SEC Company Response from Idaho Copper Corp (COPR) (CIK 0001263364) (COPR) — Dec 28, 2010
Idaho Copper Corp (COPR) (CIK 0001263364)
Date: Dec. 28, 2010 · CIK: 0001263364 · Accession: 0001193125-10-288358
AI Filing Summary & Sentiment
File numbers found in text: 333-108715
Referenced dates: November 5, 2010
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Correspondence
G2 Ventures, Inc.
No. 2, Baowang Road, Baodi Economic Development Zone,
Tianjin, PRC 300180
December 23, 2010
John Reynolds
Assistant Director
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street NE
Washington, DC 20549
Re:
G2 Ventures, Inc.
Form 8-K
Filed on
October 7, 2010
File: 333-108715
Dear Mr. Reynolds:
This
letter responds to certain comments of the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) contained in the letter from the Staff to G2 Ventures, Inc. (the “Company”) dated
November 5, 2010.
For your convenience, we have included each of the Staff’s comments in italics before each of the
Company’s responses. References in this letter to “we,” “our” or “us” mean the Company or its advisors, as the context may require.
Entry into a Material Definitive Agreement, page 5
Staff Comment 1.
We note your short descriptions of your VIE agreements on pages five and seven. Please revise to provide a description of all of the material terms of these agreements.
Response: The Company will file an amendment to its Current Report on Form 8-K (the “8-K Amendment”) to enhance
its disclosure to describe all of the material terms of the VIE Agreements. See Exhibit A for the text of the revised disclosure.
Staff Comment 2. We note your disclosure on page six that you entered into the VIE arrangements because “it was not feasible
for us to acquire PRC companies for cash pursuant to PRC laws and regulations. . .” Please revise the appropriate places in the current report to clearly describe the regulatory regime that made it more feasible for the Company to use the VIE
arrangements instead of cash.
Response: The 8-K Amendment will enhance the Company’s disclosure to
describe the regulatory regime that made it more feasible for the Company to use the VIE arrangements. See Exhibit A for the text of the revised disclosure.
Staff Comment 3. The disclosure on page 5 indicates that the Consulting Services Agreement provides Junhe Consulting with the right to “advise, consult, manage and operate
Joway Group.” However, exhibit 10.2 states that Junhe Consulting will provide advice and assistance. Please reconcile the disclosure.
John Reynolds
Assistant Director
Securities and Exchange Commission
December , 2010
Page
2
Response: The 8-K Amendment will reconcile the disclosure to the terms of
Exhibit 10.2. See our response to Staff Comment 1 above.
Staff Comment 4. Please provide a discussion of the
consideration provided to the shareholders of Joway Group for entering into the VIE agreements. In addition, we note that Zhang Jinghe signed these agreements for both parties to the transaction. Please disclose whether Joway Group and Junhe
Consulting were under common control at the time these agreements were entered into. Please also provide a more detailed discussion of the reasons for these agreements. We also note that Zhang Jinghe signed the Share Exchange Agreement on behalf of
G2 Ventures. Please explain his relationship with G2 Ventures and/or Crystal Globe at or prior to entering into these agreements.
Response: The 8-K Amendment will enhance the Company’s disclosure to include a discussion of the consideration provided to the shareholders of Joway Group and to clarify Zhang
Jinghe’s relationship with G2 Ventures and Crystal Globe at or prior to entering into these agreements. See Exhibit A for the text of the revised disclosure.
Staff Comment 5. Please disclose the material terms of the option agreement. We note that the purchase price of the equity interest is equal to the capital paid in by the
transferors. Please clarify the amount of capital paid by the shareholders of the Joway Group.
Response:
The 8-K Amendment will disclose the material terms of the option agreement. See our response to Staff Comment 1 above. The amount of paid-in capital of Joway Group is RMB 50 million (approximately USD $7.52 million). See Exhibit A
for the text of the revised disclosure.
Staff Comment 6. Please clarify the role of Lionel Even Liu
and Crystal Globe Ltd. For example, please clarify whether Mr. Liu and/or Crystal Globe Ltd. were involved with the founding, operation or ownership of the Joway Group or any of its operating subsidiaries, directly or indirectly. Also, please
clarify whether Mr. Liu has any role other than as an investor. Lastly, please disclose any relationships, connections or agreements between Crystal Globe and Zhang Jinghe.
Response: The disclosure under the heading Corporate Structure and History shall be revised to clarify Mr. Liu’s
and Crystal Globe’s relationship to the Joway Group and its subsidiaries. See Exhibit A for the text of the revised disclosure.
