SEC Company Response from XMax Inc. (XMAX) (CIK 0001473334) (XMAX) — Aug 9, 2011
XMax Inc. (XMAX) (CIK 0001473334)
Date: Aug. 9, 2011 · CIK: 0001473334 · Accession: 0001185185-11-001165
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-163019
Referenced dates: July 27, 2011
Letter
VIA EDGAR Division of Corporation Finance Nova Lifestyle, Inc. Current Report on Form 8-K Filed June 30, 2011 File No. 333-163019
Dear Ms. Long:
This letter is in response to the comment letter of the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), dated July 27, 2011, to Nova Lifestyle, Inc. (the “Company”) regarding the above-captioned filing of the Company (the “Original Filing”). Please note that the Staff’s comments are restated below along with the Company’s responses.
Form 8-K filed on June 30, 2011
General
1.
Please amend your Form 8-K to address the comments below.
Response:
The Company has filed Amendment No. 1 to the above-captioned filing (“Amendment No. 1”) to address the comments below.
2.
Please provide the disclosure required by Item 14 of Form 10, Changes in and Disagreements with Accountants on Accounting and Financial Disclosure, relating to your dismissal of Kyle L. Tingle, LLC, on July 13, 2010. You may identify the Form 8K in which the required disclosure is included instead of including separate disclosure in this filing. See Item 2.01(f) of Form 8-K.
Response:
On June 30, 2011, the Company filed a Form 8-K disclosing its change in independent accountant to Marcum Bernstein and Pinchuk LLP from Goldman Kurland and Mohidin, LLP, as of June 30, 2011. This concurrent disclosure was filed separate from the Original Filing because of EDGAR limitations on the number of Form 8-K items allowed per individual filing.
The Company has revised the disclosure in accordance with the Staff’s comment. Please see page 56 of Amendment No. 1.
Ms. Pamela Long
U.S. Securities and Exchange Commission
August 9, 2011
Page 2 of 16
Item 1.01 Entry into a Material Definitive Agreement
3.
Please revise your disclosure to name all of the parties to the Share Exchange Agreement and Plan of Reorganization, including the shareholders of Nova Furniture Holdings Limited and St. Joyal and the number of shares received by each shareholder. See Item 1.01(a)(1) of Form 8-K.
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see page 3 of Amendment No. 1.
Item 2.01 Completion of Acquisition or Disposition of Assets
Our Company, page 4
4.
We note your disclosure that you are a “manufacturer of choice for leading global furniture distributors and large national retailers.” Please disclose the standard you used to determine that such distributors were “leading global furniture distributors” and how you determined that you were a “manufacturer of choice” for such distributors. Please revise your disclosure accordingly.
Response:
The Company has revised the disclosure to remove these statements. Please see page 4 of Amendment No. 1.
Our History, page 4
5.
We note your disclosure that St. Joyal is committed pursuant to a shareholder agreement to pay $2.4 million by January 1, 2014 for its 18.75% equity interest in Nova Furniture, and that pursuant to such agreement, it has agreed to help you expand into the U.S. market by establishing show rooms, a logistic center, sales team and a sales network. Please revise your disclosure to discuss whether (1) St. Joyal has paid any of the $2.4 million to Nova Furniture, and if so, the total amount paid to date; and (2) St. Joyal was considered the beneficial owner of such shares of Nova Furniture prior to its payment of the $2.4 million, and how such shares were treated in connection with the Share Exchange Agreement.
Response:
Pursuant to the Shareholder Agreement dated January 1, 2011 (the “Shareholder Agreement”), by and between Nova Furniture Limited and St. Joyal, St. Joyal was considered the beneficial owner of 1,875 shares of Nova Furniture Limited as of the date of the Shareholder Agreement in exchange for its commitment to pay $2.4 million to Nova Furniture by January 1, 2014. St. Joyal has not paid any amounts due under the Shareholder Agreement as of June 30, 2011, and is not in default of its obligations.
The Company has revised the disclosure in accordance with the Staff’s comment. Please see page 4 of Amendment No. 1.
Ms. Pamela Long
U.S. Securities and Exchange Commission
August 9, 2011
Page 3 of 16
6.
Please revise your structure chart on page five to show the percentage holdings of each of Nova Holdings and St. Joyal.
