SEC Company Response from Sibannac, Inc. (SNNC) (CIK 0001313938) (SNNC) — Oct 6, 2005
Sibannac, Inc. (SNNC) (CIK 0001313938)
Date: Oct. 6, 2005 · CIK: 0001313938 · Accession: 0001004878-05-000153
AI Filing Summary & Sentiment
File numbers found in text: 333-122009
Referenced dates: February 11, 2005
Letter
Re: Naprodis, Inc. Registration Statement on Form SB-2 File No. 333-122009
HART & TRINEN Attorneys at Law
1624 Washington Street Denver, Colorado 80203 (303) 839-0061 (303) 839-5414 (fax)
October 5, 2005
Adam Halper Mail Stop 4-6 Securities and Exchange Commission Division of Corporation Finance 100 F Street, NE Washington, DC 20549
This office represents Naprodis, Inc. (the "Company"). Amendment No. 2 to the Company's registration statement has been filed with the Commission. This letter contains the Company's responses to the comments received from the Staff by letter dated February 11, 2005. The paragraph numbers in this letter correspond with the numbered paragraphs in the Staff's comment letter. A numerical reference next to a response indicates the page where changes have been made in response to the comment. Page Reference
1. Once a trading market develops it is possible that the share price of the Company's common stock will be adversely affected due to sales by the selling shareholders. It is for this reason that the Risk Factor # 1 is part of the registration statement. N/A
2. As of the date of this letter the Company had not filed any applications with any state securities agency. N/A
3. Comment complied with. 21
4. We have removed the reference to options or warrants in the disclosure pertaining to Rule 416. 2
5. The Company does not plan to distribute the prospectus prior to the effective date of the registration statement. N/A
6. Comment complied with. 1
7. Comment complied with. 1
<PAGE>
Page Reference
8. Comment complied with. 1
9. Information concerning shares outstanding has been revised to August 31, 2005. 2
10. Comment complied with. 4
11. In the copy of the prospectus which will be distributed to investors all risk factors will be numbered and the headings will be in bold face. N/A
12. We have revised the Risk Factor section of the prospectus. However, in our opinion, the fact that a risk factor may be generic (i.e. the fact that the Company will need to eventually earn a profit to continue operating) does not lessen its importance as a material risk that should be disclosed to investors. 4, 5
13. We have added some of the risks which are requested by this comment. However the following risks requested by this comment have not been added 4, 5, 8, 26
o The limited experience of Paul Petit in accounting and finance. We have disclosed in the Management section of the prospectus that Paul Petit has experience in accounting and finance.
o The ability of the Company to suspend its reporting obligations. The Company has no intention of suspending its reporting obligations after the first year that the registration statement is effective.
o The Company's involvement in a direct public offering. We do not know of any risks involved in the Company conducting a direct public offering.
14. We have disclosed in the prospectus that suppliers of the Company's raw materials are readily available. As a result we have removed the risk factor which is the subject of this comment. 5
15. Comment complied with. 6, 7
16. Comment complied with. 7
<PAGE>
Page Reference
17. We have modified the sections of the prospectus which are the subject of this comment. Any events or uncertainties that may be expected to have a material impact on the Company's revenues are disclosed in the Risk Factor section of the prospectus. 10, 11
18. We have removed the risk relating to the evironmental regulation of the Company's manufacturing process. The Company does not know of any environmental regulations directly pertaining to its business. 5
19. Comment complied with. 12
20. The Company's sales efforts in Canada and foreign countries are identical to its sales efforts in the United States. We have disclosed in the prospectus that the Company's marketing program consists of referrals from other companies and information on the Company's website. 11
21. The Company does not have any difficulty in obtaining raw materials. Accordingly, the Company does not believe that additional disclosure on this subject would be material to an investor. N/A
22. Comment complied with. 8
23. We have modified the chart which is the subject of this comment. 12
24. The full name and location of the supplier of the nebulizer has been added to the prospectus. The Company does not customize the nebulizer in any respect. 13
25. Comment complied with. 14
26. Comment complied with. 13
27. Comment complied with. 15
28. Comment complied with. 16
29. Paul Petit and Alaine Petit are not affiliated with any company conducting or proposing to conduct an offering of securities. N/A
30. Comment complied with. 19
31. Comment complied with. 18
<PAGE>
Page Reference
32. Comment complied with. 19
33. Comment complied with. 18
34. We have added disclosure in the prospectus to state that executives may be compensated in the future for past services. 19
35. Comment complied with. 20
36. Other than Paul Petit, no person can be deemed a promoter as defined by Item 404(d) of Regulation SB. N/A
38. The prospectus has been amended to name the principal shareholder of SARL Naprodis. Other than periodically filing reports required by any corporation, SARL Naprodis does not file any reports with any foreign regulatory or self regulatory organization. We have disclosed the relationships between Paul and Alaine Petit, Naprodis and SARL Naprodis. 21
39. The obligation to file materials with the NASD does not belong with the Company, but with any selling shareholder who hires a broker/dealer. N/A
40. Comment complied with. 26
41. Comment complied with. 27
42. The financial statements have been updated to May 31, 2005. 5/31/05 Financial Statements
43. Comment complied with. Audit report
44. Comiskey & Company had a previous working relationship with one of the Company's shareholders and was referred by that person. Patrick J. Comiskey, a partner in Comiskey & Company, is a licensed CPA in California. N/A
45. Related party purchases have been disclosed Statement of parenthetically in the statement of operations. Operations
46. Selling, marketing and research and development expenses are not material. However, details concerning items which are greater than 10% of the Company's general and administrative expenses are now included in the financial Statement of statements. Operations
47. The financial statements have been modified to include Statement of additional compensation in an unaudited pro-forma calculation. Operations
<PAGE>
Page Reference
48. Segment disclosure has been added to the significant accounting policies footnote as well as information about the Company's concentration of risk and geographic information. Note 1
49. The financial statements have been modified to disclose that no stock options are outstanding and that no stock option plans have been adopted to date. Note 1
50. The financial statements have been modified to expand the discussion of revenue recognition in compliance with SAB 104. Reference to service revenue has been deleted since this primarily relates to shipping costs which are billed with the sale. Note 1
51. Payment terms are C.O.D. for new customers with which a credit relationship has not been established, and net 30 for existing customers. In the May 31, 2005 financial statements a reserve was established for receivables which are past due and may not be collected. Note 1
52. The Company's historical experience with returns has been low, with the vast majority of returns relating to breakages and lost shipments and not for dissatisfaction with the Company's products. Trial periods generally do not extend beyond 30 days, and there are no arrangements whereby a customer's payment obligation is deferred until the product is returned. Furthermore, the Company's customers retain the risk of loss and breakage of the Company's products until they are returned. Note 1
53. The Company's resale of non-manufactured products consists of a small number of pre-manufactured items, primarily creams, which the Company purchases for resale, and the re-packaging of certain raw materials from bulk to smaller packages, including primarily clay and oils. The Company is the primary obligor for the product, although some recourse may be retained with the supplier. The Company sustains inventory risk by keeping the items in inventory. No items are drop-shipped. The Company sets the price, has discretion in the selection of suppliers for the raw materials, and assumes credit risk with its customers. For these reasons, the Company considers gross reporting appropriate. N/A
54. The financial statements have been revised in response to this comment. Costs of inventory include raw materials, supplies and overhead, import fees, and freight. Products are generally mixed by hand. Labor includable in total cost is estimated as part of overhead. The increase in gross profit is attributed primarily to efficiencies in the materials procurement process as the Company reduced both product and freight costs through bulk purchasing. Note 1
<PAGE>
Page Reference
55. The Company depreciates leasehold improvements over four years on a prospective basis, as the difference between a four year amortization and a nine year amortization is not material to the financial statements. N/A
56. The financial statements have been revised in response to this comment. Deferred offering costs in excess of projected net proceeds will be expensed. Note 1
57. The financial statements have been revised in response to this comment. Note 2
58. The number of shares for which subscriptions were received is disclosed in Note 2 and on the face of the balance sheet. The investors in the Company's private offering were: Note 2
Trevor Haywood $ 25,000 Archie Pavek 25,000 Alan Ligi 25,000 Socorro Austria 10,000 Kraig Butrum 10,000 Gary Chin 10,000 Stanley Lee 10,000 ---------- $115,000
Certificates for the shares were issued in January 2005 after the Company's shareholders approved the forward stock split and the amendment to the Company's articles of incorporation. The investors did not have an opportunity or right to demand repayment of their subscriptions. Consequently, the subscriptions are shown in the equity section. The subscribed shares are now part of the EPS calculation.
59. The financial statements have been revised in response to this comment. Note 5
60. The prospectus delivery legend has been added to the prospectus. Back cover
61. Comment complied with. Item 24
62. The investors that purchased the Company's securities received a copy of the Company's business plan prior to their investment in the Company. N/A
63. The certificates representing the shares were issued subsequent to August 31, 2004. N/A
64. Comment complied with. Signature Page
65. Since office space in southern California is readily available the Company does not believe its lease agreement is material. The prospectus and financial statements have been modified to change the reference from "short term notes" to "advances from related parties". The amounts advanced to the Company Balance sheet by the related parties are not evidenced by any promissory note or similar instrument. Note 5
If you should have any questions concerning the foregoing, please
Show Raw Text
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HART & TRINEN
Attorneys at Law
1624 Washington Street
Denver, Colorado 80203
(303) 839-0061
(303) 839-5414 (fax)
October 5, 2005
Adam Halper
Mail Stop 4-6
Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Washington, DC 20549
Re: Naprodis, Inc.
