
service production plants to open shop in other areas of the state, namely
Hyundai in Montgomery and Honda in Lincoln.
In other
private developments, one of downtown Birmingham's largest and most conspicuous
vacant building received a $30 million face-lift from Bayer Properties, which
finished conversion in 2003 of the eight-story 1908 Pizitz department store
building to Class A office space with a ground-floor retail component. In 2002,
American Cast Iron Pipe Co. (ACIPCO) prepared for stricter pollution regulations
with an $80 million expansion at its North Birmingham plant. The company added
61,000 square feet of space to add a state-of-the-art, electrically-fired
furnace.
University
of Alabama at Birmingham (UAB). In 1998, Alabama health officials endorsed a
5-year, $578 million expansion of UAB's University Hospital complex. In late
2004, the new 885,000 square foot, 11-story hospital opened with 37 operating
suites, 4 intensive care units, 96 private patient rooms and an emergency unit
the size of a football field.
In
April 2002, UAB broke ground on a new 300,000-square-foot, 12-story Shelby
Interdisciplinary Biomedical Research Building, which will house four distinct
research programs. Due to be completed in 2005, the new facility is expected to
generate $100 million in annual grants and employ 1,400 people. Oxmoor Valley
Research Park was created by a partnership of UAB and the city of Birmingham,
and houses the university's Office for the Advancement of Developing Industries
Technology Center (OADI). Since UAB became an autonomous campus, it has spent
about $800 million on new construction and has built about 100 buildings in an
82-block area.
Born at
the junction of two railroads, and always an important transportation center,
Birmingham today is served by an outstanding network of highways, extensive rail
track, air cargo facilities, and nearby navigable waterways. The CSX and
Burlington Northern Santa Fe railroad systems haul freight to and from the
metropolitan area, where a multimodal system is located. More than 100 truck
lines, many with nationwide service, and five air-cargo firms move goods and
products for Birmingham companies. Birmingham's Airport Industrial Park is
designated as a Foreign Trade Zone, a major asset in attracting additional
business to the area. General commodities are transported economically on barges
along the nearby Warrior-Tombigbee River System and the Tennessee-Tombigbee
Waterway to other inland cities and through the Port of Mobile to foreign
countries.
The Labor
Force and Employment Outlook in Birmingham's transformed economy is now less
dependent on cyclical manufacturing and mining sectors and more on health and
financial services. Birmingham is the state's center for advanced technology and
there are more engineers per capita living in the local area than in any other
southeastern city.
Birmingham,
like other Alabama cities, enjoys a good reputation in Asia. Local analysts
predict that the region will continue to be a magnet for overseas
capital.
The
Company generally has an inventory of homes under construction, with many of
these homes under contract (i.e., the Company has received executed sales
contracts and deposits) before the Company starts construction.
Over the
past 18 months they have seen many of their Home Building Competitors dwindle
due to over leveraging and higher than normal carrying cost of inventory. The
Company’s conservative inventory levels have given it the ability to sell homes
at a better than average sale price compared to its competitors. In
order to make it possible for purchaser of some of the Company’s homes to obtain
State of Alabama Loan Guarantees, FHA-insured or VA-guaranteed mortgages, the
Company must construct these homes in compliance with regulations promulgated by
these agencies.
Today,
Birmingham ranks as one of the most important business centers in the nation and
is also home of one of the largest banking centers in the U.S. In addition, the
Birmingham area serves as headquarters to one Fortune 500 company: Regions
Financial and five Fortune 1000 companies.
Realty
Brokerage Subsidiary
Four Star
Realty, LLC (REALTY) is a wholly owned subsidiary of Four Star Holdings.
REALTY’s primary focus is a residential real estate Brokerage Company, providing
brokerage services to home buyers and sellers in the Birmingham Alabama area.
The Company also markets and sells its homes as well as other homes through
commissioned agents and independent outside real estate
brokers. Realty offers locality data and targeted information on new
home listings, home sales comparables and local school information through its
website images and virtual tours. The Company’s President Fran Mize
has almost 20 years in listing, marketing properties on behalf of sellers, as
well as assisting in negotiating, advising, transaction processing, and closing
activities.
The one
thing that graphs, charts and statistics won’t show in this submittal is the
stability of the company’s operation and holdings. Over the past 18 months they
have seen many of their Home Building Competitors dwindle due to over leveraging
and higher than normal carrying cost of inventory. Management’s conservative
inventory levels have given it the ability to sell homes at a better than
average sale price compared to its competitors. In order to make it
possible for purchasers of some of the Company's homes to obtain State of
Alabama Loan Guarantees, FHA-insured or VA-guaranteed mortgages, the Company
must construct those homes in compliance with regulations promulgated by those
agencies.
Today,
Birmingham ranks as one of the most important business centers in the
Southeastern United States and is also one of the largest banking centers in the
U.S. In addition, the Birmingham area serves as headquarters to one Fortune 500
company: Regions Financial and five Fortune 1000 companies are headquartered in
Birmingham.
The
Company balances its local operating structure with centralized corporate-level
Management. The Company's local managers, who have significant experience in the
homebuilding industry generally and in their respective markets, are responsible
for operating decisions regarding land identification, home design, construction
and marketing. Decisions related to overall Company strategy, acquisitions of
land and businesses, financing and disbursements are centralized at the
corporate level. Our current inventory is stated below;
|
Development
Sites as of March 31, 2010
|
||||||
|
Region
|
Home
Sites
|
Homes
Under
|
Homes
|
Commercial
|
Appraised
|
Liability
|
|
Developed
|
Construction
|
Sold
|
Parcels
|
Value
|
||
|
Ridgefield
|
899
|
12
|
504
|
0
|
$10,770,000
|
$6,134,945
|
|
12
Oaks
|
185
|
4
|
11
|
0
|
$6,875,000
|
$1,900,000
|
|
Four
Star Investment
|
-
|
-
|
-
|
-
|
$7,461,107
|
$5,535,014
|
|
4
Star Properties
|
52
|
4
|
15
|
2
|
$5,395,000
|
$5,188,986
|
|
Legacy
Springs Apts
|
-
|
-
|
-
|
-
|
$13,560,000
|
$1,600,000
|
|
4
Star Land Ventures
|
277
|
18
|
71
|
0
|
$21,200,000
|
$10,821,358
|
|
SBE
|
-
|
-
|
-
|
20
|
$13,032,400
|
$3,025,000
|
|
Total
|
1413
|
38
|
601
|
22
|
$78,293,507
|
$34,205,303
|
We have
not publicly announced any new development other than what is stated
above.
Today,
Four Star Realty has over 25 Realtor Associates and is ranked third behind D. R.
Horton and another local real estate company, which has 16 offices and over
2,000 realtors listing properties in the area. For the entire Birmingham MLS
reporting area, Four Star Realty is ranked number 25 out of 325 agencies in
combined sales and listing volume. Management is projecting a 20% growth rate
despite the current economic conditions. Many of our competitors may
have significantly greater financial, technical, marketing and other resources
than us. We believe that our ability to compete depends on a number
of factors, including price, quality of building material, new home
availability, name recognition and post-sales service and support.
Management
supervises and controls the development and building of its own residential
communities. It employs subcontractors for site improvements and virtually all
of the work involved in the construction of homes.
In
almost all instances, the arrangements between the Company and the
subcontractors commit the subcontractors to complete specified work in
accordance with written price schedules and guarantee their work. These price
schedules normally change every 90 days to meet changes in labor and material
costs. The CEO, Bobby R. Smith, Jr. through his personally owned company,
B&B Smith Construction, Inc., owns heavy construction equipment and has a
labor force used to supervise excavating, development and construction, and
perform routine maintenance.
Our focus
is primarily single family homes which require wide base of customers, we do not
rely on one or a few major customers.
We do not
have any patents or trademarks. The need for such will be assessed from time to
time.
We do
need local government approval for zoning and impact of the amount of lots we
can develop.
We are
not able to predict the nature of such future laws, regulations, repeals or
interpretations or to predict the effect of any additional governmental
regulation, when or if it occurs, or what effect it could have on our business
in the future. Such developments could require reformulation of certain
construction to meet new standards, recalls or discontinuance of
certain financial instruments, additional record-keeping requirements, increased
documentation of the properties deeds of trust, adverse event reporting or other
new requirements. Any such developments could increase our costs significantly
and could have a material adverse effect on our business, financial condition
and results of operations.
Other
than the building and land improvements of our existing properties, we do not
spent any funds on research and development to date, however, future research
and development will be assessed from time to time.
The
company operates and is in full compliance with all local, state and Federal
Environmental laws and has all permits and applications current with A.D.E.M.,
Alabama Department of Environmental Management.
Employees
As of
June 1, 2010, we have 12 full-time employees plus at least 300 contractors,
subcontractors and suppliers. All activities to date have been undertaken by
Bobby R. Smith Jr., our Chief Executive Officer, and Treasurer, along with Fran
Mize as President both of whom currently spend all of their time on the
business.
The
Company continuously considers the purchase of, and from time to time acquires,
land for its development and sales programs. The Company generally does not
acquire land for speculation. In some instances, the Company acquires land by
acquiring options enabling it to purchase parcels as they are
needed.
At this
time there is one legal proceeding; filed May 6, 2010, Rich Woods et al, as
Plaintiffs, claiming that the Company owes him and undetermined cash and common
stock for referral fees. At this time Management is denying these
allegations.
There is
no public market for our shares of common stock or our preferred
stock. There can be no assurance that a market will develop or be
maintained. We currently have 15 record holders of our shares of
common stock and no holders of our preferred stock.
The
Penny Stock Rules
The SEC
has adopted regulations that generally define a penny stock to be any equity
security that has a market price less than $5.00 per share, subject to certain
exceptions. If our shares fall within the definition of a penny stock they will
become subject to rules that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess of
$1,000,000 or annual income exceeding $200,000, or $300,000 together with their
spouse). For transactions covered by these rules, the broker-dealer must make a
special suitability determination for the purchase of such securities and have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction, of a risk
disclosure document mandated by the SEC relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker- dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealers presumed control
over the market. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. The penny stock rules may restrict the ability
of broker-dealers to sell our securities and may affect the ability of our
shareholders to sell our shares of common stock in the secondary
market.
DIVIDEND
POLICY
The
Common Stock offered by this prospectus does not carry a fixed periodic
dividend. In the event a dividend or distribution is declared on our common
stock, in cash or other property (other than a dividend of our common stock),
the holders of the Common Stock will be entitled to receive the amount of cash
or property equal to the cash or property which would be received by the holders
of the number of shares of common stock into which such shares of Common Stock
could be converted immediately prior to such dividend or distribution. We have
not paid any dividends on our common stock, and it is not anticipated that any
dividends will be paid in the foreseeable future. The declaration and payment of
dividends in the future will be determined by the Board of Directors in light of
conditions then existing, including the company's earnings, financial condition,
capital requirements and other factors.
REGULATION
M
Our
officer and director, who will offer and sell the Shares, is aware that he is
required to comply with the provisions of Regulation M promulgated under the
Securities Exchange Act of 1934, as amended. With certain exceptions,
Regulation M precludes the officers and directors, sales agents, any
broker-dealer or other person who participate in the distribution of shares in
this offering 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.
REPORTS
We are
subject to certain reporting requirements and will furnish annual financial
reports to our stockholders, certified by our independent accountants, and will
furnish un-audited quarterly financial reports in our quarterly reports filed
electronically with the SEC. All reports and information filed by us
can be found at the SEC website, www.sec.gov.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Manhattan Transfer
Registrar 57 Eastwood Road, Miller
Place, NY 11764, Phone (800) 786-0362, (631) 928-6171
Fax.
Our
fiscal year end is December 31. We intend to provide financial
statements audited by an Independent Registered Accounting Firm to our
shareholders in our annual reports. The audited financial statements
for the period from the date of incorporation, October 4, 2007, to December 31,
2009 immediately follow along with the unaudited financials for the
Quarter ended March 31, 2010.
TABLE
OF CONTENTS FINANCIAL STATEMENTS
Dragons
Lair Holdings, Inc. 2009 Audited Financial Statements
Four Star
Holdings, Inc. March 31, 2010 Interim Unaudited Financial
Statements
Four Star
Realty, LLC 2009 Audited Financial Statements and Pro Forma
Ridgefield
Development Corporation 2009 Audited Financial Statements and Pro
Forma
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and
Stockholders
of Dragon’s Lair Holdings, Inc.
We have
audited the accompanying balance sheet of Dragon’s Lair Holdings, Inc. (a
development stage enterprise)(the “Company”) as of December 31, 2009 and 2008
and the related statements of operations, stockholders’ deficit, and cash flows
for the years then ended, and for the period October 4, 2007 (inception) through
December 31, 2009. 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 audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Dragon’s Lair Holdings, Inc. (a
Florida corporation) as of December 31, 2009 and 2008 and the results of its
operations and its cash flows for the years then ended and the period October 4,
2007 (inception) through December 31, 2009, 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 further in Note 1, the Company
has been in the development stage since its inception (October 4, 2007) and
continues to incur significant losses. The Company's viability is dependent upon
its ability to obtain future financing and the success of its future operations.
These factors raise substantial doubt as to the Company's ability to continue as
a going concern. Management's plan in regard to these matters is also described
in Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/Lake
& Associates CPA’s LLC
Lake
& Associates, CPA’s LLC
Schaumburg,
Illinois
February
4, 2010
|
DRAGON'S
LAIR HOLDINGS, INC.
|
||||||||
|
(A
DEVELOPMENT STAGE COMPANY)
|
||||||||
|
CONSOLIDATED
BALANCE SHEETS
|
||||||||
|
(Audited)
|
||||||||
|
December
31, 2009
|
December
31, 2008
|
|||||||
|
CURRENT
ASSETS:
|
||||||||
|
Cash and equivalents
|
$ | 137 | $ | 66,613 | ||||
|
Inventory
|
402 | 402 | ||||||
|
Total
Current Assets
|
539 | 67,015 | ||||||
|
FIXED
ASSETS:
|
||||||||
|
Equipment, net of accumulated depreciation of $150 and $50,
respectively
|
345 | 445 | ||||||
|
OTHER
ASSETS:
|
||||||||
|
License, net
|
660 | 900 | ||||||
|
Total
Assets
|
$ | 1,544 | $ | 68,360 | ||||
|
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIENCY)
|
||||||||
|
CURRENT
LIABILITIES:
|
||||||||
|
Accounts
payable & accrued expenses
|
$ | 7,000 | $ | 6,051 | ||||
|
Total
Liabilities
|
7,000 | 6,051 | ||||||
|
SHAREHOLDERS'
EQUITY/(DEFICIT):
|
||||||||
|
Preferred
stock (50,000,000 authorized;
|
||||||||
|
par
value $.001; none issued and outstanding)
|
$ | - | $ | - | ||||
|
Common
stock (100,000,000 shares authorized;
|
||||||||
|
no
par value; 8,001,078 issued and outstanding)
|
88,587 | 84,741 | ||||||
|
Deficit
accumulated during the development stage
|
(94,043 | ) | (22,432 | ) | ||||
|
Total
Shareholders' Equity (Deficit)
|
(5,456 | ) | 62,309 | |||||
|
Total
Liabilities and Shareholders' Equity/(Deficit)
|
$ | 1,544 | $ | 68,360 | ||||
The accompanying notes are an integral
part of these statements.
|
DRAGON'S
LAIR HOLDINGS, INC.
|
||||||||||||
|
(A
DEVELOPMENT STAGE COMPANY)
|
||||||||||||
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||||||
|
(Audited)
|
||||||||||||
|
Cumulative
from
|
||||||||||||
|
For
the year ended
ended
|
For
the year ended
|
October
4, 2007 (Inception)
through
|
||||||||||
|
December
31, 2009
|
December
31, 2008
|
December
31, 2009
|
||||||||||
|
Net
Sales
|
$ | - | $ | 1,241 | $ | 1,241 | ||||||
|
Cost
of Sales
|
- | 131 | 131 | |||||||||
|
Gross
Profit
|
- | 1,110 | 1,110 | |||||||||
|
Expenses:
|
||||||||||||
|
Amortization
|
240 | 240 | 540 | |||||||||
|
Depreciation
|
100 | 50 | 150 | |||||||||
|
General and
Administrative
|
71,271 | 21,723 | 94,463 | |||||||||
|
Total
Expenses
|
(71,611 | ) | (22,013 | ) | 95,153 | |||||||
|
Net
(loss) before Income Taxes
|
(71,611 | ) | (20,903 | ) | (94,043 | ) | ||||||
|
Provision
for Income Taxes
|
- | - | - | |||||||||
|
Net
(loss)
|
$ | (71,611 | ) | $ | (20,903 | ) | $ | (94,043 | ) | |||
|
Basic
and diluted net loss per common share
|
$ | - | $ | - | ||||||||
|
Weighted
average number of common shares outstanding
|
7,976,420 | 6,119,597 | ||||||||||
The
accompanying notes are an integral part of these statements.
| CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||
| FROM OCTOBER 4, 2007 (INCEPTION) THROUGH DECEMBER 31, 2009 | ||||||||||||||||||||||||
| (Audited) | ||||||||||||||||||||||||
|
Accumulated
|
Total
|
|||||||||||||||||||||||
| Preferred Stock | Common Stock |
(Deficit)
During
|
Shareholders' | |||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Development
Stage
|
Equity
|
|||||||||||||||||||
|
Balance
at October 4, 2007
|
- | $ | - | 975,000 | $ | 1,200 | $ | - | $ | 1,200 | ||||||||||||||
|
Common
stock issued for license
|
||||||||||||||||||||||||
|
Founder's
shares
|
- | - | 5,000,000 | 11,100 | - | 11,100 | ||||||||||||||||||
|
November
4, 2007, $0.00222/share
|
||||||||||||||||||||||||
|
Common
stock issued for cash
|
- | - | 63,278 | 633 | - | 633 | ||||||||||||||||||
|
December
31, 2007, $0.01/share
|
||||||||||||||||||||||||
|
Net
(loss) for the period
|
- | - | - | - | (1,529 | ) | (1,529 | ) | ||||||||||||||||
|
Balance
at December 31, 2007
|
- | - | 6,038,278 | 12,933 | (1,529 | ) | 11,404 | |||||||||||||||||
|
Common
stock issued for services
|
- | - | 100,000 | 4,008 | - | 4,008 | ||||||||||||||||||
|
March
27, 2008, $0.04008/share
|
||||||||||||||||||||||||
|
Common
stock issued for cash
|
||||||||||||||||||||||||
|
December
31, 2008, $0.03846/share
|
1,762,800 | 67,800 | 67,800 | |||||||||||||||||||||
|
Net
(loss) for the period
|
- | - | - | - | (20,903 | ) | (20,903 | ) | ||||||||||||||||
|
Balance
at December 31, 2008
|
- | - | 7,901,078 | 84,741 | (22,432 | ) | 62,309 | |||||||||||||||||
|
Common
stock issued for services
|
- | - | 100,000 | 3,846 | - | 3,846 | ||||||||||||||||||
|
April
1, 2009, $0.03846/share
|
||||||||||||||||||||||||
|
Net
(loss) for the period
|
- | - | - | - | (71,611 | ) | (71,611 | ) | ||||||||||||||||
|
Balance
at December 31, 2009
|
- | - | 8,001,078 | 88,587 | (94,043 | ) | (5,456 | ) | ||||||||||||||||
The accompanying notes are an integral
part of these statements.
