January 19, 2005
By facsimile to (303) 295-1563 and U.S. Mail
Mr. Michael J. Gordon
Chief Financial Officer and Vice President, Corporate
Administration
BlastGard International, Inc.
12900 Automobile Boulevard, Suite D
Clearwater, FL 33762
RE: BlastGard International, Inc., formerly OPUS Resource Group,
Inc.
Registration Statement on Form SB-2 and Pre-effective
Amendments
1 and 2
Filed December 20, 2004 and January 7 and 11, 2005
File No. 333-121455
Annual Report on Form 10-KSB and Subsequent Exchange Act
Reports
File No. 333-47924
Dear Mr. Gordon:
We reviewed the filings and have the comments below.
Where indicated, we think that you should revise the
documents
in response to the comments. If you disagree, we will consider
your
explanation why a comment is inapplicable or a revision is
unnecessary. Be as detailed as necessary in your explanation. To
understand better your disclosure, we may ask you in some comments
to
provide us supplemental information. We may raise additional
comments after reviewing this information.
Our review`s purpose is to assist you in your compliance with
applicable disclosure requirements and to enhance the overall
disclosure in your documents. We look forward to working with you
to
achieve these objectives. We welcome any questions that you may
have
about comments or any other aspect of our review. You may call us
at
the telephone numbers listed at the end of this letter.
SB-2
1. If applicable, comments on the SB-2 are comments on the 10-KSB
and
subsequent Exchange Act reports and vice versa. Comply with the
comments in the SB-2 and, if applicable, in future Exchange Act
filings.
2. Provide an updated consent from the independent accountant in
each
amendment to the SB-2.
3. Provide updated financial statements and related disclosures,
as
necessary, to comply with Item 310(g) of Regulation S-B.
4. Since BlastGard International, Inc. or BlastGard is a penny
stock
issuer, the Private Securities Litigation Reform Act of 1995`s
safe
harbor for forward looking statements is inapplicable. See
section
27A(b)(1)C) of the Securities Act, and revise the first paragraph
on
page 22 and elsewhere.
Calculation of Registration Fee Table
5. We note that BlastGard is registering 150% of the amount of
shares
that would be issuable currently upon the notes` conversion under
an
agreement with the noteholders. We believe that it is appropriate
to
register for resale only that number of shares that BlastGard in
good
faith estimates that it will actually issue upon conversion. If
the
notes actually convert into a greater number of shares, BlastGard
may
file a resale registration statement for the excess shares at that
time. Tell us the basis for BlastGard`s estimate that it will
issue
150% of the amount into which the notes would convert currently.
6. Disclosure that BlastGard is registering 146,969 shares of
common
stock that represent shares issuable upon exercise of common stock
purchase warrants at an exercise price of $3.00 per share is
inconsistent with disclosures on pages 33-34 that BlastGard issued
class B common stock purchase warrants to acquire 141,999 shares
and
a warrant to purchase 4,870 shares at an exercise price of $3.00
per
share which total 146,869 shares. Revise or advise.
7. The total number of shares shown as being registered,
4,011,340,
is inconsistent with the maximum number of shares being offered as
shown in the table on pages 31-32, 3,712,340. Revise or advise.
Prospectus` Outside Front Cover Page
8. If the prospectus will be used before the registration
statement`s
effectiveness, include a prominent statement that the prospectus
is
not complete and registration is not effective. See Item
501(a)(10)
of Regulation S-B.
9. It appears that BlastGard`s common stock is quoted on the Over
the
Counter Bulletin Board under the symbol BLGA.OT, not BLGA. Revise
here and elsewhere in the registration statement.
Cautionary Statements Concerning Forward-Looking Statements, page
2
10. Remove the reference to documents incorporated by reference
from
the penultimate paragraph because this prospectus does not
incorporate by reference.
