SEC Company Response from SPLASH BEVERAGE GROUP, INC. (EDVA) (CIK 0001553788) (EDVA) — Dec 19, 2012
SPLASH BEVERAGE GROUP, INC. (EDVA) (CIK 0001553788)
Date: Dec. 19, 2012 · CIK: 0001553788 · Accession: 0001437904-12-000119
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-182639
Referenced dates: November 21, 2012, October 16, 2012
Letter
Division of Corporation Finance United States Securities and Exchange Commission Canfield Medical Supply, Inc. Amendment No. 3 to Registration Statement on Form S-1 Filed December 19, 2012 File No. 333-182639
Dear Mr. Reynolds:
This letter will serve as a response and/or explanation with respect to the comments in your letter dated November 21, 2012 (the "Comment Letter") regarding Canfield Medical Supply, Inc. ("Canfield" or the "Company"). The entire text of the comments contained in your comment letter has been reproduced in this letter for ease of reference. A response to each comment is set forth immediately below the text of the comment.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, page
1.
We note your revisions in response to comments 12 and 13 from our letter dated October 16, 2012, and we reissue the comment, in part. Please expand your MD&A to add a discussion of the key variables and other qualitative and quantitative factors on which the company's executives focus in evaluating your financial condition and operating performance. For example, if management considers cost control as a measure of your overall performance, you should identify this figure an indicator of your performance and discuss changes in costs over the periods covered by the MD&A.
We have added Paragraph 3 on pages 54 and 55 (of marked copy) under the Key Factors expected to Impact our Business in the Future which discusses Costs and Expenses and includes a table showing the primary costs and expenses as a percent of net sales for the periods covered in the MD&A. We have also added additional information under Paragraphs 1 and 2 in the same section. In the information added in Paragraph 1 are references to a report published by National Government Services (the Region B Medicare Provider) in their magazine and a report from the Office of Inspector General. Copies of the relevant pages regarding these two items are included as supplemental information.
John Reynolds, Assistant Director
December 19, 2012
Page 2
Liquidity and Capital Resources, page 55
2.
In order to provide an investor with a better understanding of the composition of your accounts receivable balance, please revise to:
•
Disclose in a comparative tabular format, the payor mix concentrations and related aging of accounts receivable. The aging schedule may be based on management’s own reporting criteria (i.e. unbilled, less than 30 days, 30 to 60 days etc.) or some other reasonable presentation. At a minimum, the disclosure should indicate the past due amounts and a breakdown by payor classification (i.e. Medicare, Medicaid, Managed care and other, and Self-pay). We would expect Self-pay to be separately classified from any other grouping. If your billing system does not have the capacity to provide an aging schedule of your receivables, disclose that fact and clarify how this affects your ability to estimate your allowance for bad debts.
•
If you have amounts that are pending approval from third party payors (i.e. Medicaid Pending), please disclose the balances of such amounts, where they have been classified in your aging buckets, and what payor classification they have been grouped with. If amounts are classified outside of self-pay, tell us why this classification is appropriate, and disclose the historical percentage of amounts that get reclassified into self-pay.
We have added the table requested showing accounts receivable by payor and aging category and we have added information related to claims that are on appeal with Medicare. This is on pages 60 – 61.
Strategy, page 52
3.
We note your statements that “[w]e could generate up to approximately $25,000 in additional revenue in the first 12 months after we start selling …” and “[w]e expect that this webstore could generate approximately $25,000 in revenues in the first 12 months of operation ….” The basis for factual assertions and for the company's or management's belief in certain quantitative or qualitative statements must be clear from the text of the prospectus or provided supplementally to us. Revise your disclosure to address our concerns or advise us supplementally as necessary.
We have made the requested revisions. These should be on pages 55 -56.
4.
We note your statement that “while we are attempting to increase the percentage of revenues from private insurers and others, we are continuing to increase our Medicare sales as evidenced by the fact that we have submitted bids in four new Ohio markets ….” Please revise your disclosure to clarify that submitting bids in four new Ohio markets will not necessarily increase your Medicare sales if your bids are not successful.
