1.
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We note your response to our prior comments 1-5. It appears to us that those primarily responsible for the preparation of your books and records and financial statements (i.e. CFO and Accounting Manager) do not have the requisite U.S. GAAP experience to prepare financial statements in accordance with U.S. GAAP. In this regard, we note that they do not hold a license such as Certified Public Accountant in the U.S., did not attend U.S. institutions or extended educational programs that would provide enough of the relevant education relating to U.S. GAAP, and we have not been provided any evidence regarding the depth of their U.S. GAAP and Internal Control over Financial Reporting (“ICFR”) experience and/or continuing education on the subject. We note in your response you hired an external consultant who spent “more than 20 hours” reviewing your financial statements. We do not believe the hiring of this consultant mitigates the risk that the persons ultimately responsible for the preparation of the books and records and financial statements do not have the appropriate level of education or experience in U.S. GAAP or ICFR. Accordingly, we believe that your lack of U.S. GAAP experience constitutes a material weakness and thus your internal controls over financial reporting would not be effective. Please revise your conclusion on internal controls over financial reporting and explain in detail in your amendment that the persons primarily responsible for the preparation of the financial statements have limited knowledge of U.S. GAAP and disclose how you will remedy this material weakness in the future. You should also consider the impact of this material weakness on your conclusion regarding disclosure controls and procedures.
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2.
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In connection with the comment above, please ensure to include a risk factor which describes this material weakness and its potential effect on your financial statements.
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3.
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We note your response to our prior comment 6. Your response did not fully address our comment. In future filings, please address how the same store sales metric considers relocations, remodels and changes in square footage. Please also address how many months/years a store is open before being included in the same store sales calculation.
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2011
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2010
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|||||||
Total store square footage
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414,671
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263,081
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||||||
Number of stores
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467
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293
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||||||
Average store size, square feet
|
888
|
898
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||||||
Total store sales
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$
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53,542,544
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$
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29,300,160
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||||
Sales per square foot
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$
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129
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$
|
111
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2011
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2010
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|||||||
Same store sales
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$
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24,739,631
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$
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21,320,743
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||||
Newly opened store sales
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$
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11,706,234
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$
|
5,707,014
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||||
Other* | $ | 17,096,679 | $ | 2,272,403 | ||||
Total | $ | 53,542,544 | $ | 29,300,160 |
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the Company is responsible for the adequacy and accuracy of the disclosure in the filing;
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●
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Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and
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●
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the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
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Very truly yours,
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/s/ Edward Yihua Kang | |
Edward Yihua Kang
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Chairman and Chief Executive Officer
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Ever-Glory International Group, Inc.
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