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EX-5.1 - CONSENT OF WILLIAMS SECURITIES LAW FIRM, P.A. - American Retail Alliance Corp.american_ex51.htm
EX-3.2 - BY LAWS - American Retail Alliance Corp.american_ex32.htm
EX-3.1 - ARTICLES OF INCORPORATION - American Retail Alliance Corp.american_ex31.htm
EX-3.1.2 - AMENDMENT TO ARTICLES OF INCORPORATION - American Retail Alliance Corp.american_ex312.htm
EX-23.1 - CONSENT OF MALONEBAILEY LLP - American Retail Alliance Corp.american_ex231.htm
EX-3.1.1 - AMENDMENT TO ARTICLES OF INCORPORATION - American Retail Alliance Corp.american_ex311.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________

FORM S-1
_______________
 
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

American Retail Alliance, Corp.
(Name of small business issuer in its charter)
 
Florida
 
5122
 
20-2376383
(State or Other Jurisdiction of
Incorporation or Organization)
 
(Primary Standard Industrial
Classification Code Number)
 
(I.R.S. Employer
Identification No.)

American Retail Alliance, Corp.
2979 West Bay Drive Suite 2
Belleair Bluffs, FL 33770
727-581-1500
 (Address and telephone number of principal executive offices and principal place of business)

Brett Phillips
2979 West Bay Drive Suite 2
Belleair Bluffs, FL 33770
727-581-1500
 (Name, address and telephone number for agent for service)

Approximate date of proposed sale to the public: As soon as practicable after the effective date of this registration statement
 
If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: x
  
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
If this Form is a post effective amendment filed under Rule 462(c) of 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. o
If this Form is a post effective amendment filed under Rule 462(d) of 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. o
If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o
  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
 
Large Accelerated Filer  
o
Accelerated Filer
o
Non-accelerated Filer   
o
Smaller Reporting Company
x
 


 
 

 
 
CALCULATION OF REGISTRATION FEE

 
Title of Each Class Of Securities To Be Registered
 
Amount 
To Be 
Registered
   
Proposed
Maximum
Offering
Price Per
Share
   
Proposed
Maximum
Aggregate
Offering Price
[1]
   
Amount of
Registration
Fee [1]
 
                         
Common Stock
   
2,000,000
    $
1.50
    $
3,000,000
    $
409.20
 
 
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 dates as the Commission, acting pursuant to said Section 8(a), may determine.
________________
 
(1)
Estimated solely for purposed of calculating the registration fee under Rule 457(a).
 
 
2

 
 
PRELIMINARY PROSPECTUS DATED NOVEMBER 13, 2012.
 
The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
 
PROSPECTUS
 
American Retail Alliance, Corp.
2,000,000 shares of Common Stock

We are offering for sale 2,000,000 shares of our common stock in a direct public offering.  The purchase price is $1.50 per share. No underwriter is involved in the offering and distribution of the shares. We are offering the shares without any underwriting discounts or commissions.  Our founder and President, Brett Phillips, will offer and sell the shares on our behalf. If all of the shares offered are purchased, the gross proceeds to us will be $3,000,000. This offering will be made on a "best efforts" basis with no minimum amount required to be raised in this offering. There can be no assurance that all or any of the offered will be subscribed. Subscriptions for shares of our common stock are irrevocable once made, and funds will only be returned upon rejection of the subscription.  There is no arrangement to place the funds in an escrow, trust or similar account. All cleared funds will be available to us following deposit into our bank account.
 
This is our initial public offering and no public market currently exists for shares of our common stock. This offering will terminate 180 days following the effective date of this registration statement and will not be extended. There is no minimum amount that must be sold. We have not made any arrangements to place funds received in an escrow, trust or similar account, which means we will have access to any proceeds from this offering immediately upon our acceptance of subscription agreements we receive.   We will only offer our common stock in foreign jurisdictions where registration is not required.

Our common stock is not now listed on any national securities exchange, the NASDAQ stock market or the OTC Bulletin Board.

The table below provides the title and amount of the offering and the offering price of the shares, with varying levels of success of the offering:

Title of Securities to be Offered
 
Number of
Offered Shares
 
Offering Price
Per Share
   
Maximum Offering
Proceeds
 
                     
Common Stock
 
 (100% of offered shares)
  $ 1.50     $ 3,000,000  
Common Stock
 
 (75% of offered shares)
  $ 1.50     $ 2,250,000  
Common Stock
 
 (50% of offered shares)
  $ 1.50     $ 1,500,000  
Common Stock
 
 (25% of offered shares)
  $ 1.50     $ 750,000  
 
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and will therefore be subject to reduced public company reporting requirements.

The securities offered by this prospectus involve a high degree of risk. See “Risk Factors” beginning on Page 8 for factors to be considered before purchasing shares of our common stock.
 
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 date of this prospectus is _________________
 
 
3

 
 
TABLE OF CONTENTS
 
SUMMARY
    5  
RISK FACTORS
    8  
USE OF PROCEEDS
    13  
DETERMINATION OFFERING PRICE
    14  
SELLING SECURITY HOLDERS
    15  
DILUTION
    15  
PLAN OF DISTRIBUTION
    15  
LEGAL PROCEEDINGS
    17  
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
    17  
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
    18  
DESCRIPTION OF SECURITIES
    19  
INTEREST OF NAMED EXPERTS
    19  
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES LIABILITIES
    19  
DESCRIPTION OF BUSINESS
    20  
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    26  
DESCRIPTION OF PROPERTY
    29  
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    30  
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
    30  
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    33  
FINANCIAL STATEMENTS
    F-1  
 
 
4

 
 
SUMMARY

The following prospectus summary is qualified in its entirety by, and should read in conjunction with, the more detailed information and our Financial Statements and Notes thereto appearing elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus carefully.

Organization

We were formed on February 3, 2005 as Phillips Sales & Marketing, Inc., a Florida corporation, and changed our name to American Retail Alliance, Corp., a Florida corporation, on January 23, 2012.  Our address is 2979 West Bay Drive Suite 2, Belleair Bluffs, FL 33770.  Telephone: 727-581-1500

Business

We are the distributor of a variety of consumer non-durable and durable products made by third party manufacturers.  We sell these products in the United States through vendors such as Walgreens, CVS, Rite Aid, McKesson, Kerr Drug, Amway and independent pharmacies as well as product specific catalogs.  Our current product offerings are designed to appeal to a broad range of consumers.  We maintain vendor agreements with Walgreens, CVS, Rite Aid, McKesson, Kerr Drug and Amway. In general, products cannot be sold to these vendors by us or by any other party without a vendor agreement being in place.

In our fiscal year ended December 31, 2011, the following products accounted for the following amounts and percentages of our total revenues:
 
Name of Product
 
Amount of
Revenues
    Percentage of Revenues  
             
Snap It Eye Glass Repair Kit                                             $ 34,055       12 %
Avenger Bed Bug Killer                                              
  $ 127,764       45 %
CitiKitty                                                                    $ 37,455       13 %

In our fiscal year ended December 31, 2011, the following vendors accounted for the following amounts and percentages of our total revenues:
 
Name of Customer                   
 
Amount of
Revenues
    Percentage of Total Revenues  
             
Magellan’s
  $ 84,643       30 %
Walgreens
  $ 59,487       21 %
Rite Aid
  $ 33,039       12 %
Access Business Group   $ 30,392       11 %

Our corporate website is http://www.americanretailalliance.com/.  Nothing on our website is part of this prospectus.

The terms "Our Company" "we," "us" and "our" as used in this prospectus refer to American Retail Alliance, Corp.
 
 
5

 

Emerging Growth Company
 
We are an emerging growth company under the JOBS Act. We shall continue to be deemed an emerging growth company until the earliest of:
 
(a)
the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;

(b)
the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective IPO registration statement;

(c)
the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or

(d)
the date on which such issuer is deemed to be a ‘large accelerated filer’, as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.
 
As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting.  As an emerging growth company we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes.  These exemptions are also available to us as a Smaller Reporting Company.
 
We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

The Offering

We are offering for sale 2,000,000 shares of our common stock. We will sell the shares we are registering only to those individuals who have received a copy of the prospectus.  There is no trading market for our common stock.  We are not currently listed or quoted on any exchange or market.  We hope to have our common stock quoted on the Over the Counter Bulletin Board and OTCQB although we do not have any current plans in place to have our common stock quoted. We cannot guarantee that our common stock will be quoted on the Over the Counter Bulletin Board or OTCQB.   The aggregate market price of our common stock is $46,200,000 based on the proposed offering price of $1.50 per share and 30,800,000 issued and outstanding shares of common stock.  As of June 30, 2012, our total stockholders’ equity balance is ($189,731).  28,800,000 shares of our common stock are currently issued and outstanding. After the offering, there may be up to 30,800,000 shares of our common stock issued and outstanding if all of the offered shares are sold.     
 
We will receive $3,000,000 if all of the offered shares are sold and $1,500,000 if half the offered shares are sold. If all of the offered shares are purchased, we intend to use the proceeds for inventory, marketing & advertising, working capital and to repay debt. Offering expenses are estimated to be $45,420.

This is a best efforts offering with no minimum offering amount. There is no guarantee that we will even raise enough funds to cover the expenses of this offering.

