SEC Company Response from Dream Homes & Development Corp. (DREM) (CIK 0001518336) (DREM) — Jul 25, 2011
Dream Homes & Development Corp. (DREM) (CIK 0001518336)
Date: July 25, 2011 · CIK: 0001518336 · Accession: 0001518336-11-000009
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-174674
Letter
Division of Corporate Finance United States Securities and Exchange Commission The Virtual Learning Company, Inc. Registration Statement on Form S-1 Filed June 2, 2011 File No. 333-174674
Dear Mr. Spirgel:
We have reviewed the Staff’s comments and have amended the registration statement as follows:
Registration Statement Cover Page
1. Please check the box which indicates that you are offering securities on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933.
We have checked the box.
General
2. Please review your entire document for grammatical errors that can make the
disclosure unclear. For example, we note your statement on page 18: “the market for
products sold through the Internet has not begun to develop and will rapidly
evolving.
The revision of the statement now to be found on page 17 of the marked copy clarifies the meaning. We have revised the registration statement throughout in numerous locations to eliminate grammatical errors.
3. Furnish the information required by Item 505 of Regulation S-K, determination of offering price. See Item 5 of Form S-1.
Our Page 26 we have added the section “Determination of the Offering Price” wherein we discuss the factors considered in pricing this issue as required by Item 505.
4. We note reference to third party information throughout the filing. For example, you cite information from the Association of American Publishers on page 6. Please
provide us with marked copies of any materials that support third party statements,
clearly cross-referencing a statement with the underlying factual support.
The requested materials have been scanned and are provided as an Appendix at the end of this letter with the requested cross references.
5. On page 16 and elsewhere you state that you have not commenced operations. Revise your disclosure to accurately describe your business as currently constituted and make clear aspects that are not yet operational. As an example, on page 6 you refer to a
“visible recurring revenue stream and high profit margins.” As another example, a page 10 Risk Factor heading reads “If we fail to develop new or expand existing subscriber relationships…” But, on page 35 you disclose that as of March 31, 2011 you had not “begun to accept subscribers.” As a third example, the page 13 Risk Factor titled “Our future growth and profitability will depend in large part upon the effectiveness and efficiency…” contains several inappropriate characterizations including reference to retaining your most productive sales managers and staff. We note that you have one fulltime employee. These are just examples of disclosures that do not address the company’s current lack of operations, that indicate that proposed operations are either currently happening or are possible in the near future and that do not address the time, costs and risks involved with becoming operational. Please revise throughout.
We have made numerous revisions to correct not only the cited examples but many others to make clear that the company has not yet become revenue producing.
6. We note several favorable statements regarding, among other topics, your product,
accomplishments-to-date and market opportunities. To the extent you retain favorable statements provide objective support for your assertions and ensure that you make clear upon what standard or measure you base your claims. For example, revise to include the basis for you assertion on page 6 that your “online products are easily, automatically, and frequently updated with new or more current content, additional features and enhancements and can provide students with instant feedback, positive reinforcement and remediation when proficiency levels are not met.” To the extent that you do not have independent support for your statements, please characterize them as your beliefs and disclose the bases for these beliefs.
We have removed the favorable statements cited and have attempted to make it clear through the registration statement that such assertions are our beliefs. However, we have refrained from supplying the main reason for these beliefs which are that we continuously updated the modules as teachers and teachers assistants in the relevant grades commented upon the modules, rapidly increased the number of modules within each title to meet changing curriculum assessments made by teachers and their assistants since these statements raise only more questions that could go on ad infinitum, e.g. which teachers and assistants, their qualifications, why are they chosen and how. As for reinforcement and remediation, these are inherent properties of the method used in each title wherein the student can go back after missing a question and try again. We have also recently begun to make numerous examples of certain questions, e.g. addition or multiplication, with answers available for students to do more examples without the sophistication of the interactive titles. These question sheets more closely resemble what we consider to be inferior products manufactured by our quite successful competition. In order to maintain a balance we have omitted this more accurate but more promotional approach so as not to make our products seem too good to be true, which if you compare them with the competition, they are. Since these quality factors are less important than marketing, at least in immediate future, we have decided not to stress those superior qualities more than are necessary to accurately describe them.
