The Loev Law Firm, PC |
6300 West Loop South, Suite 280 |
Bellaire, Texas 77401 |
Telephone (713) 524-4110 |
Facsimile (713) 524-4122 |
| October 15, 2007 |
Mr. Hugh Fuller
Division of Corporate Finance
Securities and Exchange Commission
Mail Stop 4561
100 F. Street N.E.
Washington D.C. 20549
Phone (202) 551-3853
Fax (202) 772-9210
Re: | EPAZZ, Inc. |
Amendment No. 3 to Form SB-2 |
File No. 333-139117
Filed September 24, 2007
| Dear Mr. Fuller, |
In response to your comment letter dated October 10, 2007, EPAZZ, Inc. (the “Company,” “we,” and “us”) has the following responses:
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
1. | Please comply with the requirement of Item 304(a)(3) of Regulation S-B regarding the furnishing of a letter by Malone & Bailey, PC stating whether or not it agrees with the disclosure in this caption regarding the change of accounting firms. |
RESPONSE:
We will include the required letter from Malone & Bailey, PC as exhibit 16.1 to the amended filing as you have requested, which will be in substantially similar form to the draft of Exhibit 16.1, attached hereto as Exhibit A.
We have also added the following paragraph under “Changes In and Disagreements with Accountants on Accounting and Financial Disclosure”:
“The Company has authorized Malone to respond fully to any inquiries of any new auditors hired by the Company relating to their engagement as the Company's independent accountant. The Company has requested that Malone review the disclosure and Malone has been given an opportunity to furnish the Company with a letter addressed to the Commission containing any new information, clarification of the Company's expression of its views, or the respect in which it does not agree with the statements made by the Company in this section. Such letter has been filed as Exhibit 16.1 to this Registration Statement.”
Part II
Item 26. Recent Sales of Unregistered Securities
2. | Please see prior comment 3 of our letter dated August 16, 2007 and prior comments on the same topic. We note your revised disclosure regarding your Section 4(2) issuances; please not, however, that there is no “reasonable belief” standard for 4(2) unlike in Rule 506. Please revise or advise. Further, as previously requested, since the purchases were “sophisticated,” please clarify whether they had access to information. |
RESPONSE:
We will revise the disclosure in the registration statement to disclose that Epazz is relying on an exemption from registration provided by Rule 504 for all of its prior sales and issuances to consultants as the total value of such issuances is less than $1,000,000. Epazz will however still be relying on a Section 4(2) exemption for the issuance of the shares of Series B Common Stock to Mr. Passley in March 2006. In connection with the revision in the filing stating that Epazz relied on an exemption provided by Rule 504, instead of Section 4(2) for the issuance of the shares of Class A Common Stock, Epazz will add the following disclosure at the end of “Item 26. Recent Sales of Unregistered Securities”:
“All of the Class A Common Stock issuances disclosed above were issued in reliance on Regulation D Rule 504 of the Securities Act of 1933, as amended, since the offerings met the following requirements as set forth in Rule 504:
(A) No general solicitation or advertising was conducted by us in connection with the offering of any of the Shares;
(B) The aggregate offering price of the offering was less than $1,000,000;
(C) Our management was available to answer any questions by prospective purchasers; and
(D) Shares issued in connection with this offering were restricted and certificates indicating ownership of such shares bore the appropriate legend.
We have never utilized an underwriter for an offering of our securities.”
