PRIMCO MANAGEMENT, INC.
700 Rockaway Turnpike
Suite $300
Lawrence, NY 11559
June 14, 2011
United States Securities and Exchange Commission
Division of Corporation Finance
Mail Stop 3561
Washington, D.C. 20549
Re: Primco Management, Inc.
Amendment No. 1 to Registration Statement on Form S-1
Filed March 28, 2011
File No. 333-173119
Dear Sir and/or Madam:
We have reviewed the Securities and Exchange Commission's comment
letter dated April 25, 2011 and have the following responses.
Comment Letter dated April 26, 2011
-------------------------------------
General
1. Please refer to Rule 419 of Regulation C, which includes a
definition of "blank check company." Please note that the Commission
stated it would "scrutinize . . . offerings for attempts to create the
appearance that the registrant . . .has a specific business plan, in an
effort to avoid the application of Rule 419." See Securities Act
Release No. 33-6932 (April 28, 1992). Due to your financial condition,
it is unclear how you have disclosed a specific business plan that would
allow you to continue as a going concern. Further, your current assets,
operations, and revenues are nominal in nature.
As such, it is uncertain from your disclosure whether the company will
be able to implement a business plan based on your current financial
condition. In view of the foregoing, it appears that your proposed
business may be commensurate in scope with the uncertainty ordinarily
associated with a black check company.
Accordingly, please revise your disclosure throughout your registration
statement to comply with Rule 419 of Regulation C or supplementally
provide a detailed explanation as to why Rule 419 does not apply to this
offering. If you believe that you do not fall within the definition of
a blank check company, appropriate disclosure to demonstrate your status
as a non-blank check company should be included in the prospectus as
well as a specific business plan.
The disclosure has not been revised to include the application of
Rule 419. Management is actively pursuing its business plan as
set out in the registration statement. On May 1, 2011, the
registrant has signed a contract with New Visions Group Inc. to
manage their benefit interest in a 100 unit multi family
residential development. We continue to market ourselves and
build up and develop the business.
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The registrant has a business plan which is inconsistent with the
business plan of a blank check company. As described above, the
registrant provides managing services in the real estate industry
and receives 5% of the amounts collected by the residents of the
residential development. The registrant will pursue the other
aspects of its business plan as funds allow.
The registrant does not intend to solely engage in any activities
which would be consistent with the business plan of a blank check
company.
Management of the registrant does not considers the registrant to
be, or has treated the registrant as a blank check company.
Prospectus Cover Page
2. Please revise the cover page to reference the applicability of penny
stock rules to transactions in your securities and include such
disclosure in your prospectus summary.
Disclosure has been added to the cover page and the prospectus
summary regarding the applicability of penny stock rules.
Prospectus Summary
Operations, page 5
3. Please revise the summary to discuss briefly your historical and
current operations and provide additional detail in your business
section. For instance, please revise to clarify that you have net
losses. This disclosure should provide balance to your disclosure in
the first paragraph of your activities under the Operations subheading.
The disclosure has been revised to include the following:
Historical operations: Since inception, the registrant's
representatives have contacted business organizations, real estate
firms, known owners of real estate and other contacts as
perspective clients for future business
Current operations: The registrant has signed a contract with New
Visions Group Inc. to manage their beneficial interest in a 100
unit multi family residential development. We continue to market
ourselves and build up and develop the business.
4. Please revise your summary to briefly explain what your auditor's
going concern opinion means.
The following disclosure has been added.
Our independent auditor has expressed substantial doubt about our
ability to continue as a going concern given our lack of operating
history and the fact to date have had no revenues. Potential
investors should be aware that there are difficulties associated
with being a new venture, and the high rate of failure associated
with this fact. We have incurred an accumulated deficit of
$16,182 for the three months ended March 31, 2011 and have had no
revenues to date. Our future is dependent upon our ability to
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obtain financing and upon future profitable operations from our
operations. These factors raise substantial doubt that we will be
able to continue as a going concern.
Risk Factors, page 6
General
5. Please include a risk factor that indicates that the offering price
was arbitrarily determined and that the price bears no relations to your
assets, earnings, book value or other criteria of value. Please
disclose the material risks to investors resulting from the arbitrary
determination of your offering price.
The following risk fact has been added.
