News
12/03/08 | Press Release
Quarterly Report
Item 2. Management's Discussion and Analysis or Plan of Operation
OVERVIEW AND OUTLOOK
Prime Star Group, Inc. (formerly American Water Star, Inc.) was started as a company which developed, marketed, sold, and distributed bottled water with four branded beverages: Hawaiian Tropic, Geyser Fruit, Geyser Sport, and Geyser Fruta. The products were orientated to the health conscious consumer looking for an alternative to products containing high sugar and caffeine levels. Our customers included single and multi-store retail operations, governmental agencies, and distributors who in turn sell to retail stores, convenience stores, schools and other outlets. In addition, we branched into the private label and co-packing industries in the fourth quarter of 2004.
We initially sold our products exclusively through distributors who then supplied our products to retailers. Although we continued to use distributors, we also expanded our sales effort through sales directly to retailers.
We had hoped the private label and co-packaging of beverages for other corporations would allows us to avoid costly marketing expenses that would otherwise be associated with brand development, launch, and continuing promotions. We anticipated the distribution of our sales over the next couple of years to be approximately 50% to 60% on private labeling.
CURRENT OPERATIONS
During the third quarter of 2005, we entered into a "Forbearance Agreement" with Laurus Master Fund ("Laurus") as a result of having previously defaulted on our initial agreements with Laurus dated as of October 2004. Pursuant to the Forbearance Agreement, Laurus agreed to forbear taking action on our existing defaults until October 26, 2007, provided that we did not default under the new Forbearance Agreement. In consideration for the Forbearance Agreement, we issued a Secured Convertible Term Note in the principal amount of $1,286,098.61, which represented the aggregate accrued interest and fees owed to Laurus as of July 31, 2005.
On September 15, 2005, Laurus notified us that certain Events of Default had occurred under the second note and demanded payment of approximately $207,458 by September 21, 2005. Although our operations continued through the third quarter of 2005, the impact of the Laurus debt which was in default by the end of the third quarter was having a negative impact on our ability to continue operations as previously planned.
During the fourth quarter of 2005, our operations ceased and Laurus began to foreclose on all of our assets and subsidiaries. On November 4, 2005, Laurus again notified us that certain defaults had occurred in the Securities Purchase Agreement, including our failure to make interest payments on September 1, 2005, October 1, 2005 and November 1, 2005. In addition, we had failed to make principal and interest payments due to Laurus on August 1, 2005, September 1, 2005, October 1, 2005 and November 1, 2005. Based upon the occurrence and continuance of these defaults, Laurus notified us that they had accelerated the amounts due under the obligations, demanding payment in full on November 7, 2005 in the amount of $6,694,875.
Subsequent to November 7, 2005, foreclosure proceedings were begun on all of our real, personal, tangible, and intangible property, including all buildings, structures, leases, fixtures, and moveable personal property. On March 2, 2006, all of the real property was sold through a foreclosure sale, and on March 23, 2006, all personal property was sold through a UCC sale. Pursuant to the Order of the Court, on or about April 3, 2006, the Superior Court of the State of Arizona in and for the County of Maricopa approved an order (i) Approving Receiver's Final Report; (ii) Discharging Receiver; and (iii) Dismissing Case. Further, the Order of the Court stated as follows: "On March 2, 2006, all of the real property of the Receivership Property was sold through a foreclosure sale ("Real Property Sale"). Laurus purchased the real property sold at the Real Property Sale." "On March 23, 2006, all of the personal property of the Receivership Property was sold through a UCC sale ("Personal Property Sale"). Laurus purchased the personal property sold at the Personal Property Sale." "Following the Real Property Sale and the Personal Property Sale, substantially all of the Company's assets have been sold to Laurus." The loss of the assets included the loss of the ownership of five of our subsidiaries; All Star Beverage, Inc., All Star Beverages Arizona, Inc., All Star Beverages Jax, Inc., All Star Beverages Mississippi, Inc., and Hawaiian Tropicals, Inc. Substantially all of our assets were sold, which had a significant negative impact on our Results of Operations. Our results of operations discussed for the year ended December 31, 2007 and 2006 are not indicative of future operations since during the fourth quarter of 2005 we substantially ceased all operations and lost all assets due to the foreclosure process by Laurus in the first quarter of 2006.
On November 23, 2005, we received a letter from the American Stock Exchange ("AMEX") notifying us we were not in compliance with Sections 134, 1003(a)(iv), and 1101 of AMEX`s Company Guide. Pursuant to AMEX`s letter we were required to submit two plans, one by December 9 and the second one by December 23, 2005, advising AMEX on the action we planned to take to become compliant by January 5, 2006 and February 23, 2006. On January 11, 2006, we received notice from AMEX that we were not in compliance with their continued listing standards and that our securities were being delisted.
