Mail Stop 0306
April 11, 2005
VIA U.S. MAIL AND FAX (918) 583-7442
Mr. Robert H. Nelson
Chief Financial Officer
Palweb Corporation
1613 East Fifteenth Street
Tulsa, Oklahoma 74120
Re: Palweb Corporation
Form 10-KSB for the year ended May 31, 2004
Dear Mr. Nelson:
We have reviewed your filings and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and will make no further review of your
documents. Where indicated, we think you should revise your
documents
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
filings.
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.
Form 10-KSB for the year ended May 31, 2004
Item 6. Management`s Discussion and Analysis - Page 13
1. Revise future filings to include a discussion of the company`s
policy for identifying and accounting for obsolete or unsaleable
inventory as a critical accounting policy. Alternatively, tell us
why
you do not believe this to be one of the company`s critical
accounting policies.
Item 8A. Controls and Procedures - Page 23
2. We note your disclosure that "there can be no assurance that
any
design will succeed in adhering to its stated goals under all
potential future conditions." Revise future filings to remove
this
qualifying disclosure.
3. Please revise the language used in your disclosure concerning
changes in your internal control over financial reporting in
future
filings to indicate whether there was any change to your internal
control over financial reporting that has materially affected, or
that is reasonably likely to materially affect, your internal
control
over financial reporting, consistent with the language used in
amended Item 308(c) of Regulation S-B.
Consolidated Statements of Cash Flows - Page F-5
4. We note that you acquired Greystone Plastics, Inc. in fiscal
year
2004 by paying $4.2 million in cash and issuing $8.3 million of
notes
payable. Tell us how you have reflected the cash paid for the
acquisition of the assets and liabilities of Greystone in your
statement of cash flows. Tell us how your accounting complies
with
paragraphs 15-17 of SFAS No. 95.
Note 1. Summary of Significant Accounting Policies
Recognition of Revenues - Page F-8
5. We noted that you state "revenues are recognized when the
product
is shipped." However, we also noted on page 8 that it appears you
offer both products and services to your customers. Tell us and
revise future filings to discuss what services you provide and how
you recognize revenues for such services.
Note 14. Acquisition - Page F-17
6. It appears that Greystone Plastics had a significant
arrangement
with at least one customer. However, it does not appear that you
allocated any amounts as an intangible asset relating to this
contractual agreement. Please supplementally tell us why you did
not
allocate a greater amount to any intangible assets based on
paragraphs 37(e) and 39 of SFAS 141 and also Appendix A14 of SFAS
141. Tell us and revise future filings to disclose why the
purchase
resulted in such a significant amount being recorded to goodwill.
Form 10-QSB for the period ended November 30, 2004
Item 3. Controls and Procedures - Page 11
7. We note your statement that the chief executive officer and
chief
financial officer have concluded that the company`s disclosure
controls and procedures are effective "except as set forth below."
Given the exceptions noted, it remains unclear whether your chief
executive officer and chief financial officer have concluded that
your disclosure controls and procedures are effective. Please
amend
your filing to revise your disclosure to state, in clear and
unqualified language, the conclusions reached by your chief
executive
officer and your chief financial officer on the effectiveness of
your
disclosure controls and procedures. For example, if true, you can
state that your disclosure controls and procedures are effective
including consideration of the identified matters, so long as you
provide appropriate disclosure explaining how the disclosure
controls
and procedures were determined to be effective in light of the
identified matters. Or, if true, you can state that given the
identified matters, your disclosure controls and procedures are
not
effective. You should not, however, state the conclusion in your
current disclosure, which appears to state that your disclosure
controls and procedures are effective except to the extent they
are
not effective.
8. We do not see where you have included the information required
by
Item 308(c) of Regulation S-B. Revise to indicate whether there
was
any change to your internal control over financial reporting that
has
materially affected, or that is reasonably likely to materially
affect, your internal control over financial reporting.
* * * *
As appropriate, please amend your Form 10-QSB for the period
ending November 30, 2004 and respond to these comments within 10
business days or tell us when you will provide us with a response.
You may wish to provide us with marked copies of the amendment to
expedite our review. Please furnish a cover letter that keys your
responses to our comments and provides any requested supplemental
information. Detailed cover letters greatly facilitate our
review.
Please file your cover letter on EDGAR. Please understand that we
may have additional comments after reviewing your 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.
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.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that
? the company is responsible for the adequacy and accuracy of
the
disclosure in the filings;
? staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
? the company 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.
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 our review of your filing or in
response to our comments on your filing.
You may contact Julie Sherman, Staff Accountant, at (202)
824-
5506 or Kevin Vaughn at (202) 824-5387 or me at (202) 942-7903 if
you
have any questions regarding these comments.
Sincerely,
Michele Gohlke
Branch Chief
Mr. Robert H. Nelson
Palweb Corporation
April 11, 2005
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