Michael A. Littman
Attorney at Law
7609 Ralston Road
Arvada, CO 80002
(303) 422-8127
Fax (303) 431-1567
malattyco@aol.com
August 15, 2006
VIA FACSIMILE ONLY TO 202-772-9208
- ----------------------------------
Mr. Mark Webb
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: Navidec Financial Services, Inc.
File No. 000-51139
Dear Mr. Webb:
Registrant hereby responds to your letter dated August 3, 2006 as
follows:
General
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Comment #1: We note that you have not responded to the staff's previous
comments concerning your status as an investment company. It is essential to the
staff's review that this issue is resolved. Therefore, as a threshold issued,
please provide us with your legal analysis as to how Navidec Financial Services
is not obligated to register under the Investment Company Act of 1940. We remind
you that a registration statement on Form 10 goes effective automatically 60
days after filing, if it is not officially withdrawn.
Response: The issuer is not an investment company required to register
under the Investment Company Act of 1940 for the following reasons:
Section 3c of the Act provides as follows: "None of the following
persons is an investment company within the meaning of this title":
Mr. Mark Webb
Securities and Exchange Commission
August 15, 2006
Page 2
"...4. Any person substantially all of whose business is confined to
making small loans, industrial banking, or similar businesses.
"...6. Any Company primarily engaged, directly or through majority
owned subsidiaries, in one or more of the businesses described in paragraphs
(3), (4), and (5) or in one or more of such businesses (from which not less than
25 percent of such company's gross income during its last fiscal year was
derived) together with an additional business or businesses, other than
investing, reinvesting, owning, holding, or trading securities."
In the case of the Issuer, in 2005, $1,841,000 of the Company's gross
income came from the operations of Northsight Mortgage Group, LLC. an 80% owned
subsidiary which is actively engaged in the home mortgage origination business,
which is covered under 3c(4) of the Act.
The mortgage services division is focused on the Phoenix and Scottsdale
Arizona markets and is primarily engaged in the business of marketing,
originating, and brokering residential mortgages secured by real estate.
The test of 25 percent of the gross revenue from the Company's last
fiscal year is met as allowed under Section 3c(6) of the Investment Company Act
to exempt the Company from the obligations to register as an investment company.
The Company may act as a developer of, or consultant to, other companies and
businesses, and in fact, the Company is currently negotiating a farmout for a
rework of producing gas wells in Kansas, in which it intends to invest. The
Company is not "primarily engaged in owning, holding, investing, or trading
securities." Any ownership of securities is ancillary to its primary operations
and is not its "business."
In April 2005, NFS acquired a 94% interest in Aegis Business Group,
Inc. ("Aegis"), a technology company that develops and markets security
solutions related to identity and computer access management. In December 2005,
Aegis was sold because the Issuer was unable to liquidae its interest in BPZ
Energy, Inc. and thereby recapitalize Aegis, and it appeared Aegis would
continue to penetrate losses for a sustained period of time. As a result of this
sale, effective December 13, 2005 the Company discontinued all operations within
the technology division. As of that date the operations of Aegis USA, Inc. are
no longer consolidated into the financials of the Company. Aegis was sold for
approximately the basis for which it was purchased, $628,000, but the losses it
had incurred were consolidated into the Company's financial statements resulting
in a gain. A total of $744,000 gain was recognized from the Aegis USA
transaction in 2005 (discontinued operations).
The Company has a business development division which focuses on
identifying and acquiring controlling interests in development stage companies
to further their growth by
Mr. Mark Webb
Securities and Exchange Commission
August 15, 2006
Page 3
providing capital, consulting, personnel and other services, both internally and
through the use of subcontractors. This division also provides consulting,
personnel and other services, both internally and through the use of
subcontractors, to development stage companies, in which the Company may have
decided not to invest. This is usually provided on a contract basis for fees and
related expenses. After evaluating a potential candidate for the probability of
success in its core business and determining its growth strategy and anticipated
capital requirements, the Coompany develops a specific strategy of success with
management of the development stage company and provide personnel and services
to work in concert with the management to develop and execute the business plan.
Aegis was sold for approximately the basis for which it was purchased,
$628,000, but the losses it had incurred were consolidated into Navidec's
financial statements resulting in a gain. A total of $744,000 gain was
recognized from the Aegis USA transaction in 2005 (discontinued operations).
Navidec believes this adequately answers the comment posed by the SEC.
If you have further questions or comments, please let us know.
Sincerely,
/s/ Michael A. Littman
Michael A. Littman
MAL:jb