SEC Company Response from WALKER FINANCIAL CORP (CIK 0000104224) — Jul 1, 2005
WALKER FINANCIAL CORP (CIK 0000104224)
Date: July 1, 2005 · CIK: 0000104224 · Accession: 0001144204-05-020503
AI Filing Summary & Sentiment
File numbers found in text: 333-122776
Referenced dates: March 11, 2005
Letter
Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549-0405 Attention: Reginald A. Norris, Esq. Mail Stop 0407 Form 10-KSB for the year ended December 31, 2003 Forms 10-QSB for the quarter ended September 30, 2004 File No. 0-28173
Re: Walker Financial Corporation (the "Company") Amendment No. 1 to Form SB-2 File No. 333-122776 Filed February 11, 2005
Dear Mr. Norris:
On behalf of the Company, we are hereby enclosing two copies of Amendment No. 1 (the "Amendment") to the Company's registration statement on Form SB-2 (the "Registration Statement"). One of the copies has been marked to show changes from the Registration Statement. The Registration Statement was filed on February 11, 2005. By letter dated March 11, 2005, the staff of the Securities and Exchange Commission (the "Staff") issued comments on the Registration Statement and the Form 10-QSB for the three months ended September 30, 2004 (the "Form 10-QSB") and the Form 10-KSB for the year ended December 31, 2004 (the "Form 10-KSB") (Commission File No. 0-13215). Following are the Company's responses to the Staff's comments. For ease of reference, each response is preceded by the Staff's comment.
In its letter, the Staff requested that the Company make certain revisions to its Form 10-QSB. As noted in our responses to comments 49 through 52, the Company intends to file amendments to the Form 10-QSB and, to the extent required, to the Form 10-KSB upon clearing the Staff's comments on the Registration Statement.
General
1. The financial statements and MD&A and should be updated to December 31, 2004, as required by Rule l-l0(g) of Regulation S-B. In addition, please update your other disclosure where required (e.g. executive compensation information).
<PAGE>
The financial statements and MD&A have been updated to March 31, 2005. In addition, per the requirements of Rule 1-10(g) of Regulation S-B, the Company has updated its disclosures as required.
2. Please note that companies do not "list" their securities on the OTC Bulletin Board. Brokers must apply to the to quote a company's securities on the OTC Bulletin Board. Therefore, revise the reference to your stock being listed on the OTC Bulletin Board.
The Company has revised the Registration Statement in accordance with the Staff's comment.
Prospectus Summary, Overview, page 5
3. As currently drafted, the description of your business is vague and contains industry jargon that does not provide any meaningful information. For example, what do you mean that you provide "prearrangement" and "pre-need products?" Also, what does it mean that you have "established a worksite and affinity marketing strategy?" Instead of this disclosure, simply state, if true, that you sell funeral plans to individuals on behalf of funeral companies. In addition, in light of your financial history and condition, it is unclear the nature and extent of your current and future operations. Please revise to discuss what products/services you currently provide, the extent of those operations to date, and how you provide these operations. In addition, please discuss what product/service you intend to provide as well as status of that product/service in development. Revise your entire document, including this section, your Business section, and your MD&A, so that ordinary investors have a clear understanding of what you do and the goods and services that you sell and how you sell them.
The Company has revised this disclosure to provide a clearer description of its business and industry. The Company has also revised its business description to discuss its current and future operations, what products/services it currently provides, the extent of those operations to date, and how it provides these operations. In addition, the Company has added disclosure describing the products/services it intends to provide as well as status of those products/services that are in development.
4. Further, as part of your revisions, please continue to provide a balanced picture of your operations, financial condition, and structure. Please disclose that you have an accumulated deficit of $4.1 million and only recently entered into your current business. In addition, disclose that you need $1 million to fund your operations for the next twelve months.
The Company has revised the Registration Statement to disclose that it has an accumulated deficit of $6.1 million and that it only recently entered into its current business. In addition, the Company has added disclosure to the effect that it needs $1 million to fund its operations for the next twelve months.
5. In this regard, please revise throughout the prospectus where appropriate to discuss your corporate history including when and how you entered into your current business.
The Company has revised throughout the prospectus where appropriate to discuss its corporate history including when and how it entered into its current business.
Risk Factors, Page 6
6. Please delete the second and third sentences of the introductory paragraph. Once you describe all material risks, and tailor each one to your specific facts and circumstances, you will not need this generic, boilerplate risk disclosure.
<PAGE>
The Company has deleted the second and third sentences of the introductory paragraph.
7. Please revise each risk factor caption so that it reflects the risk that you discuss in the text. Currently, many of your risk factor captions are unduly vague, such as "We have a limited operating history with which to judge our performance" on page 3, or merely state a fact about you, such as "Our auditors have recognized a material weakness in our internal controls" on page 4. Others captions simply allude to a future event, such as "Changes or increases in, or failure to comply with, regulations applicable to our business could increase our costs" on page 5. These are only examples. Revise throughout to identify briefly in your captions the risks that result from the facts or uncertainties. Potential investors should be able to read the risk factor captions and come away with an understanding of what the risk is and the result of the risk as it specifically applies to you. As a general rule, your revised captions should work only in this document. If they are readily transferable to other companies' documents, they are probably too generic. Please revise accordingly.
The Company has revised each risk factor caption so that it reflects the risk that is discussed in the text.
8. Please avoid the generic conclusion in the captions and discussions that if a risk occurs your business and results of operations could be adversely affected or substantially harmed. This does not represent meaningful disclosure. Instead, replace this language with specific disclosure of the possible impact upon your operating results, business, liquidity, cash flow, financial condition, share price, etc.
The Company has replaced this language in the risk factors with specific disclosure of the possible impact upon its operating results, business, liquidity, cash flow, financial condition and share price.
Our auditors have recognized a material weakness ..., page 4
9. Please provide more disclosure regarding the risk to you and your investors resulting from your auditors identifying a material weakness in your internal controls. In this regard, we note your statement on page 4 that management "believes that sufficient compensating controls have been implemented to minimize the risks associated with this material weakness." Please delete this disclosure as mitigating language is not appropriate in the risk factor section.
The Company has provided more disclosure regarding the risk to it and its investors resulting from its auditors identifying a material weakness in the Company's internal controls.
Increased advertising or better marketing by our competitors, page 5
10. To the extent possible, please quantify your market share in the industry.
The Company has made revisions to the Registration Statement in accordance with the Staff's comment.
Changes or increases in, or failure to comply with, regulations.... page 5
11. Please provide more disclosure how this risk may affect you and your investors. For example, are you in compliance with all applicable laws? Have you incurred any costs due to these laws?
<PAGE>
The Company has made revisions to the Registration Statement in accordance with the Staff's comment.
If we fail to remain current on our reporting requirements. .. page 7
12. In order for investors to understand the likelihood of this risk occurring, please disclose whether you have been delinquent in your periodic reporting during the last twelve months.
The Company has made revisions to the Registration Statement in accordance with the Staff's comment.
Forward Looking Statement, page 9
13. Please delete your reference to Section 27A and Section 21E as these safe harbors do not apply to any issuer who has issued penny stock. See Section 27A(b)(1)(C) of the Securities Act of 1933 and Section 21E(b)(l)(C) of the Securities Exchange Act of 1934.
The Company has made revisions to the Registration Statement in accordance with the Staff's comment.
Management's Discussion and Analysis..., Overview, page 11
14. Please revise this section to highlight the most important developments of the period being reported without being repetitive of or summarizing the ensuing MD&A discussion. This discussion should be written in Plain English from the CEO's perspective, focusing on issues "that keep him up at night." Such topics could include:
o economic or industry-wide factors relevant to the company;
o how the company earns revenues and income and generates cash;
o the company's lines of business, locations of operations and principal products and services without being repetitive of the Business section or disclosure elsewhere in the prospectus; and
o the material opportunities, challenges and risks that management are most focused on for the short and long term, as well as actions that they are taking to address these opportunities, challenges and risks. For example, we note your disclosure on page 13 that National Preplanning "expects to start achieving more substantial revenues in the second quarter of 2005." Your overview should highlight why management expects revenues to increase substantially in the second quarter of 2005.
The Company has made revisions to the Registration Statement in accordance with the Staff's comment.
15. Please discuss any future plans to expand our services and offerings including a discussion of the funding and timing requirements to complete any expansions for each subsidiary.
The Company has made revisions to the Registration Statement in accordance with the Staff's comment.
<PAGE>
16. We note that your auditors cited a material weakness in your internal control over financial reporting for the period ended September 20, 2004. Please revise this section to discuss any potential material impacts on your financial condition related to the weaknesses in the company's internal control over financial reporting.
The Company has made revisions to the Registration Statement in accordance with the Staff's comment.
Critical Accounting Policies, page 11
17. We note that your discussion of your critical accounting policies basically repeats the discussion of your accounting policies in note 1 to your financial statements. Please note that this is not the purpose of this disclosure. This section should only highlight accounting estimates or assumptions where:
o the nature of the estimates or assumption is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and
o the impact of the estimates and assumptions on financial condition or operating performance is material.
Such disclosures should supplement, not duplicate, the description of accounting policies required in the notes to the financial statements. The accounting policy note to the financial statements generally describes the method used to apply an accounting principle while the MD&A disclosure should present a company's analysis of the uncertainties involved in applying a principle at the current time or the variability that is reasonably likely to result from its application over time. Please revise accordingly.
The Company has made revisions to the Registration Statement in accordance with the Staff's comment.
Results of Operations...page 13
18. Throughout this subsection, you frequently attribute a material change to two or more events or factors that you describe without quantification. In discussing the material changes, please quantify the amount of change attributed to each factor. For example, operating expenses were a significant reason for your net loss for the nine months ended September 30, 2004; however, there is no detail as to how much each component of your operating expenses (new employee hires, website development and marketing costs) contributed to the overall increase from the comparable earlier period. Refer to Item 303 of Regulation S-B.
The Company has made revisions to the Registration Statement in accordance with the Staff's comment.
19. Also, in this regard, please provide disclosure that will provide insight into the underlying business developments or conditions that resulted in the changes. Discuss whether any of these factors represent part of a trend that will continue to affect your operations going forward. For example, how do you expect competing with larger and more established funeral companies will impact you as you commence and expand operations. See Item 303(b)(1)(iv) of Regulation S-B.
Show Raw Text
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SICHENZIA ROSS FRIEDMAN FERENCE LLP
1065 AVENUE OF THE AMERICAS NEW YORK NY 10018
TEL 212 930 9700 FAX 212 930 9725 WEB WWW. SRFF.COM
June 30, 2005
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0405
Attention: Reginald A. Norris, Esq.
Mail Stop 0407
Re: Walker Financial Corporation (the "Company")
Amendment No. 1 to Form SB-2
File No. 333-122776
Filed February 11, 2005
Form 10-KSB for the year ended December 31, 2003
Forms 10-QSB for the quarter ended September 30, 2004
File No. 0-28173
Dear Mr. Norris:
On behalf of the Company, we are hereby enclosing two copies of Amendment No. 1
(the "Amendment") to the Company's registration statement on Form SB-2 (the
"Registration Statement"). One of the copies has been marked to show changes
from the Registration Statement. The Registration Statement was filed on
February 11, 2005. By letter dated March 11, 2005, the staff of the Securities
and Exchange Commission (the "Staff") issued comments on the Registration
Statement and the Form 10-QSB for the three months ended September 30, 2004 (the
"Form 10-QSB") and the Form 10-KSB for the year ended December 31, 2004 (the
"Form 10-KSB") (Commission File No. 0-13215). Following are the Company's
responses to the Staff's comments. For ease of reference, each response is
preceded by the Staff's comment.
In its letter, the Staff requested that the Company make certain revisions to
its Form 10-QSB. As noted in our responses to comments 49 through 52, the
Company intends to file amendments to the Form 10-QSB and, to the extent
required, to the Form 10-KSB upon clearing the Staff's comments on the
Registration Statement.
General
1. The financial statements and MD&A and should be updated to December 31,
2004, as required by Rule l-l0(g) of Regulation S-B. In addition, please
update your other disclosure where required (e.g. executive compensation
information).
<PAGE>
The financial statements and MD&A have been updated to March 31, 2005. In
addition, per the requirements of Rule 1-10(g) of Regulation S-B, the
Company has updated its disclosures as required.
2. Please note that companies do not "list" their securities on the OTC
Bulletin Board. Brokers must apply to the to quote a company's securities
on the OTC Bulletin Board. Therefore, revise the reference to your stock
being listed on the OTC Bulletin Board.
The Company has revised the Registration Statement in accordance with the
Staff's comment.
Prospectus Summary, Overview, page 5
3. As currently drafted, the description of your business is vague and
contains industry jargon that does not provide any meaningful information.
For example, what do you mean that you provide "prearrangement" and
"pre-need products?" Also, what does it mean that you have "established a
worksite and affinity marketing strategy?" Instead of this disclosure,
simply state, if true, that you sell funeral plans to individuals on behalf
of funeral companies. In addition, in light of your financial history and
condition, it is unclear the nature and extent of your current and future
operations. Please revise to discuss what products/services you currently
provide, the extent of those operations to date, and how you provide these
operations. In addition, please discuss what product/service you intend to
provide as well as status of that product/service in development. Revise
your entire document, including this section, your Business section, and
your MD&A, so that ordinary investors have a clear understanding of what
you do and the goods and services that you sell and how you sell them.
The Company has revised this disclosure to provide a clearer description of
its business and industry. The Company has also revised its business
description to discuss its current and future operations, what
products/services it currently provides, the extent of those operations to
date, and how it provides these operations. In addition, the Company has
added disclosure describing the products/services it intends to provide as
well as status of those products/services that are in development.
4. Further, as part of your revisions, please continue to provide a balanced
picture of your operations, financial condition, and structure. Please
disclose that you have an accumulated deficit of $4.1 million and only
recently entered into your current business. In addition, disclose that you
need $1 million to fund your operations for the next twelve months.
The Company has revised the Registration Statement to disclose that it has
an accumulated deficit of $6.1 million and that it only recently entered
into its current business. In addition, the Company has added disclosure to
the effect that it needs $1 million to fund its operations for the next
twelve months.
5. In this regard, please revise throughout the prospectus where appropriate
to discuss your corporate history including when and how you entered into
your current business.
The Company has revised throughout the prospectus where appropriate to
discuss its corporate history including when and how it entered into its
current business.
Risk Factors, Page 6
6. Please delete the second and third sentences of the introductory paragraph.
Once you describe all material risks, and tailor each one to your specific
facts and circumstances, you will not need this generic, boilerplate risk
disclosure.
2
<PAGE>
The Company has deleted the second and third sentences of the introductory
paragraph.
7. Please revise each risk factor caption so that it reflects the risk that
you discuss in the text. Currently, many of your risk factor captions are
unduly vague, such as "We have a limited operating history with which to
judge our performance" on page 3, or merely state a fact about you, such as
"Our auditors have recognized a material weakness in our internal controls"
on page 4. Others captions simply allude to a future event, such as
"Changes or increases in, or failure to comply with, regulations applicable
to our business could increase our costs" on page 5. These are only
examples. Revise throughout to identify briefly in your captions the risks
that result from the facts or uncertainties. Potential investors should be
able to read the risk factor captions and come away with an understanding
of what the risk is and the result of the risk as it specifically applies
to you. As a general rule, your revised captions should work only in this
document. If they are readily transferable to other companies' documents,
they are probably too generic. Please revise accordingly.
The Company has revised each risk factor caption so that it reflects the
risk that is discussed in the text.
8. Please avoid the generic conclusion in the captions and discussions that if
a risk occurs your business and results of operations could be adversely
affected or substantially harmed. This does not represent meaningful
disclosure. Instead, replace this language with specific disclosure of the
possible impact upon your operating results, business, liquidity, cash
flow, financial condition, share price, etc.
The Company has replaced this language in the risk factors with specific
disclosure of the possible impact upon its operating results, business,
liquidity, cash flow, financial condition and share price.
Our auditors have recognized a material weakness ..., page 4
9. Please provide more disclosure regarding the risk to you and your investors
resulting from your auditors identifying a material weakness in your
internal controls. In this regard, we note your statement on page 4 that
management "believes that sufficient compensating controls have been
implemented to minimize the risks associated with this material weakness."
Please delete this disclosure as mitigating language is not appropriate in
the risk factor section.
The Company has provided more disclosure regarding the risk to it and its
investors resulting from its auditors identifying a material weakness in
the Company's internal controls.
Increased advertising or better marketing by our competitors, page 5
10. To the extent possible, please quantify your market share in the industry.
The Company has made revisions to the Registration Statement in accordance
with the Staff's comment.
Changes or increases in, or failure to comply with, regulations.... page 5
11. Please provide more disclosure how this risk may affect you and your
investors. For example, are you in compliance with all applicable laws?
Have you incurred any costs due to these laws?
3
<PAGE>
The Company has made revisions to the Registration Statement in accordance
with the Staff's comment.
If we fail to remain current on our reporting requirements. .. page 7
12. In order for investors to understand the likelihood of this risk occurring,
please disclose whether you have been delinquent in your periodic reporting
during the last twelve months.
The Company has made revisions to the Registration Statement in accordance
with the Staff's comment.
Forward Looking Statement, page 9
13. Please delete your reference to Section 27A and Section 21E as these safe
harbors do not apply to any issuer who has issued penny stock. See Section
27A(b)(1)(C) of the Securities Act of 1933 and Section 21E(b)(l)(C) of the
Securities Exchange Act of 1934.
The Company has made revisions to the Registration Statement in accordance
with the Staff's comment.
Management's Discussion and Analysis..., Overview, page 11
14. Please revise this section to highlight the most important developments of
the period being reported without being repetitive of or summarizing the
ensuing MD&A discussion. This discussion should be written in Plain English
from the CEO's perspective, focusing on issues "that keep him up at night."
Such topics could include:
o economic or industry-wide factors relevant to the company;
o how the company earns revenues and income and generates
cash;
o the company's lines of business, locations of operations and
principal products and services without being repetitive of
the Business section or disclosure elsewhere in the
prospectus; and
o the material opportunities, challenges and risks that
management are most focused on for the short and long term,
as well as actions that they are taking to address these
opportunities, challenges and risks. For example, we note
your disclosure on page 13 that National Preplanning
"expects to start achieving more substantial revenues in the
second quarter of 2005." Your overview should highlight why
management expects revenues to increase substantially in the
second quarter of 2005.
The Company has made revisions to the Registration Statement in accordance
with the Staff's comment.
15. Please discuss any future plans to expand our services and offerings
including a discussion of the funding and timing requirements to complete
any expansions for each subsidiary.
The Company has made revisions to the Registration Statement in accordance
with the Staff's comment.
4
<PAGE>
16. We note that your auditors cited a material weakness in your internal
control over financial reporting for the period ended September 20, 2004.
Please revise this section to discuss any potential material impacts on
your financial condition related to the weaknesses in the company's
internal control over financial reporting.
The Company has made revisions to the Registration Statement in accordance
with the Staff's comment.
Critical Accounting Policies, page 11
17. We note that your discussion of your critical accounting policies basically
repeats the discussion of your accounting policies in note 1 to your
financial statements. Please note that this is not the purpose of this
disclosure. This section should only highlight accounting estimates or
assumptions where:
o the nature of the estimates or assumption is material due to the
levels of subjectivity and judgment necessary to account for highly
uncertain matters or the susceptibility of such matters to change; and
o the impact of the estimates and assumptions on financial condition or
operating performance is material.
Such disclosures should supplement, not duplicate, the description of
accounting policies required in the notes to the financial statements. The
accounting policy note to the financial statements generally describes the
method used to apply an accounting principle while the MD&A disclosure
should present a company's analysis of the uncertainties involved in
applying a principle at the current time or the variability that is
reasonably likely to result from its application over time. Please revise
accordingly.
The Company has made revisions to the Registration Statement in accordance
with the Staff's comment.
Results of Operations...page 13
18. Throughout this subsection, you frequently attribute a material change to
two or more events or factors that you describe without quantification. In
discussing the material changes, please quantify the amount of change
attributed to each factor. For example, operating expenses were a
significant reason for your net loss for the nine months ended September
30, 2004; however, there is no detail as to how much each component of your
operating expenses (new employee hires, website development and marketing
costs) contributed to the overall increase from the comparable earlier
period. Refer to Item 303 of Regulation S-B.
The Company has made revisions to the Registration Statement in accordance
with the Staff's comment.
19. Also, in this regard, please provide disclosure that will provide insight
into the underlying business developments or conditions that resulted in
the changes. Discuss whether any of these factors represent part of a trend
that will continue to affect your operations going forward. For example,
how do you expect competing with larger and more established funeral
companies will impact you as you commence and expand operations. See Item
303(b)(1)(iv) of Regulation S-B.