DAVID M. LOEV, ATTORNEY AT LAW
6300 WEST LOOP SOUTH, SUITE 280
BELLAIRE, TEXAS 77401
TELEPHONE: (713) 524-4110
FACSIMILE: (713) 524-4122
October 11, 2006
H. Christopher Owings VIA FED-EX
Division of Corporate Finance ----------
United States Securities and Exchange Commission AND VIA EDGAR
Mail Stop 3561 -------------
100 F. Street, N.E.
Washington, D.C. 3561
Phone: (202) 551-3720
Re: Nano Holdings International, Inc.
Amendment No. 1 to Registration Statement on Form SB-2
Filed September 20, 2006
File No. 333-136215
Dear Mr. Owings:
We have enclosed three red-lined copies of the amended registration
statement for your review. In response to your comment letter dated August 24,
2006, Nano Holdings International, Inc. (the "Company" and "Nano") has the
following responses:
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND EMPLOYEES
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1. WE NOTE YOUR RESPONSE TO COMMENT 12 IN OUR LETTER DATED AUGUST 24, 2006.
PLEASE REVISE YOUR DISCLOSURE TO STATE WHETHER THE NAMED PERSONS ARE
COMPENSATED. PLEASE ALSO STATE THAT YOU DO NOT HAVE ANY EMPLOYMENT CONTRACTS IF
TRUE.
Response:
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Nano has added disclosure to the second sentences of both Mr. Rector's
and Mr. Barnes' biographical information regarding the fact that neither
individual has an employment agreement with Nano and/or receives any
compensation from Nano, other than the 100,000 shares previously issued to
Mr. Rector.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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2. WE REISSUE COMMENT 20 IN OUR LETTER DATED AUGUST 24, 2006.
Response:
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Nano has revised the registration statement to better describe the
services performed by Viking Investment Group, Inc. under the Certain
Relationships and Related Transactions section of the registration
statement similar to how it has previously revised the Recent Sales of
Equity Securities section, as you have requested.
CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2006
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REVIEW REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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3. WE NOTE YOUR RESPONSE TO COMMENT 37 IN OUR LETTER DATED AUGUST 24, 2006.
IT DOES NOT APPEAR THAT YOUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
REVISED ITS REVIEW REPORT TO REMOVE THE REFERENCE TO THE STATEMENTS OF RETAINED
EARNINGS AND INSTEAD REFERENCE THE CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY (DEFICIT). THEREFORE, WE REISSUE OUR PREVIOUS COMMENT.
Response:
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Nano has obtained a correctly worded review report from its
independent public accounting firm and included it in the revised
registration statement as you have requested.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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4. WE REVIEWED YOUR RESPONSE TO COMMENT 38 IN OUR LETTER DATED AUGUST 24,
2006. IT DOES NOT APPEAR THAT THE SUMMARY HAS BEEN REVISED TO INCLUDE APPLICABLE
REVISIONS MADE TO THE SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INCLUDED IN THE
AUDITED FINANCIAL STATEMENTS. FOR EXAMPLE, YOUR REVENUE RECOGNITION POLICY HAS
NOT BEEN CLARIFIED. IN ADDITION, CERTAIN SIGNIFICANT ACCOUNTING POLICIES
INCLUDED IN YOUR AUDITED FINANCIAL STATEMENT HAVE BEEN OMITTED. SINCE YOU HAVE
REPEATED SIGNIFICANT ACCOUNTING POLICIES IN YOUR INTERIM FINANCIAL STATEMENTS,
WE BELIEVE THAT THE SUMMARY SHOULD BE AS COMPREHENSIVE AS THE SUMMARY INCLUDED
IN YOUR AUDITED FINANCIAL STATEMENTS. PLEASE REVISE ACCORDINGLY.
Response:
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Nano has revised the summary of significant accounting policies in the
notes to the unaudited financial statements as of June 30, 2006 to match
those presented in the footnotes to the audited financial statements as of
December 31, 2005, as you have requested.
