Pre-Effective Amendment to Registration of Securities of a Small-Business Issuer — Form SB-2
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1: SB-2/A Pre-Effective Amendment to Registration of 42 180K
Securities of a Small-Business Issuer --
sb2ano1
6: CORRESP ¶ Comment-Response or Other Letter to the SEC 19 43K
2: EX-5.1 Opinion of Blackburn & Stoll, Lc 2± 10K
3: EX-10.2 Amendment to Asset Purchase Agreement 1 7K
4: EX-23.1 Consent of Pritchett, Siler & Hardy, P.C. 1 5K
5: EX-99.1 Subscription Agreement 2 8K
‘SB-2/A’ — Pre-Effective Amendment to Registration of Securities of a Small-Business Issuer — sb2ano1
Document Table of Contents
As filed with the Securities and Exchange Commission on February ___, 2006.
Registration Statement No. 333-128532
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM SB-2/A
Registration Statement Under
the Securities Act of 1933
(Amendment No. 1)
World Trophy Outfitters, Inc.
---------------------------------------------
(Name of small business issuer in its charter)
Nevada 7990 20-2190950
------------------------------ ---------------------------- -------------------
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
4245 Production Court, Las Vegas, Nevada 89115, (801) 635-5576
--------------------------------------------------------------
(Address and telephone number of principal executive offices and
principal place of business)
Eric L. Robinson
BLACKBURN & STOLL, LC
257 East 200 South, Suite 800
Salt Lake City, UT 84111 (801) 521-7900
--------------------------------------------------------
(Name, address and telephone number of agent for service)
Approximate date of proposed sale to the public: As soon as practicable
from time to time after this registration statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
WORLD TROPHY OUTFITTERS, INC.
$100,000 Minimum/$200,000 Maximum
Common Stock
This is our initial public offering. We are offering a minimum of
200,000 shares and a maximum of 400,000 shares of common stock. The public
offering price will be fixed at $.50 per share. No public market currently
exists for our shares. From inception to date we have had very limited
operations.
The shares are offered on a "minimum/maximum, best efforts" basis
directly through our officers. No commission or other compensation related to
the sale of the shares will be paid to our officers. The proceeds of the
offering will be placed and held in an escrow account at U.S. Bank National
Association, until a minimum of $100,000 in cash has been received as proceeds
from sale of shares. Subscribers are not subject to any minimum purchase
requirement. If we do not receive the minimum proceeds within 90 days from the
date of this prospectus, unless extended by us for up to an additional 30 days,
your investment will be promptly returned to you without interest and without
any deductions. This offering will expire no later than 120 days after the date
of this prospectus.
Price to Public Commissions Proceeds to Company
--------------------- ---------------- --------------------
Per Share $.50 $0 $.50
Minimum $100,000 $0 $100,000
Maximum $200,000 $0 $200,000
Investing in shares of our stock involves significant risks. Our "Risk
Factors" begin on page 5.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
---------------
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
The date of this prospectus is February __, 2006.
TABLE OF CONTENTS
PAGE
Prospectus Summary........................................................... 3
Risk Factors................................................................. 4
Forward-Looking Statements................................................... 7
Dilution..................................................................... 8
Use Of Proceeds.............................................................. 9
Determination Of Offering Price.............................................. 10
Market For Common Equity And Related Stockholder Matters..................... 10
Description Of Business...................................................... 12
Description Of Property...................................................... 16
Management's Discussion And Analysis Or Plan Of Operation.................... 16
Directors, Executive Officers, Promoters And Control Persons................. 21
Executive Compensation....................................................... 21
Certain Relationships And Related Transactions............................... 22
Security Ownership Of Certain Beneficial Owners And Management............... 22
Description Of Securities.................................................... 23
Plan Of Distribution......................................................... 24
Legal Proceedings............................................................ 26
Legal Matters................................................................ 26
Experts...................................................................... 26
Changes And Disagreements With Accountants On Accounting And Financial
Disclosure................................................................. 26
Available Information........................................................ 26
Financial Statements.........................................................F-1
PROSPECTUS SUMMARY
We were formed as a Nevada corporation on January 13, 2005 as World
Trophy Outfitters, Inc. ("WTO"). We are in the business providing a booking and
consulting service for and selling big game hunting packages to high end clients
who seek to hunt with the top tier big game outfitters. Our principal executive
offices are located at 4245 Production Court, Las Vegas, Nevada 89115. Our
telephone number is: (801) 635-5576.
From January 13, 2005 (inception) through September 30, 2005, we had
revenues of $159,400 and realized a net income of $22,699. However, we have a
limited operating history and there can be no assurance that we will be
profitable in the future. These factors raise substantial doubts about our
ability to continue as a going concern.
We are offering a minimum of 200,000 and a maximum of 400,000 shares.
Upon completion of the offering, we will have 11,200,000 shares of common stock
outstanding if we sell the minimum and 11,400,000 shares of common stock
outstanding if we sell the maximum number of shares. After completion of this
offering, Mr. Don Peay, our president and a director, will direct approximately
88% of the voting control of WTO if the maximum amount is raised and
approximately 90% of the voting control of WTO if the minimum amount is raised.
As a result, Mr. Peay will effectively have voting control of WTO with respect
to all matters submitted to the vote of the stockholders, including the election
of directors.
We will realize $77,500 if we raise the minimum and $177,500 if we
raise the maximum amount of the offering. We anticipate our expenses related to
the offering to be approximately $22,500. We will use the proceeds from the
offering to purchase big game hunts for resale to our customers and to cover
some of our operating costs over the next year.
Selected Historical Financial Data
The following selected historical financial data of is only a summary
and you should read it in conjunction with our consolidated financial statements
and the notes to those financial statements.
[Enlarge/Download Table]
January 13, 2005 January 13, 2005
Six Months Ended (Date of Inception) to (Date of Inception) to
September 30, 2005 March 31, 2005 September 30, 2005
Statement of Operations Data: (Unudited) (Audited) (Unaudited)
----------------------------- ---------- --------- -----------
Sales.................................... $ 75,400 $ 79,000 $ 154,400
Consulting............................... -- 5,000 5,000
Cost of Sales............................ 67,389 60,575 127,964
General and Administrative Expenses...... 3,564 -- 3,564
Net Income............................... 3,783 18,916 22,699
Balance Sheet Data:
Current assets.......................... $ 100,413 $ 152,601
Total assets............................ 100,658 152,061
Current liabilities..................... 84,607 140,333
Total liabilities....................... 84,607 140,333
Working capital......................... 15,806 12,268
Stockholder's equity.................... 16,051 12,268
3
RISK FACTORS
YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS WHICH DESCRIBE
ALL MATERIAL RISKS THAT RELATE SPECIFICALLY TO US AND OF WHICH WE ARE AWARE.
BECAUSE WE ARE A NEW BUSINESS AND WE HAVE NOT PROVEN OUR ABILITY TO
GENERATE PROFIT, AN INVESTMENT IN WTO IS RISKY.
We have no meaningful operating history so it will be difficult for you
to evaluate an investment in our stock. Our operations are subject to all risks
inherent in the creation of a new business and the acquisition, marketing and
resale of big game hunts, including the absence of a history of significant
operations and of proven big game hunt packages which have been produced and
sold over a significant period of time. We are continuing to establish many
functions which are necessary to conduct business, including, managerial and
administrative structure, marketing activities, financial systems, computer
systems, web development and personnel recruitment. From inception (January 13,
2005) through September 30, 2005, we had revenues of $159,400 and a net income
of $22,699. We cannot assure that we will be profitable in the future. Since we
have not proven the essential elements of profitable operations, you will be
furnishing venture capital to us and will bear the risk of complete loss of your
investment in the event we are not successful.
BECAUSE OF OUR LIMITED FINANCIAL RESOURCES AND LACK OF A TRACK RECORD
OUR BUSINESS MAY FAIL.
Our audited financial statements have been prepared assuming that we
continue as a going concern. Our auditors have noted that we have a limited
operating history and do not have a track record of profitable operations. As a
result, our auditors have indicated that these conditions raise substantial
doubt about our ability to continue as a going concern.
WE DO NOT HAVE SUFFICIENT FUNDING TO EXECUTE OUR PLAN OF OPERATION AND
OUR BUSINESS WILL NOT BE SUCCESSFUL WITHOUT ADDITIONAL FUNDING.
As of September 30, 2005, we had current assets of $100,413 and current
liabilities of $84,607. We are devoting substantially all of our present efforts
to establishing a new business and need the proceeds from this offering to
continue implementing our plan of operation. We estimate that we will need to
raise at least $100,000 in additional funding to execute our plan of operation.
This funding is needed to acquire big game hunts for resale and to cover some of
our operating costs over the next year. Without this funding it is unlikely our
business will succeed. While we currently anticipate that $100,000 will be
sufficient to allow us to execute our plan of operations, our estimates may be
wrong or unforeseen circumstances may arise which results in our needing
additional funding to execute our plan of operation. If we need additional
funding, we may be unsuccessful in obtaining it or it may only be available on
terms that are disadvantageous to us. If we are unsuccessful in raising
additional funds, should it be required, it may result in the discontinuance of
our business due to lack of funding. These factors raise substantial doubt about
our ability to continue as a going concern.
IF OUR REVENUES ARE BELOW OUR ESTIMATES OR OUR EXPENSES EXCEED OUR
ESTIMATES IT MAY IMPACT OUR ABILITY TO CONTINUE OPERATIONS.
We believe we have accurately estimated our needs for the next twelve
months based on our projected revenues and receiving funding in this offering.
There can be no assurance that we have accurately projected future revenues. It
is possible that our marketing costs, hunting package acquisition costs or our
other costs will exceed our estimates. If this happens, it may impact our
ability to generate revenue and we would need to seek additional funding. We
have no arrangements in place whereby we could obtain additional funding.
4
BECAUSE OF THE CONCENTRATION OF SHARE OWNERSHIP, STOCKHOLDERS OTHER
THAN MR. PEAY WILL HAVE NO ABILITY TO ELECT DIRECTORS OR APPROVE OR
DISAPPROVE OF ANY OTHER MATTER VOTED ON BY THE STOCKHOLDERS.
In January 2005, we issued 10,000,000 shares of common stock to Mr.
Peay, our president and sole director. After completion of this offering, Mr.
Peay will direct approximately 88% of the voting control of WTO, assuming the
maximum amount is sold. As a result, Mr. Peay will effectively have voting
control of WTO with respect to all matters submitted to the vote of the
stockholders, including the election of directors. The concentration of voting
control may also have the effect of impeding a non-negotiated change in control
which result may or may not benefit stockholders. In addition, stockholders may
be disadvantaged in the event matters are put to the stockholders for approval
and the interests of the holders of the preferred stock are dissimilar to the
interests of the stockholders generally.
