January 26, 2015
VIA EDGAR AND OVERNIGHT MAIL
Securities and Exchange Commission
Staff Attorney | Division of Corporation Finance
100 F Street, NE
Washington, DC 20549
Attn: Kristi Marrone
Re: CAM Group, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2013
Filed April 15, 2014
File No. 001-33907
Ms.Marrone:
CAM Group, Inc. (the “Company”) hereby submits its response letter for the comments by the staff of the Division of the Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “SEC”) dated December 2, 2014, relating to the abovementioned 10-K. Please note that for the Staff’s convenience, we have recited each of the Staff’s comments in the order in which they appeared in the comment letter and provided the Company’s response to each comment immediately thereafter.
Item1. Business, page 4
| 1. | We note your response tocomment 1 fromour letter datedSeptember 4, 2014. It isstillnot clearhow themarketing rightswereacquired. If theserights werecontributed byHebei AMP in theformation of theJV, pleaseclarify. |
Response: Yes, the markets rights to the network of 16,000 retail stores were contributed by Hebei AMP in formation of the JV.
| 2. | Relatedtothecomment above, itisstill notclearhow themarketing rightsarereflectedin yourfinancialstatements. If suchrights are consideredanasset,tell uswhich lineitemthey areincluded in.Also, tell us whethertherights arecarried at costlessamortization,fair value,or are accounted forsomeother way. |
Response: Pursuant to the Joint Venture Contract between and amongst ChinaAgricultureMedia Group Co.Ltd., our wholly-owned subsidiary (“China AMG”), andHebeiAMP on March 25, 2011, the total paid in capital of JV at inception was approximately $159,000 (RMB 1,000,000), all of which were contributed by China AMG. We simultaneously surrendered 40% of JV to Hebei AMP in exchange of its assistance in setting up the network for our advertising business. We considered such agreement with Hebei AMP as collaborative arrangement for marketing our advertising business in Hebei area, rather than acquisition of the intangible assets. All costs incurred and revenue generated in connection with Joint Operating Activities were included in the financial statements of JV Company, which were consolidated into our financial statements since inception of JV Company. Pursuant to paragraph 808-15-4 of ASC 808Collaborative Arrangements, the existence of JV Company for part of an arrangement does not prevent an arrangement from being a collaborative arrangement. A copy of the Joint Venture Contract was attached as Exhibit 10.3 to Form 8-K filed on April 24, 2012.
| 3. | We also note fromyour responseto comment 1 thatHebeiAMP owns 40% of the JVCompany.Pleasereconcilethistoyourdisclosure on page 24 ofthe 10-Kwhich statesthat Hebei AMPholds2% of theequityinterestofCAM Heibei.In yourresponsepleasetell us whatownershippercentagewas used tocalculateamountsattributable tonon-controllinginterests inthefinancial statements as well as your basis for using that percentage. |
Responses: On September 11, 2012, we received an approval from the Chinese authority in connection with the increase in registered capital of CAM Hebei, the JV Company, from RMB 1,000,000 (approximately USD$159,000) to RMB 20,000,000 (approximately USD$3,200,000), of which CAM HK invests RMB 19,600,000 (approximately USD$3,136,000) and Hebei AMP keeps the original investment amount of RMB 400,000 (approximately USD$64,000) unchanged. CAM HK completed its portion in investment by the end of 2012. Therefore, Hebei AMP’s ownership in the JV Company was reduced from 40% to 2%. Thenon-controllinginterests inthefinancial statements reflects Hebei AMP’s 2% ownership in the JV Company.
Employees, page 9
| 4. | We note your response tocomment 2 fromour letter datedSeptember 4, 2014. Pleaseclarifywhether any of Hebei AMP’semployees provideservices toCAMG,CAM HK orCAM Hebei. If theemployees are shared byHebei AMP and the JVCompany only,please clarify this inyourdisclosurein futurefilings.As previouslyrequested,please tellus if thereare any costsharingarrangements in place, orotherwise how you or the JVCompany, as applicable,have accounted for personnel costsofsharedemployees. |
Responses: After the establishment of JV Company, there are 5 employees from Hebei AMP start working for JV Company and getting paid directly from JV Company. The related expenses were included in our financial statements since inception of JV Company. There are no cost sharing arrangement in place.
Note 2.Summary ofSignificantAccountingPolicies,page24
AccountsReceivable,page 24
| 5. | Wenote your response to comment 7 fromour letter datedSeptember 4, 2014. Pleasetell us thenature of youraccounts receivable.In thatregard,we notethatnearlyall ofyour revenuewas generated fromHebei AMP, but yourresponse states that none oftheaccountsreceivable aredue fromrelatedparties.Inaddition,we notethattheaccountsreceivablebalanceas ofSeptember 30, 2014 hasremainedrelatively flatdespite nonewrevenuein2014. Pleaseadvise usif any ofyour accounts receivable aregreaterthan180daysoutstanding as ofSeptember 30, 2014 and if so,why youbelievethese accountsarefullycollectible. |
Responses: The accounts receivable of $1,675,831 (RMB 10,240,000) represents 5 sales of fertilizer to Shijiazhuang Deyuan Nongzi Wuliu Co., Ltd. (石家莊德源農資物流有限公司) (“Deyuan”), a non-related party of the Company. These sales accounted for approximately 8 % of our total sales of fertilizer in 2013. Since the Company serves primarily as a trading agent during the sales of fertilizer, the revenues from sales of fertilizer were recognized by net method and included in “revenues – other” in the consolidated income statements. Based on management’s representation, Deyuan is a non-related third party of the Company and these sales were carried out on arm-length transactions. The reason why the balance of the account receivable was still outstanding as of September 30, 2014 is because Deyuan had a quality concern about the products. We have since resolved the issue. We are comfortable that the amount is fully collectible as of today’s date. We expect the payments made by Deyuan on or before February 6, 2015.
We hereby acknowledge that:
| · | We are responsible for the adequacy and accuracy of the disclosure in the filing; |
| · | Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and |
| · | We may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
We trust that the foregoing is responsive to the Staff’s comments. Please do not hesitate to call me via email at kakit5110@gmail.com if you have any further questions. Thank you.
Very truly yours,
CAM Group, Inc.
/s/ Kit Ka
Name: Kit Ka
Title: Chief Executive Officer