3. The initial price of $.25 may have little or no relationship
to the market price, if any of our common stock.
The offering price of our common stock by the selling security
holder was arbitrarily determined without regard to book value,
recent issuances of shares, such as for cash and services or
market value. There may be little or no relationship between the
initial prices of $.25 and the market price. You may lose your
entire investment.
6. Please review your risk factors and eliminate those generic risks
applicable to any public company. For example, we note your risk factor
at the top of page 7 regarding the risks related to compliance with
periodic reporting requirements and your second risk factor on page 11
regarding the prospective impact that your responsiveness to future
growth opportunities could have on your business. Alternatively, please
revise any generic risk factors to demonstrate risks specific to your
business.
The risk factor relating to the risks related to compliance with
period reporting requirements has been revised to demonstrate
risks specific to the registrant's business.
6. Our current operations will not be sufficient to cover the
cost associated with satisfying our reporting obligations. The
costs to meet our reporting and other requirements as a public
company subject to the Exchange Act of 1934 will be substantial
and may result in us having insufficient funds to complete the
development of our product line or even to meet routine business
obligations.
If we become a public entity, subject to the reporting
requirements of the Exchange Act of 1934, we will incur ongoing
expenses associated with professional fees for accounting, legal
and a host of other expenses for annual reports and proxy
statements. We estimate that these costs could range up to
$35,000 per year for the next few years and will be higher if our
business volume and activity increases but lower during the first
year of being public because we have not yet completed development
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of our line of services, and we will not yet be subject to the
requirements of Section 404 of the Sarbanes-Oxley Act of
2002. Our current operations will not be sufficient to cover the
cost associated with satisfying our reporting obligations. As a
result, we may not have sufficient funds to complete the
development of our line of services or even to meet routine
business obligations.
The generic risk factor regarding the prospective impact . . . has
been eliminated.
7. We note that Mr. Friedman will continue to own a majority of your
outstanding shares after this offering. As such, please revise to
discuss the risk associated wit his ability to cause you to engage in a
business combination without seeking shareholder approval, as
applicable.
The following risk factor has been added.
9. Even after completion of the offering, assuming all of the
common shares is sold, our executive officer will own
approximately 66.67% of our outstanding common stock. Investors
may find that corporate decisions influenced by our executive
officer are inconsistent with the best interests of other
stockholders.
Neal Friedman, our executive office owns all of the outstanding
shares of our common stock as of the date of this prospectus.
Accordingly, he has, and following the completion of the offering,
will continue to have power in deciding every aspect of our
business, including:
- all employment decisions;
- the appointment of other management positions; and
- whether to enter into material transactions with
related parties.
He will have the power in determining the outcome of all corporate
transactions or other matters, including mergers, consolidations
and the sale of all or substantially all of our assets, and also
the power to prevent or cause a change in control. While we have
no current plans with regard to any merger, consolidation or sale
of substantially all of its assets, the interests of our executive
officer may still differ from the interests of other stockholders.
Mr. Friedman owns 8,000,000 common shares for which he paid
$12,100.
8. Please also include a separate risk factor under this
subheading to make clear your key officers will also have
complete control over decisions, including, but not limited to:
- all employment decisions;
- the appointment of other management positions; and
- whether to enter into material transactions with related
parties.
See response to comment 7.
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9. Please include a risk factor that discusses your principal
officer's inexperience in running a public company and in the
company's current business, if applicable.
The principal officer's resume has been revised to discuss
his experience in the business of the registrant. The
following risk factor has been added.
8. Because our executive officer does not have experience in
running a public company, there is a higher risk our business will
fail.
Our executive officer does not any experience in running a public
company. As a result our business could suffer irreparable harm
due to his lack of experience.
5. The costs to meet our reporting and other requirements ...
page 7
10. Please revise this risk factor to clarify, if true, that
your current operations will not be sufficient to cover the cost
associated with satisfying your reporting obligations.
The risk factor has been revised.
6. We are dependent on Neal Friedman...page 8
11. Considering your disclosure elsewhere in Risk Factor section
regarding your lack of financial resources, please revise this
risk factor and your later disclosure in the business section to
explain in greater detail how you plan to engage qualified
personnel to implement your strategy.
The disclosure has been added to the risk factor and the
business section.
