Advanced Technologies Group, Ltd
331 Newman Springs Road
Red Bank, N.J. 07701
September 4, 2009
VIA EDGAR AND TELECOPY
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Attn: William Kearns, Esq.
Re: Advanced Technologies Group, Ltd.
Form 10-K
File No. 000-30987
Filed May 18, 2009
Ladies and Gentlemen:
On behalf of Advanced Technologies Group, Ltd., a Nevada corporation ("ATG" or
the "Company"), we have set forth below the Company's proposed responses to the
Staff's comment letter dated August 3, 2009 with respect to the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 2009 (the "Form
10-K"). The Staff's comments have been reproduced (in bold) below and are
immediately followed by the Company's responses thereto.
FORM 10-K FOR THE YEAR ENDED JANUARY 31, 2008
GENERAL
1. WE NOTE THAT THE COMPANY DOES NOT INDICATE THAT IT IS A SHELL COMPANY ON
ITS FORM 10-K COVER. GIVEN THE SALE OF SUBSTANTIALLY ALL OF YOUR
OPERATIONS, PLEASE ADVISE US WHY THE COMPANY CONCLUDED IT WAS NOT A SHELL
COMPANY UNDER RULE 12B-2 OF THE EXCHANGE ACT. ALTERNATIVELY, REVISE TO
INDICATE THAT YOU ARE A SHELL COMPANY.
The sale of the Company's interest in FX Direct in March 2009 did not
terminate the Company's business activities related to the development
and/or acquisition of new technologies. In this regard, in July 2009, the
Company acquired the rights to the "moveidiot.com" website and related
software. As a result, the Company does not believe that it falls within
the definition of a "shell company" under Rule 12b-2 in that it has more
than nominal operations.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS, PAGE 14
2. ON PAGE 14 YOU INDICATE THAT ON JANUARY 31, 2009, YOUR BOARD AND ITS
AFFILIATES, REPRESENTING 60% OF YOUR SHARES, EXECUTED A WRITTEN CONSENT
APPROVING THE SALE OF THE COMPANY'S INTEREST IN FXDIRECT. WE NOTE THAT YOUR
DEFINITIVE CONSENT SOLICITATION WAS NOT FILED UNTIL FEBRUARY 23, 2009. THAT
DOCUMENT STATES THAT "[T]HE SALE WILL NOT BECOME EFFECTIVE UNTIL AT LEAST
20 CALENDAR DAYS FOLLOWING THE DATE OF THE MAILING" OF THE INFORMATION
STATEMENT. IT WAS UNCLEAR TO US HOW THE COMPANY CONSIDERED RULE 14C-2(B)
WITH RESPECT TO THE APPROVAL OF THIS SALE, AND THE CLOSING DATE OF THE
TRANSACTION, PLEASE ADVISE. IN RESPONDING, PLEASE READ THIS COMMENT
CONSISTENT WITH COMMENT SIX BELOW.
The corporate action with respect to which an Information Statement was
circulated to stockholders was the sale of the Company's membership
interest in FX Direct, which closed on March 17, 2009. In accordance with
Rule 14c-2(b), the Information Statement was first sent to the stockholders
of the Company on or about February 24, 2009, which was 20 days prior to
the date on which the corporate action was taken.
ITEM 9A. CONTROLS AND PROCEDURES
(B) MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING, PAGE 18
3. PLEASE REVISE YOUR MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING TO INCLUDE A STATEMENT SIMILAR TO "THIS ANNUAL REPORT DOES NOT
INCLUDE AN ATTESTATION REPORT OF THE COMPANY'S REGISTERED PUBLIC ACCOUNTING
FIRM REGARDING INTERNAL CONTROL OVER FINANCIAL REPORTING. MANAGEMENT'S
REPORT WAS NOT SUBJECT TO ATTESTATION BY THE COMPANY'S REGISTERED PUBLIC
ACCOUNTING FIRM PURSUANT TO TEMPORARY RULES OF THE SECURITIES AND EXCHANGE
COMMISSION THAT PERMIT THE COMPANY TO PROVIDE ONLY MANAGEMENT'S REPORT IN
THIS ANNUAL REPORT." REFER TO ITEM 308T(A) (4) FOR FURTHER GUIDANCE.
