Jody M. Walker
Attorney At Law
7841 South Garfield Way
Centennial, CO 80122
303-850-7637 telephone jmwalker85@earthlink.net 303-482-2731 facsimile
March 29, 2011
Division of Corporation Finance
Securities and Exchange Commission
100 F. Street N.E.
Washington, D.C. 20549
Re: Strategic Dental Management Corp.
Registration Statement on Form S-1
Filed February 8, 2011
File No. 333-172110
Gentlemen:
We have reviewed the Securities and Exchange Commission's comment
letter dated March 7, 2011, and have provided the following responses.
Cover Page
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1. You have two indications on your cover page as to whether or not the
securities being registered are offered on a delayed or continuous
basis, one checked and unchecked. Please remove the incorrect
indication.
The disclosure has been revised for accuracy.
Prospectus Summary, page 6
--------------------------
2. Elsewhere in your registration statement, you note that one of your
goals is to acquire a dental practice within the next twelve (12)
months. Please include this goal in your summary discussion.
The disclosure updated as follows:
We will use the proceeds of this offering to acquire a dental
practice within the next twelve (12) months. Should we be unable
to raise at least $75,000, we would give priority to allocating
capital to complete everything necessary to be ready to meet our
SEC reporting requirements. Any remaining capital would be used
to fund our working capital needs. If we are unable to raise the
funds needed, Mr. Ray, an officer and director has agreed to
provide the necessary funds to move forward with the marketing
and promotion.
3. You state here that the proceeds of your offering will be used to
develop and execute a marketing plan. However, on page 27, you
indicate that the bulk of the proceeds will be applied toward the
purchase of a dental practice, either with or without property. Please
reconcile this discrepancy and, if your proceeds will be largely
directed toward the purchase of a practice, amend your disclosure here
accordingly. You should also note here how you will allocate proceeds
if you fail to raise at least $75,000, as you have done on page 28.
2
The disclosure updated as follows:
We will use the proceeds of this offering to develop and execute
a fully operational valid marketing plan for our product. We
plan to acquire a dental practice within the next twelve (12)
months. Should we be unable to raise the necessary capital, we
would give priority to allocating capital to complete everything
necessary to be ready to meet our SEC reporting requirements.
Any remaining capital would be used to fund our working capital
needs. If we are unable to raise the funds needed, Mr. Ray, an
officer and director has agreed to provide the necessary funds to
move forward with the marketing and promotion.
Risk Factors
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"Funds raised in this offering will not be sufficient to purchase more
than one dental practice along with the building and assets. It is
likely that we will incur operating losses in the next twelve months
and need to raise additional capital" page 8
4. Given the current state of your operations, please revise this risk
factor in both the header and the body to state that you are likely to
incur operating losses in at least the next twelve months, and possibly
for some time afterward.
Risk factor 2 has been revised for accuracy as follows:
2. Funds raised in this offering will not be sufficient to
purchase more than one dental practice along with the building and
assets. It is likely that we will incur operating losses in the
next twelve months, and possibly for some time afterward, and will
need to raise additional capital.
Although we hope to raise sufficient money from this offering to
locate and purchase at least one practice, there is no assurance
that we will be successful. We will incur operating losses in the
next twelve months and possibly for some time afterward. It will
be necessary to either raise additional capital or to secure bank
loans to purchase the practices along with all equipment.
Furthermore, it will be necessary for the registrant to raise
additional capital over the next 12 to 24 months to be able to
acquire additional practices and to fully implement our business
plan.
"Our auditors have expressed a going concern issue that notes our need
for capital and/or revenues to survive as a business" page 8
5. Please include both your current cash balance and your accumulated
deficit figure in this risk factor.
The disclosure has been updated as follows:
We are currently a development stage company. Continued
operations are dependent on our ability to complete equity or
debt financing activities or to generate profitable operations.
Such capital formation activities may not be available or may not
be available on reasonable terms. Our financial statements do
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not include any adjustments that may result from the outcome of
this uncertainty. As of December 31, 2010, we had a cash balance
of $7,855, and an accumulated deficit of $(7,866). We believe
that if we do not raise sufficient money from our offering, we
may have to suspend or cease operations within twelve months.
