SEC Company Response from INTERNATIONAL FOOD PRODUCTS GROUP INC (CIK 0001019216) — Aug 31, 2005
INTERNATIONAL FOOD PRODUCTS GROUP INC (CIK 0001019216)
Date: Aug. 31, 2005 · CIK: 0001019216 · Accession: 0000939798-05-000051
AI Filing Summary & Sentiment
Referenced dates: July 25, 2005
Letter
Washington, D.C. 20549 Re. International Food Products Group, Inc. Form 10K-SB for the fiscal year ended June 30, 2004 File Number 0-33251
Dear Ms. Henderson:
This letter is in response to your letter dated July 25, 2005. The schedule of shares issued has been corrected to reflect the following.
Comment 1. APB 25 paragraph 4 states “This Opinion deals with some aspects of accounting for stock issued to employees through both noncompensatory and compensatory plans [a plan is any arrangement to issue stock to officers and employees, as a group or individually].” Paragraph 1 of ABP 25 states “Many corporations have adopted various plans, contracts, and agreements to compensate officers and other employees by issuing to them stock of the employer corporation.” Paragraph 10 of APB 25 states “Compensation for services that a corporation receives as consideration for stock issued through employee stock option, purchase, and award plans should be measured by the quoted market price of the stock at the measurement date less the amount, if any, that the employee is required to pay.”
International Food Products Group, Inc. has not adopted any type of stock compensation plan, contract or arrangement contemplated by APB 25. Rather the Company has entered into compensation arrangements with its officers and employees. As the Company was unable to satisfy these arrangements by payment in cash as contemplated by the parties, the obligations were satisfied by the issuance of shares. We therefore do not believe that the provisions of APB 25 are applicable to these transactions.
Comment 2. The response was in error. We issued no shares to employees in exchange for services [See response to Comment 1 above]. The shares issued to employees were in exchange for the cancellation of debt. We used the guidance in FASB 123 in determining the fair value of the shares issued, however the value assigned was the amount of the debt that was cancelled.
Comment 3. EITF 96-18, Issue 1- states “The Task Force reached a consensus that the issuer should measure the fair value of the equity instruments using the stock price and other measurement assumptions as of the earlier of either of the following:
1.
The date at which a commitment for performance by the conterparty to earn the equity instrument is reached [a “performance commitment”] or
2.
The date at which the counterparty’s performance is complete.”
In each case, shares issued to non-employees were valued at the date of the commitment between the parties was reached, which was before the performance of the services by the non-employee was complete.
\
Comment 4.
1.
Common stock issued to non-employees in exchange for services.
The measurement date used is the date at which a performance commitment is entered into by the Company and the non-employee, in accordance with EITF 96-18. The valuation of these shares, issued pursuant to Form S-8, is the closing bid price on the measurement date.
2.
Common stock issued to employees in exchange for services.
The measurement date used for shares issued to employees pursuant to Form S-8 is the date on which the number of shares issued to be issued to an employee and the purchase price, is known, in accordance with paragraph 10.b. of APB 25. The valuation method used is the quoted market price, as required by paragraph 10. a. of APB 25.
3.
Common stock issued to employees in exchange for lock-up agreements.
The Company’s Board of Directors approved a lock-up agreement available to all shareholders. This agreement was approved and offered to all shareholders before the Company’s common stock began trading on any exchange. All shares issued pursuant to this lock-up agreement were restricted. The measure date used was the date of the offer to all shareholders. The Company’s Board of Directors determined the fair value of the shares to be issued in the lock-up agreements by using the Company’s shareholders’ equity, current earnings and future earnings potential. No independent appraisers were used in the valuation.
4.
Common stock issued to non-employees in exchange for lock-up agreements.
See response to 3. above. The Company offered a single lock-up arrangement to all shareholders, both employees and non-employees. This was one offer at one date. Therefore, the Company valued all shares issued in exchange for the lock-up agreements in the same manner. No independent appraisers were used in the valuation.
5.
Restricted stock issued to non-employees in exchange for services.
The measurement date is the earlier of the commitment for performance or the completion of performance as described in EITF 96-18.
The shares issued were valued at their fair value using the Black Scholes Option Pricing Model with data specific to the Company’s common stock.
The assumptions used in the valuation model varied for each measurement date.
Certain examples follow.
Measurement
Vesting
Exercise
Stock
Annual Risk
Expected
Volatility
Date
Period
Price
Price
Dividend
Life
Yield
11/7/03
years
$0.17
$0.17
1.99%
years
164.7627%
4/13/04
year
0.16
0.16
1.92%
year
166.0344%
Volatility is calculated by the software using the last 12 months trading.
The shares issued to non employees on 12/1/02 were valued prior to the shares of the Company being traded. Trading began in mid December, 2002. The schedule has been revised.
6.
Restricted stock issued to employees in exchange for services.
No restricted common shares were issued to employees in exchange for services (See response to Comment 1 above). The shares were issued in cancellation of the debt to the employees. SFAS 15, paragraph 15 states “A debtor that issues or otherwise grants an equity interest to a creditor to settle fully a payable shall account for the equity interest at its fair value.” The fair value of the shares issued were determined using the Black Scholes Option Pricing Model. The measurement date was the date upon which the Company’s Board of Directors approved the transaction.
Comment 5. There were no shares voluntarily exchanged for restricted shares. The schedule has been amended to reflect the issuance of shares in the lock-up agreement.
Comment 6. Reconciliation of analysis of stock transactions to financial statements.
Shares issued for services:
Balance per financial statements
10,464,917
Shares issued in satisfaction of payroll
liabilities incorrectly reflected in
financial statements:
Richard Damion
157,859
Joe Rodriguez
300,000
Joe Rodriguez
100,000
Shares issued in lock-up agreement incorrectly
Reflected in financial statements
32,058
Total shares issued for services
9,875,000
Shares issued in satisfaction of accrued payroll:
Balance per financial statements
2,666,667
Shares reflected as issued for services
in financial statements
557,859
Total shares issued in satisfaction of
payroll liability
3,224,526
Shares issued in lock-up agreement:
Balance per financial statements
58,750
Shares reflected as issued for services
in financial statements
32,058
Total shares issued in lock-up agreements
90,758
Comment 7. The schedule has been adjusted to reflect the compensation expensed for Joe Rodriguez and Richard Damion satisfied through the issuance of restricted common shares.
Comment 8. The schedule has been adjusted whether the shares issued to Richard Damion and Joe Rodriguez were restricted or unrestricted.
Comment 9. A column that shows the measurement date has been added.
Comment 10. The schedule has been amended to reflect the per share closing bid price on the measurement date.
If you have any further questions, please call me.
Sincerely,
/s/ Joe
Rodriguez
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CORRESP
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filename1.htm
IFPG CORR AUGUST 2005
International
Food Products Group, Inc.
170
Newport Center Drive, Suite 260
Newport
Beach, California 92660
August
18, 2005
The
United States Securities and Exchange Commission
Ms. Ta
Tanisha Henderson
Staff
Accountant
Corporation
Finance
450 Fifth
Street, N.W.
Washington,
D.C. 20549
Re. International
Food Products Group, Inc.
Form
10K-SB for the fiscal year ended June 30, 2004
File
Number 0-33251
Dear Ms.
Henderson:
This
letter is in response to your letter dated July 25, 2005. The schedule of shares
issued has been corrected to reflect the following.
Comment
1. APB 25 paragraph 4 states “This Opinion deals with some aspects of accounting
for stock issued to employees through both noncompensatory and compensatory
plans [a plan is any arrangement to issue stock to officers and employees, as a
group or individually].” Paragraph 1 of ABP 25 states “Many corporations have
adopted various plans, contracts, and agreements to compensate officers and
other employees by issuing to them stock of the employer corporation.” Paragraph
10 of APB 25 states “Compensation for services that a corporation receives as
consideration for stock issued through employee stock option, purchase, and
award plans should be measured by the quoted market price of the stock at the
measurement date less the amount, if any, that the employee is required to
pay.”
