U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2/A
Amendment No. 2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
DesignerSportsApparel, Inc.
(Exact name of Registrant as specified in its charter)
| NEVADA | 20-3491905 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
| 207 N. Center Street, Unit A, Arlington, Texas | 76011 |
| (Name and address of principal executive offices) | (Zip Code) |
| Registrant's telephone number, including area code: (817) 201-4912 | |
| Approximate date of commencement of proposed sale to the public: | As soon as practicable after the effective date of this Registration Statement. |
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |__|
If any of the securities being registered on the Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box |X|
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, check the following box. |__|
CALCULATION OF REGISTRATION FEE | ||||
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED | AMOUNT TO BE REGISTERED | PROPOSED MAXIMUM OFFERING PRICE PER SHARE (1) | PROPOSED MAXIMUM AGGREGATE OFFERING PRICE (2) | AMOUNT OF REGISTRATION FEE |
| Common Stock | 3,257,000 shares | $0.25 | $814,250 | $103.17 (3) |
| (1) | This price was arbitrarily determined by DesignerSportsApparel, Inc. |
| (2) | Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) under the Securities Act. |
| (3) | Previously paid |
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 SECTION 8(a), MAY DETERMINE.
COPIES OF COMMUNICATIONS TO:
The Corporate Law Center
Ronald Serota
2620 Regatta Dr., Suite 102
Las Vegas, NV 89128
(702) 869-0099 Fax: (702) 446-6071
SUBJECT TO COMPLETION, Dated March 26, 2007
PROSPECTUS
DESIGNERSPORTSAPPAREL, INC.
3,257,000
COMMON STOCK
INITIAL PUBLIC OFFERING
The selling shareholders named in this prospectus are offering up to 3,257,000 shares of common stock offered through this prospectus. We will not receive any proceeds from this offering and have not made any arrangements for the sale of these securities. We have, however, set an offering price for these securities of $0.25 per share. This offering will expire on August 31, 2007 unless extended by the board of directors. The board of directors has discretion to extend the offering period for a maximum of an additional six months.
Offering Price | Underwriting Discounts and Commissions | Proceeds to Selling Shareholders | |
| Per Share | $0.25 | None | $0.25 |
| Total | $811,250 | None | $811,250 |
Our common stock is presently not traded on any market or securities exchange. The sales price to the public is fixed at $0.25 per share until such time as the shares of our common stock are traded on the NASD Over-The-Counter Bulletin Board. Although we intend to apply for quotation of our common stock on the NASD Over-The-Counter Bulletin Board, public trading of our common stock may never materialize. If our common stock becomes traded on the NASD Over-The-Counter Bulletin Board, then the sale price to the public will vary according to prevailing market prices or privately negotiated prices by the selling shareholders.
The purchase of the securities offered through this prospectus involves a high degree of risk. See section entitled “Risk Factors” on page 7-12.
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. The prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
The Date of This Prospectus is: March 26, 2007
Page | |
DesignerSportsApparel, Inc.
We were incorporated as DesignerSportsApparel, Inc. in the State of Nevada on August 29, 2005. We are primarily in the business of providing custom, silk-screened T-shirts. The initial focus of our business plan is to target college-aged consumers who frequently purchase T-shirts.
Currently, we have a licensing agreement with the Sigma Alpha Epsilon Fraternity, allowing us to provide silk-screened T-shirts to every chapter of the fraternity on college campuses nation-wide for events. Our sales are primarily generated through direct contact with fraternity chapter presidents and other officers at campuses across the country. We have a website at www.designersportsapparel.com and are also able to generate sales through our website. We presently contract with outside vendors for purchasing blank T-shirts, for printing of our products and graphic design. We retain three different graphic artists to work directly with our customers to generate artwork for t-shirts on a project-by-project basis. We also contract with outside vendors for purchasing blank t-shirts, and for printing our products. Our business plan is to increase our product offering and to seek to develop additional licensing agreements to act a supplier to other national organizations whose membership base consists of our target market.
As stated in our notes to the financial statements, we have limited working capital, received limited revenue from sales of products or services and have incurred significant costs since inception. There is substantial doubt that we will be able to continue as a going concern beyond August 31, 2006 without the infusion of additional capital. For these reasons, our auditors issued in their report a going concern opinion regarding our company.
David Parker is our sole executive officer and director. All references in this prospectus to “our board of directors” or “our management” exclusively refer to Mr. Parker as our sole officer and director.
Our fiscal year end is August 31.
Our principal offices are located at 207 N. Center Street, Unit A, Arlington, TX 76011. Our phone number is 817-201-4912.
The Offering
| Securities Being Offered | Up to 3,257,000 shares of our common stock. These shares include all of our outstanding shares with the exception of those held by our President. Our President owns sufficient shares to substantially control the operations of the Company. |
| Offering Price | The offering price of the common stock is $0.25 per share. There is no public market for our common stock. We can not provide any assurance that the shares offered will have a market value, or that they could be resold at the offering price if any when an active secondary market might develop, or that a public market for our securities could be sustained even if developed. The absence of a public market will limit the ability of the shares to be resold aversely impacting their liquidity and forcing shareholders to enter into private transactions to dispose of the shares. We intend to apply to the NASD over-the-counter bulletin board to allow the trading of our common stock upon our becoming a reporting entity under the Securities Exchange Act of 1934. In order to be quoted on the OTCBB, a market maker must file an application on our behalf in order to make a market for our common stock. If our common stock becomes so traded and a market for the stock develops, the actual price of stock will be determined by prevailing market prices at the time of sale or by private transactions negotiated by the selling shareholders. The offering price would thus be determined by market factors and the independent decisions of the selling shareholders. |
| Minimum Number of Shares To Be Sold in This Offering | None |
| Securities Issued and to be Issued | 5,757,000 shares of our common stock are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by existing shareholders. There will be no increase in our issued and outstanding shares as a result of this offering. Our sole executive officer and director, Mr. Parker, holds 43.4% of the shares of our common stock issued and outstanding. As a result, Mr. Parker will exercise substantial control over our direction. Mr. Parker is also our sole employee. |
| Use of Proceeds | We will not receive any proceeds from the sale of the common stock by the selling shareholders. |
| Expiration of Offering | This offering will expire on August 31, 2007 unless extended by the Mr. Parker, our sole executive officer and director. The board of directors consisting currently of only Mr. Parker has discretion to extend the offering period for a maximum of an additional six months. The primary factors that the board of directors would consider in deciding whether to extend the offering are as follows: · if the shares offered have not been sold; · if extending the offering would not result in any harm to the company; · if those shares not sold could be sold within a six month period of time; and · if there was insufficient time for a market to develop for reasons which may include a delay or failure to have our common stock quoted on the OTCBB. |
Summary Financial Information
| Balance Sheet Data | As of August 31, 2006 (Audited) | As of November 30, 2006 (Unaudited) |
| Cash | $ 1,854 | $ 1,497 |
| Total Assets | $14,388 | $13,281 |
| Liabilities | $19,838 | $27,071 |
| Total Stockholders’ Deficit | $ 5,450 | $13,790 |
| Statement of Operations | For the Year Ended August 31, 2006 (Audited) | For the Three Months Ended November 30, 2006 (Unaudited) |
| Revenue | $ 1,935 | $2,339 |
| Loss for the Period | $61,475 | $8,340 |
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. Currently, shares of our common stock are not publicly traded. In the event that shares of our common stock become publicly traded, the trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.
We have earned limited revenue since our inception, which makes it difficult to evaluate whether we will operate profitably. Operating expenses for the year ended August 31, 2006, totaled $56,373. We incurred operating expenses of $7,643 for the three months ended November 30, 2006. We have incurred cumulative net losses of $69,815 since our inception. We have not attained profitable operations and are dependent upon obtaining financing to continue operations. As of November 30, 2006, we had cash in the amount of $1,497. Our future is dependent upon our ability to obtain financing and upon future profitable operations. We plan to seek additional funds through private placements of our common stock and/or through debt financing. Our ability to raise additional financing is unknown. We do not have any formal commitments or arrangements for the advancement or loan of funds. For these reasons, our auditors stated in their report that they have substantial doubt we will be able to continue as a going concern. As a result, there is an increased risk that you could lose the entire amount of your investment in our company.
Your evaluation of our business will be difficult because we have a limited operating history. We face a number of risks encountered by early-stage companies, including our need to develop infrastructure to support growth and expansion; our need to obtain long-term sources of financing; our need to establish our marketing, sales and support organizations, and our need to manage expanding operations. Our business strategy may not be successful, and we may not successfully address these risks. If we are unable to sustain profitable operations, investors may lose their entire investment in us.
We have verbal agreements with our graphic artists, printers, and suppliers to provide services to us at their respective and customary rates upon request. In addition, we have a verbal agreement with our accountants to perform requested financial accounting services and our outside auditors to perform auditing functions. Each of these functions requires the services of persons in high demand
and these persons may not always be available. The implementation of our business plan and ability to services our customers may be impaired if these parties do not perform in accordance with our verbal agreement. In addition, it may be difficult to enforce a verbal agreement in the event that any of these parties fail to perform.
We are primarily in the business of providing custom, silk-screened T-shirts to collegiate consumers. As a result, the demand for our products is generally during the academic school year. The seasonality of our business requires us to manage our cash flows carefully over the course of any given fiscal year. If we fail to manage our cash flows effectively in response to seasonal fluctuations, we may be unable to offset the results from any such period with results from other periods, which could impair our ability to meet cash flow needs. If we fail to monitor production and distribution accurately during these peak seasonal periods and are unable to satisfy our customers' delivery requirements, we could jeopardize our relationships with our customers.
All completed product orders are shipped to our corporate office for delivery to our customers. The success of our business depends on our ability to deliver our products to our consumers’ specifications for time sensitive events. We are dependent on third party consultants for the graphic design and screening of our products. Disruptions in the delivery of merchandise to us for any reason could delay our ability to make timely delivery of the merchandise to our consumers, which could result in cancelled sales and excess inventory.
Our management does not have any specific training in running a retail apparel business. With no direct training or experience in this area, our management may not be fully aware of many of the specific requirements related to working within this industry. As a result, our management may lack certain skills that are advantageous in managing a retail apparel company. Consequently, our operations, earnings, and ultimate financial success could suffer irreparable harm due to management’s lack of experience in this industry.
Our designs may infringe on issued trademarks and/or copyright rights of others. We may be subject to legal proceedings and claims from time to time in our ordinary course of business arising out of intellectual property rights of others. These legal proceedings can be very costly, and thus can negatively affect the results of our operations.
Our success will depend, in part, on our ability to obtain and enforce intellectual property rights over our name and original designs in the United States. We intend to apply for trademark and copyright protection for our designs, but have not applied for such protections at the present. No assurance can be given that any intellectual property rights owned by us, if granted, will not be challenged, invalidated or circumvented, that any rights granted will provide competitive advantages to us. Intellectual property litigation is expensive and time-consuming, and can be used by well-funded adversaries as a strategy for depleting the resources of a small company such as us. There is no assurance that we will have sufficient resources to successfully prosecute our interests in any litigation that may be brought. The failure to adequately protect our intellectual property and original designs could result in our competitors utilizing our designs and impair our ability to achieve profitable operations.
Mr. Parker, our chief executive officer and chief financial officer, devotes 10 to 15 hours per week to our business affairs. We do not have an employment agreement with Mr. Parker nor do we maintain a key man life insurance policy for him. Currently, do not have any full or part-time employees and hire consultants on an as-needed basis. If the demands of our business require the full business time of Mr. Parker, it is possible that Mr. Parker may not be able to devote sufficient time to the management of our business, as and when needed. If our management is unable to devote a sufficient amount of time to manage our operations, our business will fail.
The Sarbanes-Oxley Act of 2002 was enacted in response to public concerns regarding corporate accountability in connection with recent accounting scandals. The stated goals of the Sarbanes-Oxley Act are to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies, and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. The Sarbanes-Oxley Act generally applies to all companies that file or are required to file periodic reports with the SEC, under the Securities Exchange Act of 1934. Upon becoming a public company, we will be required to comply with the Sarbanes-Oxley Act. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may deter qualified individuals from accepting these roles. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers. We continue to evaluate and monitor developments with respect to these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
A market for our common stock may never develop. We intend to contact an authorized OTC Bulletin Board market-maker for sponsorship of our securities on the OTC Bulletin Board upon the effectiveness of the registration statement of which this prospectus forms a part. However, our shares may never be traded on the bulletin board, or, if traded, a public market may not materialize. If our common stock is not traded on the bulletin board or if a public market for our common stock does not develop, investors may not be able to re-sell the shares of our common stock that they have purchased and may lose all of their investment.
The selling shareholders are offering 3,257,000 shares of our common stock through this prospectus. Our common stock is presently not traded on any market or securities exchange, but should a market develop, shares sold at a price below the current market price at which the common stock is trading will cause that market price to decline. Moreover, the offer or sale of a large number of shares at any price may cause the market price to fall. The outstanding shares of common stock covered by this prospectus represent approximately 56.6% of the common shares outstanding as of the date of this prospectus.
Our board of directors is authorized to issue up to 10,000,000 shares of preferred stock. Our board of directors has the power to establish the dividend rates, liquidation preferences, voting rights, redemption and conversion terms and privileges with respect to any series of preferred stock. The issuance of any shares of preferred stock having rights superior to those of the common stock may result in a decrease in the value or market price of the common stock. Holders of preferred stock may have the right to receive dividends, certain preferences in liquidation and conversion rights. The issuance of preferred stock could, under certain circumstances, have the effect of delaying, deferring or preventing a change in control of us without further vote or action by the stockholders and may adversely affect the voting and other rights of the holders of common stock.
We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. Our payment of any future dividends will be at the discretion of our board of directors after taking into account various factors, including but not limited to our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. Accordingly, investors must rely on sales of their own common stock after price appreciation, which may never
occur, as the only way to realize their investment. Investors seeking cash dividends should not purchase our common stock.
Broker-dealer practices in connection with transactions in “penny stocks” are regulated by penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on some national securities exchanges or quoted on Nasdaq). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to persons other than established customers and “accredited investors” must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules, and investors in our common stock may find it difficult to sell their shares.
In the event that our shares are quoted on the over-the-counter bulletin board, we will be required order to remain current in our filings with the SEC in order for shares of our common stock to be eligible for quotation on the over-the-counter bulletin board. In the event that we become delinquent in our required filings with the SEC, quotation of our common stock will be terminated following a 30 day grace period if we do not make our required filing during that time. If our shares are not eligible for quotation on the over-the-counter bulletin board, investors in our common stock may find it difficult to sell their shares.
This prospectus contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. The actual results could differ materially from our forward-looking statements. Our actual results are most likely to differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in this Risk Factors section and elsewhere in this prospectus.
We will not receive any proceeds from the sale of the common stock offered through this prospectus by the selling shareholders.
The $0.25 per share offering price of our common stock was arbitrarily chosen using the last sales price of our stock from our most recent private offering of common stock. There is no relationship between this price and our assets, earnings, book value or any other objective criteria of value.
We intend to apply to the NASD over-the-counter bulletin board for the quotation of our common stock upon our becoming a reporting entity under the Securities Exchange Act of 1934. We intend to file a registration statement under the Exchange Act concurrently with the effectiveness of the registration statement of which this prospectus forms a part. If our common stock becomes so traded and a market for the stock develops, the actual price of stock will be determined by prevailing market prices at the time of sale or by private transactions negotiated by the selling shareholders. The offering price would thus be determined by market factors and the independent decisions of the selling shareholders.
The common stock to be sold by the selling shareholders is common stock that is currently issued and outstanding. Accordingly, there will be no dilution to our existing shareholders.
The selling shareholders named in this prospectus are offering all of the 3,257,000 shares of common stock offered through this prospectus. The shares include the following:
| · | 3,105,000 common shares that the selling shareholders acquired from us in an offering that was exempt from Registration under Rule 506 of Regulation D of the Securities Act of 1933, as amended, and completed on December 16, 2005, and |
| · | 152,000 common shares that the selling shareholders acquired from us in an offering that was exempt from Registration under Rule 506 of Regulation D of the Securities Act of 1933, as amended, and completed on July 31, 2006. |
The following table provides information regarding the beneficial ownership of our common stock held by each of the selling shareholders as of March 26, 2007 including:
1. the number of shares owned by each prior to this offering;
2. the total number of shares that are to be offered by each;
3. the total number of shares that will be owned by each upon completion of the offering;
4. the percentage owned by each upon completion of the offering; and
5. the identity of the beneficial holder of any entity that owns the shares.
The named party beneficially owns and has sole voting and investment power over all shares or rights to the shares, unless otherwise shown in the table. The numbers in this table assume that none of the selling shareholders sells shares of common stock not being offered in this prospectus or purchases additional shares of common stock, and assumes that all shares offered are sold. The percentages are based on 5,757,000 shares of common stock outstanding on March 26, 2007.
Name and Address of Selling Shareholder | Shares Owned Prior to This Offering | Total Number of Shares to be Offered for Selling Shareholder Account | Total Shares to be Owned Upon Completion of this Offering | Percent Owned Upon Completion of this Offering |
Thomas M. Aigner 5033 Comstock Circle Keller, Texas 76248 | 200,000 | 200,000 | 0 | 0% |
Zachary T. Aigner 11409 Lauren Way Keller, Texas 76248 | 5,000 | 5,000 | 0 | 0% |
Helen Allen 713 Hurst Dr. Bedford, Texas 76022 | 4,000 | 4,000 | 0 | 0% |
Nora Cloud 11724 Tuscany Way Dallas, Texas 75218 | 5,000 | 5,000 | 0 | 0% |
William F. Davis 5300 Shamrops Dr. Kenner, Louisiana 70065 | 15,000 | 15,000 | 0 | 0% |
Martha G. Davis 214 Megan Ln. Slidell, Louisiana 70458 | 15,000 | 15,000 | 0 | 0% |
Kent Donithan 8228 Maplestar Rd. Las Vegas, Nevada 89128 | 200,000 | 200,000 | 0 | 0% |
Marlene Endler 351 Town Place Circle, #205 Buffalo Grove, Illinois 60089 | 230,000 | 230,000 | 0 | 0% |
Mary Fish 1529 Schilling Ft. Worth, Texas 76103 | 5,000 | 5,000 | 0 | 0% |
Patricia H. Folse 925 Marlene Dr. Gretna, Louisiana 70056 | 15,000 | 15,000 | 0 | 0% |
Robyn Gilliland 600 Bridle Trail Saginaw, Texas 76179 | 5,000 | 5,000 | 0 | 0% |
John Edward Gilliland 4205 Fernleaf Drive Ft. Worth, Texas 76137 | 5,000 | 5,000 | 0 | 0% |
Roy Alexander Gilliland III 8704 Paloma Blanca Dr. Ft. Worth, Texas 76179 | 5,000 | 5,000 | 0 | 0% |
Joseph C. Greco 250 Park Ave., #505 Minneapolis, Minnesota 55415 | 200,000 | 200,000 | 0 | 0% |
Suann Hayes 5420 Paloma Blanca Drive Ft. Worth, Texas 76179 | 5,000 | 5,000 | 0 | 0% |
Geoffrey Holmes 7621 Gosport Ave. Las Vegas, Nevada 89131 | 200,000 | 200,000 | 0 | 0% |
Suzanne Hughes 901 Hardage Ln. Colleyville, Texas 76034 | 4,000 | 4,000 | 0 | 0% |
Donald India Jr. 607 Woodvale Ave. Deerfield, Illinois 60015 | 230,000 | 230,000 | 0 | 0% |
Gerald Kieft 9709 S.W. Pueblo Terrace Palm City, Florida 34990 | 5,000 | 5,000 | 0 | 0% |
A.J. LaSota 601 E. 1st Street, Unit 230 Ft. Worth, Texas 76102 | 200,000 | 200,000 | 0 | 0% |
David W. Lee 5400 Rustic Trail Colleyville, Texas 76034 | 5,000 | 5,000 | 0 | 0% |
Timothy Lupo & Julie Ann Davis 214 Megan Lane Slidell, Louisiana 70458 | 15,000 | 15,000 | 0 | 0% |
Billy D. Moore 102 Brandon Dr. Weatherford, Texas 76087 | 200,000 | 200,000 | 0 | 0% |
Dee Ann Rhodes 2711 Margret Dr. Arlington, Texas 76012 | 4,000 | 4,000 | 0 | 0% |
Joseph A. Sanger 1512 W. Victoria St. #1 Chicago, Illinois 60660 | 230,000 | 230,000 | 0 | 0% |
John C. Savage 709 High Star Ct. Hurst, Texas 76054 | 5,000 | 5,000 | 0 | 0% |
Edward A. Stephens 610 Lock Chalet Ct. Arlington, Texas 76012 | 200,000 | 200,000 | 0 | 0% |
Hayley Stephens 5412 47th Street Lubbock, Texas 76120 | 5,000 | 5,000 | 0 | 0% |
Kelli G. Teinert 8550 Meadowbrook Dr. Ft. Worth, Texas 76008 | 175,000 | 175,000 | 0 | 0% |
Danny Terrell 11521 Blue Creek Dr. Ft. Worth, Texas 76008 | 200,000 | 200,000 | 0 | 0% |
Sanford Terrell 3617 Live Oak Rd. Weatherford, Texas 76087 | 5,000 | 5,000 | 0 | 0% |
Valerie Terrell 11521 Blue Creek Dr. Aledo, Texas 76008 | 5,000 | 5,000 | 0 | 0% |
Paige Thomas 600 Bridle Trail Saginaw, Texas 76179 | 250,000 | 250,000 | 0 | 0% |
Michael S. Todd 7635 Golden Filly St. Las Vegas, Nevada 89131 | 160,000 | 160,000 | 0 | 0% |
Kelly Vallelungo 291 Moonraker Dr. Slidell, Louisiana 70458 | 15,000 | 15,000 | 0 | 0% |
Richard Wiener 2634 Violet Street Glenview, Illinois 60026 | 230,000 | 230,000 | 0 | 0% |
None of the selling shareholders;
| (1) | has had a material relationship with us other than as a shareholder at any time within the past three years; |
| (2) | has been one of our officers or directors; or |
| (3) | are broker-dealers or affiliate of broker-dealers. |
The selling shareholders may sell some or all of their common stock in one or more transactions, including block transactions:
| 1. | on such public markets or exchanges as the common stock may from time to time be trading; |
| 2. | in privately negotiated transactions; |
| 3. | through the writing of options on the common stock; |
| 4. | in short sales, or; |
| 5. | in any combination of these methods of distribution. |
We intend to contact an authorized Over-The-Counter Bulletin Board market-maker for sponsorship of our securities on the Over-The-Counter Bulletin Board, but we, or anyone acting on our behalf, have not requested or encouraged any broker-dealer to act as a market-maker for our securities at the present time. The sales price to the public is fixed at $0.25 per share until such time as the shares of our common stock become quoted on the NASD Over-The-Counter Bulletin Board or another exchange. Although we intend to apply for quotation of our common stock on the NASD Over-The-Counter Bulletin Board, public trading of our common stock may never materialize. If our common stock becomes traded on the NASD Over-The-Counter Bulletin Board, or another exchange, then the sales price to the public will vary according to the selling decisions of each selling shareholder and the market for our stock at the time of resale. In these circumstances, the sales price to the public may be:
1. the market price of our common stock prevailing at the time of sale;
2. a price related to such prevailing market price of our common stock, or;
3. such other price as the selling shareholders determine from time to time.
