SEC Company Response from INTERNATIONAL FOOD PRODUCTS GROUP INC (CIK 0001019216) — May 10, 2005
INTERNATIONAL FOOD PRODUCTS GROUP INC (CIK 0001019216)
Date: May 10, 2005 · CIK: 0001019216 · Accession: 0000939798-05-000030
AI Filing Summary & Sentiment
Referenced dates: March 25, 2005
Letter
Form 10-KSB for the fiscal year ended June 30, 2004 Filed November 16, 2004 Forms 10-QSB for the quarters ended September 30 and December 31, 2004
Dear Mr. Ohsiek:
This letter is in response to your comment letter dated March 25, 2005, regarding the matters listed above. In response to your comments we have filed amendments to the Form 10-KSB and the Forms 10-QSB listed above. In addition, we provide the following information. The comments are being answered in behalf the issuer. Accordingly, some answers are given in first person as though the issuer was answering the comment directly.
Response to Comment 1. We note the comment and will include applicable revisions in future filings.
Response to Comment 2. The company does not own or have any ownership interest in the coffee roasting facility in Colombia. We have revised applicable MD&A sections with the following language to clarify any misunderstanding:
Our Colombian Coffee is roasted in the Coastal Valley of the Sierra Nevada de Santa Marta mountain range, which gives us a strategic advantage due to the proximity of this gourmet coffee growing region to the roasting facility. The coffee is sorted and roasted in the facility owned by our supplier, which has a 100 Million pound roasting capacity and has been in business for over 70 years roasting quality coffee. Roasting in Columbia provides significant cost advantages that will allow IFPG to provide high quality Colombian Coffee at competitive prices in the U.S.
Response to Comment 3. We deleted references to expected annual sales of this product. We also modified our discussion of our quality standards as follows:
By providing the finest varieties of coffee, IFPG has taken the first step towards a differentiated product. To further distinguish our coffee, we adhere to high quality standards, which we believe are greater than many of our competitors. In addition, all of our beans are of the Sierra Nevada variety. The “Sierra Nevada” strain is considered one of the finest Colombia has to offer. It is grown in the Mountains surrounding Barranquilla and is highly sought after by specialty roasters from around the World.
We also included the following language in our discussion of plan of operations to discuss the needs to raise additional funds:
Management believes that it will need to raise additional capital in order to implement its business plan. Management believes it can raise the needed capital through additional debt, lines of credit, and the sale of equity in the company. Management has had discussions with sources of capital and from these discussions feels that IFPG can be financed if it secures retail outlets for its products.
Response to Comment 4. Critical accounting policies were amended in the Form 10-KSB for the year ended June 30, 2004 to include the following language:
During the year ended June 30, 2004 we entered into only one sale of our product. This sale had provisions for certain allowances, which amounted to 28% of the gross sale. It is too early for us to determine whether future transactions will provide for similar, greater or lesser allowance terms.
Response to Comment 5. We modified our discussion regarding General and Administrative expenses in the Form 10-KSB by replacing existing language with the following:
General and Administrative expenses. General and Administrative expenses for the fiscal year ended June 30, 2004, were $1,696,224 or approximately 3694% of net sales, as compared to $427,556 or approximately 251% of net sales for the fiscal year ended June 30, 2003. This increase in General and Administrative expenses was due primarily to the following: a. IFPG increased its spending on marketing expense by over $754,000 in preparation to begin selling its coffee products and organic vegetable line of products. b. Officer and office salaries increased by $419,000. Monthly salaries of officers have remained unchanged since this increase, and c. There was a net decrease in consulting expense and shareholder relations expense of approximately ($44,000).
We expect in future years that General and Administrative expenses will be comparable to or exceed those experienced in 2004. We anticipate that marketing expenses which amounted to 44% of General and Administrative expenses for 2004 will remain at the 2004 level or increase as we continue to develop and market new products.