The Company will comply with the Staff's comment by filing an amendment to
the Form 10-K to include the requested language in Item 9A
ITEM 11 EXECUTIVE COMPENSATION, PAGE 23
4. WE NOTE THAT UNDER THEIR EMPLOYMENT AGREEMENTS YOUR CHIEF EXECUTIVE AND
PRESIDENT WERE ENTITLED TO RECEIVE RETROACTIVE SALARY PAYMENTS IN THE EVENT
THAT THE COMPANY RECEIVED A PROFIT DISTRIBUTION FROM ITS 25% INVESTMENT IN
FXDIRECT. PLEASE REVISE TO:
A. EXPLAIN WHEN THESE AGREEMENTS WERE ENTERED INTO AND WHO NEGOTIATED AND
APPROVED THEM ON BEHALF OF THE COMPANY;
The Company will comply with the Staff's comment by filing an
amendment to the Form 10-K that will indicate that the referenced
Employment Agreements were entered into in April 2008; and that the
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terms of the Employment Agreements were proposed by Messrs Stelmak and
Raskas and were approved on behalf of the Company by Mr. Stan Mashov,
the sole disinterested director on the Board of Directors.
B. CLARIFY THE EXACT NATURE OF THE TRIGGERING EVENTS(S) WHICH LED TO THE
RETROACTIVE PAYMENTS, HOW THEY WERE DETERMINED, AND WHEN YOU BECAME
AWARE OF THEM;
The Company will comply with the Staff's comment by filing an
amendment to the Form 10-K that will include the following
explanation:
The Employment Agreements provide that Messrs. Stelmak and Raskas
shall be paid a base salary of $250,000 per annum (calculated
retroactively from April 13 2002) only after the Company has begun
receiving profit distributions from its investment in FX Direct. The
Company received an allocation of income for federal income tax
purposes on account of its investment in FX Direct for the 2007 tax
year pursuant to a Schedule K-1 that was issued by FX Direct to the
Company on or about June 2008, thereby triggering the accrual of the
salary payments. As a result, the Company changed the accounting
treatment of the amounts payable pursuant to the Employment Agreements
from a contingent obligation in fiscal 2008 to accrued expenses in
fiscal 2009.
C. CLARIFY ANY RELATIONSHIP BETWEEN THESE PAYMENTS AND YOUR JANUARY 2009
AGREEMENT TO SELL SUBSTANTIALLY ALL OF YOUR OPERATING ASSETS;
The Company will comply with the Staff's comment by filing an
amendment to the Form 10-K that will indicate that a portion of the
funds received by the Company from the sale of its interest in FX
Direct was used to pay the accrued salary expenses.
D. CLARIFY WHY, GIVEN THE AGREEMENT WAS ENTERED INTO IN 2008, THE COMPANY
CHARACTERIZED THE $3.1 MILLION PAYMENT AS A RETROACTIVE SALARY
ADJUSTMENT AS OPPOSED TO COMPENSATION REPORTABLE IN THE SUMMARY
COMPENSATION TABLE.
The Employment Agreements characterize the payments as a base salary
per annum calculated retroactively to 2002 so the Company did not
believe it was appropriate to report the total amount of the payments
in one fiscal year. However, if the staff believes that all of such
payments would be more properly reported as compensation in 2008 or
2009, the Company will revise the Form 10-K accordingly.
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EXHIBITS
SIGNATURES
5. PLEASE REVISE YOUR SIGNATURES SECTION TO INDICATE THAT ALEX STELMAK IS
SIGNING THE REPORT IN THE CAPACITIES OF CHIEF EXECUTIVE OFFICER AND CHIEF
FINANCIAL OFFICER. PLEASE ALSO REVISE TO INCLUDE THE SIGNATURE OF YOUR
PRINCIPAL ACCOUNTING OFFICER OR CONTROLLER. IF ALEX STELMAK ALSO ACTS IN
THAT CAPACITY, YOU MUST INDICATE ON THE SIGNATURE PAGE ALL OF THE
CAPACITIES IN WHICH THE PERSON IS SIGNING THE FORM. SEE GENERAL INSTRUCTION
D(2) TO FORM 10-K
The Company will comply with the Staff's comment by filing an amendment to
the Form 10-K that will include a revised signature page that indicates
that Mr. Stelmak is signing the Form 10-K as the Company's principal
executive officer, principal financial officer and principal accounting
officer.
FINANCIAL STATEMENTS
GENERAL
6. WE NOTE, IN JANUARY 2009, YOU ENTERED INTO AN AGREEMENT TO SELL YOUR 25%
JOINT INVESTMENT INTEREST TO FX DIRECT DEALER, LLC. WE ALSO NOTE THAT THIS
TRANSACTION CLOSED IN MARCH 2009. BASED ON THE PURCHASE AND SALE AGREEMENT
(FILED AS EXHIBIT 10.1 TO FORM 8-K FILED JANUARY 30, 2009) AND THE FACT
THAT ASSETS WERE NOT EXCHANGED UNTIL CLOSING (I.E. 9 MILLION IN CASH
RECEIVED IN MARCH 2009), TELL US WHY YOU BELIEVE IT IS APPROPRIATE TO
RECORD THIS TRANSACTION AS OF JANUARY 31, 2009. IN YOUR RESPONSE, PLEASE
CITE THE AUTHORITATIVE LITERATURE SUPPORTING YOUR POSITION.
