April 5, 2007
By facsimile to (310) 552-5001 and U.S. Mail
Mr. Luo Ken Yi
China Architectural Engineering, Inc.
105 Baishi Road
Jiuzhou West Avenue
Zhuhai 519070, People`s Republic of China
Re: China Architectural Engineering, Inc.
Pre-effective Amendment 2 to Registration Statement on Form
SB-2
Filed March 13, 2007
File No. 333-138603
Dear Mr. Luo:
We reviewed the filing and have the comments below.
Principal Terms of the Share Exchange, page 3
1. Please revise the new disclosure in this section to clearly
describe which shares are being registered now and which will be
registered later. Currently, this discussion is difficult to
follow.
Capitalization, page 21
2. We note your response to prior comment 7. It remains unclear
to
us why your total capitalization differs from your total
stockholders` equity. As previously requested, please revise your
disclosure to explain the difference between these two numbers.
Selected Consolidated Financial Data, page 23
3. We note your response to our prior comment 9. As previously
requested, please revise your selected financial data to include
cash
dividends declared per share as required by Item 301 of Regulation
S-
K.
Dilution, page 22
4. As requested in prior comment 1, please include all non-Rule
430A
information missing from the registration statement, including the
second table in the dilution section.
Liquidity and Capital Resources, page 32
5. We note your response to prior comment 15. As previously
requested, please ensure that the balances disclosed in your
analysis
of cash flows agree with the balances as indicated on the face of
your financial statements.
Executive Compensation, page 47
6. Please elaborate upon how you determine the amount of bonus to
pay
the executive officers. We note your statement that bonuses are
paid
for individual and company achievement and that bonuses were paid
in
2004, 2005, and 2006. Please disclose what measures of individual
and company achievement and any formulae that you have used to
determine the disclosed bonus amounts for each officer.
7. We note also that you have not yet developed a compensation
program for fiscal 2007. Please discuss how the determination is
made as to when bonuses are granted.
Certain Relationships and Related Transactions, page 49
8. Please discuss your policies and procedures for the review,
approval, or ratification of related party transactions. See Item
404(b) of Regulation S-K.
Financial Statements for the Fiscal Period Ended September 30,
2006
Note 3 - Contract Receivables, page F-14
9. We note your response to prior comment 21. Please confirm to
us,
if true, that you have either recovered or expect to recover the
full
amount of the $1,292,520 of overdue payments. If our
understanding
is correct, please revise your discussion of the related lawsuits
on
page 32 to clarify this matter.
Financial Statements for the Fiscal Year Ended December 31, 2005
General
10. We note that your audited financial statements have changed
from
those appearing in prior drafts of your filing. Specifically,
your
balances for cash and retained earnings have increased by $5,722
for
each of the three years appearing on your balance sheet, this
increase is reflected on your equity statement as an increase to
your
opening January 1, 2003 balance for retained earnings, and this
increase is reflected on your cash flow statement in the new
numbers
shown for your beginning and ending balances of cash for each year
presented. If these changes were unintentional, please revise
your
financial statements. Otherwise, please tell us why these changes
were made, how these changes and your disclosures comply with SFAS
154, and what consideration your auditors gave to addressing this
restatement in their audit opinion.
Consolidated Statements of Income, page F-20
11. Based on your response to prior comment 24, your
classification
of "design fee income" as non-operating income remains unclear.
Please provide us a more detailed explanation of the services that
you provide in exchange for this income. If this relates to
designing curtain walls or other construction projects, please
help
us to understand how you determined that this income did not
represent revenues, including the accounting guidance upon which
you
are relying.
Closing
File an amendment to the SB-2 in response to the comments.
To
expedite our review, CAEI may wish to provide us three marked
courtesy copies of the amendment. Include with the filing any
supplemental information requested and a cover letter tagged as
correspondence that keys the responses to the comments. If CAEI
thinks that compliance with any of the comments is inappropriate,
provide the basis in the letter. We may have additional comments
after review of the amendment, the responses to the comments, and
any
supplemental information.
We urge all persons responsible for the accuracy and adequacy
of
the disclosure in the registration statement reviewed by us to
ensure
that they have provided all information investors require for an
informed decision. Since CAEI and its management are in
possession
of all facts
relating to the disclosure in the registration statement, they are
responsible for the adequacy and accuracy of the disclosures that
they have made.
If CAEI requests acceleration of the registration
statement`s
effectiveness, CAEI should furnish a letter at the time of the
request, acknowledging that:
* Should the Commission or the staff acting by delegated authority
declare the registration statement effective, it does not
foreclose
the Commission from taking any action on the filing.
* The action of the Commission or the staff acting by delegated
authority in declaring the registration statement effective does
not
relieve CAEI from its full responsibility for the adequacy and
accuracy of the registration statement`s disclosures.
* CAEI may not assert our comments or the declaration of the
registration statement`s effectiveness as a defense in any
proceedings initiated by the Commission or any person under the
United States` federal securities laws.
The Commission`s Division of Enforcement has access to all
information that CAEI provides us in our review of the
registration
statement or in response to our comments on the registration
statement.
We will consider a written request for acceleration of the
registration statement`s effectiveness under Rule 461 of
Regulation C
under the Securities Act as confirmation that those requesting
acceleration are aware of their responsibilities under the
Securities
Act and the Exchange Act as they relate to the proposed public
offering of the securities specified in the registration
statement.
We will act on the request and by delegated authority grant
acceleration of the registration statement`s effectiveness.
You may direct questions on accounting comments to Dale
Welcome,
Staff Accountant, at (202) 551-3865 or Jennifer K. Thompson, Staff
Accountant, at (202) 551-3737. You may
direct questions on other comments and disclosure issues to Edward
M.
Kelly, Senior Counsel, at (202) 551- 3728 or me at (202) 551-3760.
Very truly yours,
Pamela A. Long
Assistant Director
cc: Thomas J. Poletti, Esq.
Anh Q. Tran, Esq.
Kirkpatrick & Lockhart Nicholson Graham LLP
10100 Santa Monica Boulevard, 7th Floor
Los Angeles, CA 90067
Joseph V. Stubbs, Esq.
Scott Galer, Esq.
Stubbs Alderton & Markiles, LLP
15260 Ventura Boulevard, 20th Floor
Sherman Oaks, CA 91403
Mr. Luo Ken Yi
April 5, 2007
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE