Mail Stop 0407
April 29, 2005
Via U.S. Mail and Fax (561-750-0420)
Mr. Anton Lee Wingeier
Chief Financial Officer, Director
Adsouth Partners, Inc.
1515 N. Federal Highway, Suite 418
Boca Raton, FL 33432
RE: Adsouth Partners, Inc.
Form 10-KSB for the fiscal year ended December 31, 2004
Filed March 31, 2005
File No. 0-33135
Dear Mr. Wingeier:
We have reviewed the above referenced 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. As such, all persons who are
responsible
for the adequacy and accuracy of the disclosure are urged to be
certain that they have included all information required pursuant
to
the Securities Exchange Act of 1934. Please address the following
comments in future filings. If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a future
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.
Form 10-KSB for the fiscal year ended December 31, 2004
Item 8A - Controls and Procedures, page 20
1. We note the statement that your chief executive officer and
chief
financial officer "believe that our disclosure controls and
procedures, as defined in Rule 13a-14(c) of the Securities
Exchange
Act of 1934, as amended, are designed to enable us to disclose the
information required to be disclosed by us." Item 307 of
Regulation
S-B, which became effective on August 14, 2003, requires you to
"[d]isclose the conclusions of the small business issuer`s
principal
executive and principal financial officers, or persons performing
similar functions, regarding the effectiveness of the small
business
issuer`s disclosure controls and procedures." Please confirm to
us
in your response letter whether or not your chief executive
officer
and chief financial officer concluded that your disclosure
controls
and procedures are effective. Further, please comply with this
comment through appropriate disclosure in your future filings.
See
Securities Act Release No. 33-8238 (June 5, 2003), which is
available
on our web site at <http://www.sec.gov/rules/final/33-8238.htm>.
2. Additionally, please confirm to us in your response letter
whether
you are using the definition of disclosure controls and procedures
found in Rule 13a-15(e) or 15d-15(e), which became effective on
August 14, 2003. Your current disclosure references Rule 13a-
14(c).
See Securities Act Release No. 33-8238 (June 5, 2003).
3. We note your disclosure that your disclosure controls and
procedures are "designed to enable us to disclose the information
required to be disclosed by us in the reports that we file or
submit
under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the
Commission`s rules and forms." Confirm to us in your response
letter
and revise in future filings to clarify, if true, that your
disclosure controls and procedures are:
* designed to ensure that information required to be disclosed by
you
in the reports that you file or submit under the Securities
Exchange
Act is recorded, processed, summarized and reported, within the
time
periods specified in the Commission`s rules and forms; and
* designed to ensure that information required to be disclosed by
you
in the reports that you file or submit under the Securities
Exchange
Act is accumulated and communicated to your management, including
your principal executive and principal financial officers, or
persons
performing similar functions, as appropriate to allow timely
decisions regarding required disclosure
See Rule 13a-15(e) of the Exchange Act. Alternatively, you may
simply state, if correct, that your chief executive officer and
chief
financial officer concluded that your disclosure controls and
procedures are effective.
4. We note your disclosure that "As a result of their evaluation,
there were no significant changes in our disclosure controls or
procedures." Confirm to us in your response letter, if true, that
there were no changes in your internal control over financial
reporting that occurred during your last fiscal quarter (the
fourth
fiscal quarter in the case of an annual report) that have
materially
affected, or are reasonably likely to materially affect, your
internal control over financial reporting. See Item 308(c) of
Regulation S-B, which became effective on August 14, 2003.
Further,
in future filings, please comply with Item 308(c) of Regulation S-
B.
See also Section II.J. of Securities Act Release No. 33-8238 (June
5,
2003).
Note 1. Summary of Significant Accounting Policies
Factored Receivables (Due to Factor), page F-14
5. Tell us in more details, citing accounting literature used, how
you account for factored receivables. Provide us with journal
entries giving effect to these transactions. Also:
* Tell us why the factoring company reserves 20% of receivables,
given that you sell qualified receivables without recourse.
* Tell us why total fixed and variable discounts are included in
interest expense.
* Tell us what is included in the due to factor.
* Tell us and disclose in future filings the amount of receivables
sold.
* Tell us how you considered SFAS 140.
Investment in Product Line Rights, page F-15
6. We note that in February 2004, you acquired Dermafresh, Inc.,
whose sole asset was the Dermafresh Product Line. The acquisition
cost is included in other assets and is being amortized as an
expense
against the sales of the Dermafresh product as calculated as the
percentage of sales of the Dermafresh line in any period to the
total
expected sales over the life of the Dermafresh Line. We also note
on
page 6 of your Risk Factors that you have no patent rights to your
products or registered trademark for the Dermafresh name.
Addressing
accounting literature used, tell us in more detail how you
accounted
for this purchase. Also:
* Tell us how you estimate the total expected sales over the life
of
the Dermafresh Line.
* Tell us whether you acquired a business, an asset, marketing
rights, or distribution rights. Refer to accounting literature
used.
7. We also note on page 16 of your MD&A that since December 31,
2004,
you have either acquired or obtained marketing rights to a number
of
additional products and your strategy contemplates that you will
seek
to acquire additional products. Tell us your accounting for these
transactions. Refer to accounting literature used.
Revenue Recognition, page F-15
8. We note on page 15 of your MD&A that a major client that
accounted
for approximately 67% of you advertising revenue in 2004, was
unable
to pay a significant portion of the money it owed you. As a
result
you wrote off approximately $482,000 of accounts receivable. In
addition on page 19 you state that in January 2005, you accepted
restricted stock in payment of the outstanding receivable due from
such customer. Given the fact pattern above, tell us how you meet
"collectability is reasonably assured" criteria as addressed in
SAB
101 and SAB 104.
9. We also refer to your statement that revenue from the sale of
products are recognized upon the shipment of the goods being sold
and
are net of estimated returns and other promotional allowances.
Given
that you introduced your products to the market in June 2004 (6
months ago), tell us why you believe you can reasonably estimate
return and other promotional allowances as addressed in paragraph
6
and 8 of SFAS 48. Tell us how you meet the "delivery and
acceptance"
criteria addressed in SAB 101 and SAB 104.
Exhibit 31.1
Exhibit 31.2
10. Please confirm to us in your response letter that your chief
financial officer meant to certify this annual report on Form 10-
KSB,
rather than "this quarterly report" as stated in your Exhibit
31.2.
11. In future filings, please remove your exhibits from the body
of
the periodic report. The exhibits should be separately filed and
tagged on EDGAR as exhibits, and not appended to the body of the
periodic report.
* * * *
Please respond to these comments within 10 business days or
tell us when you will provide us with a response. Please furnish
a
letter that keys your responses to our comments and provides any
requested supplemental information. Please file your response
letter
on EDGAR.
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.
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 do not foreclose the Commission from taking any action
with
respect to the filings; 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 filings or
in
response to our comments on your filings.
You may contact Inessa Berenbaum, Staff Accountant, at (202)
551-3371 or Carlos Pacho, Senior Assistant Chief Accountant, at
(202)
551-3835 if you have questions regarding comments 5 through 9 on
the
financial statements and related matters. If you have questions
regarding comments 1-4, 10, and 11 please contact Dan Zimmerman at
(202) 551-3367. Please contact me at (202) 551-3810 with any
other
questions.
Sincerely,
Larry Spirgel
Assistant Director
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Mr. Anton Lee Wingeier
Adsouth Partners, Inc.
April 29, 2005
Page 5
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE