May 6, 2005
Mail Stop 4561
Anju Tandon
President and Chief Executive Officer
TNT Designs, Inc.
305 Madison Avenue, Suite 449
New York, NY 10165
Re: TNT Designs, Inc.
Registration Statement on Form SB-2 filed April 8, 2005
File No. 333-123941
Dear Mr. Tandon:
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
1. Please tell us how the resale of securities by the selling
security holders does not constitute an indirect primary offering.
In connection with your analysis, please discuss the following
facts:
* how long the selling shareholders have held the securities;
* the circumstances under which the selling shareholders received
the
securities;
* the selling shareholders` relationship to the issuer;
* the amount of securities involved;
* whether the sellers are in the business of underwriting
securities;
and
* whether under all the circumstances it appears that the seller
is
acting as a conduit for the issuer.
In addition, please discuss whether the purchasers in the
private offering were given registration rights. Finally,
please
provide us with a copy of the private offering memorandum given
to
purchasers in the March 2005 private offering.
2. We note your use throughout the prospectus of the term
"Company"
to refer to TNT Design, Inc. The term "Company" is a vague,
abstract
term. Please revise to use your actual company name or a
shortened
version of it.
3. We note that Ms. Tandon is the sole officer, director and
member
of management. We also note that you use the terms "management"
and
"we" to refer to Ms. Tandon. Please revise your prospectus to
clarify throughout your disclosure that TNT Design, Inc. has only
one
officer, director and member of management.
4. Please supplementally provide us with copies of any graphics,
maps, photographs, and related captions or other artwork including
logos that you intend to use in the prospectus. Such graphics and
pictorial representations should not be included in any
preliminary
prospectus distributed to prospective investors prior to our
review.
5. We note the reference to your website at the bottom of page 12.
Please confirm supplementally that all material information that
is
included in your website can be found in the prospectus.
6. Please provide disclosure on the cover discussing the
applicability of the penny stock rules to transactions in TNT
Design`s securities.
Prospectus Summary, page 1
7. Please include the following in your summary:
* you have incurred losses since inception;
* that Ms. Tandon is the sole officer and director as well as your
controlling stockholder and that you have no employees;
* you have not generated revenues since inception; and
* quantify your total accumulated deficit.
8. Please consider disclosing the address of your website in this
section.
Forward-Looking Information, page 3
9. Please delete references to the Private Securities Litigation
Reform Act here and elsewhere in your document if it appears. The
"safe harbor" provided for by the Private Securities Litigation
Reform Act only applies to statements made by issuers who at the
time
the statement is made are subject to the reporting requirements of
Exchange Act Section 13(a) or 15(d). It also does not apply to
companies that issue penny stock. See Securities Act Section 27A
and
Exchange Act Section 21E.
Risk Factors, page 3
10. You indicate in your introductory paragraph that these risk
factors "among others" may cause actual results to differ
materially
from the statements made in this prospectus. It is not
appropriate
to indicate that additional risk factors not included in the
prospectus exist or that existing risks that management deem to be
immaterial may, at a later date, be material. All material risk
factors should be described in the prospectus and risks that are
deemed to be immaterial should not be referenced. Please revise.
11. Currently, some of your risk factor headings are difficult to
distinguish from your general text. Please consider revising this
section to highlight each risk factor heading. For example,
consider
using boldface type, italics, or underling each risk factor
headings.
12. Many of your risk factor subheadings state a fact, or describe
some aspect of your business, rather than state a risk. These
risk
factors convey the cause of concern, but not the effect. This
requires the reader to infer the risk. Revise your captions to
accurately convey the risks that relate to the facts your present.
For example, but not limited to:
* "We have no revenues;"
* "Our future operating results will be difficult to predict;"
* "Because we do not intend to pay any dividends on our common
shares...;" and
* "We can not guarantee we will ever develop a customer base."
Risks Related to Our Financial Condition, page 3
Our short operating history makes our business difficult to
evaluate, page 3
13. Please revise to clarify that you have not generated revenues
since inception. Your disclosure under this heading states that
you
have "very little operating history or revenues," which implies
that
you have generated revenues.
As we are a development stage enterprise, our failure to
secure
...., page 3
14. In order to give depth to your disclosure, please revise to
quantify the amount of funds you will need to raise in the next 12
months in order to achieve your business objectives.
Our future operating results will be difficult to predict,
page
4
15. We note you have presented several factors that may affect
your
future financial results. If material, please consider discussing
each of these risk factors under a separate caption that
adequately
describes the risk being presented. Additionally, some of these
risks are repeated in other risk factors. Please delete all
redundancies.
16. We refer to the second bullet point that refers to India as
the
"main source" of your products. Since you currently have only on
agreement with one provider, please revise to clarify that this is
the sole source of the products you seek to import.
17. We refer to the fourth and fifth bullet points under this
heading. Since you do not discuss, in any detail, your expansion
plans or plans to acquire other companies, please consider whether
these points pose material risks to investors. Alternatively,
please
revise your disclosure in the "Business" or "Plan of Operation"
sections to discuss these items.