Therefore, we may be unable to continue operations in the future
as a going concern. If we cannot continue as a viable entity, our
stockholders may lose some or all of their investment in the
registrant.
6. Please clarify your statement "Our financial statements do not
include any adjustments that may result from the outcome of this
uncertainty," and provide an explanation as to which adjustments you
are referring to.
The sentence has been deleted for clarity.
"As a development stage company, we may experience substantial cost
overruns in acquiring our first practices" page 9.
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7. The possibility that you may incur cost overruns s likely not
limited to only the first two practices you acquire. Accordingly,
please revise this risk factor to state that cost overruns could impact
multiple purchases as you attempt to execute your business plan or,
alternatively, explain to us why you feel this risk is only applicable
to your first two acquisitions.
The risk factor disclosure has been updated as follows:
4. As a development stage company, we may experience
substantial cost overruns in acquiring dental practices and
creating a strategy for future stages such marketing the
practices, and we may not have sufficient capital to purchase
other practices.
We may experience substantial cost overruns in purchasing dental
practices, and may not have sufficient capital to successfully
execute our entire business plan. Because the practices are not
yet identified, we do not currently know the exact purchase price
or timing of purchase. If the purchase prices are greater than
expected, we may not have nor be able to raise sufficient capital
to purchase other practices. In addition, the commercial success
of any dental practice is often dependent upon factors beyond the
control of the registrant attempting to market the services,
including, but not limited to, market acceptance of the company,
medical industry or governmental restrictions, and whether or not
third parties promote the services through prominent marketing
channels and/or other methods of promotion.
"We are a small company with limited resources compared to some of our
current and potential competitors" page 10
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8. Please identify your current and potential competitors
Disclosure has been updated to provide more information about our
competitors as follows:
4
The industry that we propose to be in is highly competitive. We
cannot guarantee that the features of our product are enough to
effectively capture a significant enough market share to
successfully launch and sustain our busines. Our current
competitors include dentists with their own practice, dentists
that own multiple practices, regional and national chains,
corporate owned practices, and dental management groups. Of the
practices with multiple locations, the most recognizable names
include Western Dental, Dental One, Southwest Dental, Sunwest
Dental, Pacific Dental, and Bright Now Dental. These companies
own between 5-15 offices each. Everyone in the preceding list is
also a potential competitor since they will consider adding
additional offices in areas with a lower than average
concentration of dentists. Other potential competitors include
new dentists opening their first office, dentists relocating from
another state, and dental associates wanting to open their own
office. These competitors have greater name credibility with our
potential distributors and customers. Our competitors also may be
able to adopt more aggressive pricing policies and devote greater
resources to the development, promotion, and sale of their
services than we can to ours. To be competitive, we must continue
to invest significant resources in sales and marketing, and
customer support. We may not have sufficient resources to make
the investments necessary to be competitive, which in turn will
cause our business to suffer and restrict our profitability
potential.
"We will rely on third parties to perform all dental work" page 10
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9. Your disclosure elsewhere in the prospectus indicates that you will
hire dentists and hygienists as employees to perform all dental work.
As such, they will not be third parties, as that term is generally
understood. Please revise the heading and the body of this risk factor
to clarify that the risk is that you may not find or retain a
sufficient level of dentists. Moreover, it does not seem correct that
you will have little or no control over your dentists and hygienists.
As your employees, these personnel must abide by the terms of their
employment relationships. Accordingly, please delete your statements
that you will have little or no control over these personnel or explain
why, as your employees, you may have no ability to control the services
they perform.
Risk factor 6 has been deleted for accuracy, and risk factor 7
has been expanded as required.
7. Our success depends on hiring the staff, dentists, and
hygienists. We may not be able to locate and hire necessary
personnel to make our operations a success.
The expansion of our business will place further demands on
existing management and future growth. Profitability will depend,
in part, on our ability to hire and retain the necessary
personnel to operate our business. There is no certainty that we
will be able to identify, attract, hire, train, retain and
motivate other highly skilled dentists and hygienists as well as
other, administrative, managerial, marketing and customer service
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personnel. Competition for such personnel is intense and there
is no certainty that we will be able to successfully attract,
integrate or retain sufficiently qualified personnel. The
failure to attract and retain the necessary personnel could have
a materially adverse effect on our business, operations and
financial condition.
We intend to hire all staff upon purchase of each practice. In
general, most staff will stay in place from the previous owner,
however it is possible that some or all of the staff may either
quit or we may find it necessary to let all staff members go and
start new. Our future revenue growth will depend in large part
on being able to hire skilled dentists and hygienists as well as
the other staff members. We may or may not be successful in
acquiring a dentist to work as an associate at any or all of the
practices.
"Our officers have no experience in running multiple dental offices.
They may not be able to successfully operate such a business which
could cause you to lose your investment," page 11
-------------------------------------------
10. Please revise your statement that "you" have successfully run a
single dental practice, as "you" refers to the registrant, not the
officers, and identify the name and location of the dental practice run
by your officers.
Disclosure has been updated for clarity as follows:
Our officers have been very successful in running a single dental
practice. They purchased SofTouch Dental LLC located in Gilbert
Arizona in June of 2005 and brought it from $30,000 a month of
production up to $80,000 per month in production within 7 months
of ownership. Although our officers have successfully run a
single dental practice, they are not experienced in running
several practices simultaneously. Our current officers have
effective control over all decisions regarding both policy and
operations of our operations with no oversight from other
management. Our success is contingent upon the ability of these
individuals to make appropriate business decisions in these
areas. However, our officers have no experience in operating
multiple dental practices. It is possible that this lack of
relevant operational experience could prevent us from becoming a
profitable business.
"If we lose the services of key members of our management team, we may
not be able to execute our business strategy effectively" page 11
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11. Please note in your risk factor that neither of your executive
officers has entered into an employment agreement with you and are, in
effect, at-will employees.
The disclosure updated for accuracy as follows:
10. If we lose the services of key members of our management
team, we may not be able to execute our business strategy
effectively.
6
Our future success depends in a large part upon the continued
service of key members of our management team. In particular,
Brian E. Ray, our chief executive officer and John Lundgreen,
chief financial officer, are critical to our overall management
as well as our strategic direction. The loss of Messrs. Ray's
and/or Lundgreen's services could have a material adverse effect
on our business operations and financial condition. We do not
maintain any key-person life insurance policies. The loss of any
of our management or key personnel could materially harm our
business. Neither of our executive officers have entered into an
employment agreement with us, and are, in-effect at-will
employees.
"Our officers have other business activities" page 11
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12. Please clarify whether the other business activities of Mr. Ray
and Mr. Lungreen may compete for business opportunities with the
registrant and, if so, whether this will run afoul of these directors'
state law duties to the registrant.
The disclosure updated for accuracy as follows:
12. Our officers have other business activities and will only be
devoting up to 50% of their time to our operations. Our
operations may be sporadic which may result in periodic
interruptions or suspensions of our business activities.
Our officers are not required to work exclusively for us, are
only engaged in our business activities on a part-time basis and
do not intend to devote full time to the business of the
registrant in the foreseeable future. This could cause the
officers a conflict of interest between the amount of time they
devote to our business activities and the amount of time required
to be devoted to their other activities. Our current officers,
intend to devote only approximately 20 to 30 hours per week to
our business activities, however they devote whole days or even
multiple days at a stretch when required. Subsequent to the
completion of this offering, the purchase of two practices, and
the raising of additional needed capital, we intend to increase
our business activities in terms of development, marketing and
sales. This increase in business activities may require that our
officers engage in our business activities on a full-time basis
or that we hire additional employees; however, at this time, we
do not have sufficient funds to pursue either option. Messrs.
Ray and Lundgreen are of the opinion that, though their other
activities may compete with the activities of the registrant,
they are aware of their fiduciary duties and will not violate
duties to the registrant.
"We have not yet adopted certain corporate governance measures" page 13
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13. Please specify the corporate governance measures to which you
refer and state when you will be required to comply with them.