Corporate Structure and History, page 6
Staff Comment 7. Please provide a clear discussion of the various transactions in your corporate history, including a discussion
of the relationships between the entities at the time of the transactions.
Response: See our response to
Staff Comment 6 above.
Staff Comment 8. Please revise to disclose the July 9, 2010, July 25, 2010, and
July 28, 2010 transactions where the Joway Group purchased minority interests of Joway Decoration, Joway Technology, and Shengtang Trading from Chen Jingyun and Wang Aiying, as described on pages F-6 and
John Reynolds
Assistant Director
Securities and Exchange Commission
December , 2010
Page
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F-7 of your fiscal year end financial statements. Also, please clarify the role of Chen Jingyum and Wang Aiying as to the Company or its subsidiaries. We note that you lease property from
Mr. Aiying according to Exhibit 10.9. Further, please file the agreements related to these stock purchases as exhibits, pursuant to Item 601 of Regulation S-K.
Response: We will file the agreements pursuant to which the Joway Group acquired the minority interests of Joway Decoration, Joway Technology, and Shengtang Trading. Jingyun Chen is General
Manager and Executive Director of Joway Technology and Joway Decoration. Aiying Wang currently is not in any significant role in the Company nor its subsidiaries, but a staff member of Shengtang Trading.
Staff Comment 9. Please provide the basis for your belief on page seven that the terms of the VIE Agreements are no less
favorable than what could be obtained from third parties or remove. It appears that these transactions were all related party transactions.
Response: As these transactions were related-party transactions, the Company will remove the statement that the terms of the VIE Agreements are no less favorable than what could be obtained
from third parties.
Staff Comment 10. We note the statement that PRC counsel believes that your conduct of business
through these agreements complies with existing PRC laws, rules and regulations. Please provide the consent of counsel for this statement. Also, clarify whether counsel provided you with an opinion. If so, please file as an exhibit.
Response: The Company’s PRC counsel issued an opinion dated October 1, 2010 that opines, among other things, that
the consummation of the contractual arrangements set forth in the VIE Agreements will not violate any provision of applicable PRC Law. A copy of the legal opinion will be filed as an exhibit to the 8-K Amendment, together with the consent of
counsel.
Staff Comment 11. We note the disclosure on page eight that you received a certificate of approval on
September 9, 2010 from the local PRC government regarding the foreign ownership of Junhe Consulting by Dynamic Elite. Please disclose the regulations under which such approval was obtained.
Response: The certificate of approval did not cite the specific regulations under which such approval
was granted, however, we believe such approval was granted pursuant to the Law of the People’s Republic of China on Wholly Foreign-Owned Enterprises (adopted April 12, 1986 at the 4th Sess. of the 6th National People’s Congress and as amended on October 31, 2000). We will cite this regulation in the 8-K
Amendment.
Description of Business, page 9
Staff Comment 12. Please provide us supplementally with copies of the sources cited throughout the business section, including the Niwa Institute for Immunology study referred to
on page nine. In addition, we note that the courses cited discuss the tourmaline gemstone; however, we note that you purchase liquid tourmaline for use in your product. Please clarify whether there are any studies relating to the benefits of liquid
tourmaline.
John Reynolds
Assistant Director
Securities and Exchange Commission
December , 2010
Page
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Response: We will provide the SEC supplementally with copies of sources
cited for the benefits of tourmaline.
Staff Comment 13. Please clarify whether you have a website. If so, please
provide the web address.
Response: The Company is in the process of constructing a new company website, and
we will provide that in SEC filings when it is completed.
Staff Comment 14. In addition, we note that one of your
principal suppliers has a website where it refers to itself as Joway Group. See, http://en.joway.cn/page/html/index.php. Please disclose all material connections between the two companies and discuss any confusion that may be created due to
both companies using the name “Joway Group.”
Response: This URL belongs to the Company and used
to be the Company’s website. However, it has been abandoned since the Company is currently constructing a new Company website. See Answer to Staff Comment 13 above.
Staff Comment 15. We note your disclosure on page 9 regarding the specific benefits of tourmaline and that tourmaline has “powerful health benefits.” Please revise to
provide the basis for these statements. For example, please indicate whether any scientific studies have been performed concerning the health benefits of tourmaline or would otherwise support these health claims. We note other claims made elsewhere
in this section. Please provide the basis for those statements. We may have further comment.
Response: See
our response to Staff Comment 12 above.