Forward-Looking Statements, page 11
12. Please revise your disclosure in the last sentence in the
second paragraph under this subheading to clarify that your are
required, pursuant to applicable regulations to update this
prospectus during your continuous offering.
The disclosure has been revised as follows:
Because of the number and range of the assumptions underlying our
projections and forward-looking statements, many of which are
subject to significant uncertainties and contingencies that are
beyond our reasonable control, some of the assumptions inevitably
will not materialize and unanticipated events and circumstances
may occur subsequent to the date of this prospectus or the date of
any updates to this prospectus, pursuant to applicable
regulations, during our continuous offering.
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Use of Proceeds, page 12
13. Please revise to provide a separate discussion of each
component of the total estimated costs for this offering,
consistent with your disclosure under Item 13.
The following disclosure has been added.
Offering expenses include general and administrative expenses,
including legal and accounting fees and administrative support
expenses incurred in connection with our reporting obligations
with the SEC.
Start-Up/Expansion Costs include purchasing software,
infrastructure computers server, printers, website development,
personnel, office fixtures and supplies.
Marketing and sales includes advertising at industry shows, in
industry journal ads and website advertising.
Working capital includes rent, salaries and other operation
expenses.
Business Operations
Services, page 14
14. Please significantly revise to describe more specifically
what services you currently provide, how you provide these
operations and to whom. In addition, please discuss in detail
your planned real estate services. Revise your prospectus,
including this section and your MD&A so that ordinary investors
have a clear understanding of what you do and what services you
provide.
The following disclosure has been added:
To date, we offer real estate management services for a per diem
rate or for a traditional percentage rate. We provide investment
analysis, possible restructuring, refinancing, or repositioning
analysis and implementation and strategic partnering.
On May 1, 2011, the registrant entered into a management agreement
with New Visions Group to act as the managing agent of a 100 unit
multi family residential apartment buildings known as Wallnut
Villas Apts. located at 1027 Florence Avenue, Vineland, NJ 08360,
for a term of five years. New Visions Group is owned by Murray
Friedman, the father of Neal Friedman, an officer and director of
the registrant. Pursuant to the agreement, the registrant will
receive 5% of amounts collected from the distributions of income
derived from the buildings and will be reimbursed for all out-of-
pocket costs. There are no specific termination provisions.
15. Please discuss in greater detail how the company will earn
fees form providing consulting and management services, including
a more robust discussion of the payment structure of your
contractual arrangements.
The following disclosure has been added:
Revenues
--------
The registrant will offer its management services as a per
diem/per unit fee or a traditional percentage of rent roll fee as
negotiated on a per property basis. All other services will be
billed at a per contract fee, or as an hourly fee as per
negotiation with the particular client. All services will be
billed on a net 30 day basis.
Competition, page 20
16. Please revise this section to discuss how you compete within
your industry despite having limited operations and assets. In
this regard, please discuss your competition's advantages over
you and discuss how this will affect your competitive position
within the industry.
The following disclosure has been added:
The registrant plans to service its clients at a cheaper service
fee. The registrant is willing to take on troublesome properties
and "go the extra mile" with plans and imagination to cure
problems not white wash them. The registrant is willing to do
this even at a per diem rate which management believes is easier
to afford on a troubled property`s limited budget. The registrant
is willing to negotiate a grace period for management fees on a
yearly signed contract in order to help the owner over come the
hurdles of management change.
17. We note your disclosure on pages 20 and 22 regarding
strategic partners and alliances. Please revise to remove
duplicative disclosure and clarify, if true, that you currently
have no strategic partners or alliances.
The duplicative disclosure has been deleted and the
disclosure has been revised to clarify that the registrant
currently has no strategic partners or alliances.
Employees, page 20
18. Please disclose the approximate amount of time that your
executive officers will devote to you.
The following disclosure has been added.
Messrs. Friedman and Spira will devote their full efforts
and as much time as needed when operations and funding are
available.
Management's Discussion and Analysis of Financial Condition or
Results of Operation
Results of Operations, page 26
19. Considering that your auditors have issued a going concern
opinion, please revise to indicate the course of action that you
intend to take to remedy the deficiency.
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The following disclosure has been added under Plan of
Operation.
The registrant's 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, the registrant expects
operating costs to continue to exceed funds generated from
operations. As a result, the registrant expects to continue to
incur operating losses, and the operations in the near future are
expected to continue to use working capital.
