corresp.htm
Law
Offices of Stephen M. Fleming PLLC
49
FRONT STREET SUITE 206 ROCKVILLE CENTRE NEW YORK 11570
TEL 516
833-5034 FAX 516 977
1209 WWW.FLEMINGPLLC.COM
October 30, 2009
Mark P.
Shuman, Legal Branch Chief
U. S.
Securities and Exchange Commission
Division
of Corporation Finance
One
Station Place
100 F
Street
Washington,
D.C. 20549
Re: Forex
International Trading Corp.
Amendment No. 1 to Registration
Statement on Form S-1
Filed September 9, 2009
File No. 333-161795
Dear Mr.
Shuman:
This firm is counsel to Forex
International Trading Corp. (the “Company”). Below, please find our responses to
your October 8, 2009 comment letter.
Forepart of the Registration
Statement
1. We
note that the securities being registered in this filing are being offered on a
continuous or delayed basis pursuant to Rule 415 of the Securities Act of
1933. Please check the appropriate box on the cover page of the
filing.
Response
We have
checked the appropriate box indicating that the securities will be offered on a
delayed or continued basis.
Cover page of
Prospectus
2. Clarify
that this registration statement constitutes the initial public offering of
Forex International Trading Corp.’s common stock.
Response
We have
revised the cover page of the prospectus to state that this is our initial
public offering.
3. Please
revise the cover page and other relevant sections of the prospectus to state
clearly that there is no minimum number of shares that must be sold in the
offering, the company will retain the proceeds from the sale of any of the
offered shares, and that funds will not be returned to investors. You
indicate that the offering is not being underwritten, yet you present
information in the prospectus as though all of the shares of common stock will
be sold. Revise throughout to provide investors with information to
appropriately inform them of the range of outcomes that are possible as a
consequence of the any-and-all, no minimum offering structure. In
this respect, a presentation based on the sale of five or ten percent of the
maximum offering should be presented in the use of proceeds and other applicable
sections.
Response
We have
revised throughout the prospectus to state that there is no minimum number of
shares, that the Company will retain the proceeds and that funds will not be
returned to investors. In addition, we have revised the prospectus to
provide investors with a description of the consequence of an any or all
offering. We have revised the use of proceeds
accordingly.
Mark P.
Shuman, Legal Branch Chief
U. S.
Securities and Exchange Commission
October
30, 2009
Page
2
4. Please
delete the table in the prospectus summary, which provides information as if all
of the proceeds will be received. In the context of a direct public,
no minimum offering, a table of this type is not appropriate as it is likely to
suggest to the reader that the total offering price and the proceeds to the
issuer will be received. You can more concisely inform holders of the
maximum dollar amount of gross proceeds and the estimated expenses of the
offering in text. Revise throughout the prospectus, as applicable, to
address the proceeds to the company if the offering is subscribed to at varying
levels, including the Summary, Use of Proceeds and liquidity discussion in
Management’s Discussion and Analysis.
Response
We have
made the requested changes.
5. Please
delete the second through fifth sentences of the first paragraph as the
information contained therein does not appear to be key to investors and appears
excessively detailed.
Response
The
second through fifth sentences of the first paragraph have been deleted as
requested.
Prospectus Summary, page
1
6. In
the first paragraph you express business objectives as events that will take
place. Please revise throughout to express your objectives as goals
that may be realized but are not assured.
Response
The first
paragraph of the Prospectus Summary as well as the prospectus throughout has
been revised to reflect your above request regarding the business objectives
section.
7. You
state on page 1 that the company intends to develop and market software for
trading foreign currencies, but on page 12 you state that you plan to offer
“foreign currency exchange trading” over a web-based proprietary trading
system. Please clarify the description of your proposed business to
indicate whether you are proposing to offer online brokerage services or to sell
a software product.
Response
We have
revised the paragraph on page 1 to clarify that the Company intends to offer a
web-based and real time online trading system for foreign exchange
trading.
Mark P.