The shares may also be sold in compliance with the Securities and Exchange Commission's Rule 144. In general, under Rule 144 as currently in effect, a person who has beneficially owned shares of a company's common stock for at least one year is entitled to sell within any three month period a number of shares that does not exceed the greater of:
| 1. | one percent of the number of shares of the company's common stock then outstanding, which, in our case, will equal approximately 57,570 shares as of the date of this prospectus, or; |
| 2. | the average weekly trading volume of the company's common stock during the four calendar weeks preceding the filing of a notice on form 144 with respect to the sale. |
As of the date of this prospectus, no selling shareholder has held their shares for more than one year. Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about the company.
Under Rule 144(k), a person who is not one of the company's affiliates at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, is entitled to sell shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.
As of the date of this prospectus, persons who are our affiliates hold 100% of the total shares that may be sold, at least partially, pursuant to Rule 144 after September 16, 2006.
The selling shareholders may also sell their shares directly to market makers acting as agents in unsolicited brokerage transactions. Any broker or dealer participating in such transactions as an agent may receive a commission from the selling shareholders or from such purchaser if they act as agent for the purchaser. If applicable, the selling shareholders may distribute shares to one or more of their partners who are unaffiliated with us. Such partners may, in turn, distribute such shares as described above.
We are bearing all costs relating to the registration of the common stock. The selling shareholders, however, will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the common stock.
The selling shareholders must comply with the requirements of the Securities Act of 1933 and the Securities Exchange Act in the offer and sale of the common stock. During such times as the selling shareholders are deemed to be engaged in a distribution of the common stock, and therefore are underwriters, they must comply with applicable law and may, among other things:
| 1. | not engage in any stabilization activities in connection with our common stock; |
| 2. | furnish each broker or dealer through which common stock may be offered, such copies of this prospectus, as amended from time to time, as may be required by such broker or dealer; and; |
| 3. | not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities other than as permitted under the Securities Exchange Act. |
We are not currently a party to any legal proceedings.
Our agent for service of process in Nevada is Boyce & Gianni, LLP, 1701 N. Green Valley Parkway, Suite #8-A, Henderson, Nevada 89074.
Our executive officers and directors and their respective ages as of March 26, 2007 are as follows:
| Director: | ||
| Name of Director | Age | |
| David B. Parker | 50 | |
| Executive Officers: | ||
| Name of Officer | Age | Office |
| David B. Parker | 50 | Chief Executive Officer, Chief Financial Officer |
Set forth below is a brief description of the background and business experience of executive officers and directors.
David B. Parker. In addition to acting as our sole executive officer and director, Mr. Parker also acts as Chief Executive Officer of Certified Services USA, Inc. Certified Services USA, Inc. is a private company incorporated in November 2006 that is seeking to develop a membership association for independent contractors. Mr. Parker served as Chief Executive Officer and a member of the board of directors of Assured Pharmacy, Inc. from April 2003 to February 2005. Assured Pharmacy, Inc. is a reporting company that is engaged in the business of establishing and operating specialty pharmacies focused on dispensing highly regulated medication for chronic pain management. Mr. Parker founded RxSystems, Inc. in March 2002 and served as its Chairman and Chief Executive Officer until its dissolution in 2003. RxSystems, Inc. dissolved following the assignment of its sole asset, exclusive licensing rights, to Assured Pharmacy, Inc. in 2003. From December 2001 to June 2002, Mr. Parker served as a business consultant. Mr. Parker served as Vice President of Retail Sales for Prudential Securities from November 1989 to December 1991. Mr. Parker launched and operated his own independent consulting practice from January 1991 until December 2001. From August 1983 to February 1988, Mr. Parker was employed at Merrill Lynch Pierce Fenner & Smith, where he rose to the position of executive Vice President. Mr. Parker graduated from Texas Christian University in 1981.
Term of Office
Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
Significant Employees
David Parker is our only employee.
We conduct our business through agreements with consultants and arms-length third parties. Current arrangements in place include the following:
| 1. | A verbal agreement with our graphic artists, printers, and suppliers to provide services at their respective and customary rates upon request. |
| 2. | Verbal agreements with our accountants to perform requested financial accounting services. |
| 3. | Verbal agreements with auditors to perform audit functions at their respective normal and customary rates. |
These verbal agreements are unenforceable. We do not intend to enter into written agreements regarding these arrangements because the services that these parties provide are not unique and we are confident that suitable replacements could be secured are comparable rates to provide these services if necessary.
Involvement in Certain Legal Proceedings
To the best of our knowledge, during the past five years, none of the following occurred with respect to our present or former director, executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
The following table sets forth, as of March 26, 2007, certain information as to shares of our common stock owned by (i) each person known by us to beneficially own more than 5% of our outstanding common stock, (ii) each of our directors, and (iii) all of our executive officers and directors as a group:
Title of Class | Name and address of beneficial owner | Number of Shares of Common Stock | Percentage of Common Stock (1) |
| Common Stock | David Parker 207 N. Center Street, Unit A Arlington, TX 76011 | 2,500,000 | 43.4% |
| Common Stock | All Officers and Directors as a Group (one person) | 2,500,000 | 43.4% |
| (1) | The percent of class is based on 5,757,000 shares of common stock issued and outstanding as of March 26, 2007. |
The persons named above have full voting and investment power with respect to the shares indicated. Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.
Our authorized capital stock consists of 90,000,000 shares of common stock, with a par value of $0.001 per share, and 10,000,000 shares of preferred stock, with a par value of $0.001 per share. As of March 26, 2007, there were 5,757,000 shares of our common stock issued and outstanding. Our shares are held by thirty-seven (37) stockholders of record. We have not issued any shares of preferred stock.
Common Stock
Our common stock is entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise required by law or provided in any resolution adopted by our board of directors with respect to any series of preferred stock, the holders of our common stock will possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of our common stock that are present in person or represented by proxy, subject to any voting rights granted to holders of any preferred stock. Holders of our common stock representing fifty percent (50%) of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation. Our Articles of Incorporation do not provide for cumulative voting in the election of directors.
Subject to any preferential rights of any outstanding series of preferred stock created by our board of directors from time to time, the holders of shares of our common stock will be entitled to such cash dividends as may be declared from time to time by our board of directors from funds available therefore.
Subject to any preferential rights of any outstanding series of preferred stock created from time to time by our board of directors, upon liquidation, dissolution or winding up, the holders of shares of our common stock will be entitled to receive pro rata all assets available for distribution to such holders.
In the event of any merger or consolidation with or into another company in connection with which shares of our common stock are converted into or exchangeable for shares of stock, other securities or property (including cash), all holders of our common stock will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash).
Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.
Preferred Stock
Our board of directors is authorized by our articles of incorporation to divide the authorized shares of our preferred stock into one or more series, each of which must be so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and classes. Our board of directors is authorized, within any limitations prescribed by law and our articles of incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock including, but not limited to, the following:
| 1. | The number of shares constituting that series and the distinctive designation of that series, which may be by distinguishing number, letter or title; |
| 2. | The dividend rate on the shares of that series, whether dividends will be cumulative, and if so, from which date(s), and the relative rights of priority, if any, of payment of dividends on shares of that series; |
| 3. | Whether that series will have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; |
| 4. | Whether that series will have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors determines; |
| 5. | Whether or not the shares of that series will be redeemable, and, if so, the terms and conditions of such redemption, including the date or date upon or after which they are redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; |
| 6. | Whether that series will have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; |
| 7. | The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights of priority, if any, of payment of shares of that series; |
| 8. | Any other relative rights, preferences and limitations of that series. |
Provisions in Our Articles of Incorporation and By-Laws That Would Delay, Defer or Prevent a Change in Control
Our articles of incorporation authorize our board of directors to issue a class of preferred stock commonly known as a "blank check" preferred stock. Specifically, the preferred stock may be issued from time to time by the board of directors as shares of one (1) or more classes or series. Our board of directors, subject to the provisions of our Articles of Incorporation and limitations imposed by law, is authorized to adopt resolutions; to issue the shares; to fix the number of shares; to change the number of shares constituting any series; and to provide for or change the following: the voting powers; designations; preferences; and relative, participating, optional or other special rights, qualifications, limitations or restrictions, including the following: dividend rights, including whether dividends are cumulative; dividend rates; terms of redemption, including sinking fund provisions; redemption prices; conversion rights and liquidation preferences of the shares constituting any class or series of the preferred stock.
In each such case, we will not need any further action or vote by our shareholders. One of the effects of undesignated preferred stock may be to enable the board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management. The issuance of shares of preferred stock pursuant to the board of director's authority described above may adversely affect the rights of holders of common stock. For example, preferred stock issued by us may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of common stock. Accordingly, the issuance of shares of preferred stock may discourage bids for the common stock at a premium or may otherwise adversely affect the market price of the common stock.
Dividend Policy
We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.
Share Purchase Warrants
We have not issued and do not have outstanding any warrants to purchase shares of our common stock.
Options
We have not issued and do not have outstanding any options to purchase shares of our common stock.
Convertible Securities
We have not issued and do not have outstanding any securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock.
Nevada Anti-Takeover Laws
Nevada Revised Statutes sections 78.378 to 78.379 provide state regulation over the acquisition of a controlling interest in certain Nevada corporations unless the articles of incorporation or bylaws of the corporation provide that the provisions of these sections do not apply. Our articles of incorporation and bylaws do not state that these provisions do not apply. The statute creates a number of restrictions on the ability of a person or entity to acquire control of a Nevada company by setting down certain rules of conduct and voting restrictions in any acquisition attempt, among other things. The statute is limited to corporations that are organized in the state of Nevada and that have 200 or more stockholders, at least 100 of whom are stockholders of record and residents of the State of Nevada; and does business in the State of Nevada directly or through an affiliated corporation. Because of these conditions, the statute currently does not apply to our company.
Transfer Agent
We appointed Pacific Stock Transfer Company of Las Vegas, Nevada, as our transfer agent.
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
Ronald Serota of The Corporate Law Center, our independent legal counsel, has provided an opinion on the validity of our common stock.
Ronald N. Silberstein, C.P.A., P.L.L.C., has audited our financial statements included in this prospectus and registration statement to the extent and for the periods set forth in its audit report. Ronald N. Silberstein, C.P.A., P.L.L.C. has presented its report with respect to our audited financial statements. The report of Ronald N. Silberstein, C.P.A., P.L.L.C. is included in reliance upon its authority as experts in accounting and auditing.
Our articles of incorporation provide that we will indemnify an officer, director, or former officer or director, to the full extent permitted by law. We have been advised that in the opinion of the Securities and Exchange Commission indemnification for liabilities arising under the Securities Act of 1933 is against public policy as expressed in the Securities Act of 1933, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court's decision.
We were incorporated as DesignerSportsApparel, Inc. in the State of Nevada on August 29, 2005. We are primarily in the business of providing custom, silk-screened t-shirts to fraternities for Greek-sponsored events. On April 4, 2006, we entered into a License Agreement with the Sigma Alpha Epsilon Fraternity, authorizing us to utilize graphics and symbols held by the Sigma Alpha Epsilon Fraternity under copyright and trademark laws and provide silk-screened T-shirts to every chapter of the fraternity on college campuses nation-wide for events in exchange for a percentage of all gross sales to local chapters of the Sigma Alpha Epsilon Fraternity.