THE PRICE AT WHICH SECURITIES ARE BEING OFFERED IN THIS OFFERING IS
SUBSTANTIALLY GREATER THAN THE PRICE AT WHICH EXISTING STOCKHOLDERS
PURCHASED SHARES SO THAT INVESTORS IN THIS OFFERING WILL NOT OWN A
SUFFICIENT NUMBER OF THE OUTSTANDING STOCK TO TAKE ACTION AS
STOCKHOLDERS.
Although you will pay a price per share that substantially exceeds the
price per share paid by current stockholders and will contribute a significantly
higher percentage of the total amount to fund our operations, investors in this
offering will own a very small percent, less than 4% of our common shares if the
maximum amount is raised. As a result, you will have no ability to control how
management operates our business. Moreover, Mr. Peay will direct at least 88% of
the voting control of WTO after the offering is completed. Mr. Peay, as majority
stockholder and the sole director, will be able to control the future course of
WTO.
IF WE LOSE THE SERVICES OF MR. PEAY IT IS UNLIKELY THAT OUR BUSINESS
COULD CONTINUE.
We are in the development stage and require the services of our
president to become established. Mr. Peay current spends about ten percent (four
hours per week) of his available business time working for WTO. Mr. Peay is also
involved in other businesses. As WTO grows, Mr. Peay may not have sufficient
time to properly manage the business which could materially and adversely affect
growth, revenue and profitability. In addition, we do not have an employment
agreement with Mr. Peay. As a result, Mr. Peay may terminate his employment at
any time. There is intense competition for management and marketing personnel in
our business. If we lost the services of our president, it is questionable
whether we would be able to find a replacement and it is likely our business
would fail.
WE DO NOT HAVE EXCLUSIVE ARRANGEMENTS WITH ANY OF THE BIG GAME
OUTFITTERS WITH WHOM WE WORK, GUIDE SERVICES FROM OUTFITTERS ARE WIDELY
AVAILABLE TO OTHER WHOLESALERS AND CAN BE READILY SOLD BY COMPETITORS.
We have no exclusive arrangements that would preclude or inhibit
competitors from selling big game outfitting packages that are substantially
similar to or the same as the packages that we sell. As a result, our
competitors could buy and market packages that are substantially similar to our
packages.
WE DEPEND ON THIRD PARTY OUTFITTERS TO SELL US BIG GAME HUNTING
PACKAGES AND IF OUTFITTERS STOPPED SELLING TO US AT COMPETITIVE PRICES
OUR BUSINESS WILL FAIL.
We resell hunting packages from various big game outfitters. There are
no arrangements whereby any outfitters have agreed or are required to continue
to sell hunting packages to us. The hunting packages we sell could be purchased
from a number of third parties. If we are not able to acquire big game packages
at competitive prices we could not longer conduct this business.
IN THE EVENT THAT ANY GAME OUTFITTER FROM WHOM WE HAVE ACQUIRED HUNTING
PACKAGES DOES NOT PERFORM THE AGREED SERVICES, THEN WE MAY LOSE ALL
FUNDS PAID FOR THOSE HUNTING PACKAGES AND, DEPENDING ON THE AMOUNTS
INVOLVED, THE LOSS COULD BE OF A MAGNITUDE THAT WOULD RESULT IN OUR
INABILITY TO CONTINUE TO CONDUCT BUSINESS.
5
We have entered into arrangements to acquire hunting packages from
outfitters and we plan to enter into further long and short term arrangements to
acquire hunting packages. Acquiring these packages generally requires either
payment for the full purchase price of the package or payment of a substantial
deposit towards to purchase price of the hunting package. In the event that an
outfitter with whom we have contracted has financial difficulties, wildlife
populations unexpectedly diminish, government regulation stops hunting or an
outfitter is otherwise unable to perform the agreed services, then we may lose
the entire purchase price or deposit for the hunting package(s) in question. If
such a loss should occur, then, depending on the size of the loss, it may result
in the loss of all of our working capital and result in our inability to
continue to conduct our business.
IN THE EVENT THAT MARKET PRICES FOR HUNTING PACKAGES DROP IT MAY RESULT
IN OUR LOSING MONEY ON HUNTING PACKAGES THAT WE HAD PREVIOUSLY
PURCHASED.
We buy and then resell hunting packages. The price at which hunting
packages are sold can fluctuate based on numerous conditions, including, the
number of hunting permits issued by the regulatory authorities, economic
conditions, weather, wildlife populations, travel costs, and other factors. In
the event that we purchase hunting packages and the price of similar hunting
packages drops after our purchase, then we may be required to resell such
hunting packages at a discount or a loss. A significant drop in the price of
prices in areas where we had previously purchased hunting packages may result in
significant losses.
WE DO NOT HAVE SUFFICIENT FUNDS TO PAY THE AMOUNTS OWING UNDER OUR
PURCHASE AGREEMENT WITH MR. PEAY.
We entered into an asset purchase agreement with Mr. Peay that calls
for the payment of $123,000, representing the remaining amounts owned under the
agreement, on or before January 31, 2007. We do not have the funds to pay the
amounts owing. We intend to generate the funds to pay the amount owing as we
collect on our outstanding receivables and through the sale of additional
hunting permits that we currently holds. In the event that we are unable pay the
amounts owing, Mr. Peay will have a claim against us for any unpaid amounts
owing.
WE HAVE LIMITED EXPERIENCE IN SALES AND MARKETING WHICH MAY AFFECT OUR
ABILITY TO GENERATE CLIENTS.
As a new company, we have limited experience in sales, marketing, or
distribution, of our outfitter packages. Our current plan is to approach
additional high end hunters who might be interested in our packages. We cannot
assure you that we will be able to establish sales and distribution capabilities
or that we will be able to obtain a client base for our packages.
WE MUST KEEP PACE WITH CHANGING CONDITIONS IN WILDLIFE POPULATIONS AND
GUIDING AND HUNTING REGULATIONS THROUGHOUT THE US, CANADA, MEXICO AND
AFRICA IN ORDER TO PROVIDE OUR CUSTOMERS THE BEST POSSIBLE PACKAGES.
Wildlife populations are subject to disease, predation and harsh
weather conditions that can dramatically affect herd size and trophy quality.
Governments and hunting regulations change frequently. Our future success will
depend in part on our ability to maintain existing clients and outfitter
relationships, and develop new relationships with outfitters that meet changing
client requirements. We may not be successful in attracting additional clients
who desire our custom services. We could experience difficulties that delay or
prevent the successful development and marketing of outfitter packages. We
cannot guarantee that any current or newly acquired outfitter packages will
achieve market acceptance.
THERE IS NO MARKET FOR OUR STOCK AND THERE CAN BE NO ASSURANCE THAT A
MARKET WILL DEVELOP AFTER THIS OFFERING.
There is no market for our stock. There can be no assurance that a
market for our stock will develop after this offering. If a market does develop,
there can be no assurance as to the depth or liquidity of any such market or the
6
prices at which holders may be able to sell their shares. As a result, an
investment in our stock may be illiquid, and investors may not be able to
liquidate their investment readily or at all when they need or desire to sell.
BECAUSE OUR BOARD OF DIRECTORS IS COMPRISED OF OUR SOLE OFFICER, OUR
BOARD WILL NOT HAVE THE BENEFIT OF RECEIVING INDEPENDENT OVERSIGHT
WHICH MAY DIMINISH OUR OPERATING RESULTS.
Our sole director is Mr. Peay, who is also the sole officer of the
Company. As a result, our board of directors may be influenced by the concerns,
issues or objectives of management to a greater extent than would occur with
independent board members. In addition, we do not have the benefit of having
persons independent of management review, comment and direct our corporate
strategies and objectives.
THERE IS NO COMMITMENT FOR ANYONE TO BUY SHARES IN THIS OFFERING.
The shares are being sold by us on a reasonable efforts basis. There is
no underwriter and no firm commitment from anyone to purchase all or any of the
shares offered. Management will not purchase shares in this offering in order to
reach the minimum or otherwise. No assurance can be given that all of the shares
will be sold. If we are unable to sell the minimum amount we will not have
sufficient funds to execute our plan of operation.
YOUR INVESTMENT MAY BE DILUTED BECAUSE WE HAVE THE ABILITY TO ISSUE
ADDITION SHARES OF COMMON AND PREFERRED STOCK WITHOUT YOUR APPROVAL.
We are authorized to issue up to 100,000,000 shares of common stock. To
the extent of such authorization, we have the ability, without seeking
stockholder approval, to issue additional shares of common stock in the future
for such consideration we may consider sufficient. The issuance of additional
common stock in the future will reduce the proportionate ownership and voting
power of the common stock offered hereby. We are also authorized to issue up to
10,000,000 shares of preferred stock, the rights and preferences of which may be
designated in series by the board of directors. To the extent of any
authorizations, such designations may be made without stockholder approval. The
designation and issuance of a series of preferred stock in the future could
create additional securities which may have voting, dividend, liquidation
preferences or other rights that are superior to those of the common stock,
which could effectively deter any takeover attempt of WTO.
AFTER THE EFFECTIVE DATE OF THIS REGISTRATION WE WILL BE SUBJECT TO
INCREASED COSTS AND EXPENSES AND WE MAY NOT BE ABLE TO GENERATE
SUFFICIENT REVENUES TO PAY THESE INCREASED COSTS AND EXPENSE WHICH MAY
RESULT IN OUR INABILITY TO CONTINUE TO CONDUCT BUSINESS.
We have chosen a public registration before our business has developed
a predictable cash flow. There are present registration expenses and future
legal and accounting expenses, future reporting requirements to the SEC,
potential future listing requirements, and future investor relations costs that
must be borne by a public company but not a private company. These costs can be
a burdensome expense that we may not be able to afford to pay in which case it
may lead to the cessation of our business.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These
forward-looking statements are subject to a number of risks and uncertainties,
many of which are beyond our control. All statements other than statements of
historical facts included in this prospectus, including the statements under
"Description of Business," "Management Discussion and Analysis or Plan of
Operation" and elsewhere in this prospectus regarding our strategy, future
operations, financial position, projected costs, projected revenues, prospects,
7
plans and objectives of management, are forward-looking statements. When used in
this prospectus, in our press releases or other public or stockholder
communications, or in oral statements made with the approval of our executive
officers, the words or phrases "would be," "intends to," "will likely result,"
"are expected to," "is anticipated," "estimate," "project," or similar
expressions are intended to identify "forward-looking statements", although not
all forward-looking statements contain such identifying words.