7
The disclosure has been revised as follows:
The Sarbanes-Oxley Act of 2002, as well as rule changes proposed
and enacted by the SEC, the New York and American Stock Exchanges
and the Nasdaq Stock Market, as a result of Sarbanes-Oxley,
require the implementation of various measures relating to
corporate governance. These measures required by Sarbanes-Oxley
are designed to enhance the integrity of corporate management and
the securities markets and apply to securities which are listed
on those exchanges or the Nasdaq Stock Market. Because we are
not a publicly traded company, we not presently required to
comply with many of the corporate governance provisions and
because we chose to avoid incurring the substantial additional
costs associated with such compliance any sooner than necessary,
we have not yet adopted these measures.
"We may be exposed to potential risks resulting from new requirements
under Section 404" page 14
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14. Please state when you will be required to comply with Section 404
and explain why your inability to segregate responsibilities for
financial reporting poses risks to the company.
The risk factor has been altered to clarify the meaning of the
statement.
If we become registered as a publicly trading company with the
SEC, we will be required, pursuant to Section 404 of the
Sarbanes-Oxley Act of 2002, to include in our annual report our
assessment of the effectiveness of our internal control over
financial reporting. The cost of these assessments can be
prohibitive, which would mean less of our capital would be
available for operational uses.
"There is a disparity between the offering price and the prices at
which the selling security holders acquired their common shares. This
may negatively affect your ability to sell your common shares in the
future" page 15
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-
15. Please revise this risk factor to make clear that risk of dilution
is that purchasers in the offering will acquire their shares at a price
per share significantly greater than the price paid by existing
shareholders and therefore investors in this offering will experience
immediate dilution in the book value of their shares.
The second paragraph of risk factor 15 has been revised as
follows:
In the offering, the selling security holders will sell their
common shares at $.10 per common share until our common shares
are quoted on a market or securities exchange. The selling
security holders acquired their common shares for no cash and/or
services for $.001 per common share and are registering common
shares to be sold at $.10 until our common shares are quoted on
the OTC Electronic Bulletin Board. The risk of dilution is that
purchasers in the offering will acquire their shares at a
8
significantly greater price than that paid by existing
shareholders and thus investors in this offering will experience
immediate dilution in the book value of their shares.
16. This risk factor is duplicative of the one on page 13 that begins
"(w)e are not subject to compliance with rules requiring the adoption
of certain corporate governance measures." Please delete it.
The risk factor has been deleted.
"We may be exposed to potential risks resulting from new requirements
under Section 404 of the Sarbanes-Oxley Act of 2002." page 17
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17. This risk factor is identical to one on page 14. Please delete
it.
The risk factor has been deleted.
"The costs to meet our reporting and other requirements as a public
company subject to the Exchange Act of 1934 will be substantial" page
17
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-
18. This risk factor is virtually identical to one on page 14, with
the exception of your estimate of the costs you will incur. Please
retain the risk factor that you believe more closely approximates the
projected costs and delete the other one.
The noncomplying risk factor has been deleted.
Plan of Distribution and Selling Security Holders, page 18
----------------------------------------------------------
19. Please identify FINRA in this disclosure as the Financial Industry
Regulatory Authority.
The disclosure has been updated for accuracy as follows:
There has been no market for our securities. Our common stock is
not traded on any exchange or on the over-the-counter market.
After the effective date of the registration statement relating
to this prospectus, we hope to have a market maker file an
application with the Financial Industry Regulatory Authority for
our common stock to be eligible for trading on the over-the-
counter market. We do not yet have a market maker who has agreed
to file such application.
Business Operations
-------------------
General, page 21
20. Please amend your disclosure to clarify exactly what you mean by
"acted as dental consulting with a number of other practices in the
Phoenix area."