Shuman, Legal Branch Chief
U. S.
Securities and Exchange Commission
October
30, 2009
Page
3
8. The
term “best efforts” is typically utilized in the context of offerings where
there is an independent selling agent that will exercise sales efforts on behalf
of the issuer. Please revise to use the phrase “direct public
offering” throughout the filing.
Response
The term
“best efforts” has been changed to “direct public offering” where it occurs in
the document.
9. Please
revise the introductory paragraph to eliminate the disclaimer regarding omission
of risks of which you are not currently aware or immaterial. We will
not object if you state that this section includes risks you consider material
of which you are currently aware.
Response
The
introductory paragraph has been revised to reflect the requested
change.
10. Please
prominently place a risk factor in this section that alerts investors that you
have not yet developed a product or product design. Explain the risks
and uncertainties regarding your ability to design, develop, and commercialize a
product.
Response
A risk
factor has been added in this section reflecting your above request regarding
the design, development and commercialization of the trading
platform.
11. It
appears there is a material risk that the company will lack sufficient capital
resources to discharge the significant additional expenses that would be
expected once it becomes a reporting company subject to the requirements of
Section 15(d) of the Exchange Act. Please add a risk factor that
alerts investors to what appears to be substantial increases in administrative
costs that will be experienced after the effective date, and indicate the
anticipated minimum amount of such increased expenses, or tell us why you do not
believe that such a risk factor is necessary or appropriate.
Response
A risk
factor has been added in this section to reflect your above request regarding
raising sufficient capital resources to discharge the anticipated additional
administrative costs.
Mark P.
Shuman, Legal Branch Chief
U. S.
Securities and Exchange Commission
October
30, 2009
Page
4
Our working capital is
limited and we will likely need to complete this offering…page
3
12. You
state that your ability to commence and continue operations is contingent on
raising additional funds. Please disclose the minimum dollar amount
of funding you require to conduct proposed operations for a minimum period of
one year from the date of filing. Quantitative information regarding
your financial requirements is necessary to provide meaningful context for
investors to assess the company’s financial condition, the likelihood you will
be able to pursue your business plan, and the risks associated with a “no
minimum” offering structure.
Response
The
above-referenced risk factor has been revised to include the minimum dollar
amount of funding required to conduct proposed operations for a minimum period
of one year from the date of filing.
Capitalization, page
9
13. Please
revise the capitalization table which assumes that all 20,000,000 shares of
common stock being offered will be issued. In a no minimum offering,
it is inappropriate for a pro forma capitalization table to reflect the receipt
or application of all offering proceeds. Please refer to Rule 170
under the Securities Act of 1933.
Response
We have
received the capitalization table to provide disclosure relating to the sale of
10,000,000 shares of common stock.
Dilution, page
10
14. The
subheading in the table on page 10 titled, “Assuming Minimum Offering” indicates
that there is a minimum amount required in this offering, while your disclosures
in the risk factors and Use of Proceeds section indicate that you have not
established a minimum amount of proceeds that must be received in this offering
before any proceeds may be accepted. Please advise or revise the
chart to remove this subheading.
Response
We have
revised the table accordingly.
Use of Proceeds, page
11
15. You
state that the estimate of the proceeds is based on the initial public offering
price “before deduction for any commissions or non-accountable expenses [you]
may pay to registered broker-dealers, if any.” We note your
disclosure on the cover page that the shares will be offered through your sole
officer and director and that you currently have no plans to
offer shares through registered broker-dealers. Please clarify your
disclosure in this section to state unequivocally whether you intend to use any
registered broker-dealers.
Response
The Use
of Proceeds section has been revised to state that the estimate of the use of
proceeds is based on the initial offering price before deduction for any
commissions, but that we have no plan to pay any commissions.
Mark P.
Shuman, Legal Branch Chief
U. S.
Securities and Exchange Commission
October
30, 2009
Page
5
Determination of Offering
Price, page 11
16. You
list several factors that were considered in setting the offering price on page
11 that differs from the factors disclosed on page 1 such as the “amount of
equity and control desired to be retained by the present
stockholders.” Please explain.