Selected Financial Data

Because this is only a financial summary, it does not contain all the financial information that may be important to you. Therefore, you should carefully read all the information in this prospectus, including the financial statements and their explanatory notes before making an investment decision. This information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as the audited financial statements and footnotes thereto contained in this report.
 
 
6

 
 
   
For the Year Ended
 
   
December 31,
 
   
2011
   
2010
 
SUMMARY OF OPERATIONS
           
Net Revenues
  $ 284,377     $ 154,347  
Cost of Sales
    187,345       56,972  
Gross Margin
    97,032       97,375  
                 
Operating Expenses
    192,953       99,526  
Other Expenses
    4,818       1,031  
NET LOSS
    (100,739 )     (3,182 )
NET LOSS PER SHARE
    (0.00 )     (0.00 )
                 
BALANCE SHEET DATA
               
Total Current Assets
  $ 86,430     $ 25,722  
Total Assets
    89,852       28,452  
Total Current Liabilities
    176,982       44,804  
Total Liabilities
    176,982       44,804  
 
   
For the Six-Months Ended
 
   
June 30,
 
   
(Unaudited)
 
   
2012
   
2011
 
SUMMARY OF OPERATIONS
           
Net Revenues
  $ 156,034     $ 121,021  
Cost of Sales
    100,920       60,397  
Gross Margin
    55,114       60,624  
                 
Operating Expenses
    122,461       73,385  
Other Expenses
    4,793       979  
NET LOSS
    (72,140 )     (13,740 )
NET LOSS PER SHARE
    (0.00 )     (0.00 )
                 
BALANCE SHEET DATA
               
Total Current Assets
  $ 65,981          
Total Assets
    68,692          
Total Current Liabilities
    227,962          
Total Liabilities
    227,962          
 
 
7

 
 
RISK FACTORS
 
Any investment in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, and all other information contained in this prospectus, before you decide whether to purchase our common stock. The occurrence of any of the following risk factors could harm our business.  You may lose part or all of your investment due to any of these risks or uncertainties.
 
There is substantial doubt about our ability to continue as a going concern and if we are unable to generate significant revenue or secure additional financing we may be unable to implement our business plan and grow our business.

Our auditors have raised substantial doubt as to our ability to continue as a going concern because we have suffered from continuous losses with an accumulated deficit of $189,731 as of June 30, 2012.  The continuation of our business as a going concern is dependent upon the continued financial support from our stockholders and credit facility from the revolving lines of credit. There is uncertainty regarding our ability to implement our business plan and grow our business without additional financing.  We have no agreements, commitments or understandings to secure additional financing. Our future growth and success is dependent upon our ability to continue selling our products, generate cash from operating activities and obtain additional financing. There is no assurance that we will be able to continue selling our products, generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse affect on our ability to grow our business and implement our business plan.
 
Risks Related to our Business

Because of dependence on consumer preference for our variety of consumer non-durable and durable products, our revenues are susceptible to fluctuations and decreases.

We are susceptible to fluctuations in our business based upon consumer demand for our products. In addition, we cannot guarantee that increases in demand for our products associated with changes or innovations in consumer products will continue. We believe that our success depends on our ability to anticipate, gauge and respond to fluctuations in consumer preferences. However, it is impossible to predict with complete accuracy the occurrence and effect of fluctuations in consumer demand over a product’s life cycle. Moreover, we caution that any growth in revenues that we achieve may be transitory and should not be relied upon as an indication of future performance.

Any failure to anticipate or respond adequately to technological developments and customer requirements, or any significant delays in product introduction, could reduce our revenues or profitability.

Our ability to remain competitive in the variety of consumer non-durable and durable products market will depend considerably upon our ability to successfully identify new product opportunities, as well as secure the right to sell and introduce these products and enhancements on a timely and cost effective basis. There can be no assurance that we will be successful at securing the rights to sell and marketing new products or enhancing our existing products, or that these new or enhanced products will achieve consumer acceptance and, if achieved, will sustain that acceptance. In addition, there can be no assurance that products developed by others will not render our products non-competitive or obsolete or that we will be able to obtain or maintain the rights to use proprietary technologies developed by others which are incorporated in our products. Any failure to anticipate or respond adequately to technological developments and customer requirements, or any significant delays in product development or introduction, could reduce our revenues or profitability.
 
 
8

 
 
Our revenues are highly concentrated in several vendors which accounts for more than 74% of our revenues, and our revenues could be reduced if these customers reduce their orders from us.

In our fiscal year ended December 31, 2011, the following vendors accounted for the following amounts and percentages of our total revenues:
 
Name of Customer
 
Amount of
Revenues
    Percentage of Total Revenues  
             
Magellan’s
  $ 84,643       30 %
Walgreens
  $ 59,487       21 %
Rite Aid
  $ 33,039       12 %
Access Business Group
  $ 30,392       11 %
 
We have vendor agreements with these customers, but these customers purchase from us on purchase orders only.  If we cease to do business with these customers at current levels and are unable to generate additional sales with new and existing customers that purchase a similar amount of our products, our revenues and net income would decline considerably.

Almost all of our revenues have been generated from sales of products with the entities with whom we have marketing arrangements, if we were to lose these arrangements, our revenues could be reduced.

We market primarily products developed and made by third party customers.  We view these marketing arrangements as material to our future success in that all of our revenues were generated from sales of products with the entities with which we have these marketing arrangements.  If we were to lose these arrangements, our revenues could be reduced.

Our purchases are concentrated in several product suppliers and third party manufacturers, which account for more than 75% of our orders and our sales and thus our revenues could be reduced if these product suppliers stop supplying us or sales of these products decreased.

For the year ended December 31, 2011, three product suppliers accounted for 10% or more of our purchases as follows:

Supplier
 
Purchases
   
Percentage of Purchases
   
Accounts
Payable
 
                         
EyeEgo
  $ 25,527       14 %   $ -0-  
Cutting Edge Formulations
  $ 83,370       45 %   $ 12,513  
CittiKitty, Inc.
  $ 29,808       16 %   $ 28,681  
 
Our sales and thus our revenues could be reduced if these product suppliers stop supplying us or sales of these products decreased.
 
If our business reputation is damaged due to the actions of external factors over which we may have little or no control, including the performance of persons acting as suppliers of our smart home system products, our revenues could be reduced.
 
Promoting our business depends largely on the success of our marketing efforts and our ability to provide a consistent, positive customer experience for consumers of our products. Our ability to provide a positive customer experience is dependent on external factors over which we may have little or no control, including the nature and quality of the products we sell.  We will purchase the products we sell from third parties.  Our failure to provide our customers with positive customer experiences, including our or our suppliers failure to deliver high quality products on a timely basis, for any reason could substantially harm our reputation. The failure of these activities could adversely affect our ability to attract new customers and maintain customer and vendor relationships and, as a result, substantially harm our business and reduce our revenues.
 
 
9

 
 
If we cannot increase our sales volumes, reduce our costs or introduce higher margin products to offset anticipated reductions in the average unit price of our products, our operating results may suffer.
     
The average unit price of our products may decrease in the future in response to changes in product mix, competitive pricing pressures, new product introductions by our competitors or other factors. If we are unable to offset the anticipated decrease in our average selling prices by increasing our sales volumes or through new product introductions, our net revenues will decline. Our business could be seriously harmed, particularly if the average selling price of our products decreases significantly without a corresponding increase in sales.

Because our competitors in the consumer products sales business have greater financial and marketing resources than we do, we may experience a reduction in market share and revenues.

The markets for our consumer products are highly competitive and rapidly changing.  Some of our current and prospective competitors have significantly greater financial, technical, marketing resources than we do.  Our ability to compete in our markets depends on a number of factors, some within and others outside our control.  These factors include: the frequency and success of product introductions by us and by our competitors, the selling prices of our products and of our competitors’ products, the performance of our products and of our competitors’ products, product distribution by our competitors, our marketing ability and the marketing ability of our competitors, and the quality of customer support offered by us and by our competitors.
 
Damage claims against our products could reduce our sales and revenues.

If any of our products are found to cause injury or damage, the Company could suffer financial damages. We have not had significant claims for damages or losses from our products to date. The Company does carry product liability insurance as follows: Products Liability limits of $9,000,000 each occurrence / $10,000,000 aggregate.  However, it only covers our proprietary products.  It does not cover the products of others and we have no products liability insurance on the products of others.  Any claims for damages related to the products we sell could damage our reputation and reduce our revenues.

RISKS RELATED TO MANAGEMENT AND PERSONNEL

We depend heavily on key personnel, and turnover of key senior management could harm our business.

Our future business and results of operations depend in significant part upon the continued contributions of Brett Phillips, Director, President & CEO.  If we lose Brett Phillips, President and CEO, or if he fails to perform in his current positions, or if we are not able to attract and retain skilled employees as needed, our business could suffer. Significant turnover in our senior management could significantly deplete our institutional knowledge held by our existing senior management team. We depend on the skills and abilities of these key employees in managing the product acquisition, marketing and sales aspects of our business, any part of which could be harmed by turnover in the future.
 
Our management has limited experience in managing the day to day operations of a public company and, as a result, we may incur additional expenses associated with the management of our company.

Brett Phillips, President and CEO is responsible for the operations and reporting of the combined company. The requirements of operating as a small public company are new to the management team and the employees as a whole. This may require us to obtain outside assistance from legal, accounting, investor relations, or other professionals that could be more costly than planned. We may also be required to hire additional staff to comply with additional SEC reporting requirements and compliance under the Sarbanes-Oxley Act of 2002. Our failure to comply with reporting requirements and other provisions of securities laws could negatively affect our stock price and adversely affect our results of operations, cash flow and financial condition.
 
 
10

 

Because we do not have an audit or compensation committee, shareholders will have to rely on the entire board of directors, none of which are independent, to perform these functions.

We do not have an audit or compensation committee comprised of independent directors.  Indeed, we do not have any audit or compensation committee.  These functions are performed by the board of directors as a whole.  No members of the board of directors are independent directors.  Thus, there is a potential conflict in that board members who are also part of management will participate in discussions concerning management compensation and audit issues that may affect management decisions.

Certain of our stockholders hold a significant percentage of our outstanding voting securities which could reduce the ability of minority shareholders to effect certain corporate actions.

Our officers, directors and majority shareholders are the beneficial owners of 97.7% of our outstanding voting securities. As a result, they possess significant influence and can elect a majority of our board of directors and authorize or prevent proposed significant corporate transactions. Their ownership and control may also have the effect of delaying or preventing a future change in control, impeding a merger, consolidation, takeover or other business combination or discourage a potential acquirer from making a tender offer.

RISKS RELATED TO OUR STOCK

Investors may have difficulty in reselling their shares due to the lack of market or state Blue Sky laws. 

Our common stock is currently not quoted on any market. No market may ever develop for our common stock, or if developed, may not be sustained in the future.

The holders of our shares of common stock and persons who desire to purchase them in any trading market that might develop in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. Accordingly, even if we are successful in having the Shares available for trading on the OTCBB, investors should consider any secondary market for the Company's securities to be a limited one. We intend to seek coverage and publication of information regarding the company in an accepted publication which permits a "manual exemption." This manual exemption permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations.  We may not be able to secure a listing containing all of this information.  Furthermore, the manual exemption is a non issuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are those published in Standard and Poor's, Moody's Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals” but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.

Accordingly, our shares should be considered totally illiquid, which inhibits investors’ ability to resell their shares.
 
 
11

 
 
We will be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.
 
The SEC has adopted regulations which generally define so-called “penny stock” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions.  We anticipate that our common stock will become a “penny stock”, and we will become subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule”. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers. For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market.

For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.

We do not anticipate that our common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.
 
Sales of our common stock under Rule 144 could reduce the price of our stock.

We are registering 2,000,000 shares of Common Stock in this offering.  An additional 3,300,000 shares of our common stock held by non-affiliates are currently eligible for resale under Rule 144. All 25,500,000 shares of common stock held by affiliates are subject to the resale restrictions of Rule 144. 
 
In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least six months, may not sell more than one percent of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price.  The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.

Investors in this offering will suffer immediate and substantial dilution of their investment.
 
The initial public offering price is substantially higher than the pro forma net tangible book value per share of our outstanding common stock. Our existing shareholders have paid considerably less than the amount to be paid for the common stock in this offering. As a result, assuming an initial public offering price of $1.50 per share, investors purchasing common stock in this offering will incur immediate dilution of $1,407 in pro forma net tangible book value per share of common stock as of June 30, 2012 if all of the offered shares are sold.  To the extent that we rely upon additional equity financing to implement our plan of operation in the future, investors in this offering will be further diluted.
 
We may not realize sufficient proceeds from this offering to implement our business plan, as we are offering shares on direct participation basis, rather than using the experience of a dealer-broker .

We are offering shares on a direct participation basis. No individual, firm, or corporation has agreed to purchase any of the offered Shares. We cannot guarantee that any or all of the shares will be sold. We do not plan to use a dealer-broker, even though a dealer-broker may have more experience, resources and contacts to more effectively achieve the sale of shares. A delay in the sale of the shares in this offering can be expected to cause a similar delay in the implementation of our business plan.
 
 
12

 
 
We are an "emerging growth company," and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although we could lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock held by non-affiliates exceeds $700 million as of any March 31 before that time, in which case we would no longer be an emerging growth company as of the following March 31. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

Special Information Regarding Forward Looking Statements

Some of the statements in this prospectus are “forward-looking statements.”  These forward-looking statements involve certain known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.  These factors include, among others, the factors set forth above under “Risk Factors.”  The words “believe,” “expect,” “anticipate,” “intend,” “plan,” and similar expressions identify forward-looking statements.  We caution you not to place undue reliance on these forward-looking statements.  We undertake no obligation to update and revise any forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements in this document to reflect any future or developments.  However, the Private Securities Litigation Reform Act of 1995 is not available to us as a non-reporting issuer.  Further, Section 27A(b)(2)(D) of the Securities Act and Section 21E(b)(2)(D) of the Securities Exchange Act expressly state that the safe harbor for forward looking statements does not apply to statements made in connection with an initial public offering.

USE OF PROCEEDS
 
We will receive up to $3,000,000 if all of the shares of common stock offered by us at $1.50 per share are purchased. We cannot guarantee that we will sell any or all of the shares being offered by us.  This is a best efforts offering with no minimum offering amount.
 
 
13

 

The table below estimates our use of proceeds, in order of priority, given the varying levels of success of the offering.  
 
Offered Shares Sold
Offering Proceeds [1]
Principal Uses of Net Proceeds
500,000 shares (25%)
$750,000
Inventory:     $135,000
Marketing & Advertising:     $405,000
Working Capital:     $100,000
Repay Debt:     $110,000
 
1,000,000 shares (50%)
$1,500,000
Inventory:     $297,500
Marketing & Advertising:     $892,500
Working Capital:     $200,000
Repay Debt:     $110,000
1,500,000 shares (75%)
 
$2,250,000
Inventory:     $460,000
Marketing & Advertising:  $1,380,000
Working Capital:     $300,000
Repay Debt:     $110,000
 
2,000,000 shares (maximum)
 
$3,000,000
Inventory:      $622,500
Marketing & Advertising:   $1,867,500
Working Capital:      $400,000
Repay Debt:      $110,000
   
[1] Excludes estimated offering costs of $45,420 which must be paid regardless of how much is raised.
 
Working capital will be used to pay general and administrative expenses, legal expenses, accounting expenses and public company reporting costs for the next twelve months. Our anticipated post-offering burn rate of $180,000 per month includes our anticipated public company reporting costs of $50,000 per year.  Those expenses may increase if we are able to grow our operations and marketing activities.  Marketing expenses primarily include costs associated with advertising and some travel and entertainment expenses and development, preparation and printing of marketing materials.  Funds projected above allocated to the hiring of employees and independent contractors, are those who would be engaged to help conduct our business operations, and exclude compensation that would be paid to our officers.  The funds from this offering will not be used to pay our officers for any services related to activities undertaken to further the success of this offering, whether provided prior to, during, or subsequent to the offering.  None of the proceeds will be used to reimburse the expenses that were contributed by our president including office rent.
  
DETERMINATION OF OFFERING PRICE
 
The offering price of the 2,000,000 shares of common stock being offered by us has been determined primarily by our capital requirements and has no relationship to any established criteria of value, such as book value or earnings per share.  Additionally, the price of the shares of common stock is not based on past earnings, nor is the price of the shares indicative of current market value for the assets owned by us. No valuation or appraisal has been prepared for our business and potential business expansion.
 
 
14

 
 
DILUTION

We intend to sell 2,000,000 shares of our common stock. We were initially capitalized by the sale of our common stock. The following table sets forth the number of shares of common stock purchased from us, the total consideration paid and the price per share. The table assumes all 2,000,000 shares of common stock will be sold.
 
   
Shares Issued
   
Total Consideration
   
Price
 
   
Number
   
Percent
   
Amount
   
Percent
   
Per Share
 
                                         
Existing Shareholders
    28,800,000       93.5     $ 30,500       1     $ .001  
Purchasers of Shares
    2,000,000       6.5     $ 3,000,000       99     $ 1.50  
Total
    30,800,000       100     $ 780,500       100     $ .10  
 
The following table sets forth the difference between the offering price of the shares of our common stock being offered by us, the net tangible book value per share, and the net tangible book value per share after giving effect to the offering by us, assuming that 100%, 75%, 50% and 25% of the offered shares are sold. Net tangible book value per share represents the amount of total tangible assets less total liabilities divided by the number of shares outstanding as of June 30, 2012.  Totals may vary due to rounding.
 
Offering Price
  $ 1.50  
Net tangible book value at 06/30/2012
  $ (.0056 )
Net tangible book value after giving effect to the offering
  $ .093  
Increase in net tangible book value per share attributable to cash payments made by new investors
  $ .0986  
Per Share Dilution to New Investors
  $ 1.407  
Percent Dilution to New Investors
    93.8 %
 
SELLING SECURITY HOLDERS
 
There are no selling security holders in this offering.
 
PLAN OF DISTRIBUTION
 
We are offering for sale 2,000,000 shares of our common stock in a direct public offering on a best efforts basis with no minimum.  There is no minimum amount that must be sold, and we will receive any proceeds from this offering immediately upon the acceptance of subscription agreements we receive.   We maintain the right to accept or reject subscriptions in whole or in part for any reason or for no reason. We will accept or reject any subscription agreement within ten days of receipt, and any checks submitted with rejected subscription agreements will be returned promptly.  There is no arrangement to place the funds in an escrow, trust or similar account. All cleared funds will be available to us following deposit into our bank account.
 
 
15

 

We have not conducted any discussions or negotiations for the sale of all or any portion of those 2,000,000 shares of our common stock. There is no minimum number of shares that must be purchased by each prospective purchaser and the maximum number of shares we will sell is 2,000,000. We will not pay any commissions or other fees, directly or indirectly to any person or firm in connection with solicitation of sales of the common stock.  We will not conduct any aspect of this offering online, nor is any such online offering contemplated. This offering will terminate 180 days following the effective date of this registration statement, and will not be extended.  
 
Our officers and directors do not have any agreements or plans to purchase any shares in this offering.  They will participate in the offer and sale of our shares of common stock, and rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934.  Although Mr. Phillips is an associated person of the company as that term is defined in Rule 3a4-l under the Exchange Act, both he does not believe that he will be deemed to be a broker for the following reasons:
 
·    
He is not subject to a statutory disqualification as that term is defined in Section 3(a) (39) of the Exchange Act at the time of his participation in the sale of our securities.
·    
He will not be compensated for their participation in the sale of company securities by the payment of commission or other remuneration based either directly or indirectly on transactions in securities.
·    
He is not an associated person of a broker or dealer at the time of participation in the sale of company securities.
 
Mr. Phillips will restrict his participation to the following activities:
 
·    
preparing any written communication or delivering such communication through the mails or other means that does not involve oral solicitation by the associated person of a potential purchaser; provided, however, that the content of such communication is approved by a partner, officer or director of the issuer;
·    
responding to inquiries of potential purchasers in communication initiated by the potential purchasers, provided, however, that the content of responses are limited to information contained in a registration statement filed under the Securities Act or other offering document;
·    
performing executive and clerical work involved in effecting any transaction.
 
We have not retained a broker for the sale of securities being offered. In the event we retain a broker who may be deemed an underwriter, an amendment to the registration statement will be filed.
 
The shares of common stock being offered by us have not been registered for sale under the securities laws of any state as of the date of this prospectus. We have no current plans to register or qualify our shares in any state in the United States. The shares will be offered in foreign jurisdictions where registration is not required.
 
Under the Securities Exchange Act of 1934 and the regulations thereunder, any person engaged in a distribution of the shares of our common stock offered by this prospectus may not simultaneously engage in market making activities with respect to our common stock during the applicable “cooling off” periods prior to the commencement of such distribution.
 
 
16

 
 
LEGAL PROCEEDINGS
 
There are no pending or threatened lawsuits against us.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS

The board of directors elects our executive officers annually.  A majority vote of the directors who are in office is required to fill vacancies.  Each director shall be elected for the term of one year, and until his successor is elected and qualified, or until his earlier resignation or removal. Our director and executive officer is as follows:

Name
 
Age
 
Position
         
Brett Phillips
  51  
CEO and President, Director
 
Mr. Phillips has been CEO, President and Director of our company since inception in February 2005. As a member of the board, Mr. Phillips contributes significant industry-specific experience and expertise on our products and services and contributes a deep understanding of all aspects of our business, products and markets, as well as substantial experience developing corporate strategy, assessing emerging industry trends, and business operations.

Family Relationships

There are no family relationships between our officers and directors.

Legal Proceedings

No officer, director, or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the following:

 
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,

 
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses),

 
Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities,

 
Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

 
Having any government agency, administrative agency, or administrative court impose an administrative finding, order, decree, or sanction against them as a result of their involvement in any type of business, securities, or banking activity.

 
Being the subject of a pending administrative proceeding related to their involvement in any type of business, securities, or banking activity.

 
Having any administrative proceeding been threatened against you related to their involvement in any type of business, securities, or banking activity.
 
 
17

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following tables set forth the ownership, as of the date of this prospectus, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, our directors, and our executive officers and directors as a group.  To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted.  There are not any pending or anticipated arrangements that may cause a change in control.

The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown. The business address for these shareholders is 2979 West Bay Drive Suite 2, Belleair Bluffs, FL 33770.
 
             
% of
   
% of
 
             
Common
   
Common
 
Name
 
Title
 
Number of
Shares
   
Shares before Offering
   
Shares after
Offering [1]
 
                             
Brett Phillips
 
President, CEO, Director
    25,500,000       88.5       82.8  
Paul Winkle
 
Consultant
    2,650,000       9.20       8.60  
All officers and directors as a group [1 persons]
        25,500,000       88.5       82.8  
 
[1]  Assumes all 2,000,000 shares sold in this offering.
 
[2]  Paul Winkle, Consultant to the Company, beneficially owns 2,650,000 shares, 1,400,000 through his Consulting Firm Alex Consulting and 1,250,000 additional shares as Paul & Lisa Winkle, his wife

This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Except as set forth above, applicable percentages are based upon 28,500,000 shares of common stock outstanding as of June 30, 2012.
 
 
18

 

DESCRIPTION OF SECURITIES

The following description as a summary of the material terms of the provisions of our Articles of Incorporation and Bylaws.  The Articles of Incorporation and Bylaws have been filed as exhibits to the registration statement of which this prospectus is a part.
 
Common Stock

We are authorized to issue 50,000,000 shares of common stock with $0.001 par value per share. As of the date of this registration statement, there were 28,800,000 shares of common stock issued and outstanding held by six shareholders of the record.

Each share of common stock entitles the holder to one vote, either in person or by proxy, at meetings of shareholders. The holders are not permitted to vote their shares cumulatively. Accordingly, the shareholders of our common stock who hold, in the aggregate, more than fifty percent of the total voting rights can elect all of our directors and, in such event, the holders of the remaining minority shares will not be able to elect any of such directors. The vote of the holders of a majority of the issued and outstanding shares of common stock entitled to vote thereon is sufficient to authorize, affirm, ratify or consent to such act or action, except as otherwise provided by law.

Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of funds legally available. We have not paid any dividends since our inception, and we presently anticipate that all earnings, if any, will be retained for development of our business. Any future disposition of dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements, and other factors.

Holders of our common stock have no preemptive rights or other subscription rights, conversion rights, redemption or sinking fund provisions. Upon our liquidation, dissolution or winding up, the holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to shareholders after the payment of all of our debts and other liabilities. There are not any provisions in our Articles of Incorporation or our Bylaws that would prevent or delay change in our control.
 
INTEREST OF NAMED EXPERTS

The financial statements for the years ended December 31, 2011 and December 31, 2010 included in this prospectus have been audited by Malone Bailey, LLP, which are independent certified public accountants, to the extent and for the periods set forth in our report and are incorporated herein in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

The legality of the shares offered under this registration statement is being passed upon by Williams Law Group, P.A., Tampa, Florida.  Michael T. Williams, principal of Williams Law Group, P.A., owns 300,000 shares of our common stock.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES LIABILITIES

Our Bylaws, subject to the provisions of Florida Law, contain provisions which allow the corporation to indemnify any person against liabilities and other expenses incurred as the result of defending or administering any pending or anticipated legal issue in connection with service to us if it is determined that person acted in good faith and in a manner which he reasonably believed was in the best interest of the corporation.  Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
 
 
19

 

DESCRIPTION OF BUSINESS

Organization

We were formed on February 3, 2005 as Phillips Sales & Marketing, Inc., a Florida corporation, and changed our name to American Retail Alliance, Corp., a Florida corporation, on January 23, 2012.  

Business

We are the distributor of a variety of consumer non-durable and durable products made by third party manufacturers.  We sell these products in the United States through vendors such as Walgreens, CVS, Rite Aid, McKesson, Kerr Drug, Amway and independent pharmacies as well as product specific catalogs.  Our current product offerings are designed to appeal to a broad range of consumers.  We maintain vendor agreements with Walgreens, CVS, Rite Aid, McKesson, Kerr Drug and Amway. In general, products cannot be sold to these vendors by us or by any other party without a vendor agreement being in place.

Products

We currently sell the following products:

Name of Product
Description Of Product
Client Supplying the Product
Retail Sales Price
Avenger Liquid Fertilizer
Avenger Liquid Ferilizer - 32 oz. spray bottle
Cutting Edge Formulations
29.95
Avenger's Weed Killer
Avengers Weed Killer - 24oz. Spray bottle
Cutting Edge Formulations
11.95
Bed Bug Killer:106-BB-24
Avenger Bed Bug Killer, 24 oz. Spray Bottle
Cutting Edge Formulations
24.98
Bed Bug Killer:106-BB-24 w/ 3oz. bottle
Avenger Bed Bug Killer 24 oz spray bundled with 3 oz. bottle
Cutting Edge Formulations
34.95
Bed Bug Killer:107-BB-3oz
Avenger Bed Bug Killer, 3 oz.
Cutting Edge Formulations
9.95
Bed Bug Killer:108-BB-3oz Luggage
Bed Bug Killer - 3 oz. -Luggage Spray
Cutting Edge Formulations
9.95
Bed Bug Killer:109-BB-Bed Bug Killer 3 oz. Dual Pack
Bed Bug Killer 3 oz. Dual Pack- Luggage/BedBug Spray Combo
Cutting Edge Formulations
19.95
Bug/Insect Killer:120-BI-24
Avenger Bug/Insect Killer, 24 oz. spray bottle
Cutting Edge Formulations
13.95
BladderVoid, LLC:BladderVoid
1 BladderVoid unit with Terrycloth Cover - UPC# 6 1007451598 2 -
BladderVoid, LLC
29.99
BPong (“Beer Pong”): BPONG Kit 22 Cup & 2 Balls
BPONG Kit
BPong Rack Set
Bpong The Rack - Essential Kit
Bpong, LLC
5.99 to
15.99
 
 
20

 
 
Couture Keys and Pins
Peace - Item#2000
Love - Item#2002
Believe - Item#2003
Passion - Item#2004
Luck - Item#2005
Kisses - Item#2007
Faith - Item#2001
No Place Like Home - Item#2014
Skull&Crossbones - Item#1000
Baseball - Item#1004
Sand Dollar - Item#1005
Seashell - Item#1006
Antique - Item#1009
Queens Crown - Item#1015
Fairytale Castle - Item#1017
Flip Flop - Item#1019
Peace Sign - Item#1020
Dagger - Item#1022
Butterfly - Item#1024
Boot - Item#1031
Cowboy Up! - Item#1032
Dainty Humming Bird - Item#1035
Electric Guitar - Item#1307
Basketball - SKU 707-S-301
Couture Crown with Pink - SKU#707-S110
Couture Fleur-de-lis SKU#707-S-900
Fleur-de-lis - SKU#707-S-151
Golf Key - 707-S-101
Sacred Cross - Item#1010
Couture Keys
15.99 to
17.99
Fein
Fein 5 Pack Energy Drink
Fein Innovations
3.29
Pain-Med:201-PM-1.5
Pain-Med Gel, 1.5 oz.
GM International
19.95
Para Cleanse
Parasite Kit - Twin Treatment Colon Cleansing Program
American Retail Alliance, Corp
29.99
Pegetables
Pegetables - Nature's Dog Chew
Splinktek, Inc
11.99
Picture Keeper
Picture Keeper
Simplified
24.95
SnapIt:9357 Snap It Eye Glass Repair Kit
9357CS - Snap It- Blister card with counter display
EyeEgo, Inc
3.99 to 4.99
SnapIt:9357Rite- Snap It Eye Glass Repair Kit
9357-Snap It Eye Glass Repair Kit w/ counter display
EyeEgo, Inc
3.99 to 4.99
Sports Tissues
Sports Tissues
Sports Tissues
2.99
Survival Straps
 
Paracord Key Fob with Licensed Logo on Dog Tag
Key Fob (coral pink) with Licensed Logo on Dog Tag
Light Duty Paracord Survival Bracelet with Logo on Dog Tag
Light Duty Paracord Survival Bracelet with Logo on Dog Tag
Light Duty Paracord Survival Bracelet with Logo on Dog Tag (coral pink)
Paracord Neck Cord (black) with Liscensed Logo on Dog
Paracord Neck ID Lanyard (black) with Licensed Logo on
Regular Paracord Survival Bracelet with Liscensed Logo on Dog Tag
Wide Paracord Survival Bracelet with Licensed Logo on Dog Tag
Survival Straps
 
19.95 to 34.95
 
Tates Organic's: Conditioner & Shampoo Kit
The Natural Miracle Conditioner and Shampoo Kit
Tates Organics
24.95
 
Of these products, Para Cleanse Kit - Parasite and Intestinal Colon Cleanse sold under our private label.  This product is made for us by a third party manufacture on a purchase order basis.  We have no written agreement with this manufacturer.  We believe we could find alternative manufacturers upon similar terms.
 
 
21

 
 
Vendors and Supplier/Clients
 
All of our primary vendors including Walgreens, CVS, Rite Aid, McKesson, Kerr Drug, Amway require any entity that wants to sell products in their stores to undergo a rigorous vendor qualification procedure.  In order to qualify as a vendor, we must have the following qualifications:

·  
Past experience as a retail vendor
·  
Offer multiple SKU’s (products)
·  
Carry sufficient product liability insurance
·  
D&B rated
·  
Member of EDI (Electronic Data Interchange)
·  
Vendor approval of customer’s supplier network – assures proper computer qualifications for transmitting information back and forth

We are then issued a vendor number and are entitled to sell our products in these stores.

As a vendor, we must comply with the vendor’s terms and conditions, which in general cover matters such as:

·  
Compliance terms
·  
Payout terms
·  
Return policy
·  
Warranty coverage and liability
·  
Shipping and receiving terms
·  
Advertising & marketing approval procedure
 
In our fiscal year ended December 31, 2011, the following vendors accounted for the following amounts and percentages of our total revenues:
 
Name of Customer
 
Amount of
Revenues
   
Percentage of
Total Revenues
 
             
Magellan’s 
  $ 84,643       30 %
Walgreens
  $ 59,487       21 %
Rite Aid
  $ 33,039       12 %
Access Business Group
  $ 30,392       11 %

We have vendor agreements with these customers, but these customers purchase from us on purchase orders only.  If we cease to do business with these customers at current levels and are unable to generate additional sales with new and existing customers that purchase a similar amount of our products, our revenues and net income would decline considerably.
 
 
22

 

For the year ended December 31, 2011, three product suppliers accounted for 10% or more of our purchases as follows:

Supplier
 
Purchases
   
Percentage of Purchases
   
Accounts
Payable
 
                         
EyeEgo
  $ 25,527       14 %   $ -0-  
Cutting Edge Formulations
  $ 83,370       45 %   $ 12,513  
CittiKitty, Inc.
  $ 29,808       16 %   $ 28,681  

Our sales and thus our revenues could be reduced if these product suppliers stop supplying us or sales of these products decreased.
 
Initially, we decide which of our vendors would be interested in the products we sell.  In general, we meet with local or regional representatives of a vendor to attempt to interest them in agreeing to allow a product to be sold in their store.

In general, we will do a test marketing program in a local or regional area supported by newspaper or other media ads.  Sometimes we will arrange for a celebrity endorsement of the product to be featured in these ads.  We will make adjustments to the pricing or marketing strategy based upon these test results and then attempt to have the product sold throughout the country in the vendor’s stores.  Based on sales results with the original vendor, we will then approach other vendors and attempt to secure agreements with them to allow these products to be sold in their stores as well.

Our products are primarily sold through the efforts of our officers, directors and employees.

Distribution

Physical distribution of the client’s products occurs via a DSD (direct store distribution) program where a purchase order is sent to the client by the vendor for fulfillment or we fulfill the purchase order from the vendor from pre purchased client inventory.  In some instances, client products are shipped directly to a vendor’s warehouse for fulfillment.
 
Warranties

We provide no separate warranty for goods of suppliers.  Purchasers of these products must look to the supplier and not us in case of warranty claim.  We provide warranty coverage on our proprietary products as a 30 day return if not satisfied.

In practice, if a large chain store that bought from us had a product returned claiming defect and the chain store refunded the purchase price, the chain store will offset with a credit to them on their next order and similarly we will offset with a credit to us on future purchases from a client.
 
 
23

 

Insurance

We have the following products liability insurance but only on our proprietary products.

·  
General Liability limits of $9,000,000 each occurrence / $10,000,000 aggregate.
·  
Products Liability limits of $9,000,000 each occurrence / $10,000,000 aggregate.

We have no products liability insurance covering products of others that we sell.
 
Intellectual Property

We have no intellectual property.

Environmental Issues

We have not incurred and do not expect to incur any costs relating to environmental matters.

Competition and Market Position

Companies in the consumer products and wholesale and retail distribution markets continue to face intense competition, slow growth, rising costs and a fragile economic environment.  The sector is highly dependent on household income to drive sales and is price sensitive to economic issues such as rising input commodity prices, energy costs, interest rates, unemployment, a weakening dollar and consumer confidence levels.

The company competes in a market which requires becoming an approved vendor of record to the nation’s largest retail chain stores.  The process is costly, time consuming and in many instances requires a prior relationship.  There are significant barriers to entry including a vendor approval process which requires carrying sufficient product liability insurance; past experience as a retail vendor; a D&B rating; membership in EDI (Electronic Data Interchange) and; Vendor approval of customer’s supplier network which assures proper computer qualifications for transmitting information back and forth.  The retailer may also require a vendor to offer multiple sku’s (market ready products).

Many of our competitors have substantially greater financial, marketing, personnel and other resources than we do.

The major competitors are:

·  
Media Funding Solutions – Provides funding for retail advertising campaigns.
·  
Idea Village Products Corp. – Markets “As Seen on TV” products to leading discount retailers, major drug stores and specialty retailers in the U.S.
·  
Product Placement & Promotions, LLC – Provides product branding, promotion and placement services.
·  
National Product Placement - Provides product placement services.
 
 
24

 

We compete with based upon:

·  
Product review - The Company has expertise in package design, contract manufacturing, chain store sales programs, broker services and mail order and catalog sales.
·  
Barriers to entry – The Company can reduce the time and expense a client would incur to bring their product to market at retail chain stores. The Company’s established vendor accounts enable more speedy product placement at the retail level as well as the ability to launch a test market to a smaller demographic within the retail chain store infrastructure.  Because the Company represents the client’s products, the company is the approved vendor of record for those products.  The client cannot sell those product under a separate vendor agreement with the same vendor unless the products are discontinued and the client establishes a new vendor relationship with that vendor.
 
Research and Development
 
We have not incurred research and development expenses during the last two fiscal years.
 
Order Backlog

As of October 31, 2012, we have an order backlog of $30,000.

Government Regulation

The Company is subject to various federal, state, local and foreign regulations. Various governmental agencies have an impact on our business. The regulations cover product ingredients, manufacture, distribution, marketing, sales, compensation and taxation, to name a few.

Our nutritional supplements products are also subject to government regulation.  If one or more of the ingredients of our products become subject to regulatory action, then there is a risk of the supplier or us having to re-formulate the product, if allowed, in order to put it on the market. The cost of this process may be substantial. The future acceptance of the re-formulated product cannot be assured.
 
We believe we are in full compliance with all laws, rules and regulations governing our business.

Employees
 
We have the following full time employees:
 
·  
Management – 1
·  
Administrative – 2
·  
Sales – 2

We have no collective bargaining agreement with our employees.  We consider our relationship with our employees to be excellent.
 
 
25

 
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
You should read the following discussion together with our financial statements and the related notes included elsewhere in this Report. This discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ materially from those we currently anticipate as a result of many factors, including the factors we describe under "Risk Factors” and elsewhere in this Report.

Forward Looking Statements

Some of the information in this section contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as "may," "will," "expect," "anticipate," "believe," "estimate" and "continue," or similar words. You should read statements that contain these words carefully because they discuss our future expectations, contain projections of our future results of operations or of our financial condition, and state other “forward-looking” information.

We believe it is important to communicate our expectations. However, there may be events in the future that we are not able to accurately predict or over which we have no control. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors," "Business" and elsewhere in this Annual Report. See "Risk Factors."

Unless stated otherwise, the words “we,” “us,” “our,” “the Company” or “Active” in this Annual Report collectively refers to the Company.
 
Liquidity and Capital Resources

As of December 31, 2011, we had cash of $44,491 and an accumulated deficit of $117,591. Our operating activities used $53,694 in cash for the fiscal year period ended December 31, 2011, and provided $606 in cash in the fiscal year ended December 31, 2010. The increase in cash used in operating activities was primarily attributable to an increase in professional fees, wages and payroll, and general and administrative expenses.
 
We generated revenues totaling $284,377 and $154,347 during the fiscal years ended December 31, 2011 and 2010, respectively, resulting in an 84% increase.  We anticipate similar increases in revenues in subsequent years as the Company continues to develop our customer base and further expand our product lines.

In order to continue as a going concern and achieve a profitable level of operations, the Company will need, among other things, additional capital resources and development of a consistent source of revenues. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its strategic business plan, become profitable and to be able to sustain such profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Management believes that the Company will require substantial cash infusion for the next twelve months to fund its full operations. There is no guarantee that such cash infusion will be available.

At December 31, 2011, the Company had loans and notes outstanding of $98,039, related-party payables of $7,340 and accounts payable and accrued expenses totaling $71,603.
 
 
26

 
 
Results of Operations
 
Fiscal Year Ended December 31, 2011 Compared to December 31, 2010

The following table summarizes the results of our operations during the fiscal years ended December 31, 2011 and 2010, respectively, and provides information regarding the dollar and percentage increase or (decrease) from the current 12-month period to the prior 12-month period:

 
 
Line Item
 
12/31/2011
(Audited)
   
12/31/2010
(Audited)
   
Increase
(Decrease)
   
Percentage
Increase
(Decrease)
 
                         
Revenues
 
$
284,377
   
$
154,347
   
$
130,030
     
84%
 
Total Operating Expenses
 
$
192,953
   
$
99,526
   
$
93,427
     
94%
 
Net Loss
 
$
(100,739)
   
$
(3,182)
   
$
(97,557)
     
3,066%
 
Loss Per Share of Common Stock
 
$
(0.00)
   
$
(0.00)
   
$
0.00
     
0%
 

Assets. On December 31, 2011, we had $44,491 cash on hand. On December 31, 2010, we had $-0- cash on hand. On December 31, 2011, we had $21,939 in accounts receivable, and on December 31, 2010, we had $25,722 in accounts receivable.  On December 31, 2011, we had $20,000 in prepaid expenses, and on December 31, 2010, we had $-0- in prepaid expenses.  In addition we had $3,422 in property, plant, and equipment at December 31, 2011 and $2,730 at December 31, 2010.

Total Current Liabilities. Our Total Current Liabilities increased $132,178 to $176,982 on December 31, 2011 from $44,804 on December 31, 2010. This increase in Total Current Liabilities was due primarily to the Company borrowing $100,000 during the period.

Revenues. Our Revenues were $284,377 for the fiscal year ended December 31, 2011, and $154,347 for the fiscal year ended December 31, 2010. This increase was due primarily to our strengthening and expanding our business relationships with vendors selling our products.

Operating Expenses. Our Total Operating Expenses was $192,953 for the fiscal year ended December 31, 2011 compared to $99,526 for the fiscal year ended December 31, 2010. This increase in total operating expenses was due to increased business activity, as evidenced by increases in wages and payroll, professional fees, and general and administrative expenses.
 
Net Loss. We recorded a Net Loss of $100,739 for the fiscal year ended December 31, 2011 as compared with a Net Loss of $3,182 for the fiscal year ended December 31, 2010. The increase in Net Losses was due to increased business activity, as evidenced by the Company’s increased operating expenses.
 
 
27

 
 
Six Months Ended June 30, 2012 Compared to June 30, 2011
 
The following table summarizes the results of our operations during the six-month periods ended June 30, 2012, and 2011, respectively, and provides information regarding the dollar and percentage increase or (decrease) from the current 6-month period to the prior 6-month period:

 
 
Line Item
 
6/30/12
(Unaudited)
   
6/30/11
(Unaudited)
   
Increase
(Decrease)
   
Percentage
Increase
(Decrease)
 
                                 
Revenues
 
$
156,034
   
$
121,021
   
$
35,013
     
29%
 
Total Operating Expenses
 
$
122,461
   
$
73,385
   
$
49,076
     
67%
 
Net Loss
 
$
(72,140)
   
$
(13,740)
   
$
(58,400)
     
425%
 
Loss Per Share of Common Stock
 
$
(0.00)
   
$
(0.00)
   
$
0.00
     
0%
 

Revenues. Our Revenues were $156,034 for the six-months ended June 30, 2012, and $121,021 for the six-months ended June 30, 2011. This increase was due primarily to our strengthening and expanding our business relationships with vendors selling our products.

Operating Expenses. Our Total Operating Expenses was $122,461 for the six-months ended June 30, 2012 compared to $73,385 for the six-months ended June 30, 2011. This increase in total operating expenses was due to increased business activity, as evidenced by increases in wages and payroll, professional fees, and general and administrative expenses.
 
Net Loss. We recorded a Net Loss of $72,140 for the six-months ended June 30, 2012 as compared with a Net Loss of $13,740 for the six-months ended June 30, 2011. The increase in Net Losses was due to increased business activity, as evidenced by the Company’s increased operating expenses.
 
Off-Balance Sheet Arrangements
 
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.
 
Seasonality

Our operating results are not affected by seasonality.

Inflation

Our business and operating results are not affected in any material way by inflation.
 
 
28

 

Critical Accounting Policies
 
Revenue Recognition
The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured. The Company had revenues of $284,377 and $154,347 for the periods ending December 31, 2011 and December 31, 2010, respectively.

Stock-Based Compensation
The Company accounts for stock-based compensation pursuant to ASC 718, Stock-Based Compensation which requires measurement of compensation cost for all stock awards at fair value on the date of issue and recognition of compensation, net of estimated forfeitures, over the requisite service period for awards expected to vest over time. The Company recognized $28,000 and $-0- of stock-based compensation during the years ended December 31, 2011 and 2010, respectively.

The Securities and Exchange Commission issued Financial Reporting Release No. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies" suggesting that companies provide additional disclosure and commentary on their most critical accounting policies. In Financial Reporting Release No. 60, the Securities and Exchange Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. The nature of our business generally does not call for the preparation or use of estimates. Due to the fact that the Company does not have any operating business, we do not believe that we do not have any such critical accounting policies.
 
DESCRIPTION OF PROPERTY

We rent the following properties:

·  
Address: City/State/Zip
2979 West Bay Drive #9
Belleair Bluffs, FL  33770
·  
Number of Square Feet: 680
·  
Name of Landlord: Skyview Enterprises, LLC
·  
Term of Lease: 14 months
·  
Monthly Rental: $606.34
 
We believe our current facilities are currently fully suitable and adequate for our business.
 
We do not intend to renovate, improve, or develop properties.  We are not subject to competitive conditions for property.  We have no policy with respect to investments in real estate or interests in real estate and no policy with respect to investments in real estate mortgages.  Further, we have no policy with respect to investments in securities of or interests in persons primarily engaged in real estate activities.
 
 
29

 
 
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the year ended December 31, 2009 the Company borrowed $5,000 from a related party.  During the year ended December 31, 2010 the Company borrowed an additional $1,600 from the same related party, and an additional $740 from an officer and related party. These notes are due on demand and do not carry an interest rate.  As of June 30, 2012 and December 31, 2011, the balances outstanding on these related-party notes totaled $7,340.
 