We have made the requested revisions.
John Reynolds, Assistant Director
December 19, 2012
Page 3
Financial Statements
General
5.
Please amend your filing to update your financial information as required by Rule 8-08 of Regulation S-X and provide a current consent for any amendment over 30 days.
The financials have been updated through September 30, 2012 and a new consent is included.
6.
We note that you have restated your financial statements for all periods presented in the filing. Please amend to (i) prominently label your financial statements as restated and (ii) provide disclosures required by FASB ASC 250-10-50.
Please see the revisions to the financial statement headings, opinion letter and footnote 5 which address restatement disclosure requirements.
Report of Independent Registered Public Accounting Firm, page F-2
7.
Please obtain and file an updated audit report from your independent accountant that provides an explanatory paragraph related to your restatement. Refer to paragraph 9 of PCAOB Auditing Standard No. 6.
We have included an updated audit report with a paragraph related to the restatement.
8.
In connection with the comment above, please advise your independent accountant to clarify for us why their opinion was not dual dated or re-dated as a result of the restatement of your financial statements. Refer to AU 530.
The audit report has been re-dated.
Statements of Operations, page F-5
9.
We note your disclosure on page 61, stating that consulting revenue of $100,000 recorded in 2010 was not related to your business nor performed on behalf of your business. Such services were independently performed by your CEO and CFO as officers of another entity. Please provide us with your basis for recognizing this amount as your revenue. In your response provide us with an analysis of the authoritative literature you used to support your position.
We have clarified the disclosure relating to this issue in the section entitled Certain Relationships and Related Transactions on page 65. We have deleted the language which stated that the services were not performed on behalf of the Company and were not related to its business. When our attorney drafted this language he didn’t realize that management had previously provided consulting services in the healthcare industry through the Company on several occasions. We
John Reynolds, Assistant Director
December 19, 2012
Page 4
added to the disclosure that they determined to have the consulting fees paid to the Company because at the time it was an S Corp wholly-owned by Michael West and ever since the Company was founded in 1992 he has periodically provided consulting services in the healthcare industry, and when he did, he treated the consulting fees as revenue of the Company. Providing consulting services in the healthcare industry is not a part of the Company’s business plan, but the Company’s President has many relationships in the industry and if he is asked to provide consulting services which would not interfere with his normal duties, he may elect to perform such services and any payments for such services would be paid to the Company.
While the Company has no specific literature citations to provide, the Company believes that as a common practice it has reasonable flexibility to include business transactions in which it has participated in a consulting capacity or otherwise, in its financial reporting as a corporation. The $100,000 was paid in cash and the Company reported the $100,000 in revenue on its Federal corporate tax return for 2010.
Revenue Recognition, page F-7
10.
We note your revisions in response to comment 20. Please further expand your accounting policy to clarify how you recognize revenue from the rental of durable home medical equipment.
The requested disclosure was added to Footnote 1.
Exhibit Index
11.
Please revise your exhibit index to reflect only the current version of your legality opinion.
We made this change.
Legality Opinion
12.
We note that counsel has not undertaken and does not intend to undertake any independent investigation beyond the listed documents and records or to verify the adequacy of such documents. Please note that counsel must examine those documents which are necessary to the formulation of its opinion and may not assume the conclusion that certain documents are adequate in the formulation of that opinion. Please have counsel revise the legality opinion to remove the limitation on the documents examined and the assumption about the adequacy of those documents.
We removed the language as requested.
* * * * *
John Reynolds, Assistant Director
December 19, 2012
Page 5
Thank you for your attention to this matter. Please contact the undersigned if you have any questions or need any additional information.
