CREDEX CORPORATION
454 Treemont Drive
Orange City, FL 32763
386-218-6823 phone
November 3, 2010
Michael Clampitt, Senior Counsel
Division of Corporation Finance
Securities and Exchange Commission
Washington, DC 20549 Mail Stop 4561
Re: Credex Corporation
Registration Statement on Form 10
Filed October 6, 2010
File No. 0-54142
Dear Mr. Clampitt:
We have received your comment letter dated November 2, 2010. We have
reviewed all of your comments and spoken by telephone to some of your staff
members regarding our intended responses to some of your comments and sought
guidance on other comments The responses that follow are numbered to correspond
with the numbers of your comments. They are also inserted, where applicable,
into the revised Form 10-12g/A.
Our responses to your comments are as follows:
Form 10-12G filed October 6, 2010
Business, Page 3
3. We have inserted into the revised Form 10 at page 3 the following:
The Company has attempted to raise funds for its stated purpose by two
different methods previously. 1)The Company has attempted to attract
private placement investment by discussions with individual potential
investors. The Company sold some of its stock through its own effort to
various individuals. The Company believes now with its Form 10 and S-1
filing it can attract smaller investments from a wider public population.
2) The Company has tried to sell its stock with the use of Regulation D,
Rule 506. This was unsuccessful. Although the Company was formed on
September 2, 2005, it did not develop
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its business plan until 2008. The Company has diligently strived to raise
equity capital. It has not yet implemented its plan nor began operations
because it has not yet been successful in raising the equity capital
necessary to implement the plan.
4. The following sentence is added to the first paragraph of "The Company"
page 3:
The Company has had minimal revenues to date. It has an accumulated
deficit of $52,804.00.
5. We have deleted "immediate revenue for profit" and expanded the disclosure
of our business plan.
6. We have deleted the following language "intends to hire additional
management that has over 15 years experience in analyzing, forecasting,
planning, implementing and achieving projected recovery yields from
portfolios of charged-off accounts."
7. We have revised our business plan to clarify the form of milestones,
indicating the specific steps needed to make the company operational and
successful, the timing of those steps in weeks, months, quarters, the
costs, the source of funds and the expected date of first revenues.
8. We have deleted the following statements regarding the characteristics of
"50-day Charge-off" credit card debt, particularly the claim regarding a
"consistent predictable yield in excess of 150% of cost."
9. We have designated Cypress as a related party in Number of Employees on
Page 4 and also in Certain Relationships and Related Transactions, Item 7.
Inserted on Page 4:
Effective July 12, 2010, the Company entered into an agreement for services
with Cypress Bend Executive Services, LLC ("Cypress"), a related party,
whereby Cypress acts as consultant to:
1. Raise the necessary money for the Company to operate in the short term,
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2. Prepare and file documents with the SEC to take the Company public,
3. Secure a transfer agent and market maker broker-dealer for the Company's
stock,
4. Secure the necessary audits for the required filing documents, and
5. Provide day-to-day operational management of the Company.
In exchange for these services, which the Company anticipates will last
for six month period, the Company agreed to pay Cypress cash fees of
$200,000 as well as provide Cypress with 2,958,625 shares of its stock,
which effectively transfers control of the Company to Cypress during this
period. Upon receipt of the cash payment of $200,000, Cypress is to return
the shares to the Company's treasury.
Inserted on Page 26:
Cypress is a Nevada, LLC with three members. It was formed on July 7, 2010.
Cypress has a business plan to provide services similar to those provided to
Credex. Credex is Cypress's first client.
10. The following paragraph has been inserted to "The Company" page 3:
Company intends to file an S-1 to register the shares now in the hands of
the shareholders. This will allow the shareholders an opportunity to
profit from their investment if a market develops in the stock. By
Registering the stock, there is a much greater chance that the investment
will be liquid. We intend to also file an S-1 at a later undetermined
date to register authorized but unissued stock to raise capital for the
Company. By filing the Form 10 and S-1 in the manner proposed the Company
will be able to obtain a trading symbol and have an established market for
the stock prior to filing the S-1 to register the new issue.
Risk Factors, Page 12
11. The following sentence has been deleted "We are in a competitive industry
with well financed competitors."
12. We have deleted the generic Rick Factors.
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Development Stage Company, page 12
13. The following paragraph has been inserted on page 14 to clarify that the
company will require additional funding to affect its business plan.
Credex is a development stage company. The Company will be reliant upon
additional funding between $100,000 and $250,000 during the next twelve
(12) months to initiate its business as set forth in its continuing
strategic plan for growth.
Uncertainty of Significant Assumptions, page 13
14. Any reference to "there can be no assurance" is deleted.
15. We have the revised the Uncertainty of Significant Assumptions risk factor
to clarify the risk we are describing.
The Company's plans for financing and implementing its planned business
operations and the projection of the Company's potential for profitability
from its intended operations are based on the experience, judgment and
certain assumptions of management and upon certain available information
concerning availability of non-performing credit card debt. Funds
anticipated through stock sales may not be realized. The Company's plans
are based on the following assumptions: That all or any shares in future
offerings will be sold; that the Company will be successful in adhering to
its planned formula for growth; and that sales will reach a minimum level
to allow probability.
16. Any reference to "this offering" is deleted.
Competition, page 13
17. We have revised the risk factor as follows:
Competitors of the Company include traditional consumer debt buyers and
sellers such as Portfolio Recovery Associates, Collins Financial Services,
Inc., Oliphant Financial Corp., US Credit Corp., and many other financial
institutions. Competitors have
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an advantage over the Company primarily due to the fact that they have
more funds to invest in portfolio purchases. These competitors also have
lengthy profitable operating histories.
No Historical Basis for Management's Opinion, page 14
18. We have revised the risk factor as follows:
Although all of the Company's Officers, Directors, and its management team
have experience in and have been involved in the daily operations of the
Company, there is no basis, other than the judgment of the Company's
management, on which to estimate, (i) the level of market acceptance or
the amount of revenues which the Company's planned operations may generate,
or (ii) other aspects of the Company's proposed operations.
Our Management has Limited Experience in Managing..page 14
19. We have deleted the risk factors with different formatted headings. These
were incorrectly inserted in the document by some with an accounting bias.
20. Please see answers 21 and 38 in response to "management has limited
experience" in managing a public company.
21. We have revised the statement "that none of the officers or directors have
any experience managing a company in this industry" to read as follows on
page 16:
None of the officers or directors have any experience in management of a
company providing the services Credex proposes to offer.
Only Mr. Salmond, the company's CFO, has experience managing and operating
a public company. Failure to comply or adequately comply with any laws,
rules, or regulations applicable to our business may result in fines or
regulatory actions, which may materially adversely affect our business,
results of operation, or financial condition and could result in delays in
the development of an active and liquid trading market for our stock.
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Our Planned Expansion could be delayed...
22. This risk factor has been deleted.
We encounter substantial competition in our business...,
23. This risk factor has been deleted.
Our Limited Operating History May not Servs...,
24. This risk factor has been deleted.
25. This risk factor has been deleted.
We Need to Manage Growth in Operations...,
26. This risk factor has been deleted.
Need for Additional Employees,
27. This risk factor has been deleted.
There is a Limited Liquidity on the OTCBB,
28. This risk factor has been deleted.
Currently There is no Public Market for our Securities,
29. This risk factor has been deleted.
30. Any and all reference to "CTCJ" has been deleted.
31. The statement that "FINRA has approved your stock for quotation on the
OTCBB" has been deleted.
32. The phrase "fully distributed" has been deleted.
Liquidity and Capital Resources, page 16
33. We have inserted the revised statement on page 17.
We anticipate taking the following actions during the next 12 months,
assuming we receive the required funding:
Buy Portfolios
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Begin Collections
Continue Collections
34. The Company's history is better explained on page 3 under "The Company."
Proposed Business, page 18
35. We have inserted the following into the second paragraph of the Proposed
Business to explain the expected return of 10% to 12% of the face value of
the portfolios acquired.
According to Kaulkin Ginsberg Whitepaper: Operational Efficiency in the
ARM Industry dated October 2006, an example shown of a debt buyer
purchasing a $100 million portfolio face value of delinquent receivables
for 5 cents on the dollar would spend $5 million for the acquisition of
the portfolio. Collection of $15 million on the portfolio over the next
5 years shows a 3X return. Because the economy has declined from 2006,
the management of the Company believes 10% to 12% return is a conservative
position to have until full operations are attained with experienced
personnel.
Directors and Executive Officers, page 20
36. We have revised the second paragraph of Denise Leonardo's resume' on
page 21 to say:
Ms. Leonardo received the designation of CSOX (Certificate in
Sarbanes-Oxley) in December, 2006 from the SOX Institute of the
Sarbanes-Oxley Group, Clifton, New Jersey.
37. We have deleted any and all reference to such subjective and promotional
words as "outstanding team," "superior service," "cohesive team,"
"effectively leveraging," and "meet and exceed customer expectations."
38. We have revised Mr. Salmond resume' to briefly discuss the size and nature
of the "several public companies" for which Mr. Salmond has acted as CFO:
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Steven G. Salmond - Mr. Salmond has consulted small businesses on
accounting and related systems including setup of accounting system,
transfer of accounting records to new systems, and training of staff in
the new systems. He has also in the private sector of accounting performed
accounts receivable, accounts payable, payroll, general journal adjustments
and prepared financial statements for both publicly and privately held
companies. Mr. Salmond has been Chief Financial Officer ("CFO") in several
public companies reporting under the 1934 Securities Act. Mr. Salmond was
the CFO in Lincoln Floorplanning Company, Inc. and consulted the CFO of
United Park City Mines for its 1934 filings. Lincoln was a small company
with no continous operations. United Park was a New York Stock Exchange
company with real estate development operation until it was taken private.
He has managed personnel in accounting departments as well as work under
the management of accounting to perform the work to be completed.
Mr. Salmond has experience in oil and gas, timber harvesting, mining, real
estate development, water purification equipment manufacture and service,
computer software training, marketing, and health spas. Mr. Salmond was an
audit partner in a small accounting practice. He audited oil and gas,
mining, health spas, printing, fast food and startup companies. Most of
the audits were for publicly traded companies with some filing with the
U.S. Securities and Exchange Commission. He graduated with a B.S. Degree
in Accounting in 1975 from Weber State University located in Ogden, Utah.
Certain Relationships and Related Transactions, page 26
39. We have inserted the nature of the subscription agreements referred to and
have attached a copy to the Amended Form 10 as an exhibit. Each purchaser
of stock pursuant to the Private Placement Memorandum signed a
subscription agreement. All of these subscription agreements are the same.
A specimen is attached as Exhibit 10.2.
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Market Price of and Dividends on the Registrant's Common Equity..., page 26
40. We think we can sell this stock because this is a booming industry
because of the increasing amount of defaulted credit card debt. The profit
margins exceed most other business models thus providing the basis to
establish a market in the company's equities.
41. We have inserted the following to describe the differences between having
shares quoted on the OTCBB and on the Pink Sheets. The Bulletin Board
interdealer systems both require current information on file with the SEC.
They also provide somewhat real time information as to trades in quoted
securities. The Pink Sheets do not require current information to be on
file and the current tracking of trades in less than real time.
Recent Sales of Unregistered Stock, page 27
42. The reverse transaction on 5/15/2010 involving $16,131 was included as a
issuance of new stock in error. The chart on Item 10 is now current as of
9/30/2010. The sale of all of this unregistered stock was not pursuant to
any public offering. The stock was not advertised in any media. No
solicitation in any form was made to the general public.
Description of Registrant's Securities to be Registered, page 28
43. To clarify the 5,658,000 shares of common stock outstanding we have updated
the outstanding shares as of September 30, 2010.
44. Any and all references to "shares of common stock offered by this
prospectus" and "all of the shares offered by him under this prospectus"
and the "Securities registered hereby" have been deleted.
Exhibits
45. We have attached a copy of the management contract with Cypress as
Exhibit 10.1, page 61.
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The Company understands it is responsible for the adequacy and accuracy of
the disclosure in the filing.
The Company understands that the 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.
The Company understands that it may not assert staff comments as a defense
in any proceeding initiated by the Commission or any person under federal
securities laws of the United States.
Sincerely,
Denise Leonardo
President
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