We caution readers not to place undue reliance on any forward-looking
statements, which speak only as of the date made, are based on certain
assumptions and expectations which may or may not be valid or actually occur,
and which involve various risks and uncertainties. We disclose important factors
that could cause our actual results to differ materially from our expectations
under the caption "Risk Factors", including but not limited to our history of
losses, working capital deficit, need for additional funds to execute our
business plan, dependence on our distributors, and the risk of product demand,
economic conditions, competitive products, changes in the regulation of our
industry and other risks. As a result, our actual results for future periods
could differ materially from those anticipated or projected.
DILUTION
As of September 30, 2005, we had a net tangible book value, which is
the total tangible assets less total liabilities, of $8,765, or less than $.01
per share. Assuming gross proceeds of $100,000 are raised in the offering and
without taking into account any changes in our net tangible book value after
September 30, 2005, we will have net offering proceeds of $77,500, a net
tangible book value before the offering of $8,765, and a pro forma net tangible
book value after the offering of $86,265. Assuming gross proceeds of $200,000
are raised in the offering and without taking into account any changes in our
net tangible book value after September 30, 2005, we will have net offering
proceeds of $177,500, a net tangible book value before the offering of $8,765,
and a pro forma net tangible book value after the offering of $186,265.
The following table shows the dilution to your investment on a per
share basis without taking into account any changes in our net tangible book
value after September 30, 2005, except the sale of the minimum and maximum
number of shares offered.
Assuming Minimum Assuming Maximum
Shares Sold Shares Sold
----------- -----------
Shares outstanding 11,200,000 11,400,000
Public offering proceeds $.50 $.50
Net tangible book value before offering * *
Pro forma net tangible book value after
offering * $.02
Increase attributable to purchase of shares
by new investors * $.02
Dilution to new investors $.50 $.48
Percent dilution 100% 96%
* Less than $.01
The following table summarizes the comparative ownership and capital
contributions of existing common stock stockholders and investors in this
offering as of September 30, 2005:
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[Download Table]
Shares Owned Total Consideration Average Price
Number - % Amount - % Per Share
---------- ---------- ---------
Present Stockholders (1):
Minimum Offering 11,000,000 - 98% $20,000 - 17% (2) (2)
Maximum Offering 11,000,000 - 97% $20,000 - 9% (2) (2)
New Investors:
Minimum Offering 200,000 - 2% $100,000 - 83% $.50
Maximum Offering 400,000 - 3% $200,000 - 91% $.50
--------------------
(1) The numbers used for Present Stockholders assumes that none of the present
stockholders purchase additional shares in this offering.
(2) Prior to this offering, we had 11,000,000 shares of common stock
outstanding. Of these shares, 10,000,000 shares were issued for $10,000 and
1,000,000 shares were issued for $10,000. The average price per share for
these sales was less than $.01.
USE OF PROCEEDS
The net proceeds to be realized by us from this offering, after
deducting estimated offering related expenses of approximately $22,500, is
$77,500 if the minimum and $177,500 if the maximum number of shares are sold.
The following table sets forth our estimate of the use of proceeds from the sale
of the minimum and the maximum amount of shares offered. Since the dollar
amounts shown in the table are estimates only, actual use of proceeds may vary
from the estimates shown. None of the offering proceeds will be used to pay
officers' salaries, related party debt or otherwise paid directly or indirectly
to officers and directors for compensatory purposes.
[Download Table]
Assuming Assuming Assuming Assuming
Sale of Gross Gross Sale of
Mimimum Proceeds of Proceeds of Maximum
Description Offering $135,000 $170,000 Offering
----------- -------- -------- -------- --------
Total Proceeds $100,000 $135,000 $170,000 $200,000
Less Estimated Offering
Expenses 22,500 22,500 22,500 22,500
-------- -------- -------- --------
Net Proceeds Available $77,500 $112,500 $147,500 $177,500
Use of Net Proceeds:
Purchase of big game hunts(1) $67,500 $99,000 $130,500 $157,500
Working Capital (2) 10,000 13,500 17,000 20,000
-------- -------- -------- --------
Total Net Proceeds $77,500 $112,500 $147,500 $177,500
--------
(1) In addition to the hunts that we have already acquired, we are
targeting the purchase of at least six dall sheep hunts from Arctic Red
River Outfitters in 2008, NWT Canada, two moose and goat hunts with
Scoop Lake Outfitters in 2007, British Columbia, and an African Safari
with San Miguel Worldwide hunting in 2007. In addition, we may acquire
hunts from other outfitters, in different locations or for different
game depending on market conditions. There can be no assurance that we
will be successful in acquiring these or any hunts.
(2) Our working capital will be used to pay general and administrative
expenses, other than compensation to our officer and director. Our
working capital expenditures could vary significantly because we may
use some of these funds to acquire hunts should such a need arise.
9
Factors that may cause us to use some of our working capital to acquire
hunts include whether we are able to acquire hunts at the anticipated
prices, how quickly we are able to resell the hunts, the prices at
which we are able to resell the hunts, changing markets demands and
pricing for hunts, and availability of hunts.
The working capital reserve may be used for general corporate purposes
to operate, manage and maintain the current and proposed operations including
additional product development, professional fees including legal and consulting
fees, expenses including office supplies and travel costs and other
administrative costs. The amounts actually expended for working capital purposes
may vary significantly and will depend on a number of factors, including the
amount of our future revenues and the other factors described under Risk
Factors.
Costs associated with being a public company, including compliance and
audits of our financial statements will be paid from working capital and
revenues generated from our operations. If less than the maximum offering is
received, we will apply the proceeds according to the priorities outlined above.
The proceeds will be used as outlined and we do not intend to change the use of
proceeds or pursue any other business other than as described in this
prospectus.
Pending expenditures of the proceeds of this offering, we may make
temporary investments in short-term, investment grade, interest-bearing
securities, money market accounts, insured certificates of deposit and/or in
insured banking accounts.
DETERMINATION OF OFFERING PRICE
The offering price of the shares was determined by our management. The
offering price bears no relationship to our assets, book value, net worth or
other economic or recognized criteria of value. In no event should the offering
price be regarded as an indicator of any future market price of our securities.
In determining the offering price, we considered such factors as the perceived
prospects for our business, our management's previous experience, our historical
and anticipated results of operations and our present financial resources.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Currently, there is no public trading market for our securities and
there can be no assurance that any market will develop. If a market develops for
our securities, it will likely be limited, sporadic and highly volatile. We do
not have any agreements with market makers regarding the trading of our shares,
but at some time in the future a market maker may make application for listing
our shares.
Presently, we are privately owned. This is our initial public offering.
Most initial public offerings are underwritten by a registered broker-dealer
firm or an underwriting group. These underwriters generally will act as market
makers in the stock of a company they underwrite to help insure a public market
for the stock. This offering is to be sold by our officers. We have no
commitment from any brokers to sell shares in this offering. As a result, we
will not have the typical broker public market interest normally generated with
an initial public offering. Lack of a market for shares of our stock could
adversely affect a stockholder in the event a stockholder desires to sell his
shares.
10
Our shares are subject to Rule 15g-1 through Rule 15g-9, which
provides, generally, that for as long as the bid price for the shares is less
than $5.00, they will be considered low priced securities under rules
promulgated under the Securities Exchange Act of 1934. Under these rules,
broker-dealers participating in transactions in low priced securities must first
deliver a risk disclosure document which describes the risks associated with
such stocks, the broker-dealer's duties, the customer's rights and remedies, and
certain market and other information, and make a suitability determination
approving the customer for low priced stock transactions based on the customer's
financial situation, investment experience and objectives. Broker-dealers must
also disclose these restrictions in writing to the customer and obtain specific
written consent of the customer, and provide monthly account statements to the
customer. Under certain circumstances, the purchaser may enjoy the right to
rescind the transaction within a certain period of time. Consequently, so long
as the common stock is a designated security under the Rule, the ability of
broker-dealers to effect certain trades may be affected adversely, thereby
impeding the development of a meaningful market in the common stock. The likely
effect of these restrictions will be a decrease in the willingness of
broker-dealers to make a market in the stock, decreased liquidity of the stock
and increased transaction costs for sales and purchases of the stock as compared
to other securities.
Shares Available for Future Sale
As of the date of this prospectus, there are 11,000,000 shares of our
common stock issued and outstanding. Upon the effectiveness of this document,
200,000 shares of common stock will be freely tradable if the minimum is sold
and 400,000 shares of common stock will be freely tradable if the maximum number
of shares is sold. The remaining shares of common and preferred stock will be
subject to the resale provisions of Rule 144. Sales of shares of stock in the
public markets may have an adverse effect on prevailing market prices for the
common stock.
Rule 144 governs resale of "restricted securities" for the account of
any person, other than an issuer, and restricted and unrestricted securities for
the account of an "affiliate" of the issuer. Restricted securities generally
include any securities acquired directly or indirectly from an issuer or its
affiliates which were not issued or sold in connection with a public offering
registered under the Securities Act. An affiliate of the issuer is any person
who directly or indirectly controls, is controlled by, or is under common
control with the issuer. Affiliates of a company may include its directors,
executive officers, and person directly or indirectly owning 10% or more of the
outstanding common stock. Under Rule 144 unregistered resales of restricted
common stock cannot be made until it has been held for one year from the later
of its acquisition from the issuer or an affiliate of the issuer. Thereafter,
shares of common stock may be resold without registration subject to Rule 144's
volume limitation, aggregation, broker transaction, notice filing requirements,
and requirements concerning publicly available information about the company.
Resales by the issuer's affiliates of restricted and unrestricted securities are
subject to similar requirements. The volume limitations provide that a person
(or persons who must aggregate their sales) cannot, within any three-month
period, sell more than the greater of one percent of the then outstanding
shares, or the average weekly reported trading volume during the four calendar
weeks preceding each such sale. A non-affiliate may resell restricted common
stock which has been held for two years free of the volume limitation,
aggregation, broker transaction, notice filing requirements, and requirements
concerning publicly available information.
11
Dividends
To date, we have not paid dividends on our common stock. The
outstanding preferred stock is not entitled to receive dividend payments. The
payment of dividends on the common stock in the future, if any, is within the
discretion of the board of directors and will depend upon our earnings, capital
requirements, financial condition and other factors the board views are
relevant. The board does not intend to declare any dividends in the foreseeable
future, but instead intends to retain all earnings, if any, for use in our
operations.
Holders of Record
As of the date of this prospectus, there were three holders of record
of our common stock.
