Vision Global Solutions Inc.
455 Notre Dame Street East
Montreal, Quebec,
Canada H2Y 1C9
December 22, 2005
Securities and Exchange Commission
450 Northwest Avenue
Washington D.C.
20549-0304
RE: Vision Global Solutions Inc.
Form 10-KSB for Fiscal Year Ended March 31, 2005
Filed: July 19, 2005
File No. 000-3114
Attn: Brent Skinner, Christine Davis, Mark Kronforst.
Dir Sir/Madam:
1. We note that your principal office is located in Quebec, Canada and
your auditors are located in Hollywood, Florida. We generally
believe that there should be a logical relationship between the
location from which the audit report is rendered and the location of
a registrant's corporate offices or place where the registrant
conducts its principal operations. Please explain to us why you have
engaged auditors located in Florida and indicate whether they are
licensed to practice in Quebec.
Answer: Vision Global Solution Inc. is a Nevada Corporation having
its office located in Quebec, Canada.. Being a reporting issuer in
the United States, management believes that U.S. auditors would best
serve the accounting principals generally accepted in the United
States and by the Securities and Exchange Commission. Furthermore,
we also retain the services of a Canadian audit firm Kosseim Labrie
Inc. who are licensed to practice in Quebec and who work with the
U.S. auditors. The audit of the Company's financial statements was
performed in accordance with the procedures required by professional
standards established by the Public Company Oversight Board of the
Commission and auditing standards generally accepted in the United
States. These standards and qualifications do not vary from state to
state and, accordingly, we believe that the audit satisfies the
requirements of the Commission. Rule SX 2-01 requires that an
accountant be licensed and in good standing under the laws of the
place of the accountant's residence or principal office. The rule is
silent as to whether or not the accountant's state or country of
licensure must coincide with the location of the registrant's
corporate offices or place where the registrant conducts its
principal operations.
Consolidated Balance Sheet
2. We note that you have recorded a note payable to a related party.
Please tell us how you have considered the disclosure requirements
of paragraph 2 of SEAS 57.
Answer: The Company will amend the 10-KSB and re-file to include the
disclosure requirements of SFAS 57 Related Party Disclosures.
3. We note that you have classified your mandatorily redeemable
preferred stock as a liability within your balance sheet. Explain to
us why you believe such classification is appropriate and refer to
the authoritative guidance that supports your accounting.
Additionally, tell us how you have considered the disclosures
required by SFAS 129.
Answer: The mandatorily redeemable preferred stock has been
classified in our balance sheet as a liability because it is a loan
that the Company received from Investment Quebec, a governmental
agency who aids companies operating in the Province of Quebec,
Canada to pursue research and development. This loan was differed
and guaranteed by the redeemable preferred shares no per value 3%
cumulative dividends due beginning April 2008. The Company has
adopted SFAS 150 - Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity, and would also
qualify as "Preferred Stocks Subject to Mandatory Redemption
Requirements or Whose Redemption is Outside the Control of the
Issuer" as defined by Accounting Series Release ("ASR") No. 268 -
Redeemable Preferred Stocks.
Consolidated Statement of Stockholders' Deficit
4. We note that you have issued a significant number of shares as
compensation for services. Please identify the recipients of these
shares and explain to us the nature and timing of the services
received. In addition, explain to us how you have accounted for
these transactions and refer to the authoritative guidance that
supports your accounting.
Answer: The compensation was to outside consultants as disclosed in
our Form S-8, filed on March 16, 2005. The services were rendered
prior to the issuance and were contractually to be rendered
subsequent to the date of issuance. Services included financial and
business consulting services which would include evaluating various
business strategies and recommending changes where appropriate and
also critically evaluate Vision Global's performance in view of its
corporate planning and business objectives, including but not
limited to: Corporate Planning--(a) develop an in-depth
familiarization with the issuer's business objectives and bring to
its attention potential or actual opportunities which meet those
objectives or logical extensions thereof, (b) alert the issuer to
new or emerging high potential forms of product and distribution
which could either be acquired or developed internally, (c) comment
on the issuer's corporate development including such factors as
position in competitive environment, financial performances vs.
competition, strategies, operational viability, etc., and (d)
identify prospective suitable merger or acquisition candidates for
the issuer, perform appropriate diligence investigations with
respect thereto, advise the issuer, with respect to the desirability
of pursuing such candidates, and assist the issuer in any
negotiations which may ensue there from.
The Company valued the issuances at there fair market value on the
date of issuance in accordance with SFAS 123.
Notes to Consolidated Financial Statements
Note 1 -- Summary of Accounting Policies Revenue Recognition
5. We note that you indicate, within your MD&A, that services are
always included in the sate of software and represent installation,
consulting, training and specific modifications to the software
required by the customer. We further note that you recognize revenue
in accordance with SOP 814 when, the software requires significant
consultation and customization or modification of the software.
However, your revenue recognition policy, as described within your
financial statements, does not appear to be consistent with these
disclosures. Please describe your typical arrangements to us in more
detail and explain to us how you recognize the related revenue. In
addition, reconcile your disclosures within your MD&A and your
financial statements regarding revenue recognition.
