Amendment to Registration of Securities of a Small-Business Issuer — Form 10-SB Filing Table of Contents
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1: 10SB12G/A Amendment to Registration of Securities of a HTML 939K
Small-Business Issuer
4: CORRESP ¶ Comment-Response or Other Letter to the SEC HTML 53K
2: EX-10.1 Material Contract HTML 29K
3: EX-21 Subsidiaries HTML 7K
On
behalf
of the Company, we are hereby enclosing two copies of Amendment No. 2 to the
Company’s registration statement on Form 10-SB (the “Registration Statement”)
that was filed initially on October 23, 2007. One of the copies has been marked
to show changes from the Registration Statement.
By
letter
dated January 24, 2008, the staff of the Securities and Exchange Commission
(the
“Staff”) issued comments on amendment No. 1 to the Registration Statement.
Following are the Company’s responses to the Staff’s comments. For ease of
reference, each response is preceded by the Staff’s comment.
Description
of Business. page 3
1.We
note your response to prior comment S. Please explain, if true, that Cavico
Vietnam is your wholly-owned subsidiary, as indicated under “Subsidiaries”.
Then, please explain how you came to own Cavico Vietnam and whether that was
part of the asset acquisition. As currently described, you acquired assets
from
Cavico Vietnam, which then spun off the shares of Cavico that you issued in
exchange for the assets to its shareholders. You subsequently transferred the
assets back to Cavico Vietnam. Please explain what the business purpose of
this
asset transfer was and what consideration you received for the asset transfer,
as well has how you acquired ownership of Cavico Vietnam.
The
Company has made revisions to the Registration Statement to clarify the
following issues:
Cavico
Vietnam is the Company’s wholly-owned subsidiary as previously stated in the
Registration Statement. For emphasis, the Company has repeated this in a number
of places. See pages 3, 17 and 32 of the Registration
Statement.
The
Company has clarified that the acquisition of Cavico Vietnam occurred in steps.
Specifically, as a result of legal restrictions on foreign ownership of
Vietnamese companies, the acquisition of Cavico Vietnam could not be completed
outright without government approval. Rather, as an interim step, the Company
was required to acquire the assets of Cavico Vietnam which then continued to
be
used and operated by Cavico Vietnam under the Company's control until
the acquisition of Cavico Vietnam as an entity was formalized. The approval
of
the acquisition of Cavico Vietnam by the relevant government authorities was
granted in January 2007. Following this approval and the acquisition of Cavico
Vietnam, the assets that were previously acquired from Cavico Vietnam were
transferred back to that entity which now operates as our wholly-owned
subsidiary.
2.We
note your response to prior comment 6. Under “Operations” on page 4, please
disclose that it is your belief that you are the “first company to use TBM
tunnel technology in Vietnam”
The
Company has made revisions in accordance with the Staff’s comment. See
page 4 of the Registration Statement.
Management’s
Discussion of and Analysis or Plan of Operation. page
17
Results
ofOperations.
page 19
3.We
note your revised disclosure in response to prior comment 17. However, please
state whether the restructuring of your ownership levels in your subsidiaries
will impact your results of operations. If so, please briefly describe how
the
restructuring will affect your results of operations.
The
Company has added disclosure in accordance with the Staff’s comment. See
page 20 of the Registration Statement.
Liquidityand
Capital Resources, page 22
4.Your
revised liquidity analysis provides information that is readily available from
the face of your financial statements rather than relevant information to gain
an understanding into the key drivers contributing to the material changes
in
your working capital accounts. For example, your revised disclosure does not
explain the 43%increase
in inventory and 95%
increase
in accounts payable from the year ended December 31, 2005, to December 31,2006.
Please revise your tiling to include a discussion of these and other material
factors impacting your operating activities during fiscal 2006, as well as
the
most recent quarter presented. Refer to SEC Release 33-8350, available at the
SEC website at www.sec.gov./rules/interp/3 3-835 0.htm.
The
Company has added disclosure in accordance with the Staff’s comment. See
page 22 of the Registration Statement.
Description
of Property, page 23
5.We
note that you have “land use rights with respect to 15,000 square feet of land
in Hanoi.” Please briefly describe what you mean by land use rights, including
the duration of these rights and any restrictions on your ability to use or
develop the land.
The
Company has added disclosure detailing some of the land use right issues. See
page 23 of the Registration Statement.
6.We
note that you have a “long term land lease (70 years) in Son La consisting of an
area if 160 hectares” and that “this parcel of land was granted to the company
in payment for its services in the general area.” Please clarify that this 160
hectare parcel was granted to you in payment for the development of the Chieng
Ngan 400 hectare new urban area in Son La. Additionally, please briefly describe
any restrictions on your ability to use or develop the
land.
The
Company has added disclosure in accordance with the Staff’s comment. See
page 23 of the Registration Statement.
Directors
and Executive Officers. Promoters and Control Persons, page
28
7.We
note your response to prior comment 25~ however, it appears that certain persons
arc still identified differently throughout your filing. Please revise to
correctly identify each person.
·
CEO/Chairman
Ha Quang Bui. On pages 31, F-15, and F-34, you identify him
as Bui Quang Ha
·
Vice-President/Director
Hung Manh Turn. On pages 31, F-IS, and F-34, you identify him as
Tran Manh
Hung.
·
Chief
Financial Officer Edward K. Chi. You identified him as Chi Edward
K in
--Exhibit 10.1, which was previously filed. Please file an amended
Exhibit
10.1 to correctly identify
him.
The
Company has made revisions throughout the document to make the naming of the
various executives consistent. The Company advises the Staff supplementally
that
confusion sometimes arises respecting the naming of Vietnamese nationals since
it is not uncommon in Vietnam to interchange a person’s first and last name. The
agreement with Mr. Chi has been refiled to correct his name.
8.We
note your revised disclosure in response to prior comment 27. However, Hung
Manh
Tran’s employment history remains unclear. Please specify his business
experience during the past five years, including the relevant dates for each
position held.
The
Company has made revisions in accordance with the Staff’s comment. See
page 28 of the Registration Statement.
9.Under
“Committees of the Board” on page 30, please clarify that you have three
separate board committees: an Audit Committee, a Compensation Committee, and
a
Nominating Committee. Additionally, please clearly identify the members of
the
Audit Committee. Lastly, it appears that your Nominating Committee is performing
the function of your Compensation Committee. Please clarify or revise
accordingly.
The
Company has made revisions in accordance with the Staff’s comment. See
page 30 of the Registration Statement.
Executive
Compensation, page 30
10.We
note your response to prior comment 31. In the filing, please include a footnote
to the Summary Compensation Table indicating where in the registration statement
an investor will find disclosure regarding all assumptions made in the valuation
of the stock awards.
The
Company has added disclosure explaining how the Company arrived at the $0.01
per
share valuation. See page 30 of the Registration Statement.
Revenue
Recognition. page F-9
11.We
note your response to prior comment 39 and the disclosures relating to revenue
recognition on pages F-9 and 18. We have the following
comments:
·
Your
discussion of the sale of finished goods states revenue is recognized
“at
the date of shipment” when “delivery is completed.” Please disclose the
typical shipping terms of your finished goods (i.e. FOB shipping
or FOB
destination). Clarify whether revenue is recognized upon shipment
or
receipt and when title is actually passed to the
customer.
The
Company has added disclosure in accordance with the Staff’s comment. See page
F-9 of the Registration Statement.
·
Please
clarify the nature of the “service revenue” discussed on page F-9. If
service revenue includes material sales from different types of services
(e.g. construction services, building maintenance, etc.), please
expand
the disclosure to discuss the revenue recognition policy for each
revenue
stream, including the key terms and conditions of your agreements
that
affect revenue
recognition.
Provide
us with a more detailed discussion of your revenue recognition process
for
service revenue. Explain what is meant by the measurement of “contract
outcome.” Explain whether you consider these service contracts to be
within the scope of SOP 81—1, as discussed in paragraph 11 and footnote I
of the SOP. If not, explain your basis for recognizing revenue based
on
labor hours.
Provide
us with a more detailed discussion of your policies for “revenue from
construction contract” on page F-9. Clarify whether this disclosure is
related to a single contract or all of your construction contracts.
Explain the nature of a “Hand—over Minute and Summary of amount,”
including who prepares this document and who certifies it. Clarify
its
relation to the customer verification process described in the following
sentence. Explain in more detail what the customer is verifying.
Explain
how this discussion relates to the discussion of engineering and
construction contract revenues and the percentage-of-completion method
in
the following paragraph. Ti is not clear whether these paragraphs
are
meant to address the same types of
contracts.
Explain
how the disclosure on page 1 8 that revenue from services are recognized
when provided and “accepted by the customer” fits into your discussion
of verification on page F-9. discussed
above.
Reconcile
your response to prior comment 41 that engineering and construction
services “are not separated from the respective agreements for the purpose
of calculating gross profit.” with your disclosure on page 19 that
“contracts are segmented between types of services such as engineering
and
construction, and accordingly, gross margin related to each activity
is
recognized as those separate services are rendered.” Provide a detailed
explanation of this disclosure, addressing the method of accounting,
as
well as the nature of your contracts and
services.
The
disclosure has been revised to state that contracts are not
segmented between engineering and construction services. See page 18 of the
Registration Statement.
·
You
state, “The portion of revenue related to warranty ranging 5% to 10%
depending on each contract is not recognized until the warranty period
is
matured.” Please explain the specific terms and conditions of this
warranty feature, as well as the nature of the contracts that include
such
a provision. Explain whether the warranty is an agreement to remedy
defects in the construction services or whether it is a service contract
and considered a separate deliverable. Tell us the accounting literature
supporting your accounting treatment and discuss any assumptions
underlying your estimates of warranty
costs.
12.We
note your discussion of development projects on pages 5 and 23. Please clarify
whether you have generated any revenue to date from real estate operations,
including rental operations and the development of buildings or commercial
areas
for rental or sale. Explain how your revenue recognition disclosures apply
to
these projects.
The
Company has added disclosure to the effect that to date no revenues have been
generated from these projects. See pages 5 and 23 of the Registration
Statement.
Note
11 —
Income
Tax, page F-16
13.Given
that your 2006 income tax expense of $258,000 represents 32% of your income
before taxes and minority interest, please explain to us how you concluded
your
effective tax rate was 0% for the your ended December 31, 2006. Furthermore,
we
note that you had a net operating carry forward and valuation allowance of
$13,000 as of December 31, 2005. We note for the year ended December 31, 2006,
both arc zero. We assume that at some point during 2006 you reversed the
valuation allowance and then utilized your deferred tax asset of $l3,000. Please
clarify.
The
Company has revised the disclosure to show the correct amount of deferred tax
assets and to clarify the valuation allowance applied to losses from operations.
See page F-16 of the Registration Statement.