INCOME TAXES
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5. WE NOTE YOUR RESPONSE TO COMMENT 39 IN OUR LETTER DATED AUGUST 24, 2006
AND THE REVISIONS TO YOUR DISCLOSURE IN THE NOTE ON PAGE F-15 OF YOUR AUDITED
FINANCIAL STATEMENTS. IT APPEARS THAT THE ACCOUNTING POLICY INCLUDED IN YOUR
AUDITED FINANCIAL STATEMENTS SHOULD BE THE ACCOUNTING POLICY REFLECTED IN YOUR
UNAUDITED FINANCIAL STATEMENTS. IT ALSO APPEARS THAT THE ACCOUNTING POLICY
INCLUDED IN THE UNAUDITED FINANCIAL STATEMENTS SHOULD BE THE ACCOUNTING POLICY
REFLECTED IN YOUR AUDITED FINANCIAL STATEMENTS. IF OUR UNDERSTANDING IS
INCORRECT, PLEASE ADVISE AND PROVIDE A RESPONSE THAT ADDRESSES COMMENT 39 IN OUR
LETTER DATED AUGUST 24, 2006. OTHERWISE, PLEASE REVISE AND CLARIFY YOUR
DISCLOSURES ACCORDINGLY. IN DOING SO, PLEASE DISCLOSE AND/OR CLARIFY YOUR
DISCLOSURES IN BOTH YOUR UNAUDITED AND AUDITED FINANCIAL STATEMENTS REGARDING:
o THE CHANGE IN YOUR TAXABLE STATUS AS A RESULT OF THE ACQUISITION; AND
o THE AMOUNTS OF DEFERRED TAX ASSETS AND LIABILITIES AND THE
VALUATION ALLOWANCE RECOGNIZED AT THE DATE THAT YOU BECAME A TAXABLE
ENTERPRISE.
Response:
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The disclosure of Income Taxes in the footnotes to the unaudited
financial statements as of June 30, 2006 has been revised to conform to the
disclosure in the footnotes to the audited financial statements dated
December 31, 2005, as you have requested. The act of becoming a taxable
enterprise did not create any deferred tax assets, liabilities or valuation
allowance accordingly none were recognized at the date Nano became a
taxable enterprise and therefore, Nano believes that no additional
disclosure is necessary.
NOTE 4-NOTES PAYABLE
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6. WE NOTE YOUR RESPONSE TO COMMENTS 40 AND 41 IN OUR LETTER DATED AUGUST
24, 2006 AND THE REVISIONS TO YOUR FINANCIAL STATEMENTS AND RELATED DISCLOSURES.
HOWEVER, YOU STILL DISCLOSE THAT THE NOTES ARE PAYABLE ON DEMAND ON PAGE F-9.
PLEASE REVISE YOUR DISCLOSURE ACCORDINGLY. ALSO, PLEASE DISCLOSE IN BOTH YOUR
UNAUDITED AND AUDITED FINANCIAL STATEMENTS THAT THE PAYMENT TERMS OF NOTE
OBLIGATIONS WERE CHANGED ON JULY 31, 2006 AND THAT THE NOTES WERE RECLASSIFIED
FROM CURRENT LIABILITIES AS REPORTED IN YOUR PREVIOUSLY ISSUED FINANCIAL
STATEMENTS TO LONG-TERM LIABILITIES.
Response:
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The description of the notes payable in Note 4 to the unaudited
financial statements as of June 30, 2006 has been revised to conform to the
disclosure in the audited financial statements as of December 31, 2005.
Both the audited and unaudited financial statements have been revised to
disclose that the payment terms of the notes were revised and that the
notes were reclassified from current to long-term liabilities.
NOTE 5- RELATED PARTY TRANSACTIONS
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7. IT DOES NOT APPEAR THAT YOUR DISCLOSURE REGARDING THE AMOUNT OF
UNCOMPENSATED SERVICES RECORDED IN 2005 IS CORRECT GIVEN THE AMOUNT NON-CASH
CHARGES DISCLOSED IN YOUR STATEMENTS OF CASH FLOW. PLEASE ADVISE OR REVISE.