Answer: Yes, services are included in the sale of the Software and
represent installation, consulting, training and specific
modifications to the software when requested by the customer.
The Software sold to our customers is a standard version much like
an out of the box software ready to be used as it is. This standard
version is the product which is purchased by the customer. This
revenue is recognized only once it is delivered and installed on the
customer's server.
Consulting and training services may for part of the contract in
cases where the customer lack internal I.T. people or when they
decide not to retain services of a 3rd party. These services are
recognized when they have been rendered.
Considering that the customer purchases a standard version of the
software, they may request that we modify the standard version to
meet their specific requirements. These revenues are recognized once
the modifications have been completed, installed on the customer's
site, tested by the customer and accepted by the customer.
6. We note that you have disclosed a policy of giving refunds to
"unhappy customers," Please provide us with the following:
o Describe this policy to us in more detail and describe the
circumstances under which you offer such refunds;
o Provide us with the amount of refunds that have been granted
during the periods presented and your subsequent interim
periods;
o Explain to us how you have been able to conclude that your
fees are fixed or determinable in order to recognize revenue
under your arrangements; and
o Clarify for us why you believe it is appropriate to record
refunds as a reduction of revenue as they occur if the refund
is granted within one year of sale or as bad debt expense if
the refunds are granted beyond one year from the sale.
Refer to the authoritative literature that supports your accounting
and indicate how your accounting complies with that literature.
Answer: Refunds are given to unhappy customers. Refunds are netted
against sales if they occur in the year of the sale and are recorded
as bad debts if they occur in the following year. Vision Global
offers an independent warranty for a 1-year period for an
agreed-upon up-front payment. It collects the amount up front and
amortizes the revenue over the term of the coverage, with the
unearned portion shown as deferred revenue.
To date, no refunds have been requested or issued to any of our
customers. We have, to a limited, de minimus degree, issued credit
notes when our employees charged for services which were covered by
our warranty.
7. You disclose that VSOE of fair value is based on the price
management establishes prior to introduction into the marketplace.
Please clarify for us whether you have sold separately any of the
products or services for which VSOB has been established in this
manner, Provide us with an analysis that indicates the date you
began to recognize revenue under each arrangement using this method
for establishing VSOE and the date that each affected element was
subsequently sold separately.
Answer: Revenue Recognition
We generally sell our software products and services together in a
multiple-element arrangement under both perpetual and term license
arrangements. When we enter into a multiple-element perpetual
arrangement, we use the residual method to allocate the total fee
among the various
elements of the arrangement. Under the residual method, revenue is
recognized when vendor-specific objective evidence, or VSOE, of fair
value exists for all of the undelivered elements in the arrangement,
but does not exist for one or more of the delivered elements in the
arrangement. Each license arrangement requires that we analyze the
individual elements in the transaction and estimate the fair value
of each undelivered element, which typically includes maintenance
and services. We allocate revenue to each undelivered element based
on its fair value, with the fair value determined by the price
charged when that element is sold separately.
We generally estimate the fair value of the maintenance portion of
an arrangement based on the maintenance renewal price for that
arrangement. In multiple-element arrangements where we sell
maintenance for less than fair value, we defer the contractual price
of the maintenance plus the difference between such contractual
price and the fair value of maintenance over the expected life of
the product. We make a corresponding reduction in license revenue.
The fair value of the professional services portion of the
arrangement is based on the rates that we charge for these services
when sold independently from a software license. If, in our
judgment, evidence of fair value cannot be established for the
undelivered elements in a multiple-element arrangement, the entire
amount of revenue from the arrangement is deferred until evidence of
fair value can be established, or until the elements for which
evidence of fair value could not be established are delivered.
Consent of Independent Auditors
8. We note that the consent provided by Jewett, Schwarz & Associates
appears to refer to an audit performed by Malone & Bailey, PLLC and
does not appear to be dated. Please explain to us why you believe
this consent complies with Item 601 of Regulation S-B.
Answer: The reference to March 31, 2004 was inadvertent and is
intended only for March 31, 2005. The consent of the former auditors
to their report for 2004 was filed with the Form 10-KSB/A on
September 15, 2004.
Section 302 Certification
9. We note that paragraph 4(d) refers to the quarter ended November 30,
2004 and that your officers have provided certifications related to
your internal control over financial reporting. Please explain to us
why you believe that these certifications comply with Exhibit 31
provided in Item 601 of Regulation S-B and the transition guidance
in Section III.E of SEC Release 33-8238.
The disclosure complies with the disclosure in 4(d) in that it is
certified that the Company has disclosed in this report any change
in the small business issuer's internal control over financial
reporting that occurred during the small business issuer's fourth
fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the small business issuer's internal control
over financial reporting, except that the reference was intended to
be to March 31, 2005, the end of the issuer's fourth fiscal quarter.
On behalf of the Company, we hereby affirm the following:
o the company is responsible for the adequacy and accuracy of
the disclosure in the filing;
o staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any
action with respect to the filing; and
o 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.
Sincerely,
/s/ Jean-Paul Ouellette
Jean-Paul Ouellette.