DESCRIPTION OF BUSINESS
General
We were formed as a Nevada corporation on January 13, 2005 as World
Trophy Outfitters, Inc. Our principal executive offices are located at 4245
Production Court, Las Vegas, Nevada 89115. Our telephone number is: (801)
635-5576. We do not consider ourselves to be a blank check company as that term
is defined in Regulation C, Rule 419. We have no present intent of merging with
or acquiring another company. As with any business, as our business develops
merger or acquisition opportunities may present themselves and any merger or
acquisition opportunities would be considered by management on a case-by-case
basis if such opportunities ever arose.
We are in the business providing a booking and consulting service for
and selling big game hunting packages to high end clients who seek to hunt with
the top tier big game outfitters. Our business model centers our past
experiences of Mr. Peay's hunting with several outfitters in Alaska, British
Columbia, the Yukon, Northwest Territories, and the western United States. Mr.
Peay is also a well know figure internationally in the hunting and conservation
industry from his efforts with several wildlife conservation organizations.
Our main product being sold is hunting trips, which includes the
hunting license and guide fees. This does not include the travel requirements,
any special charter fees or obtaining government visas or other potentially
required instruments to complete the hunts. We attempt to sell the hunting
packages at a profit or for a mark-up. We provide consulting services by helping
clients select an appropriate hunt. We do not expect to charge additional fees
for these services.
We offer the following additional consulting services: (1) providing
clients with advice about which outfitters are providing the hunts, including
dates, times, and locations that most meet the clients desires; (2) assisting
clients in making travel arrangements and obtaining any special visa or travel
permits; (3) accompanying the hunters on the hunting expedition; (4) taking
video footage of the entire hunting and travel experience; and (5) providing
outfitters information about improving land use and improving their business
operations by effectively marketing their hunting services.
We intend to accomplish our business objectives primarily through the
establishment of business relationships with guides and outfitters and our past
12
experiences arranging for hunts. In particular, we will initially target hunters
desiring to hunt Dall Sheep, Stone Sheep, Elk, Mule Deer, and Grizzly Bears.
Our Marketing and Advertising Plan
High end hunting adventures can impose serious personal safety issues
such as plane crashes in remote wilderness areas, attacks from dangerous game
such as Grizzly Bears, Lions, Leopards, etc. Personal injury can result from
accidents involving horses, pack animals, firearms, and steep and unsettled
terrain. We cannot control the weather which has a substantial influence on the
outcome of a hunt. We cannot control the physical abilities and shooting
abilities of our clients. We cannot control government policies that affect the
overall hunting experience. Failure to provide satisfactory experiences, even if
it is from elements beyond our control could result in the following:
o loss of revenues;
o delays in establishing our business;
o damage to our reputation; and
o increased service costs.
Hunters seeking our services want to know that we know the best places to hunt,
and want advise in doing it safely.
At present, we have acquired ten Dall Sheep hunts for the 2006 and 2007
seasons with Kelly Hougen of Arctic Red River Outfitters. The relationship
between Arctic Red River Outfitters and WTO is that of independent contractors
and these organizations are not affiliated. Six of the Dall Sheep hunts have
been resold. In addition, we have booked and sold a bear hunt in Canada and an
African Safari.
Initially, we anticipate charging hunters fifty percent down to secure
the hunts, and then fifty percent three months prior to the hunt. Deposits are
expected to be non-refundable. We believe hunters are willing to pay a premium
price to hunt with the best outfitters at the best time slots. Generally, to
secure these best hunts at premium times requires booking these hunts up to
years in advance.
We will market hunts to contacts of Mr. Peay. We hope to also receive
referrals by word of mouth from satisfied customers. We do not plan to engage in
any other marketing activities.
The Industry and Competition
Hunting adventures can be high risk and expensive. We believe that many
high end hunters want a relationship with someone they trust. We believe that
factors that are important to grow the WTO client base and business include:
o price;
o satisfaction of hunting adventures arranged;
o established relationships with guides and outfitters;
o knowledge of changing regulations; and
o sales and marketing efforts.
13
We believe that our prices will be higher than those offering by the
average booking service. We believe that although our prices may be higher than
many other outfitters, the satisfaction of our clients, our relationships with
guides and outfitters and our knowledge of the changing regulations and
conditions will result in our services being competitive with those offered by
our competitors. In addition, we believe that the relationship developed by Mr.
Peay in the big game hunting industry over the past decade will provide us with
a competitive advantage in our sales and marketing efforts.
There are hundreds of other booking agents and consultants in this
field and the only barrier to entry is having sufficient funds to buy and resell
hunting packages. There is no single booking agency or small group of booking
agencies with whom we compete. Rather, we compete with hundreds of other small
booking agencies located throughout the United States and abroad. This is a
highly competitive business and are competing directly with companies that have
longer operating histories, more experience, substantially greater financial
resources, greater size, more substantial marketing organizations, and
established distribution channels that are better situated in the market than
us. We believe that the principal methods of competition in the big game booking
and consulting market is price, contacts, access to high demand hunting
packages, industry knowledge and experience and sales and marketing efforts.
There can be no assurance that competition will not result in price
reductions, reduced gross margins and challenges in growing our market share,
any of which would have a material adverse effect on our business, operating
results and financial condition. We cannot ensure we will be able to compete
successfully against any competitors.
Sources and Availability of Hunting Packages
We believe that we will be able to acquire big game hunts for resale
from a large number of outfitters in a variety of locations. This belief is
based, in part, on the relationships Mr. Peay has developed while working with
Sportsman for Fish and Wildlife, Sportsmen for Habitat and the Utah Chapter of
the Foundations for North American Wild Sheep and as a result of discussions
with various outfitters.
Through 2005 we had acquired hunts without difficulty from Arctic Red
River Outfitters (Yukon Canada), Mokore Safaris (Zimbabwee Africa), T-14 Ranches
(Texas), and Elk Valley Bighorn Outfitters (British Columbia). Through 2005, we
had bought fifteen hunts from a total of four different outfitters. Of the
fifteen hunts bought all have been resold.
In February 2006 we also acquired three Marco Polo sheep hunts in
Tajikistan from Profone-Hunts in Tajikistan.
We have also had formal discussions and may purchase additional hunts
from Arctic Red River Outfitters (Yukon Canada), Scoop Lake Outfitters (British
Columbia), Harv Holleck Outfitters (Kyrgystan), and San Miguel Outfitters
(Africa). As a result, we do not anticipate any difficulty in acquiring big game
packages for resale.
Distribution
Our distribution methods comprise contacting reputable outfitters in
locations and for hunts that we believe will be in demand. We then negotiate and
acquire hunts from these outfitters. We will then hold these hunts in inventory
14
until we find a suitable buyer at a suitable price. We find potential buyers
through people with whom we have established a pre-existing relationship or who
have are referred to us by word of mouth or otherwise.
Regulation
Hunting laws and regulations vary widely are updated and modified
frequently. Hunting laws are promulgated by local government, state government
and federal government. Hunting regulations outside the United States also vary
widely. Generally, these laws a regulations relating to who can hunt, what can
be hunted and when it can be hunted. Generally, hunting is not permitted without
receiving a license or permit from applicable governmental agencies and
regulators. Sometimes these licenses or permits are transferable. In such cases,
outfitters may acquire permits that they sell to clients (or to resellers such
as WTO) at a mark-up and in connection with a hunting package to be provided by
the outfitter. In other jurisdictions licenses or permits are not transferable,
in which case the outfitter will provide guide or other services to those who
have acquired licenses or permits. In the event that wildlife herds are reduced
as a result of over hunting, disease or otherwise, then the number of available
hunting licenses or permits is generally reduced.
We are also subject to the local and federal laws that are applicable
to businesses generally. In the future, we may be subject to additional or
different laws or regulations administered by the federal, state, local or
foreign regulatory authorities. We can neither predict the nature of such future
laws, regulations, interpretations or applications, nor what effect additional
governmental regulations or administrative orders, when and if promulgated,
would have on its business. They could, however, reduce our ability to resell
hunting packages or impose additional record-keeping or other requirements on
us. Any or all such requirements could have a material adverse effect on our
results of operations, liquidity and financial position.
We believe that we are in compliance with all laws and governmental
regulations that are applicable to our company.
Research and Development
To date, we have not conducted research and development activities as
understood using generally accepted accounting principles.
Dependence Upon Customers and Distributors
No customer of outfitter has been or is expected to be responsible for
ten percent or more of our revenues in any given quarterly period. To date,
however, we have primarily acquired big game hunts from Arctic Red River
Outfitters.
Backlog
There is no backlog for hunting packages we are selling.
Employees
Our officer and director is our only employee and is working part time
for WTO. We intend to hire other part-time and full-time employees in the future
if our business becomes profitable.
15
Our success will be dependent upon the efforts and active participation
of Mr. Peay. The loss of his services will adversely affect our business
operations. We do not have key man insurance in place for any personnel and do
not anticipate purchasing key man insurance until such time as revenues from
operations allow.
Legal proceedings
We are not a party in any bankruptcy, receivorship or other legal
proceeding, and to the best of our knowledge, no such proceedings by or against
WTO have been threatened.
DESCRIPTION OF PROPERTY
Our principal offices are located at 4245 Production Court, Las Vegas,
Nevada 89115, for which we pay minimal rent. These office are provided to us by
Mr. Peay, our sole officer and director. No rent has been paid to Mr. Peay for
providing these office and it is not anticipated that Mr. Peay will require the
Company to reimburse Mr. Peay for rental charges in the immediate future. This
space is leased by Mr. Peay for $50 per month under the terms of a lease with an
unaffiliated lessor. Mr. Peay has made these premises available to us on a month
to month basis. At any time we may be required to find other facilities. We
believe that this office space will be adequate to meet our needs for the
foreseeable future. If our lease arrangements were terminated, we believe that
comparable office space is readily available at reasonable prices.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's condensed results of operations and financial condition. The
discussion should be read in conjunction with the consolidated financial
statements and accompanying notes.
Plan of Operation
We are in the business providing a booking and consulting service for
and selling big game hunting packages to high end clients who seek to hunt with
the top tier big game outfitters. We intend to accomplish our business
objectives primarily through the establishment of strategic alliances with
guides and outfitters and our past experiences arranging for hunts. In
particular, we will initially target hunters desiring to hunt Dall Sheep, Stone
Sheep, Elk, Mule Deer, and Grizzly Bears.
Our main product being sold is hunting trips, which includes the
hunting license and guide fees. This does not include the travel requirements,
any special charter fees or obtaining government visas or other potentially
required instruments to complete the hunts. We attempt to resell the hunting
packages at a profit or for a mark-up. We provide consulting services by helping
clients select an appropriate hunt. We have not and do not expect in the future
to charge additional fees for these consulting services. We also offer other
consulting services which we may charge additional fees for which consulting
services are described below.
