SEC Company Response from NUWAVE TECHNOLOGIES INC (CIK 0001009802) — Oct 28, 2005
NUWAVE TECHNOLOGIES INC (CIK 0001009802)
Date: Oct. 28, 2005 · CIK: 0001009802 · Accession: 0001144204-05-033090
AI Filing Summary & Sentiment
File numbers found in text: 000-28606
Referenced dates: August 25, 2005
Letter
October 28, 2005 VIA FACSIMILE AND EDGAR ----------------------- Mr. Jorge Bonilla Senior Staff Accountant Division of Corporate Finance United States Securities and Exchange Commission 450 Fifth Street, N. W. Washington, D.C. 20549-0407
Re: Nuwave Technologies, Inc. Form 10-KSB for the Fiscal Year Ended December 31, 2004 Form 10-QSB for the Fiscal Quarter Ended June 30, 2005 File No. 000-28606
Dear Mr. Bonilla:
We have received your letter dated August 25, 2005. Please find our responses to your comments, as follows.
Form 10-KSB
Item 8A - Controls and Procedures, pages A-22 - A23
COMMENT 1: We note your statement that the chief executive officer and chief financial officer have concluded that the Company's disclosure controls and procedures did contain a material weakness. It remains unclear how you considered the identified material weakness in reaching the conclusion that your disclosure controls and procedures are effective. If true, you can state the your disclosure controls and procedures are effective including consideration of the identified matters, so long as you provide appropriate disclosure explaining how the disclosure controls and procedures were determined to be effective in light of the identified matters. Or, if true, you can state that given the identified matters, your disclosure controls and procedures are not effective. Please revise as appropriate.
RESPONSE: Please be advised that effective August 31, 2005, subsequent to the date of the filing of our Form 10-KSB, our Company was merged with Corporate Strategies, Inc., pursuant to a merger agreement dated August 31, 2005, as reported on Form 8-K on August 31, 2005. Pursuant to the merger, Mr. George D. Kanakis has resigned as the sole officer of the Company. Mr. Timothy J. Connolly and Mr. A. P. Shukis have replaced Mr. Kanakis as Chief Executive Officer and Chief Financial Officer, respectively. In our response herein, we shall respond to your comments with respect to the disclosure controls and procedures of the Company both before and after the August 31, 2005 merger. <PAGE>
Mr. Jorge Bonilla October 28, 2005 Page 2
We have added additional language (see underlined text below) to clarify that prior to the August 31, 2005 merger of our Company, our principal executive officer has relied on compensating factors to reach the conclusion that our disclosure controls and procedures are effective. For the period after the effect of the merger, Mr. Timothy J. Connolly has performed the duties of the Company's Chief Executive Officer. In addition, after the merger, Mr. Shukis, shall perform the duties of Chief Financial Officer, supported by an Accounting Manager. Mr. Connolly and Mr. Shukis have assumed the responsibilities for the Company's ongoing accounting and reporting, including reporting to the Securities and Exchange Commission.
Therefore, in accordance with our response to you, our Item 8A of our Form 10-KSB for the year ended December 31, 2004 has been modified as follows:
"The Company's principal executive officer, who is also the acting principal financial officer, has evaluated the effectiveness of the Company's "disclosure controls and procedures," as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this Annual Report on Form 10-KSB/A. The evaluation process, including the inherent limitations on the effectiveness of such controls and procedures is more fully discussed below. Based upon his evaluation, the principal executive officer, who is also the acting principal financial officer, has concluded that the Company's disclosure controls and procedures, did contain a material weakness.
This material weakness is the lack of the necessary corporate accounting resources. At the current time, the Company's Chief Executive Officer, who is one of only two of the Company's full time employees, solely has the responsibility for receipts and disbursements. The Company employs a financial consultant to prepare the periodic financial statements and public filings. Reliance on these limited resources impairs our ability to provide for a proper segregation of duties and the ability to ensure consistently complete and accurate financial reporting, as well as disclosure controls and procedures. Our Company's Chief Executive Officer has concluded that the disclosure controls and procedures are effective, even though there is the foregoing material weakness. This conclusion is based upon the following factors: (1) the business experience of our Chief Executive Officer, (2) The effective utilization of a senior level financial consultant and (3) the limited scope of our operations at this early stage in the Company's development. As the Company grows, and as resources permit, we project that the Company's Chief Executive Officer will hire such additional competent financial personnel to assist in the segregation of duties with respect to financial reporting, and Sarbanes-Oxley Section 404 compliance. <PAGE>
Mr. Jorge Bonilla October 28, 2005 Page 3
We believe that, for the reasons described above, we will be able to improve our financial reporting and disclosure controls and procedures and remedy the material weakness identified above. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, will be or have been detected.
