June 4, 2012
Via Email
United States Securities and Exchange Commission
100 F St. NE
Washington, DC 20549-7010
ATTENTION:
John Reynolds
Assistant Director
Re: PN Med Group Inc.
Registration Statement on Form S-1
Filed May 8, 2012
File No. 333-181229
GENERAL
1. Since you appear to qualify as an "emerging growth company," as defined in
the Jumpstart Our Business Startups Act, please disclose on your prospectus
cover page that you are an emerging growth company and revise your prospectus
to:
- Describe how and when a company may lose emerging growth company status;
- Briefly describe the various exemptions that are available to you, such as
exemptions from Section 404(b) of the Sarbanes-Oxley Act of 2002 and
Section 14A(a) and (b) of the Securities Exchange Act of 1934; and
- State your election under Section 107(b) of the JOBS Act:
* If you have elected to opt out of the extended transition period for
complying with new or revised accounting standards pursuant to Section
107(b), include a statement that the election is irrevocable; or
* If you have elected to use the extended transition period for
complying with new or revised accounting standards under Section
102(b)(1), provide a risk factor explaining that this election allows
you to delay the adoption of new or revised accounting standards that
have different effective dates for public and private companies until
those standards apply to private companies. Please state in your risk
factor that, as a result of this election, your financial statements
may not be comparable to companies that comply with public company
effective dates. Include a similar statement in your critical
accounting policy disclosures. In addition, consider describing the
extent to which any of these exemptions are available to you as a
Smaller Reporting Company.
Response: We have added the following disclosure and risk factor:
Because we generated less than $1 billion in total annual gross revenues during
our most recently completed fiscal year, we qualify as an "emerging growth
company" under the Jumpstart Our Business Startups ("JOBS") Act.
We will lose our emerging growth company status on the earliest occurrence of
any of the following events:
1. on the last day of any fiscal year in which we earn at least $1
billion in total annual gross revenues, which amount is adjusted for
inflation every five years;
2. on the last day of the fiscal year of the issuer following the fifth
anniversary of the date of our first sale of common equity securities
pursuant to an effective registration statement;
3. on the date on which we have, during the previous 3-year period,
issued more than $1 billion in non-convertible debt; or
4. the date on which such issuer is deemed to be a `large accelerated
filer', as defined in section 240.12b-2 of title 17, Code of Federal
Regulations, or any successor thereto."
A "large accelerated filer" is an issuer that, at the end of its fiscal year,
meets the following conditions:
1. it has an aggregate worldwide market value of the voting and
non-voting common equity held by its non-affiliates of $700 million or
more as of the last business day of the issuer's most recently
completed second fiscal quarter;
2. It has been subject to the requirements of section 13(a) or 15(d) of
the Act for a period of at least twelve calendar months; and
3. It has filed at least one annual report pursuant to section 13(a) or
15(d) of the Act.
As an emerging growth company, exemptions from the following provisions are
available to us:
1. Section 404(b) of the Sarbanes-Oxley Act of 2002, which requires
auditor attestation of internal controls;
2. Section 14A(a) and (b) of the Securities Exchange Act of 1934, which
require companies to hold shareholder advisory votes on executive
compensation and golden parachute compensation;
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3. Section 14(i) of the Exchange Act (which has not yet been
implemented), which requires companies to disclose the relationship
between executive compensation actually paid and the financial
performance of the company;
4. Section 953(b)(1) of the Dodd-Frank Act (which has not yet been
implemented), which requires companies to disclose the ratio between
the annual total compensation of the CEO and the median of the annual
total compensation of all employees of the companies; and
5. The requirement to provide certain other executive compensation
disclosure under Item 402 of Regulation S-K. Instead, an emerging
growth company must only comply with the more limited provisions of
Item 402 applicable to smaller reporting companies, regardless of the
issuer's size.
Pursuant to Section 107 of the JOBS Act, an emerging growth company may choose
to forgo such exemption and instead comply with the requirements that apply to
an issuer that is not an emerging growth company. We have elected to maintain
our status as an emerging growth company and take advantage of the JOBS Act
provisions.
2. Please provide the information required by Item 404(a) of Regulation S-K. To
this extent, we note loan from a shareholder and officer disclosed on page F-7
of the financial statement and your office space provided by an officer free of
charge.
Response: We have disclosed the relationship of the shareholder who provided the
loan, the date and the dollar value. We have disclosed that the loan was
provided free of charge by the shareholder because being a majority shareholder
it is in his interest that the company succeeds in its business endeavors.
3. Please provide supplemental support for your factual assertions. Clearly mark
the supplemental materials to highlight the specific information you believe
supports the statement referenced. For example purposes only, we note the
following statements:
* "40.3% of all the population, including hospitals and any type of care
centers are located in the Metropolitan area of Santiago..." page 15;
* "Due to the isolated location of Chile there is a shortage of
importers from around the world especially with the increasing demand
for sophisticated diagnostic equipment and supplies." page 15;
* "The medical field grows rapidly and there is a constant need for new
and more sophisticated equipment as well as more supplies," page 17.
Response: We have removed the statements in question.
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PROSPECTUS COVER PAGE
4. Please disclose the duration of the offering on the cover page. See Item
501(b)(8)(iii) of Regulation S-K. In addition, we note the disclosure on page
four that the duration of the offering is the earlier of the date when you sell
all of the shares in this offering or the board determines to terminate the
offering. Such indeterminate duration is inconsistent with Rule 415(a)(2) of
Regulation C. Please revise the duration accordingly.
Response: See exhibit 5.1 legal opinion attached
PROSPECTUS SUMMARY, PAGE 3
5. We note the statement that PN Med Group "is a distributor of medical supplies
and equipment." Please revise this and other similar statements throughout the
prospectus to clarify that you are a development stage company, have not yet
commenced operations and have generated no revenues to date.
Response: We have clarified that we are a development stage company, and have
not yet commenced operations or generated revenues to date.
6. We note the reference to net proceeds of $100,000 on page 4. Please provide
clear disclosure in this section and throughout the prospectus as necessary to
clarify that this is the maximum net proceeds and that there is no minimum and
no guarantee you will raise any funds in this offering.
Response: We have made these revisions throughout the prospectus.
RISK FACTORS, PAGE 5
7. We note your statement on page 3 that Mr. Niklitschek informally agreed to
advance funds for professional fees and operating expenses; however, he has not
formally agreed to do so and it appears from the disclosure that he is not
legally obligated to provide such funding. Since you have no formal agreement
with Mr. Niklitschek for the advancement of funds, please add risk factor
disclosure which addresses the risk that Mr. Niklitschek may fail to advance you
funds, if needed.
Response: We have added this risk factor.
8. Since Mr. Niklitschek will hold 50% of your shares outstanding after the
offering, please add a risk factor describing the substantial influence he will
be able to wield over your operations.
Response: We have added this risk factor
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9. Risk factors one and six appear to discuss the transportation industry.
Please explain the relevance to the transportation industry to your planned
distribution business or revise these risk factors.
Response: We have deleted these risk factors.
"IF WE DO NOT ATTRACT CUSTOMERS, WE WILL NOT MAKE A PROFIT...," PAGE 6
10. We note your statement on within this risk factor that you have approached
five local clients to offer your products. Since you disclose that you have no
agreement with any potential customers, please remove references to your
"clients" from throughout your prospectus or describe these entities as
"potential clients."
Response: We have described these entities as "potential clients."
USE OF PROCEEDS, PAGE 9
11. Please revise this section to only describe your use of proceeds for this
offering. To this extent, please remove any discussion of expenses already paid
for. Also please revise to remove any discussion of intended expenses which will
not come from the proceeds of this offering.
Response: We have made the required revisions.
12. Please revise to provide a more specific description of your use of
proceeds, describing the various uses of proceeds under each offering scenario.
To the extent you will need additional funds to complete your intended use of
proceeds, please describe the amount and sources of such funds. See Instruction
3 to Item 504 of Regulation S-K.
Response: If we raise more than $25,000 in this offering we will increase our
expenditures as follows under each offering scenario:
$50,000
Legal and professional expenses: will stay the same.
Web development expenses: will increase to $2,000 as extra funds will be paid to
web developer to add additional features and improve our website Establishing an
office expenses: will increase to $13,000 as we will purchase additional
computers and furniture.
Order supplies and equipment expenses: will increase to $13,000 as we will
purchase additional supplies and equipment to keep in our inventory. Car
expenses: will increase to $12,000 as we will purchase a car (2007-2009 Peugeot
Partner).
$75,000
Legal and professional expenses: will stay the same.
Web development expenses: will increase to $3,000 as extra funds will be paid to
web developer to add additional features and improve our website
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Establishing an office expenses: will stay at $13,000.
Order supplies and equipment expenses: will increase to $37,000 as we will
purchase additional supplies and equipment to keep in our inventory.
Car expenses: will stay at $12,000.
$100,000
Legal and professional expenses: will stay the same.
Web development expenses: will stay at $3,000.
Establishing an office expenses: will stay at $13,000.
Order supplies and equipment expenses: will increase to $50,000 as we will
purchase additional supplies and equipment to keep in our inventory.
Car expenses: will stay at $12,000.
If we are unable to raise at least $25,000 we will seek to raise additional
funds through the sale of our common stock or obtain additional loans from our
director. We do not have any arrangements to raise additional funds or obtain
loans as of today.