Prospectus Summary, page 5
7. The Prospectus Summary is intended to provide a brief overview of the most salient aspects of the offering and the company’s business. Your summary provides mostly marketing information about the company that is largely repeated elsewhere in your prospectus. Revise to include only a brief overview of your offering and business and make sure the presentation is balanced.
We have completely rewritten the Summary in response to the comment.
8. If retained, revise to make clear that none of the key attributes of your business model have been materialized as of yet. For example, your statement that your “business model is characterized by a visible recurring revenue stream and high profit margins” should be balanced by accompanying disclosure that you have not yet generated revenues and have never generated a profit.
In response to Comment 8, we have made several revisions to make clear that none of the key attributes as yet exist.
Our Company, page 5
9. Your websites, as disclosed on page 5, feature television and movie programs. Explain whether you have negotiated the right to broadcast these programs. If you have not, add a risk factor to disclose the possibility that you are infringing intellectual property rights and highlight the potential repercussions.
This option in the website has been deleted. It was originally thought to add these videos as a marketing enhancement for the benefit of the adults and to enhance sales from the adults who would be paying the bill. No analysis was made with respect to infringement and many of the titles were outside the copyright term. No complaints or contacts from copyright owners had been received to date.
10. It appears that three out of the four websites referenced contain identical content. Revise to accurately characterize your web based offerings. In particular, we note the statement “[t]he Company provides standards-based instruction…through one of our several websites on the World Wide Web.”
Actually only one website is in use www.learningisbasic.com. The other websites www.eschoolroom.com, www.mathisbasic.com are simply redirected to www.learningisbasic.com. We have revised our disclosure to note that fact at pages 5 and 6 and elsewhere throughout the registration statement.
Summary Financial Information, page 9
11. Tell us how your total operating expenses for the three months ended March 31, 2010 can be more than your total operating expenses for the year ended December 31, 2010.
This happened because a journal entry capitalizing $110,000 in consulting fees was posted in December 31, 2010. This entry should have been posted as of March 31, 2010 where the initial entry was booked in error.
Risk Factors, page 10
12. Revise this section to make sure that each risk factor relates to risks the company faces as currently constituted. For example, on page 15 under the risk factor “Protection of our intellectual property is limited…” you state “[d]espite enforcement efforts against software piracy, we lose significant revenue due to illegal use of our software.” We note, however, that you have generated no revenue to date. As another example, the risk factor titled “If securities or industry analysts do not publish research or reports about our business…” is inapplicable given your status as a development stage company. These are just examples.
We have revised the risk factors at numerous places and eliminated some risk factors in response to this comment.
We note though that we may be subject to liability for information retrieved from the Internet…, page 21
13. The subject matter of this risk factor and how it relates to the company is unclear. Revise to clarify.
The risk factor has been deleted.
Future sales of restricted shares could decrease the price a willing buyer…, page 21
14. Revise the disclosures here and under Shares Eligible For Future Sale on pages 54 and 55 to accurately describe Rule 144 of the Securities Act. For example, on page 54 you state that “only the shares held by Thomas P. Monahan and Dr. John Swift will be subject to the volume selling requirements of Rule 144. But, on page 22 you state that if certain requirements are met non-affiliates may sell their securities “in an amount equal to not less than one percent of [your] outstanding common stock every three months.” As another example, you indicate that the holding period applicable to non-affiliates is six months on page 22 and one year on page 55.
The disclosure has been revised both in the risk factor and at former pages 54 and 55, now page 57, for consistency and accuracy.
Plan Of Distribution, page 25
15. Reconcile your disclosure here, stating that the offering will be completed ninety days
after the effective date, with the disclosure on page 52 stating that the offering will
terminate no later than 12 months after the effective date of the prospectus.
