September 21, 2005
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: Julie Sherman
Re: Enova Systems, Inc.
Responses to Comments
Form 10-K for the year ended December 31, 2004
Filed March 31, 2005
SEC File No. 0-25184
Dear Ms. Sherman:
In response to the SEC's comments on the Form 10-K for the year ended December
31, 2004, Enova Systems submits the following responses
Item 9a, Controls and Procedures, page 37
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1. The Company acknowledges its understanding that it is not appropriate
to qualify its conclusion with respect to the effectiveness of its
disclosure controls and procedures.
Future filings will include revised language to be consistent with the
definition of disclosure controls and procedures set forth in Rule
13a-15(e) of the Exchange Act.
2. All future filings will include additional disclosures that, "the
Company's system of internal control over financial reporting is
designed to provide reasonable assurance that the objective of the
system will be met," and "that the design and operation of [our]
system of internal controls does in fact provide reasonable assurance
in achieving the objectives of the system" consistent with Part II.F.4
of Release No. 33-8238.
3. All future 10-K filings commencing with our 2005 year-end will address
changes in our internal control over financial reporting to indicate
whether there was any change in our internal control over financial
reporting that occurred during the fourth quarter that has materially
affected or is reasonably likely to materially affect our internal
control over financial reporting as required by Item 308(c) of
Regulation S-K as amended effective August 13, 2003.
Note 1. Organization and Line of Business, page 11
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4. On September 19, 2005, the Company filed Form 10-K/A for the year
ended December 31, 2004 with the Rule 3-09 of Regulation S-X financial
statements for the Hyundai-Enova Innovative Technology Center (HEITC)
because the 40% investment in the HEITC exceeded 20% of Enova's total
assets as of that date. Future filings of Form 10-K will also be filed
in conformance with this regulation as well as Form 10-Q including the
disclosure required by Item 4-08(g) of Regulation S-X for any
significant equity method investees above the 20% threshold. Based on
the Company's total assets as of the date of this response, Rule 3-09
no longer applies to the HEITC as it no longer represents over 20% of
the Company's total assets due to a capital infusion of approximately
$18 million in July 2005.
Supplemental Information, page 30
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5. Our auditor for the 2002 financial statements was Moss Adams. Although
Rule 5-04 of Regulation S-X requires Schedule II to be filed for each
period for which an audited income statement is provided, we also
understand that the rule states that if the information, including
notes, required by the schedule can be shown in the financial
statements without making the statement unclear or confusing, then the
schedule may be omitted. Additionally, under Rule 4-02, if the amount
is not material, this Rule provides that it does not need to be
presented.
For the year ended December 31, 2002, there was no valuation allowance
against receivables as all receivables were deemed collectible. The
allowance against inventory, which was unchanged at $80,000 since
2000, was deemed immaterial. Therefore a Supplemental Information
schedule was not provided for that year and therefore was no opinion
rendered.
The Company acknowledges:
o it is responsible for the adequacy and accuracy of the disclosure in
the filings;
o SEC staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
o it may not assert any staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
If you have any questions regarding these matters, you may contact me at
310-527-3847.
Very truly yours,
ENOVA SYSTEMS, INC.
By: /s/ Larry Lombard
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Larry Lombard
Chief Financial Officer
cc: Don Dreyer, Audit Committee Chairman
Edwin Riddell, President and CEO
Don Reinke, General Counsel
Elberta Yee, Singer Lewak
Steve Wallaert, Moss Adams