VANDERKAM & ASSOCIATES
1301 TRAVIS, #1200
HOUSTON, TX 77002
(713) 547-8900 PHONE
(713) 547-8910 FACSIMILE
August 9, 2006
U.S. Securities & Exchange Commission
450 Fifth Street NW
Mailstop 4561
Washington, D.C. 20549
Attn: Barbara C. Jacobs
Assistant Director
Re: Integrated Management Information, Inc.
Pre-Effective Amendment No. 2 to Form SB-2
Filed August 3, 2006; File No. 333-133624
Dear Ms. Jacobs:
Your letter of July 20, 2006 has been forwarded to this office for response.
Each of the numbered responses below corresponds with your letter of July 20,
2006.
1. We have revised all of the statements which claim that we were listed on
the OTC Board to state that we intend to apply for listing (see the various
Risk Factors listed on pages 8 and 9).
2. A provision for determination of the offering price was put into a separate
section on page 9 as required by Item 505 Regulation S-B.
3. The inconsistencies in the delivery legends have been corrected and both
now state 90 days.
4. The statement that this registration statement constitutes the initial
public offering of Integrated Management Information common stock has now
been removed from the cover page of the Registration Statement and is on
the cover page of the prospectus.
5. Information relating to risk factors is actually in bold. However, Ascii
has the ability to show only one type of typeface. Accordingly, the version
filed through EDGAR does not show such. However, the hardcopy does.
6. The paragraphs following the table of contents and preceding the summary
have been moved to page 9 (after the risk factors).
7. We have now made the disclosure consistent that he price will be $.83 until
the securities are quoted on the OTC bulletin board and thereafter at
market or negotiated prices. (page 5)
8. The paragraph, "term of sale" has been removed in its entirety from page 5.
9. The "boiler plate" language has been removed and the risk factors rewritten
to make them more definitive to our organization (see pages 5 - 9)
10. We have modified the headings to make them more germane to our company (see
pages 5-9)
11. After a review of the information at the company, it is my opinion that
such does not rise to the level of market research. Accordingly, we have
changed this statement on page 6 to now state "management believes".
12. We have added a sentence to our second risk factor on page 6 which states
in excess of 40% of our projected near term revenue growth is contingent
upon sales of USVerified source and age verifification systems.
13. We have deleted in its entirety the risk factor, our future success in part
depends on our ability to establish strategic . . .
14. We have revised the risk factor relative to patents to clarify the status
of our patents.
15. We have modified our footnote originally on page 8 which we have moved to
page 6 to state that we may be unable to raise additional capital which is
necessary to continue as a going concern. We have also expanded how long we
have adequate cash and how soon our need for additional cash arises.
16. We have modified our risk factor on page 8 to advise the investor what risk
there is from the investor's point of view if there is limited liquidity in
our stock.
17. We have added language to both the penny stock heading and the penny stock
text risk factor to state that it will be more difficult and costly for an
investor to resell their shares.
18. We have expanded our discussion on page 11 and identified which export
markets other than Japan continue to be closed to US beef exports. In
addition, between the time pre-effective amendment No. 1 was filed and the
filing of this amendment, the Japanese market has conditionally opened. (pg
11)
19. Our MD&A for the quarter ended March 31, 2006 compared to 2005 has been
substantially expanded under selling, general and administrative expenses
to include numerical quantifications of individual items in this category.
(page 12)
20. We have quantified the headcount discussed in selling, general and
administrative expenses. (page 12)
21. On page 13, we have added a paragraph stating as of March 31, 2006 the
company has no off balance sheet arrangements of any type.
22. We have expanded the discussion on revenues and broken down the different
categories into dollar amounts. (page 13) 23. We have substantially
modified the second to the last paragraph on page 12 of the liquidity and
capital resources section which states our current cash position and our
need for additional cash. We have also stated that we have inadequate cash
to cover our operations for the next 12 months.
