January 19, 2004
Mail Stop 0510
via U.S. Mail and facsimile
Nicole Funk
President and Chief Executive Officer
Aerobic Creations, Inc.
201-15225 Thrift Avenue
White Rock, B.C., Canada
Re: Aerobic Creations, Inc.
Form 10-SB12G
File No. 000-51091
Dear Ms. Funk:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
General
Please note that the Form 10-SB goes effective by lapse of time
within 60 days of the filing pursuant to Exchange Act Section
12(g)(1). If our comments are not addressed within this 60 day
time
period, you should withdraw the Form 10-SB prior to effectiveness
and
refile a new Form 10-SB including changes responsive to our
comments.1.
2. As you are aware, your registration under Section 12(g) of the
Securities Exchange Act of 1934 is voluntary and following
registration you will be required to file periodic reports with
the
SEC under Section 13(a) of the Exchange Act. Once the
registration
statement is effective, the only way to discontinue your reporting
obligations without violating federal securities laws will be to
deregister the securities by filing Form 15 under Exchange Act
Rule
12g-4.
3. The financial statements should be updated, as necessary, to
comply with Rule 310(g) of Regulation S-B.
Description of Business; page 2
We note your statement regarding the company`s intended use of the
net proceeds from "this Offering." Please note that you are
registering a class of securities on Form 10-SB pursuant to
Section
12(g)4. of the Exchange Act, rather than an offering from which
you
will derive proceeds. Please revise your disclosure to refrain
from
referring to this registration as an offering or indicating that
you
are receiving proceeds from this registration.
5. We note your statement on page 7 that your "success" is the
result
of a number of methods by which you intend to compete. Because
you
have not yet begun operations, however, you cannot have achieved
"success." Please revise this disclosure accordingly.
6. We note your statement on page 9 that you are "subject to the
information reporting requirements of the Securities Exchange Act
of
1934 . . . ." Please revise this statement to indicate that you
will
be subject to the reporting requirements of the Exchange Act
following the effectiveness of this registration statement.
Management`s Discussion & Analysis; page 9
Results of Operations; page 9
7. Liquidity generally should be discussed on both a long-term and
short-term basis. Accordingly, the discussion of the sufficiency
of
your resources to satisfy ongoing cash requirements for the next
twelve months should be expanded to discuss liquidity on a long-
term
basis. See Item 303(b)(1)(i) of Regulation S-B.
8. On page 11, you state that you are "dependent on additional
financing," but on page 9 you state that revenues from operations
should satisfy cash requirements for "the next 12 months without
having to raise additional funds or seek bank loans." We also
note
that the independent auditor`s report on page 22 states that "the
Company is dependent on raising additional capital to fund future
operations . . ." and that similar disclosure appears in Note 1 to
the financial statements on page 27. Please revise your
disclosures
to eliminate this inconsistency.
9. In your discussion of business risks, please discuss your
auditor`s conclusion that there is "substantial doubt about the
Company`s ability to continue as a going concern."
10. We note your disclosure in your fourth risk factor on page 12
that failure to establish your brand name could result in "loss of
revenue." Please revise this disclosure to reflect the fact that
you
cannot lose revenue, as you have not yet received any revenues.
Independent Auditors` Report, page 22
11. Please make arrangements with your auditors to have them
revise
their report to indicate their audit was conducted in accordance
with
the standards of the Public Company Accounting Oversight Board
(United States) as required by PCAOB Auditing Standard No. 1. See
also SEC Release 33-8422.
Financial Statements; page 23
Balance Sheets; page 23
12. The total current assets line item is the same as the cash
balance disclosed on page 9. Cash and cash equivalents as shown
and
titled in your balance sheet should be identical to that in your
statement of cash flows. Please make the necessary revisions.
See
paragraph 7 of SFAS 95.
Statements of Operations; page 24
13. We do not understand how your weighted average number of
shares
outstanding could be 1, 000,000 for the four months ended
September
30, 2004 and the period from inception to September 30, 2004.
Please
make any necessary revisions and provide us with your computations
for each of these periods.
Cash Flow Statement; page 26
14. The cash flow statement is improperly labeled statements of
operations. Please revise.
15. As there was no cash provided from operating activities,
please
revise the line item to a more appropriate description such as net
cash used in operating activities.
16. Since there were increases and decreases in cash during the
three
periods presented, please retitle the net increase in cash line
item
as net increase (decrease) in cash.
Note 1 - Nature of operations and basis of presentation
Organization; page 27
17. In view of the uncertainties concerning your continued
existence
as a going concern, you should disclose in reasonable detail
management`s specific viable plans intended to mitigate the effect
of
such conditions and management`s assessment of the likelihood that
such plans can be effectively implemented. Those elements of the
plan that are particularly significant or critical to overcoming
present financial difficulties should be clearly identified and
discussed. Additionally, there should be a reasonably detailed
discussion of your ability (or inability) to generate sufficient
cash
to support your operations during the twelve-month period
following
the date of the most recent balance sheet presented. We note your
discussion in the management`s discussion and analysis. You
should
describe the plan in both the management`s discussion and analysis
of
liquidity and the notes to the financial statements. This
discussion
should be updated, as necessary, in future quarterly and annual
filings with us.
Note 3 - Common Stock; page 29
18. Please disclose who you issued the 800,000 shares to and
separately identify those shares issued to related parties, along
with the issuance price.
Note 4 - Related Parties; page 29
19. Please disclose the terms of your rental agreements with
related
parties, including those that are rent-free, such as the use of
the
personal residence of the officers and directors.
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
the amendment to expedite our review. Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested supplemental information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Marie Trimeloni at (202) 942-1860 or Rufus
Decker at (202) 942-1774 if you have questions regarding comments
on
the financial statements and related matters. Please contact Matt
Franker at (202) 824-5495 or Chris Edwards at (202) 942-2842.
Alternatively, you may contact me at (202) 942-1950.
Sincerely,
Pamela A. Long
Assistant Director
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Nicole Funk
Aerobic Creations, Inc.
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0404
DIVISION OF
CORPORATION FINANCE