|
DRAGON'S
LAIR HOLDINGS, INC.
|
||||||||||||
|
(A
DEVELOPMENT STAGE COMPANY)
|
||||||||||||
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||||||
|
(Audited)
|
||||||||||||
|
Cumulative
from
|
||||||||||||
|
For
the year ended
|
For
the year ended
|
October
4, 2007 (Inception)
through
|
||||||||||
|
December
31, 2009
|
December
31, 2008
|
December
31, 2009
|
||||||||||
|
OPERATING
ACTIVITIES:
|
||||||||||||
|
Net loss
|
$ | (71,611 | ) | $ | (20,903 | ) | $ | (94,043 | ) | |||
|
Issuance
of common stock for services
|
3,846 | 4,008 | 7,854 | |||||||||
|
Increase
in amortization
|
240 | 240 | 540 | |||||||||
|
Increase
in depreciation
|
100 | 50 | 150 | |||||||||
|
(Increase)
decrease in inventory
|
- | 131 | (402 | ) | ||||||||
|
Increase
in accounts payable
|
949 | 4,582 | 7,000 | |||||||||
|
Net
cash used in operating activities
|
(66,476 | ) | (11,892 | ) | (78,901 | ) | ||||||
|
INVESTING
ACTIVITIES:
|
||||||||||||
|
Increase
in equipment
|
- | (495 | ) | (495 | ) | |||||||
|
FINANCING
ACTIVITIES:
|
||||||||||||
|
Proceeds
from issuance of common stock
|
- | 67,800 | 79,533 | |||||||||
|
NET
INCREASE (DECREASE) IN CASH
|
(66,476 | ) | 55,413 | 137 | ||||||||
|
CASH
BEGINNING BALANCE
|
66,613 | 11,200 | - | |||||||||
|
CASH
ENDING BALANCE
|
$ | 137 | $ | 66,613 | $ | 137 | ||||||
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||||||
|
Taxes
paid
|
$ | - | $ | - | $ | - | ||||||
|
Interest
paid
|
$ | - | $ | - | $ | - | ||||||
|
CASH
TRANSACTIONS AFFECTING OPERATING, INVESTING
|
||||||||||||
|
AND
FINANCING ACTIVITIES:
|
||||||||||||
|
Issuance
of common stock for license
|
$ | - | - | $ | 1,200 | |||||||
The accompanying notes are an integral
part of these statements.
DRAGON’S
LAIR HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND DECEMBER 31, 2008
NOTE
1 - DESCRIPTION OF BUSINESS AND DEVELOPMENT STAGE RISK
Description of
Business
Dragon’s
Lair Holdings, Inc., a Florida corporation (the “Company”, “we”, “us” and
“our”), was incorporated on October 4, 2007, and conducts is operations through
its sole operating subsidiary, Dragon’s Lair Health Products, Inc., a Florida
corporation, which was incorporated on October 5, 2007. Our company
structure is set forth in the following chart:
|
DRAGON’S
LAIR HOLDINGS, INC.
a
Florida corporation
|
|
DRAGON’S
LAIR HEALTH PRODUCTS, INC.
a
Florida corporation
(100%
Owned Subsidiary)
|
Our
Company is a provider of personal care products by means of a network of direct
sales consultants, which is in the development stage. Our business
strategy is to provide quality products, operate at a profit and enable our
direct sales consultants to operate at a profit. In July, 2008, we
commenced providing our first product, the Sore-EezÔ Chinese herbal body
liniment.
Our
principal executive office is located at 785 N.E. 78th
Street, Miami, FL 33138. Our telephone number is
(786) 554-2771 , and our company website is www.sore-eez.com. Our
fiscal year ends on December 31st.
Basis of
Presentation
The
accompanying consolidated financial statements have been prepared by the
Company. The Company’s consolidated financial statements are prepared in
accordance with generally accepted accounting principals in the United States of
America (“US GAAP”). The consolidated financial statements of the Company
include the Company and its sole subsidiary. All material inter-company balances
and transactions have been eliminated.
Going
Concern
The
Company’s financial statements are prepared using generally accepted accounting
principles in the United States of America applicable to a going concern, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. The Company has not yet established an
ongoing source of revenues sufficient to cover its operating costs and allow it
to continue as a going concern. The ability of the Company to
continue as a going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable. If the
Company is unable to obtain adequate capital, it could be forced to cease
operations. The accompanying financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.
Management’s Plan to
Continue as a Going Concern
The
Company has met its historical working capital requirements from the sale of its
capital shares. In order to continue as a going concern, the Company
will need, among other things, additional capital
resources. Management’s plans to obtain such resources for the
Company include (1) obtaining capital from the sale of its securities, (2) the
sale of the Sore-EezÔ Chinese herbal body
liniment and other product candidates, and (3) seeking out and completing a
merger with an existing operating company. However, management cannot
provide any assurance 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.
Development Stage
Risk
The
Company has earned minimal revenues from operations. Accordingly, the
Company's activities have been accounted for as those of a "Development Stage
Enterprise" as set forth in Accounting Standards Codification (“ASC”) 915
“Development Stage Entities”, which was previously Financial Accounting
Standards Board Statement No. 7 ("SFAS 7"). Among the disclosures required by
ASC 915 are that the Company's financial statements be identified as those of a
development stage company, and that the statements of operations, stockholders'
equity/(deficit) and cash flows disclose activity since the date of the
Company's inception
Since its
inception, the Company has been dependent upon the receipt of capital investment
to fund its continuing activities. In addition to the normal risks
associated with a new business venture, there can be no assurance that the
Company's business plan will be successfully executed. Our ability to execute
our business plan will depend on our ability to obtain additional financing and
achieve a profitable level of operations. There can be no assurance that
sufficient financing will be obtained. Further, we cannot give any
assurance that we will generate substantial revenues or that our business
operations will prove to be profitable.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash
Equivalents
The
Company considers all highly liquid debt instruments with original maturities of
three months or less to be cash equivalents. The Company has no cash
equivalents.
Use of
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Inventories
Inventories
are valued at the lower of cost or market on a first-in, first-out (FIFO) basis,
and include finished goods.
Equipment
Equipment
is stated at cost, less accumulated depreciation. Depreciation is
provided using the straight-line method over the estimated useful life of five
years.
Advertising
Costs
Advertising
costs are expensed as incurred. For the years ended December 31, 2009
and 2008, advertising expenses totaled $3,900 and $156,
respectively.
Revenue
Recognition
The
Company recognizes revenue when:
|
·
|
Persuasive evidence of an arrangement
exists;
|
|
·
|
Shipment has occurred;
|
|
·
|
Price is fixed or determinable; and
|
|
·
|
Collectibility is reasonably
assured.
|
The
Company closely follows the provisions of ASC 605, “Revenue Recognition”, which
includes the guidelines of Staff Accounting Bulletin No. 104 as described above.
For the periods from October 4, 2007 (inception) to December 31, 2007 and
January 1, 2008 to June 30, 2008, respectively, the Company recognized no
revenues. In July, 2008, the Company commenced providing our first
product, the Sore-EezÔ Chinese herbal body
liniment. For the period from October 4, 2007 (inception) to December
31, 2008, the Company recognized revenues in the amount of
$1,241. For the year ended December 31, 2009, the Company recognized
no revenues.
Earnings (Loss) Per
Share
The
Company computes earnings per share in accordance with ASC 260, “Earnings Per
Share”, which was previously Statement of Accounting Standards No. 128,
"Earnings per Share (“SFAS No. 128”). Under the provisions of SFAS No. 128,
basic earnings per share is computed by dividing the net income (loss) for the
period by the weighted average number of common shares outstanding during the
period. Diluted earnings per share is computed by dividing the net income (loss)
for the period by the weighted average number of common and potentially dilutive
common shares outstanding during the period. There were no
potentially dilutive common shares outstanding during the period.
Intangible
Assets
Intangible
assets consist of a license agreement which is recorded at cost and amortized
over a straight-line basis. The value of the license was determined
to be the legal costs to create the license, which was $1,200, as there were no
other out-of-pocket costs for the license or the development of the
recipe. The Company evaluates the recoverability of identifiable
intangible assets whenever events or changes in circumstances indicate that an
intangible asset’s carrying amount may not be recoverable. There was no
impairment loss for the period from October 4, 2007 (inception) to December 31,
2009.
Income
Taxes
The
Company accounts for income taxes as outlined in ASC 740, “Income Taxes”, which
was previously Statement of Financial Accounting Standards No. 109, “Accounting
for Income Taxes.” Under the asset and liability method of Statement 109,
deferred tax assets and liabilities are recognized for the estimated 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
in effect for the year in which those temporary differences are expected to be
recovered or settled.
Fair Value of Financial
Instruments
The
Company considers that the carrying amount of financial instruments, including
accounts payable, approximates fair value because of the short maturity of these
instruments.
Share Based
Payments
In
December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment,” which
replaces SFAS No. 123 and supersedes APB Opinion No. 25. SFAS No. 123(R) is now
included in ASC 718 “Compensation – Stock Compensation.” Under SFAS
No. 123(R), companies are required to measure the compensation costs of
share-based compensation arrangements based on the grant-date fair value and
recognize the costs in the financial statements over the period during which
employees or independent contractors are required to provide services.
Share-based compensation arrangements include stock options and warrants,
restricted share plans, performance-based awards, share appreciation rights and
employee share purchase plans. In March 2005, the SEC issued Staff Accounting
Bulletin No. 107, or “SAB 107”. SAB 107 expresses views of the staff regarding
the interaction between SFAS No. 123(R) and certain SEC rules and regulations
and provides the staff's views regarding the valuation of share-based payment
arrangements for public companies. SFAS No. 123(R) permits public companies to
adopt its requirements using one of two methods. On April 14, 2005, the SEC
adopted a new rule amending the compliance dates for SFAS 123(R). Companies may
elect to apply this statement either prospectively, or on a modified version of
retrospective application under which financial statements for prior periods are
adjusted on a basis consistent with the pro forma disclosures required for those
periods under SFAS 123.
Effective
for the year ended December 31, 2007, the Company has fully adopted the
provisions of SFAS No. 123(R) and related interpretations as provided by SAB
107. As such, compensation cost is measured on the date of grant as the fair
value of the share-based payments. Such compensation amounts, if any, are
amortized over the respective vesting periods of the option grant.
Recently Issued Accounting
Pronouncements
The
company has adopted all recently issued accounting
pronouncements. The adoption of the accounting pronouncements,
including those not yet effective, is not anticipated to have a material effect
on the financial position or results of operations of the Company.
Subsequent
Events
We
evaluated subsequent events through the date and time our financial statements
were issued on February 5, 2010.
NOTE
3 - EQUITY TRANSACTIONS
On
October 4, 2007 (inception), the Company issued 975,000 shares of common stock
for the purchase of the license to manufacture, distribute and sell, the
Sore-EezÔ
Chinese herbal liniment, its initial product, from Yamit Lemoine. The
value of the license was determined to be the legal costs to create the license,
which was $1,200, as there were no other out-of-pocket costs for the license or
the development of the recipe.
On
November 4, 2007, the Company issued 5,000,000 shares of common stock to an
investor for cash in the amount of $11,100.
On
December 31, 2007, the Company issued 63,278 shares of common stock to an
investor for cash in the amount of $633.
On March
27, 2008, the Company issued 100,000 shares of common stock to our initial
directors for services rendered at a value of $4,008.
On
December 11, 2008, the Company completed its public offering pursuant to its
Form S-1 Registration Statement of 6,780 shares of Series A Convertible
Preferred Stock, which were converted into 1,762,800 shares of common stock and
provided aggregate offering proceeds in the amount of $67,800.
On April
1, 2009, the Company issued 100,000 shares of common stock to its transfer agent
for services rendered at a value of $3,846.
NOTE
4 – INCOME TAXES
The
Company provides for income taxes under ASC 740, “Income Taxes”, which was
previously Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes. SFAS No. 109 requires the use of an asset and liability approach
in accounting for income taxes. Deferred tax assets and liabilities are recorded
based on the differences between the financial statement and tax bases of assets
and liabilities and the tax rates in effect when these differences are expected
to reverse.
SFAS No.
109 requires the reduction of deferred tax assets by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized.
The
provision for income taxes differs from the amounts which would be provided by
applying the statutory federal income tax rate of 34% to the net loss before
provision for income taxes for the following reasons:
|
December
31,
|
December
31,
|
|||||||
|
2009
|
2008
|
|||||||
|
Income
tax expense (asset) at statutory rate
|
$
|
(24,348
|
)
|
$
|
(7,107
|
)
|
||
|
Valuation
allowance
|
24,348
|
7,107
|
||||||
|
Income
tax expense per books
|
$
|
-0-
|
$
|
-0-
|
||||
Net
deferred tax assets consist of the following components as of:
|
December
31,
|
December
31,
|
|||||||
|
2009
|
2008
|
|||||||
|
NOL
Carryover
|
$
|
94,043
|
$
|
22,432
|
||||
|
Valuation
allowance
|
(94,043
|
)
|
(22,432
|
)
|
||||
|
Net
deferred tax asset
|
$
|
-0-
|
$
|
-0
|
||||
Due to
the change in ownership provisions of the Tax Reform Act of 1986, net operating
loss carry forwards for the years ended December 31, 2009 and December 31, 2008,
were $94,043 and 22,432, respectively, and for federal income tax reporting
purposes are subject to annual limitations. Should a change in our
ownership occur the net operating loss carry forwards may be limited as to their
use in future years.
NOTE
5 - CONCENTRATION OF CREDIT RISK
Financial
instruments that potentially subject the Company to concentrations of credit
risk consist principally of cash deposits. Accounts at each institution are
insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At
December 31, 2009 and December 31, 2008, respectively, the Company had no
amounts in excess of FDIC insured limit.
NOTE
6 - LICENSE AGREEMENT
We have
entered into a license agreement with Yamit Lemoine, a significant shareholder
and the wife of our former chief executive officer, which grants us a license
for a term five (5) years until at least October 4, 2012 for the exclusive
worldwide use of the Sore-EezÔ Chinese herbal
liniment recipe and, perpetually, thereafter, if we have generated at least
$400,000 from the sale of products based on the Sore-EezÔ Chinese herbal
liniment recipe on or prior to such date. Pursuant to this license
agreement, we are required to exercise our best efforts to undertake and
maintain the commercial scale production, marketing and distribution of products
embodying the subject matter of the Sore-EezÔ Chinese herbal
liniment recipe. We may not sublicense or assign any of our rights
under the license agreement.
On
October 4, 2007, the date of our inception, we issued 975,000 shares of our
restricted common stock to Yamit Lemoine, for a purchase price of $0.0012308 per
share, for the license to the Sore-EezÔ Chinese herbal
liniment recipe. The value of the license was determined to be the
legal costs to create the license, which was $1,200, as there were no other
out-of-pocket costs for the license or the development of the
recipe. We do not have any future payments obligations to Yamit
Lemoine under the license agreement.
The
license will be amortized over five years using the straight line
method. Yamit Lemoine may terminate this license agreement in the
event that we have not recognized revenues of at least $400,000 from the sale of
products based on the Sore-EezÔ Chinese herbal
liniment recipe by October 4, 2012. We have not achieved this level
of sales as of December 31, 2009, so the license remains subject to termination
by the licensor at the end of such period.
