CORRESP 1 filename1.htm

 

May 29, 2015

 

Celeste M. Murphy 

Division of Corporate Finance 

Securities Exchange Commission

 

Re:

Poverty Dignified 

Registration Statement on Form S-1 

Filed February 6, 2015 

File No. 333-201936

 

Dear Ms. Murphy,

 

Please see our response to your comments below.

 

General 

 

1. We note your response to Comment 2 and references throughout the filing to your first sale of a franchise on March 30, 2015 for $105,000.  It appears from your filing that you have not commenced performance under the terms of the disclosed sale and that the sold franchise has not begun business operations.  Please provide more information in your filing as to the details of the franchise sale and your legal reasoning as to how subsequent operations, if any, act as to not qualify you for shell company status.  In responding please also indicate if the sold franchise was the prototype My Power Solutions charging station, a different charging station other than the referenced prototype, or if the sold franchise was part of a different subsidiary enterprise. 

 

The section under “Our first microfranchise: My Power Solutions, Inc.” on page 26 was amended to read:

 

My Power Solutions, Inc. (“MPS”) was originally organized in the State of Nevada in 2014 and wholly owned by Poverty Dignified and is the first microfranchise proposed by the Company. On March 30, 2015, we sold our first franchise for $105,000 based on our Franchise and Trademark agreement for our prototype of the charging station in Africa designed by Poverty Dignified discussed below.

 

10617 Kettering Drive, Ste 219 

Charlotte, NC 28226 

UNITED STATES 

719.761.1869 

www.povertydignified.com

1

 

According to our Franchise and Trademark Agreement, once a franchisee has been approved and the purchase complete with a signed Franchise and Trademark Agreement and payment of the franchise fee, the site selection process begins. From this point forward, we as a company have a legal responsibility to assist with this process. As stated in Article 2, Section 2.2 Selection of Location for New Business: “If this Agreement is for a new Business, you agree to propose a location for your Business in the Territory within 90 days after the Agreement Date. Your proposed location must conform to our site selection guidelines and requirements and is subject to our approval.” Currently our first franchisee is completing the site location process. The very act of approving a new franchisee places a legal responsibility on the company to fulfill all its responsibilities as a franchisor under the Franchise Disclosure Document, and set in operation events such as the training program. Once the site location has been approved, training begins as stated in Article 5, Section 5.1 Training Programs: “If you (or, if applicable, your Operating Partner) have not previously attended and successfully completed our initial training program, then prior to opening or operating your Business, you (or your Operating Partner) must attend and successfully complete an initial training program on the operation of a My Power Solutions Business.” Once training is complete, the franchise unit is setup and equipped according to Article 7, Operating Standards, which includes all products and equipment being ordered and delivered and involves our procurement team operating in their roles and responsibilities to ensure the franchise business opens successfully and on time. Although it may take months for the franchise doors to open, operations officially commenced to fulfill our legal Franchisor responsibilities on March 30, 2015 with the sale of our first franchise.

 

According to CFR §230.405, the term shell company means a registrant, other than an asset-backed issuer as defined in Item 1101(b) of Regulation AB, that has:

 

(1) No or nominal operations; and

 

(2) Either:

 

(i) No or nominal assets;

 

(ii) Assets consisting solely of cash and cash equivalents; or

 

(iii) Assets consisting of any amount of cash and cash equivalents and nominal other assets.

 

The Commission does not define the term “nominal” as [it] believe[s] that this term embodies the principle that [the Commission] seeks to apply and is not inappropriately vague or ambiguous. Therefore, it is our belief that the sale of a franchise is evidence that the Company has operations that are more than the development of our business plan, research and development, and marketing and extends beyond “nominal operations” excluding the Company as a “shell company.”

 

Risk Factors, page 9

 

2. We note your responses to Comment 2 and Comment 5.  Please add a risk factor clarifying that the common stock being registered for resale will not be eligible for resale under Rule 144 until the conditions of Rule 144(i) are met.

