OLSHAN
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
PARK AVENUE TOWER
65 EAST 55TH STREET
NEW YORK, NEW YORK 10022
TELEPHONE: 212.451.2300
December 1, 2005 FACSIMILE: 212.451.2222
WWW.OLSHANLAW.COM
DIRECT DIAL: 212-451-2259
EMAIL: HKESNER@OLSHANLAW.COM
Ms. Sonia Barros
Division of Corporation Finance
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549-0404
Re: Response of CepTor Corporation to Comment Letter to Registration
Statement on Form SB-2 filed October 17, 2005 (File No. 333-129070)
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Dear Ms.Barros:
We are counsel to CepTor Corporation (the "Company"). We hereby submit, on
behalf of the Company a response to the letter of comment dated November 7, 2005
from the Division of Corporation Finance to the Company's Registration Statement
on Form SB-2 filed with the Securities and Exchange Commission (the
"Commission") on October 17, 2005 (the "Form SB-2"). Our responses are numbered
to correspond to the Commission's comments and are filed in conjunction with the
Pre-Effective Amendment No. 1 to the Form SB-2.
GENERAL
1. We note that Fusion Capital may not sell 1,509,435 shares of the
common stock being registered (the Initial Commitment Shares, the
shares issuable pursuant to the Fusion Warrant and the 754,717
additional commitment shares that may be issued) until the earlier of
February 7, 2009 or the date the Stock Purchase Agreement is
terminated. Please provide us your analysis of why you believe it is
appropriate to register these shares for resale at this time.
The Agreement may be terminated by the Company at any time for any
reason or for no reason. After such termination, Fusion Capital would
have the right to transfer any or all of the Commitment Shares. The
Company has contractually agreed to register the shares. Therefore,
the Company believes it is appropriate to register these shares for
resale at this time.
December 1, 2005
Page 2
PROSPECTUS SUMMARY
2. We note your statement here that you estimate that the maximum number
of shares of common stock you will sell to Fusion Capital will be
5,000,000 for maximum proceeds of $20,000,000. Please clarify that
this estimate assumes a market price of $4.00 per share and that your
current market price is only $1.50 per share. Please also explain that
you will only be able to raise $7,500,000 at current market prices,
unless you decide to register additional shares on a new registration
statement.
The second paragraph under the heading "The Offering" has been revised
to add the following:
"The selling price of the Common Stock will have to average at least
$4.00 per share for us to receive the maximum proceeds of "$20
million" and "Assuming a purchase price of $1.10 per share, the
closing sale price of the Common Stock as reported on the OTC Bulletin
Board on November 28, 2005 and the purchase by Fusion Capital of the
full 5,000,000 shares under the Stock Purchase Agreement, proceeds to
us would only be $5,500,00 unless we choose to register more than
5,000,000 shares, in which case, we would be required to file a new
registration statement and have it declared effective by the SEC."
3. You state in this section that the Initial Commitment Shares and the
shares issuable pursuant to the Fusion Warrant cannot be sold until
the earlier of February 7, 2009 or the date the Stock Purchase
Agreement is terminated. Please clarify that this restriction also
applies to the 754,717 additional commitment shares.
The second paragraph under the heading "The Offering" has been revised
to add the following, italicized language:
"Unless an event of default occurs, Fusion Capital may not transfer or
sell the Initial Commitment Shares, the shares issuable pursuant to
the Fusion Warrant OR THE ADDITIONAL 754,717 SHARES REPRESENTING AN
ADDITIONAL COMMITMENT FEE."
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
4. Please disclose how you intend to account for the additional
commitment shares that will be issued to Fusion Capital each time a
purchase of securities under the Stock Purchase Agreement is made.
The following paragraph has been added as a new seventh paragraph
under the heading "Capital Resources and Cash Requirements":
Under the terms of the Stock Purchase Agreement Fusion Capital has
received 377,359 shares of Common Stock and the Fusion Warrant to
purchase up to 377,359 shares of Common Stock at a purchase price of
December 3, 2005
Page 3
$0.01 per share as an initial commitment fee. In connection with each
purchase of Common Stock after Fusion Capital has purchased $10
million of Common Stock, we will issue up to 754,717 additional shares
of Common Stock to Fusion Capital as an additional commitment fee.
These additional shares will be issued pro rata based on the
proportion that a dollar amount purchased by Fusion bears to the
remaining $10 million amount under the Stock Purchase Agreement and
will be accounted for when issued at par value with a corresponding
charge to paid-in capital. For example, when Fusion Capital purchases
the next $25,000 of Common Stock after it purchases the first
$10,000,000, we will issue 1,887 shares of Common Stock to Fusion
Capital ($25,000 /10,000,000 x 754,717). Unless an event of default
occurs, these shares must be held and may not be transferred or sold
by Fusion Capital until 40 months from the date of the Stock Purchase
Agreement or the date the Stock Purchase Agreement is terminated.
DESCRIPTION OF THE TRANSACTIONS
5. We note your statement that the additional shares will be issued "pro
rata based on the proportion that a dollar amount purchased by Fusion
bears to the $10 million amount under the Stock Purchase Agreement."
Please revise to clarify the operation of this formula and consider
using an example for clarification.
An example has been added to the first paragraph under the heading
"Commitment Shares Issued to Fusion Capital" to clarify the operation
of the formula.
6. Please enhance your disclosure regarding the additional commitment fee
shares to discuss the fact that the economic effect of these issuances
is a lower average purchase price than Fusion Capital is obligated to
pay for the shares. In addition, please disclose the dilutive effect
on stockholders that these issuances will have.
The following language has been added under the heading "Commitment
Shares Issued to Fusion Capital":
"When we issue additional commitment shares to Fusion Capital in
connection with each purchase of our Common Stock by Fusion Capital
after Fusion Capital has purchased $10 million of our Common Stock,
Fusion Capital will only pay for the shares purchased and not the
additional commitment shares. The issuance of additional commitment
shares will therefore result in a lower average price per share
purchase price and may result in substantial dilution to the interests
of our other stockholders."
The Company acknowledges that 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; do not relieve the Company from its
full responsibility for the adequacy and accuracy of the disclosure in the
filing; and that it may not assert staff comments as a defense in any
December 3, 2005
Page 4
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
Please direct any questions or comments concerning this response to
Nancy Brenner at (212) 451-2217.
Sincerely,
/s/ Harvey J. Kesner
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Harvey J. Kesner
cc: William H. Pursley
Donald W. Fallon