Response to Comment 6. Changes made in all three amended filings as requested.
Response to Comment 7. Changes made in all three amended filings as requested.
Response to Comment 8. Changes made in all three amended filings as requested.
Response to Comment 9. Changes made in all three amended filings as requested.
Response to Comment 10. We note the comment and will revise future filings as requested.
Response to Comment 11. Attached to this letter are schedules that provide the information requested.
Response to Comment 12. In future filings, Note 10 Contingencies and Concentrations will be amended to include an explanation such as:
At June 30, 2004 the company had no physical assets and all of its sales were to one customer.
Response to Comment 13. All of our purchases are in U.S. dollars; therefore, we are not subject foreign currency gains and losses. In future filings, the MD&A will be amended to reflect this as follows:
Commodity Prices and Competition
Also, currency exchange rates factor into IFPG’s ability to make a profit from its foreign produced goods because IFPG is subject to currency exchange rates at the time of purchase. Even though all of our purchases are in U.S. Dollars, we may not be able to pass on increased costs due to changing exchange rates to our customers.
Response to Comment 14. Title transfer and risk of loss occur upon shipment. In future filings, Note 2 to our financial statements will be revised as follows:
Revenue Recognition: Product revenues are recognized upon shipment at which time title and risk of loss transfers to the customers.
Response to Comment 15. The reference in Note 2 to our financial statements to lease commitments was an error and will be deleted from our financial statements in future filings. The revised paragraph to Footnote 2 will be as follows:
In December 2003, the FASB issued a revised interpretation (“FIN 46R”). Among other things, FIN 46R provides clarified guidance regarding the calculation of a VIE’s expected losses and expected residual returns and removes the bias against fees paid to decisions makers, such as collateral managers, that was present in the original interpretation. Since the Company has no interests in variable interest entities at December 31, 2003, it did not need to apply the provisions of the original interpretation as of December 31, 2003. The Company will apply the revised interpretation as of March 31, 2004.
Response to Comment 16. The stipulated judgment in the amount of $126,123 has been accrued and is included in accounts payable and accrued liabilities in our balance sheet. This amount will be shown as a separate line item or referenced in the foot notes in future filings.
Response to Comment 17. Amended filings include correct language in the certifications.
Response to Comment 18. The caption Cash and Cash Equivalents will be revised as Cash in future filings.
Response to Comment 19. The agreement was entered into prior to December 31, 2004 and will be attached to the periodic report for that quarter end.
Response to Comment 20. Revisions made in amended filings as requested.
In addition to the amended filings and the responses to the comments herein, the Company hereby acknowledges that:
·
the Company is responsible for the adequacy and accuracy of the disclosures in the filing;
·
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking an action with respect to the filing; and
·
the Company may not assert this action as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Very
truly yours,
/s/ Gary R. Henrie
Show Raw Text
CORRESP
1
filename1.htm
IFPG Correspondence
Gary R.
Henrie
Attorney
at Law
1688
E. 1460 N.
Telephone:
702-616-3093
Logan,
UT 84341
Facsimile:
435-753-1775
E-mail:
grhlaw@comcast.net
May 9,
2005
THE
UNITED STATES SECURITIES
AND
EXCHANGE COMMISSION
Mr.
George F. Ohsiek, Jr.
Branch
Chief
Corporation
Finance
450 Fifth
Street, N.W., Mail Stop 3-8
Washington,
D.C. 20549
Re: International
Food Products Group, Inc.
File
No. 0-33251
Form
10-KSB for the fiscal year ended June 30, 2004
Filed
November 16, 2004
Forms
10-QSB for the quarters ended September 30
and
December 31, 2004
Dear Mr.
Ohsiek:
This
letter is in response to your comment letter dated March 25, 2005, regarding the
matters listed above. In response to your comments we have filed amendments to
the Form 10-KSB and the Forms 10-QSB listed above. In addition, we provide the
following information. The comments are being answered in behalf the issuer.
