SecProbe.io

CORRESP
1
filename1.htm

    spresponse12023008.htm

    December
5, 2008

    BY EDGAR

    Norman
Gholson, Esq.

    Division
of Corporation Finance

    Securities
and Exchange Commission

    100 F
Street, N.E.

    Washington,
D.C. 20002

    Re:  SkyPeople
Fruit Juice, Inc.

    Amendment
No. 3 to Registration Statementon Form S-1

    File No.
333-149896

    Amendment
No. 2 Filed: October 6, 2008

    Dear Mr.
Gholson:

    Reference
is made to your comment letter, dated October 28, 2008 to our client, SkyPeople
Fruit Juice, Inc. (the “Company”), relating to Amendment No. 2 to the subject
registration statement (the “Comment Letter”). Set forth below are the comments
contained in the Comment Letter followed by our response thereto:

    General

    1.           You
will expedite the review process if you address each portion of every numbered
comment that appears in this letter. Provide complete responses and, where
disclosure has changed, indicate precisely where in the marked version of the
amendment we will find your responsive changes. Similarly, to minimize the
likelihood that we will reissue comments, please make corresponding changes
where applicable throughout your document. For example, we might comment on one
section or example in the document, but our silence on similar or related
disclosure elsewhere does not relieve you of the need to make similar revisions
elsewhere as appropriate.

    The
responses contained in this transmittal and response letter have been drafted in
a manner designed to comply with the first two sentences of the comment. Where
changes have been made in Amendment No. 3 to the subject registration statement
(“Amendment No. 3”) in response to a comment in the Comment Letter or for other
reasons, where appropriate, corresponding changes have been made throughout
other portions of Amendment No. 3 which address the same subject
matter.

        -1-

    Prospectus Summary - The
Company - Registration Rights Agreement, page 11

    2.           We
note your liquidated damages due and proposed accounting for those damages on
page F-10. Please quantify the estimated damages that will incurred under this
registration rights agreement as of the date of your filing.

    The
fourth paragraph of the subsection of the Prospectus Summary entitled
“Registration Rights Agreement” on page 10 of the prospectus contained in
Amendment No. 3 (the “Prospectus”) has been revised to quantify the estimated
damages that will incurred under the registration rights agreement as of the
approximate date of the filing of Amendment No. 3 as well as of December 31,
2008, an estimated date of effectiveness of the registration
statement.

    Prospectus Summary - Our
Corporate Structure, page 15

    3.           We
note that in the organizational chart of the company's structure, you have added
a footnote about a minority 8.85% equity interest held by Xi'an Qinmei Food Co.,
Ltd. in a subsidiary of the company. The footnote states that it relates to
"such company"; however, we do not see an asterisk in the chart or any other
mark in the chart to indicate which company is being referenced in the footnote.
Please revise and make corresponding revisions to the other places in the
document where the organizational chart appears, such as page 36 and page
F-6.

    An
asterisk has been added after 91.15% in the organizational chart contained in
the subsection of the Prospectus Summary entitled “Our Corporate Structure” on
page 14 of the Prospectus as well as the two other organizational structure
charts included in the Prospectus.

    Risk
Factors

    General

    4.           We
note your response to our prior comment 9 and reissue it. Specifically, we note
that in your Risk Factors you have not included a discussion of the covenant in
the Stock Purchase Agreement, discussed on pages 7 and 43 of the Prospectus,
pursuant to which you are not permitted to issue any preferred stock or
convertible debt for three years as long as Barron Partners LLP and Eos
Holdings, LLC continue to beneficially own 20% of the Series B Preferred Stock
issued under the Stock Purchase Agreement.

        -2-

    The
heading of the risk factor formerly called “Our inability to fund capital
expenditure requirements may adversely affect our growth and profitability” on
page 17 of the Prospectus has been expanded and a new second paragraph has been
added to the risk factor on page 18 of the Prospectus to disclose the negative
covenant as a risk.

    "We may have inadvertently
violated Section 402 ...," page 22

    5.           Please
advise as to whether the recipients of the loans paid interest or other
consideration to the company for the time value of the money that was
borrowed.

    The
second paragraph of the risk factor has been revised to state that no interest
or other consideration to the Company for the time value of the money that was
borrowed.

    Management's Discussion and
Analysis of Financial Condition and Results of Operations

    Results of Operations and
Business Outlook

    Gross Margin, page
39

    6.           Please
revise to disclose what factors contributed to your 100% gross margin from
kiwifruit seed sales for the six months ended June 30, 2008.

