Mail Stop 0308
March 2, 2005
VIA U.S. MAIL AND FACSIMILE
Matt Lettau, President
Internet Acquisition Group, Inc.
302 Creekside Ct. E.
Huntertown, Indiana 46748
Re: Internet Acquisition Group, Inc
Registration Statement on Form SB-2
File No. 333-122563
Filed February 4, 2005
Dear Mr. Lettau:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Part I
General
1. Your disclosure indicates that you are a development stage
company
established two months ago with no revenues and limited
operations.
As you do not appear to have an established plan of operation,
your
proposed business may be commensurate in scope with the
uncertainty
ordinarily associated with a blank check company. Accordingly,
please revise your disclosure throughout your registration
statement
to comply with Rule 419 of Regulation C or supplementally provide
an
explanation why Rule 419 does not apply.
Registration Statement Facing Page
2. Below the delaying amendment, we note the paragraph beginning
with
"The information in the prospectus is not complete . . ." and
"Subject to Completion...." This disclosure should appear on the
prospectus cover page, rather than on the registration statement
facing page. Please revise accordingly.
Prospectus Cover Page
3. Your prospectus cover page must disclose an offering price per
share. See Item 501 of Regulation S-B. Please consider the
following language:
"The selling security holders will sell at a price of $x.xx (or a
range) per share until our shares are quoted on the OTC
Bulletin
Board and thereafter at prevailing market prices or privately
negotiated prices."
4. In addition, please include in your document a section
captioned
"Determination of Offering Price" where you discuss the factors
considered in determining the offering price. See Item 505 of
Regulation S-B.
5. We note in the fourth paragraph that you intend to file for
inclusion of your common stock on the OTC Bulletin Board. Please
clarify that, to be quoted on the OTC Bulletin Board, a market
maker
must file an application on your behalf in order to make a market
for
your common stock. Also revise throughout the remainder of the
prospectus accordingly.
6. Briefly explain "intuitive shopping interface." Also, please
explain what kind of "strategic relationships" you intend to
establish with partners.
7. Please include in your summary that you have only one employee,
Matt Lettau, who is your sole officer, director and controlling
shareholder.
Risk Factors, page 3
8. Refer to risk factor 1, "We are a developmental stage
company..,"
second paragraph. Please explain "the uncertain nature of the
markets addressed by us."
9. Several of your risk factor captions do not describe the risk
in a
concrete manner, but merely state facts that give rise to the
risks.
For example, the caption to risk factor 4 states that you are
substantially dependent on the Internet and continued growth of
the
online commerce market, but does not concisely state the risk to
your
business if the use of the Internet does not continue to grow or
grows more slowly than expected. Stating that the risk may
"adversely affect" or "seriously harm" your business does not
adequately address the potential consequences should the risk
factor
occur. Please generally review your risk factor captions to
ensure
they express your risks in more concrete terms with adequate, but
not
excessive, non-generic detail so that readers are able to clearly
identify and assess the magnitude of the risk. Do not assume that
investors will be able to decipher the risk.
10. Please eliminate language from your risk factors that
mitigates
the risk. For example, in risk factor 6, "We are significantly
dependent on Matt Lettau," revise "Although Mr. Lettau is not
irreplaceable." In risk factor 7, "Mr. Lettau has no experience
in
running...," revise "Although Mr. Lettau intends to hire personnel
in
the future, when sufficiently capitalized, who may have the
experience required to manage our company...."
11. The caption to risk factor 6, "We are significantly dependent
on
Matt Lettau..", we cannot guarantee future results, levels of
activity, states that Mr. Lettau has limited experience. The
caption
to risk factor 7 states that Mr. Lettau has no experience in
running
either a public or private company. Please reconcile these
apparent
inconsistencies.
12. The last paragraph of the risk factors section is
inappropriate
and should be deleted. In the headnote to the risk factors
section,
you indicated you are setting forth the material risks management
is
aware of and you also urged investors to consider the other
information in the prospectus.
Selling Security Holders, page 11
13. Refer to the last paragraph of this section which follows the
footnotes. If true, please delete "Unless footnoted above" and
"Except as otherwise provided in this prospectus." If not, please
advise. We may have further comments.
Plan of Distribution, page 14
14. We note that your registration statement covers the selling
security holders, or their "partners, pledgees, donees (including
charitable organizations), transferees or other successors in
interest[.]" Please note that your registration statement must
identify all known selling shareholders and provide Item 507 of
Regulation S-K information with respect to all selling
shareholders.
If the "partners, pledgees, donees (including charitable
organizations), transferees or other successors in interest" plan
to
use this registration statement, they must be identified and Item
507
information must be provided. Supplementally, confirm your
understanding of this obligation. Please be advised you may add
or
substitute selling shareholders through the use of Rule 424(b)
prospectus supplements under limited conditions. For additional
guidance, refer to July 1997 Telephone Interpretations, B.81 and
H.3.
Directors, Executive Officers, Promoters and Control Persons, page
16
15. Please describe the business of The Bob Rohrman Group where
Mr.
Lettau worked from 1991 to January 2004.
Description of Business, page 20
16. As currently drafted, this disclosure does not adequately
explain
your business. Please revise to more clearly discuss your
principal
products, distribution methods, sources of supplies, names of
principal suppliers, and customer base. See Item 101 of
Regulation
S-B. Currently, most of the disclosure under "General" on page
20,
"The IAG Solution" on page 23, and "Our Online Websites" on page
25
does not provide meaningful disclosure about what it is you do and
how you do it. As examples, please consider the following:
* What is your "virtual operating model"?
* To whom and how do you outsource your operating infrastructure?
* How much, if any, inventory do you have?