3. | Revised selling shareholder and Item 26 disclosure indicates that five purchasers in your Rule 504 offering “immediately gifted” their shares to various parties. Please tell us the nature of the relationships between the various parties. |
RESPONSE:
| Epazz will clarify the nature of the relationships between the various gifting parties and those receiving the gifted shares as you have requested both under Item 26 and under the Selling Shareholder table in its amended filing, which revised disclosure will read as follows (underlined text is new): |
| Revised Selling Shareholders Table Disclosure: |
Stockholder | Number of Shares |
| Vivienne Passley(9) | 2,975,900 |
| Fay Passley(10)(9) | 2,748,240 |
| L & F Lawn Service, Inc. (1) | 1,399,100 |
| Elderham Braham(10) | 500 |
| Patricia Reid (12) | 500 |
| Allyson Kaegi (12) | 500 |
| Janice Stielow (12) | 500 |
| Foundation Leukamia Research (2) | 2500 |
| Todd Seawell | 2500 |
| Foundation University of Wisconsin (3) | 5000 |
| Rona Seams | 2500 |
| Jeffrey Seawell | 2500 |
| Todd Seawell as Trustee of Nichole Trust | 5000 |
| Lloyd Passley (10) | 500 |
| Susan Berkun(14) | 1,000 |
| Penny Berkun(14) | 500 |
| Emliy Carrara(14) | 500 |
| Stacy Harvey(10) | 500 |
| Dianne Harvey(10) | 500 |
| Ray Kennedy | 500 |
| Edith Moore | 1,000 |
| Faye Ann Marshall(15) | 500 |
| Olga Passley(9) | 500 |
| Marie Pindling(9) | 500 |
| Gregory Johnson(9)(10) | 500 |
| Robert Johnson(9)(10) | 500 |
| Phil Marshall(9)(15)(10) | 500 |
| Paul Marshall(9)(15)(10) | 500 |
| Gordie Hay (3)(10) | 500 |
| Nicholas Hay (3)(10) | 500 |
| Nevelle Brown | 2,000 |
| Yvonne Brown | 2,000 |
| Carl Hay(10) | 500 |
| Sharon Evans (12) | 500 |
| Craig Passley(10) | 100,500 |
| Margaret Marshall(9) | 1,500 |
| Lynx Consulting Group, Inc. (4) | 500,000 |
| Falcon Financial Consulting, LLC (5) | 500,000 |
| Intelective Communications, Inc. (6) | 200,000 |
| Island Capital Management, LLC (7) | 20,000 |
| Greg Gniadek | 100 |
| Alvaro Liceaga | 100 |
| Charles Ince | 100 |
| Ramsey Batmangelich | 100 |
| Edward Liceaga | 100 |
| Justin Ederle | 100 |
| Rich Gardner | 100 |
| Netkode Solutions (P) Limited (8) | 1,000,000 |
Total Shares Offered | 9,482,440 |
| (1) | Control person for L & F Lawn Service, Inc is Lloyd Passley and Fay Passley. Lloyd Passley is the father of Shawn Passley and Fay Passley is the mother of Mr. Passley. |
| (2) | Control person for Foundation Leukemia Research is Kevin Radelet. |
| (3) | Control person for Foundation University of Wisconsin is Sandy Wilcox. |
| (4) | Control person for Lynn Consulting Group, Inc. is Chris Lipa. |
| (5) | Control person for Falcon Financial Consulting, LLC is Edward M. Liceaga. |
| (6) | Control person for Intelective Communications, Inc. is Lee Traupel. |
| (7) | Control person for Island Capital Management is David Lopez. |
| (8) | Control person for Netkode Solutions (P) Limited is Anil Mathews. |
| (9) | Vivienne Passley is the aunt of Shaun Passley. Vivienne Passley is the sister of Faye Ann Marshall (who is the mother of our Chief Executive Officer, Shaun Passley), Olga Passley, and Margaret Marshall, and the aunt of Marie Pindling, Gregory Johnson, Robert Johnson, Phil Marshall and Paul Marshall. |
| (10) | Fay Passley was secretary of EPAZZ until 2005. Fay Passley is the mother of Shaun Passley, our Chief Executive Officer, the sister of Elderham Braham, the wife of Lloyd Passley, the mother of Craig Passley, our Secretary, and the aunt of Stacey Harvey and Dianne Harvey. Mrs. Passley is also the aunt of Stacey Harvey, Dianne Harvey, Marie Pindling, Gregory Johnson, Robert Johnson, Phil Marshall, Paul Marshall, Gordie Hay, Nicholas Hay and Carl Hay. |
| (11) | Craig Passley is the brother of Shaun Passley. Craig Passley has been secretary of EPAZZ from 2005 until the present. |
| (12) | Patricia Reid is the mother of Janice Stielow, Allyson Kaegi and Sharon Evans. |
| (13) | Nicholas Hay is the brotherof Gordie Hay. |
| (14) | Susan Berkun is the mother of Penny Berkun and Emily Carrara. |
| (15) | Faye Anne Marshall is the mother of Phil and Paul Marshall. |
Revised Item 26 Disclosure (note: similar disclosure will also be added to the explanatory discussion under the Selling Shareholders table as well):
“In July 2005, we issued a total of 18,000 shares of our Class A Common Stock to a total of 11 investors at a price per share of $.25 for an aggregate offering price of $4,500.