The registrant estimates that it will require approximately
$15,000 per month for operations including salaries office
expenses etc without expansion. This will also include legal,
accounting and transfer agent fees.
Our current cash balance is estimated not to be sufficient to fund
our current operations. In addition to revenues received from our
management agreement with New Visions Group, Mr. Friedman has
verbally agreed to personally loan any amounts up to the $50,000
needed to run operations. Any loan provided by Mr. Friedman shall
be binding, with an interest rate of five percent per annum and a
term of one year. However, we still need raise sufficient funds
to complete the development of our service line. No other
financing plans are in place. We may never obtain the necessary
financing to complete product development and begin operations.
Liquidity and Capital Resources, page 256
20. Please discuss the company's specific cash requirements for
next 12 months to continue its operations. Please also revise to
discuss in greater detail the specifics of your oral loan
arrangement with your principal officer to cover various expenses
outstanding after you have exhausted the offering proceeds.
See response to comment 19 above relating to specific cash
requirements.
There are no additional material terms to disclose
regarding the oral loan arrangement.
21. We not your discussion of the impact that compliance with
reporting company requirements under the Exchange Act will have
on your liquidity on an going-forward basis. Please revise to
discuss your estimated expenses in greater detail and how you
determined such amounts.
The following disclosure has been added.
Our estimated costs based on discussions with each professional
include accountants/auditors, legal counsel and transfer agents
are breakdown yearly as follows:
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Accounting $25,000
Legal $12,000
Transfer agent $ 5,000
This will add approximately $3,500 per month to our bottom line
expenses.
22. Please disclose the offering expenses to be paid by the
company as disclosed in Part II of the registration statement and
discuss how these expenses will affect your liquidity.
The disclosure has been revised.
Plan of Operations, page 25
23. We note you intend to spend $100,000 over the next one to
three months to "complete management programs." Please revise to
explain what you mean by complete management programs and more
specifically describe and provide a breakdown of how the $100,000
will be used, assuming you are able to raise any proceeds.
The following disclosure has been added.
Assuming we raise sufficient proceeds, to complete our management
programs, we intend to buy software for marketing, real estate
management, book keeping and operations and integrate them
together. We intend to train our staff with the latest available
real estate management/operations criteria in order to provide an
integrated streamlined service to our clients.
24. We note that you received proceeds of $12,100 from the sale
of common stock to Neal Friedman and that Mr. Friedman has
verbally agreed to personally loan any amounts up to the $50,000
needed to run operations. Please provide applicable disclosure,
including the approximate dollar value of any transaction, in
accordance with Item 404(a) of Regulation S-K.
The applicable disclosure has been added.
Directors, Executive Officers, Promoters and Control Persons,
page 27
25. Please expand your disclosure here to provide a discussion
of the specific experience qualifications, attributes or skills
that led to the conclusion that Mr. Friedman should serve as a
director. Please refer to Item 401(e) of Regulation S-K.
The following disclosure has been added:
Mr. Friedman was a consultant at Sapphire Capital Ventures, a
private real estate venture fund and management firm from 2008 to
2010. He was responsible for the management of large scale
commercial and residential real estate development projects. Mr.
Friedman's consulting role included team leadership, client
development, advising on contract negotiation, finance-management,
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due diligence, site and building assessment. Mr. Friedman has a
developed a large contact base that will be very useful to the
registrant and its growth.
During Mr. Friedman's tenure with Sapphire Capital Ventures he was
trained in and was responsible for the management of commercial
and residential real estate projects he worked with many clients
and gained much of his experience during that time and was
introduced to many people in the industry. His expertise in
financial analysis and due diligence will be instrumental in the
registrant's success. Mr. Friedman's experience in debt collection
and debt restructure will be of great value to the registrant in
today's trying financial markets
26. Please revise to disclose Mr. Friedman's specific experience
as a consultant for Sapphire Capital Ventures.
See response to comment 25.
Report of Independent Registered Public Accounting Firm, page 35
27. Please revise to include the words "substantial doubt" in
the going concern opinion paragraph to comply with PCAOB
standards.
The report has been revised.
Thank you for your time and consideration in this matter.
Sincerely,
/s/Neal Friedman
-----------------------
Neal Friedman
Chief Executive Officer