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

There is no established public trading market for our securities and a regular trading market may not develop, or if developed, may not be sustained.  A shareholder in all likelihood, therefore, will not be able to resell his or her securities should he or she desire to do so when eligible for public resale. Furthermore, it is unlikely that a lending institution will accept our securities as pledged collateral for loans unless a regular trading market develops.

Penny Stock Considerations

Our shares will be "penny stock shares," as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00.  Thus, our shares will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.

Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer must make a special suitability determination regarding the purchaser and must receive the purchaser's written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt.

In addition, under the penny stock regulations, the broker-dealer is required to:

 
Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;
 
Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;
 
Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer's account, the account's value, and information regarding the limited market in penny stocks; and
 
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, prior to conducting any penny stock transaction in the customer's account.
 
Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our Common Stock, which may affect the ability of selling shareholders or other holders to sell their shares in the secondary market, and have the effect of reducing the level of trading activity in the secondary market.  These additional sales practices and disclosure requirements could impede the sale of our securities, if our securities become publicly traded.  In addition, the liquidity for our securities may be decreased, with a corresponding decrease in the price of our securities.  Our shares in all probability will be subject to such penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities.
 
 
30

 
 
OTC Bulletin Board Qualification for Quotation

To have our shares of Common Stock on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our Common Stock.  We have not engaged in any discussions with a FINRA Market Maker to file our application on Form 211 with FINRA.  Based upon our counsel's prior experience, we anticipate that after this registration statement is declared effective, it will take approximately 2 - 8 weeks for FINRA to issue a trading symbol and allow sales of our Common Stock under Rule 144.

Sales of our common stock under Rule 144.

We are registering 2,000,000 shares of Common Stock in this offering.  An additional 3,300,000 shares of our common stock held by non-affiliates are currently eligible for resale under Rule 144. All 25,500,000 shares of common stock held by affiliates are subject to the resale restrictions of Rule 144. 
 
In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least six months, may not sell more than one percent of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price.  The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.

Holders

As of the date of this registration statement, we had approximately six shareholders of record of our common stock.
 
Dividends

We have not declared any cash dividends on our common stock since our inception and do not anticipate paying such dividends in the foreseeable future.  We plan to retain any future earnings for use in our business.  Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as the Board of Directors deems relevant.

Reports to Shareholders

As a result of this offering, as required under Section 15(d) of the Securities Exchange Act of 1934, we will file periodic reports with the Securities and Exchange Commission through December 31, 2012, including a Form 10-K for the year ended December 31, 2012, assuming this registration statement is declared effective before that date.  At or prior to December 31, 2012, we intend voluntarily to file a registration statement on Form 8-A which will subject us to all of the reporting requirements of the 1934 Act. This will require us to file quarterly and annual reports with the SEC and will also subject us to the proxy rules of the SEC. In addition, our officers, directors and 10% stockholders will be required to submit reports to the SEC on their stock ownership and stock trading activity.  We are not required under Section 12(g) or otherwise to become a mandatory 1934 Act filer unless we have more than 500 shareholders and total assets of more than $10 million on December 31, 2012.  If we do not file a registration statement on Form 8-A at or prior to December 31, 2012, we will continue as a reporting company not subject to the proxy statement or other information requirements of the 1934 Act, our securities can no longer be quoted on the OTC Bulletin Board, and our officers, directors and 10% stockholders will not be required to submit reports to the SEC on their stock ownership and stock trading activity.
 
 
31

 

Where You Can Find Additional Information

We have filed with the Securities and Exchange Commission a registration statement on Form S-1.  For further information about us and the shares of common stock to be sold in the offering, please refer to the registration statement and the exhibits and schedules thereto. The registration statement and exhibits may be inspected, without charge, and copies may be obtained at prescribed rates, at the SEC's Public Reference Room at 100 F St., N.E., Washington, D.C. 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The registration statement and other information filed with the SEC are also available at the web site maintained by the SEC at http://www.sec.gov.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table shows for the fiscal years ended December 31, 2011 and December 31, 2010 compensation awarded or paid to, or earned by, the Company’s sole executive officer.
 
Name and
 
Year
 
Salary
   
Bonus
   
Stock
Awards
   
Option
awards
   
Nonequity
incentive
plan
compensation
   
Nonqualified
deferred
compensation
earnings
   
All other
compensation
   
Total
 
principal position
  (a)  
$
   
$
   
$
   
$
   
$
   
$
   
$
   
$
 
                                                     
Brett Phillips,
 
2010
   
61,355
     
-
     
-
     
-
     
-
     
-
     
-
     
61,355
 
President and CEO
 
2011
   
65,205
     
-
     
-
     
-
     
-
     
-
     
-
     
65,205
 
 
Outstanding Equity Awards at Fiscal Year End
 
The following table sets forth certain information for our executive officers concerning unexercised options, stock that has not vested, and equity incentive plan awards as of December 31, 2011.
 
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END DECEMBER 31, 2010
 
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
($)
 
                                                       
Brett Phillips
    -       -       -       -       -       -       -       -       -  
 
 
32

 
 
Long-Term Incentive Plans
 
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers, except that our directors and executive officers may receive stock options at the discretion of our Board of Directors. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our Board of Directors.
 
As of the date of this prospectus, we have no compensatory plan or arrangement with respect to any officer that results or will result in the payment of compensation in any form from the resignation, retirement or any other termination of employment of such officer’s employment with our company, from a change in control of our company or a change in such officer’s responsibilities following a change in control. 
 
Director Compensation
 
Director Compensation for 2011
 
Name
 
Fees
earned
or paid
in cash
($)
   
Stock
awards
($)
   
Option
awards
($)
   
Non-equity
incentive plan
compensation
($)
   
Nonqualified
deferred
compensation
earnings
($)
   
All other
compensation
($)
   
Total
($)
 
                                                         
Brett Phillips
   
65,205
     
0
     
0
     
0
     
0
     
0
     
65,205
 
 
This compensation was paid as an officer as set forth in the Executive Compensation Table Above. No separate compensation was paid to Mr. Phillips as a director.
 
We reimburse our directors for expenses incurred in connection with attending board meetings.  

We have no other formal plan for compensating our directors for their service in their capacity as directors.
 
Employment Agreements

We have no written or oral agreement or understanding with Mr. Wang concerning his compensation in 2011 or thereafter.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
There have been no disagreements regarding accounting and financial disclosure matters with our independent certified public accountants.
 
 
33

 
 
 
 
 
 
 
 
 
 
FINANCIAL STATEMENTS
 
 
 
 
 
 
 
 
 
 
F-1

 
 
AMERICAN RETAIL ALLIANCE, CORP.
(Formerly Phillip Sales and Marketing, Inc.)
Balance Sheets
 
 
June 30,
 
December 31,
 
 
2012
 
2011
 
 
(Unaudited)
     
ASSETS
CURRENT ASSETS
           
Cash
  $ 1,938     $ 44,491  
Accounts receivable, net
    44,043       21,939  
Prepaid expenses
    20,000       20,000  
                 
Total Current Assets
    65,981       86,430  
                 
PROPERTY AND EQUIPMENT, net
    2,711       3,422  
                 
TOTAL ASSETS
  $ 68,692     $ 89,852  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
               
Accounts payable and accrued expenses
  $ 89,458     $ 69,318  
Factoring liabilities
    22,590       429  
Other current liabilities
    8,574       1,856  
Short term debt, net of discounts of $- and $1,961
    100,000       98,039  
Short term debt - related parties
    7,340       7,340  
                 
Total Current Liabilities
    227,962       176,982  
                 
STOCKHOLDERS' DEFICIT
               
 
               
Common stock; 50,000,000 shares authorized, at $0.001 par value, 28,500,000 and 28,500,000 shares issued and outstanding, respectively
    28,500       28,500  
Additional paid-in capital
    1,961       1,961  
Accumulated deficit
    (189,731 )     (117,591 )
                 
Total Stockholders' Deficit
    (159,270 )     (87,130 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
  $ 68,692     $ 89,852  
 
The accompanying notes are an integral part of these unaudited financial statements.

 
F-2

 
 
AMERICAN RETAIL ALLIANCE, CORP.
(Formerly Phillip Sales and Marketing, Inc.)
Statements of Operations
(Unaudited)
 
   
For the Six Months Ended
 
   
June 30,
 
   
2012
   
2011
 
             
REVENUES
  $ 156,034     $ 121,021  
COST OF SALES
    100,920       60,397  
                 
GROSS MARGIN
    55,114       60,624  
                 
OPERATING EXPENSES
               
Wages and payroll
    67,200       41,178  
Professional fees
    17,362       2,025  
General and administrative
    37,899       30,182  
                 
Total Operating Expenses
    122,461       73,385  
                 
LOSS FROM OPERATIONS
    (67,347 )     (12,761 )
                 
OTHER EXPENSES
               
Interest expense
    (4,793 )     (979 )
                 
Total Other Expenses
    (4,793 )     (979 )
                 
LOSS BEFORE INCOME TAXES
    (72,140 )     (13,740 )
PROVISION FOR INCOME TAXES
    -       -  
                 
NET LOSS
  $ (72,140 )   $ (13,740 )
                 
BASIC AND DILUTED INCOME (LOSS) PER SHARE
  $ (0.00 )   $ (0.00 )
                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
    28,500,000       25,500,000  
 
The accompanying notes are an integral part of these unaudited financial statements.
 