Risks Related to the Market for Our Common Stock, page 4
There is no active trading market for our common stock ...,
page
4
18. Please revise the heading to remove the implication that,
unless
your shares are traded on the OTC Bulletin Board, investors will
be
"unable" to sell their shares. As you indicate on the cover page
and
elsewhere, the selling shareholders will be able to sell their
shares
at a fixed price of $0.10 unless a market develops, and
thereafter,
at market prices or in privately negotiated transactions.
Risk Related to Our Business, page 6
We have only commenced our business operations in February
2004
...., page 6
19. In connection with your disclosure regarding the fact that the
agreement you have only applies to New York State which may affect
your ability to sell Radico`s products on a greater scale in the
future, please supplementally advise as to whether Radico has
entered
into similar exclusive agreements with other wholesalers for other
geographic regions in the United States. If so, please disclose
this
here and discuss this in the "Business" or "Plan of Operation"
section of the prospectus.
If we cannot locate qualified personnel, we may have to suspend or
cease operations..., page 6
20. Please revise your risk factor subheading to reflect the facts
you describe in the body of your risk factor.
21. You indicate that your sole officer and director`s decision
and
choices may not take into account standard practices companies
commonly use within your industry. In order to give depth to your
risk factor, revise to indicate what types of standard practices
used
by your industry that may not be followed by your officer and
director. In addition, in light of your disclosure indicating
that
she has experience in this industry, please clarify to indicate
why
she may not follow these standard practices.
Inability of officers and directors to devote sufficient time to
the
operation of the business may limit our success, page 6
22. Please revise your risk factor to quantify the approximate
amount
of time your sole officer and director dedicates to TNT Designs.
We lack an operating history and have losses which we expect to
continue into the future..., page 6
23. We note you have presented seven risks that are inherent to
development stage companies, many of which could apply to any
company. Please consider discussing each of these risk factors
under
a separate caption that adequately describes the risk being
presented. Focus on how these risks may affect your business in a
degree or manner that is different or more significant than other
development stage companies. Additionally, some of these risks
are
repeated in other risk factors. Please delete all redundancies.
We cannot guarantee we will ever develop a customer base,
page
7
24. Please revise to clarify whether you will need to develop
agreements with additional suppliers in order to offer products
for
sale. The last sentence under this risk factor heading appears to
imply that additional suppliers may be needed in order to generate
sales.
We are currently dependent for all products we intend to sell and
distribute through our only alliance agreement, page 7
25. You indicate that should you have difficulty obtaining apparel
products from Radico or difficulty importing "these products from
other sources", your business may be adversely affected. Please
revise to identify whether you have "other sources" of Radico`s
products.
Selling Security Holders, page 8
26. We refer to your statement that the shares registered on
behalf
of the selling shareholders may be "sold in any and all states
that
recognize an effective registration statement." Please expand
your
disclosure to provide guidance to the selling shareholders and
prospective purchasers as to what states recognize an effective
registration statement and whether you will seek to have your
shares
registered in any other states.
27. Please revise the table on page 8 to show that Ms. Tandon will
own approximately 65 percent of the aggregate issued and
outstanding
shares following the proposed offering, not 100 percent, as
currently
disclosed.
Plan of Distribution, page 9
28. We note your disclosure in the second paragraph under this
heading that states selling security holders may also sell shares
under Rule 144. Please revise to indicate the number of shares
that
are held by affiliates and are limited by timing and volume
constraints imposed by Rule 144.
Directors, Executive Officers, Promoters and Control Persons, page
10
29. Please revise to expand your discussion of Ms. Tandon`s
business
experiences. For example, describe how Ms. Tandon was "involved"
as
an entrepreneur in the apparel, home furnishings, travel and
fashion
accessories industry. Provide dates and positions served for each
position in the last five years. See Item 401 of Regulation S-B.
30. Please revise to include the term of office for each officer
and
director. See Item 401(a)(3) of Regulation S-B.
Description of Securities, page 11
31. Please revise your disclosure to describe any provision in the
charter or by-laws that would delay, defer or prevent control of
TNT
Design`s. If you do not have any such provision, state so. See
Item
202(a)(4) of Regulation S-B.
Description of Business, page 12
Overview, page 12
32. Please clarify whether you intend to serve as a wholesaler and
distributor of Radico products, as indicated here, or whether you
intend to serve as a specialty retailer as implied by your
disclosure
that discusses competition within the specialty retail industry.
We
refer to page 7. In addition, on page 12 you discuss selling
items
from a fixed retail location. Please revise or advise.
33. Please provide a basis for your statement that you intend to
eventually sell products throughout the United States as well as
Europe and Asia. In light of the fact that you have a single
distribution agreement that is limited to New York and taking into
consideration your cash position and lack of operations to date,
it
is not clear what this statement is based on. To the extent that
expansion of the sort disclosed here is anticipated, please revise
the "Business" and "Plan of Operation" sections to discuss your
specific plans. This comment also applies to your disclosure on
page
14 that indicates you intend to "negotiate an expansion" of the
existing agreement. Has Radico agreed to do this?