Staff Comment 16. We note the Percentage of Sales column for your “Top
Ten Customers in 2008” table on page 13. Some of the percentages do not appear to be accurate. Please revise accordingly.
Response: We have revised our disclosure in the 8-K amendment to correct this table. A copy of our revised disclosure is set forth in Exhibit B.
Staff Comment 17. We note the disclosure on page 16 that approximately 72% of sales were made through franchise stores. Please
disclose that material terms of the franchise arrangements and file that standard franchise agreement as an exhibit.
Response: We will file the standard franchise agreement as an exhibit to the 8-K Amendment. In addition, we will revise our
disclosure in the 8-K Amendment to disclose the material terms of our franchise agreements as follows:
The Company enters
into franchising agreements to develop retail outlets for the Company's products. The agreements provide that franchisees will sell Company products exclusively. In exchange the Company provides them with geographic exclusivity, discounted product,
training and support. The agreements also require franchisees to adhere to certain standards of product merchandising, promotion and presentment. The agreements also require franchisees to charge certain minimum sales prices, and prohibit them from
selling competitor’s products. The agreements do not require any initial franchise fees from the franchisees, nor do they require the franchisees to pay continuing royalties. The agreements do
John Reynolds
Assistant Director
Securities and Exchange Commission
December , 2010
Page
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not require the franchisees to purchase any minimum levels of product, but do require that they make at least one purchase during each year. The Company does not act to manage the
franchisees’ levels of product. Franchisees hold periodic conferences, assisted by the Company’s marketing department, to promote product awareness and the introduction of new products. The franchising agreements are generally for terms of
three years and are renewable at the mutual agreement of both parties. The franchising agreements are cancelable at the Company’s discretion if franchisees violate the terms of the agreements.
Staff Comment 18. We note your discussion regarding China’s “Eleventh Five-Year Plan (2006-2010)” concerning
China’s efforts to support the PRC healthcare industry. Please clarify the relevance of this disclosure, including whether any of these initiatives would involve the purchasing or subsidizing the use of tourmaline healthcare products. It is
unclear whether your products are used, endorsed, or supported by the traditional healthcare industry, such as hospitals, medical doctors, research centers, etc. If not, then please remove this disclosure or revise to provide a more focused
discussion of the industry relating to your health products.
Response: We will revise our disclosure in the
8-K Amendment to remove this discussion.
Staff Comment 19. Please clarify whether your marketing efforts, and those
of your franchisees, are directed directly towards the end user, or intermediaries like healthcare professionals like doctors, hospitals, or other healthcare facilities.
Response: We will revise our disclosure in the 8-K Amendment to clarify the focus of our marketing efforts as follows:
Our primary marketing strategies are directed towards both our franchisees and end users, and the marketing efforts of our franchisees
are directed towards end users. The Company assists franchisees on monthly product introduction seminars, which are open to both our franchisees and to the general public. We also host an annual conference, which is open to both our franchisees and
to the general public. For example, in 2009, in connection with our annual conference we sponsoredan episode of Our Chinese Heart, a well-known international original Chinese song concert series hosted by China Central Television, which was
broadcasted internationally.
Staff Comment 20. Please provide the basis for your belief that you are one of the first
few Chinese tourmaline health product companies who possess leading tourmaline particle attachment technology or remove.
Response: We will revise our disclosure in the 8-K Amendment to remove this statement.
Staff Comment 21. Please clarify your competitive position in your industry, as required by Item 101(h)(4)(iv) of Regulation
S-K.
Response: We will revise our disclosure in the 8-K Amendment to clarify the Company’s competitive
position in the industry.
John Reynolds
Assistant Director
Securities and Exchange Commission
December , 2010
Page
6
Staff Comment 22. Please revise to clarify how the State Food and Drug
Administration regulates tourmaline related healthcare products and whether any of your products require approval before you can sell your products. Provide the disclosure required by Items 101(h)(4)(viii) and (xi) of Regulation S-K.
Response: The PRC State Food and Drug Administration is responsible for (i) regulating the research
and development, manufacturing, distribution and utilization of drugs; (ii) supervising and coordinating the safety management of food, health food and cosmetics; and (iii) investigating serious accidents with respect to the foregoing. The
products we manufacture are not regulated by the SFDA as they are not drugs, diet supplements or food consumed by humans. There are no existing laws or regulations in China governing the manufacture and sale of tourmaline health care products such
as those sold by the Company nor are there any inspection requirements applicable to our products.
We act as a distributor
for two products—Xin-Nao-Ling Fish Oil Soft Gel and Zhi-Li-Bao Fish Oil Soft Gel, whic