International
Food Products Group, Inc. has not adopted any type of stock compensation plan,
contract or arrangement contemplated by APB 25. Rather the Company has entered
into compensation arrangements with its officers and employees. As the Company
was unable to satisfy these arrangements by payment in cash as contemplated by
the parties, the obligations were satisfied by the issuance of shares. We
therefore do not believe that the provisions of APB 25 are applicable to these
transactions.
Comment
2. The response was in error. We issued no shares to employees in exchange for
services [See response to Comment 1 above]. The shares issued to employees were
in exchange for the cancellation of debt. We used the guidance in FASB 123 in
determining the fair value of the shares issued, however the value assigned was
the amount of the debt that was cancelled.
Comment
3. EITF 96-18, Issue 1- states “The Task Force reached a consensus that the
issuer should measure the fair value of the equity instruments using the stock
price and other measurement assumptions as of the earlier of either of the
following:
1.
The
date at which a commitment for performance by the conterparty to earn the
equity instrument is reached [a “performance commitment”]
or
2.
The
date at which the counterparty’s performance is
complete.”
In each
case, shares issued to non-employees were valued at the date of the commitment
between the parties was reached, which was before the performance of the
services by the non-employee was complete.
\
Comment
4.
1.
Common
stock issued to non-employees in exchange for
services.
The
measurement date used is the date at which a performance commitment is entered
into by the Company and the non-employee, in accordance with EITF 96-18. The
valuation of these shares, issued pursuant to Form S-8, is the closing bid price
on the measurement date.
2.
Common
stock issued to employees in exchange for
services.
The
measurement date used for shares issued to employees pursuant to Form S-8 is the
date on which the number of shares issued to be issued to an employee and the
purchase price, is known, in accordance with paragraph 10.b. of APB 25. The
valuation method used is the quoted market price, as required by paragraph 10.
a. of APB 25.
3.
Common
stock issued to employees in exchange for lock-up
agreements.
The
Company’s Board of Directors approved a lock-up agreement available to all
shareholders. This agreement was approved and offered to all shareholders before
the Company’s common stock began trading on any exchange. All shares issued
pursuant to this lock-up agreement were restricted. The measure date used was
the date of the offer to all shareholders. The Company’s Board of Directors
determined the fair value of the shares to be issued in the lock-up agreements
by using the Company’s shareholders’ equity, current earnings and future
earnings potential. No independent appraisers were used in the
valuation.
4.
Common
stock issued to non-employees in exchange for lock-up
agreements.
See
response to 3. above. The Company offered a single lock-up arrangement to all
shareholders, both employees and non-employees. This was one offer at one date.
Therefore, the Company valued all shares issued in exchange for the lock-up
agreements in the same manner. No independent appraisers were used in the
valuation.
5.
Restricted
stock issued to non-employees in exchange for
services.
The
measurement date is the earlier of the commitment for performance or the
completion of performance as described in EITF 96-18.
The
shares issued were valued at their fair value using the Black Scholes Option
Pricing Model with data specific to the Company’s common stock.
The
assumptions used in the valuation model varied for each measurement
date.
Certain
examples follow.
Measurement
Vesting
Exercise
Stock
Annual
Risk
Expected
Volatility
Date
Period
Price
Price
Dividend
Life
Yield
11/7/03
2
years
$0.17
$0.17
1.99%
2
years
164.7627%
4/13/04
1
year
0.16
0.16
1.92%
1
year
166.0344%
Volatility
is calculated by the software using the last 12 months trading.
The
shares issued to non employees on 12/1/02 were valued prior to the shares of the
Company being traded. Trading began in mid December, 2002. The schedule has been
revised.
