LEGAL & COMPLIANCE, LLC
LAURA ANTHONY, ESQUIRE
STUART REED, ESQUIRE WWW.LEGALANDCOMPLIANCE.COM
DIRECT E-MAIL:
LANTHONY@LEGALANDCOMPLIANCE.COM
July 18, 2006
VIA FEDERAL EXPRESS
Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Washington, DC 20549
Attn: Michele M. Anderson, Legal Branch Chief
RE: IELEMENT CORPORATION
AMENDMENT NO. 2 TO REGISTRATION STATEMENT ON FORM SB-2
FILED JUNE 6, 2006
FILE NO. 333-131451
FORM 10-KSB FOR YEAR ENDED MARCH 31, 2005
FORM 10-QSB FOR THE QUARTERS ENDED JUNE 30,
SEPTEMBER 30 AND DECEMBER 31, 2005
FILE NO. 0-29331
Dear Ms. Anderson:
We have electronically filed herewith on behalf of IElement Corporation (the
"Registrant") Amendment No. 3 to the above-referenced Registration Statement. In
addition, and for your convenience, we are including a complete copy of the
submission herewith for your review. The Amendment No. 3 is marked with "R" tags
to show changes made from the previous filings. In addition, we have included a
narrative response herein. We trust you shall deem Amendment No. 3 and the
contents of this transmittal letter responsive to your comment letter dated June
19, 2006.
In addition to responding to your specifically numbered changes we have updated
sections of Amendment No. 3 where such update was appropriate and applicable. In
particular, we have amended and updated the Industry Consolidation section under
Regulatory Overview has been updated to reflect the status of the discussed
mergers and acquisitions.
Our responses below are numbered in accordance with Ms. Anderson's numbered
comments:
1. The SB-2 has been updated to include financial statements and updated
information for fiscal year end March 31, 2006.
2. Amendment No. 3 reflects the requested change. In addition, complete list of
the shares referred to in Note 4, including the date of issuance, who the shares
were to be issued to, and have since been issued to, the reason for the
issuance, number of shares and dollar value of such issuance is as follows:
Securities and Exchange Commission
Division of Corporation Finance
July 18, 2006
Page 2
Date Payee Reason Shares Amount
- ---- ----- ------ ------ ------
8/12/2005 Tim Dean Smith Debt Repayment 80,000 $4,000.00
8/12/2005 Susan Walton Debt Repayment 400,000 $20,000.00
8/12/2005 Tim Dean Smith Debt Repayment 1,600,000 $80,000.00
8/12/2005 Jeremy Dean Smith Debt Repayment 1,800,000 $90,000.00
8/12/2005 Dolphin Capital Debt Repayment 2,900,000 $145,000.00
8/16/2005 Duane Morris, LLP Settlement 880,000 $44,000.00
8/17/2005 Michael Bloch Private Placement 2,000,000 $70,000.00
8/29/2005 Isaac de la Pena Debt Repayment 150,000 $7,500.00
8/29/2005 Johnathan Lowenthal Private Placement 500,000 $17,500.00
8/31/2005 Palladian Advisors Settlement 2,500,000 $100,000.00
9/12/2005 Wayne Schoenmakers Private Placement 100,000 $3,500.00
9/13/2005 Thomas Barrett Private Placement 200,000 $7,000.00
9/19/2005 William Goatley Private Placement 250,000 $8,750.00
9/26/2005 Robert Gillman Private Placement 500,000 $17,500.00
9/28/2005 Timothy Broder Private Placement 500,000 $17,500.00
9/30/2005 Thomas Piscula Private Placement 500,000 $17,500.00
10/3/2005 ROBERT ROWLEY Private Placement 500,000 $17,500.00
10/4/2005 John Niedfelt Private Placement 200,000 $7,000.00
10/4/2005 Jerome Niedfelt Private Placement 300,000 $10,500.00
10/4/2005 Michael Melson Private Placement 500,000 $17,500.00
10/4/2005 Raymond Dunwoodie Private Placement 500,000 $17,500.00
10/4/2005 Fred Matulka Private Placement 500,000 $17,500.00
10/7/2005 Oscar Greene Private Placement 500,000 $17,500.00
10/11/2005 Kenneth Meyer Private Placement 1,000,000 $35,000.00
10/14/2005 William Cail Private Placement 25,000 $875.00
10/14/2005 Trey Investments Private Placement 150,000 $5,250.00
10/18/2005 Richard Crose Private Placement 500,000 $17,500.00
10/27/2005 Frank Davis Private Placement 200,000 $7,000.00
11/1/2005 Global Equity Trading Private Placement 500,000 $17,500.00
11/16/2005 Holger Pfeiffer Private Placement 250,000 $8,750.00
11/18/2005 Calder Capital Private Placement 500,000 $17,500.00
11/21/2005 Bellano Family Trust Private Placement 300,000 $10,500.00
12/1/2005 Brett Jensen Employee Comensation 200,000 $7,000.00
12/1/2005 JEFF WILSON Employee Comensation 714,286 $25,000.00
12/2/2005 Marianne Issels Private Placement 250,000 $8,750.00
12/5/2005 Robert Flaster Private Placement 200,000 $7,000.00
12/5/2005 Ulrich Nusser Private Placement 250,000 $8,750.00
12/6/2005 William Harner Private Placement 150,000 $5,250.00
12/6/2005 Sat Paul Dewan Private Placement 300,000 $10,500.00
12/6/2005 Annette Bohmer Private Placement 500,000 $17,500.00
12/7/2005 Robert Smith Private Placement 300,000 $10,500.00
12/8/2005 Thomas Weis Private Placement 250,000 $8,750.00
12/9/2005 Laurence B. Straus Private Placement 300,000 $10,500.00
12/9/2005 Jurgen Popp Private Placement 1,500,000 $52,500.00
12/12/2005 Stefan Muller Private Placement 500,000 $17,500.00
12/12/2005 Veronica Kristi Prenn Private Placement 1,500,000 $52,500.00
12/13/2005 Global Equity Trading Private Placement 2,000,000 $70,000.00
12/14/2005 AK Asset Management Private Placement 1,000,000 $35,000.00
12/15/2005 Stefan Muller Consulting Payment 1,000,000 $60,000.00
12/15/2005 Jurgen Popp Consulting Payment 1,000,000 $60,000.00
12/15/2005 Glenn Jensen Private Placement 3,000,000 $105,000.00
12/16/2005 Clarence Keck Private Placement 150,000 $5,250.00
12/16/2005 Benjamin Eichholz Private Placement 1,500,000 $52,500.00
12/16/2005 Ryan Cornelius Private Placement 1,500,000 $52,500.00
12/19/2005 Christiane Loberbauer Private Placement 250,000 $8,750.00
12/19/2005 Fred Schmitz Private Placement 5,000,000 $175,000.00
12/20/2005 Jorn Follmer Private Placement 500,000 $17,500.00
12/23/2005 Matthias Graeve Private Placement 250,000 $8,750.00
12/23/2005 Hendrik Paulus Private Placement 500,000 $17,500.00
12/27/2005 Donald Kennedy Consulting Payment 20,000 $1,000.00
12/27/2005 John Fox Consulting Payment 100,000 $5,000.00
12/27/2005 Film & Music Entertainment Private Placement 1,000,000 $35,000.00
12/27/2005 Gerd Weger Private Placement 10,000,000 $350,000.00
12/28/2005 General Research GmbH Private Placement 500,000 $17,500.00
12/30/2005 Vista Capital Consulting Payment 1,000,000 $70,000.00
12/30/2005 Vittorio Boeri Private Placement 500,000 $17,500.00
12/30/2005 Red Giant Productions Private Placement 500,000 $17,500.00
Securities and Exchange Commission
Division of Corporation Finance
July 18, 2006
Page 3
3. The 168,680 shares were issued to Quality Sound Communications on March 8,
2006. In addition, the Selling Stockholder table has been amended to reflect
that Quality Sound beneficially owns 1,795,210 of which 1,626,530 are included
in the offering. Amendment No. 3 reflects this change.