Sincerely,
JIN, SCHAUER & SAAD LLC
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filename1.htm
Converted by EDGARwiz
600 17th Street, Suite 2700, Denver, Colorado 80202
Main: (720) 889-2211 Fax: (720) 889-2222
December 19, 2012
John Reynolds, Assistant Director
Division of Corporation Finance
United States Securities and Exchange Commission
100 F Street
Washington, DC 20549
Re:
Canfield Medical Supply, Inc.
Amendment No. 3 to Registration Statement on Form S-1
Filed December 19, 2012
File No. 333-182639
Dear Mr. Reynolds:
This letter will serve as a response and/or explanation with respect to the comments in your letter dated November 21, 2012 (the "Comment Letter") regarding Canfield Medical Supply, Inc. ("Canfield" or the "Company"). The entire text of the comments contained in your comment letter has been reproduced in this letter for ease of reference. A response to each comment is set forth immediately below the text of the comment.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, page
51
1.
We note your revisions in response to comments 12 and 13 from our letter dated October 16, 2012, and we reissue the comment, in part. Please expand your MD&A to add a discussion of the key variables and other qualitative and quantitative factors on which the company's executives focus in evaluating your financial condition and operating performance. For example, if management considers cost control as a measure of your overall performance, you should identify this figure an indicator of your performance and discuss changes in costs over the periods covered by the MD&A.
We have added Paragraph 3 on pages 54 and 55 (of marked copy) under the Key Factors expected to Impact our Business in the Future which discusses Costs and Expenses and includes a table showing the primary costs and expenses as a percent of net sales for the periods covered in the MD&A. We have also added additional information under Paragraphs 1 and 2 in the same section. In the information added in Paragraph 1 are references to a report published by National Government Services (the Region B Medicare Provider) in their magazine and a report from the Office of Inspector General. Copies of the relevant pages regarding these two items are included as supplemental information.
John Reynolds, Assistant Director
December 19, 2012
Page 2
Liquidity and Capital Resources, page 55
2.
In order to provide an investor with a better understanding of the composition of your accounts receivable balance, please revise to:
•
Disclose in a comparative tabular format, the payor mix concentrations and related aging of accounts receivable. The aging schedule may be based on management’s own reporting criteria (i.e. unbilled, less than 30 days, 30 to 60 days etc.) or some other reasonable presentation. At a minimum, the disclosure should indicate the past due amounts and a breakdown by payor classification (i.e. Medicare, Medicaid, Managed care and other, and Self-pay). We would expect Self-pay to be separately classified from any other grouping. If your billing system does not have the capacity to provide an aging schedule of your receivables, disclose that fact and clarify how this affects your ability to estimate your allowance for bad debts.
•
If you have amounts that are pending approval from third party payors (i.e. Medicaid Pending), please disclose the balances of such amounts, where they have been classified in your aging buckets, and what payor classification they have been grouped with. If amounts are classified outside of self-pay, tell us why this classification is appropriate, and disclose the historical percentage of amounts that get reclassified into self-pay.
We have added the table requested showing accounts receivable by payor and aging category and we have added information related to claims that are on appeal with Medicare. This is on pages 60 – 61.
Strategy, page 52
3.
We note your statements that “[w]e could generate up to approximately $25,000 in additional revenue in the first 12 months after we start selling …” and “[w]e expect that this webstore could generate approximately $25,000 in revenues in the first 12 months of operation ….” The basis for factual assertions and for the company's or management's belief in certain quantitative or qualitative statements must be clear from the text of the prospectus or provided supplementally to us. Revise your disclosure to address our concerns or advise us supplementally as necessary.
We have made the requested revisions. These should be on pages 55 -56.
4.
We note your statement that “while we are attempting to increase the percentage of revenues from private insurers and others, we are continuing to increase our Medicare sales as evidenced by the fact that we have submitted bids in four new Ohio markets ….” Please revise your disclosure to clarify that submitting bids in four new Ohio markets will not necessarily increase your Medicare sales if your bids are not successful.
We have made the requested revisions.
John Reynolds, Assistant Director
December 19, 2012
Page 3
Financial Statements
General
5.
Please amend your filing to update your financial information as required by Rule 8-08 of Regulation S-X and provide a current consent for any amendment over 30 days.
The financials have been updated through September 30, 2012 and a new consent is included.
6.
We note that you have restated your financial statements for all periods presented in the filing. Please amend to (i) prominently label your financial statements as restated and (ii) provide disclosures required by FASB ASC 250-10-50.
Please see the revisions to the financial statement headings, opinion letter and footnote 5 which address restatement disclosure requirements.
Report of Independent Registered Public Accounting Firm, page F-2
7.
Please obtain and file an updated audit report from your independent accountant that provides an explanatory paragraph related to your restatement. Refer to paragraph 9 of PCAOB Auditing Standard No. 6.
We have included an updated audit report with a paragraph related to the restatement.
8.
In connection with the comment above, please advise your independent accountant to clarify for us why their opinion was not dual dated or re-dated as a result of the restatement of your financial statements. Refer to AU 530.
The audit report has been re-dated.
Statements of Operations, page F-5
9.
We note your disclosure on page 61, stating that consulting revenue of $100,000 recorded in 2010 was not related to your business nor performed on behalf of your business. Such services were independently performed by your CEO and CFO as officers of another entity. Please provide us with your basis for recognizing this amount as your revenue. In your response provide us with an analysis of the authoritative literature you used to support your position.
We have clarified the disclosure relating to this issue in the section entitled Certain Relationships and Related Transactions on page 65. We have deleted the language which stated that the services were not performed on behalf of the Company and were not related to its business. When our attorney drafted this language he didn’t realize that management had previously provided consulting services in the healthcare industry through the Company on several occasions. We
John Reynolds, Assistant Director
December 19, 2012
Page 4
added to the disclosure that they determined to have the consulting fees paid to the Company because at the time it was an S Corp wholly-owned by Michael West and ever since the Company was founded in 1992 he has periodically provided consulting services in the healthcare industry, and when he did, he treated the consulting fees as revenue of the Company. Providing consulting services in the healthcare industry is not a part of the Company’s business plan, but the Company’s President has many relationships in the industry and if he is asked to provide consulting services which would not interfere with his normal duties, he may elect to perform such services and any payments for such services would be paid to the Company.
While the Company has no specific literature citations to provide, the Company believes that as a common practice it has reasonable flexibility to include business transactions in which it has participated in a consulting capacity or otherwise, in its financial reporting as a corporation. The $100,000 was paid in cash and the Company reported the $100,000 in revenue on its Federal corporate tax return for 2010.
Revenue Recognition, page F-7
10.
We note your revisions in response to comment 20. Please further expand your accounting policy to clarify how you recognize revenue from the rental of durable home medical equipment.
The requested disclosure was added to Footnote 1.
Exhibit Index
11.
Please revise your exhibit index to reflect only the current version of your legality opinion.
We made this change.
Legality Opinion
12.
We note that counsel has not undertaken and does not intend to undertake any independent investigation beyond the listed documents and records or to verify the adequacy of such documents. Please note that counsel must examine those documents which are necessary to the formulation of its opinion and may not assume the conclusion that certain documents are adequate in the formulation of that opinion. Please have counsel revise the legality opinion to remove the limitation on the documents examined and the assumption about the adequacy of those documents.
We removed the language as requested.
* * * * *
John Reynolds, Assistant Director
December 19, 2012
Page 5
Thank you for your attention to this matter. Please contact the undersigned if you have any questions or need any additional information.
Sincerely,
JIN, SCHAUER & SAAD LLC
By
Jon D. Sawyer
Canfield Medical Supply, Inc.
Amendment No. 3 to Registration Statement on Form S-1
Filed December 19, 2012
SUPPLEMENTAL INFORMATION
Jurisdiction B - National Government Services Connection Magazine
HME News - November 21, 2012