13. Please revise to show the complete use of all proceeds under each scenario.
In particular, we note that under the $100,000 proceeds scenario, your intended
uses total only $88,000.
Response: We have revised as required.
14. Please revise to indicate the order of priority for your listed uses of
offering proceeds. See Instruction 1 to Item 504 of Regulation S-K.
Response: We have revised to indicate the order of priority.
15. We note the statement on page 10 that the above figures represent only
estimated costs. The company may reserve the right to change the use of
proceeds, provided that such reservation is due to certain contingencies that
are discussed specifically and the alternatives to such use in that event are
indicated. See Instruction 7 to Item 504 of Regulation S-K. Please revise to
provide more specificity regarding the changes in the use of proceeds or remove
the above language.
Response: We have removed the language in question.
16. We note your disclosure on page 3 that you will need at least $34,450 to
implement your plan of operations and on page 5 that you are completely
dependent on the proceeds of this offering to develop your business plan. Please
reconcile this with your use of proceeds section which shows the allocation of
your proceeds if 25% of your shares are sold. Please clarify, if true, that you
will seek to implement your plan of operations even if you are unable to raise
$37,500 through this offering. If not, revise your use of proceeds to clearly
disclose your plans if you raise less than $37,500. Also, add disclosure
regarding the use of proceeds if you raise less than 25% of the offering
maximum.
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Response: We have clarified that we will seek to implement our plan of
operations even if we are unable to raise $34,450 through this offering. If we
raise less than 25% of the offering, we will spend our proceeds as described in
the $25,000 scenario. When we will require additional funds, we will attempt to
raise them through sale of additional common stock or through director loans. We
do not have any arrangements to raise additional funds at this time.
DILUTION, PAGE 10
17. We note your statement within this section that assuming completion of the
offering, there will be up to 15,000,000 shares of common stock outstanding. We
also note that as of March 31, 2012 you only had 5,000,000 shares outstanding
and are offering an additional 5,000,000 shares in this offering. Please
reconcile the planned amount of shares outstanding here and throughout your
prospectus or advise.
Response: We have made the required revision.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION, PAGE 11
PLAN OF OPERATION, PAGE 11
18. Please provide a more detailed description of the company's plan of
operations for the next twelve months. In particular, please explain how the
company intends to meet each of these milestones if it cannot raise adequate
funding.
Response: We have revised our plan of operation.
19. We note the inclusion of the following items in your plan of operations. *
Put together a product list brochure for clients and potential clients, page 11;
* Advertise and promote our products on a national webpage..., page 11;
Please revise this section to include the costs and the anticipated source of
funds for these activities. Also, add these items to your Use of Proceeds
section, if applicable.
Response: We have revised that it will cost the company $500 for the year to put
together and print a product list brochure for our potential clients. We have
rephrased the "Advertise and promote" to "List " our products free of charge on
a national webpage www.mercadopublico.cl
PAGE 5
20. Please reconcile the disclosure on pages 12 and 16 that you are required to
order from Kangtai at least once every 3 months with the agreement filed as
Exhibit 10.1, which reflects 5 months. In addition, please clearly disclose the
duration of the agreement and termination provision.
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Response: We have clarified that the Company is required to order from Kangtai
at least once every 5 months as reflected in our Distribution Agreement. We have
also added the following info to disclose the duration and termination
provisions.
1. This Agreement became effective as of February 25, 2012 hereof upon execution
by an officer or other authorizuted representative of the Manufacturer and by an
authorized representative of Distributor and shall remain in effect for 3 years
thereafter unless previously terminated by either party for any other reason
upon not less than thirty (30) calendar days prior written notice to the other
party.
2. Without limitation, the following events shall constitute grounds for
termination by Manufacturer:
(a) if Distributor shall file or have filed against it a petition in
bankruptcy or insolvency or if Distributor shall make an assignment
for benefit of its creditors of if Distributor's viability as a going
concern should, in Manufacturer's judgment, become impaired;
(b) if Distributor fails to provide and maintain a proper and sufficient
sales force;
(c) if Distributor degrades and places in bad repute the name and
reputation of Manufacturer expressly or by virtue of its methods of
handling and/or promoting the Products;
(d) if Distributor fails to meet any other of its obligations hereunder;
or
(e) if Distributor fails to meet minimum purchase goals
3. Except as may be otherwise determined pursuant to the laws of the
jurisdiction where Distributor has its principle office, Manufacturer shall have
no liability to Distributor by any reason of any termination or cancellation of
this Agreement by Manufacturer, including without limitation, liability for
direct or indirect damages on account of loss of income arising from anticipated
sales, compensation, or for expenditures, investments, leases or other
commitments or for loss of goodwill or business opportunity or otherwise.
