Mail Stop 3561
September 8, 2005
Via U.S. Mail and Fax
Don Dallape
Chairman and CEO
Execute Sports, Inc.
1284 Puerta Del Sol, Suite 150
San Clemente, CA 92673
Re: Execute Sports, Inc.
Amendment No. 1 to the Form SB-2
Filed August 30, 2005
File No. 333-125868
Dear Mr. Dallape:
We have reviewed your filing and your August 30, 2005
response
letter and have the following comments. Where indicated, we think
you should revise your Form SB-2 in response to these comments.
If
you disagree with any of our comments, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may or may not raise additional
comments. Please note that all page number references are to the
marked version of the First Amendment to the Form SB-2.
We welcome any questions you may have about our comments or
on
any other aspect of our review. Feel free to call us at the
telephone numbers listed at the end of this letter.
Amendment No. 1 to the Form SB-2
General
1. Please move your discussion of your change in auditors from
page 6
to Item 23 of the Form SB-2.
2. It is unclear why the letter filed from your former auditors as
Exhibit 16 references a Form 8-K. Please advise.
Prospectus Cover Page, page 3
3. Your disclosure changes in response to our prior comment 18
mistakenly convey that your offering is now a minimum/maximum
offering. Since you affirmatively state on your prospectus cover
page that "there is no minimum number of shares that we have to
sell
pursuant to this offering," you should delete the other references
that there is a minimum amount of shares being offered by the
company. Our prior comment 18 was only intended to result in
disclosure reflecting the sale of varying amount of proceeds.
However, if the company is structuring this offering as a
minimum/maximum offering, completely revise the document to
accurately reflect it as such and provide all the necessary
disclosure (e.g. see Exchange Act Rule 10b-9).
Risk Factors, page 10
General
4. We note the statement "we expect that our initial funding, even
if
we receive the maximum anticipated proceeds, will be sufficient in
the near term to allow us to produce and distribute our existing
lines of products..." on page 12, and the statement on page 15
that
your company has entered into an agreement "we believe will
substantially expand our addressable customer base for our
products
as well as increase our sales by fulfilling purchase orders on a
wholesale distribution basis." Please revise to remove these
mitigating statements from your risk factors section.
5. Revise to discuss the risks that stem from the purchase and
sale
of your securities, which securities will be considered "penny
stock"
as defined by Section 3(a)(51) and Rule 3a51-1 under the
Securities
Exchange Act. In addition, expand the "Plan of Distribution"
section
to discuss in detail the effect that the "penny stock" rules will
have on investors` ability to purchase and sell your securities in
the future.
6. We note your response to our prior comment 13. Since these
notes
have already come to maturity (April 7, 2005 through July 22,
2005),
disclose conclusively whether they have been repaid and, if not,
describe the material adverse effect on your business.
Management`s Discussion and Analysis, page 27
Overview, page 27
7. On page 28, you state that if the maximum number of shares are
sold in your offering, you will have sufficient working capital to
fund operations until the end of 2005. Please revise to disclose
the
amount of funding that you will need to continue operations for
the
next 12 months. Discuss in detail your plan to secure this needed
financing if the company is not successful in selling the maximum
number of shares in this offering. Clarify how the shortfall will
be
met, including the sources and the amount from each source that
will
contribute to lowering the deficiency in short-term liquidity.
Disclose whether management believes it will be able to secure
financing needed to fund operations for the next 12 months. See
Section III.C of the Commission`s Interpretive Release No. 33-
6835,
"Management`s Discussion and Analysis of Financial Condition and
Results of Operations," found on our website at
http://www.sec.gov/rules/interp/33-6835.htm.
8. Please revise to include your response to our prior comment 30.
Results of Operations for the Six Months Ended June 30, 2005 and
June
30, 2004, page 31
9. Revise your discussion to include changes in the significant
balance sheet accounts from December 31, 2004 to June 30, 2005.
Results of Operations for the Years Ended December 31, 2004 and
December 31, 2003, page 34
10. Revise your discussion to include disclosure about the changes
in
cost of sales and gross profit for this period as well as the
discussion for the six months ended June 30, 2005.
Executive Compensation, page 42
11. Please revise to provide additional disclosure regarding your
restricted stock, as requested by our prior comment 48. For
further
guidance, please see Item 402(b)(2)(iv) of Regulation S-B,
Instruction 2 to that subsection, and Interpretation J.12 of the
Division of Corporation Finance`s Manual of Publicly Available
Telephone Interpretations, found on our website at
http://www.sec.gov/interps/telephone/1997manual.txt.
Interest of Named Experts and Counsel, page 50
12. We note your response to prior comment 54 and we reissue that
comment. Please include a consent from Traci J. Anderson, similar
to
the consent included from your current auditors as Exhibit 23.1.
Note A - Loss per common share, page F-9
13. We note your response to comment 55 however, pursuant to
paragraph 10 of SFAS No. 128, to be issued shares should be
considered outstanding common shares and included in the
computation
of basic earnings per share when all necessary conditions for
their
issuance have been satisfied. In this regard, it appears the
shares
sold during 2004 in the private placement and the shares earned
under
the service contract dated August 18, 2004 should be included in
your
computations. It also may be necessary for you to include the
founder`s shares, depending upon the date the founders decided to
issue themselves such shares, and the shares issued to key
employees,
depending upon the date of their employment agreements. Please
revise and advise us.
Note B - Accounts Receivable, page F-12
14. It appears that your disclosure on page F-12, where you state
that the Company performs substantially all collection efforts, is
not consistent with your disclosure on page 29 and your response
to
comment 32, where you indicate that Benefactor Funding Corp.
performs
some of this function. Please revise or advise.
Note C - Inventory, page F-13
15. We note your disclosure on page 34 that you recorded a
significant write-down of inventory to the lower of cost or market
in
the year ended December 31, 2004. Revise your filing to discuss
this
write-down here and tell us in your response to this comment where
this amount is recorded in the Statement of Operations.
Note F - Notes Payable, page F-14
16. It appears that the amounts for the Unsecured Notes payable
for
the year ended December 31, 2003 are incorrectly included in the
2004
table. Please revise.
Note K - Subsequent Event, page F-16
17. Tell us in response to this comment and disclose to what the
$150,000 worth of shares subscribed relates.
18. We note your response to prior comment 12. Tell us in your
response to this comment how you determined that the 400,000
shares
granted to Comprehensive Communications in 2004 did not represent
an
up-front fee. We note that in addition to this fee, it appears
from
Exhibit 10.3 that you are also paying $2,000 a month for this
arrangement.
Financial Statements for the Three and Six Months Ended June 30,
2005
Statements of Stockholders` Equity, page F-25
19. It appears that you have incorrectly included the shares
payable
to Chris Martin in your equity as of June 30, 2005 since the
contract
term does not begin until 7/5/05. Revise or advise.
Exhibit 5.1
20. Please revise the legal opinion to reconcile the aggregate
number
of securities discussed in the opinion with the total quantity
registered under the Form SB-2, as requested by our prior comment
72.
* * * *
Please amend your Form SB-2 in response to these comments.
You
may wish to provide us with marked copies of the amendment to
expedite our review. Please file on EDGAR a cover letter with
your
amendment that keys your responses to our comments and provides
any
requested supplemental information. Detailed cover letters
greatly
facilitate our review. Please understand that we may have
additional
comments after reviewing your amendment and responses to our
comments.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Kathleen Kerrigan, Staff Accountant, at
(202)
551-3369 or Robert Littlepage, Accountant Branch Chief, at (202)
551-
3361 if you have questions regarding comments on the financial
statements and related matters. Please contact Derek Swanson,
Staff
Attorney, at (202) 551-3366, or me at (202) 551-3810 with any
other
questions.
Sincerely,
/s/ Larry Spirgel
Larry Spirgel
Assistant Director
cc: Michael L. Corrigan, Esq.
Via Facsimile (858) 362-1441
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Mr. Don Dallape
Execute Sports, Inc.
September 8, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE