M2
LAW
PROFESSIONAL
CORPORATION
January
3, 2007
As
Filed On Edgar
Securities
and Exchange Commission
Division
of Corporate Finance
Washington,
DC 20549
Mail
Stop
4561
Attn:
Gregory Dundas
|
Re:
|
Format,
Inc., a Nevada corporation
|
|
Registration
Statement on Form 10-SB
|
|
Filed
December 13, 2006
|
|
File
No. 0-52213
|
Dear
Mr.
Dundas:
On
behalf
of Format, Inc., a Nevada corporation (“Company”), please find enclosed two (2)
copies of the Company’s Registration Statement on Form 10-SB, Amendment No. 2
(“Amendment No. 2”), which was filed with the Securities and Exchange Commission
on January 3, 2007. To facilitate your review, the copies are marked to show
changes from the Company’s Amendment No. 1 to Registration Statement on Form
10-SB.
The
purpose of this letter is to respond, in writing, to the questions, comments
and
requests for information specified in your comment letter dated December 21,
2006, and to key those responses to the revisions and additions specified in
Amendment No. 2.
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.
Audited
Financial Statements
Note
2
- Summary of Significant Accounting Policies
Allowance
for Doubtful Accounts, page F-24
| 1. |
The
Company notes your comment, and agrees. Upon answering the December
8th
response letter, there was a variance in the response from the November
13, 2006 letter. The Company has removed the phrase regarding any
difference between the shareholder advance payable and the value
of the
stock received by the Company’s President in the statement of operations.
There was in fact no difference as the shares received by the Company’s
President did in fact equal the value of the receivable on the Company’s
books.
|
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
4
| 2. |
The
Company has revised its disclosure to read as follows for “Allowance for
Doubtful Accounts” in its Significant Accounting
Policies:
|
The
Company provides an allowance for doubtful accounts, which is based upon a
review of outstanding receivables as well as historical collection information.
Credit is granted to substantially all customers on an unsecured basis. In
determining the amount of the allowance, management is required to make certain
estimates and assumptions. Management monitors the collectibility of the
accounts receivable quarterly. Outstanding balances are required to be followed
up by phone calls to the respective companies accounts payable department and
have sufficient evidence that warrants the receivable to remain. The Company
previously had both estimated based on the age of the receivable, and also
directly wrote off certain receivables. In 2006, the Company ceased direct
write-offs, and will only be estimating bad debts based on the aging of the
receivables. Only receivables that are 90 days or older will be considered
for
write-off. During the years ended December 31, 2005 and 2004, the Company
directly wrote off $17,089 and $58,822 in accounts receivable. Management has
determined that as of December 31, 2005 and 2004, an allowance of $4,675 and
$12,000, respectively is required. The following represents a reconciliation
of
the allowance for doubtful accounts, which does not include any direct
write-offs of accounts receivable during the periods, for the years ended
December 31, 2005 and 2004:
| Balance, December 31, 2003 |
$
|
5,760 | ||
|
Bad
debt expense
|
6,240
|
|||
|
Recovery
of bad debt
|
(-
|
)
|
||
|
Balance,
December 31, 2004
|
12,000
|
|||
|
Bad
debt expense
|
-
|
|||
|
Recovery
of bad debt
|
(-
|
)
|
||
|
Adjustment
to reserve
|
(7,325
|
)
|
||
|
Balance,
December 31, 2005
|
$
|
4,675
|
Certain
accounts receivable at December 31, 2005 of $16,978 and for the six months
ended
June 30, 2006 of $5,691 were settled in 2006 for the issuance of shares of
the
customers’ common stock. The certificates, which were part of a Form S-8
issuance by these customers, were issued to the Company’s President, as the
shares could not be issued to the Company. The President, on behalf of the
Company, who was a consultant to the various customers, whom had no previous
or
current relationship with these customers outside of their edgar consultant,
accepted these shares as full consideration of the obligation due the Company.
The substance of this transaction was that the President received the fair
value
of the Company’s accounts receivable in the form of stock of the Company’s
customers and transferred the certificates to the Company. The Company’s
President does not owe any amounts to the Company.
Securities
and Exchange Commission
Mr.
Gregory Dundas
Page 3
of
4
The
Company’s customers that paid their obligations in the form of stock were all
public companies with actively trading stock with readily determinable values.
The
revised disclosure includes language to address each of the points in your
comment, except for the last point which requires a reconciliation of the roll
forward chart to the statement of operations for bad debt expense. To answer
that portion, the amount in bad debt expense for 2004 in the statement of
operations is $65,062. This includes $58,822 in direct write-offs and $6,240
in
adjustments to the allowance for doubtful accounts. For 2005 in the statement
of
operations for bad debts is $9,764. This includes $17,089 in direct write-offs
and ($7,325) in adjustments to the allowance for doubtful accounts. All of
these
amounts agree to the disclosure and the footnote.
All
corresponding adjustments to the disclosures have been revised in the interim
September 30, 2006 and 2005 financial statements as well. For the nine months
ended September 30, 2006 in the statement of operations for bad debts is $3,049.
This includes $1,664 in direct write-offs and $1,385 in adjustments to the
allowance for doubtful accounts. All of these amounts agree to the disclosure
and the footnote. The roll forward chart for September 30, 2006 is as
follows:
|
Balance,
December 31, 2003
|
|
$
|
5,760
|
|
|
Bad
debt expense
|
|
|
6,240
|
|
|
Recovery
of bad debt
|
|
|
(-
|
)
|
|
Balance,
December 31, 2004
|
|
|
12,000
|
|
|
Bad
debt expense
|
|
|
-
|
|
|
Recovery
of bad debt
|
|
|
(-
|
)
|
|
Adjustment
to reserve
|
|
|
(7,325
|
)
|
|
Balance,
December 31, 2005
|
|
|
4,675
|
|
|
Bad
debt expense
|
|
|
1,385
|
|
|
Recovery
of bad debt
|
|
|
(-
|
)
|
|
Balance,
September 30, 2006
|
|
$
|
6,060
|
|
Securities
and Exchange Commission
Mr.
Gregory Dundas
Page 4
of
4
Should
you have any questions or comments concerning the enclosed materials, please
contact me at 949-706-1470.
Sincerely,
M2
Law
Professional Corporation
/s/
Michael Muellerleile
Michael
Muellerleile