Mail Stop 3561
January 11, 2006
Mr. Steven M. Hershman, President
Loans4Less.com, Inc.
210 Avenue I, Suites E and F
Redondo Beach, California 90277
Re: Loans4Less.com, Inc
Amendment No. 3 to Offering Statement on
Form 1-A
Filed December 22, 2005
File No. 24-10109
Dear Mr. Hershman:
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 on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Part I. Notification
Item 5. Unregistered Securities Issued or Sold Within One Year
1. We note your response to our previous comment four and we
reissue
in part our previous comment. We note the disclosure throughout
this
item that "[t]he Company believes that the shares were issued to
an
accredited investor with access to information about the Company
and
its financial condition." It appears that the company would be in
a
position to make this determination whether or not the person was
accredited or whether such person had access to information about
the
company including its financial condition. Please reconcile this
disclosure with your supplemental response that "no formal attempt
was made to determine sophistication" and provide a reasonable
basis
for the company`s belief. We continue to note the lack of
disclosure
regarding the sophistication of the November 23, 2004 transaction.
Section 4(2) of the Securities Act has been interpreted to require
investors to meet a sophistication test. See SEC v. Ralston
Purina
Co., 364 U.S. 119 (1953). In Ralston, the Supreme Court
determined
that a private offering is available to persons able to fend for
themselves, which depends on the purchaser`s sophistication and
ability to bear the economic risks of investment. Please describe
whether the company made a determination as to sophistication for
each investor. In light of the Ralston case, the sophistication
requirement along with access to information about the company
would
appear to be applicable to the employees of the company that
received
stock for services. Please revise accordingly. Furthermore, we
note
your supplemental response that this issuance could be exempt
pursuant to Rule 504 of Regulation D. At the time of the stock
issuance, it appears your company was a blank check company, since
the company was inactive until January 2005, when it acquired
Union
Discount Mortgage. In light of this, it would appear that Rule
504
was not available to the company. Lastly, in light of the
inactive
status of the company, please explain the services provided to the
company, for which these investors received securities.
Part II. Offering Circular
Risk Factors, page 2
General Risks of Investments, page 4
2. We note that the first risk factor and the third risk factor
under
this subsection appear to have duplicative disclosure. Please
consider combining these two risk factors.
Dilution, page 7
3. Please revise the dilution per share to new investors at each
offering amount. Several appear incorrect.
Plan of Distribution, page 11
4. We note the subscription agreement provides for arbitration of
any
disputes arising from the investment in this offering. Please
explain how this complies with the requirements of Section 14 of
the
Securities Act regarding waivers of compliance with the Securities
Act or the rules and regulations of the Commission.
Management`s Discussion and Analysis, page 21
Financial Condition, page 22
5. We note the statement that the "Company closed 240 loans in the
nine months ending September 30, 2005." Please compare this
amount
to the amount of loans closed during the same nine months in the
fiscal years 2003 and 2004 or update to state the amount of loans
closed through the end of 2005. Also include similar disclosure
in
the subsection "Nine Months Ended September 30, 2005 Compared to
September 30, 2004."
6. Please include in the results of operations, a comparison of
expenses, including a comparison of any line items of expenses
that
have materially changed. Discuss the reason(s) for the changes.
7. Include a discussion of the net loss in the most recent
financial
period. Discuss the likelihood of net losses in the future.
Consider adding a risk factor.
Employment and Agent Agreements, page 29
8. We reissue prior comment 32. Please disclose the material
terms
of each agreement. This would include the amount to be paid to
each
individual pursuant to the agreement, including any provisions for
bonuses.
Financial Statements
9. In our prior comment 35, we asked you to provide us with a
schedule of changes in the financial statements supplementally.
We
note you have included trial balances in amendment 3 of the Form
1-A,
after page 35. These trial balances contain numerous symbols and
notations that are not explained, as well as comments that may be
confusing to an investor. Please remove these trial balances and
consider expanding MD&A to clearly discuss any information you
consider material.
* * * * *
As appropriate, please amend your offering 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 will consider a written request for qualification of the
offering statement as a confirmation of the fact that those
requesting qualification 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 offering of
the
securities specified in the above offering statement. We will act
on
the request and, pursuant to delegated authority, grant the
qualification.
Please allow adequate time after the filing of any amendment
for further review before submitting a request for qualification.
Please provide this request at least two business days in advance
of
the qualification date.
You may contact Carlton Tartar at (202) 551-3387 or Terence
O`Brien at (202) 551-3355 if you have questions regarding comments
on
the financial statements and related matters. Questions on other
disclosure issues may be directed to Thomas Kluck at (202) 551-
3233
or Pamela Howell, who supervised the review of your filing, at
(202)
551-3357.
Sincerely,
John Reynolds
Assistant Director
cc: Lee W. Cassidy, Esq.
Fax (202) 745-1920
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Steven M. Hershman
Loans4Less.com Inc.
January 11, 2006
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