The
estimated amortization expense over the next five years is as
follows:
|
Year
Ending December 31
|
||||
|
2007
|
$
|
60
|
||
|
2008
|
$
|
240
|
||
|
2009
|
240
|
|||
|
2010
|
240
|
|||
|
2011
|
240
|
|||
|
2012
|
180
|
|||
|
$
|
1,200
|
|||
|
FOUR
STAR HOLDINGS, INC.
|
||||||||
|
CONSOLIDATED
BALANCE SHEETS
|
||||||||
|
ASSETS
|
||||||||
|
March
31,
|
December
31,
|
|||||||
|
2010
|
2009
|
|||||||
|
(Unaudited)
|
||||||||
|
CURRENT
ASSETS:
|
||||||||
|
Cash
|
$ | - | $ | 137 | ||||
|
Accounts
receivable
|
44,872 | - | ||||||
|
Due
from related parties
|
875,048 | - | ||||||
|
Inventories:
|
402 | |||||||
|
Real
estate held for sale
|
3,389,566 | - | ||||||
|
Land
held for development
|
6,480,836 | - | ||||||
|
Total
Current Assets
|
10,790,322 | 539 | ||||||
|
FIXED
ASSETS:
|
||||||||
|
Equipment,
net of accumulated depreciation
|
889,724 | 345 | ||||||
|
OTHER
ASSETS:
|
||||||||
|
License,
net
|
660 | 660 | ||||||
|
Loan
origination fees, net of accumulated amortization
|
40,888 | - | ||||||
|
Total
other assets
|
41,548 | 660 | ||||||
|
Total
Assets
|
$ | 11,721,594 | $ | 1,544 | ||||
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
||||||||
|
CURRENT
LIABILITIES:
|
||||||||
|
Accounts
payable & accrued expenses
|
$ | 60,863 | $ | 7,000 | ||||
|
Long
Term Liabilities:
|
||||||||
|
Notes
payable
|
5,834,248 | - | ||||||
|
Deferred
tax liability
|
1,387,179 | - | ||||||
|
Total
long term liabilities
|
7,221,427 | - | ||||||
|
Total
Liabilities
|
7,282,290 | 7,000 | ||||||
|
SHAREHOLDERS'
EQUITY:
|
||||||||
|
Preferred
stock (50,000,000 authorized;
|
||||||||
|
par
value $.001; none issued and outstanding)
|
- | - | ||||||
|
Common
stock (100,000,000 shares authorized;
|
||||||||
|
no
par value; 22,234,228 and 8,001,078 issued and outstanding,
respectively)
|
4,533,347 | 88,587 | ||||||
|
Accumulated
deficit
|
(94,043 | ) | (94,043 | ) | ||||
|
Total
Shareholders' Equity (Deficit)
|
4,439,304 | (5,456 | ) | |||||
|
Total
Liabilities and Shareholders' Equity
|
$ | 11,721,594 | $ | 1,544 | ||||
The
accompanying notes are an integral part of these financial
statements
|
FOUR
STAR HOLDINGS, INC.
|
||||||||
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||
|
March
31,
|
March
31,
|
|||||||
|
2010
|
2009
|
|||||||
|
Unaudited
|
||||||||
|
Net
Sales
|
$ | 163,148 | $ | - | ||||
|
Cost
of Sales
|
116,575 | - | ||||||
|
Gross
Profit
|
46,573 | - | ||||||
|
Expenses:
|
||||||||
|
Amortization
|
2,813 | 60 | ||||||
|
Depreciation
|
2,596 | 25 | ||||||
|
General
and Administrative
|
80,516 | 17,430 | ||||||
|
Total
|
85,925 | (17,515 | ) | |||||
|
Loss
before other income (expense):
|
(39,352 | ) | (17,515 | ) | ||||
|
Other
income - commission
|
2,215 | - | ||||||
|
Interest
expense
|
(94,305 | ) | - | |||||
|
Total
other expense, net
|
(92,090 | ) | - | |||||
|
Net
(loss) before Income Taxes
|
(131,442 | ) | (17,515 | ) | ||||
|
Provision
for Income Taxes
|
- | - | ||||||
|
Net
loss
|
$ | (131,442 | ) | $ | (17,515 | ) | ||
|
Basic
and diluted net loss per common share
|
$ | (0.0076 | ) | $ | (0.0022 | ) | ||
|
Weighted
average number of common shares outstanding
|
17,386,048 | 7,901,078 | ||||||
The
accompanying notes are an integral part of these financial
statements.
|
FOUR
STAR HOLDINGS, INC.
|
||||||||
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||
|
March
31,
|
March
31,
|
|||||||
|
2010
|
2009
|
|||||||
|
Unaudited
|
||||||||
|
OPERATING
ACTIVITIES:
|
||||||||
|
Net
loss
|
$ | (131,442 | ) | $ | (17,515 | ) | ||
|
Adjustments
to reconcile net income to net cash
|
||||||||
|
used
in operating activities:
|
||||||||
|
Issuance
of common stock for services
|
60,829 | - | ||||||
|
Increase
in amortization
|
2,813 | 60 | ||||||
|
Increase
in depreciation
|
2,596 | 25 | ||||||
|
Changes
in operating assets and operating liabilities:
|
||||||||
|
Accounts
receivable
|
(44,872 | ) | - | |||||
|
Due
from related parties
|
(875,048 | ) | - | |||||
|
Changes in
inventory:
|
||||||||
|
Real
estate held for sale
|
(3,389,566 | ) | - | |||||
|
Land
held for development
|
(6,480,836 | ) | - | |||||
|
Loan
origination fees
|
(38,075 | ) | - | |||||
|
Accounts
payable and accrued expenses
|
60,863 | - | ||||||
|
Deferred
tax liability
|
1,387,179 | - | ||||||
|
Net
cash used in operating activities
|
(9,445,559 | ) | (17,430 | ) | ||||
|
INVESTING
ACTIVITIES:
|
||||||||
|
Increase
in Equipment
|
(882,628 | ) | - | |||||
|
Net
cash used in investing activities
|
(882,628 | ) | - | |||||
|
FINANCING
ACTIVITIES:
|
||||||||
|
Increase
in notes payable
|
5,834,248 | - | ||||||
|
Stock
issued for investment in Ridgefield Development
Corporation
|
4,417,772 | - | ||||||
|
Stock
issued for investment in Four Star Realty
|
26,984 | - | ||||||
|
Net
cash provided by financing activities
|
10,279,004 | - | ||||||
|
NET
DECREASE IN CASH
|
(49,183 | ) | (17,430 | ) | ||||
|
CASH
BEGINNING BALANCE
|
49,183 | 66,613 | ||||||
|
CASH
ENDING BALANCE
|
$ | - | $ | 49,183 | ||||
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
|
Taxes
paid
|
$ | - | $ | - | ||||
|
Interest
paid
|
$ | 94,305 | $ | - | ||||
The
accompanying notes are an integral part of these financial
statements.
FOUR
STAR HOLDINGS, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March
31, 2010
NOTE
1 – BASIS OF PRESENTATION
The
accompanying unaudited interim financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission for the presentation of interim financial information, and include
all the information and footnotes required by generally accepted accounting
principles for complete financial statements. The audited financial
statements for the period December 31, 2009 and the year then ended were filed
on February 5, 2010 with the Securities and Exchange Commission are hereby
referenced. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended
March 31, 2010 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2010.
NOTE
2 - DESCRIPTION OF BUSINESS
Description of
Business
Dragon’s
Lair Holdings, Inc., a Florida corporation, was incorporated on October 4, 2007,
and conducts its operations through its operating subsidiaries. Our Company was
a provider of personal care products by means of a network of direct sales
consultants. Our business strategy was to provide quality products,
operate at a profit, and enable our direct sales consultants to operate at a
profit.
On
December 14, 2009, Bobby Smith, Jr., (100% owner of Four Star Investment, Inc.),
and Frances Mize (a single person) together consummated the purchase of
5,928,235 shares of common stock of Dragon’s Lair Holdings, Inc. from Talles
Investments, Inc., Michel Lemoine, Yamit Lemoine, H. Bradley Ress, Steve
Kravitz, Joseph R. Pierre-Louis, and Island Capital Management, LLC, which
constituted 74.1 percent (74.1%) of the issued and outstanding shares of common
stock of Dragon’s Lair Holdings, Inc., for an aggregate cash purchase price in
the amount of $325,000. The source of the funds for the purchase
price for the shares of common stock of the Company was from Four Star
Investments, Inc., an Alabama corporation, which is wholly owned by Bobby Smith,
Jr. As a result of the transactions, (i) Bobby R. Smith, Jr. owns
individually 43.7 percent (43.7%) of the issued and outstanding common stock of
the Company and has the sole power to vote and dispose of the such shares (ii)
Frances Mize owns individually 30.4 percent (30.4%) of the issued and
outstanding common stock of Dragon’s Lair Holdings, Inc. and has the sole power
to vote and dispose of the such shares.
On
February 10, 2010, Dragon’s Lair Holdings, Inc. changed its name to Four Star
Holdings, Inc., (hereinafter known as the “Company”). The Company is a real
estate acquisition and development entity that invests in companies that operate
as real estate developers and home builders in order to (i) maximize cash flows,
(ii) create value within the organizations and (iii) eventually sell at a
profit.
Ridgefield
Development Corporation and Four Star Realty, LLC, an Alabama corporation and an
Alabama limited liability company, incorporated and organized on September 17,
2003 and January 1, 2006 respectively, were acquired on March 31, 2010 by the
Company. (See Note 6). As of March 31, 2010, the company structure is
set forth in the following chart:
|
FOUR
STAR HOLDINGS, INC.
a
Florida corporation
|
|
RIDGEFIELD
DEVELOPMENT CORPORATION
An
Alabama corporation
(100%
Owned Subsidiary)
|
|
FOUR
STAR REALTY, LLC
An
Alabama limited liability company
(100%
Owned Subsidiary)
|
Our principal executive office is located at 100 Four Star Lane, Odenville, AL 35120. Our telephone number is (205)-640-7821, and our company website is www.4StarHoldings.com. Our fiscal year ends on December 31st.
Basis of
Presentation
The
accompanying consolidated financial statements have been prepared by the
Company. The Company’s consolidated financial statements are prepared in
accordance with generally accepted accounting principles in the United States of
America (“US GAAP”). The consolidated financial statements of the Company
include the Company and its subsidiaries. All material inter-company balances
and transactions have been eliminated.
NOTE
3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash
Equivalents
The
Company considers all highly liquid debt instruments with original maturities of
three months or less to be cash equivalents. As of March 31, 2010, the Company
has no cash equivalents.
Use of
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Inventories
Inventories
are stated at cost unless the inventory within a community is determined to be
impaired, in which case the impaired inventory is written down to fair value.
Inventory costs include land, land development and home construction costs, real
estate taxes, deposits on land purchase contracts and interest related to
development and construction. Construction overhead and selling expenses are
expensed as incurred. Real estate held-for-sale is classified as inventories
until delivered. Land, land development, amenities and other costs are
accumulated by specific area and allocated to homes within the respective areas.
The Company reviews its inventory for indicators of impairment by evaluating
each community during each reporting period. The inventory within each community
is categorized as real estate held-for-sale or land held for development based
on the development state within respective phases.
Revenue
Recognition
Revenues
from fixed-price contracts are recognized on the completed contract method. This
method is used because the typical contract is completed in three months or
less, and financial position and results of operations do not vary significantly
from those that would result from use of the percentage-of-completion method. A
contract is considered complete when all costs except insignificant items have
been incurred and the installation is operating according to specifications or
has been accepted by the customer.
Contract
costs include all direct material and labor costs and those indirect costs
related to contract performance, such as indirect labor, supplies, tools,
repairs, and depreciation costs. General and administrative costs are charged to
expense as incurred. Provisions for estimated losses on uncompleted contracts
are made in the period in which such losses are determined.
Earnings (Loss) Per
Share
The
Company computes earnings per share in accordance with the Accounting Standards
Codification (“ASC”) 260 “Earnings Per Share” which was previously Statement of
Accounting Standards No. 128, “Earnings per Share” (“SFAS No. 128”). Under
the provisions of SFAS No. 128, basic earnings per share is computed by dividing
the net income (loss) for the period by the weighted average number of common
shares outstanding during the period. Diluted earnings per share is computed by
dividing the net income (loss) for the period by the weighted average number of
common and potentially dilutive common shares outstanding during the
period. There were no potentially dilutive common shares outstanding
during the period.
Income
Taxes
The
Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, “Accounting for Income Taxes.” Under the asset and
liability method of Statement 109, deferred tax assets and liabilities are
recognized for the estimated 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 in effect for the year in which those
temporary differences are expected to be recovered or settled.
Fair Value of Financial
Instruments
The
Company considers that the carrying amount of financial instruments, including
accounts payable, approximates fair value because of the short maturity of these
instruments.
Share Based
Payments
In
December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment,” which
replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R),
companies are required to measure the compensation costs of share-based
compensation arrangements based on the grant-date fair value and recognize the
costs in the financial statements over the period during which employees or
independent contractors are required to provide services. Share-based
compensation arrangements include stock options and warrants, restricted share
plans, performance-based awards, share appreciation rights and employee share
purchase plans. In March 2005, the SEC issued Staff Accounting Bulletin No. 107,
or “SAB 107”. SAB 107 expresses views of the staff regarding the interaction
between SFAS No. 123(R) and certain SEC rules and regulations and provides the
staff's views regarding the valuation of share-based payment arrangements for
public companies. SFAS No. 123(R) permits public companies to adopt its
requirements using one of two methods. On April 14, 2005, the SEC adopted a new
rule amending the compliance dates for SFAS 123(R). Companies may elect to apply
this statement either prospectively, or on a modified version of retrospective
application under which financial statements for prior periods are adjusted 1on
a basis consistent with the pro forma disclosures required for those periods
under SFAS 123.
Effective
commencing on the year ended December 31, 2007, the Company has fully adopted
the provisions of SFAS No. 123(R) and related interpretations as provided by SAB
107. As such, compensation cost is measured on the date of grant as the fair
value of the share-based payments. Such compensation amounts, if any, are
amortized over the respective vesting periods of the option grant.
Recent Accounting
Pronouncements
FASB
Accounting Standards Codification
(Accounting
Standards Update (“ASU”) 2009-01)
In
June 2009, FASB approved the FASB Accounting Standards Codification (“the
Codification”) as the single source of authoritative nongovernmental GAAP. All
existing accounting standard documents, such as FASB, American Institute of
Certified Public Accountants, Emerging Issues Task Force and other related
literature, excluding guidance from the Securities and Exchange Commission
(“SEC”), have been superseded by the Codification. All other non-grandfathered,
non-SEC accounting literature not included in the Codification has become
non-authoritative. The Codification did not change GAAP, but instead introduced
a new structure that combines all authoritative standards into a comprehensive,
topically organized online database. The Codification is effective for interim
or annual periods ending after March 15, 2009, and impacts the Company’s
financial statements as all future references to authoritative accounting
literature will be referenced in accordance with the Codification. There have
been no changes to the content of the Company’s financial statements or
disclosures as a result of implementing the Codification during the quarter
ended March 31, 2010. As a result of the Company’s
implementation of the Codification during the quarter ended March 31, 2010,
previous references to new accounting standards and literature are no longer
applicable. In the current quarter financial statements, the Company will
provide reference to both new and old guidance to assist in understanding the
impacts of recently adopted accounting literature, particularly for guidance
adopted since the beginning of the current fiscal year but prior to the
Codification.
In
June 2009, the FASB revised the authoritative guidance for consolidating
variable interest entities, which changes how a company determines when an
entity that is insufficiently capitalized or is not controlled through voting
(or similar rights) should be consolidated. The determination of whether a
company is required to consolidate an entity is based on, among other things, an
entity’s purpose and design and a company’s ability to direct the activities of
the entity that most significantly impact the entity’s economic performance. The
Company is currently evaluating the impact the adoption of this guidance will
have on its consolidated financial statements.
In
January 2010, the FASB issued ASU 2010-06, “Improving Disclosures about
Fair Value Measurements,” which requires additional disclosures about transfers
between Levels 1 and 2 of the fair value hierarchy and disclosures about
purchases, sales, issuances and settlements in the roll forward of activity in
Level 3 fair value measurements. This guidance was effective for the Company in
the current quarter, except for the Level 3 activity disclosures, which are
effective for fiscal years beginning after December 15, 2010. The adoption
of this guidance, which is related to disclosure only, will not have a material
impact on the Company’s consolidated financial position, results of operations
or cash flows.
Subsequent
Events
(Included
in Accounting Standards Codification (“ASC”) 855 “Subsequent Events”, previously
SFAS No. 165 “Subsequent Events”)
SFAS
No. 165 established general standards of accounting for and disclosure of
events that occur after the balance sheet date, but before the financial
statements are issued or available to be issued (“subsequent events”). An entity
is required to disclose the date through which subsequent events have been
evaluated and the basis for that date. For public entities, this is the date the
financial statements are issued. SFAS No. 165 does not apply to subsequent
events or transactions that are within the scope of other GAAP and did not
result in significant changes in the subsequent events reported by the Company.
SFAS No. 165 became effective for interim or annual periods ending after
June 15, 2009 and did not impact the Company’s financial statements. The
Company evaluated for subsequent events through the issuance date of the
Company’s financial statements. No recognized or non-recognized subsequent
events were noted.
Determination of the Useful
Life of Intangible Assets
(Included
in ASC 350 “Intangibles – Goodwill and Other”, previously FSP SFAS No. 142-3
“Determination of the Useful Lives of Intangible Assets”)
FSP SFAS
No. 142-3 amended the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life of a
recognized intangible asset under previously issued goodwill and intangible
assets topics. This change was intended to improve the consistency between the
useful life of a recognized intangible asset and the period of expected cash
flows used to measure the fair value of the asset under topics related to
business combinations and other GAAP. The requirement for determining useful
lives must be applied prospectively to intangible assets acquired after the
effective date and the disclosure requirements must be applied prospectively to
all intangible assets recognized as of, and subsequent to, the effective date.
FSP SFAS No. 142-3 became effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. The adoption of FSP SFAS No. 142-3 did not impact the
Company’s financial statements.
Non-controlling
Interests
(Included
in ASC 810 “Consolidation”, previously SFAS No. 160 “Non-controlling Interests
in Consolidated Financial Statements an amendment of ARB No. 51”)
SFAS
No. 160 changed the accounting and reporting for minority interests such
that they will be recharacterized as non-controlling interests and classified as
a component of equity. SFAS No. 160 became effective for fiscal years
beginning after December 15, 2008 with early application prohibited. The
Company implemented SFAS No. 160 at the start of fiscal 2009 and no longer
records an intangible asset when the purchase price of a non-controlling
interest exceeds the book value at the time of buyout. Any shortfall resulting
from the early buyout of non-controlling interests will continue to be
recognized as a benefit in partner investment expense up to the initial amount
recognized at the time of buy-in. Additionally, operating losses can be
allocated to non-controlling interests even when such allocation results in a
deficit balance (i.e., book value can go
negative). Minority interest expense is no longer separately reported
as a reduction to net income on the consolidated income statement, but is
instead shown below net income under the heading “net income attributable to
non-controlling interests.” The adoption of SFAS No. 160 did not have any
other material impact on the Company’s financial statements.
Consolidation of Variable
Interest Entities – Amended
(To be
included in ASC 810 “Consolidation”, SFAS No. 167 “Amendments to FASB
Interpretation No. 46(R)”)
SFAS
No. 167 amends FASB Interpretation No. 46(R) “Consolidation of
Variable Interest Entities regarding certain guidance for determining whether an
entity is a variable interest entity and modifies the methods allowed for
determining the primary beneficiary of a variable interest entity. The
amendments include: (1) the elimination of the exemption for qualifying
special purpose entities, (2) a new approach for determining who should
consolidate a variable-interest entity, and (3) changes to when it is
necessary to reassess who should consolidate a variable-interest entity. SFAS
No. 167 is effective for the first annual reporting period beginning after
November 15, 2009, with earlier adoption prohibited. The Company will adopt
SFAS No. 167 in fiscal 2010 and does not anticipate any material impact on
the Company’s financial statements.
Management
does not believe that any other recently issued, but not yet effective,
accounting standards or pronouncements, if currently adopted, would have a
material effect on the Company’s financial statements.
NOTE
4 - EQUITY TRANSACTIONS
On
October 4, 2007 (inception), Dragon’s Lair Holdings issued 975,000 shares of
common stock for the purchase of the license to manufacture, distribute and
sell, the Sore-Eez Chinese herbal liniment, its initial product, from Yamit
Lemoine. The value of the license was determined to be the legal
costs to create the license, which was $1,200, as there were no other
out-of-pocket costs for the license or the development of the
recipe.
On
November 4, 2007, Dragon’s Lair Holdings, Inc. issued 5,000,000 shares of common
stock to an investor for cash in the amount of $11,100.
On
December 31, 2007, Dragon’s Lair Holdings, Inc. issued 63,278 shares of common
stock to an investor for cash in the amount of $633.
On March
27, 2008, Dragon’s Lair Holdings, Inc. issued 100,000 shares of common stock to
directors for services rendered at a value of $4,008.
On
December 11, 2008, Dragon’s Lair Holdings, Inc. completed its public offering
pursuant to its Form S-1 Registration Statement of 6,780 shares of Series A
Convertible Preferred Stock, which were converted into 1,762,800 shares of
common stock and provided aggregate offering proceeds in the amount of
$67,800.
On April
1, 2009, Dragon’s Lair Holdings, Inc. issued 100,000 shares of common stock to
its transfer agent for services rendered at a value of $3,846.
On
December 14, 2009, Bobby Smith Jr. and Frances T. Mize purchased 74.1% of the
issued and outstanding stock of Dragon’s Lair holdings, Inc. exchanging
beneficial ownership to these persons.
On
February 10, 2010, the Company issued 2,075,000 restricted shares for consultant
services.
On
February 10, 2010, the Company issued an aggregate of 12,000,000 shares of
common stock of the Company, of which six (6) million were issued to each of
Frances Mize and Bobby R. Smith, Jr. to cover extraordinary expenses incurred
and paid on behalf of the Company and for future and probable
acquisitions.
On
February 10, 2010, the Company executed an agreement to issue an aggregate of
200,000 shares of common stock to Joseph L. Pittera, attorney for the Company,
for services rendered.
On March
15, 2010, the Company issued 158,150 restricted shares for IT consulting
services.
NOTE
5 - CONCENTRATION OF CREDIT RISK
Financial
instruments that potentially subject the Company to concentrations of credit
risk consist principally of cash deposits. Accounts at each institution are
insured by the Federal Deposit Insurance Corporation (“FDIC”). At March 31,
2010, the Company had no amounts in excess of the FDIC insured
limit.
NOTE
6 – BUSINESS COMBINATIONS
On March
31, 2010, the Company acquired 100% of the outstanding common shares of
Ridgefield Development Corporation, (“Ridgefield”) from Ridgefield’s former
majority shareholders (“the shareholders”). Ridgefield is a real estate
development company in Odenville, Alabama, and the acquisition is expected to
increase the Company’s brand awareness and market share in the area. The
business combination was a tax-free reorganization under Section 368(a) of the
Internal Revenue Code.
Consideration
paid by the Company included the issuance of 1,477,516 shares of Company common
stock. The fair value assigned to the consideration is as follows:
The fair
value of $4,417,772 for the 1,477,516 shares issued by Company as consideration
paid for Ridgefield was determined on the basis of the closing market price of
Company’s common shares on the acquisition date.
The
transaction was accounted for using the acquisition method required by Topic
805, Business
Combinations. The assignment of the total consideration as of the date of
the acquisition is as follows:
|
Buildings,
net
|
872,737 | |||
|
Real
estate held for sale
|
3,389,566 | |||
|
Land
|
6,480,836 | |||
|
Other
assets
|
918,847 | |||
|
Accounts
payable and accrued expenses
|
(22,787 | ) | ||
|
Deferred
income tax liability
|
(1,387,179 | ) | ||
|
Notes
payable
|
(5,834,248 | ) | ||
|
Total
fair value
|
$ | 4,417,772 |
Fair
valuation methods used for the identifiable net assets acquired in that
acquisition make use of quoted prices in active markets and discounted cash
flows using current interest rates.
Seasonality
Historically,
the homebuilding industry has experienced seasonal fluctuations; therefore, the
operating results for the period ended March 31, 2010 is not necessarily
indicative of the results that may be expected for the fiscal year ending
December 31, 2010.
On March
31, 2010, the Company acquired 100% of the membership interests of Four Star
Realty, LLC (“Realty”) in a stock-for-membership interests exchange. The Company
issued 9,026 shares for all interests held by the members of Realty. The
transaction was a tax-free reorganization under Section 368(b) of the Internal
Revenue Code. Realty is a licensed real estate brokerage located in Odenville,
Alabama, and the acquisition is expected to increase the Company’s brand
awareness and market share in the area.
DEALER
PROSPECTUS DELIVERY OBLIGATION
No
dealer, salesman or any other person has been authorized to give any information
or to make any representations other than those contained in this prospectus,
and, if given or made, such information or representations may not be relied on
as having been authorized by us or any of the underwriters. Neither the delivery
of this prospectus nor any sale made hereunder shall under any circumstances
create an implication that there has been no change in our affairs since the
date of this prospectus. This prospectus does not constitute any offer to sell,
or solicitation of any offer to buy, by any person in any jurisdiction in which
it is unlawful for any such person to make such an offer or solicitation.
Neither the delivery of this prospectus nor any offer, solicitation or sale made
hereunder, shall under any circumstances create any implication that the
information herein is correct as of any time subsequent to the date of the
prospectus.
Until 180
days from the effective 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 dealers'
obligation to deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.
Independent Auditor’s
Report
To the
Members
Four Star
Realty, LLC
100 Four
Star Lane
Odenville,
AL 35120
We have
audited the accompanying balance sheets of Four Star Realty, LLC as of December
31, 2008 and 2009, and the related statements of operations, changes in members’
equity, and cash flows for the years ended December 31, 2008 and 2009. These
financial statements are the responsibility of Four Star Realty, LLC management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Four Star Realty, LLC as of
December 31, 2008 and 2009, and the results of its operations and its cash flows
for the years ended December 31, 2008 and 2009 in conformity with generally
accepted accounting principles.
Labrozzi
& Co., P.A.
Miami,
Florida
January
21, 2010
|
FOUR
STAR REALTY, LLC
|
||||||||||||
|
BALANCE
SHEETS
|
||||||||||||
|
December
31, 2008 and 2009
|
||||||||||||
|
ASSETS
|
||||||||||||
|
Pro
forma
|
||||||||||||
|
2009
|
2008
|
2009
|
||||||||||
|
Cash
and cash equivalents
|
$ | 15,340 | $ | 16,195 | $ | 15,477 | ||||||
|
Due
from members
|
25,505 | 15,000 | 25,505 | |||||||||
|
Inventories
|
- | - | 402 | |||||||||
|
License,
net
|
- | - | 660 | |||||||||
|
Property,
plant, and equipment, net of accumulated depreciation
|
18,161 | 24,236 | 18,506 | |||||||||
|
TOTAL
ASSETS
|
$ | 59,006 | $ | 55,431 | $ | 60,550 | ||||||
|
LIABILITIES
AND MEMBERS' EQUITY
|
||||||||||||
|
Payroll
liabilities
|
$ | 2,963 | $ | 1,119 | $ | 2,963 | ||||||
|
Accounts
Payable
|
7,000 | |||||||||||
|
Due
to member
|
5,071 | 3,000 | 5,071 | |||||||||
|
Commission
payable
|
12,129 | 14,422 | 12,129 | |||||||||
|
TOTAL
LIABILITIES
|
20,163 | 18,541 | 27,163 | |||||||||
|
Members'
equity
|
38,843 | 36,890 | 33,387 | |||||||||
|
TOTAL
LIABILITIES AND MEMBERS' EQUITY
|
$ | 59,006 | $ | 55,431 | $ | 60,550 | ||||||
The
accompanying notes are an integral part of these financial statements.
|
STATEMENTS
OF OPERATIONS and CHANGES IN MEMBERS' EQUITY
|
||||||||||||
|
Years
Ended December 31, 2008 and 2009
|
||||||||||||
|
Pro
forma
|
||||||||||||
|
2009
|
2008
|
2009
|
||||||||||
|
Revenue
|
||||||||||||
|
Commission
income
|
$ | 818,277 | $ | 1,049,817 | $ | 818,277 | ||||||
|
Cost
of sales-commssions
|
627,575 | 800,122 | 627,575 | |||||||||
|
Gross
profit
|
190,702 | 249,695 | 190,702 | |||||||||
|
General
and administrative expenses
|
||||||||||||
|
Advertising
and marketing, net of reimbursements
|
44,502 | 73,466 | 44,502 | |||||||||
|
Amortization
|
- | - | 240 | |||||||||
|
Depreciation
|
6,075 | 6,080 | 6,175 | |||||||||
|
Insurance
|
3,530 | 5,321 | 3,530 | |||||||||
|
Miscellaneous
|
14,090 | 24,537 | 14,090 | |||||||||
|
Salaries
and wages
|
43,282 | 62,024 | 43,282 | |||||||||
|
Repairs
and maintenance
|
2,275 | 3,071 | 2,275 | |||||||||
|
Professional
fees
|
33,031 | 10,790 | 33,031 | |||||||||
|
Rent
|
23,000 | 42,000 | 23,000 | |||||||||
|
Supplies
|
5,962 | 8,279 | 5,962 | |||||||||
|
Utilities
|
13,002 | 13,906 | 13,002 | |||||||||
|
Other
General & Administrative Costs
|
- | - | 71,271 | |||||||||
|
Total
expenses
|
188,749 | 249,474 | 260,360 | |||||||||
|
Net
income
|
$ | 1,953 | $ | 221 | $ | (69,658 | ) | |||||
|
MEMBERS'
EQUITY DECEMBER 31, 2008
|
$ | 36,890 | ||||||||||
|
2009
NET INCOME
|
1,953 | |||||||||||
|
MEMBERS'
EQUITY DECEMBER 31, 2009
|
$ | 38,843 | ||||||||||
The
accompanying notes are an integral part of these financial statements.
|
FOUR
STAR REALTY, LLC
|
||||||||
|
STATEMENTS
OF CASH FLOWS
|
||||||||
|
Years
Ended December 31, 2008 and 2009
|
||||||||
|
2009
|
2008
|
|||||||
|
Cash
Flows from Operating Activities
|
||||||||
|
Net
income from operations
|
$ | 1,953 | $ | 221 | ||||
|
Adjustments
to reconcile net income to net cash
|
||||||||
|
used
in operating activities:
|
||||||||
|
Depreciation
|
6,075 | 6,080 | ||||||
|
Changes
in operating assets and operating liabilities:
|
||||||||
|
Note
receivable-related party
|
(10,505 | ) | (15,000 | ) | ||||
|
Payroll
liabilities
|
1,844 | (758 | ) | |||||
|
Due
to member
|
2,071 | (9,081 | ) | |||||
|
Commissions
payable
|
(2,293 | ) | 14,422 | |||||
|
Net
cash used in operating activities
|
(855 | ) | (4,116 | ) | ||||
|
Cash
Flows from Investing Activities
|
||||||||
|
Cash
paid for equipment
|
- | (1,888 | ) | |||||
|
Net
cash used in investing activities
|
- | (1,888 | ) | |||||
|
Net
change in cash and cash equivalents
|
(855 | ) | (6,004 | ) | ||||
|
Cash
and cash equivalents - beginning of year
|
16,195 | 22,199 | ||||||
|
Cash
and cash equivalents - end of year
|
$ | 15,340 | $ | 16,195 | ||||
|
Supplemental Disclosure of Cash Flow
Information:
|
||||||||
|
Cash
paid for interest
|
$ | - | $ | - | ||||
|
Cash
paid for taxes
|
$ | - | $ | - | ||||
The
accompanying notes are an integral part of these financial
statements.
NOTE 1 -
DESCRIPTION OF ORGANIZATION
Organization. Four
Star Realty, LLC (the “Company”) was formed on January 3, 2006 under the laws of
the state of Alabama. The Company is engaged to perform all acts and lawful
transactions relating to real estate business including sale, purchase,
management, operation, construction, refurbishing and trading in plots of land
for construction, real estate of all categories, owned either by the company or
by related or other third parties.
Basis of accounting.
The financial statements are prepared using the accrual basis of
accounting. Revenues are recognized when services are rendered and
expenses are recognized in the period in which they were incurred. The basis of
accounting conforms to accounting principles generally accepted in the United
States of America.
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLCIES
Use of estimates. The
preparation of financial statements in conformity with generally accepted
accounting principles (GAAP) 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.
Cash and cash
equivalents. The Company considers all highly liquid investments with
original maturities of three months or less to be cash equivalents. There were
no cash equivalents at December 31, 2009.
Revenue recognition.
The Company recognizes revenue in accordance with Statement of Accounting Standards
No. 66, Accounting for Real Estate Sales. The Company recognizes revenue
from real estate sales under the full accrual method. Under the full accrual
method, profit may be realized in full when real estate is sold, provided
(1) the profit is determinable and (2) the earnings process is
virtually complete (the Company is not obligated to perform significant
activities after the sale to earn the profit). The Company recognizes revenue
from real estate sales transactions on the closing date.
Impairment and Disposal of
Long-Lived Assets. The Company evaluates the carrying value of its
long-lived assets under the provisions of SFAS No. 144, “Accounting for the
Impairment or Disposal of Long-Lived Assets”. Statement No. 144
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted future
cash flows estimated to be generated by those assets are less than the assets’
carrying amount. If such assets are impaired, the impairment to be recognized is
measured at the
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLCIES (Continued)
amount by
which the carrying amount of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying value or fair
value, less costs to sell.
Income taxes: The
Company has elected partnership status for income tax purposes. Accordingly, a
provision for income taxes has not been established.
New
accounting pronouncements:
Fair Value
Measurements
In
September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements". SFAS No. 157 provides guidance for using fair
value to measure assets and liabilities. SFAS No. 157 addresses the requests
from investors for expanded disclosure about the extent to which companies
measure assets and liabilities at fair value, the information used to measure
fair value and the effect of fair value measurements on earnings. SFAS No. 157
applies whenever other standards require (or permit) assets or liabilities to be
measured at fair value, and does not expand the use of fair value in any new
circumstances. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and was adopted by the Company in
the first quarter of fiscal year 2006. The Company is unable at this time to
determine the effect that its adoption of SFAS No. 157 will have on its results
of operations and financial condition.
In
February 2008, the FASB issued Staff Position (“FSP”) 157-2,
“Effective Date of FASB Statement No. 157”. This FSP delays the
effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at fair value on a
recurring basis (at least annually) to fiscal years beginning after
November 15, 2008, and interim periods within those fiscal years. The
impact of adoption was not material to the Company’s financial condition or
results of operations.
Accounting for Uncertainty
in Income Taxes
In July
2006, the FASB issued FASB
Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes – an
interpretation of FASB Statement No. 109". FIN 48 clarifies that
accounting for uncertainty in income taxes recognized under SFAS No. 109
"Accounting for Income Taxes". FIN 48 prescribes a recognition threshold and
measurement attribute for financial statement recognition measurement of a tax
position taken or expected to be taken in a tax return and also provides
guidelines on various related matters such as derecognition,
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLCIES (Continued)
measurement
and classification of income tax uncertainties, interest and penalties, and
disclosure. FIN 48 also includes guidance concerning accounting for income tax
uncertainties in interim periods and increases the level of required disclosures
associated with any recorded income tax uncertainties. The differences between
the amount recognized in the statement of financial position prior to the
adoption of FIN 48 and the amounts reported after adoption are to be accounted
for as a cumulative-effect adjustment recorded to the beginning balance of
retained earnings. FIN 48 was effective beginning in fiscal year 2007 and did
not have a material effect on the Company's financial position, results of
development stage activities or liquidity.
Considering the Effects of
Prior Year Misstatements
In
September 2006, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 108
(SAB No. 108) "Considering the Effects of Prior Year Misstatements When
Qualifying Misstatements in Current Year Financial Statements". SAB No.
108 provides interpretive guidance on how the effects of the carryover or
reversal of prior year misstatements should be considered in qualifying a
current year misstatement. The SEC staff believes that registrants should
qualify errors using both a balance sheet and income statement approach and
evaluate whether either approach results in qualifying a current year
misstatement that, when all relevant quantitative and qualitative factors are
considered, is material. The provisions of SAB No. 108 were effective for the
Company's fiscal year ending December 31, 2006. The adoption of SAB No. 108 did
not have a material impact on the Company's financial statements.
Business
Combinations
In
December 2007, the FASB issued SFAS No. 141(R) “Business
Combinations”. This Statement replaces the original SFAS No.
141. This Statement retains the fundamental requirements in
Statement 141 that the acquisition method of accounting (which Statement
No. 141 called the purchase method) be used for all business combinations and
for an acquirer to be identified for each business combination. The objective of
this SFAS No. 141(R) is to improve the relevance, and comparability of the
information that a reporting entity provides in its financial reports about a
business combination and its effects. To accomplish that, SFAS No. 141(R)
establishes principles and requirements for how the acquirer:
|
1.
|
Recognizes
and measures in its financial statements the identifiable assets acquired,
the liabilities assumed, and any non-controlling interest in the
acquiree.
|
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLCIES (Continued)
|
2.
|
Recognizes
and measures the goodwill acquired in the business combination or a gain
from a bargain purchase. the beginning of the first annual reporting
period beginning on or after December 15, 2008 and may not be applied
before that date.
|
The
Company is unable at this time to determine the effect that its adoption of SFAS
No. 141(R) will have on its results of operations and financial
condition.
Fair Value Option for
Financial Assets and Financial Liabilities
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities – Including an amendment of FASB
Statement No. 115”, which becomes effective for the Company on February
1, 2008, permits companies to choose to measure many financial instruments and
certain other items at fair value and report unrealized gains and losses in
earnings. Such accounting is optional and is generally to be applied instrument
by instrument. The Company does not anticipate that the election, of this
fair-value option will have a material effect on its financial condition,
results of operations, cash flows or disclosures.
NOTE 3 -
PROPERTY PLANT & EQUIPMENT
Amounts
and expected lives of property plant & equipment are as
follows:
|
Amounts
|
Expected useful lives
|
||||
|
Computer
equipment
|
$ | 3,881 |
3-5
years
|
||
|
Furniture
|
21,447 |
5-7
years
|
|||
|
Telephone
equipment
|
12,050 |
5-7
years
|
|||
|
Total
depreciable PP&E
|
37,378 | ||||
|
Less:
Accumulated depreciation
|
(19,217 | ) | |||
|
Net
depreciable PP&E
|
18,161 | ||||
|
Total
net PP&E
|
$ | 18,161 | |||
Depreciation
expense for December 31, 2008 and 2009 was $6,080 and $6,075
respectively.
NOTE 4-
DUE FROM MEMBERS
During
2009, the Company made loans to the members of the Company. The balance of the
outstanding receivable as of December 31, 2009 is $25,505.