6.
Restricted
stock issued to employees in exchange for
services.
No
restricted common shares were issued to employees in exchange for services (See
response to Comment 1 above). The shares were issued in cancellation of the debt
to the employees. SFAS 15, paragraph 15 states “A debtor that issues or
otherwise grants an equity interest to a creditor to settle fully a payable
shall account for the equity interest at its fair value.” The fair value of the
shares issued were determined using the Black Scholes Option Pricing Model. The
measurement date was the date upon which the Company’s Board of Directors
approved the transaction.
Comment
5. There were no shares voluntarily exchanged for restricted shares. The
schedule has been amended to reflect the issuance of shares in the lock-up
agreement.
Comment
6. Reconciliation of analysis of stock transactions to financial
statements.
Shares
issued for services:
Balance
per financial statements
10,464,917
Shares
issued in satisfaction of payroll
liabilities
incorrectly reflected in
financial
statements:
Richard
Damion
157,859
Joe
Rodriguez
300,000
Joe
Rodriguez
100,000
Shares
issued in lock-up agreement incorrectly
Reflected in
financial statements
32,058
Total
shares issued for services
9,875,000
Shares
issued in satisfaction of accrued payroll:
Balance
per financial statements
2,666,667
Shares
reflected as issued for services
in
financial statements
557,859
Total
shares issued in satisfaction of
payroll
liability
3,224,526
Shares
issued in lock-up agreement:
Balance
per financial statements
58,750
Shares
reflected as issued for services
in
financial statements
32,058
Total
shares issued in lock-up agreements
90,758
Comment
7. The
schedule has been adjusted to reflect the compensation expensed for Joe
Rodriguez and Richard Damion satisfied through the issuance of restricted common
shares.
Comment
8. The schedule has been adjusted whether the shares issued to Richard Damion
and Joe Rodriguez were restricted or unrestricted.
Comment
9. A column that shows the measurement date has been added.
Comment
10. The schedule has been amended to reflect the per share closing bid price on
the measurement date.
If you
have any further questions, please call me.
Sincerely,
/s/ Joe
Rodriguez
Joe
Rodriguez
Chief
Financial Officer
International
Food Products Group, Inc.
Summary
of Stock Transactions
June
30, 2003
Measurement
Date
Per
Share
Per
Share
Employee
Restricted/
Issuance
Measurement
Shares
Closing
Fair
Stockholder
y
or n
Unrestricted
Date
Date
Issued
Bid
Price
Value
Expense
Balance
6-30-02
21,523,803
Issued
for Services:
Scott
Cambell
n
Restricted
12/1/2002
11/22/2002
400,000
n/a
$
0.02
$
8,000.00
Chuck
Milden
n
Restricted
12/1/2002
11/23/2002
20,000
n/a
$
0.02
$
400.00
Robert
George
n
Restricted
12/1/2002
11/24/2002
50,000
n/a
$
0.02
$
1,000.00
Ned
Van Rensselaer
n
Restricted
12/1/2002
11/25/2002
50,000
n/a
$
0.02
$
1,000.00
David
Euzarraga
n
Restricted
12/1/2002
11/26/2002
60,000
n/a
$
0.02
$
1,200.00
Jim
Clarke
n
Restricted
1/27/2003
1/27/2003
25,000
$
0.07
$
0.15
$
3,750.00
David
Euzarraga
n
Restricted
1/28/2003
1/1/2003
60,000
$
0.08
$
0.15
$
9,000.00
David
Euzarraga
n
Restricted
1/29/2003
1/8/2003
300,000
$
0.06
$
0.15
$
45,000.00
David
Euzarraga
n
Restricted
4/8/2003
4/1/2003
40,000
$
0.06
$
0.23
$
9,200.00
David
Euzarraga
n
Restricted
4/15/2003
4/15/2003
165,000
$
0.07
$
0.19
$
31,350.00
David
Wells
n
Restricted
6/16/2003
6/16/2003
60,000
$
0.08
$
0.25
$
15,000.00
David
Euzarraga
n
Restricted
6/16/2003
10/30/2002
40,000
n/a
$
0.02
$
800.00
Total
for services
1,270,000
$
125,700.00
Lock-up
Shares:
A.R.
