Liberty Vision, Inc.
2530 Meridian Parkway, Unit 200
Durham, NC 27713
November 2, 2011
U.S. Securities & Exchange Commission
Division of Corporate Finance
100 F Street NE
Washington, D.C. 20549-3561
Attn: Mr. Matthew Crispino, Staff Attorney
Re: Liberty Vision, Inc.
Registration Statement on Form S-1
Filed August 19, 2011
File No. 333-173456
Dear Mr. Crispino
Further to your letter dated September 7, 2011 concerning the deficiencies in our registration statement on Form S-1, we provide the following responses:
Results of operations for the three months ended May 31, 2011 compared to the three months ended May 31, 2010, page 22
1. We note your first sentence under “Revenue” that identifies that various services that generate revenue. This statement appears to conflict with your disclosure on page F-8 that website development was your only revenue stream for the three months ended May 31, 2011 and 2010 and cumulative since inception. Please advise or revise accordingly.
We have amended our disclosure to clarify our current revenue stream.
Results of operations for the year ended February 28, 2011 compared to the period from inception (September 29, 2009) to February 28, 2010, page 23
2. We note your effective tax rate increased from 15% for the period ended February 28, 2010 to 27% for the fiscal year ended February 28, 2011. Please expand your discussion of results of operations to discuss each of the material items in your reconciliation between the statutory tax rate and your effective tax rate. Refer to Section III.B of SEC Release 33-8350.
We have expanded our discussion as required.
Liquidity and Capital Resources, page 25
3. We repeat our prior comment 5 to address material changes in the underlying drivers that affect your cash flows. These disclosures should also include a discussion of the underlying reasons for changes in working capital items that affect operating cash flows. Please revise accordingly. Also provide these disclosures for the three months ended May 31, 2011 compared to the three months ended May 31, 2010. Refer to Section IV.B of SEC Release 33-8350.
We have revised this section of our Registration Statement as required.
Description of Our Business and Properties, page 26
4. Please disclose in this section the total number of your employees and the number of your full-time employees. Refer to Item 101(h)(4)(xii) of Regulation S-K.
We have disclosed the total number of our employees as required.
Consolidated Financial Statements May 31, 2011 and 2010
Consolidated Statements of Operations, page F-3
5. Please tell us why you do not show any expense or benefit in your Provision for Income Taxes line item for the periods ended May 31, 2011 or May 31, 2010.
Our Registration Statement was amended with enclosure of unaudited financial statements for the six-month period ended August 31, 2011. At August 31, 2011, the Company had net operating loss (“NOL”) carry–forwards for federal income tax purposes of $78,876 that may be offset against future taxable income through 2031. No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements because the Company believes that the realization of the Company’s net deferred tax assets of approximately $11,831 (assuming 15% tax rate), was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by a valuation allowance of $11,831. Full income tax disclosure and reconciliation will be provided in the footnotes to the audited financial statements for the year ended February 29, 2012.
Consolidated Financial Statements February 28, 2011 and 2010
Report of Independent Registered Public Accounting Firm, page F-15
6. We note the disclosure in the first sentence of the explanatory paragraph which includes, “as being appropriately reported”. It appears that the disclosure should read “as not being appropriately reported.” Please advise.
The disclosure was updated.
Consolidated Statements of Operations, page F-17
7. We note that you currently show consulting expense of $14,000 for the year ended February 28, 2011 and $8,000 for the year ended February 28, 2010. Your executive compensation table on page 34 indicates that both your CEO and CFO provided consulting services during 2011 for $14,000 and during 2010 for $8,000 each. Please reconcile the difference in amounts between your statements of operations and your compensation table.
We have provided additional disclosure to clarify consulting and executive compensation expenses as reported on our statement of operations.
Note 1 – Organization and Operations, page F-20
8. We note your formation of your wholly-owned subsidiary (LVMI) in Canada. Your disclosure on page 33 indicates that your designers are based in Canada as well as your project management and business development. Please provide clarifying disclosure as to the business purpose of your wholly-owned subsidiary. In addition, provide clarifying disclosure as to the business purpose of your United States based entity.
We have provided the required disclosures.
Note 2 – Summary of Significant Accounting Policies
Revenue recognition, page F-22
9. We note in your revised disclosures in response to prior comment 9 that all of your revenues to date have been generated by website development, which you indicate that revenue is recognized under this stream based on a “completed performance method.” As such, please clarify if revenue is recognized based on the guidance in FASB ASC 605-35-50.
We have provided the required clarification.
Foreign currency transactions, page F-22
10. We note your disclosure that the U.S. Dollar is the reporting currency and functional currency, of LVMI (Canada), your wholly owned subsidiary. We further note that 62% and 100% of your revenues for the years ended February 28, 2011 and February 28, 2010, respectively, were generated outside of the United States. Please expand your disclosures to clarify if these sales and related receivables were transacted in U.S. Dollars.
We have clarified that all sales and related receivables were transacted in U.S. Dollars.
Note 6 – Income Tax, page F-29
11. Please address the following items related to income tax:
- Your disclosure of taxable income of $39,606 for the year ended February 28, 2011 in the table on page F-29 does not appear to tie to income for the same period in your statement of operations on page F-17. Please advise.
We have provided a reconciliation table that shows calculation of the federal taxable income.
- Please provide a table to show the components of income before tax expense as either
domestic or foreign. Refer to Rule 4-08(h) of Regulation S-X.
All the company’s revenues for 2011 and 2010 were generated by US domestic operations. The breakdown of the revenues by country in the geographic information table on page F-23 was provided to show the clients’ demographics only. Inadvertently, the figures reported in this table were interpreted as revenues generated in particular country. We have revised the geographic information table to reflect the place of origin of the generated income rather than clients’ geographic locations. Also we have updated the table on page F-29 to show the origin of the component of income before income tax expense.
- We note your tax provision table only includes a line item for federal taxes. Your disclosures in the table on page F-23 indicate that you generate significant revenue outside of the United States. Please tell us why you do not show any foreign or state income taxes. Refer to Rule 4-08(h) of Regulation S-X.
We have revised our revenue allocation disclosure (see item above). The company is subject only to the US income tax provisions.
- We note your effective tax rates for the years ended February 28, 2010 and February 28, 2011 differ from statutory rates. Please provide disclosure for the reconciling items. Refer to FASB ASC 740-10-50-11 through 50-13.
We have provided the required disclosure.
- In light of your significant revenue generated in multiple countries outside of the United States, please provide clarifying disclosure if you have unremitted earnings in local international jurisdictions and the Company’s current intentions related to these earnings.
We have provided clarifying disclosure. The Company has no unremitted earnings in local international jurisdictions.
Sincerely,
/s/ Oleg Gabidulin
Oleg Gabidulin
Liberty Vision, Inc., CEO