Mr. David B. Parker, our President, CEO, Secretary, Treasurer, and sole director has been a promoter of our company since its inception.
Company Overview
We were incorporated as DesignerSportsApparel, Inc. in the State of Nevada on August 29, 2005. We are primarily in the business of providing custom, silk-screened t-shirts to fraternities for Greek-sponsored events. The initial focus of our business plan is to target college-aged consumers who frequently purchase T-shirts.
Currently, we have a licensing agreement with the Sigma Alpha Epsilon Fraternity, allowing us to provide silk-screened T-shirts to every chapter of the fraternity on college campuses nation-wide for events. To date, our sales have been generated through direct contact by our executive officer, Mr. Parker, with fraternity chapter presidents and other officers at campuses across the country. Contact information is obtained through Sigma Alpha Epsilon’s national office. Following our incorporation, we sent product samples to Sigma Alpha Epsilon fraternity chapter officers to introduce the quality of our product, and begin a dialogue with decision-makers at the chapter level. We have a website at www.designersportsapparel.com and are also able to generate sales through our website.
Mr. Parker presently contracts with outside vendors for purchasing blank T-shirts, for printing of our products and graphic design. Mr. Parker has retained three different graphic artists to work
directly with our customers to generate artwork for t-shirts on a project-by-project basis if our consumers are seeking a graphic design that we currently do not provide. Mr. Parker also contracts with outside vendors for purchasing blank t-shirts, and for printing our products. Printed t-shirts that we maintain in inventory are stored at our corporate office. Our turnaround time from receipt of an order to delivery is generally 2 business days provided that we are able to fill the order from our existing inventory. Turnaround time from receipt of an order to delivery for apparel that we either do not have in inventory or require a custom graphic design varies, but generally these orders can be delivered in 5-10 business days. All product orders are shipped to our corporate office for delivery to our customers.
Our business plan is to increase our product offering and to seek to develop additional licensing agreements to act a supplier to other national fraternities and sororities whose membership base consists of our target market. We decided to target national Fraternities and Sororities because they are large organizations that are comprised of college-aged consumers who frequently purchase t-shirts and not for their affiliation with any specific university.
Licensing Agreement
On April 4, 2006, we entered into a non-exclusive License Agreement with the Sigma Alpha Epsilon Fraternity. This License Agreement grants us the right to utilize the Greek letters of the fraternity, crest, badge, flag, name, and “True Gentlemen” logo of the organization. Through this agreement, we are able to design and produce silk-screened t-shirts and other products which include graphics and logos held by the Sigma Alpha Epsilon Fraternity under trademark laws, and sell those products to local chapters of the Sigma Alpha Epsilon Fraternity for Greek-sponsored events. Given that this License Agreement is non-exclusive, we compete with other licensees that also provide similar merchandise to members of the Sigma Alpha Epsilon Fraternity. We believe that we can compete favorably on the basis of quality, uniqueness and creativity of the designs produced by our artists and our personalized and direct marketing efforts.
Under the terms of the License agreement, we are required to provide a quarterly sales report to the Sigma Alpha Epsilon Fraternity within thirty (30) days of the end of each calendar quarter detailing product sales and royalties due to the Sigma Alpha Epsilon Fraternity. We are also required to submit to the Sigma Alpha Epsilon Fraternity within thirty (30) days of the end of each quarter, a License royalty payment equal to eight (8%) percent of the gross product sales during the quarter. Any royalty which is not paid within seven (7) days of the due date shall accrue interest at the rate of ten (10%) per annum.
The License Agreement remains in effect through the 30th day of June each year, and is renewable on an annual basis. In order to renew the License Agreement to be effective July 1 of each year, we must submit a written request for renewal to the Sigma Alpha Epsilon Fraternity, along with a forty ($40.00) dollar annual advance. This advance will be deducted from the quarterly royalty payments due to the Sigma Alpha Epsilon Fraternity in the following year until the entire forty ($40.00) dollar advance has been satisfied. We must also submit to the Sigma Alpha Epsilon Fraternity, along with the written request for renewal, representative samples of any merchandise we wish to market pursuant to the renewal of the License Agreement.
Before any new merchandise can be marketed to local chapters, a representative sample of the new merchandise utilizing the Sigma Alpha Epsilon Fraternity’s trademarked graphics or logos must be submitted to the Sigma Alpha Epsilon Fraternity for quality control approval. This requirement is in addition to the required submission of representative samples of merchandise to accompany the annual request for the renewal of the License Agreement.
We are required to maintain records of sales of merchandise containing the licensed graphics or logos of the Sigma Alpha Epsilon Fraternity for a period of three (3) years following each transaction. Said records shall be made reasonably available for audit or inspection by or on behalf of the Sigma Alpha Epsilon Fraternity.
As part of our License Agreement with the Sigma Alpha Epsilon Fraternity, we maintain a comprehensive general and product liability insurance protecting against claims of any sort for loss or damage arising out of the design, manufacture, or marketing of licensed products. This insurance policy is maintained in the face amount of one million ($1,000,000.00) dollars and names the Sigma Alpha Epsilon Fraternity as co-insured.
By virtue of our License Agreement with the Sigma Alpha Epsilon Fraternity we are named as a Licensed Vendor on the National Sigma Alpha Epsilon Fraternity website. We are allowed to link our website with the National Sigma Alpha Epsilon Fraternity website as well as display the Greek Licensing Logo on our website identifying us as an approved licensed vendor of Sigma Alpha Epsilon Fraternity themed apparel.
Business Strategy
Our initial business plan was to target members of the Sigma Alpha Epsilon Fraternity for sales of originally designed silk-screened t-shirts. The current structure of the Sigma Alpha Epsilon Fraternity includes more than 8,200 undergraduates at more than 200 chapters in 48 states and Canada. In an attempt to undercut the pricing of competition and secure product orders, we sold our products below cost and at a loss. This strategy has enabled us to secure product orders, but would not enable us to achieve profitability. As a result, we are planning to increases our prices at the beginning of the next academic year in August 2007.
Beginning in August 2006, we expanded our product line for by adding a denim long sleeve shirt with the Sigma Alpha Epsilon Fraternity flag embroidered above the pocket to our list of available products. In an attempt to increase our sales, we are planning within the next twelve months to further expand our product line to provide a broader range of merchandise to our customers including baseball caps and other items of apparel. In furtherance of this plan, we intend to seek vendors that supply these items of apparel and negotiate agreements for the purchase of these products. At the present time, we have not negotiated any agreements with outside vendors or taken any steps to implement our plan to further expand our product line.
While Sigma Alpha Epsilon was our initial target, there several other national fraternities and sororities that are similar in size which presents the same business opportunities for growth. During the next twelve months, we are planning to enter into licensing agreements with additional
National fraternities and sororities so that we could design and produce apparel for the organization’s members that included its graphics and logos held under trademark laws.
As sales increase, we are planning to add a full-time graphic artist to our staff to design artwork for our products. Currently, we contract with three separate freelance graphic artists on a project-by-project basis. We intend to add additional employees to reduce our dependence upon outside businesses and contractors, and allowing us greater flexibility in meeting the needs of our customers and achieve higher profit margins.
We are planning to purchase a screen printing machine to silk-screen our products in-house. This purchase will eliminate our reliability on outside vendors for printing quality t-shirts and allow us greater flexibility in pricing and turnaround time. The anticipated cost of this equipment is approximately $50,000. Our management has evaluated different screen printing machines, but taken no other step toward acquiring this equipment at this time. We will need to seek additional financing prior to being able to purchase this equipment. This purchase may necessitate the addition of a full-time screen press operator. A screen press operator could be retained for an annual salary of approximately $30,000. A warehouse location will be necessary for the housing the equipment and for storage of our bulk t-shirt purchases. Management believes suitable warehouse space will be available when it is needed.
Marketing Strategy
Our focus is a very specific niche market. We provide silk-screened t-shirts and apparel to fraternity or sorority chapters for their events. Beginning with the start of the school year, Greek fraternities or sororities sponsor events and parties throughout the entire school year. Most fraternities and sororities commemorate each event by printing t-shirts for the attendees. In order to provide t-shirts for a local fraternity or sorority chapter, we seek to enter into a License Agreement with that chapter’s national office. Such an agreement allows us to use symbols, graphics and logos trademarked by the fraternity or sorority in exchange for a nominal percentage of our gross sales to local chapters. The national fraternity or sorority benefits financially from the license royalties, thus positioning us in a favorable position versus non-licensed competitors. We currently have such a License Agreement in place with the Sigma Alpha Epsilon Fraternity.
Once License Agreements are secured with other national fraternities, our plan is to make direct contact with their chapters an individual basis via email, HTML product-specific email, telephone marketing, special promotion post cards and standard letter mail. Chapter presidents are sent sample t-shirts to demonstrate the high quality of our products, and chairpersons are sent promotional ink pens, customized with their Greek letters, in order to establish meaningful contact. Our management believes that these promotional products increase response rates to email and telephone contacts with chapter presidents, other officers of the fraternity, and chairpersons for their specific events. Over the next twelve months, we intend to employ representatives on major campuses to initiate and maintain relationships with fraternity chapter leaders. Our management believes that this direct, individual attention will enhance our ability to become the supplier of choice for silk-screened t-shirts for our target market. We intend to compensate representatives on each college campus through the payment of a fee based on sales generated.
While we presently have an operational full service e-commerce website, it has been our direct contact with chapter presidents that has resulted in product sales. In our correspondence and contact with customers and prospects, we direct them to our website where they can view our entire graphic image library and product line, place orders, pay for orders, and track shipping of existing orders. Customers and prospects may also find all of the information about us and the ordering process which they may require on our website, including contact information, quote requests, frequently asked questions, testimonials from other fraternity customers, and the history of our company. In an attempt to generate product sales through our e-commerce website, we are planning to make investments in search engine placement fees and positioning fees in order to give our e-Commerce website broader visibility over the next twelve months.
Our full service e-Commerce site is capable of quickly and accurately transacting customer orders, but we have not generated any online orders at the present time. All of our orders to date have been accepted by telephone, fax and email. Our website is capable of accepting all forms of payment including: cash via PayPal; credit card payments, including Visa, MasterCard, and other major cards via our credit card merchant account; and traditional payment forms such as cashiers checks, personal checks, and money orders.
Competition
We compete generally with many other manufacturers and retailers in the retail apparel industry and specifically with those who offer products with similar content. We compete with, among many others, online providers, local university bookstores, and retail t-shirt shops generally located adjacent to the schools’ campus. This competition could result in our being unable to gain any significant market share which could have a material adverse effect on our business. However, we believe that we compete favorably on the basis of quality, uniqueness and creativity of the designs produced by our artists and our personalized and direct marketing efforts. Notwithstanding what we believe are our advantages, we may not be able to compete effectively against our competitors, many of whom have significantly greater financial resources and a stronger market presence.
Employees
We have no employees as of the date of this prospectus other than our sole executive officer, Mr. Parker. We conduct our business largely through agreements with consultants and other independent third party vendors.
Research and Development Expenditures
We have not incurred any research or development expenditures since our incorporation.
Subsidiaries
We have neither formed, nor purchased any subsidiaries since our incorporation.
We do not own, either legally or beneficially, any patent or trademark.
We believe that our success will depend, in part, on our ability to obtain and enforce intellectual property rights over our name and original designs in the United States. To date, we have not sought to protect any of our intellectual property. We plan to seek protections over our name and original designs in the United States over the next twelve months.