The terms of all hunt packages bought in the past and the terms we
expect to negotiate in the future are as follows: (1) we buy the right to have a
hunter come to a specific outfitter, to hunt specific animals at a specific
time; (2) hunts bought from the outfitters are not refundable and if not used
before the specific time of the hunt expire and have no residual value; (3) we
have sold and expect to continue selling in consideration for a non-refundable
16
deposits from the client for at least 50% of the final price at the time of
booking the hunt; and (4) final and full payments for the hunt is required at
least 3 months prior to the hunt. If a customer fails to provide final payment,
we have the right to sell the hunt to another client during the three month
period prior to the hunt in question.
At present, we have acquired ten Dall Sheep hunts for the 2006 and 2007
seasons with Kelly Hougen of Arctic Red River Outfitters. Six of the Dall Sheep
hunts have been resold. In addition, we have booked and sold a bear hunt in
Canada and an African Safari. Our revenues and costs relating to these hunts are
as follows:
[Download Table]
Hunt Acquired From Acquisition Cost Purchaser Sales Price
------------------ ---------------- --------- -----------
Dall Sheep Hunt with Artic $13,300 Trent Wall $14,000
Red River Outfitters
(Yukon Canada)
Dall Sheep Hunt with Artic $13,300 Trent Wall $14,000
Red River Outfitters
(Yukon Canada)
Dall Sheep Hunt with Artic $13,300 Dr. Scott Paey $14,200
Red River Outfitters
(Yukon Canada)
Dall Sheep Hunt with Artic $13,300 Ron Mika $14,200
Red River Outfitters
(Yukon Canada)
Dall Sheep Hunt with Artic $13,300 Dr. Chuck Edwards $14,250
Red River Outfitters
(Yukon Canada)
Dall Sheep Hunt with Artic $13,300 Todd Anderson $14,250
Red River Outfitters
(Yukon Canada)
Dall Sheep Hunt with Artic $13,300 David Woodhouse $15,000
Red River Outfitters
(Yukon Canada)
Dall Sheep Hunt with Artic $13,300 David Woodhouse $15,000
Red River Outfitters
(Yukon Canada)
Dall Sheep Hunt with Artic $13,300 Ryan Foutz $15,000
Red River Outfitters
(Yukon Canada)
Dall Sheep Hunt with Artic $13,300 Ryan Foutz $15,000
Red River Outfitters
(Yukon Canada)
Safari with Mokore Safaris $52,056 Brian Trapnell * $56,000
(Zimbabwee Africa)
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Hunt Acquired From Acquisition Cost Purchaser Sales Price
------------------ ---------------- --------- -----------
T-14 Ranches (Texas) $7,550 Brian Trapnell * $8,000
Bear Hunt with Elk Valley $6,728 Andy Madsen $7,200
Bighorn Outfitters
(British Columbia)
* Brian Trapnell is one of our shareholders.
We offer the following consulting services: (1) providing clients with
advice about which outfitters are providing the hunts, including dates, times,
and locations that most meet the clients desires; (2) assisting clients in
making travel arrangements and obtaining any special visa or travel permits; (3)
accompanying the hunters on the hunting expedition; (4) taking video footage of
the entire hunting and travel experience; and (5) providing outfitters
information about improving land use and improving their business operations by
effectively marketing their hunting services. To date, we have billed and
received $5,000 for other consulting services. These fees were for work done for
Wild Wings Hunting and Sporting Clays, Inc.
We find potential buyers through people with whom we have established a
pre-existing relationship or who have are referred to us by word of mouth or
otherwise. We do not plan to engage in any additional marketing or sales
efforts. We do not have specific milestones in implementing our business plan.
Rather, the more funds we obtain the more hunts we can purchase and resell.
Our plan of operation for the next twelve months is to raise funds from
this offering, acquire additional hunts, and continue to fund our operating
costs. Should we receive the minimum amount of $100,000, we will realize net
proceeds of $77,500. This amount will enable us to implement our plan of
operations. We anticipate that with the minimum amount and anticipated future
sales, we can continue our operations for a period of twelve months. If we
receive the maximum amount we will be able to accelerate the rate at which we
acquire big game hunts for resale. There can be no assurance that we have
accurately forecasted future sales or expenses.
Inasmuch as there is no assurance that this offering will be successful
or that we will receive any net proceeds from this offering, we have been
cautious in entering into long-term contracts and commitments to purchase hunts,
equipment or for other expenses. Therefore, there is absolutely no assurance
that we will be able, with the proceeds of this offering, to acquire sufficient
hunts or implement our plan of operations. There is also no assurance that we
will be able to purchase and sell at a profit enough hunts to operate
profitably.
However, management believes that we will be able to (1) acquire
sufficient hunts at favorable pricing; (2) successfully implement marketing
efforts; and (3) sell sufficient hunts at a profit to successfully operating our
business.
We believe we have accurately estimated our needs for the next twelve
months based on receiving the minimum amount of the offering, of which there can
be no assurance. It is possible that we may need additional funds if our sales
revenues are less than anticipated or our costs are higher than estimated. At
present, we have no current need or commitments for any capital expenditures. We
have not reserved sufficient working capital to cover any unexpected expenses.
18
If we are unable to raise the minimum amount, it will be necessary for
us to find funding in order to implement our plan of operations. In addition, we
anticipate that additional funding will be needed twelve months from the date of
this document. We anticipate seeking additional financing in the form of loans
or sales of our stock and there is no assurance that we will be able to obtain
financing on favorable terms or at all or that we will find qualified purchasers
for the sale of any stock.
Liquidity and Capital Resources
From January 13, 2005 (inception) through September 30, 2005, we
realized a net income of $22,699. However, we have a limited operating history
and there can be no assurance that we will be profitable in the future. These
factors raise substantial doubts about our ability to continue as a going
concern.
To date, we have financed our operations principally through $20,000 in
funds received from three investors, including Mr. Peay. We generated $159,400
in revenues from operations from January 13, 2005 through September 30, 2005. As
of September 30, 2005 we had $13,826 in cash, $100,413 in current assets,
$84,607 in current liabilities and working capital of $15,806. At September 30,
2005, we had not committed to spend any material funds on capital expenditures.
From January 13, 2005 (inception) through September 30, 2005, we used
net cash of $1,674 in operating activities, had no cash flows from investing
activities and received $15,500 from financing activities. During this period,
our cash flows from operating activities was comprised primarily of $22,699 in
net income plus $83,000 from related party payables, less carryover inventory
basis of $26,648, less accounts receivable of $37,126 and less inventories of
$42,420.
In January 2005, we entered into an agreement with Don Peay, our
president, whereby we acquired ten Big Dall Sheep hunts from Artic Red River
Outfitters in consideration for $133,000. Since Mr. Peay is our president, this
was not an arms length transaction. Mr. Peay acquired these hunts for $100,000.
The agreement provided that $10,000 be paid on or before June 30, 2005 and the
remaining $123,000 be paid on or before January 31, 2007. We will not use the
proceeds of this offering to pay off this obligation. We anticipate using
revenue from product sales to pay off this debt. If we raise the minimum amount,
we will be able to execute our plan of operation and we anticipate that we will
be able to satisfy our cash needs for the next twelve months while allowing our
business to generate income.
Our working capital and other capital requirements for the foreseeable
future will vary based upon a number of factors, including the number of big
game hunts we acquire, the amount we spend on our sales and marketing activities
and the level of our sales. We anticipate that if the minimum amount is raised
those amounts together with anticipated future sales will allow us to continue
our operations for a period of at least twelve months. If we do not raise the
minimum amount this offering will be terminated and investors will receive their
money back promptly and without deduction. There can be no assurance that we
have accurately forecasted future sales. If we do not raise minimum amount in
this offering we will need to locate additional sources of funds to continue
operations. There are no contractual arrangements in place that would provide us
with additional funding and there can be no assurance that we will be able to
obtain additional funding on commercially reasonable terms or at all.
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Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
investors.
Critical Accounting Policies
Our accounting policies are discussed in Note 1 to our audited
financial statements included in this prospectus. We believe that all of the
transactions and accounting policies and procedures being utilized fairly and
accurately report our financial condition and results.
Recent Accounting Pronouncements
We have not adopted any new accounting policies that are not disclosed
in our financial statements, and we believe that we are in compliance with all
applicable accounting pronouncements.
Our accounts receivable are the amounts due on hunting permit sales and
are unsecured. We carry the accounts receivable at their estimated collectible
amounts. Credit is generally extended on a short-term basis. Accounts receivable
are periodically evaluated for collectibility based on past credit history with
clients. Provisions for losses on accounts receivable are determined on the
basis of loss experience, known and inherent risk in the account balance and
current economic conditions. If we have incorrectly estimated the collectibility
of our accounts receivable it could substantially reduce our assets and increase
our bad debt expense. We have estimated that no allowance for doubtful accounts
is needed at September 30, 2005 and March 31, 2005.
Substantially all hunts that we sell generate accounts receivable.
These receivables, without interest, are payable approximately three months
prior to the related hunts. Hunt sales are included in revenues when we received
an executed sales contract and received a negotiated non-refundable down payment
of approximately 50%. We have no additional rescission, refund or customer
satisfaction requirements. When these conditions are met the buyer receives all
legal rights to the hunt, including the right of transferability and any changes
or modifications are between the buyer and the outfitter.
Consulting revenue is recognized when the consulting services are
preformed.
While we believe that we have correctly ascertained collectibility, in
the event that we have misjudged collectibility, then our revenues would be
overstated.
Employees
We anticipate hiring a limited number of additional employees during
the next twelve months if the business grows as anticipated.
20
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Set forth below is certain information concerning our sole director and
executive officer as of February 7, 2006.
With the
Name Age Position Company Since
---- --- -------- -------------
Donald K. Peay 44 Chief Executive Officer, President, Chief 2005
Financial Officer, Secretary and Treasurer
---------------
Donald K. Peay. Mr. Peay is our sole officer and director. He has been
a director and officer since inception in January 2005 and his term as a
director expires at the next annual meeting of stockholders. Mr. Peay has a BS
in Chemical Engineering and an MBA from Brigham Young University. From 1990 to
1995, Mr. Peay owned and operated Petroleum Environmental Management, Inc. In
1995, Mr. Peay started Peay's Consulting Companies, Inc. ("PCC"). PCC provides
strategic planning, business planning and business growth, wildlife management
policy implementation, land use policy, land acquisition, and revenue generation
strategies for businesses involved in the wildlife conservation and hunting
industries. It is not anticipated that PCC will do any work for WTO. Mr. Peay
has also founded three Wildlife Conservation organizations: Sportsmen for Fish
and Wildlife, Sportsmen for Habitat, and the Utah Chapter of the Foundation for
North American Wild Sheep. Mr. Peay has spent most of his available business
time during the past eight years doing consulting work for these organizations
through PCC. These organizations have tens of thousands of members and raise
tens of millions of dollars for conservation. Mr. Peay spends approximately ten
percent (four hours per week) of his available business time working for WTO.