The disclosure of the termination date in the Plan of Distribution, page 26 has been reconciled with the disclosure on former page 52, now page 54 to note a 12 month termination date.
Description Of Business, page 27
History of the Company, page 27
16. Revise to more fully describe the transaction between Mr. Thomas Monahan and
Terra Media, LTD. Your disclosure should clarify the background between the
parties, explain the statement “to be returned to Mr. Thomas Monahan Terra’s
subsidiary Ding Dong School, Ltd” and reconcile the consideration disclosed as
compared to the consideration identified in Exhibit 10.1.
The Description of the Business has been revised at Page 29 to more fully describe the transaction between Mr. Monahan and Terra Media Ltd., now Terra Energy resources, Ltd. including describing the purchase by Mr. Monahan. The consideration has been reconciled with Exhibit 10.1. The numbers disclosed reflect the accounting entry made by the accountant for Terra Media on its books and this has been described. The Separation Agreement stated a simple buy back price and the payment of that price has also been described.
Our Growth Strategy, page 33
17. Much of the disclosure within this section fails to link the topic discussed with your
growth strategy. For example, disclosures on pages 34 and 35 detail characteristics of
bilingual education, but neglect to tie that discussion into the prospective growth of your business. Substantially revise to make clear how each topic discussed relates to your business. Your disclosure should explain how each topic is relevant to growth, steps taken to date in furtherance of your various strategies and steps that must be implemented to successfully operate and grow. Similarly revise the disclosure on pages 8 and 9.
The section “Our Growth Strategy” has been revised to link the disclosure to the Issuer’s growth strategy. The redundant disclosure at pages 8 and 9 has been deleted.
Our Products and Services, page 35
18. You refer to yourself as a “software development company” on page 32. Describe
the software you intend to produce and distribute. Further revise to clarify how the
materials you plan to produce in CD and DVD format, including language training
materials, relate to your web-based offerings. Explain whether and how these offerings differ from those available via your websites.
At page 33, we have clarified that the software to be used on the website is one and the same with the software to be available for sale and distribution, albeit in different formats.
19. Disclose whether you have had any contact with potential distributors of your
products to date.
At page 36, we have revised the disclosure to state that there have been only preliminary discussions with a limited number of potential distributors.
Marketing, Sales and Subscriber Support, page 37
20. Disclose whether you have implemented any of the marketing activities described.
We have revised the disclosure to note that all marketing activities will occur in the future.
Management’s Discussion And Analysis Or Plan Of Operation, page 40
Forward-Looking Statements, page 40
21. Please delete the reference to the safe harbor provided by the Private Securities
Litigation Reform Act of 1995 as this protection does not apply to your offering
because your common stock is considered a penny stock.
We have deleted the reference to the sections of the Securities Act that relate to the PSLRA.
Plan Of Operation, page 41
Overview, page 41
22. Note 6 to your financial statements on page 79 discloses agreements for curriculum
development pursuant to which you are obligated to pay royalties on revenues earned.
Discuss those arrangements as well as the contractual arrangement filed as Exhibit
10.2 within MD&A, providing the aggregate royalties due and the effect you expect
the respective obligations to have on your financial condition going forward. If the
agreements referenced under Note 6 constitute material contracts, file them as
exhibits. See Item 601(b)(10) of Regulation S-K.
The agreement with Lawrence William Kazmierczak has been disclosed in the third paragraph of the “Plan of Operation”. This agreement was previously filed as an exhibit.
One other agreement that existed was rescinded subsequent to the date of the financial statements and the stock certificate for 200,000 shares was returned to Virtual Learning and canceled. This information has been added as a subsequent event to the Notes to the Financial Statements.
Basis of Presentation/Going Concern, page 41
23. Please revise this section to outline the various steps involved in completing each of
the development of 16 titles, the development of 36 titles, implementing the
contemplated marketing program and generally, commercializing your website.