Government Regulation
Government regulation and compliance with environmental laws have not had a material effect on our business.
We maintain our corporate office at 207 N. Center Street, Unit A, Arlington, Texas 76011. In July 2006, we began paying rent for this space under a 6 month lease agreement that is renewable on a month-to-month basis. The lease obligates us to pay $150 per month in rent plus our portion of utilities. The amount of space used is nominal and is an office-sharing arrangement. While limited in size, our present corporate office provides facilities suited to our current operations. As our business operations grow, it will be necessary for us to seek appropriate individual office space. Management believes suitable office space will be available when it is needed.
For the next twelve months, we will require significant addition capital to implement our business plan. The completion of our business plan for the next twelve months is contingent upon us obtaining additional financing. If we are unable to obtain additional financing, the implementation of our business plan will be significantly delayed or fail.
We are primarily in the business of providing custom, silk-screened T-shirts to collegiate consumers. The demand for our products is generally seasonal during the academic school year. To date, all of our sales have been generated during the academic school year. Due to the seasonal aspect of our business, our plan of operations for the next twelve months is designed to focus our development activities during the summer months and reserve the focus of our marketing activities for the academic school year.
Plan of Operation for Product Line
At the present time, we provide custom, silk-screened t-shirts and denim long sleeve shirts to members of the Sigma Alpha Epsilon fraternity for Greek-sponsored events. Prior to August 2007, we are planning to further expand our product line to provide a broader range of merchandise to our customers including baseball caps and other items of apparel. In furtherance of this plan, our management intends to seek vendors that supply these items of apparel and negotiate agreements for the purchase of these products over the next 4 to 16 weeks. At the present time, we have not
negotiated any agreements with outside vendors or taken any steps to implement our plan to further expand our product line.
To date, we have devoted our business operations to providing products specifically for members of the Sigma Alpha Epsilon fraternity for Greek-sponsored events. There several other national fraternities and sororities that are similar in size which presents the same business opportunities for growth. During the next 4 to 20 weeks, we are planning to enter into licensing agreements with additional National fraternities and sororities so that we could design and produce apparel for their organization’s members that included its graphics and logos held under trademark laws.
At the present time, we have not entered into any other licensing agreement or taken any steps toward entering into any additional licensing agreements. There are no associated costs with entering into licensing agreements with additional National fraternities and sororities because the licensing fees are generally paid as a royalty equally to a percentage of gross product sales.
Prior to August 2007, we are planning to purchase a screen printing machine to silk-screen our products in-house. The anticipated cost of this equipment is approximately $50,000. Our management has evaluated different screen printing machines, but taken no other step toward acquiring this equipment at this time because we need additional financing prior to being able to purchase this equipment. We are planning to finance the purchase of this equipment through a private equity offering following the effectiveness of this registration statement and our becoming a reporting company. If we are successful in securing additional financing, we also plan to relocate our operations to a warehouse location to house the equipment and for storage of our inventory. The cost of a warehouse location suitable for our intended use is anticipated to be approximately $1,200 per month.
If we are successful in acquiring a screen printing machine, we may consider hiring a full-time screen press operator. A screen press operator could be retained for an annual salary of approximately $30,000. As sales increase, we may also add a full-time graphic artist to our staff to design artwork for our products. A screen press operator and graphic artist could each be retained for an annual salary of approximately $30,000. The decision to hire employees is directly related to growth of our business. The timing of an increase in our business is unknown at the present time. As a result, our management is unable to provide a timeline for hiring employees.
Plan of Operation for Marketing
To date, our sales have been generated through direct contact by our executive officer, Mr. Parker, with fraternity chapter presidents and other officers at campuses across the country. Contact information is obtained through Sigma Alpha Epsilon’s national office. Following our incorporation, we sent product samples to Sigma Alpha Epsilon fraternity chapter officers to introduce the quality of our product, and begin a dialogue with decision-makers at the chapter level.
While we presently have an operational full service e-commerce website, it has been our direct contact with chapter presidents that has resulted in product sales. In an attempt to generate product sales through our e-commerce website, we are planning to make investments in search engine placement fees and positioning fees in order to give our e-Commerce website broader visibility
over the next twelve months. We anticipate that these search engine placement fees and positioning fees to be approximately $10,000. We are planning to secure these fees through a private equity offering following the effectiveness of this registration statement and our becoming a reporting company.
Beginning in August 2007, we intend to seek and retain representatives on major campuses to initiate and maintain relationships with fraternity chapter leaders. Our management believes that this direct, individual attention will enhance our ability to become the supplier of choice for silk-screened t-shirts for our target market. We intend to compensate representatives on each college campus through the payment of a fee based on sales generated.
If we are not successful in securing additional financing, we will limit our marketing activities to email and telephone contact with minimal associated costs.
The completion of our business plan for the next twelve months is contingent upon us obtaining additional financing. As of November 30, 2006, we had cash in the amount of $1,497. We have forecasted expenditures of $150,000 for the next twelve months as set forth above. Therefore, we will require financing in the approximate amount of $150,000 to pursue our business plan for the next twelve months. Following the effectiveness of this registration statement, we plan to offer equity securities in an exempt offering as a means of raising to meet our financial requirements over the next twelve months. In January 2007, our sole executive officer advanced a loan to us in the amount of $25,000 so that we could satisfy our short-term capital needs. Although our principal has no legal obligation to infuse additional capital, it is anticipated that our principal will continue to do so as reasonably necessary by providing short-term demand loans carrying a market interest rate. If we are unable to obtain additional financing, our business plan will be significantly delayed or fail.
Results of Operations for Period Ending August 31, 2006
We generated $1,935 in revenue for the year ended August 31, 2006. Our revenue was generated by sales of custom, silk-screened T-shirts. Our cost of goods sold for the year ended August 31, 2006 was $7,037. We recorded a gross loss from sales for the year ended August 31, 2006 of $5,102. During the year ended August 31, 2006, we sold our products below cost and at a loss in order to undercut the pricing of competition and secure product orders.
We incurred operating expenses in the amount of $56,373 for the year ended August 31, 2006. These operating expenses are primarily attributable to general and administrative expenses associated with the initial development of our business, legal expenses, and consulting fees. During
the year ended August 31, 2006, we incurred $23,337 in consulting fees, professional fees in the amount of $20,249, and office expenses of $8,390.
We anticipate our operating expenses will increase as we implement our business plan. The increase will be attributable to our sales and marketing plan, and the professional fees to be incurred in connection with the filing of a registration statement with the Securities Exchange Commission under the Securities Act of 1933. We anticipate our ongoing operating expenses will also increase once we become a reporting company under the Securities Exchange Act of 1934.
We incurred a loss in the amount of $61,475 for the year ended August 31, 2006.
Results of Operations for the Three Months Ended November 30, 2006 and 2005
We generated $2,339 in revenue for the three months ended November 30, 2006, compared to revenue of $0 for the three months ended November 30, 2005. Our revenue for the three months ended November 30, 2006 was generated by sales of custom, silk-screened T-shirts. Our cost of goods sold for the three months ended November 30, 2006 was $3,036, compared to costs of goods sold of $0 for the three months ended November 30, 2005. We recorded a gross loss from sales for the three months ended November 30, 2006 of $697 and $0 for the three months ended November 30, 2005. During the three months ended November 30, 2006, we sold our products below cost and at a loss in order to undercut the pricing of competition and secure product orders.
We incurred operating expenses in the amount of $7,643 for the three months ended November 30, 2006, compared to operating expenses of $9,100 for the three months ended November 30, 2005. Our operating expenses for the three months ended November 30, 2006 and 2005 were primarily attributable to general and administrative expenses associated with the initial development of our business, legal expenses, and consulting fees.
We anticipate our operating expenses will increase as we implement our business plan. The increase will be attributable to our sales and marketing plan, and the professional fees to be incurred in connection with the filing of a registration statement with the Securities Exchange Commission under the Securities Act of 1933. We anticipate our ongoing operating expenses will also increase once we become a reporting company under the Securities Exchange Act of 1934.
We incurred a loss in the amount of $8,340 for the three months ended November 30, 2006 and a loss of $9,100 for the three months ended November 30, 2005.
Liquidity and Capital Resources
As of November 30, 2006, we had total current assets of $10,396 and total assets in the amount of $13,281. Our total current liabilities as of November 30, 2006 were $27,071. We had a working capital deficit of $16,675 as of November 30, 2006.
Operating activities used $3,282 in cash for the three months ended November 30, 2006. Our net loss of $8,340 was the primary component of our negative operating cash flow. Cash flows provided by financing activities during the three months ended November 30, 2006 consisted primarily of $2,500 as loans from shareholders and officers.
As of November 30, 2006, we have insufficient cash to operate our business at the current level for the next twelve months. We must raise additional capital to achieve our business goals and to continue operations. In January 2007, our sole executive officer advanced a loan to us in the amount of $25,000 so that we could satisfy our short-term capital needs. Although our principal has no legal obligation to infuse additional capital, it is anticipated that our principal will continue to do so as reasonably necessary by providing short-term demand loans carrying a market interest rate. Management currently plans to raise additional capital following the completion of
this registration statement. We plan to offer equity securities to meet our financial requirements over the next twelve months. We believe that it will be easier to raise the requisite financing once we become a reporting company and our stock is traded on a readily accessible exchange or national quotation system. We believe this because investors generally feel more comfortable with investments in which there are periodic and complete reports filed with the SEC. In addition, investors put more value on investments in securities of a company for which they have a readily accessible market to sell their securities. We plan to be quoted on the over-the-counter bulletin board upon effectiveness of this registration statement in order to provide this benefit to investors, but we can provide no assurance that our stock will be quoted on the over-the-counter bulletin. In addition, a market for our common stock may never develop. In the event we are not able to obtain financing within the next 12 months, our operations will be limited.
Going Concern
We have limited working capital and received limited revenue from sales of products. We incurred significant initial product costs, including promotions and custom computer designs associated with our products. We also incurred costs associated with its entry into new college markets. These factors create substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if we are unable to continue as a going concern.
Our ability to continue as a going concern is dependent on us generating cash from the sale of our common stock or obtaining debt financing and attaining future profitable operations. Management’s plans include selling our equity securities and/or obtaining debt financing to fund our capital requirement and ongoing operations; however, there can be no assurance that we will be successful in these efforts.
Off Balance Sheet Arrangements
As of November 30, 2006, there were no off balance sheet arrangements.
None of the following parties has, since our date of incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
| · | Any of our directors or officers; |
| · | Any person proposed as a nominee for election as a director; |
| · | Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding shares of common stock; |
| · | Any of our promoters; |
| · | Any relative or spouse of any of the foregoing persons who has the same house address as such person. |
No Public Market for Common Stock. There is presently no public market for our common stock. We anticipate making an application for trading of our common stock on the NASD over the counter bulletin board upon the effectiveness of the registration statement of which this prospectus forms a part. We can provide no assurance that our shares will be traded on the bulletin board, or if traded, that a public market will materialize.
The Securities Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the Commission, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;(b) contains a description of the broker's or dealer's duties to the customer and of he rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities' laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;(d) contains a toll-free telephone number for inquiries on disciplinary actions;(e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and;(f) contains such other information and is in such form, including language, type, size and format, as the Commission shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with; (a) bid and offer quotations for the penny stock;(b) the compensation of the broker-dealer and its salesperson in the transaction;(c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock if it becomes subject to these penny stock rules. Therefore, because our common stock is subject to the penny stock rules, stockholders may have difficulty selling those securities.
Holders of Our Common Stock
Currently, we have thirty-seven (37) holders of record of our common stock.