NOTE- 5
DUE TO MEMBER
The
managing member loaned the Company money for operations. During 2009, the
managing member paid expenses on behalf of the Company in the amount of $2,071.
Balances due as of December 31, 2008 and 2009 were $3,000 and $5,071
respectively.
NOTE- 6
OPERATING LEASE AGREEMENT
The
following is a schedule by years of future minimum rental payments
required under operating leases that have initial or remaining
noncancelable lease terms in excess of one year as of December 31,
2009:
Year
ending December 31,:
|
2010
|
$ | 24,000 | ||
|
2011
|
$ | 24,000 | ||
|
2012
|
$ | 24,000 | ||
|
2013
|
$ | 24,000 | ||
|
2014
|
$ | 24,000 |
NOTE- 7
LITIGATION
During
2008, the Company was involved in one pending matter in the Circuit Court of St.
Clair County, Alabama, styled Jennifer Englett, et al. vs. Four
Star Realty, LLC, et al., CV 08-30. According to the pleadings
in the case, Jennifer Englett,
(the “Plaintiffs”) have asserted claims arising from construction defects
in their homes. The Company was the exclusive listing agent for the sale of the
homes and as such has been named as a defendant in the
lawsuit. According to the Company’s counsel, based on the evidence
and testimony to date, it appears the Plaintiffs will have a difficult time
prevailing on any claims directed at the Company and he anticipates moving for
summary judgment against the Plaintiffs as soon as all depositions have been
recorded.
Independent
Auditor’s Report
To the
Shareholders
Ridgefield
Development, Corporation
100 Four
Star Lane
Odenville,
AL 35120
We have
audited the accompanying balance sheets of Ridgefield Development, Corporation
as of December 31, 2008 and 2009, and the related statements of operations,
changes in shareholders’ equity, and cash flows for the years 2008 and 2009 then
ended. These financial statements are the responsibility of Ridgefield
Development, Corporation management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Ridgefield Development, Corporation
as of December 31, 2008 and 2009, and the results of its operations and its cash
flows for the years 2008 and 2009 then ended in conformity with generally
accepted accounting principles.
Labrozzi
& Co., P.A.
Miami,
Florida
February
27, 2010
|
RIDGEFIELD
DEVELOPMENT, CORPORATION
|
||||||||||||
|
BALANCE
SHEETS
|
||||||||||||
|
December
31, 2008 and 2009
|
||||||||||||
|
ASSETS
|
Pro-forma
|
|||||||||||
|
2009
|
2008
|
2009
|
||||||||||
|
Current
assets:
|
||||||||||||
|
Cash
|
$ | - | $ | 14,318 | $ | 137 | ||||||
|
Accounts
receivable
|
42,872 | 47,457 | 42,872 | |||||||||
|
Inventories
|
- | - | 402 | |||||||||
|
Total
current assets
|
42,872 | 61,775 | 43,411 | |||||||||
|
Non-current
assets
|
||||||||||||
|
Loan
closing costs, net of accumulated amortization
|
29,072 | 40,325 | 29,072 | |||||||||
|
Due
from related party
|
617,164 | 620,164 | 617,164 | |||||||||
|
Accounts
Receivable
|
11,424 | 11,424 | 11,424 | |||||||||
|
Notes
receivable-related parties
|
225,960 | 144,150 | 225,960 | |||||||||
|
Capitalized
interest
|
1,189,497 | 908,197 | 1,189,497 | |||||||||
|
Real
estate held for sale
|
1,466,649 | 1,418,874 | 1,466,649 | |||||||||
|
Land
held for development
|
2,973,369 | 2,973,369 | 2,973,369 | |||||||||
|
License
- net of accumulated amortization
|
660 | |||||||||||
|
Property,
plant & equipment, net of accumulated depreciation
|
505,014 | 515,397 | 505,359 | |||||||||
|
Total
non-current assets
|
7,018,149 | 6,631,900 | 7,019,154 | |||||||||
|
TOTAL
ASSETS
|
$ | 7,061,021 | $ | 6,693,675 | $ | 7,062,565 | ||||||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||||||
|
Liabilities:
|
||||||||||||
|
Accounts
Payable
|
$ | - | $ | - | $ | 7,000 | ||||||
|
Accrued
property tax
|
11,947 | 13,627 | 11,947 | |||||||||
|
Due
to related party
|
14,810 | 14,810 | ||||||||||
|
Line
of credit
|
5,735,662 | 5,245,957 | 5,735,662 | |||||||||
|
TOTAL
LIABILITIES
|
5,762,419 | 5,259,584 | 5,769,419 | |||||||||
|
Shareholders'
equity:
|
||||||||||||
|
Common
stock
|
1,000 | 1,000 | 89,587 | |||||||||
|
Retained
earnings
|
1,297,602 | 1,433,091 | 1,203,559 | |||||||||
|
Total
shareholders' equity
|
1,298,602 | 1,434,091 | 1,293,146 | |||||||||
|
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 7,061,021 | $ | 6,693,675 | $ | 7,062,565 | ||||||
The accompanying notes are an integral part of
these financial statements.
|
RIDGEFIELD
DEVELOPMENT, CORPORATION
|
||||||||||||
|
STATEMENTS
OF OPERATIONS AND CHANGES IN SHAREHOLDERS' EQUITY
|
||||||||||||
|
Years
Ended December 31, 2008 and 2009
|
||||||||||||
|
Pro-forma
|
||||||||||||
|
2009
|
2008
|
2009
|
||||||||||
|
Revenue
|
||||||||||||
|
Sales
|
$ | 20,011 | $ | 212,047 | $ | 20,011 | ||||||
|
Cost
of sales
|
17,479 | 58,256 | 17,479 | |||||||||
|
Gross
profit
|
2,532 | 153,791 | 2,532 | |||||||||
|
Operating
expenses
|
||||||||||||
|
Empty
lot fees
|
12,165 | 10,991 | 12,165 | |||||||||
|
Environmental
fees
|
17,670 | 13,415 | 17,670 | |||||||||
|
Repairs
|
16,762 | 8,070 | 16,762 | |||||||||
|
Total
operating expenses
|
46,597 | 32,476 | 46,597 | |||||||||
|
Non-operating
expenses:
|
||||||||||||
|
Amortization
expense
|
11,253 | 11,253 | 11,493 | |||||||||
|
Bad
debt expense
|
- | 22,777 | 0 | |||||||||
|
Depreciation
|
10,384 | 10,384 | 10,484 | |||||||||
|
Insurance
|
3,902 | 3,264 | 3,902 | |||||||||
|
Interest
|
2,010 | 25,253 | 2,010 | |||||||||
|
Marketing
|
- | 5,500 | 0 | |||||||||
|
Miscellaneous
|
10,597 | 2,866 | 10,597 | |||||||||
|
Professional
fees
|
52,968 | 2,625 | 52,968 | |||||||||
|
Property
taxes
|
49,593 | 61,862 | 49,593 | |||||||||
|
Utilities
|
2,120 | 4,991 | 2,120 | |||||||||
|
Warranty
costs
|
872 | 15,769 | 872 | |||||||||
|
Other
General & Administrative Costs
|
71,271 | |||||||||||
|
Total
non-operating expenses
|
143,699 | 166,544 | 215,310 | |||||||||
|
Net
operating loss
|
(187,764 | ) | (45,229 | ) | (259,375 | ) | ||||||
|
Other
income (expense)
|
||||||||||||
|
Timber
income
|
16,775 | 8,997 | 16,775 | |||||||||
|
Rental
income
|
35,500 | 44,735 | 35,500 | |||||||||
|
Other
expenses
|
- | (1,497 | ) | - | ||||||||
|
Net
other income
|
52,275 | 52,235 | 52,275 | |||||||||
|
Net
income (loss)
|
$ | (135,489 | ) | $ | 7,006 | $ | (207,100 | ) | ||||
|
SHAREHOLDERS'
EQUITY DECEMBER 31, 2008
|
$ | 1,434,091 | ||||||||||
|
2009
NET LOSS
|
(135,489 | ) | ||||||||||
|
SHAREHOLDERS'
EQUITY DECEMBER 31, 2009
|
$ | 1,298,602 | ||||||||||
The
accompanying notes are an integral part of these financial statements.
|
RIDGEFIELD
DEVELOPMENT, CORPORATION
|
||||||||
|
STATEMENTS
OF CASH FLOWS
|
||||||||
|
Years
Ended December 31, 2008 and 2009
|
||||||||
|
2009
|
2008
|
|||||||
|
Cash
Flows from Operating Activities
|
||||||||
|
Net
income (loss) from operations
|
$ | (135,489 | ) | $ | 7,006 | |||
|
Adjustments
to reconcile net income to net cash
|
||||||||
|
used
in operating activities:
|
||||||||
|
Amortization
expense
|
11,253 | 11,253 | ||||||
|
Depreciation
expense
|
10,384 | 10,384 | ||||||
|
Provision
for bad debts
|
- | 22,777 | ||||||
|
Gain
on sale of fixed assets-buildings
|
- | 8,997 | ||||||
|
Changes
in operating assets and operating liabilities:
|
||||||||
|
Accounts
receivable
|
4,585 | (64,252 | ) | |||||
|
Due
from Twelve Oaks Properties
|
3,000 | 10,077 | ||||||
|
Notes
receivable-related parties
|
(81,810 | ) | (26,297 | ) | ||||
|
Capitalized
interest
|
(281,300 | ) | (237,415 | ) | ||||
|
Real
estate held for sale
|
(47,775 | ) | 891,685 | |||||
|
Land
held for development
|
- | (1,469,397 | ) | |||||
|
Accounts
payable
|
- | 250 | ||||||
|
Due
to related party
|
14,810 | - | ||||||
|
Accrued
property tax
|
(1,680 | ) | 13,627 | |||||
|
Accrued
interest
|
- | (62,000 | ) | |||||
|
Net
cash used in operating activities
|
(504,022 | ) | (883,305 | ) | ||||
|
Cash
Flows from Investing Activities:
|
||||||||
|
Proceeds
from sales of fixed assets-buildings
|
- | 385,000 | ||||||
| - | ||||||||
|
Net
cash provided by investing activities
|
- | 385,000 | ||||||
|
Cash
Flows from Financing Activities:
|
||||||||
|
Draws
on line of credit
|
489,704 | 857,000 | ||||||
|
Payments
on line of credit
|
- | (475,000 | ) | |||||
|
Net
cash provided by financing activities
|
489,704 | 382,000 | ||||||
|
Net
change in cash and cash equivalents
|
(14,318 | ) | (116,305 | ) | ||||
|
Cash
and cash equivalents - beginning of year
|
14,318 | 130,623 | ||||||
|
Cash
and cash equivalents - end of year
|
$ | - | $ | 14,318 | ||||
|
Supplemental Disclosure of Cash Flow
Information:
|
||||||||
|
Cash
paid for interest
|
$ | 283,300 | $ | 314,592 | ||||
|
Cash
paid for taxes
|
$ | 49,593 | $ | 61,682 | ||||
The
accompanying notes are an integral part of these financial statements.
NOTE 1 -
DESCRIPTION OF ORGANIZATION
Organization.
Ridgefield Development Corporation, (the “Company”) was formed on October 10,
2003 under the laws of the state of Alabama. The Company was formed to secure a
1400 acre property (the “Development”) in order to develop the property into
neighborhoods of affordable homes with amenity packages found only in much more
expensive neighborhoods. The Development consists of constructing the
infrastructure and improvements for a residential development in Odenville,
Alabama.
Project
construction operations are conducted through the Company’s affiliates who share
the same ownership. The Company creates each project such that it will generate
income from the placement of the construction loan through its affiliates and/or
the capital appreciation of the facility upon sale. Affiliates and management of
the Company will develop the construction and permanent financing for the
benefit of the Company.
The
Development currently consists of four residential neighborhoods; Acton Meadows,
a starter home community consisting of starter homes in the $130,000’s;
Brookhaven, a multi-price point neighborhood starting in the low $100,000’s to
the upper $200,000’s; Hidden Ridge, a ridge top neighborhood with larger lots as
well as a small townhome site and Ridgefield, a mid-priced neighborhood with
full size lots and a price range from $170,000 to $210,000.
Basis of accounting.
The financial statements are prepared using the accrual basis of
accounting. Revenues are recognized when services are rendered and
expenses are recognized in the period in which they were incurred. The basis of
accounting conforms to accounting principles generally accepted in the United
States of America.
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLCIES
Use of estimates. The
preparation of financial statements in conformity with generally accepted
accounting principles (GAAP) 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.
Cash and cash
equivalents. The Company considers all highly liquid investments with
original maturities of three months or less to be cash equivalents. There were
no cash equivalents at December 31, 2009.
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLCIES (Continued)
Revenue recognition.
The Company recognizes revenue in accordance with Statement of Accounting Standards
No. 66, Accounting for Real Estate Sales, under the full accrual method.
Under the full accrual method, profit may be realized in full when real estate
is sold, provided (1) the profit is determinable and (2) the earnings
process is virtually complete (the Company is not obligated to perform
significant activities after the sale to earn the profit). The Company
recognizes revenue from its real estate sales transactions on the closing
date.
Impairment and Disposal of
Long-Lived Assets. The Company evaluates the carrying value of its
long-lived assets under the provisions of SFAS No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets”. Statement No. 144 requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted future cash flows
estimated to be generated by those assets are less than the assets’ carrying
amount. If such assets are impaired, the impairment to be recognized is measured
at the amount by which the carrying amount of the assets exceeds the fair value
of the assets. Assets to be disposed of are reported at the lower of the
carrying value or fair value, less costs to sell.
Income taxes: The
Company has elected subchapter S status for income tax purposes. Accordingly, a
provision for income taxes has not been established.
New accounting
pronouncements
Fair
Value Measurements
In
September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements". SFAS No. 157 provides guidance for using fair
value to measure assets and liabilities. SFAS No. 157 addresses the requests
from investors for expanded disclosure about the extent to which companies
measure assets and liabilities at fair value, the information used to measure
fair value and the effect of fair value measurements on earnings. SFAS No. 157
applies whenever other standards require (or permit) assets or liabilities to be
measured at fair value, and does not expand the use of fair value in any new
circumstances. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and was adopted by the Company in
the first quarter of fiscal year 2008. The Company is unable at this time
to
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
determine
the effect that its adoption of SFAS No. 157 will have on its results of
operations and financial condition.
In
February 2008, the FASB issued Staff Position (“FSP”) 157-2, “Effective Date of FASB Statement
No. 157”. This FSP delays the effective date of SFAS No. 157 for all
nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value on a recurring basis (at least annually)
to fiscal years beginning after November 15, 2008, and interim periods
within those fiscal years. The impact of adoption was not material to the
Company’s financial condition or results of operations.
Accounting for Uncertainty
in Income Taxes
In July
2006, the FASB issued FASB Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in
Income Taxes – an interpretation of FASB Statement No. 109". FIN 48
clarifies that accounting for uncertainty in income taxes recognized under SFAS
No. 109 "Accounting for Income Taxes". FIN 48 prescribes a recognition threshold
and measurement attribute for financial statement recognition measurement of a
tax position taken or expected to be taken in a tax return and also provides
guidelines on various related matters such as de-recognition, measurement and
classification of income tax uncertainties, interest and penalties, and
disclosure. FIN 48 also includes guidance concerning accounting for income tax
uncertainties in interim periods and increases the level of required disclosures
associated with any recorded income tax uncertainties. The differences between
the amount recognized in the statement of financial position prior to the
adoption of FIN 48 and the amounts reported after adoption are to be accounted
for as a cumulative-effect adjustment recorded to the beginning balance of
retained earnings. FIN 48 was effective beginning in fiscal year 2007 and did
not have a material effect on the Company's financial position or
liquidity.
Considering the Effects of
Prior Year Misstatements
In
September 2006, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 108 (SAB No. 108) "Considering the Effects of Prior
Year Misstatements When Qualifying Misstatements in Current Year Financial
Statements". SAB No. 108 provides interpretive guidance on how the
effects of the carryover or reversal of prior year misstatements
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
should be
considered in qualifying a current year misstatement. The SEC staff believes
that registrants should qualify errors using both a balance sheet and income
statement approach and evaluate whether either approach results in qualifying a
current year misstatement that, when all relevant quantitative and qualitative
factors are considered, is material. The provisions of SAB No. 108 were
effective for the Company's fiscal year ending December 31, 2006. The adoption
of SAB No. 108 did not have a material impact on the Company's financial
statements.
Business
Combinations
In
December 2007, the FASB issued SFAS No. 141(R) “Business Combinations”.
This Statement replaces the original SFAS No. 141. This Statement retains the
fundamental requirements in Statement 141 that the acquisition method of
accounting (which Statement No. 141 called the purchase method) be used for
all business combinations and for an acquirer to be identified for each business
combination. The objective of this SFAS No. 141(R) is to improve the relevance,
and comparability of the information that a reporting entity provides in its
financial reports about a business combination and its effects. To accomplish
that, SFAS No. 141(R) establishes principles and requirements for how the
acquirer:
|
A.)
|
Recognizes
and measures in its financial statements the identifiable assets acquired,
the liabilities assumed, and any non-controlling interest in the
acquiree.
|
|
B.)
|
Recognizes
and measures the goodwill acquired in the business combination or a gain
from a bargain purchase. the beginning of the first annual reporting
period beginning on or after December 15, 2008 and may not be applied
before that date.
|
The
Company is unable at this time to determine the effect that its adoption of SFAS
No. 141(R) will have on its results of operations and financial
condition.
Fair Value Option for
Financial Assets and Financial Liabilities
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of FASB Statement No.
115”, which becomes effective for the Company on February 1, 2008, and
permits companies to choose to measure many financial instruments and certain
other items at fair value and report unrealized
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
gains and
losses in earnings. Such accounting is optional and is generally to be applied
instrument by instrument. The Company does not anticipate that the election, of
this fair-value option will have a material effect on its consolidated financial
condition, results of operations, cash flows or disclosures.