Further, effective August 31, 2005, subsequent to the date of the filing of our Form 10-KSB, our Company was merged with Corporate Strategies, Inc. This merger was pursuant to a merger agreement dated August 31, 2005, as reported on our Form 8-K on August 31, 2005. Pursuant to the merger, Mr. George D. Kanakis, our President and CEO, has resigned as the sole officer of the Company. Mr. Timothy J. Connolly and Mr. A. P. Shukis have replaced Mr. Kanakis as Chief Executive Officer and Chief Financial Officer, respectively. Our Chief Executive Officer and our Chief Financial Officer, believe that the Company's disclosure controls and procedures, although still containing the above described material weakness, have been improved and for the reason outlined above, remain effective. "
COMMENT 2: We note your disclosure that "except as described above, there have been no significant changes in our internal controls..." You should state clearly, if correct, that there were changes in your internal control over financial reporting that occurred during this quarter that have materially affected or are reasonably likely to materially affect, your internal control over financial reporting. <PAGE>
Mr. Jorge Bonilla October 28, 2005 Page 4
RESPONSE: There were no significant changes in our internal controls over financial reporting during the reporting period. As such, we have deleted the phrase "Except as described above" from Item 8A on Form 10-KSB for the year ended December 31, 2004 and the new paragraph reads as follows:
"[deleted text- "Except as described above"] There were no significant changes in our internal controls over financial reporting that occurred during the year ended December 31, 2004 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting."
Note 5 - Land Held for Development and Sale
COMMENT 3: We note that you recognized a gain on the sale of land to a related party to Michael Kesselbrenner. Please explain to us the nature of the relationship between the buyer and Michael Kesselbrenner and provide us information that supports the following:
o The sales price is reasonable and objectively supportable.
o The buyer is independent and has economic substance.
o You are not required to support the property sold.
RESPONSE: Michael Kesselbrenner and one (1) other investor are partners in a real estate investment firm which was the buyer in the sale of the land. The buyer purchased a twenty percent (20%) interest in the undeveloped real estate for which, at that time of purchase, the Company intended to develop into a community for persons over the age of fifty-five (55). The buyer expected to benefit from the enhanced value of the underlying real estate upon the completion of the development of such a residential community. Michael Kesselbrenner is a prominent cardiac surgeon in the local area, and is an individual of substantial economic substance and wealth. Furthermore, Michael Kesselbrenner is an experienced investor in real estate and the buyer is independent of the Company. The agreement of sale with the buyer provides that the buyer has purchased the interest in the land assuming all of the risks of ownership. The Company's Board of Directors believes that the sales price of the interest in the land was reasonable, that the price was determined in an open market and that the transaction was negotiated between a willing buyer and a willing seller, with neither party under undue duress. Further, we believe that the buyer is of sufficient economic substance and wealth that there would be no expectation for the Company to support the property sold. <PAGE>
Mr. Jorge Bonilla October 28, 2005 Page 5
In regard to Comments No. 1 and No. 2, we have on this same date submitted the following amended filings with the Securities and Exchange Commission:
o Form 10-KSB for the Year Ended December 31, 2004
o Form 10-QSB for the Fiscal Quarter Ended March 31, 2005
o Form 10-QSB for the Fiscal Quarter Ended June 30, 2005
We trust that this response satisfactorily responds to your request. Should you require further information, please contact Howard Yeaton at (201) 970-3951, Matthew Ogurick at (305) 539-3352 or myself at (713) 621-2737.
Thank you very much for your consideration of this response.
Very truly yours,
/s/ Timothy J. Connolly
--------------------------------------
Timothy J. Connolly
Chief Executive Officer
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Nuwave Technologies, Inc.