Response:
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The disclosure for 2005 has been revised to correctly disclose the non
cash charges.
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2005 AND 2004
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8. WE NOTE YOUR RESPONSE TO COMMENT 25 IN OUR LETTER DATED AUGUST 24, 2006
AND THE REVISIONS TO YOUR FINANCIAL STATEMENTS TO INCLUDE THE VALUE OF FREE
SERVICES PROVIDED BY MR. BARNES. PLEASE LABEL THE RESTATED COLUMNS IN EACH OF
THE STATEMENTS "AS RESTATED" AND INCLUDE A FOOTNOTE DESCRIBING THE RESTATEMENT
IN ADDITION, PLEASE REQUEST YOUR INDEPENDENT ACCOUNTANTS TO PROVIDE A REPORT
THAT INCLUDES AN EXPLANATORY PARAGRAPH IDENTIFYING THE RESTATEMENT AND THAT
REFERS TO THE NOTE IN THE FINANCIAL STATEMENTS THAT DISCUSSES THE RESTATEMENT IN
DETAIL. PLEASE REFER TO AUDITING STANDARDS CODIFICATION SECTIONS 508 AND 420.
Response:
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The restated columns in the financial statements have been labeled as
such. Nano has also added an explanatory note to the financial statements
as you have requested. Additionally, Nano's independent accountants have
provided a report that includes an explanatory paragraph that identifies
the restatement and refers to the note to the financial statements as you
have requested.
CONSOLIDATED STATEMENTS OF OPERATIONS
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9. YOUR NET LOSS LINE ITEM FOR THE YEAR ENDED DECEMBER 31, 2005 IS
MATHEMATICALLY INCORRECT. IT APPEARS THAT YOU DID NOT SUBTRACT INTEREST EXPENSE.
PLEASE REVISE YOUR FINANCIALS ACCORDINGLY.
Response:
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The Statement of Operations for the year ended December 31, 2005 has
been corrected as requested.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING, POLICIES
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REVENUE RECOGNITION
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10. WE NOTE YOUR RESPONSE TO COMMENT 34 IN OUR LETTER DATED AUGUST 24, 2006
AND THE REVISIONS TO YOUR DISCLOSURE. PLEASE TELL US YOUR SHIPPING TERMS FOR
PRODUCTS DELIVERED TO DISTRIBUTORS AND INTERNET CUSTOMERS AND HOW YOU DETERMINE
WHEN DELIVERY HAS OCCURRED. PLEASE ALSO TELL US WHETHER YOU REDUCE SALES
REVENUES AND COST OF SALES TO REFLECT ESTIMATED RETURNS AND HOW YOU ESTIMATE THE
AMOUNT OF PRODUCT RETURNS GIVEN YOUR LIMITED HISTORICAL EXPERIENCE.
Response:
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The ownership of Nano's inventory transfers to the customer upon
receipt and acceptance of the products at the customer's address. Nano's
shipments are made by via Fedex and UPS so it is easy for Nano to identify
when a product has been received by the customer, by reviewing the tracking
information on the shipper's website.
Nano does not reduce its sales revenues and cost of sales to reflect
estimated returns. As explained in the previous response letter, Nano
believes that because its returns are so insignificant and immaterial that
such an adjustment is not warranted. Nano does however reduce sales
revenues and cost of sales for the rare product return that may occur.
EXHIBIT 23.1
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11. PLEASE INCLUDE THE CONSENT TO INCLUSION OF THE REVIEW REPORT OF YOUR
INDEPENDENT ACCOUNTANTS AS REQUIRED BY SECTION 605 OF THE CODIFICATION OF
FINANCIAL REPORTING POLICIES.
Response:
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Exhibit 23.1 has been revised as you requested.
Very Truly Yours,
/s/ John S. Gillies
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John S. Gillies,
Associate,
David M. Loev, Attorney at Law