Risk Factors, page 3
11. Some risk factors` captions or headings state merely a fact or
describe an event that may occur in the future or are too vague to
describe adequately the risk that follows. For example, refer to
the
first, second, fourth, sixth, seventh, eighth, ninth, tenth,
eleventh, twelfth, thirteenth, fourteenth, fifteenth, seventeenth,
and eighteenth risk factors. State succinctly the risk that flows
from the fact or uncertainty.
12. Include in each risk factor`s discussion information necessary
to
assess the risk, including its magnitude. For example:
* The fourth risk factor states that BlastGard will likely require
additional financing to carry out its business plans over the next
12
months. Quantify the known or estimated amount of capital that
BlastGard will require to carry out its business plans over the
next
12 months.
* The sixth risk factor states that BlastGard`s primary sales
focus
is to distribute its products through strategic partners, direct
sales, information, and education. Expand the risk factor
disclosure
to indicate whether BlastGard has entered into an agreement with
any
strategic partners and to specify BlastGard`s schedule for
organizing
its sales and marketing department.
* The eighth risk factor states that BlastGard`s future is
dependent
upon the success of the current and future generations of one or
more
of the products that BlastGard proposes to sell. Expand the risk
factor disclosure to clarify whether BlastGard has any products
available for sale, and, if so, whether BlastGard has completed
any
sales of the products as of the most recent date of the
prospectus.
* The ninth risk factor states that BlastGard intends to rely on
outside suppliers for its products. Expand the risk factor
disclosure to clarify whether BlastGard has identified any outside
suppliers and whether BlastGard has entered into any agreements
with
outside suppliers for its products.
* The sixteenth risk factor states that the market price of
BlastGard`s common stock is highly volatile. Quantify the high
and
low bid prices of BlastGard`s common stock during the past 52 week
period. Further, clarify that the quotations reflect interdealer
prices without retail markup, markdown, or commission and may not
represent actual transactions.
* The seventeenth risk factor states that future sales of common
stock by BlastGard`s management and others may affect adversely
the
current market price of BlastGard`s common stock, may affect
adversely BlastGard`s ability to obtain future funding, and create
a
potential market overhang. Quantify the number of shares of
BlastGard`s common stock that may be subject to future sales by
its
management and others.
13. The second risk factor states that BlastGard`s independent
public
accountants have included a going concern qualification in their
opinion. Expand the risk factor disclosure to include the risk of
using BlastGard`s financial statements because they do not include
any adjustments to asset carrying values or the classification of
liabilities that might result should BlastGard be unable to
continue
as a going concern. Further, include a discussion of:
* The rate at which BlastGard burned cash in the interim periods
since December 31, 2003.
* The costs of any planned research and development activities for
developing new product lines and for maintaining, improving, or
enhancing existing product lines.
* Any significant changes in the number of employees.
* Other known or estimated material operational costs.
14. The twelfth risk factor states that BlastGard relies on a
combination of patent applications, trademarks, copyright and
trade
secret laws, and confidentiality procedures to protect its
intellectual property rights. Expand the risk factor disclosure
to
state clearly that BlastGard has no patents and to address these
and
other material risks relating to each of BlastGard`s patent
applications:
* A patent may never be issued on any of BlastGard`s applications.
* Even if a patent is issued, BlastGard`s use of the patented
technology may infringe upon patents issued to third parties,
subjecting BlastGard to the cost of defending the patent and
possibly
requiring BlastGard to stop using the technology or to license it
from another party.
* Third parties may infringe on a patent issued to BlastGard. If
so,
BlastGard will bear the cost of enforcing the patent.
15. If the party with whom BlastGard entered into the failed 2003
distribution agreement, BlastGard, Inc., and BlastGard
Technologies,
Inc. are not the same company as suggested in the 2003 10-KSB,
discuss supplementally with a view toward including appropriate
risk
factor disclosure the risk of claims by BlastGard, Inc. of
violation
of its patents, trademarks, tradenames, etc. by BlastGard
Technologies, Inc. or BlastGard International, Inc. Consider any
other risks that could stem from confusion about participation in
the
same market by two participants with similar names and disclose
them
as appropriate.