Rule 144 Shares
A total of 2,500,000 shares of our common stock are currently available for resale to the public under Rule 144. As of the date of this prospectus, persons who are our affiliates hold 100% of the total shares that may be sold, at least partially, pursuant to Rule 144.
Of the shares being registered, 3,105,000 shares held by fifteen shareholders will be available for resale after December 16, 2006 and the remaining 132,000 shares held by twenty-one shareholders will be available after July 31, 2007, all in accordance with the volume and trading limitations of Rule 144 of the Securities Act of 1933.
In general, under Rule 144 as currently in effect, a person who has beneficially owned shares of a company's common stock for at least one year is entitled to sell within any three month period a number of shares that does not exceed the greater of:
| 1. | one percent of the number of shares of the company's common stock then outstanding, which, in our case, will equal approximately 57,570 shares as of the date of this prospectus, or; |
| 2. | the average weekly trading volume of the company's common stock during the four calendar weeks preceding the filing of a notice on form 144 with respect to the sale. |
Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about the company.
Under Rule 144(k), a person who is not one of the company's affiliates at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, is entitled to sell shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.
Stock Option Grants
To date, we have not granted any stock options.
Registration Rights
We have not granted registration rights to the selling shareholders or to any other persons.
We are paying the expenses of the offering because we seek to: (i) become a reporting company with the Commission under the Securities Exchange Act of 1934; and (ii) enable our common stock to be traded on the NASD over-the-counter bulletin board. We plan to file a Form 8-A registration statement with the Commission prior to the effectiveness of the Form SB-2 registration statement. The filing of the Form 8-A registration statement will cause us to become a reporting company with the Commission under the 1934 Act concurrently with the effectiveness of the Form SB-2 registration statement. We must be a reporting company under the 1934 Act in order that our common stock is eligible for trading on the NASD over-the-counter bulletin board. We believe that the registration of the resale of shares on behalf of existing shareholders may facilitate the
development of a public market in our common stock if our common stock is approved for trading on a recognized market for the trading of securities in the United States.
We consider that the development of a public market for our common stock will make an investment in our common stock more attractive to future investors. In the near future, in order for us to continue with our operations, we will need to raise additional capital. We believe that obtaining reporting company status under the 1934 Act and trading on the OTCBB should increase our ability to raise these additional funds from investors.
Dividends
There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend:
1. we would not be able to pay our debts as they become due in the usual course of business, or;
2. our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.
We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.
The table below summarizes all compensation awarded to, earned by, or paid to our executive officer for the fiscal year ended August 31, 2006.
| SUMMARY COMPENSATION TABLE | ||||||||||
Name and principal position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |
David Parker CEO & CFO | 2006 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Narrative Disclosure to Summary Compensation Table
We have not compensated our executive officer since our inception. We have no plans to compensate our executive officer until such time that we are able to generate net income from our operations.
Outstanding Equity Awards at Fiscal Year-End
The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer as of August 31, 2006.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | |||||||||
| OPTION AWARDS | STOCK AWARDS | ||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
| David Parker | - | - | - | - | - | - | - | - | - |
There were no grants of stock options since inception to date of this Prospectus.
Compensation of Directors
The table below summarizes all compensation of our directors as of August 31, 2006.
DIRECTOR COMPENSATION | |||||||
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) |
| David Parker | - | - | - | - | - | - | - |
Narrative Disclosure to Director Compensation Table
We have not compensated members of our board of directors since our inception.
Index to Financial Statements:
| Audited financial statements for the period ended August 31, 2006 including: | |
| F-2 | Balance Sheet as of August 31, 2006 |
| F-3 | Statement of Operations for the year ended August 31, 2006 |
| F-4 | Statement of Stockholders’ Deficit for the year ended August 31, 2006 |
| F-5 | Statement of Cash Flows for the year ended August 31, 2006 |
| F-6 | Notes to Financial Statements |
| Unaudited financial statements for the period ended November 30, 2006 including: | |
| F-10 | Balance Sheet as of November 30, 2006 |
| F-11 | Statement of Operations for the three months ended November 30, 2006 and 2005 |
| F-12 | Statement of Shareholders’ Deficit as of November 30, 2006 |
| F-13 | Statement of Cash Flows for the three months ended November 30, 2006 and 2005 |
| F-14 | Notes to Financial Statements |
RONALD N. SILBERSTEIN, C.P.A., P.L.L.C.
30201 ORCHARD LAKE ROAD, SUITE 150
FARMINGTON HILLS, MICHIGAN 48334
TEL: (248) 330-6226 ● FAX: (248) 479-0578
www.ronscpa.com
___________________________________________
To the Board of Directors of
DesignerSportsApparel, Inc.
Las Vegas, Nevada
We have audited the accompanying consolidated balance sheet of DesignerSportsApparel, Inc. as of August 31, 2006, and the related statements of operations, stockholders’ deficit, and cash flows for the year then ended. 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. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of DesignerSportsApparel, Inc. as of August 31, 2006, and the results of its operations and cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note H to the financial statements, the Company has limited working capital, has received limited revenue from sales of its products, and has incurred losses from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regard to these matters are described in Note H. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Ronald N. Silberstein, CPA, PLLC
Farmington Hills, Michigan
November 27, 2006
DESIGNERSPORTSAPPAREL, INC.
AS OF AUGUST 31, 2006
ASSETS | |||||
Current Assets | |||||
| Cash | $ | 1,854 | |||
| Due from Related Party | 2,285 | ||||
| Inventory | 5,952 | ||||
| Security Deposit | 1,000 | ||||
| Total Current Assets | 11,091 | ||||
Other Assets | |||||
| Web Site Development Costs | $ | 4,945 | |||
| Less: Accumulated Amortization of Web Site Costs | (1,648) | 3,297 | |||
TOTAL ASSETS | $ | 14,388 | |||
LIABILITIES | |||||
Current Liabilities | |||||
| Due to Officers and Shareholders | $ | 4,652 | |||
| Due to Consultant | 5,000 | ||||
| Accounts Payable | 10,186 | ||||
Total Liabilities | 19,838 | ||||
STOCKHOLDERS’ DEFICIT | |||||
Share Capital | |||||
| Authorized: | |||||
| 25,000,000 Common Shares, Par Value $0.001 per Share | |||||
| 10,000,000 Preferred Shares, Par Value $0.001 per Share | |||||
| Issued and Outstanding: | |||||
| 5,757,000 Common Shares | 5,757 | ||||
| Additional Paid-in Capital | 50,268 | ||||
| Share Capital | 56,025 | ||||
| Accumulated Deficit | (61,475) | ||||
Total Stockholders’ Deficit | (5,450) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 14,388 | |||
The accompanying notes are an integral part of the financial statements.
DESIGNERSPORTSAPPAREL, INC.
DESIGNERSPORTSAPPAREL, INC.
FOR THE YEAR ENDED AUGUST 31, 2006
Gross Sales | $ | 1,935 |
Cost of Goods Sold | (7,037) | |
Gross (Loss) from Sales | (5,102) | |
General and Administrative Expenses | ||
| Consulting Fees | 23,337 | |
| Professional Fees | 20,249 | |
| Office Expenses | 8,390 | |
| Transfer Agent Fees | 1,730 | |
| Amortization of Web Site Costs | 1,648 | |
| Business Travel Expenses | 1,526 | |
| Product Liability Insurance | 627 | |
| Bank Service Charges | 587 | |
| State Filing Fees | 200 | |
| Royalties | 151 | |
| Reimbursed Expenses | (2,072) | |
Total General and Administrative Expenses | 56,373 | |
Net Loss | $ | (61,475) |
Weighted Average Number Of Shares Outstanding | 4,624,500 | |
Net Loss Per Share | $ | (.01) |
The accompanying notes are an integral part of the financial statements.
DESIGNERSPORTSAPPAREL, INC.
FOR THE YEAR ENDED AUGUST 31, 2006
| Common Stock | Additional Paid-in | Accumulated | ||||||||||||
Shares | Amount | Capital | Deficit | Total | ||||||||||
| Issuance of common stock for cash @$.001, September 16, 2005 | 2,500,000 | $ | 2,500 | $ | 0 | $ | - | $ | 2,500 | |||||
| Issuance of common stock for cash @$.005, December 16, 2005 | 3,105,000 | 3,105 | 12,420 | - | 15,525 | |||||||||
| Issuance of common stock for cash @$.25, July 31, 2006 | 152,000 | 152 | 37,848 | - | 38,000 | |||||||||
| Net loss for the period | (61,475) | (61,475) | ||||||||||||
| Balance, August 31, 2006 | 5,757,000 | $ | 5,757 | $ | 50,268 | $ | (61,475) | $ | (5,450) | |||||
The accompanying notes are an integral part of the financial statements.
DESIGNERSPORTSAPPAREL, INC.
DESIGNERSPORTSAPPAREL, INC.
FOR THE YEAR ENDED AUGUST 31, 2006
Cash Flows From Operating Activities | ||
| Net Loss for the Year | $ | (61,475) |
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities | ||
| Amortization | 1,648 | |
Changes in Assets and Liabilities | ||
| Inventory | (5,952) | |
| Security Deposit | (1,000) | |
| Accounts Payable | 10,186 | |
| Due to Consultant | 5,000 | |
Net Cash Used in Operating Activities | (51,593) | |
Cash Flows from Financing Activities | ||
| Due from Related Party | (2,285) | |
| Loans from Shareholders and Officers | 4,652 | |
| Proceeds from Issuance of Common Shares | 56,025 | |
Net Cash Provided by Financing Activities | 58,892 | |
Cash Flows from Investing Activities | ||
| Web Site Development Costs | (4,945) | |
Net Increase in Cash and Cash Equivalents | 1,854 | |
Cash and Cash Equivalents - September 1, 2005 | -0- | |
Cash and Cash Equivalents - August 31, 2006 | $ | 1,854 |
The accompanying notes are an integral part of the financial statements.
DesignerSportsApparel, Inc.
DesignerSportsApparel, Inc.
AUGUST 31, 2006
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of DesignerSportsApparel, Inc. (the “Company”) is presented to assist in understanding the company’s financial statements. The financial statements and notes are representations of the company’s management, who is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied to the preparation of the financial statements. The Company will adopt accounting policies and procedures based upon the nature of future transactions.
Description of Operational Activities
The Company was incorporated on August 29, 2005 under the laws of the State of Nevada. The Company has elected a fiscal year-end of August 31. No activity took place between August 29, 2005 and August 31, 2005.
The Company is primarily in the business of providing custom, silk-screened T-shirts. The initial focus of the Company’s business plan is to target college-aged consumers who frequently purchase T-shirts. In furtherance of the Company’s business plan, the Company entered into a licensing agreement with the Sigma Alpha Epsilon Fraternity, allowing it to provide silk-screened T-shirts to every chapter of the fraternity on college campuses nation-wide for events. Company sales are generated through direct contact with fraternity chapter presidents and other officers at campuses across the country. The Company’s business plan is to increase its product offering and to seek to develop additional licensing agreements to act a supplier to other national organizations whose membership base consists of the Company’s target market. The Company presently contracts with outside vendors for purchasing blank T-shirts, for printing of its products and graphic design.
Cash and Cash Equivalents
The Company considers cash on hand, cash in banks, certificates of deposit, time deposits, and U.S. government and other short-term securities with maturities of three months or less when purchased as cash and cash equivalents.
Management Estimates
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 at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
NOTE B: ORGANIZATION AND WEB SITE DEVELOPMENT COSTS
Web Site Development costs of $4,945 are amortized over the expected life of 36 months. Regular web site maintenance costs are expensed in the current reporting period as operating expenses. Organization costs are expensed in the current reporting period.