 
F-3

 
 
AMERICAN RETAIL ALLIANCE, CORP.
(Formerly Phillip Sales and Marketing, Inc.)
Statements of Cash Flows
(Unaudited)
 
   
For the Six Months Ended
 
   
June 30,
 
   
2012
   
2011
 
OPERATING ACTIVITIES
           
Net loss
  $ (72,140 )   $ (13,740 )
                 
Adjustments to reconcile loss to cash flows from operating activities:
               
Depreciation
    711       -  
Amortization of debt discount
    1,961       -  
Changes in operating assets and liabilities
               
Accounts receivable
    (22,003 )     (12,317 )
Accounts payable
    21,179       1,386  
Other current liabilities
    27,739       26,126  
Net Cash Provided by (Used in) Operating Activities
    (42,553 )     1,455  
                 
INVESTING ACTIVITIES
               
Purchase of property, plant and equipment
    -       (1,455 )
Net Cash Used  in Investing Activities
    -       (1,455 )
                 
NET DECREASE IN CASH
    (42,553 )     -  
                 
CASH AT BEGINNING OF PERIOD
    44,491       -  
                 
CASH AT END OF PERIOD
  $ 1,938     $ -  
                 
SUPPLEMENTAL CASH FLOW INFORMATION:
               
CASH PAID FOR:
               
Interest
  $ 793     $ 979  
Income taxes
  $ -     $ -  
                 
NON-CASH FINANCING AND INVESTING ACTIVITIES:
  $ -     $ -  
 
The accompanying notes are an integral part of these unaudited financial statements.
 
 
F-4

 
 
AMERICAN RETAIL ALLIANCE, CORP.
(Formerly Phillip Sales and Marketing, Inc.)
Notes to the Unaudited Financial Statements
June 30, 2012
 
NOTE 1 – NATURE OF OPERATIONS

American Retail Alliance, Corp. (the “Company”) was incorporated in the State of Florida on February 3, 2005 as Phillips Sales and Marketing, Inc. The Company’s name was changed to American Retail Alliance, Corp. on January 23, 2012. The Company is engaged in the sale and marketing of various consumer goods.

NOTE 2 – BASIS OF PRESENTATION

The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for the interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented.  Unaudited interim results are not necessarily indicative of the results for the full year.  These financial statements should be read in conjunction with the financial statements of the Company for the Year Ended December 31, 2011.

NOTE 3 - GOING CONCERN

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplate continuation of the Company as a going concern.  However, the Company has an accumulated deficit of $189,731 as of June 30, 2012.  In addition to incurring an accumulated deficit since inception, the Company currently has limited liquidity and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Management anticipates that the Company will be dependent, for the near future, on additional investment capital, primarily from its shareholders, to fund operating expenses. The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.

NOTE 4 – RELATED PARTY PAYABLES

During the year ended December 31, 2009 the Company borrowed $5,000 from a related party.  During the year ended December 31, 2010 the Company borrowed an additional $1,600 from the same related party, and an additional $740 from an officer and related party. These notes are due on demand and do not carry an interest rate.  As of June 30, 2012 and December 31, 2011, the balances outstanding on these related-party notes totaled $7,340.

NOTE 5 – SUBSEQUENT EVENTS

Subsequent to June 30, 2012 the Company issued 300,000 shares of common stock as a retainer for legal services to be rendered.
 
The Company reviewed for subsequent events through November 13, 2012 and did not note anything additional.
 
 
F-5

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
The Board of Directors
American Retail Alliance, Corp. (formerly Phillips Sales and Marketing, Inc.)
2979 West Bay Drive Suite 2
Belleair Bluffs, FL 33770
 
We have audited the accompanying balance sheets of American Retail Alliance, Corp. (the “Company”) as of December 31, 2011 and 2010 and the related statements of operations, changes in stockholders’ deficit and cash flows for the years 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 audits.
 
We conducted our audits in accordance with 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 misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit 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 audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Retail Alliance, Corp. as of December 31, 2011 and 2010, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered losses from operations and has a working capital deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 
/s/ MaloneBailey, LLP
MaloneBailey, LLP
www.malone−bailey.com
Houston, Texas
 
November 13, 2012
 
 
F-6

 
 
AMERICAN RETAIL ALLIANCE, CORP.
(Formerly Phillip Sales and Marketing, Inc.)
Balance Sheets
 
 
December 31,
 
December 31,
 
 
2011
 
2010
 
ASSETS
CURRENT ASSETS
           
Cash
  $ 44,491     $ -  
Accounts receivable, net
    21,939       25,722  
Prepaid expenses
    20,000       -  
                 
Total Current Assets
    86,430       25,722  
                 
PROPERTY AND EQUIPMENT, net
    3,422       2,730  
                 
TOTAL ASSETS
  $ 89,852     $ 28,452  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 
CURRENT LIABILITIES
               
Accounts payable and accrued expenses
  $ 69,318     $ 37,464  
Factoring liabilities
    429       -  
Other current liabilities
    1,856       -  
Short term debt, net of discounts of $1,961 and $0
    98,039       -  
Short term debt - related parties
    7,340       7,340  
                 
Total Current Liabilities
    176,982       44,804  
                 
STOCKHOLDERS' DEFICIT
               
                 
Common stock; 50,000,000 shares authorized, at $0.001 par value, 28,500,000 and 25,500,000 shares issued and outstanding, respectively
    28,500       25,500  
Additional paid-in capital
    1,961       (25,000 )
Accumulated deficit
    (117,591 )     (16,852 )
                 
Total Stockholders' Deficit
    (87,130 )     (16,352 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
  $ 89,852     $ 28,452  
 
The accompanying notes are an integral part of these audited financial statements.
 
 
F-7

 
 
AMERICAN RETAIL ALLIANCE, CORP.
(Formerly Phillip Sales and Marketing, Inc.)
Statements of Operations
 
   
For the Years Ended
 
   
December 31,
 
   
2011
   
2010
 
             
REVENUES
  $ 284,377     $ 154,347  
COST OF SALES
    187,345       56,972  
                 
GROSS MARGIN
    97,032       97,375  
                 
OPERATING EXPENSES
               
Wages and payroll
    92,151       61,798  
Advertising
    2,294       7,818  
Professional fees
    48,968       1,356  
General and administrative
    49,540       28,554  
                 
Total Operating Expenses
    192,953       99,526  
                 
LOSS FROM OPERATIONS
    (95,921 )     (2,151 )
                 
OTHER EXPENSES
               
Interest expense
    (4,818 )     (1,031 )
                 
Total Other Expenses
    (4,818 )     (1,031 )
                 
LOSS BEFORE INCOME TAXES
    (100,739 )     (3,182 )
                 
PROVISION FOR INCOME TAXES
    -       -  
                 
NET LOSS
  $ (100,739 )   $ (3,182 )
                 
BASIC AND DILUTED INCOME (LOSS) PER SHARE
  $ (0.00 )   $ (0.00 )
                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
    25,820,000       25,500,000  
 
The accompanying notes are an integral part of these audited financial statements.
 
 
F-8

 
 
AMERICAN RETAIL ALLIANCE, CORP.
(Formerly Phillip Sales and Marketing, Inc.)
Statements of Stockholders' Equity (Deficit)
 
                           
Total
 
               
Additional
         
Stockholders'
 
   
Common Stock
   
Paid-In
   
Accumulated
   
Equity
 
   
Shares
   
Amount
   
Capital
   
Deficit
   
(Deficit)
 
                                         
Balance, December 31, 2009
    25,500,000     $ 25,500     $ (25,000 )   $ (13,670 )   $ (13,170 )
                                         
Net loss for the year ended December 31, 2010
    -       -       -       (3,182 )     (3,182 )
                                         
Balance, December 31, 2010
    25,500,000       25,500       (25,000 )     (16,852 )     (16,352 )
                                         
Common shares issued for debt discount
    200,000       200       1,761       -       1,961  
                                         
Common shares issued for services
    2,800,000       2,800       25,200       -       28,000  
                                         
Net loss for the year ended December 31, 2011
    -       -       -       (100,739 )     (100,739 )
                                         
Balance, December 31, 2011
    28,500,000     $ 28,500     $ 1,961     $ (117,591 )   $ (87,130 )
 
The accompanying notes are an integral part of these audited financial statements.
 
 
F-9

 

AMERICAN RETAIL ALLIANCE, CORP.
(Formerly Phillip Sales and Marketing, Inc.)
Statements of Cash Flows
 
   
For the Years Ended
 
   
December 31,
 
   
2011
   
2010
 
             
OPERATING ACTIVITIES
           
Net loss
  $ (100,739 )   $ (3,182 )
Adjustments to reconcile loss to cash flows from operating activities:
               
Common stock issued for services
    28,000       -  
Bad debt expense
    1,055       -  
Depreciation
    1,123       347  
Changes in operating assets and liabilities
               
Accounts receivable
    2,728       (25,419 )
Prepaid expenses
    (20,000 )     -  
Accounts payable
    30,670       28,690  
Accrued expenses
    3,469       170  
                 
Net Cash Provided By (Used in) Operating Activities
    (53,694 )     606  
                 
INVESTING ACTIVITIES
               
Purchase of property, plant and equipment
    (1,815 )     (3,077 )
                 
Net Cash Used in Investing Activities
    (1,815 )