Accordingly, some answers are given in first person as though the issuer was
answering the comment directly.
Response
to Comment 1. We note
the comment and will include applicable revisions in future
filings.
Response
to Comment 2. The
company does not own or have any ownership interest in the coffee roasting
facility in Colombia. We have revised applicable MD&A sections with the
following language to clarify any misunderstanding:
Our
Colombian Coffee is roasted in the Coastal Valley of the Sierra Nevada de Santa
Marta mountain range, which gives us a strategic advantage due to the proximity
of this gourmet coffee growing region to the
roasting
facility. The coffee is sorted and roasted in the
facility owned by our supplier, which
has a 100 Million pound roasting capacity and has been in business for over 70
years roasting quality coffee. Roasting in Columbia provides significant cost
advantages that will allow IFPG to provide high quality Colombian Coffee at
competitive prices in the U.S.
Response
to Comment 3. We deleted references to expected annual sales of this product. We
also modified our discussion of our quality standards as follows:
By
providing the finest varieties of coffee, IFPG has taken the first step towards
a differentiated product. To further distinguish our coffee, we
adhere to high quality standards, which we believe are greater than many of our
competitors. In
addition, all of our beans are of the Sierra Nevada variety. The “Sierra Nevada”
strain is considered one of the finest Colombia has to offer. It is grown in the
Mountains surrounding Barranquilla and is highly sought after by specialty
roasters from around the World.
We also
included the following language in our discussion of plan of operations to
discuss the needs to raise additional funds:
Management
believes that it will need to raise additional capital in order to implement its
business plan. Management believes it can raise the needed capital through
additional debt, lines of credit, and the sale of equity in the company.
Management has had discussions with sources of capital and from these
discussions feels that IFPG can be financed if it secures retail outlets for its
products.
Response
to Comment 4. Critical accounting policies were amended in the Form 10-KSB for
the year ended June 30, 2004 to include the following language:
During
the year ended June 30, 2004 we entered into only one sale of our product. This
sale had provisions for certain allowances, which amounted to 28% of the gross
sale. It is too early for us to determine whether future transactions will
provide for similar, greater or lesser allowance terms.
Response
to Comment 5. We modified our discussion regarding General and Administrative
expenses in the Form 10-KSB by replacing existing language with the
following:
General
and Administrative expenses. General
and Administrative expenses for the fiscal year ended June 30, 2004, were
$1,696,224 or approximately 3694% of net sales, as compared to $427,556 or
approximately 251% of net sales for the fiscal year ended June 30,
2003.
This
increase in General and Administrative expenses was due primarily to the
following: a. IFPG increased its spending on marketing expense by over $754,000
in preparation to begin selling its coffee products and organic vegetable line
of products. b. Officer and office salaries increased by $419,000. Monthly
salaries of officers have remained unchanged since this increase, and c. There
was a net decrease in consulting expense and shareholder relations expense of
approximately ($44,000).
We expect
in future years that General and Administrative expenses will be comparable to
or exceed those experienced in 2004. We anticipate that marketing expenses which
amounted to 44% of General and Administrative expenses for 2004 will remain at
the 2004 level or increase as we continue to develop and market new
products.
Response
to Comment 6. Changes made in all three amended filings as
requested.
Response
to Comment 7. Changes made in all three amended filings as
requested.
Response
to Comment 8. Changes made in all three amended filings as
requested.
Response
to Comment 9. Changes made in all three amended filings as
requested.
Response
to Comment 10. We note the comment and will revise future filings as
requested.
Response
to Comment 11. Attached to this letter are schedules that provide the
information requested.
Response
to Comment 12. In future filings, Note 10 Contingencies and Concentrations will
be amended to include an explanation such as:
At June
30, 2004 the company had no physical assets and all of its sales were to one
customer.