Mr. Peay is currently planning to continue working in the hunting and
conservation industry and for WTO for the foreseeable future. At some point in
time, Mr. Peay may devote his full attention to the operations of WTO.
The executive officer is elected by the board of directors on an annual
basis and serve at the discretion of the board.
Board Committees
Our board does not have a standing, audit, nominating or compensation
committee. The board will participate in the consideration of director nominees.
The board will formulate a policy with regard to the consideration of director
candidates recommended by security holders and the minimum qualifications of
such candidates. It anticipates having such a policy in place before our next
annual stockholders meeting. The sole member of the board is not considered
"independent" as defined by Rule 4200(a) of the NASD's Marketplace Rules. In
addition, Mr. Peay, who is not an independent director, does not qualify as a
"financial expert" as defined in Item 401 of Regulation S-B.
EXECUTIVE COMPENSATION
Currently, we do not have any written compensation agreement with Mr.
Peay, are only named executive officer, and we have not paid or awarded Mr. Peay
any amounts for services rendered nor has Mr. Peay earned any amounts from us.
We do not intend to pay Mr. Peay a salary during 2005. Thereafter, we have not
made any arrangements with Mr. Peay regarding his compensation. Mr. Peay is
entitled to reimbursement for any out of pocket costs incurred on behalf of WTO.
21
At such time as WTO is generating sufficient revenue to cover all costs, we will
enter a written compensation agreement with Mr. Peay and we intend to pay him a
salary at rates that are similar to the rates paid by similarly situated
companies. There are no compensatory plans or arrangements, including payments
to our officer in relation to resignation, retirement, or other termination of
employment with WTO, or any change in control of WTO, or a change in the
officer's responsibilities following a change in control of WTO.
Compensation of Directors
We have paid no cash fees or other consideration to our director for
service as a director since inception. We have made no agreements regarding
future compensation of directors. Our director is entitled to reimbursement for
reasonable expenses incurred in the performance of his duties as a member of the
board of directors.
Indemnification for Securities Act Liabilities
Nevada law authorizes, and our Bylaws and Certificate of Incorporation
provide for, indemnification of our directors and officers against claims,
liabilities, amounts paid in settlement and expenses in a variety of
circumstances. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted for directors, officers and controlling
persons pursuant to the foregoing, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 2005 and in connection with the organization of WTO, Mr.
Peay, our sole officer and director and a promoter, acquired 10,000,000 shares
of common stock for $10,000. At the time of Mr. Peay's investment, WTO had no
other stockholders.
In January 2005, we entered into an agreement with Don Peay, our
president, whereby we acquired ten Big Dall Sheep hunts from Mr. Peay who
acquired the hunts from Artic Red River Outfitters. Mr. Peay paid an aggregate
of $100,000 for these hunts. We paid an aggregate of $133,000 to acquire these
hunts from Mr. Peay. Our agreement with Mr. Peay provides that $10,000 be paid
on or before June 30, 2005 and the remaining $123,000 be paid on or before
January 31, 2007. The price paid for the hunts was determined by Mr. Peay. We
anticipate acquiring hunts directly from outfitters in the future and not
through Mr. Peay. At the time these hunts were acquired by Mr. Peay WTO did not
exist. We will not use the proceeds of this offering to pay off this obligation.
We anticipate using revenue from product sales to pay off this debt.
We have not entered into any other arrangements with Mr. Peay for the
payment of funds or anything else of value.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Common Stock
Except as otherwise noted, the following table sets forth certain
information with respect to the beneficial ownership of our common stock as of
February 7, 2006, for: (i) each person who is known by us to beneficially own
22
more than five percent of the our common stock, (ii) each of our directors,
(iii) our Named Executive Officer, and (iv) all directors and executive officers
as a group. As of February 7, 2006, we had 11,000,000 shares of common stock
outstanding.
[Enlarge/Download Table]
% of % of Total % of Total
Common Total Common Common
Name and Address Shares Common After After % of Total
of Beneficial Beneficially Before Minimum Maximum Voting
Owner (1) Owned Offering Offering (2) Offering(2) Power (3) Position
--------- ----- -------- ------------ --------- --------- --------
Donald K. Peay (1) 10,000,000 91% 90% 88% 88% CEO,
President,
CFO,
Secretary
and
Treasurer
Executive Officers and 10,000,000 91% 90% 88% 88%
Directors as a Group
(one person)
--------------
(1) Except where otherwise indicated, the address of the beneficial owner is
deemed to be the same address as our address.
(2) Assumes that Mr. Peay does not purchase additional shares in this offering.
(3) Percentages assume sale of maximum offering.
Changes in Control
We are not aware of any arrangements which may, at a subsequent date,
result in a change in control of our company.
DESCRIPTION OF SECURITIES
Our authorized capital stock currently consists of 100,000,000 shares
of common stock, $.001 par value per share; and 10,000,000 shares of preferred
stock, $.001 par value per share, of which no shares have been designated or
issued. The following descriptions are a summary and qualified in their entirety
by the provisions of our Articles of Incorporation and by the provisions of
Nevada General Corporation Law.
Common Stock
As of the date of this document, we had 11,000,000 shares of common
stock outstanding. Except as otherwise required by applicable law and subject to
the preferential rights of the any outstanding preferred stock, all voting
rights are vested in and exercised by the holders of the common stock with each
share of common stock being entitled to one (1) vote. In the event of
liquidation, holders of common stock are entitled to share ratably in the
distribution of assets remaining after payment of liabilities, if any. Holders
of common stock have no cumulative voting rights. Holders of common stock have
no preemptive or other rights to subscribe for shares. Holders of common stock
are entitled to such dividends as may be declared by the board of directors out
of funds legally available therefor.
Blank Check Preferred Stock
Our board of directors is empowered, without further action by
stockholders, to issue from time to time one or more series of preferred stock,
with such designations, rights, preferences and limitations as the board of
23
directors may determine by resolution. The rights, preferences and limitations
of separate series of preferred stock may differ with respect to such matters
among such series as may be determined by the board of directors, including,
without limitation, the rate of dividends, method and nature of payment of
dividends, terms of redemption, amounts payable on liquidation, sinking fund
provisions (if any), conversion rights (if any) and voting rights. Certain
issuances of preferred stock may have the effect of delaying or preventing a
change in control of our company that some stockholders may believe is not in
their interest.
Transfer Agent and Registrar
Action Stock Transfer Corporation is our stock transfer agent. Our
transfer agent's offices are located at 7069 S Highland Drive, Salt Lake City,
Utah 84121 and the telephone number is 801-274-1088.
Penny Stock Rules
Our stock will become subject to the penny stock rules which impose
significant restrictions on the Broker-Dealers and may affect the resale of our
stock. A penny stock is generally a stock that:
o is not listed on a national securities exchange or Nasdaq,
o is listed in "pink sheets" or on the NASD OTC Bulletin Board,
o has a price per share of less than $5.00, and
o is issued by a company with net tangible assets less than $5
million.
The penny stock trading rules impose additional duties and responsibilities upon
broker-dealers and salespersons effecting purchase and sale transactions in
common stock and other equity securities, including:
o determination of the purchaser's investment suitability,
o delivery of certain information and disclosures to the
purchaser, and
o receipt of a specific purchase agreement from the purchaser
prior to effecting the purchase transaction.
Many broker-dealers will not effect transactions in penny stocks, except on an
unsolicited basis, in order to avoid compliance with the penny stock trading
rules. In the event our common stock becomes subject to the penny stock trading
rules,
o such rules may materially limit or restrict the ability to
resell our common stock, and
o the liquidity typically associated with other publicly traded
equity securities may not exist.
A market for our stock may never develop and you would not have the ability to
sell your stock publicly.
PLAN OF DISTRIBUTION
We are offering a minimum of 200,000 shares and a maximum of 400,000
shares on a best efforts basis directly to the public through our officers. If
we do not receive the minimum proceeds within 90 days from the date of this
prospectus, unless extended by us for up to an additional 30 days, your
24
investment will be promptly returned to you without interest and without any
deductions. This offering will expire 60 days after the minimum offering is
raised. We may terminate this offering prior to the expiration date.
In order to buy our shares, you must complete and execute the
subscription agreement and make payment of the purchase price for each share
purchased by check payable to the order of U.S. Bank National Association,
Escrow Agent for World Trophy Outfitters, Inc. or you may send your purchase
price by wire transfer directly to the escrow agent. If you pay by check the
check can be delivered to us or directly to escrow agent. If you are pay by wire
transfer the subscription funds should be sent directly to escrow agent. You may
contact us for wiring or mail instruction for escrow agent. Any subscription
funds we receive will be forwarded to escrow agent.
The escrow agreement provides that the escrow agent is entitled to a
one time fee of $1,000, reimbursement of out-of-pocket expenses and payment for
extraordinary services rendered in connection with the escrow arrangement. We
are primarily liable to pay these fees. The $1,000 fee has been paid. In the
event we are unable to pay the reimbursement for out-of-pocket expenses or any
fees for extraordinary services rendered, the escrow agreement provides that
escrow agent has a lien or right of setoff on all funds, monies or other assets
held in the escrow account to pay all of its fees and reimbursable expenses
permitted under the escrow agreement. In other words, the funds deposited in
escrow could be used to pay fees of the escrow agent should we be unable to pay
the amounts owing.
Until the minimum 200,000 shares are sold, all funds will be deposited
in a non-interest bearing escrow account at U.S. Bank National Association In
the event that 200,000 shares are not sold during the 90 day selling period
(subject to a 30 day extension) commencing on the date of this prospectus, all
funds will be promptly returned to investors. If 200,000 shares are sold, we may
either continue the offering for the remainder of the selling period or close
the offering at any time.
Solicitation for purchase of our shares will be made only by means of
this prospectus and communications with Mr. Don Peay, our president.It is
anticipated that Mr. Peay will contact business associates, friends, clients and
contacts regarding a potential investment in WTO.
Mr. Peay will not register as a broker-dealer pursuant to Section 15 of
the Securities Exchange Act of 1934, in reliance upon Rule 3a4-1, which sets
forth those conditions under which a person associated with an issuer may
participate in the offering of the issuer's securities and not be deemed to be a
broker-dealer. Mr. Peay meets the conditions of Rule 3a4-1 and therefore, is not
required to register as a broker-dealer pursuant to Section 15. Specifically,
Mr. Peay (i) is not subject to statutory disqualification, (ii) is not
compensated in connection with his participation by the payment of commissions
or other remuneration in connection with this offering, (iii) is not an
associated person of a broker or dealer, (iv) has performed and is expected to
perform after the closing substantial duties for WTO which duties are unrelated
to the offering, (v) has not ever been a broker or dealer or an associated
person of a broker or dealer, and (vi) does not participate in selling an
offering of securities for any issuer more than once every 12 months.