Response:
The Company issued its common stock pursuant to the Share Exchange Agreement and Plan of Reorganization dated June 30, 2011 (the “Share Exchange Agreement”), to the designee shareholders of Nova Holdings, Messrs. Wong and Ho, and St. Joyal, Messrs. Jiang and Liu, in proportion to their ownership of the respective companies, and not to Nova Holdings and St. Joyal.
The Company has revised the structure chart to show the percentage holdings of such individual shareholders in accordance with the Staff’s comment. Please see page 5 of Amendment No. 1.
Our Products, page 5
7.
We note your use of various industry statistics on pages seven and nine. Please tell us whether the sources you cite are available to the public for no or nominal fee. If the reports are not publicly available or if you commissioned the report please either file consents or explain to us why you are not required to do so under Rule 436 of Regulation C and Section 7 of the Securities Act. To expedite our review, please provide us with copies of each source, clearly marked to highlight the portion or section that contains this information and cross-reference it to the appropriate location in your filing.
Response:
The industry statistics referenced in the Original Filing are from abstracts, press releases and publications that are publicly available online and at no charge. None of the industry statistics or publications cited in the Original Filing were prepared on the Company’s behalf. Copies of each source marked to highlight the referenced information and a cross-reference to the pages of the Original Filing referencing such information are enclosed herewith.
The Company has revised the average GDP growth information for China to show a corrected calculation based on the International Monetary Fund’s “World Economic Outlook Database, April 2011” for the years 2006-2010, which reflect corrected calculations of China’s GDP growth for those years. The source information is enclosed herewith. Please see page 7 of Amendment No. 1.
8.
We note your disclosure on page seven that your sales to consumers in China have been small compared to sales to the U.S. and international markets. Please provide the percentage of your sales to each market in this section.
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see pages 7 and 9 of Amendment No. 1.
9.
We note that you anticipate launching the Ming Ma, ISOFA and Wo Zhi Bao collections in 2011. Please revise your disclosure to specify when this year you anticipate launching such collections, and whether you already have commitments from customers to purchase such products.
Ms. Pamela Long
U.S. Securities and Exchange Commission
August 9, 2011
Page 4 of 16
Response:
The Company plans to exhibit its Ming Ma, 1SOFA and Wo Zhi Bao brands at the International Famous Furniture Fair in Dongguan, China in September 2011. If market reaction is favorable, the Company anticipates launching the three brands in China during the fourth quarter of 2011 and entering into product franchise agreements with store operators to retail the three brands.
The Company has revised the disclosure in accordance with the Staff’s comment. Please see pages 7, 10 and 12 of Amendment No. 1.
10.
We note your disclosure on page 10 regarding your relationship with St. Joyal. Please revise your disclosure to explain your relationship with St. Joyal, including its investment in your company. Please also provide additional disclosure regarding St. Joyal’s “investment and development relationships,” and disclose how St. Joyal plans to help you expand into the U.S. market, including a summary of any services provided by St. Joyal to date.
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see page 10 of Amendment No. 1.
Production, page 11
11.
We note that you plan to expand your facilities and production capacity in 2012. Please provide additional disclosure regarding such expansion, including the scope of such expansion, the estimated increase in your production capacity and how you plan to finance such expansion. We note your similar disclosure on page 35.
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see pages 11, 17 and 36 of Amendment No. 1.
Customers, page 12
12.
Please file any written agreements with Actona Company A/S and Dongguan Metals and Minerals Import and Export Company as exhibits to the Form 8-K, or explain why you are not required to do so. See Item 601(b)(10)(ii)(B) of Regulation S-K.
Response:
The Company respectfully submits that the supplier agreements with Actona Company A/S (“Actona”) and Dongguan Metals and Minerals Import and Export Company (“Dongguan Metals and Minerals”) are not material to the Company within the meaning of Item 601(b)(10)(ii)(B) of Regulation S-K, which would require their disclosure despite the fact that the contracts were made in the ordinary course of the Company’s business, and therefore are not required to be filed as exhibits. As is standard in the furniture industry, we have entered into renewable supplier agreements with the wholesalers Actona and Dongguan Metals and Minerals that set forth the general order process, labeling and packaging requirements, delivery terms and other supplier requirements common to agreements between trading companies and wholesalers. These supplier agreements do not set forth specific product pricing terms or firm orders for our products, serving instead as general letters of intent. Pricing terms are negotiated separately based on our current product list for the international markets and typically for a period of six to twelve months. Orders for our products by wholesalers such as Actona and Dongguan Metals and Minerals are made in the ordinary course of business and on individual purchase orders, averaging $20,000 to $25,000 per purchase order. The Company typically receives up to 30 purchase orders per week from its customers for the international markets. Accordingly, the Company believes that the written supplier agreements with Actona and Dongguan Metals and Minerals are not required to be filed as exhibits.