24. We have deleted the liquidity and capital resources section under the year
ended December 31, 2005 compared to December 31, 2004.
25. We are attaching supplemental information to support our position on the
various claims in this section. We have deleted from the text the
provisions stating that we are a recognized leader, that Merial Ltd. is a
leading veterinan products company, and that Superior Livestock is the
largest.
26. Since most of our business is for services, we do not have significant
suppliers. The only suppliers which we have are listed on page 19.
Approximately 14% of our revenue is provided by the sale of hardware during
the year ended December 31, 2005. We also state on page 18 under US
Verified that we have no principal suppliers because most of our revenue is
service related. What products we do purchase (principally cattle
identification ear tags), we purchase from Allflex and Digital Angel.
However, there are numerous other companies which manufacture and market
such ear tags. On page 21 we list our employees both at December 31, 2005
and as of July 31, 2006.
27. On page 18 we state that we have no principal suppliers. (see also response
to question 26).
28. On page 18, we have disclosed the current status of U.S. trade relations
with South Korea and Canada with respect to Beef Exports. We have also
included the position of beef exports in relationship to other countries as
well.
29. Beginning on page 19 and running through page 20, we have included each
major source of revenue as a percentage of total revenue.
30. We have deleted the "key" reference and instead listed who are our largest
customers. (page 20).
31. As disclosed on page 20, no single customer generates more than 10% of our
revenues.
32. We have substantially modified the competition section on page 20 and 21 to
disclose information on our competitors, their products and their pricing
as well as our pricing and in addition our estimate of their number of
customers.
33. We have disclosed below the listing of the executive officers on page 21
that John and Leann Saunders are husband and wife.
34. On page 23 we have revised the biography of Mr. Adam Larson to state what
his employment has been for the past five years.
35. On page 25 we have modified the executive compensation table to include
Leann Saunders, Cara Gerken, Cory Weaver and Rob Cook.
36. Certain relationships and related transactions on page 26 have been
modified and put into more readable fashion per your recommendation.
37. There were no loan agreements between Mr. Saunders and the father of Leann
Saunders. We have identified in the Certain Relationships and Related
Transactions on page 26 the name of Ms. Saunders father.
38. We have provided the natural person disclosure for Frontier Farm Credit and
Potomac Capital Partners in the table of selling shareholders and have
listed them in footnote 3 on page 31.
39. The headings for the balance sheet, the statement of operations, the
statement of stockholders' equity and the statement of cash flow were
entered as headings in the Excel spreadsheets. When the financial schedules
were Edgardized, the headers were not recognized. We have removed the
header information and manually entered the header information on all
financial statements.
40. Paragraph 54 of SFAS 128 requires retroactive treatment for nominal stock
issuances, splits, etc. that occur subsequent to period close, but prior to
issuance of financial statements. Since the additional common shares were
issued to the founders in January, 2005 (prior to issuance of the auditor's
report), the earnings per share calculation at December 31, 2004 will be
based on the new number of shares issued, including the subsequently issued
founders shares.
We have recalculated the earnings per share data for the December 31, 2004
financial statements. See addition to Note 9 in the December 31, 2005 and
2004 audited financial statements.
41. We have reviewed the transaction which reflected the issuance of 2,745,300
shares of common stock for a total consideration of $217,855. The
transaction was inadvertently described on the statement of stockholders'
equity as shares issued as compensation - related parties. The transaction
actually was an equity transaction for the exercise of stock options
granted in October, 2004 and the receipt of cash in the amount of $217,855.
We have corrected the description.
42. Inventory is an immaterial item on the balance sheet of Integrated
Management Information, Inc. We have, however, prepared and included in the
Summary of Significant Accounting Policies (Note 1) a description of the
inventory and the related required disclosures.