NOTE 3-
NOTES RECEIVABLE-RELATED PARTIES
At
December 31, 2009, “Notes receivable-related parties” in the balance sheet
consisted of notes receivable from affiliated entities of which the shareholders
of the Company are also the shareholders/members. The notes are due on demand
and are uncollateralized. The notes receivable carry interest at rates ranging
at 5% per annum. The aggregate receivable balances have been classified as
noncurrent assets because they are not expected to be collected within one year
from the balance sheet date. Below is a breakdown of the companies and the
respective balances as of December 31, 2009:
|
Company
|
Amount
|
|||
|
B&B
Smith Construction, Inc.
|
$ | 35,000 | ||
|
Four
Star Investments, LLC
|
125,960 | |||
|
Four
Star Properties, LLC
|
50,000 | |||
|
Bobby
Smith, Jr.
|
15,000 | |||
|
Total
|
$ | 225,960 | ||
NOTE
4-CAPITALIZED INTEREST
For the
year ended December 31, 2009 the Company has recognized $283,300 in
interest expense that was capitalized and $2,010 interest expensed directly to
the Statement of Operations. Project interest expense is recorded on the balance
sheet or statement of operations depending on the status of the
project(s).
NOTE 5-
LAND HELD FOR DEVELOPEMENT AND REAL ESTATE HELD FOR SALE
Land
acquisition costs are capitalized as “Land Held for Development”. Project costs
that are clearly associated with the development and construction of a real
estate project are capitalized as a cost of that project. Costs are allocated to
individual projects by the specific identification method. Interest costs are
capitalized while development is in progress. When a project is completed it is
reclassified as “Real Estate Held for Sale” until it is sold. Once a project is
sold, the capitalized costs are reclassified as “Cost of Sales” to offset real
estate sales in the Statement of Operations.
NOTE 6 -
PROPERTY PLANT & EQUIPMENT
Amounts
and expected lives of property plant & equipment are as
follows:
|
Amounts
|
Expected useful lives
|
||||
|
Real
estate building
|
$ | 339,618 |
39
years
|
||
|
Equipment
building
|
140,062 |
39
years
|
|||
|
Land
|
50,000 | ||||
|
Total
land and depreciable PP&E
|
529,680 | ||||
|
Less:
Accumulated depreciation
|
(24,666 | ) | |||
|
Net
land and depreciable PP&E
|
505,014 | ||||
|
Total
net PP&E
|
$ | 505,014 | |||
Depreciation
expense for December 31, 2009 was $10,384.
NOTE 7-
LINE OF CREDIT-UNION STATE BANK
The
Company has available a revolving line of credit with Union State Bank for
$5,500,000. The line of credit expired in August 2009. Borrowings under the line
of credit bear interest at fixed rate of 8.25% per annum. The
outstanding balance on the line of credit was $5,435,945 at December 31, 2009.
The note is personally guaranteed by the shareholders.
The
Company has available a revolving line of credit with Covenant Bank for
$300,000. Borrowings under the line of credit bear interest at fixed rate of
5.25% per annum and mature August 5, 2010. The outstanding balance on
the line of credit was $299,717 at December 31, 2009. The note is personally
guaranteed by the shareholders.
PART
II – INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM
13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The
following table sets forth the costs and expenses payable by Four Star Holdings
in connection with registering the sale of the common stock. Four Star Holdings
has agreed to pay all costs and expenses in connection with this offering of
common stock. Set for the below is the estimated expenses of issuance and
distribution, assuming the maximum proceeds are raised.
|
Legal
and Professional Fees
|
$ | 20,000 | ||
|
Accounting
Fees
|
$ | 15,000 | ||
|
Blue
Sky Qualification Fees
|
$ | 5,000 | ||
|
Total
|
$ | 40,000 |
ITEM
14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
None of
our directors will have personal liability to us or any of our shareholders for
monetary damages for breach of fiduciary duty as a director involving any act or
omission of any such director since provisions have been made in the Articles of
Incorporation limiting such liability. The foregoing provisions will not
eliminate or limit the liability of a director (i) for any breach of the
director’s duty of loyalty to us or our shareholders, (ii) for acts or omissions
not in good faith or, which involve intentional misconduct or a knowing
violation of law, (iii) under applicable Sections of the Florida Business
Corporation Act, (iv) the payment of dividends in violation of applicable
Sections of the Florida Business Corporation Act or (v) for any transaction from
which the director derived an improper personal benefit.
Our
articles of incorporation and bylaws provide for indemnification of our
directors, officers, and employees in most cases for any liability suffered by
them or arising out of their activities as our directors, officers, and
employees, if they were not engaged in willful misfeasance or malfeasance in the
performance of his or her duties; provided that in the event of a settlement the
indemnification will apply only when the Board of Directors approves such
settlement and reimbursement as being for the best interests of the
Corporation. Our articles of incorporation and bylaws, therefore,
limit the liability of directors to the maximum extent permitted by the Florida
Business Corporation Act.
Our
officers and directors are accountable to us as fiduciaries, which means they
are required to exercise good faith and fairness in all dealings affecting us.
In the event that a shareholder believes the officers and/or directors have
violated their fiduciary duties to us, the shareholder may, subject to
applicable rules of civil procedure, be able to bring a class action or
derivative suit to enforce the shareholder’s rights, including rights under
certain federal and state securities laws and regulations to recover damages
from and require an accounting by management. Shareholders who have
suffered losses in connection with the purchase or sale of our securities in
connection with such sale or purchase, including the misapplication by any such
officer or director of the proceeds from the sale of these securities, may be
able to recover such losses from us.
Insofar
as indemnification for liabilities arising under the Securities Act might be
permitted to directors, officers or persons controlling our company under the
provisions described above, we have been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
ITEM
15. RECENT SALES OF UNREGISTERED
SECURITIES.
Set forth
below is information regarding the issuance and sales of securities without
registration since inception. No such sales involved the use of an
underwriter; no advertising or public solicitation was involved; the securities
bear a restrictive legend; and no commissions were paid in connection with the
sale of any securities.
On
October 4, 2007 (inception), Dragon’s Lair Holdings issued 975,000 shares of
common stock for the purchase of the license to manufacture, distribute and
sell, the Sore-Eez Chinese herbal liniment, its initial product, from Yamit
Lemoine. The value of the license was determined to be the legal
costs to create the license, which was $1,200, as there were no other
out-of-pocket costs for the license or the development of the
recipe.
On
November 4, 2007, Dragon’s Lair Holdings, Inc. issued 5,000,000 shares of common
stock to an investor for cash in the amount of $11,100.
On
December 31, 2007, Dragon’s Lair Holdings, Inc. issued 63,278 shares of common
stock to an investor for cash in the amount of $633.
On March
27, 2008, Dragon’s Lair Holdings, Inc. issued 100,000 shares of common stock to
directors for services rendered at a value of $4,008.
On
December 11, 2008, Dragon’s Lair Holdings, Inc. completed its public offering
pursuant to its Form S-1 Registration Statement of 6,780 shares of Series A
Convertible Preferred Stock, which were converted into 1,762,800 shares of
common stock and provided aggregate offering proceeds in the amount of
$67,800.
On April
1, 2009, Dragon’s Lair Holdings, Inc. issued 100,000 shares of common stock to
its transfer agent for services rendered at a value of $3,846.
On
December 14, 2009, Bobby Smith Jr. and Frances T. Mize purchased 74.1% of the
issued and outstanding stock of Dragon’s Lair holdings, Inc. exchanging
beneficial ownership to these persons.
On
February 10, 2010, the Company issued 2,075,000 restricted shares for consultant
services.
On
February 10, 2010, the Company issued an aggregate of 12,000,000 shares of
common stock of the Company, of which six (6) million were issued to each of
Frances Mize and Bobby R. Smith, Jr. to cover extraordinary expenses incurred
and paid on behalf of the Company and for future and probable
acquisitions.
On
February 10, 2010, the Company executed an agreement to issue an aggregate of
200,000 shares of common stock to Joseph L. Pittera, attorney for the Company,
for services rendered.
On March
15, 2010, the Company issued 158,150 restricted shares for IT consulting
services.
These
securities were issued in reliance upon the exemption contained in Section 4(2)
of the Securities Act of 1933.
ITEM
16. EXHIBITS.
The
following exhibits are included with this registration
statement:
|
Exhibit
No.
|
Description
|
|||
| 3 .1 | ||||
| 3 .2 | ||||
| 4 .1 | ||||
| 5 .1 | ||||
| 10 .1 | ||||
| 10.2 | quisition of Four Star Realty LLC | |||
| 21 .1 | ||||
| 23 .1 | ||||
| 23.2 | Consent of Independent Auditor, Labrozzi & Co., PA | |||
| 23.3 |
Consent of Law Offices of Joseph
Pittera. (included in Exhibit
5.1)
|
|||
ITEM
17. UNDERTAKINGS.
Under
Rule 415 of the Securities Act, we are registering securities for an offering to
be made on a continuous or delayed basis in the future. The registration
statement pertains only to securities (a) the offering of which will be
commenced promptly, will be made on a continuous basis and may continue for a
period in excess of 30 days from the date of initial effectiveness and (b) are
registered in an amount which, at the time the registration statement becomes
effective, is reasonably expected to be offered and sold within two years from
the initial effective date of the registration.
Based on
the above-referenced facts and in compliance with the above-referenced rules,
Four Star Holdings includes the following undertakings in this Registration
Statement:
A. The
undersigned Registrant hereby undertakes:
(1) To
file, during any period, in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To
include any prospectus required by section 10(a)(3) of the Securities Act of
1933, as amended;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the “Calculation of the Registration Fee” table in the
effective Registration Statement; and
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement.
(1) That,
for the purpose of determining any liability under the Securities Act of 1933,
as amended, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(2) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
B.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant 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, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form S-1 and authorized this Registration Statement to
be signed on its behalf by the undersigned, in the City of Odenville, State of
Alabama on July 8, 2010.
|
Four Star Holdings, Inc.
|
|
(Registrant)
|
|
By: /s/ Bobby R.
Smith,
Jr.
|
|
Bobby R. Smith, Jr.
|
|
Chief
Executive Officer, Treasurer and
Director
|
In
accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated:
|
Signature
|
Title
|
Date
|
|
/s/ Bobby R. Smith,
Jr.
Bobby
R. Smith, Jr.
|
Chief
Executive Officer, and Treasurer
|
July
8, 2010
|
|
/s/Fran
Mize
Fran
Mize
|
President
and Director
|
July
8, 2010
|
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The
following discussion should be read in conjunction with (i) our financial
statements for the period from January 1, 2010, through March 31, 2010, and the
related notes; and (ii) the section of this prospectus entitled “Description of
Business” that appear elsewhere in this prospectus. The following discussion
contains forward-looking statements that reflect our plans, estimates and
beliefs. Our actual results could differ materially from those discussed in the
forward looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and elsewhere
in this prospectus, particularly in the section entitled “Risk Factors”. Our
financial statements are stated in United States Dollars and are prepared in
accordance with United States Generally Accepted Accounting
Principles.
We were
incorporated under the laws of the State of Florida on October 4,
2007. All activity to date has been related to the formation of our
business, preparing our business plan and continued operations, including but
not limited to:
Acquisition of Twelve Oaks Properties, Inc. an Alabama Corporation.
Acquisition of Four Star Investments Inc. an Alabama Corporation.
Acquisition of Four Star Properties Inc., an Alabama Corporation.
Acquisition of SBE LLC, an Alabama Limited Liability Company.
Acquisition
of Legacy Springs Apartments
Acquisition of Four Star Land Ventures, LLC, an Alabama Limited Liability
Company
Acquisition of B&B Smith Construction, Inc., an Alabama
Corporation
Begin
development of new construction of homes
Plan
of Operation
Early in
2002, after successfully working together for almost a decade, Bobby R. Smith,
Jr., a Builder and Developer, and Fran Mize, a Real Estate Broker, began to
formalize their vision of a Company which could purchase and develop land as
well as build and sell the homes. Knowing that the time was right for
St. Clair County to move to the forefront of the Birmingham Metropolitan area,
they began to purchase large tracts of land from Timber
companies. St. Clair County lies on the eastern edge of the
metropolitan area, and the land they were looking at was strategically located
along and between I-59 and I-20, the two major arteries into
Birmingham. The plan was always to purchase the land at a price where
affordable housing could be built but still have the amenity package previously
available only in neighborhoods of more expensive homes.
In 2003,
after years of maintaining A1 credit ratings and close banking relationships,
both personally and professionally, Management created Ridgefield Development
Corp., the business entity which owns the Acton Meadows, Brookhaven, Hidden
Ridge and Ridgefield neighborhoods located in Margaret, Alabama. In
2002, Margaret had a population of approximately 750 residents and had issued
only two building permits. Once Management had the developments and
infrastructure in place they began vertical construction. In less
than 5 years Margaret had 950 new homes and the population swelled to over 5000
residents. Today, the town has not only experienced commercial growth
to serve the growing population but a new elementary school is scheduled to open
in the fall of 2010.
Management
enjoys excellent working relations with the city and community
leaders. Ridgefield had all zoning in place as well as sewer access
in all of its developments. Along with the growth, Management has always
believed in giving back to the communities. Bobby Smith serves on the
St. Clair County Educational Foundation. Also Management has donated resources
to the local schools. There is a new state of the art St. Clair
County High School and a new Margaret Elementary School.
Management
has also partnered with the St. Clair Economic Board to bring millions of
dollars of revenue and hundreds of jobs to the area. Among these are
the Honda Plant, a $2 billion dollar facility employing 4,500 workers; a $35
million dollar hospital in Pell City; a Bass Pro Shop, a new Jefferson State
Junior College campus in Pell City and Grand River which is an upscale outlet
mall and retail center now under construction just off I-59 and approximately 10
minutes from five neighborhoods owned by Management.
As
Management created a boom for the City of Margaret, Management has also become a
major force in the Birmingham market. Bobby R. Smith, Jr., CEO was
named Developer of the Year by the Greater Birmingham Association of
Homebuilders for three years in a row. Bobby R. Smith, Jr. was
honored as Builder of the Year by the St. Clair County Association of
Homebuilders and two years later as Builder of the Year by the Greater
Birmingham Association of Homebuilders. He also served for two years
as President of the St. Clair Association of Homebuilders and is currently
serving as President of the GBAHB which is the fifth largest such association in
the nation. During this period of growth, St. Clair County did become
the fastest growing county in the state and Management grew along with the
county with exceptional neighborhoods in most communities. Following
their vision of providing the very best of living conditions for the most
affordable of prices, Four Star is now poised to become the largest real estate
acquisition, development and sales organization in the state and then in the
Southeastern U. S.
Management
and Operating Structure
The
Company balances its local operating structure with centralized corporate-level
Management. The Company's local managers, who have significant experience in the
homebuilding industry generally and in their respective markets, are responsible
for operating decisions regarding land identification, home design, construction
and marketing. Decisions related to overall Company strategy, acquisitions of
land and businesses, financing and disbursements are centralized at the
corporate level.
Results
of Operations
In the
first quarter of operations ending March 21,2010, we have generated revenue of
$163,148 and currently have 300 lots that are ready for construction and
scheduled for completion within 18 months from funding.
|
Cash
and cash equivalents
|
$ | 0 | ||
|
Working
capital
|
10,729,459 | |||
|
Total
assets
|
11,721,594 | |||
|
Total
liabilities
|
7,282,290 | |||
|
Total
shareholders’ equity
|
4,439,304 |
Cash
Flows from Operating Activities
As a
result of the acquisition of Ridgefield Development Corp, Four Star Holdings,
Inc received a stepped up fair value of land inventories, resulting in an
overall net cash usage from operations of ($9,445,559)
Cash
Flows from Investing Activities
Net cash
used in investing activities was $882,628.
Cash
Flows from Financing Activities
Net cash
provided from financing activities was $10,279,004.
Plan
of Operation and Funding
Our
existing working capital is not expected to be adequate to fund our operations
over the next twelve months. We have lines of credit for construction financing
arrangements in the amount of $5.5 million.
In
connection with our business plan, Management anticipates additional increases
in operating expenses and capital expenditures relating to our operating
activities. We intend to finance these expenses with further
issuances of securities, and debt issuances. We expect we will need to raise
additional capital to meet long-term operating requirements. Additional
issuances of equity or convertible debt securities will result in dilution to
our current shareholders. Further, such securities might have rights,
preferences or privileges senior to our common stock. Additional financing may
not be available upon acceptable terms, or at all. If adequate funds are not
available or are not available on acceptable terms, we may not be able to take
advantage of prospective new business endeavors or opportunities, which could
significantly and materially restrict our business operations.
Going
Concern
The
Company commenced operations on October 4, 2007 and as of March 31 2010, does
not have any going concern issues.
Significant
Purchases
In
December 2009, the Company acquired JD Edwards Financials and Homebuilder
applications software. This software is designed to help Four Star
improve margins, facilitate rapid growth, and streamline regulatory compliance
associated with a public entity.
The
Company can improve its margins by:
|
·
|
Providing
visibility into costs, leading to lower subcontractor bids and material
costs
|
|
·
|
Enable
more volume purchasing and “take-off” vs. turn-key bids, resulting in
lower cost per square foot
|
|
·
|
Reduce
“revenue leakage” related to subcontractor invoice
reconciliation
|
The
Company can facilitate rapid growth by:
|
·
|
Eliminating
manual processes, leading to faster ‘time to
build”
|
|
·
|
Scale
their existing team to handle more home volume with profitable
results
|
The
Company can facilitate better SOX & Regulatory compliance by:
|
·
|
Automating
financial controls, resulting in lower audit risk, litigation risk and
potential fraud
|
|
·
|
Using
an integrated system with consistent quality data, helping to avoid SEC
penalties due to inaccurate files
|
The
Company does not plan to acquire any significant equipment in fiscal
2010.
Off-Balance
Sheet Arrangements
We do not
have any off-balance sheet arrangements.
Critical
Accounting Policies
Our
financial statements and accompanying notes have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis. The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires Management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods.
We
regularly evaluate the accounting policies and estimates that we use to prepare
our financial statements. In general, Management's estimates are based on
historical experience, on information from third party professionals, and on
various other assumptions that are believed to be reasonable under the facts and
circumstances. Actual results could differ from those estimates made by
Management.
Cash
and Cash Equivalents
The
Company considers all highly liquid debt instruments with original maturities of
three months or less to be cash equivalents. The Company has no cash
equivalents.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires Management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Inventories
Inventories
are stated at fair value unless the inventory within a community is determined
to be impaired, in which case the impaired inventory is written down to market
value. Inventory costs include land, land development and home construction
costs, real estate taxes, deposits on land purchase contracts and interest
related to development and construction. Construction overhead and selling
expenses are expensed as incurred. Real estate held-for-sale is classified as
inventories until delivered. Land, land development, amenities and other costs
are accumulated by specific area and allocated to homes within the respective
areas. The Company reviews its inventory for indicators of impairment by
evaluating each community during each reporting period. The inventory within
each community is categorized as real estate held-for-sale or land held for
development based on the development state within respective
phases.