Ms. Pamela Long
U.S. Securities and Exchange Commission
August 9, 2011
Page 5 of 16
13.
Please provide the geographic breakdown of sales to your customers as required by Item 101(d) of Regulation S-K.
Response:
The Company respectfully submits that as a “smaller reporting company,” as defined by Item 10(f)(1) of Regulation S-K, it need not provide the geographic breakdown of sales to customers under Item 101(d) of Regulation S-K pursuant to the exception provided smaller reporting companies by Item 101(h) of Regulation S-K. The Company has provided geographical distribution of sales in the notes to its consolidated financial statements, however, and has revised the disclosure in accordance with the Staff’s comment. Please see the response to Comment 8 above and pages 7 and 9 of Amendment No. 1.
Properties, page 17
14.
Please file the leases you reference in this section as exhibits to the Form 8-K, or explain why you are not required to do so. See Item 601(b)(10)(ii)(D) of Regulation S-K.
Response:
The Company respectfully submits that the leases for its offices in the U.S. and Macao are not material to the Company within the meaning of Item 601(b)(10)(ii)(D) of Regulation S-K. The leases for the Company’s offices in the U.S. and Macao currently are immaterial in amount of total rental expense and significance. The Company’s lease in Macao has total rental expense of approximately $1,100 per month, or $13,200 annually. The Company’s lease in Commerce, California, has total rental expense of $2,500 per month, or $30,000 annually. Similar office space is readily obtainable in each of these locations upon termination of the respective leases without significant expense. The Company acknowledges the requirement to file any material leases as exhibits and, as it expands its operations in the U.S. and Macao, the Company affirms its ongoing duty to assess new leases for their materiality.
15.
Please disclose the location of the Nova Museum. See Item 102 of Regulation S-K.
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see page 17 of Amendment No. 1.
Risk Factors, page 17
General
16.
We note that some of your risk factor subheadings merely state facts about your business rather than describing the particular risk that is being discussed:
·
We may not be able to keep pace with competition in our industry, page 19;
·
We face risks associated with managing operations in China, page 21;
·
We may experience material disruptions to our manufacturing operations, page 21;
·
Our bank accounts in China are not insured or protected against loss, page 22; and
·
China’s economic policies could affect our business, page 26.
These are just examples. Please revise your risk factor subheadings to ensure that they reflect the risk you describe in the text and disclose how this risk relates specifically to your business.
Ms. Pamela Long
U.S. Securities and Exchange Commission
August 9, 2011
Page 6 of 16
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see the “Risk Factors” section beginning on page 18 of Amendment No. 1.
17.
Descriptions of risks that describe circumstances that could apply equally to other businesses that are similarly situated are generic risks that should not be included in your risk factor section. Please either eliminate these generic risks, or revise them to state specific material risks to your company. For example, we note that the following risk factors appear to contain generic disclosures:
·
Changes in economic conditions could adversely affect demand . . ., page 17;
·
We may need additional capital to execute our business plan . . ., page 20;
·
China’s economic policies could affect our business, page 26;
·
The PRC government has introduced certain policy and regulatory measures to control the rapid increase in housing prices . . . , page 26;
·
If relations between the U.S. and China worse . . ., page 27;
·
The nature and application of many laws in China . . ., page 27;
·
Tax laws and regulations in China are subject to substantial revision . . ., page 30.
These are just examples. Please review your risk factors and revise accordingly.
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see the “Risk Factors” section beginning on page 18 of Amendment No. 1.
18.
Please add a risk factor disclosing the material risks, if any, relating to the State Intellectual Property Office of the PRC’s pending approval of the intellectual property ownership transfer from Mr. Wong to Nova Dongguan.
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see page 24 of Amendment No. 1.
Ms. Pamela Long
U.S. Securities and Exchange Commission
August 9, 2011
Page 7 of 16
Our accounts receivable remain outstanding . . ., page 21
19.
Please disclose the total amount of accounts receivable, including a breakdown of the number of days past due for such acco
Show Raw Text
CORRESP
1
filename1.htm
novalife-corresp080911.htm
NOVA LIFESTYLE, INC.