    We have
revised the third paragraph after the table in the “Gross Margin” subsection of
the “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” section on page 40 of the Prospectus to disclose the factor
contributing to the 90.8% gross profit margin on sales of kiwifruit seeds for
the nine months ended September 30, 2008.

    Business - Seasonality, page
54

    7.           We
note your response to our prior comment 22 and reissue it. For example, we note
that on page 54 you still refer to "the squeezing season from August through
February or March of the following year." Please revise as
appropriate.

    The
squeezing season for all fruits we process, other than kiwifruit, is from August
to February or March of the following year and this is stated consistently
throughout the Prospectus. The squeezing season for kiwifruit is from September
to January of the following year.

        -3-

    Business - Industry and
Principal Markets, pages 54-55

    8.           We
note your response to our prior comment 25. Supplementally, please provide us
with independent support for your assertions about the following topics, which
were not covered in your response to our prior comment 25:

              ·

              The
      countries with the current largest demand for concentrated apple juice
      include the United States, EU members, Japan and
  Russia.

    This
statement has been deleted from the Prospectus.

              ·

              The
      United States is the largest concentrated apple juice consuming country in
      the world, and the physical volume of trade of concentrated apple juice in
      the United States accounted for about 35% of the world's total in
      2006.

    This
statement has been deleted from the Prospectus.

              ·

              Concentrated
      apple juice from China accounted for approximately 47.7% of total
      consumption of concentrated apple juice in the United States in
      2005.

    This
statement has been deleted from the Prospectus.

              ·

              In
      2005, 39% of concentrated apple juice consumed in the European market was
      from China.

    This
statement has been deleted from the Prospectus.

              ·

              In
      China, the output of fruit juice and drinks nationwide was approximately
      4,816,824 tons in 2004, an increase of 27.95% compared with that in 2003,
      and output increased by 29.17% to 6,000,000 tons in 2005. From January to
      October 2006, output was approximately 7,196,692 tons, an increase of
      27.96% compared with that of the first 10 months of
  2005.

    This was
contained in an article entitled “China Fruit Juice Market Analysis and
Investment Consulting Report of 2007 published on the zikoo.com website: http://www.zikoo.com/payreport/article/23132.html

        -4-

              ·

              In
      2006, the export volume of concentrated apple juice by Shaanxi Province
      was approximately 2,910,000 tons with a value of $212 million, accounting
      for 44.9% and 46.3% of the total export volume and value, respectively, of
      concentrated apple juice from all of the
PRC.

    This
statement was published on the website of the Ministry of Commerce of the
People’s Republic of China: http://fec.mofcom.gov.cn/aarticle/xiangmht/bi/200603/20060301735197.html

              ·

              At
      present, the output, output value and export volume of concentrated juice
      of Shaanxi Province all rank first among other provinces and cities in
      China.

    This
statement was published on the website of the Ministry of Commerce of the
People’s Republic of China: http://fec.mofcom.gov.cn/aarticle/xiangmht/bi/200603/20060301735197.html

      If you
provide us with third party documents in response to this comment, you can
expedite our review process by marking by highlighting or other means those
portions of the document(s) that support the various assertions that appear in
your document.

    9.           We
note your response to our prior comment 26. We note that you did not state in
the Prospectus where investors may obtain a copy of the data from the United
States Department of Agriculture. Please revise to include this
information.

    A
hyperlink to the information on the United States Department of Agriculture
website has been added to the third paragraph of the “Global Market” subsection
of the “Business” section on page 57 of the Prospectus.

    Note 2. Summary of
Significant Accounting Policies

    Consolidation, page
F-6

        -5-

    10.           We
note your analysis supporting your conclusion that Huludao Wonder Fruit Co
("Huludao") is a variable interest entity ("VIE"). Please further explain how
you determined that you had a variable interest in Huludao pursuant to the
definition in paragraph 2.c of FIN 46(R) upon formation of Huludao. Please
clarify who owned the equity investment at risk in Huludao at formation and
clarify any material changes in the equity investment at risk up to June 10,
2008, the date you acquired Huludao. Clarify whether you held an equity
investment in Huludao, i.e., an equity interest that is required to be reported
as equity in Huludao's financial statements. If Hede owned all or a majority of
the equity in Huludao, please explain why they would not consolidate Huludao
pursuant to SFAS 94. In this respect, explain how you determined that Hede did
not control Huludao.