 

10617 Kettering Drive, Ste 219 

Charlotte, NC 28226 

UNITED STATES 

719.761.1869 

www.povertydignified.com

2

 

We have added the following risk factor:

 

Sales of certain securities held by shareholders may not be sold under Rule 144 until the conditions of Rule 144(i) are met.

 

The securities sold in this offering can only be resold through registration under the Securities Act of 1933, Section 4(1), if available, for non-affiliates, or by meeting the conditions of Rule 144(i). When certain shares were issued to shareholders, the Company was deemed a shell as it had nominal assets in operations. Such shares bear a legend and may not be resold under Rule 144 until the conditions of Rule 144(i) are met. The conditions of Rule 144(i) will be met when the Company is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act; has filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and has filed current “Form 10 information” with the Commission reflecting its status as an entity that is no longer an issuer described in paragraph (i)(1)(i), then those securities may be sold subject to the requirements of this section after one year has elapsed from the date that the issuer filed “Form 10 information” with the Commission.

 

Description of Business

 

Model for Incubation, page 25

 

3. We note your incubation business model, which anticipates “PD tak[ing] a significant

 

minority share (up to 49%) in an incubated business and hold[ing] that stake indefinitely. PD is more inclined to remain as a minority shareholder than to sell an incubated business, but leaves its options open.” Please provide more information, and if material add additional risk factors, as to how your stake in incubated businesses operates. Please consider in your response:

 

·

If all incubated businesses become subsidiaries of Poverty Dignified; and

·

If management and affiliates will or can provide equity or other support to incubated businesses, independent of Poverty Dignified.

 

We have modified this section on page 25 to read as follows:

 

Poverty Dignified’s incubation model falls within two categories: 1) An existing business outside of the Poverty Dignified umbrella of wholly owned subsidiaries, that have not been able to capitalize their idea, concept or technology and desire to partner with Poverty Dignified through an incubation agreement; 2) An internal business idea, concept or technology birthed solely from within Poverty Dignified as a wholly owned subsidiary. When Poverty Dignified enters into an incubation agreement with a business outside of the Poverty Dignified umbrella of wholly owned subsidiaries, it seeks a significant minority share (up to 49%) and plans to hold that stake indefinitely. Such business will remain organizationally intact and will not be reorganized under the Poverty Dignified umbrella as a subsidiary. PD is more inclined to remain as a minority shareholder than to sell its position in the incubated businesses, but leaves its options open should selling its minority share and exiting be in the best interest of Poverty Dignified, Inc. and its shareholders. Management and affiliates will and can provide equity or other support to incubated businesses, but not independent of Poverty Dignified, Inc. When Poverty Dignified’s equity, support or resources are deployed in the incubation process, the company will be directly compensated for the resources consumed.

 

10617 Kettering Drive, Ste 219 

Charlotte, NC 28226 

UNITED STATES 

719.761.1869 

www.povertydignified.com

3

 

In consideration of the above, we have added the following risk factor on page 11:

 

We may take a minority stake in a company or concept as compensation for incubating a business. If we take a minority stake, we will lack control which will increase our risks of investment.

 

When Poverty Dignified enters into an incubation agreement with a business outside of the Poverty Dignified umbrella of wholly owned subsidiaries, it will mostly likely seek a significant minority share. Since it would be our intention to remain a minority stakeholder, we would lack control over the operations, resulting in increased risk of loss of our investment in such an incubated business. Therefore, it will be important to conduct lengthy due diligence on any business which intend to incubate. Despite a lengthy and thorough due diligence process, we may neglect to uncover certain facts or risks related to the incubated business.

 

Thank you for your time. Please direct future comments to our securities counsel at jillian@syndicationlawyers.com

 

Sincerely,

 

/s/ George Critz

Poverty Dignified, Inc. 

George Critz, CFO

 

cc: Jillian Sidoti 

Trowbridge Taylor Sidoti LLP

 

10617 Kettering Drive, Ste 219 

Charlotte, NC 28226 

UNITED STATES 

719.761.1869 

www.povertydignified.com

4