9
Disclosure has been updated as follows:
General
The registrant was incorporated under the laws of the State of
Colorado on January 8, 2010. We are a development stage company,
formed to build dental practices from scratch or to acquire
existing dental practices. In addition, we will manage all
aspects of the dental practices including payroll, human
resources, collections, personnel, training etc. The officers of
the registrant currently own and operate a privately held dental
practice called SofTouch Dental LLC since 2005. SofTouch Dental
LLC is a general dental practice located in Gilbert Arizona. In
addition to owning a dental practice, the officers have
contracted with 3 private practice dentists in the Phoenix area
on a consulting basis. Consulting Services for these practices
included: Reviewing accounting books and methods, analyze monthly
reports, managing expenses, team training, effective treatment
planning and presentation, telephone protocol, patient retention,
personal motivators, staff recruitment, performance evaluations,
promotions, employee relations, developing job descriptions,
computer system review and update, leveraging technology,
measurements and benchmarks, billing, etc. Although the
registrant is in the same line of business, because it is a new
entity, it has generated very little revenue, and our operations
have been limited to organizational, start-up, and capital
formation activities.
21. Please revise your statement that "the registrant provides a wide
range of business services" to state that you "will provide" such
services. As currently drafted, your disclosure suggests that you are
currently providing these services.
Disclosure has been updated as follows:
The registrant will provide a wide range of business services to
its affiliated dental practices. Among the services provided by
SDM are; administrative functions, including accounting, human
resources, marketing and finance; recruitment of professional,
administrative and support personnel in the practices; and
equipment and facility leasing.
22. Please amend your disclosure to provide the bases for your
assertions concerning the shortage of affordable, well-managed dental
offices in Arizona, particularly your statement that there are over
2,100 people for each dentist in the state versus 1,700 per dentist on
average nationally.
Disclosure has been updated for clarity as follows:
Industry background
There is a shortage of affordable, well-managed dental offices in
Arizona. According to a report by the American Dental Association
entitled "Distribution of Dentists in the U.S. by Region and
State", Arizona has an average of 2,100 people for every dentist.
The national average according to the same report is 1,700 people
for every dentist. Therefore, when looking at the country as a
whole, Arizona dentists have potential for a larger average
10
patient base than dentists outside of Arizona. With over 2,100
people for every dentist in the state, Arizona's concentration of
dentists is less than the national average which is 1,700 people
for every dentist. This means a typical Arizona dentist should
have, on average, 400 more patients than a dentist in another part
of the country.
23. Please amend your disclosure to more fully describe your in-house
research, including the name and the industry background of the
person(s) who performed this research and whether or not, to your
knowledge, the results obtained are comparable to results that have
been obtained by independent third parties.
Disclosure has been deleted for clarity
24. Please include the bases for your estimated projections on page 23
of annual collections exceeding $800,000 by the second year of
operation and $1.1 million by the third year.
Disclosure has been updated to provide the following information:
In each new practice, we project annual collections of $300,000 in
year one, $800,000 in year two, and 1.1 million by the end of year
three. Following is our monthly revenue forecast:
Year 1 Monthly Forecast (in thousands)
1 2 3 4 5 6 7 8 9 10 11 12
8k 10k 12k 15k 18k 21k 26k 30k 34k 38k 42k 46k
Year 2 Monthly Forecast (in thousands)
1 2 3 4 5 6 7 8 9 10 11 12
50k 54k 57k 60k 63k 66k 69k 72k 75k 77k 79k 81k
Year 3 Monthly Forecast (in thousands)
1 2 3 4 5 6 7 8 9 10 11 12
83k 85k 87k 89k 91k 92k 93k 94k 95k 96k 97k 98k
The projections above are based upon the officers' dental practice
growth results and results achieved while consulting.
25. On page 23, please describe the purposes for which you will use
the $600,000 you require in the next twelve months to implement your
business plans.
The disclosure has been updated to show the proper breakdown of
funds as follows:
The registrant estimates that it will require an approximate
minimum of $600,000 in the next 12 months. Such funds will be
needed for the following purposes:
- Locate specific dental practice for purchase
- Close on 1st practice and hire employees
- Begin general business operations and marketing
11
The officers expect to use the $600,000 as follows:
- $500,000: Purchase building and equipment. Approximate
allocation would be
- $350,000 for building and build-out expenses and $150,000
for equipment.
- $57,500: General working capital (salaries, marketing,
supplies, utilities, telephone, etc.).
- $22,500: SEC reporting costs
- $20,000: General expenses
Estimated Dental Practice Expenses, page 24
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26. Please clarify how management is "aligned" with the insurance
providers identified on page 25.
