Mail Stop 3561
September 27, 2006
Mr. Joseph K. Lau
Chairman and President
IWI Holding Limited
Oakmont Centre
1010 Executive Court, #300
Westmont, Illinois 60559
RE: IWI Holding Limited
Form 20-F for Fiscal Year Ended December 31, 2005
File No. 0-25108
Dear Mr. Lau:
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 comments are inapplicable
or
revisions are unnecessary. Please be as detailed as necessary in
your explanation. In some of our comments, we may ask you to
provide
us with information so we may better understand your disclosure.
After reviewing this information, we may 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.
As appropriate, please amend your filing and respond to
these comments within 10 business days, or tell us when you will
provide us with a response. Please furnish a cover letter that
keys
your responses to our comments and provides any requested
information. Detailed letters greatly facilitate our review.
Please
understand that we may have additional comments after reviewing
your
responses to our comments.
Item 5. Operating and Financial Review and Prospects
1. Please identify the most significant trends in sales and
inventory, the state of the order book and costs and selling
prices
since the latest year. Please also discuss for at least the
current
year any known trends, uncertainties and events that are
reasonably
likely to have a material effect on net sales, results of
operations,
liquidity or capital resources, or would cause reported financial
position not necessarily to be indicative of future operating
results
or financial condition. Please refer to Item 5.D. of Form 20-F.
2. Please include a separately-captioned section that discusses
your
off-balance sheet arrangements that have or are reasonably likely
to
have a current or future effect on your financial condition,
revenues
or expenses, results of operations, liquidity, capital
expenditures
or capital resources. The discussion should include the
information
specified in Item 5.E. of Form 20-F. Alternatively, please
include a
statement that there are no off-balance arrangements.
3. Please provide the tabular disclosure of your contractual
obligations contemplated by Item 5.F. of Form 20-F.
Results of Operations
4. Please revise to provide a narrative discussion of the extent
to
which changes in net sales or revenues are attributable to changes
in
prices or changes in the volume or amount of products being sold
or
to the introduction of new products or services. Also provide a
discussion of the impact of foreign currency fluctuations on your
business and operating results. Refer to Item 5.A. of Form 20-F.
Analysis of Financial Position, Liquidity and Capital Resources
5. Please disclose whether your working capital is sufficient for
your present requirements or, if not, how you propose to provide
the
additional working capital needed. Please refer to Item 5.B. of
Form
20-F.
6. Please disclose whether you are in compliance with the
reporting
and financial covenants contained in your credit agreement and the
potential consequences of non-compliance. Please also include
similar disclosure in the Note 4 to your financial statements.
Please refer to SEC Release No. 33-8350.
Item 15. Controls and Procedures
7. We note your statement that "any controls and procedures, no
matter how well designed and operated, can provide only
reasonable,
not absolute, assurance of achieving the desired control
objectives".
Please revise to state clearly, if true, that your disclosure
controls and procedures are designed to provide reasonable
assurance
of achieving their objectives and that your principal executive
officer and principal financial officer concluded that your
disclosure controls and procedures are effective at that
reasonable
assurance level. In the alternative, remove the reference to the
level of assurance of your disclosure controls and procedures.
Please refer to Section II.F.4 of Management`s Reports on Internal
Control Over Financial Reporting and Certification of Disclosure
in
Exchange Act Periodic Reports, SEC Release No. 33-8238, available
on
our website at http://www.sec.gov/rules/final/33-8238.htm.
8. You state that your Chief Executive Officer and your Chief
Financial Officer concluded that your disclosure controls and
procedures were effective in timely alerting them to material
information relating to the Company (including your subsidiaries)
required to be included in your periodic SEC filings. Please
revise
to clarify, if true, that your officers concluded that your
disclosure controls and procedures are also effective (at a
reasonable assurance level) to ensure that information required to
be
disclosed by you in reports filed under the Securities Exchange
Act
of 1934, as amended, is recorded, processed, summarized and
reported
within the time periods specified in the SEC`s rules and forms and
is
accumulated and communicated to your management, including the
Chief
Executive Officer and the Chief Financial Officer, as appropriate
to
allow timely decisions regarding required disclosure. Please also
revise to clearly indicate that the conclusions of your principal
executive and principal financial officers regarding the
effectiveness of your disclosure controls and procedures as of the
end of the period covered by the report. Please refer to Item 15
of
Form 20-F and Exchange Act Rule 13a-15(e).
