Mail Stop 6010 January 11, 2005
Harold Schaffrick
President
Novori, Inc.
Suite 204B
9648-128th Street
Surrey, British Columbia Canada V3T 2X9
Re: Novori, Inc
File No. 333-130344
Filed December 21, 2004
Dear Mr. Schaffrick:
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.
General
1. Please note that where we provide examples to illustrate what
we
mean by our comments, they are examples and not exhaustive lists.
If
our comments are applicable to portions of the filing that we have
not cited as examples, make the appropriate changes in accordance
with our comments.
2. In your response letter, please state our comment and then
explain
each change that has been made in response to a comment. In
addition, you should also reference each page number in which
disclosure has been revised in response to a comment so that we
can
easily place your revised disclosure in its proper context.
3. You have included a cross-reference to the Risk Factors on the
prospectus cover page. This cross-reference should be in bold-
face
type. Please see Item 501(a)(5) of Regulation S-B.
4. The disclosure is somewhat confusing as it relates to suppliers
and jewelers. As one example only, on page 12 you state that you
do
not have an agreement with your jeweler. However, on page 27, you
state that you have "entered into several agreements with jewelry
manufacturers..." Please clarify whether you have agreements with
the jewelers throughout the registration statement.
In addition, we note that on page 12, you also state that you have
no
written agreements with any of the 18 diamond suppliers from whom
you
intend to obtain diamonds. On page 10, you reference your
relationship with the one supplier with whom you are working
currently. Please disclose whether you have a written agreement
with
the current supplier.
In addition, we note that you reference this one supplier on page
10
but refer to "suppliers" throughout the registration statement.
Your
use of the plural term is confusing in light of your reference to
a
single supplier on page 10. Please clarify the disclosure
throughout
the registration statement.
Finally, for any material written agreement that you have either
with
jewelers or suppliers you should file the agreement as an exhibit
to
the registration statement and disclose all material terms of the
agreement in the Business section.
Risk Factors, p. 8
General
We lack an operating history..., p. 9
5. Please update your disclosure to include information from
November
30, 2005.
We expect our quarterly financial..., p. 9
6. In your header, it appears that the risk factor will disclose
the
risks associated with stock price volatility. However, the body
of
the risk factor seems to describe the risks associated with a
decline
in the stock price. Please revise the heading or if the risk
factor
actually concerns volatility, please clarify that a market does
not
currently exist for your common stock.
Because of potential seasonal fluctuations..., p. 12
7. Please explain what you mean when you say that "seasonal sales
patterns may cause a shortfall in net sales as compared to
expenses
in a given period." If this sentence is simply meant to explain
the
prior sentence (in reference to the fourth quarter of a given
year),
please revise the sentence to make this more clear.
Success depends in part on our ability to attract and retain...,
p.
12
8. To the extent that you have experienced problems attracting and
retaining key personnel in the recent past, please revise to
describe
these problems.
Novori`s management beneficially owns..., p.l4
9. Please explain what you mean when you say that "lack of
shareholder control could cause the investor to lose all or part
of
his investment" and how you anticipate that could happen.
Selling Shareholders, p. 16
10. Please consider whether any of the selling shareholders is a
broker-dealer who received their shares other than as compensation
for services rendered. If there are any such broker-dealer listed
on
the table, these individuals should be identified as underwriters
in
this offering.
11. In addition, if there are affiliates of broker-dealers
identified
as Selling Shareholders, please consider whether: (i) such Selling
Shareholder purchased in the ordinary course of business and (ii)
at
the time of the purchase, such Selling Shareholder had no
agreements
or understanding to distribute securities. If both (i) and (ii)
are
true for any affiliate, please include a representation to this
effect in this section for that affiliate. For any other
affiliate,
you should explicitly state that the affiliate is an underwriter.
Security ownership of certain beneficial owners..., p. 23
12. Please confirm that the shares listed on the table include
shares
that could be obtained by the named individual within the next 60
days.
Business, p. 26
13. In this section, you have included a number of statements of
opinion or belief in describing the company and its products. As
one
example only, you refer to "exquisite custom products that will
appeal to any market segment." In light of your status as an
early
stage company with no significant share in the market for
diamonds,
these statements of belief appear to be premature. Please review
this section and remove all such statements or phrases that
reflect
opinion and limit your disclosure to the material facts relating
to
the company and its business.
Internet and online commerce, p. 27
14. The data that you have provided in the first paragraph does
not
appear relevant to the business. Please delete this information
as
it may confuse investors. Similarly, since the company is
limiting
sales to its online store, the data $51B figure on page 28 may
also
confuse investors and should be deleted.
Management`s Discussion and Analysis or Plan of Operations, page
33
15. Please discuss each critical accounting policy including the
estimates and judgments made and how those estimates and judgments
could affect your results of operations. It appears at a minimum
that you have critical accounting estimates for revenue
recognition
and accounts receivable.
Known Material Trends and Uncertainties
Description of Property, page 36
16. We note that you did not record an expense for the office
space
and equipment provided by the directors of the Company for your
principal executive offices. We believe your historical financial
statements should reflect all costs of doing business. Please
tell
us the fair value of both the office space and related equipment
and
how the fair values were determined.
Recent Sales of Unregistered securities, p. 39
17. For each sale listed, please disclose the exemption from
registration that the company relied upon in connection with the
sale.
Report of Independent Registered Public Accounting Firm, page F-1
18. Your auditors` report should include the signature of the
auditor. In addition, in the first paragraph you reference May
31,
2004 which is a date prior to inception. Also, the third
paragraph
should cover the results of operations and cash flows for the
Company`s fiscal year-end. The third paragraph currently includes
the period July 26, 2004 to August 31, 2004. Please update your
auditors` report accordingly.
Consolidated Financial Statements
19. Please provide updated financial statements and financial
information throughout the filing pursuant to Rule 310(g) of
Regulation S-B.
Notes to the Consolidated Financial Statements
Note 1. Development Stage Company, page F-6
20. On page F-6 you disclose that the existing shareholders of the
Company will offer shares for resale at $0.20 per share until the
shares are quoted on the OTC Bulletin Board yet you disclose on
page
3 of the Prospectus that the selling shareholders will sell at a
price of $0.40 per share. Please revise your filing for
consistency.
Note 2. Summary of Significant Accounting Policies
(l) Revenue Recognition, page F-8
21. We refer to page 33, where you state that customers have 30
days
after delivery to return or exchange the product purchased.
Please
tell us and disclose your consideration of SFAS 48. Please
specifically address paragraphs 6 and 8 of SFAS 48 in your
response.
In addition, please expand the Company`s revenue recognition
policy
to discuss any items that reduce gross revenue such as cash
rebates,
returns, and any other discounts or allowances.
As appropriate, please amend your filing 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 file your cover letter on
EDGAR under the form type label CORRESP. 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 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 Dana Hartz at (202) 551-3648 or Joseph
Roesler,
at (202) 551-3628 if you have questions regarding comments on the
financial statements and related matters. Please contact Zafar
Hasan
at (202) 551-3653 or me at (202) 551-3715 with any other
questions.
Sincerely,
Jeffrey Riedler
Assistant Director
cc: Penny Green
Bacchus Law Group
1511 West 40th Avenue
Vancouver, British Columbia V6M 1V7
F: 604-408-5177
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