Disclosure has been updated as follows:
Private Payor Insurance: An affiliation with national payers is
critical to driving new business. Following are common insurance
plans that many dentists in Arizona accept. We plan on being in-
network providers with credentialed dentists for each of the
following insurance providers: Met Life, Delta Dental, Aetna,
Cigna and Great Western, and TDA. Management is currently
aligned with all of the above providers. National payers average
30 - 60 days for payment.
Insurance, page 26
------------------
27. Please amend your disclosure to provide an estimate of both the
maximum liability coverage you intend to purchase and the amount of the
premium you would expect to pay.
The disclosure has been updated for greater clarity:
The business liability policy will consist of liability and
medical expenses of $1,000,000 with general aggregate limits of
$2,000,000. Building and equipment losses will be covered at
replacement costs of approximately $500,000. The annual premium
for this coverage is estimated to be $1,200.
Dilution, page 28
-----------------
28. Please revise your dilution table to present amounts rounded to
the nearest cent, in order to not imply a greater degree of precision
than exists.
The Dilution table has been revised as follows:
Funding Level $600,000 $300,000 $150,000 $75,000
---------- -------- -------- --------
<s> <c> <c> <c> <c>
Offering price $0.10 $0.10 $0.10 $0.10
Net tangible book
value per common
share before offering .00 .00 .00 .00
12
Increase per common
share attributable to
investors .05 .04 .02 .01
----- ----- ----- -----
Pro forma net tangible
book value per
common share after
offering .05 .04 .02 .01
----- ----- ----- -----
Dilution to investors .05 .06 .08 .09
Dilution as a
percentage of
offering price 50% 60% 80% 90%
Management's Discussion and Analysis, page 30
---------------------------------------------
29. Please revise your disclosure to include a Results of Operations
discussion. In your disclosure address the nature and components of
both revenue from the related party and general and administrative
expenses. Refer to Item 303(a)(3)(i) of Regulation S-K.
Disclosure has been updated to include a results of operations
discussion, which is as follows:
Results of Operations
As of December 31, 2010, our gross revenue from operations was
$6704. Revenue was derived from consulting services provided to
SofTouch Dental LLC as well as Kevin Wolff DDS. During this same
period, all Operating Expenses including office supplies, postage,
consulting services, professional fees printing etc. totaled
$14,770. Adding in miscellaneous income of $200, this led to a
net loss of $7,866. Registrant continues to consult with SofTouch
Dental LLC and will continue for the foreseeable future. To date,
there have been no unusual or infrequent transactions that have
affected operations and the Registrant. Registrant will continue
consulting with other dental practices, looking for additional
consulting contracts and fulfilling those contracts.
Liquidity and Capital Resources
-------------------------------
Going Concern, page 31
30. You disclose on page 31 that in the near term, Tri-mark expects
operating costs to continue to exceed funds generated from operations.
It is not clear what Tri-Mark represents; please revise your disclosure
to clarify.
The disclosure has been updated for accuracy as follows:
Going Concern
Our financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of
business. In the near term, we expect operating costs to
continue to exceed funds generated from operations. As a result,
we expect to continue to incur operating losses and may have
13
insufficient funds to grow its business in the near future. We
can give no assurance that it will achieve profitability or be
capable of sustaining profitable operations. As a result,
operations in the near future are expected to continue to use
working capital.
Directors, Executive Officers, Promoters and Control Persons, page 32
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31. Please provide specific dates for Mr. Ray's biographical
information within the last five years. For example, if Mr. Ray has
been employed continuously at Fluid and Company since 1998, please make
this clear.
Biography has been updated for greater clarity as follows
Since January of 2003, Mr. Ray has been a part owner of LR
Properties, LLC which is a real-estate investment and development
company. He is also part owner of Baywind Holdings LLC which
owns SofTouch Dental Care LLC since 2005 as well as Strategic
Dental Management since 2008. He volunteers as a boy scout
leader and is active in politics.
Executive Compensation, page 34
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32. Please disclose the method by which you intend to compensate your
named executive officers, if and when you choose to do so, and state
when you expect these officers will begin receiving compensation.
