MAIL STOP 3561
October 21, 2005
Mr. Brian Power
President
Golden West Brewing Company, Inc.
945 West 2nd Street
Chico, CA 95928
Re: Golden West Brewing Company, Inc.
Registration Statement on Form SB-2
File No. 333-121351
Amendment No. 3 Filed September 16, 2005
Dear Mr. Power,
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. We reissue comment two from our letter of July 22, 2005.
Please
provide the staff with executed, dated copies of all applications,
including supplemental materials and proofs of filing and receipt,
made to the TTB and California ABC. We note your counsel`s
response
that, "In light of [the Company`s] response to Comment No. 1 and
the
fact that all regulatory approvals have been obtained and the
acquisition consummated, [the Company] would respectfully submit
that
further inquiry into the matter of the Company`s regulatory
submissions is moot."
However, in light of the Company`s history of responding to this
issue and because it appears from the California Department of
Alcoholic Beverage Control ("California ABC") website that the
license issued to Golden West Brewing Company was issued with
"Operating Restrictions," whereas the license appears to have had
no
such restrictions when issued to Butte Creek Brewing Company LLC,
we
reissue our previous comment.
2. In connection with the preceding comment, please advise the
staff
of the full extent of "Operating Restrictions" placed on
California
ABC License Number 425397 and revise your disclosure to discuss
the
full extent of such restrictions.
3. Please file the red-lined version of the amendment in addition
to,
rather than in place of, the regular version of the amendment.
The
latest amendment on Edgar only consisted of the red-lined version.
Furthermore, please clearly mark the changes made in the red-lined
version rather than using to mark sections changed. For
assistance with this matter, please call the SEC`s EDGAR Filer
Support Branch at (202) 551-8900 and ask to speak with the
technical
support team. It appears that the coding contained in the
document
might not be placed in the locations necessary to reflect the
changes
made.
4. We note the most recent amendment includes center justification
for the margins. Left-justification is the most easily readable
format. Consider revising.
Summary, page 1
5. We note your disclosure that you "completed" the acquisition of
Butte Creek on August 31, 2005. We also note the statement
contained
in Exhibit A to the Assignment and Assumption Agreement effective
as
of August 31, 2005 that a detailed schedule of liabilities assumed
by
Golden West would be prepared by Butte Creek and approved by
Golden
West no later than September 30, 2005. Please advise the staff as
to
whether such schedule has been prepared and approved. If it has,
please file the final version as an exhibit with your next
amendment.
Risk Factors, page 6
6. Please revise the subheading to risk factor nine to clarify
that
the loan to third parties is actually to related parties, and name
these related parties in the risk factor narrative.
7. We reissue comment 11 from our letter of July 22, 2005. Please
avoid the generic conclusion you make in several of your risk
factors
that the risk discussed would adversely affect your business or
operations, impact revenue, or that your operations may suffer.
We
direct your attention to risk factors 2, 5, 6, 7, 12, 16, 19, 21,
and
22. Instead, please replace this language with specific
disclosure
of how your business would be affected as well as putting the risk
in
context by making the magnitude of the risk clear.
Management`s Discussion and Analysis or Plan of Operation, page 25
8. We reissue comment 24 from our letter of July 22, 2005. We
note
the shortage of hops in the second quarter of 2005. Please
clarify
whether you anticipate future shortages of hops. Also, discuss in
greater detail the impact the shortage of hops has had or will
have
on your business. Currently you simply state this further
impaired
your limited working capital. Did this increase the price you
paid
for hops? Did this decrease production? Please clarify.
9. We reissue comment 25 from our letter of July 22, 2005. Please
discuss the impact your lack of inventory controls has had to date
or
may have in the future on your business and operations.
10. We note your belief that sales can be increased with increased
market penetration. Clearly state that investors should not place
undue certainty upon such projections.
11. Please expand your disclosure regarding the increase in other
operating expenses for the interim period in 2005.
12.
Reconcile the disclosure on page 29 that "the net proceeds of the
minimum offering should satisfy our working capital requirements
for
approximately five months; if the maximum offering is sold, the
proceeds should be sufficient to satisfy our additional working
capital needs for 12 months" with the disclosure in the use of
proceeds section.
13. Name the three entities that provided the $125,000 loans and
disclose the date of the loan agreement. Disclose the material
terms
of the loans, such as the due date and any interest.
Business, page 33
14. Please disclose the number of shares that were issued in the
acquisition. Currently the disclosure indicates that you issued
an
aggregate of up to 200,000 shares of common stock.
15. We note your supplemental response to comment 32 from our
letter
of July 22, 2005 that your risk factors adequately reflect the
absence of agreements with suppliers. Currently the disclosure
only
indicates that you do not have any long-term contracts for your
suppliers. Please disclose in this section and clarify what you
mean
by long-term contracts. Disclose the types of contracts you do
have
and explain why you do not feel these are material contracts.
Revise
the risk factor subheading to risk factor 22, as appropriate. We
may
have further comment.
16. Name the three distributors that accounted for 25.4% of your
sales for 2004. Provide similar disclosure for the interim period
of
2005. Also, please reconcile with the disclosure in the sales and
distribution section, which indicate that 25% of sales for the
interim period of 2005 were attributable to Mountain People`s
Warehouse and Ray`s is the Place. Also, we note that you have
written agreements with the wholesale distributors. The statement
that you have no commitments or agreements from any of your
distributors or customers contradicts the statement that "we have
written distribution agreements with all of our wholesale
distributors." The agreements with your major distributors are
material and should be filed as exhibits.
Trademarks and Intellectual Property, page 41
17. We reissue comment 35 from our letter of July 22, 2005. We
note
your filing of the Trademark Assignment Agreement as an exhibit to
the Registration Statement. Please file a final, dated (complete
with month and day) and executed copy of the agreement. We may
have
further comment. Disclose whether any consideration was paid as
part
of the assignment. Again, contrary to your counsel`s response
letter, a conformed copy of the amendment was not filed.
Facilities, page 44
18. We note that the monthly rent amount goes up in July 2006.
Please disclose the amount that will be paid monthly after July
2006.
Also, clarify that the monthly rent may be increased if the
Consumer
Price Index increases.
Management, page 45
19. Please update your disclosure with respect to the status of
the
Mr. Power`s appeal of the SEC`s finding that Mr. Power had
violated
Section 10(b) of the Securities Exchange Act of 1934 and Rule
10(b)(5).
Certain Relationships and Related Transactions, page 51
20. We note that the certificates evidencing the 400,000 shares
issued to five investors for certain assets acquired from Alta
Group
have not yet been issued, even though the exchange occurred in
December 2003. We also note your supplemental response to comment
37
from our letter of July 22, 2005, that you have not issued the
certificates for any of the common stock issued to date. Please
discuss any possible liability that may result from the company`s
failure to issue the certificates to date, such as any breaches of
contractual obligations.
The Offering, page 55
21. We reissue comment six from our letter of July 22, 2005.
Please
remove the reference on page 54 as to the minimum being on an
"all-
or-none" basis. The offering appears to be a best efforts
offering
on a minimum-maximum basis and the reference to "all-or-none"
could
be confusing.
22. With reference to your responses to comments 40 and 41 from
our
letter of July 22, 2005, we have referred your filing to the
Division
of Market Regulation. Additional comments will be forthcoming.
23. Disclose the material terms of the escrow agreement. For
example, discuss the fee to be paid to the escrow agent.
Additional Information, page 59
24. Please note the Commission`s new address:
100 F Street, NE
Washington, DC 20549
Financial Statements
Audit Report, page F-3
25. We note your responses to prior comments 44 and 45. As the
previously filed financial statements are publicly available
through
your SEC filings, we believe that the revision to the financial
statements constitutes a restatement that should be disclosed in a
footnote to the financial statements as well as the independent
auditor`s report. Please discuss with your independent
accountant,
and revise the financial statements and related audit report
accordingly.
Note 11 - Subsequent Events, page F-17
26. We note your disclosure regarding the borrowings totaling
$125,000 that occurred between March and September 2005. Please
revise your disclosure to clarify the amount of these borrowings
that
was outstanding at June 30, 2005.
Part II
Exhibits
27. We partially reissue comment 48 from our letter of July 22,
2005.
Please file an executed and dated copy of the July 31, 2005
Amendment
to the Asset Purchase and Sale Agreement, referenced in the
Assignment and Assumption Agreement filed as an exhibit with your
last amendment.
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 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 Carlton Tartar at (202) 551-3387 if you have
questions regarding comments on the financial statements and
related
matters. Questions on other disclosure issues may be directed to
John Zitko at (202) 551-3399, or Pamela Howell, who supervised the
review of your filing, at (202) 551-3357.
Sincerely,
John Reynolds
Assistant Director
cc: Clifford L. Neuman
Fax: (303) 449-1045