MAIL STOP 05-11
March 11, 2005
Sara Preston, President
Bella Trading Company, Inc.
945 E. 10th Ave.
Bloomfield, CO 80020
Re: Bella Trading Company, Inc.
Registration Statement on Form SB-2
File No.: 333-121034
Amendment Filed February 7, 2005
Dear Ms. Preston:
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.
Registration Statement Cover Page
1. We note your response to comment 4. Please explain the purpose
of
the disclosure regarding Rule 416.
Risk Factors, page 3
2. We note your response to comment 13. However, the underlined
portions of your EDGAR version and the bolded portion of your
courtesy copy do not match up. To make it easier, please have the
subheadings separate from the narratives. Consider using all
capital
letters, bullets, or actually numbering each risk factor in order
to
show a clear separation between each.
3. We note the first paragraph under "Risk Factors Related to this
Offering," discusses the risk associated with the possibility that
current shareholders may sell at prices below your offering price.
Your MD&A section indicates your anticipation that shares will be
quoted on the OTCBB four months after this registration statement
goes effective. It appears from the Prospectus Cover Page that
your
offering would be completed within four months after the
effectiveness of this registration statement. Please explain the
purpose of risk factor one.
4. While it is not apparent from the EDGAR version, your courtesy
copy indicates that the first and second full paragraphs on page 3
are separate risk factors. Please revise to include a narrative
elaborating on each risk factor. Additionally, the percentage of
Sara Preston`s ownership following the offering appears incorrect.
Please revise.
5. We note your response to comment 7. Please separate the
discussion that applies to the concerns raised in comment 7 into
its
own risk factor.
6. Please revise to relocate the paragraph that begins with "Bella
may never earn a profit[,]" so that it is discussed with the risk
factor discussing your limited operating history. In the
subheading
to that risk factor, please include the disclosure of your
auditor`s
"substantial doubt" as to your ability to continue as a going
concern.
7. We note your list of risks at the bottom of page 4. If the
listed
items encompass material risks, please revise to discuss each as a
separate risk factor or relocate the disclosure to the appropriate
section of your prospectus.
8. Please revise the paragraph that begins with "Bella has not
performed any marketing," to present it as a separate risk factor.
9. It appears from your courtesy copy that the last paragraph in
this
section is a separate risk factor. Please revise to include a
narrative to clarify whether the 25 hours figure is the total time
combined or to be devoted by each officer. Also, discuss the fact
that each officer is employed elsewhere and that their other
responsibilities could take precedence over their duties to the
company.
Dilution and Comparative Share Data, page 5
10. We note the services of your officer are valued at $200 on
this
page and $400 on page 14. Please revise to reconcile. In
addition,
since this valuation presumably took place at the time that the
shares were issued to the officer, supplementally explain the
process
by which this valuation was changed and the legal analysis from
both
a corporate (state law) and securities standpoint of changing the
value of the consideration paid for the shares. We may have
further
comment.
Use of Proceeds, page 6
11. We note your disclosure throughout the prospectus that you
have
already paid $18,000 of the offering expenses. We also note that
an
additional $18,000 of the offering proceeds is allocated to
"offering
expenses." This appears inconsistent. Please revise to correct
the
inconsistency.
12. Please revise to clarify if the private placements were meant
to
provide you with seed capital or a means of funding your current
offering expenses.
13. We note your response to comment 29 that "additional sales
will
result in more cash which Bella could use for marketing." While
that
may prove to be true, it does not address a potential deviation of
the allocation outlined in the use of proceeds section. Please
revise accordingly.
Market For Bella`s Common Stock, page 7
14. We note your response to comment 31. If applicable, please
revise to provide any information required by Item 201(d) of
Regulation S-B.
Management`s Discussion and Analysis and Plan of Operation, page 8
15. We refer to your disclosure of gross profit margins for future
periods. In making projections, please refer to Item 10(d) of
Regulation S-B.
16. We note that you intend to commence your "advertising program"
within one month. Please elaborate on this program. Discuss how
you
will improve your website, any personnel you will have to engage
to
accomplish your goals and the need for and source(s) of any
additional funds necessary to commence your advertising program.
17. We note your intended selling efforts for the next 12 months.
Please revise to elaborate on these efforts. For instance,
discuss
the timeline for the internet sales and whether its completion is
dependent on the success of this offering.
18. We note the disclosure of your capital requirements for the
next
12 months. Please revise to include your unpaid offering expenses
since you will have to pay those regardless of the results of this
offering.
19. We note your statement that you "may" cease operations if
additional financing "is not available when needed." Please
revise
to explain how you would continue if you could not obtain
necessary
financing. If it is not possible, please revise to state that you
"will" cease operations if the noted circumstance occurs.
20. We do not understand your inclusion of the qualifier
"notwithstanding the above" in the last sentence of this section.
21. We note your response to our prior comment number 37. Please
supplementally describe how the company will be able to privately
place equity securities of the company while undertaking the
"general
solicitation" offering of equity securities being made pursuant to
this registration statement.
Business, page 10
22. We note your statement that you do "not design or manufacture
any
jewelry or accessories." Please revise to discuss your "Bella
Studio" creations.
23. We note your reference to Zales and Whitehall jewelers. It is
not apparent that these two companies sell the same type of
"contemporary products" that you currently sell. Please revise to
remove the reference to those two stores.
24. We note your response to comment 48 and the removal of the
language cited in that comment. Please revise to elaborate on
your
contemporary products since your reference to "large U.S. chain
stores" does not provide any more detail than the disclosure in
your
initial filing.
25. Please revise to clarify if the statements made in the fourth
and
fifth paragraphs of this section encompasses both your traditional
and contemporary products.
26. Please revise to clarify if your suppliers have any minimum
purchase requirements.
27. Please revise to clarify if you provide any contemporary
designs
to your suppliers.
28. We note that you usually pay between $3 and $20 for your
products
and that your markup of 300% includes the shipping cost. Please
revise to clarify if the $3 and $20 figures already include
shipping
costs.
29. We note your response to comment 54 that you will increase or
decrease your prices to match those of your competitors. Please
revise to explain how you currently collect your competitors
pricing
data.
30. We note your response to comment 47 and your discussion of how
your current sales were achieved on page 12. Please revise to
define
your use of the terms "home shows" and "studio openings." Also,
please revise to discuss which of the sales mediums were reliable
and
who conducted these sales.
31. We note your disclosure of the retail value of your current
inventory. Please revise to also provide the cost value of your
inventory.
32. Please revise to define your use of the terms "artisan fairs"
and
"select customers." Also, please explain the difference between
an
art studio and a boutique.
33. If during the amendment process you begin selling your
products
on eBay, please revise to provide your seller identification.
34. Please revise to discuss your selling arrangements at the
fairs,
studios, and private showings. For instance, discuss any fees you
must pay to participate and whether the customers are those you
meet
at these mediums or those that were prearranged to view your
products.
35. Please revise to discuss the location of your inventory.
36. We note your response to comment 55 and we reissue the
comment.
In this regard please note that while currently the company may
believe that there may be no differences in the way the company
does
business with vendors in the United States as opposed to vendors
in
foreign countries, clearly there are risks that exist simply by
virtue of differences in conducting business in foreign countries
which need to be addressed.
Management, page 14
37. We reissue comment 56. We direct your attention to the
description of Lesha Barry.
38. We note that Ms. Preston sold ethnic jewelry on a part-time
basis
since August of 2002. Please revise to clarify if the products
she
sold are similar to those currently offered by your company.
Also,
please clarify if Ms. Preston is currently selling such jewelry
independent of your company.
39. We note your disclosure that Ms. Barry was associated with a
"retail outlet." Please revise to identify the outlet or remove
the
reference.
40. We note your disclosure of the projected compensation to be
paid
to your officers. Please revise to clarify if you would pay such
compensation with shares if you are not able to raise a sufficient
amount of funds from this offering.
Executive Compensation , page 14
41. We reissue comment 61.
Offering By Bella, page 16
42. We note your response to comment 66 and reissue the comment.
We
are aware of the definition of a broker in Section 3(a)(4) of the
Exchange Act of 1934. The question of whether a person is
"engaged
in the business" of effecting securities transactions on behalf of
another is a question of fact to be evaluated by each
circumstance.
However, the commission alleviated many of the questions
surrounding
the phrase "engaged in the business" by creating Rule 3a4-1 of the
Exchange Act. The rule is a regulatory safe harbor for those
claiming that they are not "engaged in the business" of
selling/buying on behalf of another. Please refer to the
proposing
release discussing the rule, Exchange Act Release No. 20943. The
first part of the rule expressly states that only those associated
with an issuer may rely on it, as is the case here. The
circumstances you rely upon in your response letter are similar to
those of Rule 3a4-1(a)(4)(ii).
43. We note your response to comment 68 and reissue the comment.
It
appears that you may still accept or reject any subscription. If
true, please revise to discuss the factors you would consider in
making such decisions. Also, please revise to clarify what
results
if a subscription is not accepted within 10 days.
44. Please file the subscription agreement as an exhibit.
45. We also note your disclosure throughout the prospectus that
the
offering expenses already paid were from funds you received in
your
recent private placements ($20,000). Your financial statements
indicate that you only received net proceeds of $16,000 from your
private placements. Please revise to reconcile.
Selling Shareholders, page 17
46. We note your response to comment 69. Please explain the basis
of
your knowledge.
Financial Statements
47. Your attention is directed to Item 310(g) of Regulation S-B
and
the possible need for updated financial statements and related
disclosures.
Part II
Recent Sales of Unregistered Securities
48. We note your response to comment 80. Please revise to discuss
how you complied with Rule 504(b) of Regulation D. Also, please
supplementally provide a copy of the Form D that documents this
transaction.
49. We reviewed your response to comment #81, which states the
accounting treatment "resulted in a value of $200,000 for the
services provided by Ms. Preston, which of course is not
realistic."
Please revise the financial statements to value the issuance of
stock
at the fair value of the services provided by Ms. Preston. Based
on
the disclosure under Item 26, management`s determination of the
fair
value appears to be $400. See SAB Topic 5G for analogous
guidance.
Closing Comments
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 staff comments and the declaration
of
effectiveness 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.
Any questions regarding the financial statements may be
directed to Brian Bhandari at (202) 824-5696. Questions on other
disclosure issues may be directed to Duc Dang at (202) 824-5508.
Sincerely,
John Reynolds, Assistant
Director
Office of Emerging Growth
Companies
cc: William T. Hart, Esq.
Fax: (303) 839-5414
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Bella Trading Company, Inc.
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