43. The three for two forward stock split is disclosed as a Subsequent Event in
Note 14. As mentioned in the response to comment 40, Paragraph 54 of SFAS
128 requires retroactive treatment for nominal stock issuances, splits,
etc. that occur subsequent to period close, but prior to issuance of the
financial statements. We have recalculated the earnings per share at
December 31, 2005 based on the new number of shares issued, including the
effects of the three for two split on February 14, 2006.
44. Cattlenetwork.com generates approximately 90% of its revenues from
advertising. Our advertising agreements do not require a minimum number of
displays. The remainder of the revenue is generated from monthly fees
earned from subscriptions to a third party site and fees paid for a weekly
new and trading information email. The fee is $12.99 per month or $99 per
year. There are approximately 200 paying subscribers, some of which pay
monthly, with the balance paying on an annual basis. The monthly income is
approximately $1700. Due to the immaterial amount of subscription revenue,
we recognize the revenue as received. Should the subscriber income increase
significantly, we will consider recognize the income as earned.
The Cattlestore.com website does not earn fees from displaying products.
Income is generated through the sale of products displayed on the website.
EITF 99-19 requires that gross revenues generated from the sale are
recognized if Integrated Management Information, Inc. is the principal, or
the net revenues recorded if the Company is operating as an agent. As sales
are generated from the Cattlestore.com website, the Company orders the
product, takes title to the product, and the product is shipped to the
customer. Therefore, the Company records the gross revenues generated as
income in accordance with EITF 99-19.
45. Revenue from the Integrated Management Information, Inc. US Verified
programs are recognized based on contract terms and matching of contract
requirements to completion of the work.
For feed yards and packers, the contracts require completion of a USDA
program compliant manual, obtaining USDA approval, and training. This cycle
is normally 60 to 90 days. The fee is recognized as earned using the
Proportional Performance Mode since the customer receives value as the
services are performed. We have modified our Revenue Recognition disclosure
in Note 1 to clarify the accounting (i.e. Proportional Performance Model).
46. Integrated Management Information, Inc. provides access to its proprietary
web-based applications to feed yards. The information contained in the site
is useful to the feed yards in their overall compliance with USDA QSA
requirements.
Meat packers have QSA requirements that are similar in nature to those of
feed yards. Therefore the information contained on the site is useful to
meat packers in meeting these QSA requirements.
SOP 97-2 cites the four elements of revenue recognition, including (1)
evidence of an agreements, (2) delivery, (3) is the fee fixed or
determinable, and (4) is collectibility probable.
The Company charges a monthly service fee ranging from $150 to $400 for web
- site hosting and maintenance of the manual. This income is billed and
recognized on a monthly basis.
47. Customers do not purchase software, and Integrated Management Information,
Inc. does not sell software to customers. The Company hosts a web-site that
the feed yards and packers have access to. The customers pay for the
hosting services, there is no sale of software. We have modified relevant
language to reflect "access to a proprietary web-based application".
48. We have changed the statement of cash flows to reflect the acquisition of
Cattlefeeding.com for $150,000 (cash), and a disclosure of the non-monetary
portion represented by the seller financing in the amount of $350,000.
We have also modified Note 2 to reflect a reconciliation to the Purchase
Price.
49. We have expanded the disclosures in Note 2 of the March 31, 2006 financial
statements to provide all of the disclosures required by SFAS 123(R).
50. We have added language under footnote 3 as to the accounting treatment for
the six million options issued to the founders.
51. The power of attorney has been clarified in the exhibit index and has been
identified in the appropriate EDGAR document tag.
52. The legal opinion has been modified and references to Nevada and Texas have
been dropped. In addition we have added additional language regarding the
provisions of Colorado including statutory provisions, provisions of the
Colorado Constitution and reported judicial decisions interpreting those
laws.
53. As stated in the response to item 52, we have dropped the reference to any
other jurisdictions in the opinions.
Please contact the undersigned should you have any questions or need any further
information.
Sincerely,
VANDERKAM & ASSOCIATES
/s/ Hank Vanderkam
Hank Vanderkam