9. You state that other than the foregoing initiatives, there were
no
"significant changes" in your "internal controls" and other
factors
that could "significantly affect" such internal controls
subsequent
to the date of the evaluation. However, Item 15 (d) of Form 20-F
requires disclosure of any change in the issuer`s "internal
control
over financial reporting" identified in connection with the
evaluation required by paragraph (d) of Exchange Act Rules 13a-15
or
15d-15 that occurred during the period covered by the annual
report
that has "materially affected, or is reasonably likely to
materially
affect, the issuer`s internal control over financial reporting."
In
addition, we do not see any disclosure relating the foregoing
initiatives to address the adequacy of your disclosure controls
and
procedures and to develop and implement a formal set of internal
controls and procedures for financial reporting you are referring
to
in your disclosure in the last two paragraphs. Please revise
accordingly.
Certifications
10. Each principal executive and principal financial officer, or
persons performing similar functions, at the time of the filing of
the report must sign a certification in the form specified in the
applicable exhibit filing requirements and such certifications
must
be filed as exhibits. The certifications required by Section 1350
of
Chapter 63 of Title 18 of the United States Code must also be
signed
by each principal executive and principal financial officer of the
issuer. Please refer to Rule 13a-14 or Rule 15d-14 of the
Exchange
Act. We note that Mr. Kenneth S. Rich signed certifications in
his
capacity as Controller. We also note that Mr. Joseph K. Lau,
listed
in Item 6 as your Chairman, President, Principal Financial Officer
and Secretary, signed certifications as Chairman, President and
Director. Please revise to provide certifications signed by your
principal executive officer and principal financial officer in
their
capacities as such. Please also revise to file the certifications
as
Exhibits, listing them in the Exhibit Index. Please refer to the
Instructions as to Exhibits of Form 20-F.
Financial Statements
Note 3. Summary of Significant Accounting Policies
11. Please disclose the types of costs included in costs of sales
and
the types of costs included in selling, general and administrative
costs.
Inventories
12. Please disclose the amounts of raw materials, work-in-process
and
finished goods inventories. Please also disclose the types of
costs
that are capitalized in inventories. Please refer to Rule 5-02.6
of
Regulation S-X.
Revenue Recognition
13. We note your disclosure that you recognize revenue when
materials
are relieved from inventory and shipped. Please revise your
revenue
recognition policy to address when title and the risks and rewards
of
ownership pass to the purchasers of your products. In addition,
disclose your accounting policies regarding returns and discounts
and
how you estimate returns and discounts in arriving at net sales.
14. Please disclose your accounting policies relating to shipping
and
handling revenues and costs. Refer to EITF 00-10.
Depreciation
15. Leasehold improvements should be depreciated or amortized over
the useful lives of the leasehold improvements or the term of the
lease agreements, including reasonably assured renewal periods,
whichever is shorter. Please refer to SFAS 13, paragraph 5(f).
Please clarify your disclosure or revise accordingly.
Advertising Costs
16. Please tell us whether you pay slotting fees or have
cooperative
advertising or buydown arrangements with purchasers of your
products.
If so, please provide your accounting policies with respect to
these
activities. Also, if you record the costs as other than
reductions
of your revenue disclose the dollar amounts of such costs and the
line item(s) in your financial statements where such amounts are
included and tell us why your classifications are appropriate.
Refer
to EITF 01-09.
17. If you receive cash consideration from vendors in the form of
rebates, discounts or cooperative advertising, please disclose
your
accounting policies relating to these activities. If you record
the
amounts of the consideration received outside costs of sales,
please
disclose the dollar amounts of such costs and the line item(s) in
your financial statements where such amounts are included and tell
us
why your classifications are appropriate. Refer to EITF 02-16.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment 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.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments 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 our review of your filing or in
response to our comments on your filing.
You may contact Sondra Snyder at (202) 551-3332, or in
her
absence, William Thompson at (202) 551-3344 if you have questions
regarding comments on the financial statements and related
matters.
Please contact me at (202) 551-3849 with any other questions.
Sincerely,
James A. Allegretto
Senior Assistant Chief
Accountant
Mr. Joseph K. Lau
IWI Holding Limited
September 27, 2006
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