Provide a time line for achieving each milestone and the associated costs. Explain
how you intend to fund these costs, taking into account the various levels of proceeds
from the offering, the offering costs, the costs of being a reporting company and your
ability/inability to raise further capital. Clarify whether you believe $500,000 will be
sufficient to meet operating expenses and capital requireme
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CORRESP 1 filename1.htm ROGER L ROGER L. FIDLER Attorney at Law 145 Highview Terrace Hawthorne, N.J. 07506 (973) 949-4193 (973) 949-4196 (Fax) rfidler0099@aol.com July 20, 2011 Larry Spirgel, Esq. Assistant Director Division of Corporate Finance United States Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Re: The Virtual Learning Company, Inc. Registration Statement on Form S-1 Filed June 2, 2011 File No. 333-174674 Dear Mr. Spirgel: We have reviewed the Staff’s comments and have amended the registration statement as follows: Registration Statement Cover Page 1. Please check the box which indicates that you are offering securities on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933. We have checked the box. General 2. Please review your entire document for grammatical errors that can make the disclosure unclear. For example, we note your statement on page 18: “the market for products sold through the Internet has not begun to develop and will rapidly evolving. The revision of the statement now to be found on page 17 of the marked copy clarifies the meaning. We have revised the registration statement throughout in numerous locations to eliminate grammatical errors. 3. Furnish the information required by Item 505 of Regulation S-K, determination of offering price. See Item 5 of Form S-1. Our Page 26 we have added the section “Determination of the Offering Price” wherein we discuss the factors considered in pricing this issue as required by Item 505. 4. We note reference to third party information throughout the filing. For example, you cite information from the Association of American Publishers on page 6. Please provide us with marked copies of any materials that support third party statements, clearly cross-referencing a statement with the underlying factual support. The requested materials have been scanned and are provided as an Appendix at the end of this letter with the requested cross references. 5. On page 16 and elsewhere you state that you have not commenced operations. Revise your disclosure to accurately describe your business as currently constituted and make clear aspects that are not yet operational. As an example, on page 6 you refer to a “visible recurring revenue stream and high profit margins.” As another example, a page 10 Risk Factor heading reads “If we fail to develop new or expand existing subscriber relationships…” But, on page 35 you disclose that as of March 31, 2011 you had not “begun to accept subscribers.” As a third example, the page 13 Risk Factor titled “Our future growth and profitability will depend in large part upon the effectiveness and efficiency…” contains several inappropriate characterizations including reference to retaining your most productive sales managers and staff. We note that you have one fulltime employee. These are just examples of disclosures that do not address the company’s current lack of operations, that indicate that proposed operations are either currently happening or are possible in the near future and that do not address the time, costs and risks involved with becoming operational. Please revise throughout. We have made numerous revisions to correct not only the cited examples but many others to make clear that the company has not yet become revenue producing. 6. We note several favorable statements regarding, among other topics, your product, accomplishments-to-date and market opportunities. To the extent you retain favorable statements provide objective support for your assertions and ensure that you make clear upon what standard or measure you base your claims. For example, revise to include the basis for you assertion on page 6 that your “online products are easily, automatically, and frequently updated with new or more current content, additional features and enhancements and can provide students with instant feedback, positive reinforcement and remediation when proficiency levels are not met.” To the extent that you do not have independent support for your statements, please characterize them as your beliefs and disclose the bases for these beliefs. We have removed the favorable statements cited and have attempted to make it clear through the registration statement that such assertions are our beliefs. However, we have refrained from supplying the main reason for these beliefs which are that we continuously updated the modules as teachers and teachers assistants in the relevant grades commented upon the modules, rapidly increased the number of modules within each title to meet changing curriculum assessments made by teachers and their assistants since these statements raise only more questions that could go on ad infinitum, e.g. which teachers and assistants, their qualifications, why are they chosen and how. As for reinforcement and remediation, these are inherent properties of the method used in each title wherein the student can go back after missing a question and try again. We have also recently begun to make numerous examples of certain questions, e.g. addition or multiplication, with answers available for students to do more examples without the sophistication of the interactive titles. These question sheets more closely resemble what we consider to be inferior products manufactured by our quite successful competition. In order to maintain a balance we have omitted this more accurate but more promotional approach so as not to make our products seem too good to be true, which if you compare them with the competition, they are. Since these quality factors are less important than marketing, at least in immediate future, we have decided not to stress those superior qualities more than are necessary to accurately describe them. Prospectus Summary, page 5 7. The Prospectus Summary is intended to provide a brief overview of the most salient aspects of the offering and the company’s business. Your summary provides mostly marketing information about the company that is largely repeated elsewhere in your prospectus. Revise to include only a brief overview of your offering and business and make sure the presentation is balanced. We have completely rewritten the Summary in response to the comment. 8. If retained, revise to make clear that none of the key attributes of your business model have been materialized as of yet. For example, your statement that your “business model is characterized by a visible recurring revenue stream and high profit margins” should be balanced by accompanying disclosure that you have not yet generated revenues and have never generated a profit. In response to Comment 8, we have made several revisions to make clear that none of the key attributes as yet exist. Our Company, page 5 9. Your websites, as disclosed on page 5, feature television and movie programs. Explain whether you have negotiated the right to broadcast these programs. If you have not, add a risk factor to disclose the possibility that you are infringing intellectual property rights and highlight the potential repercussions. This option in the website has been deleted. It was originally thought to add these videos as a marketing enhancement for the benefit of the adults and to enhance sales from the adults who would be paying the bill. No analysis was made with respect to infringement and many of the titles were outside the copyright term. No complaints or contacts from copyright owners had been received to date. 10. It appears that three out of the four websites referenced contain identical content. Revise to accurately characterize your web based offerings. In particular, we note the statement “[t]he Company provides standards-based instruction…through one of our several websites on the World Wide Web.” Actually only one website is in use www.learningisbasic.com. The other websites www.eschoolroom.com, www.mathisbasic.com are simply redirected to www.learningisbasic.com. We have revised our disclosure to note that fact at pages 5 and 6 and elsewhere throughout the registration statement. Summary Financial Information, page 9 11. Tell us how your total operating expenses for the three months ended March 31, 2010 can be more than your total operating expenses for the year ended December 31, 2010. This happened because a journal entry capitalizing $110,000 in consulting fees was posted in December 31, 2010. This entry should have been posted as of March 31, 2010 where the initial entry was booked in error. Risk Factors, page 10 12. Revise this section to make sure that each risk factor relates to risks the company faces as currently constituted. For example, on page 15 under the risk factor “Protection of our intellectual property is limited…” you state “[d]espite enforcement efforts against software piracy, we lose significant revenue due to illegal use of our software.” We note, however, that you have generated no revenue to date. As another example, the risk factor titled “If securities or industry analysts do not publish research or reports about our business…” is inapplicable given your status as a development stage company. These are just examples. We have revised the risk factors at numerous places and eliminated some risk factors in response to this comment. We note though that we may be subject to liability for information retrieved from the Internet…, page 21 13. The subject matter of this risk factor and how it relates to the company is unclear. Revise to clarify. The risk factor has been deleted. Future sales of restricted shares could decrease the price a willing buyer…, page 21 14. Revise the disclosures here and under Shares Eligible For Future Sale on pages 54 and 55 to accurately describe Rule 144 of the Securities Act. For example, on page 54 you state that “only the shares held by Thomas P. Monahan and Dr. John Swift will be subject to the volume selling requirements of Rule 144. But, on page 22 you state that if certain requirements are met non-affiliates may sell their securities “in an amount equal to not less than one percent of [your] outstanding common stock every three months.” As another example, you indicate that the holding period applicable to non-affiliates is six months on page 22 and one year on page 55. The disclosure has been revised both in the risk factor and at former pages 54 and 55, now page 57, for consistency and accuracy. Plan Of Distribution, page 25 15. Reconcile your disclosure