HART & TRINEN
Attorneys at Law
1624 Washington Street
Denver, Colorado 80203
(303) 839-0061
(303) 839-5414 (fax)
December 9, 2005
Duc Dang
Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Washington, DC 20549
Re: Bella Trading Company, Inc.
Registration Statement on Form SB-2
File Number 333-121034
Dear Mr. Dang:
This office represents Bella Trading Company, Inc. (the "Company").
Amendment No. 3 to the Company's Registration Statement on Form SB-2 has been
filed with the Commission.
Initially, we take note of the second paragraph of your August 9, 2005
letter which states, in part, as follows:
"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."
Staff comments should focus on disclosures which are material to an
investor. Matters which may be of curiosity to a particular staff member are not
necessarily material. Likewise, issues pertaining to presentation or style, to
the extent that the presentation or style is not materially misleading, should
be left to the discretion of the registrant.
In our opinion many of the comments in the staff's August 9, 2005 letter
do not in any way pertain to the disclosure of material information and can only
be considered as harrassment.
This letter contains the Company's responses to the comments received from
the Staff by letter dated August 9, 2005. The paragraph numbers in this letter
correspond with the numbered paragraphs in the Staff's comment letter. A
numerical reference next to a response indicates the page where changes have
been made in response to the comment. The letters "FS" under the Page No. column
refer to page numbers of the Company's financial statements.
Page Reference
1. The prospectus filed as part of Amendment No. 3 has page
numbers. 2
2. We have removed all references to Rule 416. Cover Page
3. Comment complied with. 2
4. The prospectus has been amended to show that the offering
will continue until July 31, 2006. 1, 18
5. For ease of identification the risk factor headings have
been underlined. 4, 5, 6
6. Comment complied with. 5
7. From the standpoint of almost all investors, there is
only one risk and that is that the price of a security
will go down and not up. People buy stocks for one
reason and that is to make money. The only way to make
money is for the stock price to go up. People do not
invest in stocks so they can receive annual reports
(which they do not read) or receive invitations to
shareholder meetings (which they do not attend). For the
most part investors do not care why the price of stocks
which they own goes up and down, they only care if the
price goes up or down. In the last sentence of the first
paragraph of the risk factor section of the prospectus it
is disclosed that Bella's common stock could decline if
any risk materializes.
Each bullet point in the risk factor which is the subject
of this comment discloses a reason why Bella may not be
profitable. Bella's inability to earn a profit may cause
Bella's common stock to decline. As such, there is simply
no reason to present each bullet point as a separate risk
factor since each one would lead to the same result i.e.
if the risk occurs Bella may never earn a profit and if
Bella does not earn a profit the price of Bella's common
stock may decline.
Nothing in the Commission's rules or regulations,
including Release 33-7497 or Rule 421(b), prohibits this
style of disclosure. In fact Rule 421(b)(1) mandates the
use of bullet lists.
The presentation of the information in this risk factor
is a question of style and should be left to the
discretion of the registrant. N/A
8. We have removed the risk factor which is the subject of
this comment. It is self-evident that there is a market
in the United States for jewelry. 5
9. Comment complied with. 8
2
10. Comment complied with. 8
11. The amended registration statement contains financial
information for the years ended September 30, 2004 and
September 30, 2005. Sales between these two periods were
comparable. 10
12. The gross profit is shown in the statements of
operations. Instruction 4 to Item 303 of Regulation S-K
provides that "Registrants need not recite the amounts of
changes from year to year which are readily computable
from the financial statements. The discussion shall not
merely repeat numerical data contained in the
consolidated financial statements." N/A
13. The reference to Christmas prices has been removed from the
prospectus since the MD&A discussion now pertains to the
years ended September 30, 2005 and September 30, 2004. N/A
14. Why would an investor care as to what portion of the
$18,000 was paid by private placement funds? To the
extent anyone would care the statements of cash flow
included as part of the prospectus provide all
information concerning the cash generated and used by the
Company since its inception. The amount of cash which
the Company netted from its private placement is also
shown in the statement of cash flows and need not be
repeated in this section of the prospectus. We revised
the prospectus to disclose the amount of cash on hand as
the most practical date. This comment also requests the
Company to disclose "your operating expenses for the
disclosed periods and reasons behind such expenses". Are
you serious? Do you really want the Company to disclose
the reasons it incurred operating expenses? This is a
comment which has no purpose other than to harass the
registrant. N/A
15. We have expanded disclosure concerning the Company's
website and who will undertake the Company's promotional
activities. With the use of any computer an "advertising
flyer" can be prepared in less than 15 minutes and copied
at a cost of 5 cents per flyer. Anyone who has ever held
a garage sale knows how easy it is to prepare an
"advertising flyer". Anyone who knows the directions to
Office Max, Office Depot, Kinko's or any similar office
supply store knows how inexpensive it is to copy an
"advertising flyer". Disclosing the details of a simple
and routine task such as preparing and copying flyers
would not provide any material information to a
prospective investor. 14, 15
16. Comment complied with. 17
17. The Company has not conducted any research regarding the
use of catalogues. We have added catalogues to the list
of advertising methods. 15
18. Comment complied with. 11
19. Item 101.c.x of Regulation S-K allows an issuer to name
its major competitors. A competitor sells the same
products or services as a registrant. If the Company
would be allowed to reference Zales and Whitehall in the
section of the prospectus dealing with competition, why
would the Company be prohibited from stating elsewhere in
the prospectus that it provides the same type of jewelry
sold by Zales and Whitehall? Nothing in the rules or
regulations of the SEC prohibits this type of disclosure
and since it is absolutely true, it cannot be misleading.