We had no revenues for either the three months or nine months ended September 30, 2008 and 2007.
For the nine months ended September 30, 2008, we incurred no expenses. This compares with general and administrative expenses of $125,000 and related party expenses of $60,000 for the corresponding period of the prior year. As a result of the foregoing, the company had no income or loss for the three months ended September 30, 2008, compared to a net loss of $185,000 or $.14 per share for the three months ended September 30, 2007.
For the nine month ended September 30, 2008 we incurred $45,000 of general and administrative expenses and $60,000 of related party expenses. This compares with general and administrative expenses of $250,000 and related party expenses of $120,000 for the corresponding period of the prior year. As a result of the foregoing, the Company incurred a net loss of $105,000 or $.08 per share for the nine months ended September 30, 2008 compared to a net loss of $370,000 or $.27 per share for the nine months ended June 30, 2007.
LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes total current assets, liabilities and working capital at September 30, 2008 compared to December 31, 2007. September December 31, 2007 Increase / (Decrease) 30, 2008 $ % Current Assets $0 $0 $0 No change Current $3,424,509 $8,354,076 ($4,929,567) (69%) Liabilities Working Capital $(3,424,509) $(8,354,076) $(4,929,567) (69%) (Deficit)
As of September 30, 2008, we had a working deficit of $3,424,509 compared to working deficit of $8,354,076 as of December 31, 2007, an decrease of $4,929,567. As of September 30, 2008, we had no cash on hand, no assets and a working capital deficiency of $3,424,509.
As described throughout this filing, during the fourth quarter of 2005 and continuing through the first quarter of 2006, foreclosure proceedings were begun on all of our real, personal, tangible, and intangible property, including all buildings, structures, leases, fixtures, and moveable personal property. On March 2, 2006, all of the real property was sold through a foreclosure sale, and on March 23, 2006, all personal property was sold through a UCC sale. As we begin to rebuild our operations, we expect future short-term business operations to be funded principally by private placements and additional short-term borrowings. However, there is no assurance that we will be successful in raising needed capital through borrowings from third parties and/or issuance of equity.
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.
Going Concern
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the financial statements, during the periods ended September 30, 2008 and 2007, the Company incurred losses from discontinued operations of $105,000 and $550,000, respectively. The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
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Form 10-Q/A for PRIME STAR GROUP INC
Quarterly Report
Item 2. Management's Discussion and Analysis or Plan of Operation
OVERVIEW AND OUTLOOK
Prime Star Group, Inc. (formerly American Water Star, Inc.) was started as a company which developed, marketed, sold, and distributed bottled water with four branded beverages: Hawaiian Tropic, Geyser Fruit, Geyser Sport, and Geyser Fruta. The products were orientated to the health conscious consumer looking for an alternative to products containing high sugar and caffeine levels. Our customers included single and multi-store retail operations, governmental agencies, and distributors who in turn sell to retail stores, convenience stores, schools and other outlets. In addition, we branched into the private label and co-packing industries in the fourth quarter of 2004.
We initially sold our products exclusively through distributors who then supplied our products to retailers. Although we continued to use distributors, we also expanded our sales effort through sales directly to retailers.
We had hoped the private label and co-packaging of beverages for other corporations would allows us to avoid costly marketing expenses that would otherwise be associated with brand development, launch, and continuing promotions. We anticipated the distribution of our sales over the next couple of years to be approximately 50% to 60% on private labeling.
CURRENT OPERATIONS
During the third quarter of 2005, we entered into a "Forbearance Agreement" with Laurus Master Fund ("Laurus") as a result of having previously defaulted on our initial agreements with Laurus dated as of October 2004. Pursuant to the Forbearance Agreement, Laurus agreed to forbear taking action on our existing defaults until October 26, 2007, provided that we did not default under the new Forbearance Agreement. In consideration for the Forbearance Agreement, we issued a Secured Convertible Term Note in the principal amount of $1,286,098.61, which represented the aggregate accrued interest and fees owed to Laurus as of July 31, 2005.
On September 15, 2005, Laurus notified us that certain Events of Default had occurred under the second note and demanded payment of approximately $207,458 by September 21, 2005. Although our operations continued through the third quarter of 2005, the impact of the Laurus debt which was in default by the end of the third quarter was having a negative impact on our ability to continue operations as previously planned.