Response
to Comment 13. All of our purchases are in U.S. dollars; therefore, we are not
subject foreign currency gains and losses. In future filings, the MD&A will
be amended to reflect this as follows:
Commodity
Prices and Competition
Also,
currency exchange rates factor into IFPG’s ability to make a profit from its
foreign produced goods because IFPG is subject to currency exchange rates at the
time of purchase. Even
though all of our purchases are in U.S. Dollars, we may
not be able to pass on increased costs due to changing exchange rates to our
customers.
Response
to Comment 14. Title transfer and risk of loss occur upon shipment. In future
filings, Note 2 to our financial statements will be revised as
follows:
Revenue
Recognition: Product revenues are recognized upon shipment at which time title
and risk of loss transfers to the customers.
Response
to Comment 15. The reference in Note 2 to our financial statements to lease
commitments was an error and will be deleted from our financial statements in
future filings. The revised paragraph to Footnote 2 will be as follows:
In
December 2003, the FASB issued a revised interpretation (“FIN 46R”). Among other
things, FIN 46R provides clarified guidance regarding the calculation of a VIE’s
expected losses and expected residual returns and removes the bias against fees
paid to decisions makers, such as collateral managers, that was present in the
original interpretation. Since the Company has no interests in variable interest
entities at December 31, 2003, it did not need to apply the provisions of the
original interpretation as of December 31, 2003. The Company will apply the
revised interpretation as of March 31, 2004.
Response
to Comment 16. The stipulated judgment in the amount of $126,123 has been
accrued and is included in accounts payable and accrued liabilities in our
balance sheet. This amount will be shown as a separate line item or referenced
in the foot notes in future filings.
Response
to Comment 17. Amended filings include correct language in the
certifications.
Response
to Comment 18. The caption Cash and Cash Equivalents will be revised as Cash in
future filings.
Response
to Comment 19. The agreement was entered into prior to December 31, 2004 and
will be attached to the periodic report for that quarter end.
Response
to Comment 20. Revisions made in amended filings as requested.
In
addition to the amended filings and the responses to the comments herein, the
Company hereby acknowledges that:
·
the
Company is responsible for the adequacy and accuracy of the disclosures in
the filing;
·
staff
comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking an action with respect to the filing;
and
·
the
Company may not assert this action as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
Very
truly yours,
/s/ Gary R. Henrie
Gary R.
Henrie
Comment 11 Schedules
International
Food Products Group, Inc.
Summary
of Stock Transactions
June
30, 2003
Per
Share
Per
Share
Related
S-8/
Issuance
Shares
Closing
Fair
Stockholder
y
or n
144
Date
Issued
Bid
Price
Value
Espense
Balance
6-30-02
21,523,803
Issued
for Services:
Scott
Cambell
n
144
12/1/2002
400,000
0.10
$
0.02
$
8,000.00
Chuck
Milden
n
144
12/1/2002
20,000
$
0.10
$
0.02
$
400.00
Robert
George
n
144
12/1/2002
50,000
$
0.10
$
0.02
$
1,000.00
Ned
Van Rensselaer
n
144
12/1/2002
50,000
$
0.1
$
0.02
$
1,000.00
David
Euzarraga
n
144
12/1/2002
60,000
$
0.10
$
0.02
$
1,200.00
Richard
Damion
y
144
1/3/2003
400,000
$
0.10
0.075
(a
)
$
30,000.00
Joseph
Rodriguez
y
144
1/3/2003
400,000
$
0.10
0.075
(a
)
$
30,000.00
Jeffrey
Ross
n
144
1/3/2003
550,000
$
0.10
0.075
(a
)
$
41,250.00
Richard
Damion
y
144
2/28/2003
266,666
$
0.16
0.075
$
19,999.95
Joseph
Rodriguez
y
144
2/28/2003
133,333
$
0.16
0.075
$
9,999.98
Jeffrey
Ross
n
144
2/28/2003
190,000
$
0.16
0.075
$
14,250.00
Jim
Clarke
n
144
1/27/2003
25,000
$
0.16
0.15
$
3,750.00
David
Euzarraga
n
144
1/1/2003
60,000
$
0.10
0.15
$
9,000.00
David
Euzarraga
n
144
1/8/2003
300,000
$
0.19
0.15
$
45,000.00
David
Euzarraga
n
144
4/8/2003
40,000
$
0.23
0.23
$
9,200.00
David
Euzarraga
n
144
4/15/2003
165,000
$
0.20
0.19
$
31,350.00
Richard
Damion
y
144
6/3/2003
347,826
$
0.23
0.115
$
39,999.99
Jeffrey
Ross
n
144
6/3/2003
208,696
$
0.23
0.115
$
24,000.04
Joe
Rodriguez
y
144
6/3/2003
173,913
$
0.23
0.115
$
20,000.00
David
Wells
n
144
6/16/2003
60,000
$
0.25
0.25
$
15,000.00
David
Euzarraga
n
144
10/30/2002
40,000
$
0.10
0.02
$
800.00
Total
for services
3,940,434
$
355,199.95
Lock-up
Shares:
A.R.