16. It appears that trading in BlastGard`s common stock is subject
to
the penny stock rules under the Exchange Act and that the shares
to
be sold in this offering will be penny stocks. Revise the
eighteenth
risk factor to state clearly that BlastGard`s common stock is
subject
to the penny stock rules and to describe concisely but
comprehensively the compliance actions required under Rules 15g-2
through 15g-9 under the Exchange Act. Then explain the risks to
investors resulting from required compliance with these
regulations
such as price fluctuations and the lack of a liquid market.
17. Avoid generic conclusions in the risk factors` captions or
headings and in the risk factors` discussions such as BlastGard`s
result of operations, business, and financial condition would or
could be materially and adversely affected or would or could be
harmed. For example, refer to the seventh risk factor. Rather,
explain specifically what the risk`s consequences or effects are
for
BlastGard and its securityholders.
18. Eliminate generic or vague bullet points in the risk factors`
discussions. For example, refer the last bullet point in the
sixteenth risk factor.
19. The actual risk that you are trying to convey does not stand
out
from the extensive detail that you provide in the fourteenth risk
factor. Revise so that you are stating the risk in at least the
second or third sentence. Provide just enough detail to place the
risk in context.
20. Some risk factors include language like "There is no
assurance,"
"No assurances can be given," "We can provide no assurances," and
"There can be no assurance." For example, refer to the first,
second, third, fourth, fifth, seventh, eighth, ninth, twelfth,
fourteenth, and fifteenth risk factors. Since the risk is the
situation described and not BlastGard`s inability to assure,
revise.
21. Disclosure on page 7 states that BlastWrap must be replaced
after
a single intense detonation. Address in a discrete risk factor
any
material risks to BlastGard and BlastGard`s customers and
investors
resulting from the requirement of replacing BlastWrap after a
single
intense detonation.
Description of Business, page 6
22. Include a prominent statement here and in the prospectus
summary
that BlastGard is a development stage company and its planned
principal operations have not begun or have not produced yet
significant revenues. Also revise the first sentence of this
section`s second paragraph that suggests that BlastGard is
actively
engaged in the manufacture and marketing of blast mitigation
materials at this time.
23. Ensure that BlastGard describes the development of its
business
over the past three years as required by Item 101 of Regulation S-
B.
We note that the 2003 10-KSB contains disclosure of developments
that
have taken place within the past three years, back to and
including
2002, that is not included in the description of business section
in
the prospectus.
24. Where information about BlastGard, BlastGard`s business, or
the
industries in which BlastGard operates or may operate is
presented,
disclose the factual basis of the information. If the information
is
not factually supportable, state that the information is
BlastGard`s
belief or remove the statement. Examples of these statements
include
but are not limited to those such as:
* BlastGard`s BlastWrap products offer a revolutionary blast
protection system against all blast and fire/burn threats.
* BlastWrap constitutes a dramatic innovation in safety.
* Strong mitigation of impulse provided by BlastWrap is virtually
impossible to reproduce through any other low-weight approach.
* BlastGard`s technology is the only blast and fire suppression
means
available for most applications.
* BlastWrap can be easily updated and deployed to address the
problems involving explosive materials specific to the oil and gas
industry.
* BlastGard`s technology will add value to almost all
manufacturing
facilities of explosives, propellants, munitions, and
pyrotechnics.
* BlastGard offers the unique ability to convert standardized
chipping containers into explosive storage units that comply with
the
technical requirements of the United States Bureau of Alcohol,
Tobacco, and Firearms type 2 magazines.
* BlastWrap technology is unique in quenching blast areas.
* BlastGard has an unrivaled understanding of the mechanics of
explosions.
* BlastGard`s products would dramatically mitigate or suppress
fireballs and explosions produced by all of the fuels now being
used
or considered for commercial introduction, for at least the next
two
decades.
* BlastGard`s engineers and design personnel are some of the
premier
experts in the field of blast effect mitigation.