Registration Statement on Form SB-2
File No. 333-122009
This office represents Naprodis, Inc. (the "Company"). Amendment No. 2 to
the Company's registration statement has been filed with the Commission. This
letter contains the Company's responses to the comments received from the Staff
by letter dated February 11, 2005. The paragraph numbers in this letter
correspond with the numbered paragraphs in the Staff's comment letter. A
numerical reference next to a response indicates the page where changes have
been made in response to the comment.
Page
Reference
1. Once a trading market develops it is possible that the
share price of the Company's common stock will be adversely affected
due to sales by the selling shareholders. It is for this reason that
the Risk Factor # 1 is part of the registration statement. N/A
2. As of the date of this letter the Company had not filed any
applications with any state securities agency. N/A
3. Comment complied with. 21
4. We have removed the reference to options or warrants in
the disclosure pertaining to Rule 416. 2
5. The Company does not plan to distribute the prospectus prior to
the effective date of the registration statement. N/A
6. Comment complied with. 1
7. Comment complied with. 1
<PAGE>
Page
Reference
8. Comment complied with. 1
9. Information concerning shares outstanding has been
revised to August 31, 2005. 2
10. Comment complied with. 4
11. In the copy of the prospectus which will be distributed
to investors all risk factors will be numbered and the headings will
be in bold face. N/A
12. We have revised the Risk Factor section of the prospectus.
However, in our opinion, the fact that a risk factor may be generic
(i.e. the fact that the Company will need to eventually earn a profit
to continue operating) does not lessen its importance as a material
risk that should be disclosed to investors. 4, 5
13. We have added some of the risks which are requested by
this comment. However the following risks requested by this comment
have not been added 4, 5, 8, 26
o The limited experience of Paul Petit in accounting and
finance. We have disclosed in the Management section of
the prospectus that Paul Petit has experience in accounting
and finance.
o The ability of the Company to suspend its reporting
obligations. The Company has no intention of suspending
its reporting obligations after the first year that the
registration statement is effective.
o The Company's involvement in a direct public offering. We
do not know of any risks involved in the Company conducting
a direct public offering.
14. We have disclosed in the prospectus that suppliers of
the Company's raw materials are readily available. As a result we have
removed the risk factor which is the subject of this comment. 5
15. Comment complied with. 6, 7
16. Comment complied with. 7
<PAGE>
Page
Reference
17. We have modified the sections of the prospectus which
are the subject of this comment. Any events or uncertainties that
may be expected to have a material impact on the Company's revenues
are disclosed in the Risk Factor section of the prospectus. 10, 11
18. We have removed the risk relating to the evironmental
regulation of the Company's manufacturing process. The Company
does not know of any environmental regulations directly pertaining
to its business. 5
19. Comment complied with. 12
20. The Company's sales efforts in Canada and foreign
countries are identical to its sales efforts in the United States.
We have disclosed in the prospectus that the Company's marketing
program consists of referrals from other companies and information
on the Company's website. 11
21. The Company does not have any difficulty in obtaining
raw materials. Accordingly, the Company does not believe that additional
disclosure on this subject would be material to an investor. N/A
22. Comment complied with. 8
23. We have modified the chart which is the subject of this
comment. 12
24. The full name and location of the supplier of the nebulizer
has been added to the prospectus. The Company does not customize the
nebulizer in any respect. 13
25. Comment complied with. 14
26. Comment complied with. 13
27. Comment complied with. 15
28. Comment complied with. 16
29. Paul Petit and Alaine Petit are not affiliated with any
company conducting or proposing to conduct an offering of securities. N/A
30. Comment complied with. 19
31. Comment complied with. 18
<PAGE>
Page
Reference
32. Comment complied with. 19
33. Comment complied with. 18
34. We have added disclosure in the prospectus to state
that executives may be compensated in the future for past services. 19
35. Comment complied with. 20
36. Other than Paul Petit, no person can be deemed a promoter
as defined by Item 404(d) of Regulation SB. N/A
38. The prospectus has been amended to name the principal
shareholder of SARL Naprodis. Other than periodically filing reports
required by any corporation, SARL Naprodis does not file any reports
with any foreign regulatory or self regulatory organization. We have
disclosed the relationships between Paul and Alaine Petit, Naprodis
and SARL Naprodis. 21
39. The obligation to file materials with the NASD does not
belong with the Company, but with any selling shareholder who hires a
broker/dealer. N/A
40. Comment complied with. 26
41. Comment complied with. 27
42. The financial statements have been updated to May 31, 2005. 5/31/05
Financial
Statements
43. Comment complied with. Audit report
44. Comiskey & Company had a previous working relationship