As indicated in SEC Staff Financial Reporting Codification Topic 13 (and
the underlying FASB principles cited therein):
- Revenue should not be recognized until it is realized or realizable
and it is earned.
- The staff believes that revenue generally is realized or realizable
and earned when all of the following criteria are met:
* Persuasive evidence of an arrangement exists,
* Delivery has occurred or services have been rendered,
* The seller's price to the buyer is fixed or determinable, and
* Collectibility is reasonably assured
We believe that the execution of the Purchase and Sale Agreement on January
26, 2009 constituted persuasive evidence of the existence of a binding
sales transaction in which all of the terms of the sale were clearly fixed
and there was a reasonable assurance of collectibility based upon the
financial resources of the buyer.
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With respect to the delivery of the goods or services, although transfer of
title to the membership interest did not occur until the closing on March
17, 2009, we believe that the transfer of title and monies was more or less
"perfunctory" at that point as the only closing condition that could not be
complied with as of January 26, 2009 was the requirement to circulate an
Information Statement to stockholders, which was within the control of the
Company. See FIN Con 5, paragraph 50. Therefore, at the time of the
execution of the Purchase and Sale Agreement there was a high likelihood
that the closing would take place following the satisfaction of the
Information Statement condition. In fact, the closing did occur prior to
the issuance of the January 31, 2009 financial statements. Also, we note,
that in connection with allocating the economic impact of the sale as
between the Company and the purchaser, Section 8(b) of the Agreement
provided that the effective date of the sale shall be December 31, 2008. As
a result, we believed that it would be appropriate to recognize the effects
of the transaction in the fiscal year ended January 31, 2009.
REPORT OF INDEPENDENT PUBLIC ACCOUNTING FIRM, F-1
7. WE HAVE REVIEWED YOUR AUDIT REPORT, NOTING THAT YOUR INDEPENDENT
ACCOUNTANTS DID NOT IDENTIFY THE FINANCIAL STATEMENTS THAT WERE BEING
AUDITED IN THE SCOPE PARAGRAPH OF THEIR REPORT (I.E. THE BALANCE SHEETS AS
OF JANUARY 31 ,2009 AND 2008, AND THE RESULTS OF THE OPERATIONS, CASH FLOWS
AND CHANGES IN STOCKHOLDERS' EQUITY FOR THE PERIODS THEN ENDED). PLEASE
ADVISE OR HAVE YOUR INDEPENDENT ACCOUNTANTS REVISE THEIR REPORT TO ADDRESS
THIS ISSUE.
The Company will comply with the Staff's comment by filing an amendment to
the Form 10-K that will include a revised Audit Report that responds to
these comments.
8. IN CONJUNCTION WITH THE COMMENT ABOVE, WE NOTE IN THE FIRST PARAGRAPH OF
YOUR AUDIT REPORT THAT YOUR INDEPENDENT ACCOUNTANTS STATE THAT THEY
COMPLETED AN AUDIT OF INTERNAL CONTROL OVER FINANCIAL REPORTING. THIS IS
INCONSISTENT WITH THEIR STATEMENT "THE COMPANY IS NOT REQUIRED TO HAVE, NOR
WERE WE ENGAGED TO PERFORM, AN AUDIT OF ITS INTERNAL CONTROL OVER FINANCIAL
REPORTING" IN THE SECOND PARAGRAPH OF THEIR REPORT. PLEASE ADVISE OR HAVE
YOUR INDEPENDENT ACCOUNTANTS REVISE THEIR REPORT TO ADDRESS THIS
INCONSISTENCY.
The Company will comply with the Staff's comment by filing an amendment to
the Form 10-K that will include a revised Audit Report that responds to
these comments.
On behalf of the Company we hereby acknowledge the following:
* the Company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* 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
* 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.
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If you have any questions concerning the responses, please do not hesitate to
call Brian Brodrick, Esq. of Phillips Nizer LLP at 212-841-0700.
Very truly yours,
Advanced Technologies Group, Ltd.
By: /s/ Alex Stelmak
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Alex Stelmak
Chief Executive Officer
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