* What, if any, strategic relationships do you currently have, and
with whom?
* If you do not own any products on your website, how are you able
to
offer them for sale?
* How many unique website visitors have you had to date and on a
monthly basis?
* Does "link" just mean cross-reference or does it mean you can
just
click on each of your other websites?
* How many customers have you had to date and on a monthly basis?
* How many of those customers were recurring?
* What is your click-through-to-purchase rate?
* Why do you have three separate websites?
* What advertising have you undertaken?
* Given your limited operations, on what basis do you expect to
establish widely recognized e-commerce brands?
* What sort of customer service operations do you have in place?
* How are the "Multi-Category Internet Superstores" and "Low
Operating Costs" points advantages, given that they appear to
exist
with all online retailers?
* What are "product lines that have market potential, that are
well
suited for e-commerce, and that are in industries that allow you
to
partner with a distributor"?
* Do you have any distributors, and how will you align them with
product categories and have access to their distribution
capabilities?
* Although you have three websites in operation, why do you have
$0.00 revenues? On what basis do you think you will generate
revenues in the future?
The above are only examples based upon your existing disclosure.
Generally, provide additional disclosure so that an average
investor
may make an informed judgment about your business and potential
operations. In so doing, please clearly specify what steps you
have
taken to date, what steps you need to take to advance your
business,
and what is required to make those advancements. We may have
further
comment based upon your revisions.
Business Development, page 20
17. Refer to the third paragraph. Do you mean to say that on July
20, 2004, the Department of Corporations for the State of
California
declined, not declining, to conduct the fairness hearing? Please
revise. Also, please briefly explain why the Department declined.
The Online Retail Opportunity, page 22
18. In the second paragraph, please identify the source of the
estimates you refer to and supplementally provide them to us in
support of your disclosure. Also, furnish support for the
statement
that media products also represent a fast growing segment of the
online retail market.
Plan of Operation, page 28
19. If your response to comment 1 above is that you are not a
blank
check company, then please revise here to provide a detailed plan
of
operation consistent with Item 303(a) of Regulation S-B.
Market for Common Equity and Related Stockholder Matters, page 31
20. Please include the information required by Item 201(a)(2) of
Regulation S-B.
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure, page 32
21. Please tell us if you had any change in independent
accountants
since inception, and if so, provide the disclosures required by
Item
304 of Regulation S-B. If you have not had any change during this
period, please revise to state this fact.
Financial Statements
Independent Auditors` Report, page F-1
22. Please request your auditors to revise their report to state
that
the audit was conducted in accordance with PCAOB standards, if
true.
Financial Statements - General
23. Please revise to disclose your fiscal year end. If your
fiscal
year end is December 31, then include audited financial statements
as
of December 31, 2004 in your next amendment. If your fiscal year
end
is something other than December 31, then revise the document to
include an audited balance sheet within 135 days from the date you
filed the Form SB-2 and subsequent interim period financial
information complying with Rule 310(g) of Regulation S-B. We may
have additional comment.
Note 1 - Revenue Recognition
24. Please tell us if you have, or plan to have, merchandise
return
policies and how this will impact your revenue recognition
accounting
policy. Also, tell us if you plan to account for your merchandise
sales on a gross basis or a net basis and why. In this regard,
tell
us what consideration you gave to expanding your revenue
recognition
policies to address these matters.
Notes to September 30, 2004 Financial Statements
25. Notes 1 and 2 refer to consolidated financial statements.
Please
either delete this reference or tell us why it is appropriate.
26. The second paragraph of Note 1 refers a reader to information
included in the Company`s Form 10-KSB Annual Report. Please
advise
or revise to correct this reference.
Part II
Recent Sales of Unregistered Securities
27. For each issuance you discuss, please also describe in further
detail the facts you relied upon to make the exemptions claimed
available. For example, describe the "consulting services" that
were
provided and identify the consultants. As another example, please
identify the persons or class of persons to whom you made these
issuances and sales. As a further example, please discuss how you
located investors based in Bermuda and the Caribbean islands.
Signatures
28. Please indicate, if accurate, that Mr. Lettau is also the
principal financial officer. Form SB-2 requires that the
principal
financial officer sign the registration statement.
Legality Opinion, Exhibit 5
29. The first sentence of the penultimate paragraph conveys that
the
opinion letter speaks only as of February 3, 2005. Please be
aware
that the opinion must speak as of the date of effectiveness of the
registration statement. Accordingly, if counsel intends to retain
this statement, then the legality opinion must be dated and filed
on
the date you request acceleration of effectiveness. Otherwise,
revise the opinion to eliminate the cited limitation.
Consent of Auditor, Exhibit 23.1
30. Please revise the consent filed in Exhibit 23.1 to delete the
reference to the audit report being incorporated by reference. We
note that there is only one audit report and it is actually
included
in the document rather than being incorporated by reference.
31. Please revise the consent of auditor to include a reference to
being named in the section "Interest of Named Experts and Counsel"
on
page 19.
* * * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert staff comments and the declaration of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Robert Burnett, Staff Accountant, at (202)
942-
1809 or Donna DiSilvio, Senior Staff Accountant , at (202) 942-
1852,
if you have questions regarding comments on the financial
statements
and related matters. Please contact Anita Karu, Attorney-Advisor,
at
(202) 942-1898, David Mittelman, Legal Branch Chief, at (202) 942-
1921, or me at (202) 942-1900 with any other questions.
Sincerely,
H. Christopher Owings
Assistant Director
cc: Donald Stoecklein, Esq.
Stoecklein Law Group
Fax: (619) 595-4883
??
??
??
??
Internet Acquisition Group, Inc.
March 2, 2005
Page 3