M2
LAW
PROFESSIONAL
CORPORATION
October
12, 2006
Securities
and Exchange Commission
Division
of Corporate Finance
Washington,
DC 20549
Mail
Stop
4561
Attn:
Gregory Dundas
AS
FILED
ON EDGAR
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Re:
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Format,
Inc., a Nevada corporation
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Registration
Statement on Form 10-SB
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Filed
September 1, 2006
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File
No. 0-52213
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Dear
Mr.
Dundas:
On
behalf
of Format, Inc., a Nevada corporation (“Company”), please find enclosed
Amendment No. 1 (“Amendment
No. 1”)
to its
Registration Statement on Form 10-SB (“Form 10-SB”) filed with the Securities
and Exchange Commission (“Commission”) on October 12, 2006.
The
purpose of this letter is to respond, in writing, to the questions, comments
and
requests for information specified in that letter and to key those responses
to
the revisions and additions specified in Amendment No. 1.
We
will
overnight two (2) marked copies of Amendment No. 1, marked to
show
changes from the previous filing,
to your
office to facilitate your review. The headings and provisions of this letter,
which are numbered, are intended to correspond and respond to the headings
and
order of the paragraphs in your letter.
Item
1. Description of Business, page 3
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1.
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The
Company has revised its disclosure to provide a history of the Company’s
business operations and
developments.
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2.
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The
Company has revised Footnote 1 to the financial statements to specify
that
the Company was incorporated in the State of Nevada.
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3.
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The
Company has revised its disclosure to specify the date that the Company
became eligible for trading on the pink sheets and that no trading
has
occurred since that date.
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500
NEWPORT CENTER DRIVE SUITE 800 NEWPORT BEACH CALIFORNIA
92660
TEL:
949 706 1470 FAX: 949 706 1475
Securities
and Exchange Commission
Mr.
Gregory Dundas
Page
2
of
8
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4.
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The
Company has revised its disclosure to specify recent operating losses
and
that the Company expects to continue to incur losses for the foreseeable
future.
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5.
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The
Company has revised its disclosure to specify that Mr. Neely devotes
90 %
of his business time to the
Company.
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6.
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The
Company has revised its disclosure to distinguish clearly between
current
and planned activities.
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7.
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The
Company has revised its disclosure to describe at greater length
what is
involved in the “EDGARization” of
documents.
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8.
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The
Company has revised its disclosure to specify that its printing services
will not become a material part of the business in the foreseeable
future.
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9.
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The
Company has revised its disclosure to clarify the nature and timing
of the
Company’s goal to become a “dominant provider” of EDGARizing services in
light of the Company’s discussion regarding the nature of its
competition.
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Risk
Factors, page 5
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10.
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The
Company has revised its disclosure to underline the section title,
“Risk
Factors” and move the preamble narrative down a
space.
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11.
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The
Company has revised its disclosure to specify a risk factor for its
reliance on a small number of customers for most of its
revenues.
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The
nature of our EDGARizing business is highly cyclical…,page 5
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12.
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The
Company has revised its disclosure regarding its ability to handle
maximum
workloads in light of the disclosure that it has one full-time employee
and one part-time employee.
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The
EDGARizing industry has been dominated…,page 5
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13.
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The
Company has revised its disclosure in this risk factor and elsewhere
to
clarify the extent to which a small number of businesses dominate
the
market.
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We
anticipate that we may need to raise additional capital…,page 6
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14.
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The
Company has revised its disclosure to specify its expected need for
additional funds of approximately $100,000, and to discuss its current
reliance on interest-free loans from Mr.
Neely.
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Securities
and Exchange Commission
Mr.
Gregory Dundas
Page
3
of 8
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15.
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The
Company has revised its disclosure to specify the risks of not being
able
to fund its sales and marketing
activities.
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As
a
service-oriented company, we depend…,page 6
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16.
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The
Company has revised its disclosure to avoid references to “officers” in
plural and in particular revise the phrase “various members of our
management team” in that risk
factor.
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Management’s
Discussion and Analysis of Financial Condition and Results of Operations
General
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17.
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The
Company has revised its disclosure to provide discussion and analysis
relating to other non-operating income and
expense.
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18.