* BlastWrap protection of military aircraft should be top priority
for the United States Department of Defense.
25. Disclosures on page 2 in the 10-KSB and on page 22 in the SB-2
and elsewhere state that:
* BlastGard acquired 100% of the issued and outstanding common
stock
of BlastGard Technologies, Inc. or BTI from BTI`s shareholders in
exchange for 91 million shares of BlastGard`s common stock on
January
31, 2004.
* BTI is not the same entity as BlastGard, Inc., and BTI`s
technology
is not the same as BlastGard, Inc.`s technology.
* BTI acquired its only significant asset, a patent application
for
BlastWrap, in January 2004.
Clarify here that although BTI was an affiliate of BlastGard, Inc.
before the exchange, BTI`s technology is not the same as
BlastGard,
Inc.`s technology. Also clarify here from whom BTI acquired the
patent application for BlastWrap, and state what consideration BTI
paid for the application.
26. Disclosure on page 8 and elsewhere states that BlastWrap
prototypes have been evaluated in different test series. For each
of
BlastGard`s products such as those listed in items 1-10 on page
10,
clarify whether a prototype exists, the degree to which product
design has progressed, and whether further engineering is
necessary.
Further, clarify which BlastWrap products are actually being
manufactured and marketed as of the most recent date practicable.
See Item 101(b)(1) of Regulation S-B.
27. We note that the paragraphs entitled "3. Explosive Storage
Units
- - ESU" and "4. BlastMag-2" suggest that BlastGard has contracts
with
or orders from Lockheed Martin Missiles and Space Company and
Autoliv, Inc. Describe BlastGard`s arrangements with these
companies
in more detail, and file copies of these agreements as exhibits to
the registration statement.
28. Disclosures on pages 10, 11, and 14 state that:
* The Department of Defense approved the explosive storage units
designed for Lockheed Martin Missiles and Space Company.
* BlastGard`s weapons container is being created specifically for
the
United States and the United Kingdom military use.
* BlastGard offers the unique ability to convert the standardized
shipping containers into explosive storage units that comply with
the
technical requirements of the United States Bureau of Alcohol,
Tobacco and Firearms type 2 magazines.
* Tests conducted by the Defence Evaluation Research Agency under
the
auspices of the United Kingdom Civil Aviation Authority have shown
that BlastGard performs better than any other system tested in
blast
effect mitigation.
Clarify whether BlastGard has any contracts or arrangements with
these entities to supply or develop its products for their use.
If
so, describe the material terms of these contracts and
arrangements,
and file copies of any contracts as exhibits to the registration
statement. If no agreements, understandings, or arrangements with
these entities exist, make that clear. As drafted, these
disclosures
suggest that some arrangement is already in place.
29. Disclosure on page 10 states that Autoliv, Inc. contracted
BlastGard to design an explosive box for its production facilities
that would mitigate blast damage and prevent sympathetic
detonation
of ZPP charges. Tell us whether BlastGard was compensated for the
design work, and, if so, what the compensation was.
30. Disclosure on page 13 states that BlastGard is working with
the
ordnance and tactical systems arm of several major companies.
Describe BlastGard`s arrangements with these companies in greater
detail. If there has been a public announcement or if BlastGard
otherwise has made public the identity of the companies, disclose
the
companies` names in the registration statement. If not, tell us
the
companies` names.
31. Disclosure on page 14 states that BlastGard is working with an
LD3 container manufacturer to develop a low cost highly effective
solution for semi-hardened blast mitigation LD3 containers. If
there
has been a public announcement or if BlastGard otherwise has made
public the identity of the manufacturer, disclose the
manufacturer`s
name in the registration statement. If not, tell us the
manufacturer`s name.
32. Disclosure on page 20 states that BlastGard intends to hire
four
sales representatives to work with the top four markets. Identify
the top four markets.
33. Discuss briefly competitive business conditions and the
methods
of competition. See Item 101(b)(4) of Regulation S-B.