Revenue
Recognition
Revenues
from fixed-price contracts are recognized on the completed contract method. This
method is used because the typical contract is completed in three months or
less, and financial position and results of operations do not vary significantly
from those that would result from use of the percentage-of-completion method. A
contract is considered complete when title is transferred.
Contract
costs include all direct material and labor costs and those indirect costs
related to contract performance, such as indirect labor, supplies, tools,
repairs, and depreciation costs. General and administrative costs are charged to
expense as incurred. Provisions for estimated losses on uncompleted contracts
are made in the period in which such losses are determined.
Earnings
(Loss) Per Share
The
Company computes earnings per share in accordance with Statement of Accounting
Standards No. 128, "Earnings per Share (“SFAS No. 128”). Under the provisions of
SFAS No. 128, basic earnings per share is computed by dividing the net income
(loss) for the period by the weighted average number of common shares
outstanding during the period. Diluted earnings per share is computed by
dividing the net income (loss) for the period by the weighted average number of
common and potentially dilutive common shares outstanding during the
period. There were no potentially dilutive common shares outstanding
during the period.
Income
Taxes
The
Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, “Accounting for Income Taxes.” Under the asset and
liability method of Statement 109, deferred tax assets and liabilities are
recognized for the estimated 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 in effect for the year in which those
temporary differences are expected to be recovered or settled.
Fair
Value of Financial Instruments
The
Company considers that the carrying amount of financial instruments, including
accounts payable, approximates fair value because of the short maturity of these
instruments.
Share
Based Payments
In
December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment,” which
replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R),
companies are required to measure the compensation costs of share-based
compensation arrangements based on the grant-date fair value and recognize the
costs in the financial statements over the period during which employees or
independent contractors are required to provide services. Share-based
compensation arrangements include stock options and warrants, restricted share
plans, performance-based awards, share appreciation rights and employee share
purchase plans.
In
March 2005, the SEC issued Staff Accounting Bulletin No. 107, or “SAB 107”. SAB
107 expresses views of the staff regarding the interaction between SFAS No.
123(R) and certain SEC rules and regulations and provides the staff's views
regarding the valuation of share-based payment arrangements for public
companies. SFAS No. 123(R) permits public companies to adopt its requirements
using one of two methods. On April 14, 2005, the SEC adopted a new rule amending
the compliance dates for SFAS 123(R). Companies may elect to apply this
statement either prospectively, or on a modified version of retrospective
application under which financial statements for prior periods are adjusted on a
basis consistent with the pro forma disclosures required for those periods under
SFAS 123.
Effective
October 4, 2007, the Company has fully adopted the provisions of SFAS No. 123(R)
and related interpretations as provided by SAB 107. As such, compensation cost
is measured on the date of grant as the fair value of the share-based payments.
Such compensation amounts, if any, are amortized over the respective vesting
periods of the option grant.
Recent
Accounting Pronouncements
In June
2006, the FASB issued Interpretation No. 48 (“FIN No. 48”), Accounting for Uncertainty in Income
Taxes—an interpretation of FASB Statement No. 109, which clarifies
the accounting for uncertainty in income taxes recognized in an enterprise’s
financial statements in accordance with SFAS No. 109, Accounting for Income Taxes.
The Interpretation provides a recognition threshold and measurement attribute
for the financial statement recognition and measurement of a tax position taken
or expected to be taken in a tax return. Under FIN No. 48, the Company may
recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position. The tax
benefits recognized in the financial statements from such a position should be
measured based on the largest benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement. FIN No. 48 also provides guidance
on de-recognition, classification, interest and penalties, accounting in interim
periods, disclosure, and transition. FIN No. 48 is effective for us
beginning July 1, 2007. The Company does not expect FIN No. 48
to have a material impact on its financial statements.
In
June 2006, the FASB ratified the Emerging Issues Task Force
(“EITF”) consensus on EITF Issue No. 06-2, “Accounting for Sabbatical
Leave and Other Similar Benefits Pursuant to FASB Statement No. 43.” EITF
Issue No. 06-2 requires companies to accrue the costs of compensated
absences under a sabbatical or similar benefit arrangement over the requisite
service period. EITF Issue No. 06-2 is effective for us beginning
July 1, 2007. The cumulative effect of the application of this consensus on
prior period results should be recognized through a cumulative-effect adjustment
to retained earnings as of the beginning of the year of adoption. Elective
retrospective application is also permitted. The Company does not expect the
application of this consensus to have a material impact on its financial
statements.
Staff
Accounting Bulletin (“SAB”) No. 108, Considering the Effects of Prior
Year Misstatements when Quantifying Current Year Misstatements. SAB
No. 108 requires companies to quantify misstatements using both a balance
sheet (iron curtain) and an income statement (rollover) approach to evaluate
whether either approach results in an error that is material in light of
relevant quantitative and qualitative factors, and provides for a one-time
cumulative effect transition adjustment. SAB No. 108 will not have an
impact on the Company’s financial statements.
In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements,
which defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. SFAS No. 157 does not require any new fair value
measurements, but provides guidance on how to measure fair value by providing a
fair value hierarchy used to classify the source of the information. This
statement is effective for us beginning May 1, 2008. The Company currently is
assessing the potential impact that adoption of SFAS No. 157 would have on
its financial statements.
In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities. SFAS No. 159 gives us the
irrevocable option to carry many financial assets and liabilities at fair
values, with changes in fair value recognized in earnings. SFAS No. 159 is
effective for us beginning July 1, 2008, although early adoption is
permitted. The Company is currently assessing the potential impact that adoption
of SFAS No. 159 will have on its financial statement.
The FASB
has replaced SFAS No. 141 with a new statement on Business Combinations that
changes the way that minority interest is recorded and modified as a parent’s
interest in a subsidiary changes. Currently, this change will have no
effect on the Company’s financial statements.
The
Company does not expect the adoption of recent accounting pronouncements to have
any material impact on its financial condition or results of
operations.
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are
not subject to risks related to foreign currency exchange rate
fluctuations.
Our
functional currency is the United States dollar. We do not transact our business
in other currencies. As a result, we are not subject to exposure from movements
in foreign currency exchange rates. We do not use derivative financial
instruments for speculative trading purposes.
None.
Our
directors and executive officers and their respective ages as of January 1, 2010
are as follows:
|
Name
|
Age
|
Principal Positions With
Us
|
||
|
Bobby
Smith Jr.
|
47
|
Chairman
of the Board, Chief Executive Officer, and Treasurer
|
||
|
Fran
Mize
|
63
|
President,
Director
|
||
|
Al
Rhoney
|
58
|
Chief
Financial Officer
|
The
following describes the business experience of each of our directors and
executive officers, including other directorships held in reporting companies,
if any:
The
success of the Company depends to a significant degree on the efforts of the
Company's senior Management, especially its president and chief executive
officer and other officers. The Company's operations may be adversely affected
if one or more members of senior Management cease to be active in the Company.
The Company has designed its compensation structure and employee benefit
programs to encourage long-term employment of executive officers.
Management
Bio’s
Bobby
R. Smith Jr.
CEO Mr.
Smith is a second generation developer and builder with approximately 30 years
of experience in the construction industry. He is a licensed builder and general
contractor with the State of Alabama. He also owns a small excavating company
which enables his to go from developing and grading the property to building and
selling the homes. Over the course of his career he has built and closed on over
800 homes in over 13 residential developments in addition to numerous commercial
buildings.
Mr. Smith
is active in the affairs of Alabama and St. Clair County. He has served as
President of St. Clair County Home Builders Association for two years and is
currently on the Board of Directors of the St. Clair Educational Foundation. He
currently holds a seat on the Board of Directors of the Greater Birmingham
Association of Homebuilders and has partnered with the St. Clair Economic
Development Council to bring business and development to St. Clair County. He is
also a Board member of the National Association of Homebuilders in Washington,
D. C. and is an Executive Officer of the State of Alabama Homebuilders
Association in Montgomery.
In
addition to his community activities, Mr. Smith has received numerous awards and
accolades over his career, including being named “Builder of the Year” for St.
Clair County in 2001 and “Business of the Year” by the Springville Chamber of
Commerce in 2002. The Greater Birmingham Association of Homebuilders presented
him with the Spring Home Tour “Developer of the Year” award for 2004, 2005, and
2006 as well as “Builder of the Year in the Greater Birmingham Area” in 2008. In
2009 Mr. Smith was elected as Vice President of the Greater Birmingham
Association of Homebuilders and will ascend to the President in
2010.
Fran
Mize
President;
Ms. Mize is the Qualifying Broker for Four Star Realty, LLC Her early career was
spent in the large corporate environment, working in Bell South’s Personnel
department and as the Plant Manager for a manufacturing plant in Birmingham. She
has spent the last 17 years as a successful realtor and Broker.
Prior to
the creation of Four Realty, LLC, Ms. Mize and a team of realtors worked with
Mr. Smith on his Peaceful Meadows and MacDonald Farm developments. When Mr.
Smith and a group of investors started to develop several neighborhoods in the
Odenville / Margaret area, Ms. Mize assembled the nucleus of what would become
Four Star Realty.
Today,
Four Star Realty has over 25 realtors and is ranked third behind D. R. Horton
and another local real estate company, which has 16 offices and over 2,000
realtors listing properties in the area. For the entire Birmingham MLS reporting
area, Four Star Realty is ranked number 25 out of 325 agencies in combined sales
and listing volume. Management is projecting a 20% growth rate despite the
current economic conditions.
Alvin
A. Rhoney, CFO
Mr.
Rhoney has 30 years of results oriented, business and financial management
experience. He is a former partner with a large international C.P.A. firm where
he was responsible for audits and management advisory services (MAS) for his
clients. The depth and breadth of his audit and MAS experience spans virtually
every business entity.
During
the past 15 years he has worked as an Interim CFO for a wide variety of
businesses, ranging in annual sales volume from $1,000,000 to $150 million,
throughout the United States, most notably, the largest privately held mining
manufacturer in the world. He designs and installs customized systems,
procedures, and controls to strengthen internal controls and increase
profit.
Mr.
Rhoney holds a degree in business administration from Niagara University, New
York. He is a New York State Certified Public Accountant and a Certified
Management Consultant.
Term
of Office
All of
our directors hold office until the next annual general meeting of the
shareholders or until their successors are elected and qualified. Our officers
are appointed by our board of directors and hold office until their earlier
death, retirement, resignation or removal.
Significant
Employees
There are
no significant employees other than our executive officers.
Committees
of the Board of Directors
After the
closing of this offering, our board of directors intends to establish an audit
committee, a compensation committee and a nominating and corporate governance
committee. Our board may establish other committees from time to time to
facilitate the Management of our company.
Audit
committee. Our audit committee will oversee a broad range of
issues surrounding our accounting and financial reporting processes and audits
of our financial statements, including by (1) assisting our board in monitoring
the integrity of our financial statements, our compliance with legal and
regulatory requirements, our independent auditor's qualifications and
independence and the performance of our internal audit function and independent
auditors, (2) appointing, compensating, retaining and overseeing the work
of any independent registered public accounting firm engaged for the purpose of
performing any audits, reviews or attest services, and (3) preparing the
audit committee report that may be included in our annual proxy statement or
annual report on Form 10-K. We will have at least three directors on our
audit committee, each of whom will be independent under the requirements of the
NASDAQ Capital Market, the Sarbanes-Oxley Act and the rules and regulations of
the SEC.
We expect
that the initial members of our audit committee will be Bobby R. Smith, Jr., Al
Rhoney and Fran Mize . We expect that Bobby R. Smith, Jr. will be our audit
committee chair. Mr. Rhoney will be our audit committee financial expert as
defined by the SEC rules implementing Section 407 of the Sarbanes-Oxley
Act.
Compensation
committee. Our compensation committee will review and
recommend our policies relating to compensation and benefits for our executive
officers and other significant employees, including reviewing and approving
corporate goals and objectives relevant to compensation of our Chief Executive
Officer and other executive officers, evaluating the performance of our
executive officers relative to goals and objectives, determining compensation
for these executive officers based on these evaluations and overseeing the
administration of our incentive compensation plans. The compensation
committee will also prepare the compensation committee report that may be
included in our annual proxy statement or annual report on Form 10-K. We
will have at least two directors on our compensation committee, each of whom
will be independent under the requirements of the NASDAQ Capital Market. We
expect that the initial members of our compensation committee will be Bobby R.
Smith, Jr. Fran Mize and Al Rhoney. We expect that Bobby R. Smith,
Jr. will be our compensation committee chair.
Nominating and
corporate governance committee. Our nominating and corporate
governance committee will (1) identify, review and recommend nominees for
election as directors, (2) advise our board of directors with respect to board
composition, procedures and committees, (3) recommend directors to serve on each
committee, (4) oversee the evaluation of our board of directors and our
Management, and (5) develop, review and recommend corporate governance
guidelines and policies. We will have at least two directors on our nominating
and corporate governance committee, each of whom will be independent under the
requirements of the NASDAQ Capital Market. We expect that the initial
members of our nominating and corporate governance committee will be Fran Mize,
Bobby R. Smith Jr. and Al Rhoney. We expect that Bobby R. Smith, Jr.
will be our nominating and corporate governance committee chair.
Compensation
Committee Interlocks and Insider Participation
Our board
of directors does not have a compensation committee. Since inception, all of our
executive compensation decisions have been made by Bobby R. Smith, Jr. and Fran
Mize, as the sole members of our board of directors.
Code
of Ethics
After the
closing of this offering, our board of directors intends to adopt a code of
ethics for our principal executive and senior financial officers. This code of
ethics will apply to our Chief Executive Officer, Chief Financial Officer,
principal accounting officer, and persons performing similar functions. After
the effectiveness of the registration statement of which this prospectus forms a
part, we intend to post the full text of this code on our website. We
intend to disclose future amendments to provisions of our code of ethics, or
waivers of such provisions, applicable to any principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions, as required by law or
regulation.
Involvement
in Certain Legal Proceedings
None of
our directors, executive officers or control persons has been involved in any of
the events prescribed by Item 401(f) of Regulation S-K during the past
five years, including:
|
1.
|
any
bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that
time;
|
|
2.
|
any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor
offenses);
|
|
3.
|
being
subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking activities;
or
|
|
4.
|
being
found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended, or
vacated.
|
Compensation
Discussion and Analysis
Philosophy
and objectives
The
primary objective of our compensation policies and programs with respect to
executive compensation is to serve our shareholders by attracting, retaining and
motivating talented and qualified individuals to manage and lead our business.
We will focus on providing a competitive compensation package that provides
significant short and long-term incentives for the achievement of measurable
corporate and individual performance objectives. After to the closing
of this offering, we intend to establish a compensation committee and future
decisions regarding executive compensation will be the responsibility of that
committee. Since our inception, we have not paid any compensation, with all
compensation decisions being made by Bobby R. Smith Jr., our Chairman, Chief
Executive Officer, on an individual basis.
Elements
of executive compensation
Base salary. We
will seek to provide our senior Management with a level of base salary in the
form of cash compensation appropriate to their roles and responsibilities. Base
salaries for our executives will be established based on the executive’s
qualifications, experience, and scope of responsibilities, future potential and
past performance and cash available to pay executive compensation. Base salaries
will be reviewed annually and adjusted from time to time to realign salaries
with market levels after taking into account individual responsibilities,
performance and experience. We will consider four factors in determining the
base salaries of our named executive officers. These four factors are, in order
of significance, (1) creating an incentive to achieve corporate goals, (2)
individual performance, (3) cash available to pay compensation and (4) the total
compensation each executive officer previously received while employed with us,
if any. We have not paid any base salary to our executive officers
since our inception.
Incentive cash
bonuses. Our practice will be to seek to award incentive cash
bonuses to our executive officers based upon their individual performance, as
well as our overall business and strategic objectives. In determining the amount
of cash bonuses paid to our named executive officers, we will consider the same
four factors (and use the same weighting and method of measurement) as in
determining their base salaries. We expect that our compensation committee will
adopt formal processes for incentive cash bonuses beginning in 2010 and will
utilize incentive cash bonuses to reward executives for achieving corporate
financial and operational goals and for achieving individual performance
objectives. We have not paid any incentive cash bonuses to our
executive officers since our inception.
Long-term equity
compensation. We believe that successful long-term performance
is achieved through an ownership culture that encourages long-term performance
by our executive officers through the use of stock and stock-based awards. We
intend to establish equity incentive plans to provide our employees, including
our named executive officers, with incentives to help align those employees’
interests with the interests of our shareholders. We expect that our incentive
plans will permit the grant of stock options, restricted shares and other stock
awards to our executive officers, employees, consultants and non-employee board
members. When we hire executive officers in the future, we expect to grant to
them stock-based awards that will generally vest over a four or five-year
period. We believe that stock-based awards provide an incentive for these
officers to continue their employment with us, provide our executive officers
with an opportunity to obtain an ownership interest in our company and encourage
them to focus on our long-term profitable growth. We believe that the use of
stock-based awards will promote our overall executive compensation objectives
and expect that equity incentives will continue to be a significant source of
compensation for our executives. In determining amounts awarded to our named
executive officers under our incentive plans, we will consider the same four
factors (and use the same method of measurement) as in determining base salary.
The third factor (cash available) has an indirect effect when determining
long-term equity compensation. Specifically, to the extent that this factor
causes us not to pay base salary or cash bonuses, it points toward providing
long-term equity compensation. We have not issued any equity to our
executive officers since our inception.
Other
compensation. Our executive officers are eligible to receive
the same benefits, including non-cash group life and health benefits, which are
available to all employees. We may offer a 401(k) plan to our employees,
including our named executive officers. This plan will permit employees to make
contributions up to a statutory maximum and will permit us to make matching or
profit-sharing contributions. To date, we have not offered a 401(k) plan or
made, or committed to make, any matching or profit-sharing contributions under a
401(k) plan.
Policies
related to compensation
Guidelines for equity
awards. We have not formalized a policy as to the amount or
timing of equity grants to our executive officers. We expect, however, that the
compensation committee will approve and adopt guidelines for equity
awards. Among other things, we expect that the guidelines will
specify procedures for equity awards to be made under various circumstances,
address the timing of equity awards in relation to the availability of
information about us, and provide procedures for grant information to be
communicated to and tracked by our finance department. As of the date
of this prospectus, we have not established a finance department. We
anticipate that the guidelines will require that any stock options or stock
appreciation rights have an exercise or strike price not less than the fair
market value of our common stock on the date of the grant.