here, stating that the offering will be completed ninety days after the effective date, with the disclosure on page 52 stating that the offering will terminate no later than 12 months after the effective date of the prospectus. The disclosure of the termination date in the Plan of Distribution, page 26 has been reconciled with the disclosure on former page 52, now page 54 to note a 12 month termination date. Description Of Business, page 27 History of the Company, page 27 16. Revise to more fully describe the transaction between Mr. Thomas Monahan and Terra Media, LTD. Your disclosure should clarify the background between the parties, explain the statement “to be returned to Mr. Thomas Monahan Terra’s subsidiary Ding Dong School, Ltd” and reconcile the consideration disclosed as compared to the consideration identified in Exhibit 10.1. The Description of the Business has been revised at Page 29 to more fully describe the transaction between Mr. Monahan and Terra Media Ltd., now Terra Energy resources, Ltd. including describing the purchase by Mr. Monahan. The consideration has been reconciled with Exhibit 10.1. The numbers disclosed reflect the accounting entry made by the accountant for Terra Media on its books and this has been described. The Separation Agreement stated a simple buy back price and the payment of that price has also been described. Our Growth Strategy, page 33 17. Much of the disclosure within this section fails to link the topic discussed with your growth strategy. For example, disclosures on pages 34 and 35 detail characteristics of bilingual education, but neglect to tie that discussion into the prospective growth of your business. Substantially revise to make clear how each topic discussed relates to your business. Your disclosure should explain how each topic is relevant to growth, steps taken to date in furtherance of your various strategies and steps that must be implemented to successfully operate and grow. Similarly revise the disclosure on pages 8 and 9. The section “Our Growth Strategy” has been revised to link the disclosure to the Issuer’s growth strategy. The redundant disclosure at pages 8 and 9 has been deleted. Our Products and Services, page 35 18. You refer to yourself as a “software development company” on page 32. Describe the software you intend to produce and distribute. Further revise to clarify how the materials you plan to produce in CD and DVD format, including language training materials, relate to your web-based offerings. Explain whether and how these offerings differ from those available via your websites. At page 33, we have clarified that the software to be used on the website is one and the same with the software to be available for sale and distribution, albeit in different formats. 19. Disclose whether you have had any contact with potential distributors of your products to date. At page 36, we have revised the disclosure to state that there have been only preliminary discussions with a limited number of potential distributors. Marketing, Sales and Subscriber Support, page 37 20. Disclose whether you have implemented any of the marketing activities described. We have revised the disclosure to note that all marketing activities will occur in the future. Management’s Discussion And Analysis Or Plan Of Operation, page 40 Forward-Looking Statements, page 40 21. Please delete the reference to the safe harbor provided by the Private Securities Litigation Reform Act of 1995 as this protection does not apply to your offering because your common stock is considered a penny stock. We have deleted the reference to the sections of the Securities Act that relate to the PSLRA. Plan Of Operation, page 41 Overview, page 41 22. Note 6 to your financial statements on page 79 discloses agreements for curriculum development pursuant to which you are obligated to pay royalties on revenues earned. Discuss those arrangements as well as the contractual arrangement filed as Exhibit 10.2 within MD&A, providing the aggregate royalties due and the effect you expect the respective obligations to have on your financial condition going forward. If the agreements referenced under Note 6 constitute material contracts, file them as exhibits. See Item 601(b)(10) of Regulation S-K. The agreement with Lawrence William Kazmierczak has been disclosed in the third paragraph of the “Plan of Operation”. This agreement was previously filed as an exhibit. One other agreement that existed was rescinded subsequent to the date of the financial statements and the stock certificate for 200,000 shares was returned to Virtual Learning and canceled. This information has been added as a subsequent event to the Notes to the Financial Statements. Basis of Presentation/Going Concern, page 41 23. Please revise this section to outline the various steps involved in completing each of the development of 16 titles, the development of 36 titles, implementing the contemplated marketing program and generally, commercializing your website. Provide a time line for achieving each milestone and the associated costs. Explain how you intend to fund these costs, taking into account the various levels of proceeds from the offering, the offering costs, the costs of being a reporting company and your ability/inability to raise further capital. Clarify whether you believe $500,000 will be sufficient to meet operating expenses and capital requireme