Grandseart
n
144
12/2/2002
40,000
$
0.10
0.02
$
4,000.00
Bruce
Hubert Trust
n
144
1/16/2003
4,800
$
0.16
$
0.02
$
96.00
Pete
Dunn
n
144
1/16/2003
1,000
$
0.16
0.02
20
Mark
Skalski
n
144
1/16/2003
2,000
$
0.16
0.02
40
Jose
Perez
n
144
1/16/2003
2,000
$
0.16
0.02
40
Terrence
Coup
n
144
1/16/2003
2,000
$
0.16
0.02
40
Kirk
& Kirk, Inc
n
144
1/16/2003
1,000
$
0.16
0.02
20
Sperry
Family Trust
n
144
1/16/2003
1,000
$
0.16
0.02
20
Barry
Tiemann
n
144
1/16/2003
500
$
0.16
0.02
10
Jerry
Horst
n
144
1/16/2003
600
$
0.16
0.02
12
Daryle
Reimer
n
144
1/16/2003
2,500
$
0.16
0.02
50
Pat
Burgess
n
144
1/16/2003
500
$
0.16
0.02
10
James
Gacki
n
144
1/16/2003
2,000
$
0.16
0.02
40
Jared
Enterprises
n
144
1/16/2003
10,000
$
0.16
0.02
200
George
Milidan
n
144
1/16/2003
4,667
$
0.16
0.02
93.34
James
Mitchell
n
144
1/16/2003
4,000
$
0.16
0.02
80
Wilfred
Wheeler
n
144
1/16/2003
40,000
$
0.16
0.02
800
Terry
Turner
n
144
1/16/2003
5,000
$
0.16
0.02
100
John
Shelling
n
144
1/16/2003
1,500
$
0.16
0.02
30
Andre
Perin
n
144
1/16/2003
500
$
0.16
0.02
10
James
Brown
n
144
1/16/2003
400
$
0.16
0.02
8
Joyce
Heilman
n
144
1/16/2003
200
$
0.16
0.02
4
Heitman
Family Trust
n
144
1/17/2003
2,000
$
0.16
0.02
40
Wilbert
& Joyce Heitman
n
144
1/17/2003
1,000
$
0.16
0.02
20
Brett
Heitman
n
144
1/17/2003
1,400
$
0.16
0.02
28
Clay
Heitman
n
144
1/17/2003
400
$
0.16
0.02
8
A F
Moore
n
144
1/17/2003
3,000
$
0.16
0.02
60
Harley
Hill
n
144
1/17/2003
820
$
0.16
0.02
16.4
Ronald
Rau
n
144
1/17/2003
3,000
$
0.16
0.02
60
Kathleen
Williams
n
144
1/17/2003
2,000
$
0.16
0.02
40
Kevin
Madera
n
144
1