34. If material, discuss the effect of existing or probable
governmental regulation on BlastGard and its business. See Item
101(b)(9) of Regulation S-B.
35. Provide an estimate of the amount spent during each of the
last
two fiscal years on research and development activities. See Item
101(b)(10) of Regulation S-B.
36. We note that BlastGard states on its website that it has
signed
and announced a number of new agreements, including an exclusive
license agreement with Media Metrica Ltd. Tell us why BlastGard
has
not disclosed the agreements in the SB-2. Further, tell us what
consideration BlastGard has given to filing the agreements as
exhibits to the SB-2. See Item 601(b)(10) of Regulation S-B.
Management`s Plan of Operation, page 22
37. Revise the plan of operations to provide the disclosures
required
by FRR-16 and Item 303(a) of Regulation S-B. BlastGard should
provide prominent disclosure of the facts and circumstances that
led
to its accountant`s report containing substantial doubt about its
ability to continue as a going concern, and BlastGard should
disclose
management`s viable plans to overcome this uncertainty. The
discussion of management`s plans should include a detailed
description of the sources and demands for cash over the 12 months
following the most recent balance sheet date presented in the
filing.
We note the statement that BlastGard believes that it will have
sufficient cash on hand to fund its operations through the fourth
quarter of 2005.
38. Revise the discussion of management`s plan of operations to
address BlastGard`s notes payable balance as of the latest balance
sheet date presented and any material subsequent changes.
Disclose
the outstanding principal balance of each note, the maturity date
of
each note, the related interest rates of each note, and the
current
status of each note. Address the expected consequences of current
or
potential debt defaults.
39. Disclosure in the fifth risk factor states that BlastGard`s
ability to produce revenues and achieve profitability is directly
related to its ability to compete with its competitors. What is
BlastGard`s basis for the statement that "we believe that we have
a
competitive advantage because of our unique technology, our
product
performance, product mix and price"? Based on BlastGard`s
financial
statements, it does not appear that BlastGard has yet had active
operations to test its ability to compete with competitors.
40. Disclosure in the eleventh risk factor states that
considerable
research is underway into blast mitigation. Summarize any
research
and development that BlastGard will perform as part of its plan of
operations for the next 12 months. See Item 303(a)(1)(ii) of
Regulation S-B.
41. Discuss the convertible debt that BlastGard has issued and the
potential adverse effect that debt may have on BlastGard`s efforts
to
raise equity capital. For example, what effect might the right of
the noteholders to have the notes` exercise price reduced by one-
third if the notes are outstanding on March 16, 2006 unless
BlastGard
reports gross revenues of at least $15 million or net profits of
at
least $1 million have on the terms on which investors will make
equity investments?
Directors and Executive Officers, page 24
42. In the biographical paragraphs of Messrs. John L. Waddell,
Jr.,
Michael J. Gordon, and Kevin J. Sharpe, describe their business
experience during the past five years. See Item 401(a)(4) of
Regulation S-B.
Executive Compensation, page 27
43. Expand the disclosures on page 29 to include this information:
* Messrs. James F. Gordon and John L. Waddell, Jr. are entitled
under
their employment agreements to a 2% net profit bonus each year
based
on BlastGard`s fiscal year December 31 financials.
* Mr. Michael J. Gordon is entitled under his employment agreement
to
a 1% net profit bonus each year based on BlastGard`s fiscal year
December 31 financials.
Certain Relationships and Related Transactions, page 30
44. Expand the disclosures to include this information:
* The value of the shares issued to Messrs. Robert P. Gordon,
Michael
J. Gordon, and Joseph R. King in the February 5, 2002 acquisition.
* The value of the shares issued to Mr. Joseph R. King on March
25,
2003.
* The value of the 5 million shares issued to BlastGard, Inc. on
March 25, 2003 and why the shares were cancelled and returned to
BlastGard.
* The value of the shares issued to Messrs. James F. Gordon,
Michael
J. Gordon, John L. Waddell, Jr., Robert P. Gordon, and Paul W.
Henry
on January 31, 2004.