The following sets forth the identity of the class of persons to whom we sold these shares and the amount of shares for each shareholder:
Shareholder | Number of Shares Purchased |
| Patricia Reid (1) | 2,000 |
Ms. Reid immediately gifted 1,500 shares to the following parties in the following amounts: | |
| Allyson Kaegi | 500 |
| Janice Stielow | 500 |
| Sharon Evans | 500 |
| Fay Passley (2) | 2,500 |
Ms. Passley immediately gifted all 2,500 of the shares to the following parties in the following amounts: | |
| Lloyd Passley | 500 |
| Craig Passley | 500 |
| Stacy Harvey | 500 |
| Dianne Harvey | 500 |
| Elderham Braham | 500 |
Shareholder | Number of Shares Purchased |
| Ray Kennedy | 500 |
| Courtney Hay (3) | 1,000 |
Ms. Hay immediately gifted all 1,000 of the shares to the following parties in the following amounts: | |
| Gordie Hay | 500 |
| Nicholas Hay | 500 |
| IT Business Solutions Group, Inc.(4) | 500 |
| Carl Hay | 500 |
| Susan Berkun (5) | 1,000 |
Ms. Berkun immediately gifted 1,000 of the shares she purchased to the following parties in the following amounts: | |
| Penny Berkun | 500 |
| Emliy Carrara | 500 |
| Vivienne Passley (6) | 5,000 |
Ms. Passley immediately gifted all 5,000 of the shares to the following parties in the following amounts: | |
| Edith Moore | 1,000 |
| Faye Ann Marshall | 500 |
| Olga Passley | 500 |
| Marie Pindling | 500 |
| Gregory Johnson | 500 |
| Robert Johnson | 500 |
| Margaret Marshall | 500 |
| Phil Marshall | 500 |
| Paul Marshall | 500 |
| Yvonne Brown | 2,000 |
| Nevelle Brown | 2,000 |
(1) Patricia Reid is the mother of Janice Stielow, Allyson Kaegi and Sharon Evans.
(2) Fay Passley is the mother of Shaun Passley, our Chief Executive Officer, is the sister of Elderham Braham, the wife of Lloyd Passley, the mother of Craig Passley, our Secretary, and the aunt of Stacey Harvey and Dianne Harvey.
(3) Courtney Hay is the father of Nicholas Hay and the father of Gordie Hay.
(4) The shares sold to IT Business Solutions Group, Inc. (“IT”) were paid for by Shaun Passley, our Chief Executive Officer. As a result, Mr. Passley beneficially owns the shares held in the name of IT, which company no longer exists.
(5) Susan Berkun is the mother of Penny Berkun and Emily Carrara.
(6) Vivienne Passley is the sister of Fay Passley (who is the mother of our Chief Executive Officer, Shaun Passley), Olga Passley, and Margaret Marshall, and is the aunt of Marie Pindling, Gregory Johnson, Robert Johnson, Phil Marshall and Paul Marshall.”
; Yours very truly, |
& #160; /s/ John S. Gillies |
; John S. Gillies |
; Associate |
Exhibit A
October ___, 2007
Securities and Exchange Commission
100 F Street, NE
Washington , D.C. 20549
Commissioners:
We have read the statements made by EPAZZ, Inc. in its Form SB-2A registration statement under the heading “Changes In and Disagreements With Accountants on Accounting and Financial Matters.” We agree with such statements made insofar as they relate to our Firm.
Very truly yours,
/s/ Malone & Bailey, PC
Malone & Bailey, PC
Houston, Texas