4. Upon termination by either Manufacturer of Distributor, Manufacturer shall
have the option of buying back from Distributor any new unsold Products
purchased from Manufacturer, at the prices charged to Distributor, less
Manufacturer's then applicable restocking charge, if any, and less any
additional expenses incurred by Manufacturer arising out of termination by
Distributor
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DESCRIPTION OF BUSINESS, PAGE 15
CUSTOMER SERVICE, PAGE 16
21. We note your disclosure within this section that you intend to pay Mr.
Niklitschek $0.25 per each kilometer driven in the delivery of your products.
Please revise your plan of operation and use of proceeds sections to include
these expenses, as applicable, or advise.
Response: We have not included this expense in the use of proceeds section
because these costs will be paid out of the revenue that we generate. We will
not use the proceeds from this offering to pay for this expense.
COMPETITION, PAGE 17
22. Please revise to describe your competitive position within the industry. See
Item 101(h)(4)(iv) of Regulation S-K. Please ensure your revised description is
consistent with your disclosure on page 15 which states that there is a shortage
of medical supply importers.
Response: The principal competitive factors in our industry are pricing and
availability of product, service and delivery capabilities, ability to assist
with problem-solving, customer relationships, and geographic coverage. Many of
our competitors have greater financial capacity and are able to withstand any
potential market fluctuations better than we can. To maintain a competitive
position, PNMG will focus on providing helpful customer service. We will have
vast selection of products as well as same- day delivery services within 100
miles radius. We also offer a no minimum order size and no shipping charges, as
well as returns of unused, saleable products for an instant credit.
Our competition will include other distribution companies, importers, and agents
with the same or similar product list. However, the medical field grows rapidly
and there is a constant need for new and more sophisticated equipment as well as
more supplies. We expect competition to continue to intensify in the future.
Competitors include companies with a more substantial customer bases. There can
be no assurance that we can maintain a competitive position against current or
future competitors, particularly those with greater financial, marketing,
service, and support, technical and other resources. Our failure to maintain a
competitive position within the market could have a material adverse effect on
our business, financial condition and results of operations. There can be no
assurance that we will be able to compete successfully against current and
future competitors, and competitive pressures faced by us may have a material
adverse effect on our business, financial condition and results of operations.
EMPLOYEES, IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES, PAGE 17
23. We note your statement that you have no employees. Please reconcile this
section with your disclosure on page 18 which lists Pedro Niklitschek as your
president and treasurer and Miguel Molina Urra as your secretary.
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Response: We have made the required revision to specify that at this time we
have two significant employees. Our president, Pedro Perez Niklitschek and
Miguel Molina Urra, our secretary, each devotes twenty hours per week to our
operations. As our business expands, Mr. Niklitschek and Molina Urra intend to
devote as much time as the Board of Directors deems necessary to manage the
affairs of the company.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTER AND CONTROL PERSONS, PAGE 18
24. Please revise this section to briefly discuss the specific experience,
qualifications, attributes, or skills that led to the conclusion that Mr.
Niklitschek should serve as your director.
Response: Mr. Niklitschek's qualifications to serve on our Board of Directors
are primarily based on his experience and established network of business
contacts in our industry as well as his business educational background.
25. Please revise to identify Mr. Niklitschek as your promoter. See Item
401(g)(1) of Regulation S-K.
Response: We have revised to identify Mr. Niklitschek as our promoter.
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS, PAGE 60
EXHIBITS
26. Please provide a written description of the oral agreement with Mr.
Niklitschek, as described in your registration statement on page 3. See Question
146.04 of the Regulation S-K Compliance and Disclosure Interpretations available
at http://www.sec.gov/divisions/corpfin/guidance/regs-kinterp.htm.
Response: We have filed the following agreement as an exhibit:
Written Description of the Oral Agreement between Mr. Niklitschek and PN Med
Group Inc.
Our officer and director, Mr. Niklitshcek informally agreed to advance funds to
allow us to pay for professional fees, including fees payable in connection with
the filing of this registration statement and operation expenses. However, Mr.
Niklitschek has made no formal commitment, arrangement or legal obligation to
advance or loan funds to the company.
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EXHIBIT 5.1
27. We note that counsel has stated that its opinion is furnished in connection
with the filing of the Registration Statement with the Commission and may not be
relied upon for any other purpose without prior written consent in each
instance. Please have counsel revise the opinion to clarify this limitation on
reliance. Purchasers of the securities in the offering are entitled to rely on
the opinion. See Section II.B.3.d of Staff Legal Bulletin 19.
Response: See exhibit 5.1 legal opinion attached
Sincerely,
/s/ Pedro Perez Niklitschek
-----------------------------------
Pedro Perez Niklitschek
President
PN Med Group Inc.
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