109 N. Post Oak Lane
Suite 422
Houston, Texas 77024
October 28, 2005
VIA FACSIMILE AND EDGAR
-----------------------
Mr. Jorge Bonilla
Senior Staff Accountant
Division of Corporate Finance
United States Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D.C. 20549-0407
Re: Nuwave Technologies, Inc.
Form 10-KSB for the Fiscal Year Ended December 31, 2004
Form 10-QSB for the Fiscal Quarter Ended June 30, 2005
File No. 000-28606
Dear Mr. Bonilla:
We have received your letter dated August 25, 2005. Please find our responses to
your comments, as follows.
Form 10-KSB
Item 8A - Controls and Procedures, pages A-22 - A23
COMMENT 1: We note your statement that the chief executive officer and
chief financial officer have concluded that the Company's
disclosure controls and procedures did contain a material
weakness. It remains unclear how you considered the identified
material weakness in reaching the conclusion that your
disclosure controls and procedures are effective. If true, you
can state the your disclosure controls and procedures are
effective including consideration of the identified matters, so
long as you provide appropriate disclosure explaining how the
disclosure controls and procedures were determined to be
effective in light of the identified matters. Or, if true, you
can state that given the identified matters, your disclosure
controls and procedures are not effective. Please revise as
appropriate.
RESPONSE: Please be advised that effective August 31, 2005, subsequent to
the date of the filing of our Form 10-KSB, our Company was
merged with Corporate Strategies, Inc., pursuant to a merger
agreement dated August 31, 2005, as reported on Form 8-K on
August 31, 2005. Pursuant to the merger, Mr. George D. Kanakis
has resigned as the sole officer of the Company. Mr. Timothy J.
Connolly and Mr. A. P. Shukis have replaced Mr. Kanakis as Chief
Executive Officer and Chief Financial Officer, respectively. In
our response herein, we shall respond to your comments with
respect to the disclosure controls and procedures of the Company
both before and after the August 31, 2005 merger.
<PAGE>
Mr. Jorge Bonilla
October 28, 2005
Page 2
We have added additional language (see underlined text below) to
clarify that prior to the August 31, 2005 merger of our Company,
our principal executive officer has relied on compensating
factors to reach the conclusion that our disclosure controls and
procedures are effective. For the period after the effect of the
merger, Mr. Timothy J. Connolly has performed the duties of the
Company's Chief Executive Officer. In addition, after the
merger, Mr. Shukis, shall perform the duties of Chief Financial
Officer, supported by an Accounting Manager. Mr. Connolly and
Mr. Shukis have assumed the responsibilities for the Company's
ongoing accounting and reporting, including reporting to the
Securities and Exchange Commission.
Therefore, in accordance with our response to you, our Item 8A
of our Form 10-KSB for the year ended December 31, 2004 has been
modified as follows:
"The Company's principal executive officer, who is also the
acting principal financial officer, has evaluated the
effectiveness of the Company's "disclosure controls and
procedures," as such term is defined in Rule 13a-15(e) of
the Securities Exchange Act of 1934, as amended, as of the
end of the period covered by this Annual Report on Form
10-KSB/A. The evaluation process, including the inherent
limitations on the effectiveness of such controls and
procedures is more fully discussed below. Based upon his
evaluation, the principal executive officer, who is also the
acting principal financial officer, has concluded that the
Company's disclosure controls and procedures, did contain a
material weakness.
This material weakness is the lack of the necessary
corporate accounting resources. At the current time, the
Company's Chief Executive Officer, who is one of only two of
the Company's full time employees, solely has the
responsibility for receipts and disbursements. The Company
employs a financial consultant to prepare the periodic
financial statements and public filings. Reliance on these
limited resources impairs our ability to provide for a
proper segregation of duties and the ability to ensure
consistently complete and accurate financial reporting, as
well as disclosure controls and procedures. Our Company's
Chief Executive Officer has concluded that the disclosure
controls and procedures are effective, even though there is
the foregoing material weakness. This conclusion is based
upon the following factors: (1) the business experience of
our Chief Executive Officer, (2) The effective utilization
of a senior level financial consultant and (3) the limited
scope of our operations at this early stage in the Company's
development. As the Company grows, and as resources permit,
we project that the Company's Chief Executive Officer will
hire such additional competent financial personnel to assist
in the segregation of duties with respect to financial
reporting, and Sarbanes-Oxley Section 404 compliance.
<PAGE>
Mr. Jorge Bonilla
October 28, 2005
Page 3
We believe that, for the reasons described above, we will be
able to improve our financial reporting and disclosure
controls and procedures and remedy the material weakness
identified above. Because of the inherent limitations in all
control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of
fraud, if any, will be or have been detected.
Further, effective August 31, 2005, subsequent to the date
of the filing of our Form 10-KSB, our Company was merged
with Corporate Strategies, Inc. This merger was pursuant to
a merger agreement dated August 31, 2005, as reported on our
Form 8-K on August 31, 2005. Pursuant to the merger, Mr.
George D. Kanakis, our President and CEO, has resigned as
the sole officer of the Company. Mr. Timothy J. Connolly and
Mr. A. P. Shukis have replaced Mr. Kanakis as Chief
Executive Officer and Chief Financial Officer, respectively.
Our Chief Executive Officer and our Chief Financial Officer,
believe that the Company's disclosure controls and
procedures, although still containing the above described
material weakness, have been improved and for the reason
outlined above, remain effective. "
COMMENT 2: We note your disclosure that "except as described above, there
have been no significant changes in our internal controls..."
You should state clearly, if correct, that there were changes in
your internal control over financial reporting that occurred
during this quarter that have materially affected or are
reasonably likely to materially affect, your internal control
over financial reporting.
<PAGE>
Mr. Jorge Bonilla
October 28, 2005
Page 4
RESPONSE: There were no significant changes in our internal controls over
financial reporting during the reporting period. As such, we
have deleted the phrase "Except as described above" from Item 8A
on Form 10-KSB for the year ended December 31, 2004 and the new
paragraph reads as follows:
"[deleted text- "Except as described above"] There were no
significant changes in our internal controls over financial
reporting that occurred during the year ended December 31,
2004 that have materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting."
Note 5 - Land Held for Development and Sale
COMMENT 3: We note that you recognized a gain on the sale of land to a
related party to Michael Kesselbrenner. Please explain to us the
nature of the relationship between the buyer and Michael
Kesselbrenner and provide us information that supports the
following:
o The sales price is reasonable and objectively
supportable.
o The buyer is independent and has economic substance.
o You are not required to support the property sold.
RESPONSE: Michael Kesselbrenner and one (1) other investor are partners in
a real estate investment firm which was the buyer in the sale of
the land. The buyer purchased a twenty percent (20%) interest in
the undeveloped real estate for which, at that time of purchase,
the Company intended to develop into a community for persons
over the age of fifty-five (55). The buyer expected to benefit
from the enhanced value of the underlying real estate upon the
completion of the development of such a residential community.
Michael Kesselbrenner is a prominent cardiac surgeon in the
local area, and is an individual of substantial economic
substance and wealth. Furthermore, Michael Kesselbrenner is an
experienced investor in real estate and the buyer is independent
of the Company. The agreement of sale with the buyer provides
that the buyer has purchased the interest in the land assuming
all of the risks of ownership. The Company's Board of Directors
believes that the sales price of the interest in the land was
reasonable, that the price was determined in an open market and
that the transaction was negotiated between a willing buyer and
a willing seller, with neither party under undue duress.
Further, we believe that the buyer is of sufficient economic
substance and wealth that there would be no expectation for the
Company to support the property sold.
<PAGE>
Mr. Jorge Bonilla
October 28, 2005
Page 5
In regard to Comments No. 1 and No. 2, we have on this same date submitted the
following amended filings with the Securities and Exchange Commission:
o Form 10-KSB for the Year Ended December 31, 2004
o Form 10-QSB for the Fiscal Quarter Ended March 31, 2005
o Form 10-QSB for the Fiscal Quarter Ended June 30, 2005
We trust that this response satisfactorily responds to your request. Should you
require further information, please contact Howard Yeaton at (201) 970-3951,
Matthew Ogurick at (305) 539-3352 or myself at (713) 621-2737.
Thank you very much for your consideration of this response.
Very truly yours,
/s/ Timothy J. Connolly
--------------------------------------
Timothy J. Connolly
Chief Executive Officer
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