Stock ownership
guidelines. As of the date of this prospectus, we have not
established ownership guidelines for our executive officers or
directors.
Compliance
with Sections 162(m) and 409A of the Internal Revenue Code
Section 162(m)
of the Internal Revenue Code limits the deductibility of compensation in excess
of $1 million paid to certain executive officers, unless such compensation
qualifies as performance-based compensation. Among other things, in order to be
deemed performance-based compensation for Section 162(m) purposes, the
compensation must be based on the achievement of pre-established, objective
performance criteria and must be pursuant to a plan that has been approved by
our shareholders. At least for the next several years, we expect the cash
compensation paid to our executive officers to be below the threshold for
non-deductibility provided in Section 162(m), and our equity incentive plans
will afford our compensation committee with the flexibility to make a variety of
types of equity awards to our executive officers, the deductibility of which
will not be limited under Section 162(m). However, as our
compensation committee, which we expect to form after this offering, will
fashion our future equity compensation awards, we do not now know whether any
such awards will satisfy the requirements for deductibility under Section
162(m).
We also
currently intend for our executive compensation program to satisfy the
requirements of Internal Revenue Code Section 409A, which addresses the tax
treatment of certain nonqualified deferred compensation benefits.
Summary
Compensation Table
Our
officers have verbally agreed to provide their services to us without
compensation until the completion of this offering.
Employment
Agreements
Bobby
Smith and Fran Mize have entered into employment agreements as
officers. After this offering, we intend to have our officers enter
into employment agreements with us providing a compensation package which will
fairly compensate them for their services, including base
salary, eligibility for annual bonuses determined by the compensation
committee. The employment agreements will also provide that these
officers are eligible to participate in our equity incentive plans and other
employee benefit programs. However, there can be no assurance that we
will enter into any such employment agreements.
Our
decision to enter into these employment agreements, if any, will be made by our
compensation committee. We believe that, following receipt of the net
proceeds of the offering, our substantially improved cash position will enable
us to compensate our officers and continue to expand and develop our
business.
Potential
Payments Upon Termination or Change in Control
As of the
date of this prospectus, there were no potential payments or benefits payable to
our named executive officers upon their termination or in connection with a
change in control. See “Employment Agreements” above for a
description of the provisions under the employment agreements we expect to enter
into with our named executive officers regarding payments and benefits to them
upon termination of their employment.
Grants
of Plan-Based Awards in 2010
We have
not granted any plan-based awards to our named executive officers since our
inception.
Outstanding
Equity Awards at Year-End
We did
not have any outstanding equity awards to our named executive officers as of
March 31, 2010.
Option
Exercises and Stock Vested in 2009
None of
our named executive officers exercised any options, nor did any unvested stock
granted to our named executive officers vest, during fiscal year
2009.
Equity
Incentive Plan
After the
closing of this offering, we expect to adopt an equity incentive plan. The
purposes of the plan are to attract and retain qualified persons upon whom our
sustained progress, growth and profitability depend, to motivate these persons
to achieve long-term Company goals and to more closely align these persons'
interests with those of our other shareholders by providing them with a
proprietary interest in our growth and performance. Our executive officers,
employees, consultants and non-employee directors will be eligible to
participate in the plan.
Compensation
of Directors
All
directors engaged in the future will be issued 25,000 shares of our common stock
in consideration of their serving as directors. All directors are
reimbursed for out-of-pocket expenses for business related
purposes. We do not have any other arrangements for compensating our
directors at this time. Our director compensation program is
determined by our board of directors.
The
following table sets forth certain information regarding beneficial ownership of
our common stock as of March 31, 2010, and as adjusted to reflect the sale of
the shares offered in this offering on the assumption that all shares offered
will be sold equating to 2,000,000 shares of common stock for:
• Each
person or group known to us to beneficially own 5% or more of our common
stock;
• Each
of our directors and director nominees;
• Each
of our named executive officers; and
• All of
our executive officers and directors as a group.
Unless
otherwise indicated below, to our knowledge, all persons listed below have sole
voting and investment power with respect to their shares of common stock, except
to the extent authority is shared by spouses under applicable law. Unless
otherwise indicated below, each entity or person listed below maintains an
address of 100 Four Star Lane Odenville AL 35120.
The
number of shares beneficially owned by each shareholder is determined under
rules promulgated by the SEC. The information is not necessarily indicative of
beneficial ownership for any other purpose. Under these rules, beneficial
ownership includes any shares as to which the individual or entity has sole or
shared voting or investment power and any shares as to which the individual or
entity has the right to acquire beneficial ownership within 60 days after March
31, 2010 through the exercise of any stock option, warrant or other right. The
inclusion in the following table of those shares, however, does not constitute
an admission that the named shareholder is a direct or indirect beneficial
owner.
|
Number
of Shares
|
Percentage
Of Shares Outstanding
|
|||||||||||
|
Beneficial
Owner
|
beneficially
owned
|
Pre
Offering
|
Post
Offering
|
|||||||||
|
Fran
Mize
|
8,430,576 | 37.92 | % | 29.02 | % | |||||||
|
Bobby
R. Smith Jr.
|
9,497,659 | 42.72 | % | 31.73 | % | |||||||
|
Private
Resources, LLC
|
8.25 | % | ||||||||||
|
218
Main St Suite 164 Setauket NY 11733
|
||||||||||||
|
All
Directors and Officers as a group
|
4,305993 | |||||||||||
|
Issued
Shares Pre-Offering
|
22,234,228 | |||||||||||
|
Post
Offering Fully Diluted
|
39,384,228 | |||||||||||
Related
Party Transactions
On
February 12, 2010, the Company issued 12,000,000 shares to Fran Mize and Bobby
Smith Jr. for the purpose of acquiring properties listed below;
|
Development
Sites as of March 31, 2010
|
||||||
|
Region
|
Home
Sites
|
Homes
Under
|
Homes
|
Commercial
|
Appraised
|
Liability
|
|
Developed
|
Construction
|
Sold
|
Parcels
|
Value
|
||
|
Ridgefield
|
899
|
12
|
504
|
0
|
$10,770,000
|
$6,134,945
|
|
12
Oaks
|
185
|
4
|
11
|
0
|
$6,875,000
|
$1,900,000
|
|
Four
Star Investment
|
-
|
-
|
-
|
-
|
$7,461,107
|
$5,535,014
|
|
4
Star Properties
|
52
|
4
|
15
|
2
|
$5,395,000
|
$5,188,986
|
|
Legacy
Springs Apts
|
-
|
-
|
-
|
-
|
$13,560,000
|
$1,600,000
|
|
4
Star Land Ventures
|
277
|
18
|
71
|
0
|
$21,200,000
|
$10,821,358
|
|
SBE
|
-
|
-
|
-
|
20
|
$13,032,400
|
$3,025,000
|
|
Total
|
1413
|
38
|
601
|
22
|
$78,293,507
|
$34,205,303
|
Policies
and Procedures for Related Party Transactions
After the
closing of this offering, we will adopt a written policy that requires any
transaction, arrangement or relationship in which we will be a participant and
the amount involved exceeds $10,000, and in which any of our directors,
executive officers or shareholders owning at least 5% of any class of our voting
securities, or any of their immediate family members or any entity in which any
of the foregoing persons is employed or is a general partner or principal had or
will have a direct or indirect material interest, to be submitted to our audit
committee for review, consideration and approval. In the event that a proposed
transaction with a related person involves an amount that is less than $10,000,
the transaction will be subject to the review and approval of our Chief
Executive Officer (or our Chief Financial Officer in the event our Chief
Executive Officer, an immediate family member of the Chief Executive Officer, or
an entity in which our Chief Executive Officer or a member of his immediate
family is employed or is a general partner or principal is a party to such
transaction). If the transaction is approved by our Chief Executive Officer or
Chief Financial Officer, such officer will report the material terms of the
transaction to our audit committee at its next meeting. The policy will provide
for periodic monitoring of pending and ongoing transactions. In approving or
rejecting the proposed transaction, our audit committee will consider the
relevant facts and circumstances available to it, including, (1) the impact on a
director’s independence if the related person is a director or his or her family
member or related entity, (2) the material terms of the proposed transaction,
including the proposed aggregate value of the transaction, (3) the benefits to
us, (4) the availability of other sources for comparable material or supplies
(if applicable), and (5) an assessment of whether the proposed transaction is on
terms that are comparable to the terms available to an unrelated third party or
to our employees generally. Our audit committee will approve only those
transactions that the committee determines to be, in light of known
circumstances, in, or not inconsistent with, our best interests and the best
interest of our shareholders.
The
validity of the securities offered hereby is being passed upon for our Company
by Law Offices of Joseph L. Pittera 2214 Torrance Boulevard Suite 101 Torrance,
California 90501 Telephone (310) 328-3588 Facsimile (310) 328-3063.
Our
directors and officers are indemnified as provided by the Florida Business Corporation
Act, our Articles of Incorporation and our Bylaws.
We have
been advised that, in the opinion of the SEC, indemnification for liabilities
arising under the Securities Act is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities is asserted by one of our directors,
officers, or controlling persons in connection with the securities being
registered, we will, unless in the opinion of our legal counsel the matter has
been settled by controlling precedent, submit the question of whether such
indemnification is against public policy to a court of appropriate jurisdiction.
We will then be governed by the court's decision.
We have
filed a registration statement on Form S-1 under the Securities Act with the SEC
with respect to the securities offered by this prospectus. This prospectus does
not include all of the information contained in the registration statement or
the exhibits and schedules filed therewith. You should refer to the registration
statement and its exhibits for additional information. Whenever we make
reference in this prospectus to any of our contracts, agreements or other
documents, the references are not necessarily complete and you should refer to
the exhibits attached to the registration statement for copies of the actual
contract, agreement or other document.
We will
file annual, quarterly and special reports and other information with the
Securities and Exchange Commission. You can read these SEC filings and reports,
including the registration statement, over the Internet at the SEC’s website at
www.sec.gov. You can also obtain copies of the documents at
prescribed rates by writing to the Public Reference Section of the SEC at
100 F Street, NE, Washington, DC 20549, on official business days
between the hours of 10:00 am and 3:00 pm. Please call the SEC at (800) SEC-0330
for further information on the operations of the public reference facilities. We
will provide a copy of our annual report to security holders, including audited
financial statements, at no charge upon receipt of your written request to us at
Four Star Holdings, Inc., 100 Four Star Lane Odenville AL 35120.
No
dealer, salesman or any other person has been authorized to give any information
or to make any representations other than those contained in this prospectus,
and, if given or made, such information or representations may not be relied on
as having been authorized by us or any of the underwriters. Neither the delivery
of this prospectus nor any sale made hereunder shall under any circumstances
create an implication that there has been no change in our affairs since the
date of this prospectus. This prospectus does not constitute any offer to sell,
or solicitation of any offer to buy, by any person in any jurisdiction in which
it is unlawful for any such person to make such an offer or solicitation.
Neither the delivery of this prospectus nor any offer, solicitation or sale made
hereunder, shall under any circumstances create any implication that the
information herein is correct as of any time subsequent to the date of the
prospectus.
Until 180
days from the effective 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 dealers'
obligation to deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.
PART
II – INFORMATION NOT REQUIRED IN PROSPECTUS
The
following table sets forth the costs and expenses payable by Four Star Holdings
in connection with registering the sale of the common stock. Four Star Holdings
has agreed to pay all costs and expenses in connection with this offering of
common stock. Set for the below is the estimated expenses of issuance and
distribution, assuming the maximum proceeds are raised.
|
Legal
and Professional Fees
|
$ | 20,000 | ||
|
Accounting
Fees
|
$ | 15,000 | ||
|
Blue
Sky Qualification Fees
|
$ | 5,000 | ||
|
Total
|
$ | 40,000 |
ITEM
14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
None of
our directors will have personal liability to us or any of our shareholders for
monetary damages for breach of fiduciary duty as a director involving any act or
omission of any such director since provisions have been made in the Articles of
Incorporation limiting such liability. The foregoing provisions will not
eliminate or limit the liability of a director (i) for any breach of the
director’s duty of loyalty to us or our shareholders, (ii) for acts or omissions
not in good faith or, which involve intentional misconduct or a knowing
violation of law, (iii) under applicable Sections of the Florida Business
Corporation Act, (iv) the payment of dividends in violation of applicable
Sections of the Florida Business Corporation Act or (v) for any transaction from
which the director derived an improper personal benefit.
Our
articles of incorporation and bylaws provide for indemnification of our
directors, officers, and employees in most cases for any liability suffered by
them or arising out of their activities as our directors, officers, and
employees, if they were not engaged in willful misfeasance or malfeasance in the
performance of his or her duties; provided that in the event of a settlement the
indemnification will apply only when the Board of Directors approves such
settlement and reimbursement as being for the best interests of the
Corporation. Our articles of incorporation and bylaws, therefore,
limit the liability of directors to the maximum extent permitted by the Florida
Business Corporation Act.
Our
officers and directors are accountable to us as fiduciaries, which means they
are required to exercise good faith and fairness in all dealings affecting us.
In the event that a shareholder believes the officers and/or directors have
violated their fiduciary duties to us, the shareholder may, subject to
applicable rules of civil procedure, be able to bring a class action or
derivative suit to enforce the shareholder’s rights, including rights under
certain federal and state securities laws and regulations to recover damages
from and require an accounting by management. Shareholders who have
suffered losses in connection with the purchase or sale of our securities in
connection with such sale or purchase, including the misapplication by any such
officer or director of the proceeds from the sale of these securities, may be
able to recover such losses from us.
Insofar
as indemnification for liabilities arising under the Securities Act might be
permitted to directors, officers or persons controlling our company under the
provisions described above, we have been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
ITEM
15. RECENT SALES OF UNREGISTERED
SECURITIES.
Set forth
below is information regarding the issuance and sales of securities without
registration since inception. No such sales involved the use of an
underwriter; no advertising or public solicitation was involved; the securities
bear a restrictive legend; and no commissions were paid in connection with the
sale of any securities.
On
October 4, 2007 (inception), Dragon’s Lair Holdings issued 975,000 shares of
common stock for the purchase of the license to manufacture, distribute and
sell, the Sore-Eez Chinese herbal liniment, its initial product, from Yamit
Lemoine. The value of the license was determined to be the legal
costs to create the license, which was $1,200, as there were no other
out-of-pocket costs for the license or the development of the
recipe.
On
November 4, 2007, Dragon’s Lair Holdings, Inc. issued 5,000,000 shares of common
stock to an investor for cash in the amount of $11,100.
On
December 31, 2007, Dragon’s Lair Holdings, Inc. issued 63,278 shares of common
stock to an investor for cash in the amount of $633.
On March
27, 2008, Dragon’s Lair Holdings, Inc. issued 100,000 shares of common stock to
directors for services rendered at a value of $4,008.
On
December 11, 2008, Dragon’s Lair Holdings, Inc. completed its public offering
pursuant to its Form S-1 Registration Statement of 6,780 shares of Series A
Convertible Preferred Stock, which were converted into 1,762,800 shares of
common stock and provided aggregate offering proceeds in the amount of
$67,800.
On April
1, 2009, Dragon’s Lair Holdings, Inc. issued 100,000 shares of common stock to
its transfer agent for services rendered at a value of $3,846.
On
December 14, 2009, Bobby Smith Jr. and Frances T. Mize purchased 74.1% of the
issued and outstanding stock of Dragon’s Lair holdings, Inc. exchanging
beneficial ownership to these persons.
On
February 10, 2010, the Company issued 2,075,000 restricted shares for consultant
services.
On
February 10, 2010, the Company issued an aggregate of 12,000,000 shares of
common stock of the Company, of which six (6) million were issued to each of
Frances Mize and Bobby R. Smith, Jr. to cover extraordinary expenses incurred
and paid on behalf of the Company and for future and probable
acquisitions.
On
February 10, 2010, the Company executed an agreement to issue an aggregate of
200,000 shares of common stock to Joseph L. Pittera, attorney for the Company,
for services rendered.
On March
15, 2010, the Company issued 158,150 restricted shares for IT consulting
services.
These
securities were issued in reliance upon the exemption contained in Section 4(2)
of the Securities Act of 1933.
The
following exhibits are included with this registration statement:
|
Exhibit
No.
|
Description
|
|||
| 3 .1 | ||||
| 3 .2 | ||||
| 4 .1 | ||||
| 5 .1 | ||||
| 10 .1 | ||||
| 10.2 | quisition of Four Star Realty LLC | |||
| 21 .1 | ||||
| 23 .1 | ||||
| 23.2 | Consent of Independent Auditor, Labrozzi & Co., PA | |||
| 23.3 |
Consent of Law Offices of Joseph
Pittera. (included in Exhibit
5.1)
|
|||
ITEM
17. UNDERTAKINGS.
Under
Rule 415 of the Securities Act, we are registering securities for an offering to
be made on a continuous or delayed basis in the future. The registration
statement pertains only to securities (a) the offering of which will be
commenced promptly, will be made on a continuous basis and may continue for a
period in excess of 30 days from the date of initial effectiveness and (b) are
registered in an amount which, at the time the registration statement becomes
effective, is reasonably expected to be offered and sold within two years from
the initial effective date of the registration.
Based on
the above-referenced facts and in compliance with the above-referenced rules,
Four Star Holdings includes the following undertakings in this Registration
Statement:
A. The
undersigned Registrant hereby undertakes:
(1) To
file, during any period, in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To
include any prospectus required by section 10(a)(3) of the Securities Act of
1933, as amended;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the “Calculation of the Registration Fee” table in the
effective Registration Statement; and
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement.
(1) That,
for the purpose of determining any liability under the Securities Act of 1933,
as amended, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(2) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
B.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant 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, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
In
accordance with the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form S-1 and authorized this Registration Statement to
be signed on its behalf by the undersigned, in the City of Odenville, State of
Alabama on July 8, 2010.
|
Four Star Holdings, Inc.
|
|
(Registrant)
|
|
By: /s/ Bobby R.
Smith,
Jr.
|
|
Bobby R. Smith, Jr.
|
|
Chief
Executive Officer, Treasurer and
Director
|
In
accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated:
|
Signature
|
Title
|
Date
|
|
/s/ Bobby R. Smith,
Jr.
Bobby
R. Smith, Jr.
|
Chief
Executive Officer, and Treasurer
|
July
8, 2010
|
|
/s/Fran
Mize
Fran
Mize
|
President
and Director
|
July
8, 2010
|
- 96
-