Exclusive Distributorship and Alliance Agreement, page 12
34. Please revise your disclosure to provide the terms of your
agreement with Radico Export Import, Ltd. For example, we note
from
Item 5 of the agreement that TNT Design must purchase a minimum
quantity of goods. Also, discuss the terms of your commission
structure with Radico and the termination provisions. Please
consider discussing the minimum purchase requirements as well as
the
termination provisions in the "Risk Factors" section as well.
35. You indicate that you have "exclusive" and non-transferable
rights granted under the agreement with Radico. Please reconcile
this with your statement that Radico also has certain preexisting
distributors in New York. Please expand your disclosure to
indicate
the nature and the extent of these preexisting relationships
Radico
has with other distributors.
Distribution Methods and Marketing, page 12
36. Please discuss your ability to link to or otherwise utilize
the
websites of Radico. We note that your website currently does not
link to any of Radico`s websites.
Plan of Operation, page 13
37. Your disclosure in the second paragraph relating to forward
looking statements is largely repeated on page 3. Please delete
all
redundancies.
38. Please revise this section to provide more specificity as to
how
and when you intend to achieve your business objectives. For
example, do you intend to initially sell Radico`s products on your
eBay store website? In addition, when do you expect to complete
your
website and how much do you expect this to cost? Finally, in
light
of the fact that you currently have minimal cash and no concrete
plans to raise additional financing, please revise your disclosure
to
discuss how you plan to conduct your business during the next
twelve
months if you are unable to raise any additional financing.
39. Please explain how you intend to conduct marketing efforts via
your website. Specifically, what methods will you utilize to
steer
traffic to your website?
40. Please revise your disclosure to include a discussion of how
long
you can satisfy your cash requirements. See Item 303(a)(1) of
Regulation S-B.
Certain Relationships and Related Transactions, page 14
41. Please revise to include the information required by Item
404(d)
of Regulation S-B.
Part II
42. Please move your financial statements to Part I of your
prospectus.
Item 26. Recent Sales of Unregistered Securities
43. You indicate on several occasions that you are relying on
Regulation D for a private placement. Please revise to clearly
indicate which rule you are relying on. Further, supplementally
provide us with enough facts to support your use of each
exemption.
44. Please revise to clarify which exemption you are relying upon
with respect to the February 2004 and December 2004 offerings.
Further, supplementally provide us with enough facts to support
your
use of each exemption.
Item 27. Exhibits
45. Please revise the exhibit index to include a specimen stock
certificate and any other instruments defining the rights of
security
holders. See Item 601of Regulation S-B.
46. Please file your legal opinion with your next amendment or
provide a draft opinion for us to review.
Exhibit 10.3
47. Please revise to file an executed copy of your Exclusive
Distributorship and Alliance Agreement.
Report of Independent Registered Public Accounting Firm, page F-2
48. It appears that the second paragraph of the audit report has
been
amended to include some of the suggested language from AU Section
9508.18. The suggested modification from AU 9508.18 also includes
the following language: "Our audit included consideration of
internal
control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for
the
purpose of expressing an opinion on the effectiveness of the
Company`s internal control over financial reporting. Accordingly,
we
express no such opinion." Either revise to include these
additional
sentences or have your auditors tell us why they believe revision
is
not necessary. We may have further comment upon review of the
response.
Balance Sheet, page F-3
49. Please revise your balance sheet to present cumulative net
losses
as "deficit accumulated during the development stage" in
accordance
with paragraph 11(a) of SFAS 7.
Notes to Financial Statements
Note 2. Summary of Significant Accounting Policies
Stock based compensation, page F-7
50. We note that shares of common stock issued for services were
based on the fair value method. Supplementally advise us how you
determined the fair value of the stock granted for services in
2004
as well as the stock granted in a private placement from March to
April 2004. In addition, please revise your document to include
the
disclosures suggested by Chapter 12 of the AICPA Practice Aid:
Valuation of Privately-Held-Company Equity Securities Issued as
Compensation.
********************
As appropriate, please amend your registration statement in
response to these comments. 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 filings 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.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
? should the Commission or the staff, acting pursuant to
delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
? the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
? the company may not assert this action 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 connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Kristi Beshears, Staff Accountant, at (202)
551-3429 or Linda Van Doorn, Senior Assistant Chief Accountant, at
(202) 551-3780 if you have questions regarding comments on the
financial statements and related matters. Please contact Jeffrey
Shady, Staff Attorney, at (202) 551-3471 or the undersigned at
(202)
551-3694 with any other questions.
Sincerely,
Owen Pinkerton
Senior Counsel
cc: Joseph A. Baratta, Esq. (via fax)
Baratta & Goldstein
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TNT Designs, Inc.
Form SB-2
Page 11