4. On March 1, 2003. Lance Stovall was the sole IElement shareholder and he
owned the one share outstanding on that date (split adjusted, the Company
financial statements now reflect 4 shares). Mr. Stovall also owned 500 shares of
ICCC reflecting well below 1%.
On March 1, 2003 the ICCC shareholders were (those with over a 5% stake are
noted): Kramerica Corp. (65%) Hugh Fagan Aaron Zweig Richard & Heather Zweig
Vivienne Infante Michael Koerner David Nolan Eric Trimble Chet Zalesky March
Enterprises Terry Byrne (6%) Barry Brault (7%) Jerry Graham Alex Ponnath (7%)
Jeffery Brault Robert Zweig Derrick Stilwell Blake Martensen Chris Zamora Lance
Stovall Bill & Debra Chase Andrew Goodman Peter Walther Heather Walther Mark
Addy Seanne McLay Albert Marerro Michael O'Reilly Sean Duncan Alex Nelson Shanna
Hunter McLain Martensen
Because ICCC and IElement did not have common shareholders, the Company
is not required to account for the transaction under paragraphs 11-13 of
Appendix D of SFAS 141. Since IElement did not have separate business operations
at the time of the transaction and ICCC shareholders received a majority of the
shares of the combined entity, the Company has restated its financials to
account for the transaction as a recapitalization with no fair value, goodwill
or customer list adjustments.
5. In restating the Company's financials to show the transaction with ICCC as a
recapitalization, the Company has revised the date of the share exchange to
coincide with both the asset transfer/liability assumption and the date on which
ICCC and IElement shareholders agreed to the recapitalization and affected the
transfer of assets, liabilities and shares. March 1, 2003 is the correct date to
recognize the transaction according to FAS 141, paragraph 48.
6. The supplemental disclosure of noncash activities has been updated to include
the assumption of accounts payable and accrued liabilities and the acquisition
of fixed assets from the March 31, 2003 ICCC transaction.
7. Amendment No. 3 reflects the requested change.
8. Revenue and Cost Recognition on Page F-13 has been amended to address the
credibility of the customers in greater detail.
9. The option table on page 30 of the amendment filed 6-7-06 included option
grants in calendar year 2005. The Company granted no options during the fiscal
year ended 3-31-05. This table has been updated to include all option grants for
the year ended 3-31-06. No options or warrants have been included in calculating
the net loss per share of common stock because including options and warrants
would be anti-dilutive and reduce the Company's net loss per share of common
stock.
10. Amendment No. 3 reflects the requested change.
11. Amendment No. 3 reflects the requested change.
12. Amendment No. 3 reflects the requested change.
13. Amendment No. 3 reflects the requested change. The Statement of Cash Flows
has been updated to present bad debt expense separately from (increase) decrease
in accounts receivable.
14. Amendment No. 3 reflects the requested change.
15. Amendment No. 3 reflects the requested change.
16. IElement shall file amended Form 10-KSBA for the year ended March 31, 2005
and amended Forms 10-QSBA for the quarters ended June 30, September 30 and
December 31, 2005 as soon hereafter as can reasonably be completed and expects
to make such filings within 10 days. In addition, IElement shall also file an
amended 10KSB for the year ended March 31, 2006 to reflect the restated
financial statements contained in Amendment No. 3.
Securities and Exchange Commission
Division of Corporation Finance
July 18, 2006
Page 4
17. IElement shall file amended Form 10-KSBA for the year ended March 31, 2005
and amended Forms 10-QSBA for the quarters ended June 30, September 30 and
December 31, 2005 as soon hereafter as can reasonably be completed and expects
to make such filings within 10 days. In addition, IElement shall also file an
amended 10KSB for the year ended March 31, 2006 to reflect the restated
financial statements contained in Amendment No. 3.
18. IElement shall file the requested Form 8-K.
We look forward to your comments on Amendment No. 3 and the foregoing responses.
Legal & Compliance, LLC
By: /s/ Laura Anthony
--------------------------------
Laura Anthony, Esq.