99 CENT STUFF LETTEHEAD
August 12, 2005
Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Washington, DC 20549
Attention: George F. Ohsiek, Jr.
Re: 99 Cent Stuff Inc. File No. 0-50581
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Ladies and Gentlemen:
This letter is written in response to the letter dated August 2, 2005
pursuant to which the staff provided comments to the Form 10-K for the Fiscal
Year Ended December 31, 2004 ("10-K") and the Form 10-Q for the Fiscal Quarter
Ended March 31, 2005 ("10-Q") for 99 Cent Stuff Inc. (the "Company"). For your
convenience, the responses are keyed to the comments.
Form 10-K for the Fiscal Year Ended December 31, 2004
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Item 7. Management's Discussion and Analysis of Financial Condition and
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Results of Operations
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Contractual Obligations and Commercial Commitments
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1. In all future filings, the Company will disclose all long-term debt
obligations in the table of contractual commitments, including, the note payable
to related party.
Item 9A. Controls and Procedures
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2. In response to this comment, commencing with the Form 10-Q for the Fiscal
Quarter ending June 30, 2005 and in all future filings, the Company will clarify
whether the officers concluded that the disclosure controls and procedures were
also effective to insure that information required to be disclosed in the
Exchange Act reports has been accumulated and communicated to management,
including the CEO and CFO, to allow timely decisions regarding timely
disclosure. Further we confirm that the inclusion of this full definition would
not result in a change in our conclusion as to the effectiveness of disclosure
controls and procedures as of December 31, 2004.
Consolidated Statements of Operations
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3. Raymond Zimmerman, the Company's chief executive officer and majority
shareholder does not receive a salary. However, as disclosed in the proxy, in
2004 the Company paid or reimbursed $40,778, which the Company deems as
compensation to Mr. Zimmerman. The Company continues to pay these medical
expenses on behalf of Mr. Zimmerman and expects a similar amount to be paid in
2005. Further, as disclosed in Liquidity and Capital Resources and Note 4 to the
Company borrows from Bank of America at 1% under the prime rate due to Mr.
Zimmerman's personal guarantee. The Company has been paying Mr. Zimmerman a fee
for his guarantee equal to 1% on amounts up to $5 million and 3% on amounts over
$5 million. In 2004, approximately $60,000 was accrued for interest payable to
Mr. Zimmerman and in 2005 such amount was approximately $150,000 through June
30, 2005 and will likely increase for the remainder of 2005 given the level of
outstanding borrowings. Further in 2004 and in 2005 the Company accrued an
additional $150,000 for fees for leases and the bank loans that Mr. Zimmerman
has guaranteed. All of these amounts have been disclosed in the financial
statement notes and management's discussion and analysis. Accordingly, Mr.
Zimmerman received almost $250,000 of compensation in 2004, which the Company
believes represents the fair value of services provided. Any further expense for
2004 would not be material given the Company's loss of over $3.5 million.
In future filings, the Company will indicate these amounts as
additional compensation to Mr. Zimmerman in the compensation table. The Company
will continue to review whether any additional compensation expense needs to be
recorded.
Please contact me with any further questions.
Very truly yours,
/s/ Barry Bilmes
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Barry Bilmes,
Chief Financial Officer
Cc: Daszkal Bolton LLP
Sachs Sax Klein