Response
We have
revised page 1 and page 11 so that each page contains consistent
disclosure..
Plan of Distribution: Terms
of the Offering, page 12
17. You
state that a portion of the proceeds from this offering will be used to pay the
salaries of your officers. We note that salaries are not specifically
listed as a line item in the Use of Proceeds on page 11 and that your sole
officer currently does not receive compensation from the
company. Please advise as to whether this compensation is in
connection with Mr. Schnapp’s participation in this
offering. Further, revise the chart in the Use of Proceeds section to
specifically disclose the amount that will be used to pay Mr. Schnapp’s
salary. Ensure that the description of management’s compensation
includes a description of changes in your compensation arrangements that you
plan to implement in the event varying portions of the offered securities are
successfully sold.
Response
We have
deleted the statement relating to the payment of the salaries of the Company’s
officers.
Business, page
13
18. Please
revise the disclosure to provide a concise and clear overview of the current
status of your business. We note your disclosure in the Management’s
Discussion and Analysis regarding your goals for the next 12 months, but explain
what you have achieved since inception to develop a marketable product and
explain what remains to be accomplished. Also, disclose the material
terms of any contracts you have with your significant customers and tell us why
you have not filed any such agreements pursuant to Item 601(b)(10) of Regulation
S-K.
Response
We have
revised the business description and the Management’s Discussion and Analysis to
further describe what has been achieved since inception. We believe
the description in the Management’s Discussion and Analysis adequately describes
the Company’s goals for the next 12 months. We have included this
disclosure from the Management’s Discussion and Analysis section in the business
section. The Company has not entered into any material agreements
with customers since inception. The Company does not expect that any
any future customer will represent a significant portion of
revenue.
Mark P.
Shuman, Legal Branch Chief
U. S.
Securities and Exchange Commission
October
30, 2009
Page
6
Government Regulation, page 16
19. Please
expand your discussion of the government regulations that are applicable to your
business. This section should provide a meaningful description of the
nature of the governmental regulation to which the company’s proposed business
will be subject, and the extent to which the company will be subject to
registration, inspection, and oversight by regulatory
agencies. Explain whether you are required to obtain any governmental
approvals to initiate the activities in your proposed business plan, such as
approval of registration as a commodities broker. See Item
101(h)(1)(vii) of Regulation S-K. Also, consider whether a risk
factor is warranted regarding these governmental approvals and oversight that
may require you to comply with objective standards such as capital
requirements.
Response
We have
revised to further discuss government approvals and regulation.
Management’s Discussion and
Analysis or Plan of Operation, page 17
20. We
note that you have omitted a discussion comparing your results of
operations. We believe that providing such a discussion will enhance
a reader’s understanding of your financial statements. Please provide
a discussion of your results of operations that enables readers of your
financial statements to see the company through the eyes of
management. See Item 303(a) of Regulation S-K ad SEC Release
33-8350. In this respect, explain the revenues you generated,
expenses incurred, and the reasons why you did not incur any cost of
revenue. We refer to Question 110.01 of the Division of Corporation
Finance’s Compliance and Disclosure Interpretation on Regulation
S-K.
Response
We have
revised the MD&A accordingly.
Liquidity and Capital
Resources, page 17
21. You
disclose that you need to raise $200,000 in this offering to satisfy your cash
requirements during the next 12 months. Please amend your filing to
clarify how you expect to meet your short and long-term cash requirements for
the next 12 months. Please see Item 303 (a)(1) of Regulation S-K and
Instructions 2 and 3 to Item 303(a) of Regulation S-K for additional
guidance. Please expand your disclosure to address the
following:
·
|
State
the minimum period of time that you will be able to conduct planned
operations using currently available capital
resources.
|
·
|
Disclose
the minimum dollar amount of funding you require to implement your
business plan for a minimum period of one
year.
|
·
|
Discuss
the impact on your business and any course of action you plan to take if
you sell less that all of the securities being offered in this
registration statement.
|
·
|
Address
any material costs associated with becoming a publicly reporting company
and how you intend to pay for such
expenses.
|
Response
We have
revised the liquidity section as requested.