During the fourth quarter of 2005, our operations ceased and Laurus began to foreclose on all of our assets and subsidiaries. On November 4, 2005, Laurus again notified us that certain defaults had occurred in the Securities Purchase Agreement, including our failure to make interest payments on September 1, 2005, October 1, 2005 and November 1, 2005. In addition, we had failed to make principal and interest payments due to Laurus on August 1, 2005, September 1, 2005, October 1, 2005 and November 1, 2005. Based upon the occurrence and continuance of these defaults, Laurus notified us that they had accelerated the amounts due under the obligations, demanding payment in full on November 7, 2005 in the amount of $6,694,875.
Subsequent to November 7, 2005, foreclosure proceedings were begun on all of our real, personal, tangible, and intangible property, including all buildings, structures, leases, fixtures, and moveable personal property. On March 2, 2006, all of the real property was sold through a foreclosure sale, and on March 23, 2006, all personal property was sold through a UCC sale. Pursuant to the Order of the Court, on or about April 3, 2006, the Superior Court of the State of Arizona in and for the County of Maricopa approved an order (i) Approving Receiver's Final Report; (ii) Discharging Receiver; and (iii) Dismissing Case. Further, the Order of the Court stated as follows: "On March 2, 2006, all of the real property of the Receivership Property was sold through a foreclosure sale ("Real Property Sale"). Laurus purchased the real property sold at the Real Property Sale." "On March 23, 2006, all of the personal property of the Receivership Property was sold through a UCC sale ("Personal Property Sale"). Laurus purchased the personal property sold at the Personal Property Sale." "Following the Real Property Sale and the Personal Property Sale, substantially all of the Company's assets have been sold to Laurus." The loss of the assets included the loss of the ownership of five of our subsidiaries; All Star Beverage, Inc., All Star Beverages Arizona, Inc., All Star Beverages Jax, Inc., All Star Beverages Mississippi, Inc., and Hawaiian Tropicals, Inc. Substantially all of our assets were sold, which had a significant negative impact on our Results of Operations. Our results of operations discussed for the year ended December 31, 2007 and 2006 are not indicative of future operations since during the fourth quarter of 2005 we substantially ceased all operations and lost all assets due to the foreclosure process by Laurus in the first quarter of 2006.
On November 23, 2005, we received a letter from the American Stock Exchange ("AMEX") notifying us we were not in compliance with Sections 134, 1003(a)(iv), and 1101 of AMEX`s Company Guide. Pursuant to AMEX`s letter we were required to submit two plans, one by December 9 and the second one by December 23, 2005, advising AMEX on the action we planned to take to become compliant by January 5, 2006 and February 23, 2006. On January 11, 2006, we received notice from AMEX that we were not in compliance with their continued listing standards and that our securities were being delisted.
We had no revenues for either the three months or nine months ended September 30, 2008 and 2007.
For the nine months ended September 30, 2008, we incurred no expenses. This compares with general and administrative expenses of $125,000 and related party expenses of $60,000 for the corresponding period of the prior year. As a result of the foregoing, the company had no income or loss for the three months ended September 30, 2008, compared to a net loss of $185,000 or $.14 per share for the three months ended September 30, 2007.
For the nine month ended September 30, 2008 we incurred $45,000 of general and administrative expenses and $60,000 of related party expenses. This compares with general and administrative expenses of $250,000 and related party expenses of $120,000 for the corresponding period of the prior year. As a result of the foregoing, the Company incurred a net loss of $105,000 or $.08 per share for the nine months ended September 30, 2008 compared to a net loss of $370,000 or $.27 per share for the nine months ended June 30, 2007.
LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes total current assets, liabilities and working capital at September 30, 2008 compared to December 31, 2007. September December 31, 2007 Increase / (Decrease) 30, 2008 $ % Current Assets $0 $0 $0 No change Current $3,424,509 $8,354,076 ($4,929,567) (69%) Liabilities Working Capital $(3,424,509) $(8,354,076) $(4,929,567) (69%) (Deficit)
As of September 30, 2008, we had a working deficit of $3,424,509 compared to working deficit of $8,354,076 as of December 31, 2007, an decrease of $4,929,567. As of September 30, 2008, we had no cash on hand, no assets and a working capital deficiency of $3,424,509.
As described throughout this filing, during the fourth quarter of 2005 and continuing through the first quarter of 2006, foreclosure proceedings were begun on all of our real, personal, tangible, and intangible property, including all buildings, structures, leases, fixtures, and moveable personal property. On March 2, 2006, all of the real property was sold through a foreclosure sale, and on March 23, 2006, all personal property was sold through a UCC sale. As we begin to rebuild our operations, we expect future short-term business operations to be funded principally by private placements and additional short-term borrowings. However, there is no assurance that we will be successful in raising needed capital through borrowings from third parties and/or issuance of equity.
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.
Going Concern
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the financial statements, during the periods ended September 30, 2008 and 2007, the Company incurred losses from discontinued operations of $105,000 and $550,000, respectively. The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
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