6451 E. Washington Blvd.
Commerce, CA 90040
(323) 888-9999
August 9, 2011
VIA EDGAR
Pamela Long
Assistant Director
Division of Corporation Finance
Mail Stop 4631
U.S. Securities and Exchange Commission
100 F. Street, N.E.
Washington, DC 20549
Re:
Nova Lifestyle, Inc.
Current Report on Form 8-K
Filed June 30, 2011
File No. 333-163019
Dear Ms. Long:
This letter is in response to the comment letter of the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), dated July 27, 2011, to Nova Lifestyle, Inc. (the “Company”) regarding the above-captioned filing of the Company (the “Original Filing”). Please note that the Staff’s comments are restated below along with the Company’s responses.
Form 8-K filed on June 30, 2011
General
1.
Please amend your Form 8-K to address the comments below.
Response:
The Company has filed Amendment No. 1 to the above-captioned filing (“Amendment No. 1”) to address the comments below.
2.
Please provide the disclosure required by Item 14 of Form 10, Changes in and Disagreements with Accountants on Accounting and Financial Disclosure, relating to your dismissal of Kyle L. Tingle, LLC, on July 13, 2010. You may identify the Form 8K in which the required disclosure is included instead of including separate disclosure in this filing. See Item 2.01(f) of Form 8-K.
Response:
On June 30, 2011, the Company filed a Form 8-K disclosing its change in independent accountant to Marcum Bernstein and Pinchuk LLP from Goldman Kurland and Mohidin, LLP, as of June 30, 2011. This concurrent disclosure was filed separate from the Original Filing because of EDGAR limitations on the number of Form 8-K items allowed per individual filing.
The Company has revised the disclosure in accordance with the Staff’s comment. Please see page 56 of Amendment No. 1.
Ms. Pamela Long
U.S. Securities and Exchange Commission
August 9, 2011
Page 2 of 16
Item 1.01 Entry into a Material Definitive Agreement
3.
Please revise your disclosure to name all of the parties to the Share Exchange Agreement and Plan of Reorganization, including the shareholders of Nova Furniture Holdings Limited and St. Joyal and the number of shares received by each shareholder. See Item 1.01(a)(1) of Form 8-K.
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see page 3 of Amendment No. 1.
Item 2.01 Completion of Acquisition or Disposition of Assets
Our Company, page 4
4.
We note your disclosure that you are a “manufacturer of choice for leading global furniture distributors and large national retailers.” Please disclose the standard you used to determine that such distributors were “leading global furniture distributors” and how you determined that you were a “manufacturer of choice” for such distributors. Please revise your disclosure accordingly.
Response:
The Company has revised the disclosure to remove these statements. Please see page 4 of Amendment No. 1.
Our History, page 4
5.
We note your disclosure that St. Joyal is committed pursuant to a shareholder agreement to pay $2.4 million by January 1, 2014 for its 18.75% equity interest in Nova Furniture, and that pursuant to such agreement, it has agreed to help you expand into the U.S. market by establishing show rooms, a logistic center, sales team and a sales network. Please revise your disclosure to discuss whether (1) St. Joyal has paid any of the $2.4 million to Nova Furniture, and if so, the total amount paid to date; and (2) St. Joyal was considered the beneficial owner of such shares of Nova Furniture prior to its payment of the $2.4 million, and how such shares were treated in connection with the Share Exchange Agreement.
Response:
Pursuant to the Shareholder Agreement dated January 1, 2011 (the “Shareholder Agreement”), by and between Nova Furniture Limited and St. Joyal, St. Joyal was considered the beneficial owner of 1,875 shares of Nova Furniture Limited as of the date of the Shareholder Agreement in exchange for its commitment to pay $2.4 million to Nova Furniture by January 1, 2014. St. Joyal has not paid any amounts due under the Shareholder Agreement as of June 30, 2011, and is not in default of its obligations.
The Company has revised the disclosure in accordance with the Staff’s comment. Please see page 4 of Amendment No. 1.
Ms. Pamela Long
U.S. Securities and Exchange Commission
August 9, 2011
Page 3 of 16
6.
Please revise your structure chart on page five to show the percentage holdings of each of Nova Holdings and St. Joyal.