with one of the Company's shareholders and was referred by that
person. Patrick J. Comiskey, a partner in Comiskey & Company,
is a licensed CPA in California. N/A
45. Related party purchases have been disclosed Statement of
parenthetically in the statement of operations. Operations
46. Selling, marketing and research and development
expenses are not material. However, details concerning items
which are greater than 10% of the Company's general and
administrative expenses are now included in the financial Statement of
statements. Operations
47. The financial statements have been modified to include Statement of
additional compensation in an unaudited pro-forma calculation. Operations
<PAGE>
Page
Reference
48. Segment disclosure has been added to the significant
accounting policies footnote as well as information about the Company's
concentration of risk and geographic information. Note 1
49. The financial statements have been modified to disclose
that no stock options are outstanding and that no stock option plans
have been adopted to date. Note 1
50. The financial statements have been modified to expand the
discussion of revenue recognition in compliance with SAB 104. Reference
to service revenue has been deleted since this primarily relates to
shipping costs which are billed with the sale. Note 1
51. Payment terms are C.O.D. for new customers with which
a credit relationship has not been established, and net 30 for
existing customers. In the May 31, 2005 financial statements a
reserve was established for receivables which are past due and may
not be collected. Note 1
52. The Company's historical experience with returns has
been low, with the vast majority of returns relating to breakages
and lost shipments and not for dissatisfaction with the Company's
products. Trial periods generally do not extend beyond 30 days, and
there are no arrangements whereby a customer's payment obligation is
deferred until the product is returned. Furthermore, the Company's
customers retain the risk of loss and breakage of the Company's
products until they are returned. Note 1
53. The Company's resale of non-manufactured products
consists of a small number of pre-manufactured items, primarily
creams, which the Company purchases for resale, and the re-packaging
of certain raw materials from bulk to smaller packages, including
primarily clay and oils. The Company is the primary obligor
for the product, although some recourse may be retained with the
supplier. The Company sustains inventory risk by keeping the items in
inventory. No items are drop-shipped. The Company sets the price, has
discretion in the selection of suppliers for the raw materials, and
assumes credit risk with its customers. For these reasons, the Company
considers gross reporting appropriate. N/A
54. The financial statements have been revised in response
to this comment. Costs of inventory include raw materials, supplies
and overhead, import fees, and freight. Products are generally mixed
by hand. Labor includable in total cost is estimated as part of
overhead. The increase in gross profit is attributed primarily to
efficiencies in the materials procurement process as the Company
reduced both product and freight costs through bulk purchasing. Note 1
<PAGE>
Page
Reference
55. The Company depreciates leasehold improvements over
four years on a prospective basis, as the difference between a four
year amortization and a nine year amortization is not material to the
financial statements. N/A
56. The financial statements have been revised in response
to this comment. Deferred offering costs in excess of projected net
proceeds will be expensed. Note 1
57. The financial statements have been revised in response to
this comment. Note 2
58. The number of shares for which subscriptions were received
is disclosed in Note 2 and on the face of the balance sheet. The
investors in the Company's private offering were: Note 2
Trevor Haywood $ 25,000
Archie Pavek 25,000
Alan Ligi 25,000
Socorro Austria 10,000
Kraig Butrum 10,000
Gary Chin 10,000
Stanley Lee 10,000
----------
$115,000
Certificates for the shares were issued in January 2005 after
the Company's shareholders approved the forward stock split and the
amendment to the Company's articles of incorporation. The investors did
not have an opportunity or right to demand repayment of their
subscriptions. Consequently, the subscriptions are shown in the equity
section. The subscribed shares are now part of the EPS calculation.
59. The financial statements have been revised in response to
this comment. Note 5
60. The prospectus delivery legend has been added to the
prospectus. Back cover
61. Comment complied with. Item 24
62. The investors that purchased the Company's securities
received a copy of the Company's business plan prior to their investment
in the Company. N/A
63. The certificates representing the shares were issued
subsequent to August 31, 2004. N/A
64. Comment complied with. Signature Page
65. Since office space in southern California is readily
available the Company does not believe its lease agreement is
material. The prospectus and financial statements have been
modified to change the reference from "short term notes" to "advances
from related parties". The amounts advanced to the Company Balance
sheet by the related parties are not evidenced by any promissory note
or similar instrument. Note 5
If you should have any questions concerning the foregoing, please