Grandseart
n
Restricted
12/2/2002
9/27/2002
40,000
n/a
$
0.02
$
800.00
Bruce
Hubert Trust
n
Restricted
1/16/2003
9/27/2002
4,800
n/a
$
0.02
$
96.00
Pete
Dunn
n
Restricted
1/16/2003
9/27/2002
1,000
n/a
$
0.02
20
Mark
Skalski
n
Restricted
1/16/2003
9/27/2002
2,000
n/a
$
0.02
40
Jose
Perez
n
Restricted
1/16/2003
9/27/2002
2,000
n/a
$
0.02
40
Terrence
Coup
n
Restricted
1/16/2003
9/27/2002
2,000
n/a
$
0.02
40
Kirk
& Kirk, Inc
n
Restricted
1/16/2003
9/27/2002
1,000
n/a
$
0.02
20
Sperry
Family Trust
n
Restricted
1/16/2003
9/27/2002
1,000
n/a
$
0.02
20
Barry
Tiemann
n
Restricted
1/16/2003
9/27/2002
500
n/a
$
0.02
10
Jerry
Horst
n
Restricted
1/16/2003
9/27/2002
600
n/a
$
0.02
12
Daryle
Reimer
n
Restricted
1/16/2003
9/27/2002
2,500
n/a
$
0.02
50
Pat
Burgess
n
Restricted
1/16/2003
9/27/2002
500
n/a
$
0.02
10
James
Gacki
n
Restricted
1/16/2003
9/27/2002
2,000
n/a
$
0.02
40
Jared
Enterprises
n
Restricted
1/16/2003
9/27/2002
10,000
n/a
$
0.02
200
George
Milidan
n
Restricted
1/16/2003
9/27/2002
4,667
n/a
$
0.02
93.34
James
Mitchell
n
Restricted
1/16/2003
9/27/2002
4,000
n/a
$
0.02
80
Wilfred
Wheeler
n
Restricted
1/16/2003
9/27/2002
40,000
n/a
$
0.02
800
Terry
Turner
n
Restricted
1/16/2003
9/27/2002
5,000
n/a
$
0.02
100
John
Shelling
n
Restricted
1/16/2003
9/27/2002
1,500
n/a
$
0.02
30
Andre
Perin
n
Restricted
1/16/2003
9/27/2002
500
n/a
$
0.02
10
James
Brown
n
Restricted
1/16/2003
9/27/2002
400
n/a
$
0.02
8
Joyce
Heilman
n
Restricted
1/16/2003
9/27/2002
200
n/a
$
0.02
4
Heitman
Family Trust
n
Restricted
1/17/2003
9/27/2002
2,000
n/a
$
0.02
40
Wilbert
& Joyce Heitman
n
Restricted
1/17/2003
9/27/2002
1,000
n/a
$
0.02
20
Brett
Heitman
n
Restricted
1/17/2003
9/27/2002
1,400
n/a
$
0.02
28
Clay
Heitman
n
Restricted
1/17/2003
9/27/2002
400
n/a
$
0.02
8
A F
Moore
n
Restricted
1/17/2003
9/27/2002
3,000
n/a
$
0.02
60
Harley
Hill
n
Restricted
1/17/2003
9/27/2002
820
n/a
$
0.02
16.4
Ronald
Rau
n
Restricted
1/17/2003
9/27/2002
3,000
n/a
$
0.02
60
Kathleen
Williams
n
Restricted
1/17/2003
9/27/2002
2,000
n/a
$
0.02
40
Kevin
Madera
n
Restricted
1/17/2003
9/27/2002
1,400
n/a
$
0.02
28
Ronal