Response:
The Company issued its common stock pursuant to the Share Exchange Agreement and Plan of Reorganization dated June 30, 2011 (the “Share Exchange Agreement”), to the designee shareholders of Nova Holdings, Messrs. Wong and Ho, and St. Joyal, Messrs. Jiang and Liu, in proportion to their ownership of the respective companies, and not to Nova Holdings and St. Joyal.
The Company has revised the structure chart to show the percentage holdings of such individual shareholders in accordance with the Staff’s comment. Please see page 5 of Amendment No. 1.
Our Products, page 5
7.
We note your use of various industry statistics on pages seven and nine. Please tell us whether the sources you cite are available to the public for no or nominal fee. If the reports are not publicly available or if you commissioned the report please either file consents or explain to us why you are not required to do so under Rule 436 of Regulation C and Section 7 of the Securities Act. To expedite our review, please provide us with copies of each source, clearly marked to highlight the portion or section that contains this information and cross-reference it to the appropriate location in your filing.
Response:
The industry statistics referenced in the Original Filing are from abstracts, press releases and publications that are publicly available online and at no charge. None of the industry statistics or publications cited in the Original Filing were prepared on the Company’s behalf. Copies of each source marked to highlight the referenced information and a cross-reference to the pages of the Original Filing referencing such information are enclosed herewith.
The Company has revised the average GDP growth information for China to show a corrected calculation based on the International Monetary Fund’s “World Economic Outlook Database, April 2011” for the years 2006-2010, which reflect corrected calculations of China’s GDP growth for those years. The source information is enclosed herewith. Please see page 7 of Amendment No. 1.
8.
We note your disclosure on page seven that your sales to consumers in China have been small compared to sales to the U.S. and international markets. Please provide the percentage of your sales to each market in this section.
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see pages 7 and 9 of Amendment No. 1.
9.
We note that you anticipate launching the Ming Ma, ISOFA and Wo Zhi Bao collections in 2011. Please revise your disclosure to specify when this year you anticipate launching such collections, and whether you already have commitments from customers to purchase such products.
Ms. Pamela Long
U.S. Securities and Exchange Commission
August 9, 2011
Page 4 of 16
Response:
The Company plans to exhibit its Ming Ma, 1SOFA and Wo Zhi Bao brands at the International Famous Furniture Fair in Dongguan, China in September 2011. If market reaction is favorable, the Company anticipates launching the three brands in China during the fourth quarter of 2011 and entering into product franchise agreements with store operators to retail the three brands.
The Company has revised the disclosure in accordance with the Staff’s comment. Please see pages 7, 10 and 12 of Amendment No. 1.
10.
We note your disclosure on page 10 regarding your relationship with St. Joyal. Please revise your disclosure to explain your relationship with St. Joyal, including its investment in your company. Please also provide additional disclosure regarding St. Joyal’s “investment and development relationships,” and disclose how St. Joyal plans to help you expand into the U.S. market, including a summary of any services provided by St. Joyal to date.
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see page 10 of Amendment No. 1.
Production, page 11
11.
We note that you plan to expand your facilities and production capacity in 2012. Please provide additional disclosure regarding such expansion, including the scope of such expansion, the estimated increase in your production capacity and how you plan to finance such expansion. We note your similar disclosure on page 35.
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see pages 11, 17 and 36 of Amendment No. 1.
Customers, page 12
12.
Please file any written agreements with Actona Company A/S and Dongguan Metals and Minerals Import and Export Company as exhibits to the Form 8-K, or explain why you are not required to do so. See Item 601(b)(10)(ii)(B) of Regulation S-K.
Response:
The Company respectfully submits that the supplier agreements with Actona Company A/S (“Actona”) and Dongguan Metals and Minerals Import and Export Company (“Dongguan Metals and Minerals”) are not material to the Company within the meaning of Item 601(b)(10)(ii)(B) of Regulation S-K, which would require their disclosure despite the fact that the contracts were made in the ordinary course of the Company’s business, and therefore are not required to be filed as exhibits. As is standard in the furniture industry, we have entered into renewable supplier agreements with the wholesalers Actona and Dongguan Metals and Minerals that set forth the general order process, labeling and packaging requirements, delivery terms and other supplier requirements common to agreements between trading companies and wholesalers. These supplier agreements do not set forth specific product pricing terms or firm orders for our products, serving instead as general letters of intent. Pricing terms are negotiated separately based on our current product list for the international markets and typically for a period of six to twelve months. Orders for our products by wholesalers such as Actona and Dongguan Metals and Minerals are made in the ordinary course of business and on individual purchase orders, averaging $20,000 to $25,000 per purchase order. The Company typically receives up to 30 purchase orders per week from its customers for the international markets. Accordingly, the Company believes that the written supplier agreements with Actona and Dongguan Metals and Minerals are not required to be filed as exhibits.