Disclosure has been updated as follows:
Officers are not currently under any employment contract and are
not due to be compensated until the first practice is acquired
and opened. Once the first practice is acquired and opened,
Officers will be compensated 10% (5% each) of practice
collections on a monthly basis. This formula will remain the
same with each practice that is opened.
Certain Relationships and Related Transactions, page 38
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33. Please amend your disclosure to include a discussion of the
consulting agreement you have entered into with SofTouch Dental,
including its material provisions, the amount paid to SofTouch Dental
to date, and file this agreement as an exhibit to your registration
statement.
The agreement filed as an attachment, and disclosure updated as
follows:
On January 15, 2010, SofTouch Dental, LLC. and Strategic Dental
Management Corp entered into a 24 month consulting agreement. As
part of this agreement, SofTouch Dental agreed to pay Strategic
Dental Management Corp for management and consulting services as
outlined in Exhibit A. Through December 31, 2010, SofTouch Dental
paid $4,500 to Strategic Dental Management Corp.
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34. Please identify the holder(s) of the convertible promissory note
dated June 26, 2010, and file this note as an exhibit to your
registration statement.
The note filed as an attachment and disclosure updated to include
the proper name.
The holder of the convertible promissory note dated June 26, 2010
is American Business Services, Inc. and is attached as Exhibit B.
Notes to Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies
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Revenue Recognition, page 52
----------------------------
35. Your accounting policy is specific to revenue from product sales.
However, your company provides consulting and management services to
the dental industry. Please revise your accounting policy to
specifically address revenue recognition from your consulting and
management services, and include a description of the services you
provided to the related party for which you recognized revenue in the
period. Clarify why you do not believe the amount received from the
related party should be classified as a capital contribution.
The registrant's revenue recognition policy in footnote 1 has
been clarified, and additional disclosure as to services provided
has been added to footnote 5. The registrant has recorded the
amounts received to revenue, as work was performed in exchange
for monies received, as opposed to a capital contribution where
funds are contributed generally without work or services
exchanged to obtain the funds.
Note 2 - Notes payable, page 54
-------------------------------
36. You disclose your note is convertible anytime at the holder's
option at five cents per share. As the conversion rate is lower than
your estimated IPO price of ten cents per share, it appears your debt
may have a beneficial conversion feature. Please provide us with your
accounting analysis as to whether your debt includes a beneficial
conversion feature, and tell us how you considered ASC 470-20-25.
Additionally, please revise your disclosure to include a description of
the conversion feature, including whether the conversion is limited to
shares of the company's stock and/or whether there will be automatic
conversion of the debt upon effectiveness of the IPO. Finally, please
label your Notes Payable as Convertible Notes Payable - related party
on your Balance Sheet.
In considering whether or not the Company's convertible note
payable has a beneficial conversion feature in light of ASC 470-
20-25 guidance, the Company noted that the note payable, with a
conversion price of $.05 per share, was issued in close proximity
to common stock sales made by the Company also at $.05 per share.
The IPO price at the time of note issuance had not been set. In
addition, although the IPO price has been set at $.10 per share,
there is no guarantee that the Company will be able to sell any
significant amount of stock at that price, or that any
15
supportable trading market for the Company's stock will develop
at any price. Therefore the Company does not believe the note
bears a beneficial conversion feature.
Additional note disclosure as requested has been added to the
balance sheet and to footnote 2.
Note 6 - Going concern, page 54
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37. You disclose on page 55 that the company hopes, through marketing
efforts, to generate revenues from sales of its art consulting and
marketing services. Based on your Organization disclosure in Note 1,
it does not appear that you have art consulting and marketing services.
Please revise your disclosure to clarify this matter.
Disclosure in footnote 6 has been corrected to reflect the
Company's business of dental practice management and consulting.
Signatures, page 61
-------------------
38. In your next amendment, please indicate which of your signatories
acts in the capacities of "principal executive officer" and "principal
financial officer," as you have done elsewhere in your registration
statement.
The disclosure has been updated to include the appropriate
capacities.
Thank you for your time and consideration in this matter. Please do
not hesitate to contact me if you have any questions regarding the
above.
Very truly yours,
/s/Jody M. Walker
------------------------
Jody M. Walker
Attorney At Law