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The
Company has revised its disclosure to include discussion and analysis
of
its financial condition and changes in financial condition for each
period
presented.
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Liquidity
and Capital Resources, page 9
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19.
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The
Company has revised its disclosure to specify the reasons why it
was
unable to pay its invoices, whether it paid its invoices subsequent
to the
year-end, and any implications of its inability to pay
invoices.
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Our
Plan of Operations for the Next Twelve Months, page 19
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20.
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The
Company has revised its disclosure to disclose the information required
by
Item 303(a) of regulation S-B.
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Part
II
Market
Price…, page 27
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21.
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The
Company has revised its disclosure to specify the number of holders
of the
Company’s stock.
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Recent
sales of Unregistered Securities, page 31
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22.
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The
Company has revised its disclosure to specify that the differences
between
the total of the issuances herein and the amount specified in the
financial statements if additional paid in capital by Mr. Neely in
2002,
and to specify the first issuance of 163,833 shares was at $0.03
for
proceeds of approximately $4,915.
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Securities
and Exchange Commission
Mr.
Gregory Dundas
Page 4
of
8
Financial
Statements for the Six Months Ended June 30, 2006
Note
2
- Summary of Significant Accounting Policies
Allowance
for Doubtful Accounts, page F-7
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23.
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The
disclosures have been revised to incorporate the following relating
to the
Allowance for Doubtful Accounts in the Summary of Significant Accounting
Policies in Note 2.
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The
Company’s President received S-8 common shares from the Company’s customers in
lieu of cash payment to settle the related obligations due the Company. The
President of the Company accepted the shares of the customer. The Company
reduced the amounts of their obligation to the President as a result of the
President accepting the shares. Additionally, the President placed the
certificates in the Company as an advance for cash flow purposes of the Company.
The total amount of receivables settled in shares of the customers securities
in
the six months ended June 30, 2006 were as follows: for the six months ended
June 30, 2006 was $3,691, for the year ended December 31, 2005 was $15,978
and
in 2004 there were no receivables settled with common stock. The difference
between the stock received by the President over the amount that was in the
shareholders advance account, is reflected as wage expense as the Company cannot
have an officer owe the Company any money.
All
of
the stock received by the Company’s President from the Company’s customers were
public companies and actively traded, so the Company used as a fair value of
the
stock, the price of the shares the day the stock was issued, multiplied by
the
number of shares the Company received.
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24.
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The
journal entries used to record the transactions with respect to the
shares
the President received as payment by the Company’s customers were as
follows:
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Dr.
Shareholder Advance
Dr.
Wage
Expense
Cr.
Accounts Receivable
Entry
to
record issuance of shares to President from customer. Wages are recorded when
the shareholder advance account is fully absorbed.
Dr.
Cash/Marketable Securities
Cr.
Shareholder Advance
Entry
to
record cash infusion by President for working capital purposes
Dr./Cr.
Marketable Securities
Dr./Cr.
Unrealized Gains or Losses
Entry
to
record holding gains or losses on trading securities
Securities
and Exchange Commission
Mr.
Gregory Dundas
Page 5
of
8
Dr./Cr.
Marketable Securities
Dr./Cr.
Realized Gains or Losses
Entry
to
record gain or loss on sale of securities
Financial
Statements for the years ended December 31, 2005 and 2004
Statement
of Cash Flows, page F-20
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25.
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The
Company has revised its statements of cash flows accordingly as noted
in
accordance with paragraph 22(a) of SFAS
95.
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Note
2
- Summary of Significant Accounting Policies, page F-21
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26.
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Despite
the fact that the Company does have retained earnings, the retained
earnings is the result of the realized and unrealized gains in their
marketable securities, and has reconsidered these facts in discussions
with their auditor, and as a result the auditor has re-issued their
opinion with the uncertainty of the Company continuing as a going
concern,
and has incorporated managements plans to mitigate these conditions
that
give rise to the uncertainty. The Company has added a risk
factor.
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27.
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The
Company does not consider the rental and other income it receives
to be a
material part of their business. The Company will include their policy
for
recognition of this in their revenue recognition
disclosures.
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Allowance
for Doubtful Accounts, page F-22
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28.
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The
Company will provide a roll-forward schedule on its allowance for
doubtful
accounts for each of the periods presented in its revised financials
statements.
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Marketable
Securities, page F-25
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29.
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As
specified in response to Comment No. 23, the securities the Company
holds
are from active trading public reporting companies, so their values
are
readily determinable. The Company receives the securities from its
President, who received the securities as payments on obligations
of its
customers. The Company does not hold the stock too long, as they
need the
cash for cash flow purposes. The Company at any holding period has
determined the fair value of the marketable securities approximates
carrying value, as the market values are readily determinable and
can be
calculated easily. The Company calculates the realized and unrealized
gains and losses based on these values for each of the periods
presented.
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Securities
and Exchange Commission
Mr.
Gregory Dundas
Page 6
of
8
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30.
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The
names of each specific entity issuer for each marketable security
held
during the periods presented are as
follows:
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Name
of Issuer
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Acquisition
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Disposal
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Litfunding
Corp.
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June
2005
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August
2005
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Cobalis
Corp.
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February
2005
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March and August 2005 |
| April 2006 |
September
2006
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IVI
Communications, Inc.
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February
2006
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March 2006 |
As
specified in response to Comment No. 23 and 25, the Company’s President received
the shares from each of the above Company’s customers in lieu of cash payment to
settle the related obligations due the Company.
Note
4
- Loans Receivable, page F-27
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31.
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The
amount funded and recorded as a loan receivable to this related company
that is principally owned by one
of our shareholders that owns less than one percent of our issued
and
outstanding shares,
was made by the Company based on the business that the company was
doing,
and the fact that they were planning on going public and utilize
the
services of the Company. The Company has provided no services to
this
company to date.
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32.
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The
individual that was loaned the amounts in question was a related
party.
This has been included in the revised financial statement
disclosures.
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33.
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The
Company has imputed interest at a rate of 4% per annum, the rate
at which
the Company would be able to receive funds from a financial institution
or
that the amounts loaned would have been obtained from a financial
institution for the shareholder advance and the loan receivable.
These
amounts were not recorded as they were not considered material to
the
financial statements taken as a whole.
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As
for
the amount financed by the bank, for the loan on the vehicle, the Company
purchased the vehicle under a special promotion run by the auto maker and there
was no interest on the amounts financed. This too, was imputed at 4%, and was
considered immaterial to record for each of the periods presented.
Provision
for Income Taxes, page F-29
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34.
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The
disclosures have been revised to include a reconciliation between
the
statutory rate and the effective tax rate as referred to in paragraph
47
of SFAS 109.
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35.
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The
Company had parenthetically described the timing differences as described
in SFAS 109, and has revised the disclosure to include charts noting
these
differences and the changes in the valuation allowances in the revised
footnote disclosures.
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Securities
and Exchange Commission
Mr.
Gregory Dundas
Page 7
of
8
Financial
Statements for the years ended December 31, 2004 and 2003
General
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36.
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The
Company has deleted the duplicative presentation of the financial
information for the fiscal year ended December 31,
2004.
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Statement
of Cash Flows, page F-35
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37.
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The
Company has revised the statement of cash flows for consistency.
Hall and
Company was provided adequate opportunity to review, discussions
occurred
between Hall and Company and Michael Pollack, and both auditors concurred.
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Part
III - Index to Exhibits, page 19
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38.
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The
Company has revised its disclosure to include Exhibit 16, a letter
from
its former independent accountant stating whether it agrees with
the
Company’s representation made in response to Item 304(a) of Regulate
S-B.
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In
addition to the foregoing, attached as Annex A to this response letter is an
acknowledgement from the Company regarding the matters requested on page 7
of
the Comment Letter.
Should
any members of the Staff have any questions or comments concerning the enclosed
materials, please contact me at 949-706-1470.
Sincerely,
M2
Law
Professional Corporation
| /s/ Michael Muellerleile | |||
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Michael Muellerleile |
ANNEX
A
ACKNOWLEDGEMENT
Format,
Inc. (the “Company”)
hereby
acknowledges that:
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the
Company is responsible for the adequacy and accuracy of the disclosure
in
the filing;
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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
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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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Format,
Inc.
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| By: | /s/ Ryan A. Neely | |
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Ryan A. Neely
President, Chief Financial Officer and
Secretary
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