Ms. Pamela Long
U.S. Securities and Exchange Commission
August 9, 2011
Page 5 of 16
13.
Please provide the geographic breakdown of sales to your customers as required by Item 101(d) of Regulation S-K.
Response:
The Company respectfully submits that as a “smaller reporting company,” as defined by Item 10(f)(1) of Regulation S-K, it need not provide the geographic breakdown of sales to customers under Item 101(d) of Regulation S-K pursuant to the exception provided smaller reporting companies by Item 101(h) of Regulation S-K. The Company has provided geographical distribution of sales in the notes to its consolidated financial statements, however, and has revised the disclosure in accordance with the Staff’s comment. Please see the response to Comment 8 above and pages 7 and 9 of Amendment No. 1.
Properties, page 17
14.
Please file the leases you reference in this section as exhibits to the Form 8-K, or explain why you are not required to do so. See Item 601(b)(10)(ii)(D) of Regulation S-K.
Response:
The Company respectfully submits that the leases for its offices in the U.S. and Macao are not material to the Company within the meaning of Item 601(b)(10)(ii)(D) of Regulation S-K. The leases for the Company’s offices in the U.S. and Macao currently are immaterial in amount of total rental expense and significance. The Company’s lease in Macao has total rental expense of approximately $1,100 per month, or $13,200 annually. The Company’s lease in Commerce, California, has total rental expense of $2,500 per month, or $30,000 annually. Similar office space is readily obtainable in each of these locations upon termination of the respective leases without significant expense. The Company acknowledges the requirement to file any material leases as exhibits and, as it expands its operations in the U.S. and Macao, the Company affirms its ongoing duty to assess new leases for their materiality.
15.
Please disclose the location of the Nova Museum. See Item 102 of Regulation S-K.
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see page 17 of Amendment No. 1.
Risk Factors, page 17
General
16.
We note that some of your risk factor subheadings merely state facts about your business rather than describing the particular risk that is being discussed:
·
We may not be able to keep pace with competition in our industry, page 19;
·
We face risks associated with managing operations in China, page 21;
·
We may experience material disruptions to our manufacturing operations, page 21;
·
Our bank accounts in China are not insured or protected against loss, page 22; and
·
China’s economic policies could affect our business, page 26.
These are just examples. Please revise your risk factor subheadings to ensure that they reflect the risk you describe in the text and disclose how this risk relates specifically to your business.
Ms. Pamela Long
U.S. Securities and Exchange Commission
August 9, 2011
Page 6 of 16
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see the “Risk Factors” section beginning on page 18 of Amendment No. 1.
17.
Descriptions of risks that describe circumstances that could apply equally to other businesses that are similarly situated are generic risks that should not be included in your risk factor section. Please either eliminate these generic risks, or revise them to state specific material risks to your company. For example, we note that the following risk factors appear to contain generic disclosures:
·
Changes in economic conditions could adversely affect demand . . ., page 17;
·
We may need additional capital to execute our business plan . . ., page 20;
·
China’s economic policies could affect our business, page 26;
·
The PRC government has introduced certain policy and regulatory measures to control the rapid increase in housing prices . . . , page 26;
·
If relations between the U.S. and China worse . . ., page 27;
·
The nature and application of many laws in China . . ., page 27;
·
Tax laws and regulations in China are subject to substantial revision . . ., page 30.
These are just examples. Please review your risk factors and revise accordingly.
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see the “Risk Factors” section beginning on page 18 of Amendment No. 1.
18.
Please add a risk factor disclosing the material risks, if any, relating to the State Intellectual Property Office of the PRC’s pending approval of the intellectual property ownership transfer from Mr. Wong to Nova Dongguan.
Response:
The Company has revised the disclosure in accordance with the Staff’s comment. Please see page 24 of Amendment No. 1.
Ms. Pamela Long
U.S. Securities and Exchange Commission
August 9, 2011
Page 7 of 16
Our accounts receivable remain outstanding . . ., page 21
19.
Please disclose the total amount of accounts receivable, including a breakdown of the number of days past due for such acco