DesignerSportsApparel, Inc.
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2006
NOTE C: OFFERING COSTS
Professional fees associated with capital raising activities which were incurred by the Company in connection with a Regulation D private stock offering, and were recorded as operating expenses. The amount of fees incurred in the year ended August 31, 2006 totaled $1,600. .
NOTE D: INCOME TAXES
No provision for income taxes has been recorded in the financial statements as the Company has incurred net operating losses from the date of inception through August 31, 2006.
For the period ended August 31, 2006, the Company has incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $61,475 at August 31, 2006, and will expire in the year 2026.
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:
| 2006 | ||
| Deferred tax asset attributable to: | ||
| Net operating loss | $ | 20,900 |
| Valuation allowance | (20,900) | |
| Net deferred tax asset | $ | -0- |
NOTE E: PROPERTY AND EQUIPMENT
The Company has a nominal amount of computer equipment and office furniture at August 31, 2006. Prior to August, 2006, the Company borrowed the use of office equipment from a related party and was not charged any fees for the use of the equipment. The Company accounts for property and equipment at cost. Expenditures for the maintenance and repair are charged against operations. Renewals and improvements that materially extend the life of the asset are capitalized.
The Company will account for depreciation of the equipment based on the straight-line method over the estimated useful lives for financial reporting and uses accelerated depreciation methods for income tax reporting.
DesignerSportsApparel, Inc.
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2006
NOTE F: RELATED PARTY TRANSACTIONS
The Company has maintained an office at the office of a shareholder. The amount of space used is nominal. During the period from inception through June 30, 2006, the company paid no rent. The fair market value of this office rent is not reflected in the statement of operations as it is valued at no more than $150 per month. In July 2006, the Company began paying rent for this space under a 6 month lease agreement that is renewable on a month-to-month basis. The lease obligates the Company to pay $150 per month in rent plus its portion of utilities. The Company paid its shareholder $300 in rent for the period ended August 31, 2006. In addition, the Company is owed money from a Company related to an officer of the Company. The Company received benefits in-kind at a cost of $2,285 in the form of capital improvements to shared office space. The amount owed from such Company relates to costs of contractors and materials used to provide capital improvements for such office space.
An officer of the Company loaned funds to the Company for operating expenses in order to assist the Company with working capital requirements. Loans outstanding at August 31, 2006 were as follows:
DATE | AMOUNT | INTEREST RATE & MATURITY DATE |
| September 2005 | $ 2,500 | 5%; 12/31/06 |
| April 2006 | 2,152 | 0%; Demand Note |
| TOTAL | $ 4,652 |
NOTE G: COMMON STOCK
On June 19, 2006 the Company amended its Articles of Incorporation to increase the authorized common shares from 25,000,000 to 90,000,000. In addition the Company amended its Articles of Incorporation to authorize 10,000,000 of Preferred Shares. As of August 31, 2006 the Company had 5,757,000 common shares outstanding.
NOTE H: LIQUIDITY AND CAPITAL RESERVES
The Company has limited working capital and received limited revenue from sales of products or services. The Company incurred significant initial product costs, including promotions and custom computer designs associated with its licensed products. The Company also incurred costs associated with its entry into new college markets. These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.
DesignerSportsApparel, Inc.
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2006
The ability of the Company to continue as a going concern is dependent on the Company generating cash from the sale of its common stock or obtaining debt financing and attaining future profitable operations. Management’s plans include selling its equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be successful in these efforts.
Management believes that the Company has insufficient capital reserves to operate through August 31, 2007 without the need for infusion of additional capital. The Company continues to sell its products which are in inventory. Although the principals of the Company have no legal obligation to infuse additional capital, it is expected that the principals shall do so as reasonably necessary by providing short-term demand loans carrying a market interest rate.
NOTE I: MATERIAL CONTRACTS
On April 4, 2006 the Company entered into a License Agreement with Sigma Alpha Epsilon Fraternity (“SAE”). The agreement provides the Company with the right to use the insignia of SAE including the Greek letters, crest, badge, flags, the True Gentleman logo, and the name of the organization. The Company shall pay a $40 annual advance and 8.5% of gross sales. The term is until June 30, 2007 and is renewable. The Company has paid royalties on its sales.
On September 28, 2005 the Company entered into a business consulting agreement with Don India, Sr. of Design U Factory, Inc. The Agreement provides compensation to the Consultant at a rate of $50 per hour. As of August 31, 2006 the Company owed $5,000 in consulting fees to Mr. India. In addition, the Company owed an additional $1,613 to other consultants. Such obligations were paid in September, 2006.
NOTE J: RECENT ACCOUNTING PRONOUNCEMENTS
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
NOTE K: SUBSEQUENT EVENTS
Management of the Company intends to file a public registration statement.
On November 27, 2006, the Company acquired the domain name www.designersportsapparel.com from an officer of the Company for $1.
An officer of the Company made two loans of $2,500 each to the Company for working capital in September 2006 and November 2006. The loans bear interest at a rate of 5% and are due one year from the date of the loan.
DESIGNERSPORTSAPPAREL, INC.
AS OF NOVEMBER 30, 2006
(UNAUDITED)
ASSETS | |||||
Current Assets | |||||
| Cash | $ | 1,497 | |||
| Due from Related Party | 1,860 | ||||
| Inventory | 6,039 | ||||
| Security Deposit | 1,000 | ||||
| Total Current Assets | 10,396 | ||||
Other Assets | |||||
| Web Site Development Costs | $ | 4,945 | |||
| Less: Accumulated Amortization of Web Site Costs | (2,060) | 2,885 | |||
TOTAL ASSETS | $ | 13,281 | |||
LIABILITIES | |||||
Current Liabilities | |||||
| Due to Officers and Shareholders | $ | 7,152 | |||
| Due to Consultant | 5,000 | ||||
| Accounts Payable | 14,919 | ||||
Total Liabilities | 27,071 | ||||
STOCKHOLDERS’ DEFICIT | |||||
Share Capital | |||||
| Authorized: | |||||
| 25,000,000 Common Shares, Par Value $0.001 per Share | |||||
| 10,000,000 Preferred Shares, Par Value $0.001 per Share | |||||
| Issued and Outstanding: | |||||
| 5,757,000 Common Shares | 5,757 | ||||
| Additional Paid-in Capital | 50,268 | ||||
| Share Capital | 56,025 | ||||
| Accumulated Deficit | (69,815) | ||||
Total Stockholders’ Deficit | (13,790) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 13,281 | |||
The accompanying notes are an integral part of the financial statements.
DESIGNERSPORTSAPPAREL, INC.
DESIGNERSPORTSAPPAREL, INC.
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2006 and 2005
(UNAUDITED)
For the Three Months Ended November 30, 2006 | For the Three Months Ended November 30, 2005 | |||||
Gross Sales | $ | 2,339 | $ | 0 | ||
Cost of Goods Sold | (3,036) | (0) | ||||
Gross (Loss) from Sales | (697) | (0) | ||||
General and Administrative Expenses | 7,643 | 9,100 | ||||
Net Loss | $ | (8,340) | $ | (9,100) | ||
Weighted Average Number Of Shares Outstanding | 5,757,000 | 2,500,000 | ||||
Net Loss Per Share | (.01) | $ | (.01) | |||
The accompanying notes are an integral part of the financial statements.
DESIGNERSPORTSAPPAREL, INC.
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2006
(UNAUDITED)
| Common Stock | Additional Paid-in | Accumulated | ||||||||||||
Shares | Amount | Capital | Deficit | Total | ||||||||||
| Beginning Balance, September 1, 2006 | 5,575,000 | $ | 5,757 | $ | 50,268 | $ | (61,475) | $ | (5,450) | |||||
Net Loss for the three Months ended November, 30, 2006 | (8,340) | (8,340) | ||||||||||||
| Ending Balance, November 30, 2006 | 5,757,000 | $ | 5,757 | $ | 50,268 | $ | (69,815) | $ | (13,790) | |||||
The accompanying notes are an integral part of the financial statements.
DESIGNERSPORTSAPPAREL, INC.
DESIGNERSPORTSAPPAREL, INC.
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2006 and 2005
(UNAUDITED)
For the Three Months Ended November 30, 2006 | For the Three Months Ended November 30, 2005 | ||||
Cash Flows From Operating Activities | |||||
| Net Loss for the Three Month Period | $ | (8,340) | $ | (9,100) | |
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities | |||||
| Amortization | 412 | 174 | |||
Changes in Assets and Liabilities | |||||
| Inventory | (87) | (1,000) | |||
| Accounts Payable | 4,733 | 5,000 | |||
Net Cash Used in Operating Activities | (3,282) | (4,926) | |||
Cash Flows from Financing Activities | |||||
| Due from Related Party | 425 | 0 | |||
| Loans from Shareholders and Officers | 2,500 | 4,591 | |||
Net Cash Provided by Financing Activities | 2,925 | 4,591 | |||
Net Decrease in Cash and Cash Equivalents | (357) | (2,426) | |||
Cash and Cash Equivalents-September 1, 2006 and 2005, respectively | 1,854 | 4,920 | |||
Cash and Cash Equivalents-November 30, 2006 and 2005, respectively | $ | 1,497 | $ | 2,494 | |
Supplemental Cash Flow Information: | |||||
Cash Paid for Interest | $ | 0 | $ | 0 | |
Cash Paid for Income Taxes | $ | 0 | $ | 0 | |
The accompanying notes are an integral part of the financial statements.
DesignerSportsApparel, Inc.
NOVEMBER 30, 2006
(UNAUDITED)
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of DesignerSportsApparel, Inc. (the “Company”) is presented to assist in understanding the company’s financial statements. The financial statements and notes are representations of the company’s management, who is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied to the preparation of the financial statements. The Company will adopt accounting policies and procedures based upon the nature of future transactions.
Description of Operational Activities
The Company was incorporated on August 29, 2005 under the laws of the State of Nevada. The Company has elected a fiscal year-end of August 31. No activity took place between August 29, 2005 and August 31, 2005.
The Company is primarily in the business of providing custom, silk-screened T-shirts. The initial focus of the Company’s business plan is to target college-aged consumers who frequently purchase T-shirts. In furtherance of the Company’s business plan, the Company entered into a licensing agreement with the Sigma Alpha Epsilon Fraternity, allowing it to provide silk-screened T-shirts to every chapter of the fraternity on college campuses nation-wide for events. Company sales are generated through direct contact with fraternity chapter presidents and other officers at campuses across the country. The Company’s business plan is to increase its product offering and to seek to develop additional licensing agreements to act a supplier to other national organizations whose membership base consists of the Company’s target market. The Company presently contracts with outside vendors for purchasing blank T-shirts, for printing of its products and graphic design.
Cash and Cash Equivalents
The Company considers cash on hand, cash in banks, certificates of deposit, time deposits, and U.S. government and other short-term securities with maturities of three months or less when purchased as cash and cash equivalents.
Management Estimates
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 at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
NOTE B: ORGANIZATION AND WEB SITE DEVELOPMENT COSTS
Web Site Development costs of $4,945 are amortized over the expected life of 36 months. Regular web site maintenance costs are expensed in the current reporting period as operating expenses. Organization costs are expensed in the current reporting period.
DesignerSportsApparel, Inc.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 2006
(UNAUDITED)
NOTE C: OFFERING COSTS
Professional fees associated with capital raising activities which were incurred by the Company in connection with a Regulation D private stock offering, and were recorded as operating expenses..
NOTE D: INCOME TAXES
No provision for income taxes has been recorded in the financial statements as the Company has incurred net operating losses from the date of inception through November 30, 2006.
For the period ended from inception (August 29, 2005) through November 30, 2006, the Company has incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $69,815 at November 30, 2006, and will expire in the year 2026.
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:
| As of November 30, 2006 | ||
| Deferred tax asset attributable to: | ||
| Net operating loss | $ | 23,737 |
| Valuation allowance | (23,737) | |
| Net deferred tax asset | $ | -0- |
NOTE E: PROPERTY AND EQUIPMENT
At November 30, 2005, the Company had no property and equipment. As of November 30, 2006, the Company has a nominal amount of computer equipment and office furniture at November 30, 2006. Prior to November 30, 2006, the Company borrowed the use of office equipment from a related party and was not charged any fees for the use of the equipment. The Company accounts for property and equipment at cost. Expenditures for the maintenance and repair are charged against operations. Renewals and improvements that materially extend the life of the asset are capitalized.
The Company will account for depreciation of the equipment based on the straight-line method over the estimated useful lives for financial reporting and uses accelerated depreciation methods for income tax reporting.
DesignerSportsApparel, Inc.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 2006
(UNAUDITED)
NOTE F: RELATED PARTY TRANSACTIONS
The Company has maintained an office at the office of a shareholder. The amount of space used is nominal. During the period from inception through June 30, 2006, the company paid no rent. The fair market value of this office rent is not reflected in the statement of operations as it is valued at no more than $150 per month. In July 2006, the Company began paying rent for this space under a 6 month lease agreement that is renewable on a month-to-month basis. The lease obligates the Company to pay $150 per month in rent plus its portion of utilities.
An officer of the Company loaned funds to the Company for operating expenses in order to assist the Company with working capital requirements. Loans outstanding at November 30, 2006 were as follows:
DATE | AMOUNT | INTEREST RATE & MATURITY DATE |
| September 2005 | $ 2,500 | 5%; 12/31/06 |
| April 2006 | 2,152 | 0%; Demand Note |
| September 2006 | 2,500 | 5%; 2/28/07 |
| TOTAL | $ 7,152 |
NOTE G: COMMON STOCK
On June 19, 2006 the Company amended its Articles of Incorporation to increase the authorized common shares from 25,000,000 to 90,000,000. In addition the Company amended its Articles of Incorporation to authorize 10,000,000 of Preferred Shares. As of November 30, 2006 the Company had 5,757,000 common shares outstanding.
NOTE H: LIQUIDITY AND CAPITAL RESERVES
The Company has limited working capital and received limited revenue from sales of products or services. The Company incurred significant initial product costs, including promotions and custom computer designs associated with its licensed products. The Company also incurred costs associated with its entry into new college markets. These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.
DesignerSportsApparel, Inc.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 2006
(UNAUDITED)
The ability of the Company to continue as a going concern is dependent on the Company generating cash from the sale of its common stock or obtaining debt financing and attaining future profitable operations. Management’s plans include selling its equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be successful in these efforts.
Management believes that the Company has insufficient capital reserves to operate through November 30, 2007 without the need for infusion of additional capital. The Company continues to sell its products which are in inventory. Although the principals of the Company have no legal obligation to infuse additional capital, it is expected that the principals shall do so as reasonably necessary by providing short-term demand loans carrying a market interest rate.
NOTE I: MATERIAL CONTRACTS
On April 4, 2006 the Company entered into a License Agreement with Sigma Alpha Epsilon Fraternity (“SAE”). The agreement provides the Company with the right to use the insignia of SAE including the Greek letters, crest, badge, flags, the True Gentleman logo, and the name of the organization. The Company shall pay a $40 annual advance and 8.5% of gross sales. The term is until June 30, 2007 and is renewable. The Company has paid royalties on its sales.
On September 28, 2005 the Company entered into a business consulting agreement with Don India, Sr. of Design U Factory, Inc. The Agreement provides compensation to the Consultant at a rate of $50 per hour. As of November 30, 2006 the Company owed $5,000 in consulting fees to Mr. India.
NOTE J: RECENT ACCOUNTING PRONOUNCEMENTS
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
NOTE K: SUBSEQUENT EVENTS
In January, 2007, an officer of the Company made a loan of $25,000 to the Company for working capital. The loan bears an interest rate of 5% and is due one year from the date of the loan.
We have had no changes in or disagreements with our accountants.
We have filed a registration statement on form SB-2 under the Securities Act of 1933 with the Securities and Exchange Commission with respect to the shares of our common stock offered through this prospectus. This prospectus is filed as a part of that registration statement, but does not contain all of the information contained in the registration statement and exhibits. Statements made in the registration statement are summaries of the material terms of the referenced contracts, agreements or documents of the company. We refer you to our registration statement and each exhibit attached to it for a more detailed description of matters involving the company, and the statements we have made in this prospectus are qualified in their entirety by reference to these additional materials. You may inspect the registration statement, exhibits and schedules filed with the Securities and Exchange Commission at the Commission's principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F Street, N.E., Washington, D.C. 20549. Please Call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The Securities and Exchange Commission also maintains a web site at http://www.sec.gov that contains reports, proxy Statements and information regarding registrants that files electronically with the Commission. Our registration statement and the referenced exhibits can also be found on this site.
If we are not required to provide an annual report to our security holders, we intend to still voluntarily do so when otherwise due, and will attach audited financial statements with such report.
Until ________________, all dealers that effect transactions in these securities whether or not participating in this offering may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
Part II
Information Not Required In the Prospectus
Item 24. Indemnification of Directors and Officers
Our officers and directors are indemnified as provided by the Nevada Revised Statutes and our bylaws.
Under the governing Nevada statutes, director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company's articles of incorporation. Our articles of incorporation do not contain any limiting language regarding director immunity from liability. Excepted from this immunity are:
| 1. | a willful failure to deal fairly with the company or its shareholders in connection with a matter in which the director has a material conflict of interest; |
| 2. | a violation of criminal law (unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful); |
| 3. | a transaction from which the director derived an improper personal profit; and |
| 4. | willful misconduct. |
Our bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Nevada law; provided, however, that we may modify the extent of such indemnification by individual contracts with our directors and officers; and, provided, further, that we shall not be required to indemnify any director or officer in connection with any proceeding (or part thereof) initiated by such person unless:
| 1. | such indemnification is expressly required to be made by law; |
| 2. | the proceeding was authorized by our Board of Directors; |
| 3. | such indemnification is provided by us, in our sole discretion, pursuant to the powers vested us under Nevada law; or; |
| 4. | such indemnification is required to be made pursuant to the bylaws. |
Our bylaws provide that we will advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer, of the company, or is or was serving at the request of the company as a director or executive officer
of another company, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefore, all expenses incurred by any
director or officer in connection with such proceeding upon receipt of an undertaking by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under our bylaws or otherwise.
Our bylaws provide that no advance shall be made by us to an officer of the company, except by reason of the fact that such officer is or was a director of the company in which event this paragraph shall not apply, in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made: (a) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (b) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the company.
Item 25. Other Expenses of Issuance and Distribution
The estimated costs of this offering are as follows:
| Securities and Exchange Commission registration fee | $ | 103 |
| Federal Taxes | $ | Nil |
| State Taxes and Fees | $ | Nil |
| Listing Fees | $ | Nil |
| Printing and Engraving Fees | $ | 500 |
| Transfer Agent Fees | $ | 1,000 |
| Accounting fees and expenses | $ | 5,000 |
| Legal fees and expenses | $ | 20,000 |
| Total | $ | 26,603 |
All amounts are estimates, other than the Commission's registration fee.
We are paying all expenses of the offering listed above. No portion of these expenses will be borne by the selling shareholders. The selling shareholders, however, will pay any other expenses incurred in selling their common stock, including any brokerage commissions or costs of sale.
Item 26. Recent Sales of Unregistered Securities
We issued 2,500,000 shares of common stock to Mr. David B. Parker, our sole officer and director, on September 16, 2005. Mr. Parker acquired these shares at the price of $0.001 per shares. These shares were issued pursuant to Section 4(2) of the Securities Act of 1933 and are restricted shares as defined in the Securities Act. We did not engage in any general solicitation or advertising. We issued the stock certificates and affixed the appropriate legends to the restricted stock.
On December 16, 2005, we completed an offering of shares of our common stock to a total of fifteen purchasers in an offering that was exempt from registration under Rule 506 of Regulation D of the Securities Act of 1933. The identity of these fifteen purchasers is included in the selling shareholder table set forth above. Upon closing, we issued 3,105,000 shares of our restricted common stock at the price of $0.005 per share for total proceeds of $15,525. Each purchaser represented his intention to acquire the securities for investment only and not with a view toward distribution. We did not engage in any public solicitation or general advertising. Each investor was given adequate access to sufficient information about us to make an informed investment decision. None of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved. No registration rights were granted to any of the purchasers. We issued the stock certificates and affixed the appropriate legends to the restricted stock.
On July 31, 2006, we completed an offering of shares of our common stock to a total of twenty-one purchasers in an offering that was exempt from registration under Rule 506 of Regulation D of the Securities Act of 1933. The identity of these twenty-one purchasers is included in the selling shareholder table set forth above. Upon closing, we issued 152,000 shares of our restricted common stock at the price of $0.25 per share for total proceeds of $38,000. Each purchaser represented his intention to acquire the securities for investment only and not with a view toward distribution. We did not engage in any public solicitation or general advertising. Each investor was given adequate access to sufficient information about us to make an informed investment decision. None of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved. No registration rights were granted to any of the purchasers. We issued the stock certificates and affixed the appropriate legends to the restricted stock.
Item 27. Exhibits
| Exhibit Number | Description |
| 3.1 | Articles of Incorporation, as amended (1) |
| 3.2 | By-Laws (1) |
| 4.1 | Sample Share Certificate (1) |
| 5.1 | Opinion of Ronald Serota, Attorney, of the Corporate Law Center, with consent to use (1) |
| 10.1 | License Agreement with Sigma Alpha Epsilon Fraternity (1) |
| 10.2 | Consulting Agreement entered into with Donald India Sr. (1) |
| 1. | Previously filed as an exhibit to the Registration Statement filed on Form SB-2 on December 14, 2006. |
The undersigned company hereby undertakes that it will:
| (1) | file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to include: |
| (a) | any Prospectus required by Section 10(a)(3) of the Securities Act; |
| (b) | 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 of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of Prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and |
| (c) | any additional or changed material information with respect to the plan of distribution not previously disclosed in the registration statement. |
| (2) | for the purpose of determining any liability under the Securities Act, each of the post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof; and |
| (3) | remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of our company pursuant to the foregoing provisions, or otherwise, our company has been advised that in the opinion of the Commission that type of indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against said liabilities (other than the payment by our company of expenses incurred or paid by a director, officer, or controlling person of our company in the successful defense of any action, suit or proceeding) is asserted by the director, officer, or controlling person in connection with the securities being registered, our company will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of the issue.
For purposes of determining any liability under the Securities Act, the information omitted from the form of Prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
For purposes of determining any liability under the Securities Act to any purchaser, each prospectus filed us pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or
Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
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 for filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in the City of Arlington, Texas on March 26, 2007.
| DesignerSportsApparel, Inc. | |
| By: | /s/ David Parker |
| David B. Parker | |
President, Secretary, Chief Executive Officer, Chief Financial Officer, Principal Executive Officer, Principal Accounting Officer, and Director | |
In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated:
| By: | /s/ David Parker |
| David B. Parker | |
| President, Secretary, Chief Executive Officer, Chief Financial Officer, Principal Executive | |
| March 26, 2007 |