Mail Stop 6010
June 13, 2005
VIA U.S. MAIL AND FAX (310) 527-7888
Mr. Larry B. Lombard
Chief Financial Officer
Enova Systems, Inc.
19850 South Magellan Drive
Torrance, California 90502
Re: Enova Systems, Inc.
Form 10-K for the year ended December 31, 2004
Filed March 31, 2005
File No. 0-25184
Dear Mr. Lombard:
We have reviewed your filing and have the following
comments.
We have limited our review to matters related to the issues raised
in
our comments. Where indicated, we think you should revise your
documents in future filings 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 comment or on any other
aspects
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for the year ended December 31, 2004
Item 9A. Controls and Procedures, page 37
1. Please note that it is not appropriate to qualify your
conclusion
with respect to the effectiveness of your disclosure controls and
procedures. Your disclosure controls and procedures must be either
"effective" or "not effective;" it is not appropriate to qualify
that
conclusion with language such as "subject to the limitations noted
above" or otherwise. Please acknowledge your understanding of the
foregoing. In addition, in future filings, please omit the "to
provide reasonable assurance that" language that currently appears
after the word "effective" in the last paragraph of your Item 9A
disclosures in your Form 10-K. While you may, if desired, state
that
your disclosure controls and procedures are effective "at the
reasonable assurance level," we do not believe that the "to
provide
reasonable assurance that" language is consistent with the
definition
of disclosure controls and procedures set forth in Rule 13a-15(e)
of
the Exchange Act.
2. We note your disclosure in the fourth paragraph that "there can
be
no assurance that any design [of a system of internal controls]
will
succeed in achieving its stated goals under all potential future
conditions (emphasis added)." If you elect to retain this
qualifying
disclosure, please revise future filings to also disclose, if
true,
that your system of internal control over financial reporting is
designed so as to provide reasonable assurance that the objectives
of
the system will be met. In addition, if the fourth paragraph of
your
disclosure is retained, please also disclose in future filings, if
true, that the design and operation of your system of internal
controls does in fact provide reasonable assurance in achieving
the
objectives of the system. For guidance, refer to Part II.F.4 of
Release No. 33-8238.
3. In addition, please revise future filings to address changes in
your internal control over financial reporting to indicate whether
there was any change in your internal control over financial
reporting that occurred during the fourth quarter that has
materially
affected or is reasonably likely to materially affect your
internal
control over financial reporting, as required by Item 308(c) of
Regulation S-K as amended effective August 13, 2003.
Note 1. Organization and Line of Business, page 11
4. We see you account for your 40% investment in Hyundai-Enova
Innovative Technology Center (ITC) under the equity method. Since
it
appears at year end your investment in ITC exceeded 20% of your
total
assets, it appears to us you are required to include Rule 3-09 of
Regulation S-X financial statements for the investee in your Form
10-
K. Please file an amended 2004 Form 10-K with all required
financial
statements or tell us why you believe no such amendment is
necessary.
Also, note that your future Form 10-Q`s should include the
disclosure
required by Item 4-08(g) of Regulation S-X for any significant
equity
investees.
Supplemental Information, page 30
5. We noted the opinion provided by Singer Lewak Greenbaum &
Goldstein regarding your supplemental Schedule II relates to only
fiscal 2003 and 2004. Please advise us as to the location of the
report related to the 2002 Schedule II information or revise the
filing to include an auditors` report on the 2002 Schedule II
information.
* * * * * * * *
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter with your response that keys your
responses to our comments and provides any requested supplemental
information. Detailed cover letters greatly facilitate our
review.
Please file your cover letter on EDGAR. 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.
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 filings;
* Staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff 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 Julie Sherman, Staff Accountant, at (202)
551-
3640, or me at (202) 551-3603 if you have questions regarding
these
comments.
Sincerely,
Jay Webb
Reviewing Accountant
Mr. Larry B. Lombard
Enova Systems, Inc.
June 13, 2005
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