I think the inventors of the Plain English Language rule
would faint if they knew the staff was requesting the Company
to define the term "contemporary jewelry. If you log onto AOL
and do a search for which contain nothing but matches to
"contemporary jewelry". Why does the whole world know the
meaning of the term contemporary jewelry, yet this term
remains a mystery to the staff?
Nevertheless we have added a definition of the term
contemporary jewelry to the prospectus. 3
20. Comment complied with. Documentation to substantiate the
disclosures which are the subject of this comment will be
sent under separate cover. 13
21. Who cares how the products are designed? Maybe they are
designed by the vendor's mother-in-law. Maybe they are
designed by the vendor's old drinking buddy who now lives
in Cleveland. All that is important is that the Company
selects those products offered by the vendor which it
believes it can sell at a profit. Who designs the
products is not material. Again this is another example
of a comment which is not designed to provide any
material information to an investor but is only designed
to harass the Company. N/A
22. Since the Company's business plan does not reflect an
intention to publish a catalogue you are correct in
inferring that the Company's reference to catalogues is a
reference to catalogues owned or run by other entities.
Since the Company is not in the catalogue business it
does not know how catalogue orders are structured. Since
the Company has not began to use catalogues it does not
know if orders will be routed directly to the Company or
through the publisher of the catalogue. We cannot even
imagine why an ordinary and prudent investor would care
whether a catalogue allows customers to purchase directly
from the Company or whether they would be required to
purchase from the catalogue which then routes the order
to the Company. In either case, the Company generates a
sale. N/A
23. Comment complied with. 14
24. Comment complied with. 17
25. It works like this. The Company receives $20,000 from
the sale of the securities in the private placement. The
Company receives a bill from the Company's accountants
for the audit of the Company's financial statements which
are included in the registration statement. It writes a
check from its checking account to pay the accountants.
The Company also writes a check for office supplies (i.e.
general administrative expenses) from the same checking
account. This is how it is able to use the funds from
the private placement to pay the expenses of this
offering and some of its general and administrative
expenses. N/A
26. How can the officers of the Company rely on Rule 3a4-1 if
they participated in the Company's private placement
which was conducted less than twelve months prior to the
time the Company filed its initial registration
statement. Insofar as the "detailed analysis" which is
requested by this comment we direct you to our response
to comment 66 of the staff's letter dated January 11,
2005. N/A
27. We recently had the opportunity to review the registration
statements filed by Cynosure, Inc. and Basic Energy Services,
Inc. in connection with their initial public offerings. We
understand these registration statements recently became
effective. Our review of these registration statements
revealed absolutely nothing:
o Concerning how an investor can purchase shares
offered by the prospectus,
o Whether the investor will receive a confirmation of the
purchase,
o Under what circumstances a potential investor
could withdraw a subscription or how the "mail
box" rule would apply in such a situation.
Although we consider this comment insulting we have
nevertheless removed the word "anticipates" from the
prospectus. 19
28. The prospectus has been modified in response to this
comment. 19
29. We have revised the prospectus to disclose how purchasers
will send the Company "subscriptions". The Company does
not have a document which will evidence the acceptance of
the Company's offer. In this regard we call your
attention to Section 4-8-113 of the Uniform Commercial
Code which is applicable in Colorado and almost all other
jurisdictions. 19
30. What does prior comment 45 have to do with the Company's
ability to pay its current expenses? We cannot explain
how the Company's available funds will be enough to pay
for its current offering expenses since, as disclosed in
the prospectus, the remaining offering expenses will be
paid from the proceeds of the offering. Prior comment 45
only related to the difference between the gross and net
proceeds of the Company's private offering. Prior
comment 45 had nothing to do with the Company's ability
to pay its offering expenses. What was the point of
reissuing prior comment 45? N/A
31. Comment complied with. F-11, F-12
32. We have modified the registration statement in response to
this comment. Item 26
If you should have any questions concerning the above please do not
hesitate to contact the undersigned.
Very truly yours,
HART & TRINEN, L.L.P.
William T. Hart
WTH:ap