Our officers will not purchase shares in this offering in order to
reach the minimum or otherwise.
We have the right to accept or reject subscriptions in whole or in
part, for any reason or for no reason. All monies from rejected subscriptions
will be returned immediately by us to the subscriber, without interest or
25
deductions. Subscriptions for securities will be accepted or rejected within 48
hours after we receive them.
LEGAL PROCEEDINGS
We are not party to any legal proceedings.
LEGAL MATTERS
The validity of the common stock offered by this prospectus will be
passed upon for us by Blackburn & Stoll, LC, Salt Lake City, Utah.
EXPERTS
The financial statements as of March 31, 2005 included in this
prospectus and filing have been audited by Pritchett, Siler & Hardy, P.C.,
independent registered public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in accounting and auditing in giving said report.
CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
AVAILABLE INFORMATION
We have filed a registration statement on Form SB-2 under the
Securities Act of 1933, as amended, with respect to the shares offered hereby.
This prospectus does not contain all of the information set forth in the
registration statement and the exhibits and schedules thereto. For further
information with respect to World Trophy Outfitters, Inc. and the shares offered
hereby, reference is made to the registration statement and the exhibits and
schedules filed therewith. Statements contained in this prospectus as to the
contents of any contract or any other document referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the registration statement, each such
statement being qualified in all respects by such reference. A copy of the
registration statement, and the exhibits and schedules thereto, may be inspected
without charge at the public reference facilities maintained by the Securities
and Exchange Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C.
and copies of all or any part of the registration statement may be obtained from
the Commission upon payment of a prescribed fee. This information is also
available from the Commission's Internet website, http://www.sec.gov.
26
FINANCIAL STATEMENTS
WORLD TROPHY OUTFITTERS, INC.
INDEX
Page
Report of Independent Registered Public Accounting Firm F-2
Balance Sheet F-3
Statements of Income F-4
Statements of Stockholders' Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
WORLD TROPHY OUTFITTERS, INC.
Bountiful, Utah
We have audited the accompanying balance sheet of World Trophy Outfitters, Inc.
at March 31, 2005 and the related statements of operations, stockholders' equity
and cash flows from inception on January 13, 2005 through March 31, 2005. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements audited by us present fairly, in all
material respects, the financial position of World Trophy Outfitters, Inc. as of
March 31, 2005, and the results of its operations and its cash flows from
inception on January 13, 2005 through March 31, 2005, in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 8 to the financial
statements, the Company was only recently formed, and has had a limited
operating history with limited sales. These factors raise substantial doubt
about the ability of the Company to continue as a going concern. Management's
plans in regards to these matters are also described in Note 8. The financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.
/s/ Pritchett, Siler & Hardy, P.C.
PRITCHETT, SILER & HARDY, P.C.
June 30, 2005
Salt Lake City, Utah
F-2
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WORLD TROPHY OUTFITTERS, INC.
(A Development Stage Company)
BALANCE SHEETS
September 30, March 31,
2005 2005
Assets (Unaudited) (Audited)
-------------------- ---------------------
Current assets:
Cash $ 13,826 60,400
Accounts receivable 37,126 30,000
Inventories 42,420 53,025
Deposits - 6,000
Deferred offering costs 4,500 -
Deferred tax asset 2,541 3,176
------------------- --------------------
Total current assets 100,413 152,601
Deferred tax asset 245 -
------------------- --------------------
Total assets $ 100,658 152,601
=================== ====================
Liabilities and Stockholders' Equity
Current liabilities:
Related party payable $ 83,000 133,000
Income taxes payable 1,607 1,333
Customer deposits - 6,000
------------------- --------------------
Total current liabilities 84,607 140,333
------------------- --------------------
Commitments and contingencies
Stockholders' equity:
Common stock, $.001 par value; 100,000,000 shares
authorized, 11,000,000 issued and outstanding 11,000 11,000
Additional paid-in capital (17,648) (17,648)
Retained earnings 22,699 18,916
------------------- --------------------
Total stockholders' equity 16,051 12,268
------------------- --------------------
Total liabilities and stockholders' equity $ 100,658 152,601
==================== ====================
F-3
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WORLD TROPHY OUTFITTERS, INC.
(A Development Stage Company)
STATEMENTS OF INCOME
Six Months January 13, 2005 January 13, 2005
Ended (Date of Inception) (Date of Inception)
September 30, to March 31, to September 30,
2005 2005 2005
(Unaudited) (Audited) (Unaudited)
--------------------- ------------------------ -------------------------
Revenues:
Sales $ 75,400 79,000 154,400
Consulting - 5,000 5,000
--------------------- ------------------------ -------------------------
75,400 84,000 159,400
Cost of sales 67,389 60,575 127,964
--------------------- ------------------------ -------------------------
Gross profit 8,011 23,425 31,436
General and administrative expenses 3,564 - 3,564
--------------------- ------------------------ -------------------------
Operating income 4,447 23,425 27,872
Provision for income taxes:
Current 274 1,333 1,607
Deferred 390 3,176 3,566
--------------------- ------------------------ -------------------------
Net income $ 3,783 18,916 22,699
===================== ======================== =========================
Income per common share $ - -
===================== ========================
Weighted average common shares -
basic and diluted 11,000,000 10,844,000
===================== ========================
F-4
[Enlarge/Download Table]
WORLD TROPHY OUTFITTERS, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
Period from January 13, 2005 (Date of Inception) to September 30, 2005 (Unaudited)
Preferred Stock Common Stock Additional
------------------ ---------------------- Paid-In Retained
Shares Amount Shares Amount Capital Earnings Total
------- ------- ---------- -------- -------- -------- --------
Balance at January 13, 2005 (date of inception) - $ - - $ - $ - $ - $ -
Issuance of common stock for cash ($.001 per share) - - 10,000,000 10,000 - - 10,000
Issuance of common stock for cash (.$01 per share) - - 1,000,000 1,000 9,000 - 10,000
Adjustment for carryover basis of inventory,
net of income taxes of $6,352 - - - - (26,648) - (26,648)
Net income - - - - - 18,916 18,916
------- ------- ---------- -------- -------- -------- --------
Balance at March 31, 2005 - - 11,000,000 11,000 (17,648) 18,916 12,268
Net income for the six months ended
September 30, 2005 (unaudited) - - - - - 3,783 3,783
------- ------- ---------- -------- -------- -------- --------
Balance at September 30, 2005 (unaudited) - $ - 11,000,000 $ 11,000 $(17,648) $ 22,699 $ 16,051
======= ======= ========== ======== ======== ======== ========
F-5
[Enlarge/Download Table]
WORLD TROPHY OUTFITTERS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Six Months January 13, 2005 January 13, 2005
Ended (Date of Inception) (Date of Inception)
September 30, to March 31, to September 30,
2005 2005 2005
(Unaudited) (Audited) (Unaudited)
-------------------- ----------------------- ----------------------
Cash flows from operating activities:
Net income $ 3,783 18,916 22,699
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Carryover basis of inventory - (26,648) (26,648)
Deferred income taxes 390 (3,176) (2,786)
(Increase) decrease in:
Accounts receivable (7,126) (30,000) (37,126)
Inventories 10,605 (53,025) (42,420)
Deposits 6,000 (6,000) -
Increase (decrease) in:
Related party payable (50,000) 133,000 83,000
Customer deposits (6,000) 6,000 -
Income taxes payable 274 1,333 1,607
------------------- ------------------- --------------------
Net cash provided by (used in)
operationg activities (42,074) 40,400 (1,674)
------------------- ------------------- --------------------
Cash flows from investing activities: - - -
------------------- ------------------- --------------------
Cash flows from financing activities:
Stock offering costs (4,500) - (4,500)
Issuance of common stock - 20,000 20,000
------------------- ------------------- --------------------
Net cash provided by
financing activities (4,500) 20,000 15,500
------------------- ------------------- --------------------
Net increase (decrease) in cash (46,574) 60,400 13,826
Cash, beginning of period 60,400 - -
------------------- ------------------- --------------------
Cash, end of period $ 13,826 60,400 13,826
==================== =================== ====================
F-6
WORLD TROPHY OUTFITTERS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2005
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
World Trophy Outfitters, Inc., (the Company) was incorporated under the laws of
the State of Nevada on January 13, 2005. The Company's business activities
consist of sales of hunting permits and guided hunting excursions and services
related to these types of activities. Further, the Company is considered a
development stage company as defined in SFAS No. 7 and has not, thus far,
commenced planned principal operations.
Concentration of Credit Risk
The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company has not experienced any losses in
such accounts and believes it is not exposed to any significant credit risk on
cash and cash equivalents.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid investments with a maturity of three months or less to be cash
equivalents.
Accounts Receivable
Accounts receivable are amounts due on hunting permit sales and are unsecured.
Accounts receivable are carried at their estimated collectible amounts. Credit
is generally extended on a short-term basis; thus accounts receivable do not
bear interest although a finance charge may be applied to such receivables that
are more than thirty days past due. Accounts receivable are periodically
evaluated for collectibility based on past credit history with clients.
Provisions for losses on accounts receivable are determined on the basis of loss
experience, known and inherent risk in the account balance and current economic
conditions. Management has estimated that no allowance for doubtful accounts is
needed at March 31, 2005 or September 30, 2005.
Inventories
Inventories are stated at the lower of average cost or market, and consist of
hunting permits.
Income Taxes
Deferred income taxes are provided for items reported in different periods for
income tax purposes than for financial reporting purposes.
Revenue Recognition
Substantially all hunts sold by the Company generate accounts receivable. These
receivables, without interest, are payable approximately three months prior to
the dates of the related hunts. Hunt sales are included in revenues when the
Company has received an executed sales contract and received a negotiated non
refundable down payment of approximately 50%. The Company has no additional
rescission, refund or customer satisfaction requirements. When these conditions
are met the buyer receives all legal rights to the hunt, including the right of
transferability and any changes or modifications are between the buyer and the
outfitter.
Consulting revenue is recognized when the consulting services are performed.
F-7
Note 1 - Organization and Summary of Significant Accounting Policies (continued)
--------------------------------------------------------------------
Earnings Per Share
The computation of basic earnings per common share is based on the weighted
average number of shares outstanding during the period.
The computation of diluted earnings per common share is based on the weighted
average number of shares outstanding during the period plus the common stock
equivalents which would arise from the exercise of stock options and warrants
outstanding using the treasury stock method and the average market price per
share during the period. Common stock equivalents are not included in the
diluted earnings per share calculation when their effect is antidilutive. The
Company does not have any stock options or warrants outstanding at March 31,
2005 or September 30, 2005.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles 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.
Unaudited Information
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments (consisting of normal recurring items) necessary to
present fairly the financial position of the Company as of September 30, 2005
and the results of operations, stockholders' equity, and cash flows for the
periods ended September 30, 2005.
Note 2 - Income Taxes
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109. SFAS No. 109 requires the Company to provide a net
deferred tax asset or liability equal to the expected future tax benefit or
expense of temporary reporting differences between book and tax accounting and
any available operating loss or tax credit carryforwards.
At September 30, 2005 and March 31, 2005, the total of all deferred tax assets
was approximately $2,800 and $3,200. The total of all deferred tax liabilities
was approximately $0 and $0. The amount of and ultimate realization of the
benefits from the deferred tax assets for income tax purposes is dependent, in
part, upon the tax laws in effect, the Company's future earnings, and other
future events, the effects of which cannot be determined. The Company
anticipates being able to utilize all of the deferred tax assets. Therefore, the
Company has not established a valuation allowance against the deferred tax
assets as of September 30, 2005 and March 31, 2005.
F-8
Note 2 - Income Taxes (continued)
The temporary differences gave rise to the following deferred tax asset
(liability):
[Enlarge/Download Table]
September 30, March 31,
2005 2005
------------- ---------
Excess of tax over financial
accounting depreciation $ 245 -
Excess of tax over financial
accounting inventory 2,541 3,176
The reconciliation of income tax from continuing operations computed at the U.S.
federal statutory tax rate to the Company's effective rate is as follows for the
periods ending:
September 30, March 31,
2005 2005
------------- ---------
Computed tax at the expected
federal statutory rate 15.00% $ 15.00%
State income taxes,
Net of federal benefit 4.25 4.25
-------- --------
Effective income tax rates 19.25% 19.25%
======== ========
The components of federal income tax expense from continuing operations
consisted of the following for the periods ending:
September 30, March 31,
2005 2005
------------- ---------
Current income tax expense:
Federal $ 203 987
State 71 346
-------- --------
Net current tax expense 274 1,333
-------- --------
Deferred tax expense (benefit) resulted from:
Excess of tax over financial
accounting depreciation (245) -
Excess of tax over financial
accounting inventory 635 3,176
-------- --------
Net deferred tax expense 390 3,176
-------- --------
Deferred income tax expense results primarily from the reversal of temporary
timing differences between tax and financial statement income.
F-9
Note 3 - Related Party Payable
The related party payable consists of amounts due to the president of the
Company for the purchase of inventory. The inventory was recorded at the
presidents carry over basis of $100,000. The difference between the carry over
basis and the note payable net of tax effect of $6,352 is recorded as a special
equity distribution. The payable is non-interest bearing and is to be paid in
two payments of $10,000 on or before June 30, 2005 and $123,000 on or before
January 31, 2007. The balance on the note payable as of September 30, 2005 is
$83,000.
Note 4 - Supplemental Cash Flow Information
No amounts have been paid for interest or income taxes during the period ended
September 30, 2005.
During the period from January 13, 2005 to March 31, 2005, the Company acquired
inventory from an officer/shareholder in exchange for a related party payable of
$133,000. The inventory was recorded at the carryover basis of $100,000, and
equity was reduced by $33,000, less the income tax effect of $6,352.
Note 5 - Fair Value of Financial Instruments
The Company's financial instruments consist of cash, accounts receivable, and
payables. The carrying amount of cash, accounts receivable, and payables
approximates fair value because of the short-term nature of these items.
Note 6 - Recently Enacted Accounting Standards
Statement of Financial Accounting Standards ("SFAS") No. 151, "Inventory Costs -
an amendment of ARB No. 43, Chapter 4", SFAS No. 152, "Accounting for Real
Estate Time-Sharing Transactions - an amendment of FASB Statements No. 66 and
67", SFAS No. 153, "Exchanges of Nonmonetary Assets - an amendment of APB
Opinion No 29", SFAS No. 123 (revised 2004), "Share-Based Payment", and SFAS No.
154, "Accounting Changes and Error Corrections - a replacement of APB Opinion
No. 20 and FASB Statement No. 3", were recently issued. SFAS No 151, 152, 153,
123 (revised 2004) and 154 have no current applicability to the Company or their
effect on the financial statements would not have been significant.
Note 7 - Preferred Stock
The Company has authorized 10,000,000 shares of preferred stock, $.001 par
value, with such rights, preferences and designations and to be issued in such
series as determined by the Board of Directors. No shares are issued and
outstanding as of September 30, 2005 or March 31, 2005.
Note 8 - Going Concern
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America, which
contemplate continuation of the Company as a going concern. However, the company
was only recently formed and has a limited operating history. These factors
raise substantial doubt about the ability of the Company to continue as a going
concern. In this regard management is proposing to raise any necessary
additional funds not provided by operations through additional sales of its
common stock. There is no assurance that the Company will be successful in
raising this additional capital or in achieving profitable operations. The
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
F-10
Note 9 - Subsequent Events
The Company is proposing to raise a maximum of $200,000 in a public stock
offering through the sale of 400,000 shares of common stock at $.50 per share.
Costs related to the proposed offering will be deferred and offset against the
proceeds of the offering.
F-11
======================================= =======================================
You should rely only on the information
provided in this prospectus or any
prospectus supplement. We have not
authorized anyone else to provide you
with different information. We are not
making an offer of these securities in
any state where the offer is not
permitted.
----------------------
Table Of Contents
Page $100,000 Minimum
Prospectus Summary................... 3 $200,000 Maximum
Risk Factors......................... 4
Forward-Looking Statements........... 7
Dilution............................. 8
Use Of Proceeds...................... 9
Determination Of Offering Price...... 10 WORLD TROPHY OUTFITTERS, INC.
Market For Common Equity And Related
Stockholder Matters................. 10
Description Of Business.............. 12
Description Of Property.............. 16
Management's Discussion And Analysis
Or Plan Of Operation................ 16
Directors, Executive Officers, ____________
Promoters And Control Persons....... 21
Executive Compensation............... 21 PROSPECTUS
Certain Relationships And Related ____________
Transactions........................ 22
Security Ownership Of Certain
Beneficial Owners And Management.... 22
Description Of Securities............ 23
Plan Of Distribution................. 24
Legal Proceedings.................... 26
Legal Matters........................ 26
Experts.............................. 26
Changes And Disagreements With
Accountants On Accounting And
Financial Disclosure................ 26
Available Information................ 26
Financial Statements.................F-1
----------------------
Until 90 days after the date of this
prospectus, all dealers that effect
transactions in these securities,
whether or not participating in this
offering, may be required to deliver a _______________________
prospectus. This is in addition to
dealers' obligation to deliver a February __, 2006
prospectus when acting as underwriters
and with respect to their unsold
allotments or subscriptions.
======================================= =======================================
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification Of Directors And Officers
Nevada General Corporation Law permits us to indemnify our directors,
officers, employees and agents, subject to limitations imposed by the Nevada
General Corporation Law. Our Bylaws and our Articles of Incorporation require us
to indemnify directors and officers to the full extent permitted by the Nevada
General Corporation Law.
Item 25. Other Expenses Of Issuance And Distribution
The following table sets forth all estimated costs and expenses, other
than underwriting discounts, commissions and expense allowances, payable by the
registrant in connection with the maximum offering for the securities included
in this registration statement:
Securities and Exchange Commission registration fee......... $ 24
Blue Sky fees and expenses.................................. --
Printing and shipping expenses.............................. 1,000
Legal fees and expenses..................................... 15,000
Accounting fees and expenses................................ 6,000
Miscellaneous fees ......................................... 476
----------
Total....................................................... $ 22,500
==========
---------------
All expenses are estimated except the Commission filing fee.
Item 26. Recent Sales Of Unregistered Securities
In January 2005, we sold 10,000,000 shares of common stock to Don Peay,
our president and sole director for $10,000. Later in January 2005, we sold
1,000,000 shares of our common stock to Brian Trapnell and Sugar Loaf
Management, LLC, both of whom are accredited and sophisticated investors, for
aggregate consideration for $10,000 (each investor purchase 500,000 shares of
stock for $5,000). The sale of these shares of common stock was exempt from
registration pursuant to Rules 504, 505 and 506 of Regulation D and Sections
4(2) and 4(6) of the Securities Act of 1933, as amended. We did not use an
underwriter or pay any commissions in connection with these transactions.
Item 27. Exhibits Index
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
3(i).1 Certificate of Incorporation (Incorporated by reference to
Exhibit 3(i).1 of the Company's registration statement on Form
SB-2 September 23, 2005, File No. 333-128532)
3(ii).1 Bylaws (Incorporated by reference to Exhibit 3(ii).1 of the
Company's registration statement on Form SB-2 September 23,
2005, File No. 333-128532)
II-1
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
5.1 Opinion of Blackburn & Stoll, LC
10.1 Asset Purchase Agreement by and between the Company and Don
Peay, dated January 19, 2005 (Incorporated by reference to
Exhibit 10.1 of the Company's registration statement on Form
SB-2 September 23, 2005, File No. 333-128532)
10.2 Amendment to Asset Purchase Agreement by and between the
Company and Don Peay, effective December 31, 2006
23.1 Consent of Pritchett, Siler & Hardy, P.C.
23.2 Consent of Blackburn & Stoll, LC (included in Exhibit 5.1
hereto)
99.1 Subscription Agreement
99.2 Escrow Agreement (Incorporated by reference to Exhibit 99.2 of
the Company's registration statement on Form SB-2 September
23, 2005, File No. 333-128532)
---------------
Item 28. Undertakings
The registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to: (i) Include
any prospectus required by section 10(a)(3) of the Securities Act of
1933; (ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume or 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 Commission 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 Registration Fee" table in the effective registration
statement; and (iii) Include any additional or changed material
information on the plan of distribution.
(2) For determining any liability under the Securities Act of 1933,
treat each post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at that time
to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the small business issuer in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
II-2
connection with the securities being registered, we 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 SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Bountiful, State of Utah, on February 10, 2006.
WORLD TROPHY OUTFITTERS, INC.
(Registrant)
By /s/ Don Peay
-----------------------------
Don Peay
Principal Executive Officer
By /s/ Don Peay
-----------------------------
Don Peay
Principal Financial Officer
By /s/ Don Peay
-----------------------------
Don Peay
Director
II-3
Dates Referenced Herein and Documents Incorporated by Reference
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