Mark P.
Shuman, Legal Branch Chief
U. S.
Securities and Exchange Commission
October
30, 2009
Page
7
Management, page
19
22. According
to the Form 10-KSB filed by Emvelco Corp., now known as Yasheng Eco-Trade Corp.,
with the Commission on April 14, 2008, we note that Moshe Schnapp served as
President and Director of Emvelco Corp. from April 2005 to August
2006. Please advise.
Response
The work
history description of Moshe J. Schnapp has been updated to reflect the fact
that Moshe Schnapp served as President and Director of Emvelco Corp. from April
2005 to August 2006.
Executive Compensation, page
20
23. The
summary compensation table presented in this section is provided in a format
that was superseded upon adoption of new rules in SEC Release 33-8732-A, as
modified in Release 33-8876. Please refer to Item 402(n) of
Regulation S-K and revise accordingly.
Response
As per
your above request, the Summary Compensation Table has been revised to conform
to the requirements if Item 402(n) of Regulation S-K.
Certain Relationships and
Related Transactions, page 21
24. Please
provide disclosure regarding any “promoters” of your company, as defined in Rule
405 under the Securities Act of 1933. In this regard, it appears that
Moshe J. Schnapp, Sean Schnapp, and Tom Schnapp may be promoters. See
Item 404(d)(2) and Item 401(g) of Regulation S-K.
Response
We have
revised the disclosure to state that Moshe Schnapp, our sole executive officer
and director, and Sean Schnapp and Tom Schnapp may be considered to be promoters
of the Company as defined in Rule 405 under the Securities Act of
1933.
Independent Registered
Accounting Firm’s Report, page F-3
25. We
note your disclosures on page F-10 where you indicate that the financial
statements have been prepared assuming the company will continue as a going
concern. Tell us how your independent auditors considered AU Section
341 in evaluating whether there was substantial doubt about the company’s
ability to continue as a going concern and how they concluded that an
explanatory paragraph about the company’s ability to continue as a going concern
was not considered necessary. Please refer to guidance in AU Section
341.
Response
Our
auditors have revised their opinion to provide a going concern.
26. Please
revise the report of the Company’s independent registered accounting firm as
follows:
·
|
Include
a signed opinion pursuant to Article 2-02(a) of Regulation S-X and Rule
302 of Regulation S-T; and
|
·
|
Provide
the independent auditor’s opinion with respect to the company’s statement
of changes in stockholder’s deficit pursuant to Article 2-02(c) of
Regulation S-X.
|
Response
Our
auditor has revised the opinion accordingly.
Note 3. Reporting on the
Costs of Start-Up Activities, page F-9
27. We
note from your disclosures on page F-10 that the company has incurred $50,000 of
legal fees in connection with the filing of this form S-1, which have been
capitalized as start-up costs and are being amortized over 60
months. Tell us how you determine that these costs were costs of
start-up activities within the guidance of Paragraph 8 of SOP
98-5. To the extent that these are start-up costs, explain further
why you believe capitalizing and amortizing such costs is
appropriate. In this regard, we refer you to paragraph 12 of SOP
98-5, which states that costs of start-up activities should be expensed as
incurred. Alternatively, tell us how you considered whether these
were expenses of the offering pursuant to SAB Topic 5.A. Also, please
explain your classification of such costs in cash flows from investing
activities and tell us why you have not classified these costs in operating cash
flows pursuant to the guidance of SFAS 95.
Response
The
Company has revised our financial statements to expense costs associated with
start-up activities in accordance with paragraph 12 of SOP 98-5.
***
Mark P.
Shuman, Legal Branch Chief
U. S.
Securities and Exchange Commission
October
30, 2009
Page
8
Should
you have any questions, please do not hesitate to contact the undersigned at
516-833-5034.
Sincerely,
/s/Stephen
M. Fleming
Stephen
M. Fleming