Mail Stop 4561
February 16, 2006
John Lai
President
Viper Powersports, Inc.
5733 International Parkway
New Hope, Minnesota 55428
Re: Viper Powersports, Inc.
Amendment Nos. 1 and 2 to Registration Statement on Form
10-SB
Filed January 19 and February 2, 2006
File No. 0-51632
Dear Mr. Lai:
We have the following comments concerning the amended Form
10SB
of Viper Powersports, Inc. Where indicated, we think you should
revise your document in response to these comments.
General
1. We note your response to our prior comment no. 2. Pursuant to
Item 310 (b) of Regulation S-B please revise your interim
financial
statements to include Statements of Operations and Cash Flows for
the
comparable preceding interim period. Also disclose material
accounting changes pursuant to Item 310 (b) (2) (v) of Regulation
S-
B, if any.
Business, page 1
2. Please refer to prior comment 3. Please disclose the dollar
value
of the securities issued in the reverse acquisition. Also,
disclose
the names of the principals of Viper Powersports (formerly ECCO
Capital Corporation).
3. Please see prior comment 9. Revise the discussion relating to
manufacturing and suppliers so that it is tailored to your company
and business. In this regard, expand the discussion to provide
more
specific information as to the nature and breadth of your
dependence
on vendors and suppliers. For example, what categories of vendors
and suppliers are you dependent upon? Are they many or few? Do
you
have any plans to put in place written agreements? Revise the
related risk factor as applicable.
4. Please see prior comment 10. You have not provided us with
data
to support your statement that "heavyweight motorcycle sales in
the
U.S. have increased each year from 1992 to 2004." In addition,
please tell us whether Harley-Davidson, Inc. has consented to the
use
of its name your document. If not, are the statistics you cite
publicly available through some other source? Alternatively, you
may
adopt the statistics as your own.
Plan of Operation and Management`s Analysis of Financial
Condition,
page 8
5. We note your response to our prior comment no. 14 and that you
do
not believe Item 303 (b) of Regulation S-B applies. Considering
that
you had sales in each of the last two fiscal years, revise your
filing to supplement your plan of operations with the information
pursuant to 303 (b) of Regulation S-B. In addition, update your
disclosures to discuss results of operations through the most
recent
interim period.
6. We note your response to our prior comment no. 17 that the
Company
is uncertain as to how they will address any short fall in working
capital. In accordance with FRC 607.02, filings containing
accountant`s reports with emphasis paragraphs that question an
entity`s continued existence must contain appropriate and
prominent
disclosure of the financial difficulties and viable plans to
overcome
these difficulties. Additionally, Management`s Discussion and
Analysis should include a reasonably detailed discussion of the
Company`s ability or inability to generate sufficient cash to
support
its operations during the twelve-month period following the date
of
the financial statements. Revise the filing accordingly. If
management has no such viable plan, explain why management
believes
it is appropriate to continue presenting the financial statements
on
a going concern basis.
7. We note your response to comment no. 21 and disclosures
relating
to critical accounting polices. Your disclosures in certain
circumstances appear to focus on the mechanics of your accounting,
such as control over inventory or when you test for impairment, as
opposed to your policy for accounting for inventory and related
inventory reserves and how you test for impairment and the
estimates
used in your accounting. Revise your disclosures as necessary to
address the estimates and assumptions relating to your critical
accounting policies. Further, tell us why you do not consider
revenue recognition a critical accounting policy.
8. We note your response to comment no. 22 and that you were not
aware of the AICPA Practice Aid. Now that you are aware of the
AICPA
Practice Aid tell us how you considered its accounting and
disclosure
provisions. Further, as previously requested, revise to disclose
the
valuation methods used by the Board of Directors and related
assumptions to determine the fair value of common stock underlying
warrants and options granted and issued for goods or services. In
addition, tell us whether the valuations performed by the Board of
Directors were contemporaneous or retrospective.
Certain Relationships and Related Transactions, page 21
9. Please see prior comment 30. Consistent with your written
response, disclose that you have no plans, arrangements or
understandings to pay accrued earnings in the future.
10. Please see prior comment 31. You state on page 21 that as
part
of the 2005 reorganization, the company converted $4.7 million in
outstanding debt into capital stock of the company. Please
clarify
for each related party the amount of debt owed and the amount of
stock issued. Also specify to whom the accounts payable and
accrued
compensation were paid. To the extent that accrued compensation
is
reflected in the summary compensation table, please disclose this
in
a footnote to the table.
11. Please see prior comment 32. We note that you have filed as
exhibit 10.5 an agreement between Viper Powersports and Racing
Partners, which, by its terms, terminated in 2004. If a new
arrangement or understanding was entered into with Racing Partners
with regard to the services rendered in 2005, please file a copy
of
the agreement covering the services that totaled $120,000.
Disclose
the material terms of this agreement and state whether the pricing
terms are the same as what you would have obtained if the
agreement
had been negotiated at arm`s length.
Consolidated Financial Statements
Consolidated Statements of Stockholders` Equity (Deficit), page F-
5
12. We note your response to comment no. 42 and revised
disclosures
relating to the rights of preferred shareholders. Tell us how you
considered paragraph 9 of SFAS 128 as it relates to including
dividends on preferred stock in your computation of earnings per
share. Further revise to present income / loss applicable to
common
stock on the face of the income statement in accordance with SAB
Topic 6B.
13. We note your response to comment no. 43. It is not evident
from
your response how you considered the provisions of EITF 00-19 and
SFAS 133 in accounting for warrants and any convertible debt or
preferred stock issuances. We refer you to Current Accounting and
Disclosure Issues in the Division of Corporation Finance, which is
available on our website at
http://www.sec.gov/divisions/corpfin/acctdis120105.pdf. In your
response address your consideration of that guidance.
Notes to Consolidated Financial Statements
Note 1. Nature of Business and Summary of Significant Accounting
Polices, page F-7
Revenue Recognition
14. We note your response to comments no 45 and 46 and revisions
to
your revenue recognition disclosures. Confirm that you will not
recognize revenue until a dealer has paid the financing company.
Further tell us the standard payment terms that the dealer
receives
from the financing company (i.e., 36 months, 12 months, etc.) and
how
you considered disclosing this information. In addition, provide
us
examples of the accounting entries to record a sales transaction.
Note 2. Equity Financing Agreements, page F-11
15. We note your disclosure of the Company`s arrangement with
Cornell
Capital Partners. Considering disclosures in other sections of
your
filing regarding the termination/validity of the arrangement with
Cornell, tell us why this information is not disclosed in your
audited financial statements.
Note 3. Purchase of Engine Development Technology, page F-12
16. We note your response to comment no. 48. Clarify the basis
for
your response that SFAS 2 does not apply to intangible assets
acquired. Paragraph 11 c of SFAS 2 specifically addresses
Intangibles purchased from others and the related accounting for
those intangibles. Considering this, we reissue our comment no
48,
in part, as it relates to the Company`s basis for not expensing
engine development costs. Address your consideration of paragraph
11
c of SFAS 2 in your response.
Note 6. Common Stock Warrants and Options, page F-16
17. We note your response to comments no. 51 and 52. We reissue
our
comments, in part. Provide us any cash sales of you equity
securities
to unrelated third parties that support the fair value of your
common
stock on the date warrants, options or common stock were issued
for
goods and services. Further tell us the valuation methodology and
related assumptions used by the Board of Directors to determine
the
fair value of your common stock and the related dates of those
valuations, if any.
18. It does not appear from note 6 that you have provided all the
disclosures pursuant to SFAS 123 and SFAS 148, such as weighted
average exercise prices, as an example. Revise to disclose
information pursuant to SFAS 123 and SFAS 148.
19. We note you response to comment 53. Now that you are aware of
the AICPA Practice Aid, tell us how you considered the disclosure
guidance in paragraph 179.
* * * * * * * *
Please direct your questions or comments concerning matters
related to the financial statements to Thomas Ferraro at 202-551-
3225. Please address all other comments to Maryse Mills-Apenteng
at
202-551-3457 or the undersigned at 202-551-3730.
Sincerely,
Barbara C. Jacobs
Assistant Director
cc: Via facsimile: 952-941-0908
Robert Knuston, Esq.
Attorney at Law
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John Lai
Viper Powersports, Inc.
February 16, 2006
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