March 27, 2009
Securities and Exchange Commission
Julie Sherman, Staff Accountant
Department of Corporate Finance
100 F Street, N.E.
Washington, DC 20649
RE: Comments on Form 10-K for the year ended August 31, 2008
Dear Ms. Sherman:
Mammatech Corporation acknowledges and addresses the comments made in your
letter dated March 5, 2009 regarding form 10-KSB for the year ending August 31,
2008, filed December 15, 2008.
Attached are the responses to your comments and Item 8A in its entirety.
Submitted,
Mary B. Sellers
Chief Financial Officer
Mammatech Corporation
930 NW 8th Avenue
Gainesville, Florida 32601
352.375.0607
352.375.6111 (fax)
sellers@mammacare.com
Responses to Letter dated March 5, 2009
Mammatech Corporation
Form 10-KSB for the year ended August 31, 2008
Filed December 15, 2008
File No. 000-11050
March 27, 2009
Item 6. Management's Discussion and Analysis of Financial Conditions and Results
of Operations, page 7
- --------------------------------------------------------------------------------
Comparison of Fiscal Year Ended August 31, 2007 and 2008, page 8
- ----------------------------------------------------------------
1. Please refer to prior comment 1. We note that you filed an amendment to your
Form 10-KSB for the year ended August 31, 2008 on February 13, 2009 to
reclassify certain training expenses that we determined to be cost of sales
rather than selling, general and administrative costs. We also note that this
reclassification had a significant effect on your cost of sales, gross profit
and selling, general, and administrative costs. Please revise future filings to
include additional discussion in the footnotes as to the nature of the
reclassification and consider providing a tabular presentation of the
reclassification. For example, providing a column that show your income
statement as originally filed, a column showing the amounts reclassified and a
column with your revised presentation.
Future filings will include additional discussion in the footnotes as to
the nature of the reclassification of certain training expenses that were
determined to be cost of sales rather than selling, general and
administrative costs and will provide a tabular presentation of the
reclassification. Mammatech Corporation will provide a column showing the
originally filed income statement, a column showing the amounts
reclassified and a column with its revised presentation.
2. In this regard, we note that the reclassification of training costs to cost
of sales represented approximately 33% of your total cost of sales. Therefore,
it appears service revenues exceeded 10% of your total revenues. In future
filings, revise your income statement to separately disclose revenues from the
sale of products, services and other products if revenues from any individual
referenced component are more than 10 percent of the total revenue for the year.
Related costs and expenses should be combined and disclosed separately. Refer to
Regulation S-X, Article 5-03(b)(1) and (2).
In future filings the company will revise its income statement to
separately disclose revenues from the sale of products, services and other
products if revenues from any individual referenced component are more than
10 percent of the total revenue for the year. All related costs and
expenses will be combined and disclosed separately, as per Regulation S-X,
Article 5-03(b)(1) and (2)
2
3. Please also expand your revenue recognition policy in future filings to
include your revenue recognition policies with regards to revenues from
services.
The company will expand its revenue recognition policy in future filings to
include its revenue recognition policies with regards to revenues from
services.
Amendment to Form 10-KSB filed February 13, 2009
- ------------------------------------------------
Item 8A, Controls and Procedures, page 19
- -----------------------------------------
4. Please refer to prior comment 2. We note that you have revised Item 8A in
your amended Form 10-KSB to include Management's Report on Internal Controls,
however, we also note the following:
o It does not appear you have included a statement in substantially the
following form: "This annual report does not include an attestation
report of the company's registered public accounting firm regarding
internal control over financial reporting. Management's report was not
subject to attestation by the company's registered public accounting
firm pursuant to temporary rules of the Security and Exchange
Commission that permit the company to provide only management's report
in this annual report," as required by Item 308T(a)(4) of Regulations
S-K.
The statement has been added to Item 8A as required by Item
308T(a)(4) of Regulations S-K.
o Additionally, it appears you deleted your discussion regarding
disclosure controls and procedures that was previously included in
your Form 10-KSB for the year ended August 31, 2008.
The Company unintentionally deleted its discussion regarding
disclosure controls and procedures that had previously been
included in the Form 10-KSB for the year ended August 31, 2008.
This discussion has been restored to Item 8A.
o Finally, it does not appear that you disclosed any changes in your
internal control over financial reporting that occurred during your
last fiscal quarter that materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting. We refer you to Item 308T(b).
3
No changes were made during the 4th quarter. This discussion has
been restored to Item 8A.
Below you will find Item 8A in its entirety.
Item 8A(T). Controls and Procedures
Disclosure Controls and Procedures
At the end of the period covered by this report on Form 10-KSB/A for the year
ended August 31, 2008, an evaluation was carried out under the supervision of
and with the participation of the Company's management, including the Chief
Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the
effectiveness of the design and operations of the Company's disclosure controls
and procedures (as defined in Rule 13a - 15(e) and Rule 15d - 15(e) under the
Exchange Act). Based on that evaluation the CEO and the CFO concluded that the
Company's disclosure controls and procedures were ineffective in ensuring that:
(a) information required to be disclosed by the Company in reports that it files
or submits to the Securities and Exchange Commission under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in applicable rules and forms and (b) material information required to be
disclosed in our reports filed under the Exchange Act is accumulated and
communicated to our management, including our CEO and CFO, as appropriate, to
allow for accurate and timely decisions regarding required disclosure.
Management acknowledges: In Item 8A(T) of the 10KSB, the Company omitted
management's assessment of the effectiveness of internal control over financial
reporting for the fiscal year ended August 31, 2008, including a statement as to
whether or not internal control over financial reporting was effective in
accordance with Item 308(T)(a)(3) of Regulation S-B; and
The Company's management first discovered these reporting errors and omissions
on January 30, 2009, upon reviewing the 10KSB based on correspondence from the
SEC staff concerning the 10KSB. Accordingly, our CEO/CFO, determined that the
Company should rectify the reporting errors and omissions in the 10KSB
Statements and Management's Report by filing this amended 10KSB Report.
Due to the inadvertent omission, The Company determined Disclosure Controls and
Procedures were ineffective for the period ended August 31, 2008. The Company's
CEO/CFO has taken actions to address the ineffectiveness of and deficiencies in
the Company's disclosure controls and procedures and internal control over
financial reporting. Specifically, in February 2009, the Company's management
adopted additional review and disclosure systems designed to improve the
Company's system of internal control over financial reporting, including:
o An improved system for financial reporting to guide the Company's
compliance with the requirements of Regulation S-X. Specifically, the
Company's management has implemented procedures designed to ensure
that the Company's consolidated financial statements include all
required disclosures for all relevant periods. These procedures
include (a) maintaining an open dialogue with the Company's auditors
to ensure that the auditor's review of and report on the Company's
year-end financial statements is complete and satisfies all relevant
SEC rules and regulations; and (b) continuously reviewing the
Company's financial statements while drafting quarterly and annual
reports to ensure the statements have not been altered during the
preparation or filing of such reports.
4
o Amending the Relevant Statements and Management's Report in this Form
10-KSB/A in order to rectify the errors and omissions as stated above.
The Company's CEO/CFO believes that the effective implementation of the above
procedures will correct the weakness cited above in its Disclosure Controls and
Procedures and internal controls over financial reporting .The Company will
continue to review and monitor its Disclosure Controls and Procedures and
internal controls over financial reporting and will adopt further changes, if
and when management determines that such changes are necessary, to ensure
accuracy in the Company's future filings.
Management's Report on Internal Control Over Financial Reporting
The Company's management is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in Rules 13a-15(e)
under the Exchange Act. Our internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation and fair presentation of financial
statements for external purposes in accordance with generally accepted
accounting principles.
The term internal control over financial reporting is defined as a process
designed by, or under the supervision of, the registrant's principal executive
and principal financial officers, or persons performing similar functions, and
effected by the registrant's board of directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles and includes those policies and
procedures that:
(1) Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the
assets of the registrant;
(2) Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and
expenditures of the registrant are being made only in accordance with
authorizations of management and directors of the registrant; and
(3) Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the registrant's assets
that could have a material effect on the financial statements.
Internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems that are determined to be effective
provide only reasonable assurance with respect to financial statement
preparation and presentation. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
The Company's CEO/CFO conducted an evaluation of the design and operation of the
Company's internal control over financial reporting as of August 31, 2008, based
on the criteria in a framework developed by the Committee of Sponsoring
Organizations of the Treadway Commission. This evaluation included review of the
documentation of controls, evaluation of the design effectiveness of controls,
walkthroughs of the operating effectiveness of controls and a conclusion on this
evaluation. Based on this evaluation, the Company's CEO/CFO has concluded that
the Company's internal control over financial reporting was not effective.
5
This annual report does not include an attestation report of the company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the company's
registered public accounting firm pursuant to temporary rules of the Security
and Exchange Commission that permit the company to provide only management's
report in this annual report.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as
defined in Rule 13(a)-15(e)) that occurred during the fiscal quarter ended
August 31, 2008 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
Subsequent to August 31, 2008, changes were made in our internal control over
financial reporting, which changes are disclosed in "Disclosure Controls and
Procedures," above.
6
5. Please refer to prior comment 3. We note from your response that you
management continues to conclude that disclosure controls and procedures were
effective as of the end of the fiscal year. In our letter dated January 30,
2009, we asked you to consider whether management's failure to provide its
report on internal control over financial reporting impacts its conclusion
regarding the effectiveness of your disclosure controls and procedures as of the
end of the fiscal year. Please tell us the factors you considered and highlight
for us those factors that supported your conclusion. In particular, please
explain how you considered the definition of disclosure controls and procedures
provided in Rule 13a-15(e), which indicates that effective controls and
procedures would ensure that information required to be disclosed by the issuer
is recorded, processed, summarized and reported within the time periods
specified in the Commission's rules and forms. In addition, as discussed in
Compliance and Disclosure Interpretation 115.02, failure to file management's
report on Internal Control over Financial Reporting rendered your annual report
materially deficient and also rendered your report not timely or current in its
Exchange Act Reporting. In light of these facts, please explain how you could
conclude that disclosure controls and procedures were effective. Alternatively,
please further amend the 10-KSB to disclose management's revised conclusion on
the effectiveness of your disclosure controls and procedure, i.e. that DC&P were
not effective as of the end of the fiscal year.
The Company acknowledges that its disclosure controls and procedures were
not effective as of fiscal year ending August 31, 2008. The failure to file
management's report on Internal Control over Financial Reporting rendered
its annual report materially deficient and also rendered the company not
timely or current in its Exchange Act Reporting. The Company intends to
file an amended 10-KSB with the specific items mentioned in Comment 4.
The Company has taken actions to address the ineffectiveness of and
deficiencies in the Company's disclosure controls and procedures and
internal control over financial reporting. Specifically, the Company's
management has adopted additional review and disclosure systems designed to
improve the Company's system of internal control over financial reporting,
including:
o An improved system for financial reporting to guide the Company's
compliance with the requirements of Regulation S-X. Specifically,
the Company's management has implemented procedures designed to
ensure that the Company's consolidated financial statements
include all required disclosures for all relevant periods. These
procedures include (a) maintaining an open dialogue with the
Company's auditors to ensure that the auditor's review of and
report on the Company's year-end financial statements is complete
and satisfies all relevant SEC rules and regulations; and (b)
continuously reviewing the Company's financial statements while
drafting quarterly and annual reports to ensure the statements
have not been altered during the preparation or filing of such
reports.
o Amending the Relevant Statements and Management's Report in this
Form 10-KSB/A in order to rectify the errors and omissions as
stated above.
The Company believes that the effective implementation of the above
procedures has corrected the weakness cited above in its disclosure
controls and procedures and internal controls over financial reporting.
However, the Company will continue to review and monitor its disclosure
controls and procedures and internal controls over financial reporting and
will adopt further changes, if and when management determines that such
changes are necessary, to ensure accuracy in the Company's future filings.
7