    On June
1, 2007 Hede acquired a controlling equity interest in Huludao, at which time
Huludao was considered to be redesigned. From that date until the Company
acquired the equity interest in Huludao from Hede, there were no changes in the
Huludao’s equity ownership. Hede, an entity under common control with the
Company, used funds borrowed from the Company to acquire Huludao with the
agreement and understanding that Hede would sell Huludao to the Company at
Hede’s purchase price after a brief operating period and that Hede could not
sell Huludao to any other party without the Company’s express consent. As such,
Hede acted as the Company’s de facto agent pursuant to FIN 46(R) paragraph 16.
By design, Hede had voting control of Huludao, but such control was intended to
be only temporary. Consequently, Hede should not consolidate Huludao pursuant to
the guidance in SFAS 94 paragraph 10. Since the Company’s eventual purchase
price of Huludao was determined at the time of Hede’s purchase of Huludao, the
Company’s loan to Hede for the purchase of Huludao was determined to be a
pecuniary interest in Huludao, an interest that would absorb all of Huludao’s
expected losses and receive all of Huludao’s expected returns. It was determined
that Huludao was more closely related to the Company than to Hede using the
criteria in FIN 46(R) paragraph 17, and consequently the Company determined to
consolidate Huludao.

    Please
consider that had the Company determined not to consolidate Huludao, subsequent
to the Company’s formal acquisition of Huludao from Hede, the Company would be
required to retroactively restate its financial statements to include Huludao’s
operations from the time of its acquisition by Hede in accordance with SFAS 141
paragraphs D11-18. Such reporting of a transfer of equity interests under common
control would have yielded identical operating results to those already reported
by the Company.

        -6-

    11.           With
respect to your analysis of FIN 46R, please further clarify the
following:

              ·

              Explain
      how Shaanxi Tianren participated significantly in the arrangement of the
      transaction.

              ·

              Explain
      why Shaanxi Tianren would be required to provide additional financial
      support to Hede. Clarify whether Shaanxi would be required to provide
      additional financial support to Hede based upon the contractual provisions
      of the loan agreement.

              ·

              Explain
      in detail the terms that or the lease agreement between Shaanxi Tianren
      and Hede and how this agreement was evaluated in your
      analysis.

              ·

              Explain
      why you assumed that Shaanxi Tianren would absorb the losses and receive
      the expected returns of Huludao if Shaanxi Tianren did not have an equity
      interest in Hulundao. Please provide your cash flow or other substantive
      analysis which supports this
conclusion.

    Hede and
Shaanxi Tianren are under common control and Shaanxi Tianren participated in the
redesign of Huludao through Hede who acted as de facto agent for Shaanxi
Tianren. Shaanxi Tianren advanced the purchase price of Huludao to Hede, which
advance represented a pecuniary interest in Huludao. The eventual purchase price
of Huludao by Shaanxi Tianren was predetermined to be the same as the price paid
by Hede, so Shaanxi Tianren’s advance to Hede ensured that Shaanxi Tianren would
absorb the expected losses and receive the expected returns of Huludao. Please
see also our response to comment #10.

    Revenue Recognition, page
F-8

    12.           We
note your response to our prior comment 45 and that you have no history of
returned
products. Please revise your disclosure to be more specific on how many
days a
customer has a contractual right of return and how management has concluded no
provision is necessary for returnable goods.

        -7-

    The
“Revenue Recognition” subsection of Note 2 to the Financial Statements on page
F-8 of the Prospectus as well as the “Revenue Recognition” subsection of the
“Critical Accounting Policies” subsection of the “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” section on page 51 of
the Prospectus have been revised to disclose such information

    Property, Plant and
Equipment, page F-9

    13.           Please
clarify the nature of your $2.6 million construction in progress asset. Explain
what asset you are currently constructing and how you have determined that it
will have future economic benefit.

    The
“Property, Plant and Equipment” subsection of Note 2 to the Financial Statements
on page F-9 of the Prospectus as well as the seventh and eighth paragraphs of
the “Financial Condition” subsection of the “ Management’s Discussion and
Analysis of Financial Condition and Results of Operations” section on pages 43
and 44 of the Prospectus have been revised to provide the requested
information.

    Minority Interest in
Subsidiary, page F-10

    14.           We
note your response to our prior comment 47. Please provide further analysis
supporting your conclusion that it is appropriate to