Selling Securityholders, page 31
45. Disclose how the selling securityholders acquired the shares
of
BlastGard`s common stock being offered for resale. We note the
narrative description of various transactions in which shares were
issued or are issuable that follows the selling securityholders
table. However, the sum of these shares does not appear to be
equal
to the number of shares in the table or the number of shares
registered for resale and offered by this prospectus. Clarify
which
of these shares are being registered for resale. If the shares
described in any of these transactions are not being registered
for
resale at this time, make this clear.
46. Indicate by footnote or otherwise whether each beneficial
owner
listed in the table that is not a natural person is a reporting
company under the Exchange Act, a majority owned subsidiary of a
reporting company under the Exchange Act, or a registered
investment
fund under the 1940 Act. If not, BlastGard must identify the
natural
person or persons having sole or shared voting and investment
control
over the securities held by the beneficial owner. Refer to
telephone
interpretation 4S. in the Regulation S-K section of the March 1999
supplement to our "Manual of Publicly Available Telephone
Interpretations" that is available on the Commission`s website at
http://www.sec.gov, and revise or advise.
47. We note that BlastGard states that none of the selling
securityholders is a broker dealer or a broker dealer`s affiliate.
However, it appears from our records that "B.B. Securities Inc."
is a
broker dealer. Confirm that neither B&B Securities Inc. nor any
other selling securityholder is a broker dealer or a broker
dealer`s
affiliate.
48. If a selling securityholder is a broker dealer, tell us
whether
the selling securityholder acquired its securities as compensation
for underwriting activities. Unless a broker dealer acquired the
securities as compensation for underwriting activities, BlastGard
must identify the broker dealer as an underwriter in the
prospectus.
Language such as "may be deemed to be" an underwriter is
unacceptable
if the selling shareholder is a broker dealer.
49. If a selling securityholder is a broker dealer`s affiliate,
include disclosure that this broker dealer`s affiliate:
* purchased the securities to be resold in the ordinary course of
business; and
* had no agreements or understandings, directly or indirectly,
with
any person to distribute the securities at the time of their
purchase.
If BlastGard is unable to make the representations noted above in
the
prospectus, BlastGard must state in the prospectus that the
selling
securityholder is an underwriter. Language such as "may be deemed
to
be" an underwriter is unacceptable if the selling securityholder
is
an affiliate of an underwriter that cannot make these
representations.
50. State that BlastGard will file a prospectus supplement to name
successors to any named selling shareholders who are able to use
the
prospectus to resell the securities.
51. BlastGard`s references to "Class A" common stock purchase
warrants and "Class B" common stock purchase warrants on page 33
may
be potentially confusing to investors because there are no
references
to classes of common stock in BlastGard`s governing instruments or
financial statements. Revise to clarify, if true, that there are
no
differences between the two classes of warrants other than their
exercise prices.
52. Disclosure on page 33 that BlastGard issued "Class A" common
stock purchase warrants to acquire 473,336 shares of common stock
at
an exercise price of $2.09 per share appears inconsistent with
disclosure in the table on page 34 that BlastGard issued "Class A"
common stock purchase warrants to acquire 440,002 shares of common
stock. Revise or advise.
53. Disclosure on page 33 that BlastGard issued "Class B" common
stock purchase warrants to acquire 141,999 shares of common stock
at
an exercise price of $3.00 per share appears inconsistent with
disclosure in the table on page 34 that BlastGard issued "Class B"
common stock purchase warrants to acquire 131,999 shares of common
stock. Revise or advise.
Financial Statements
54. Revise the order of the financial statements in the SB-2 to
present the separate financial statements of OPUS Resource Group,
Inc. or OPUS after those of the registrant. Since the
registration
statement includes historical financial statements after the date
of
the reverse acquisition, the historical financial of the
accounting
acquirer are the historical financial statements of the
registrant.
Thus, it appears to us that the financial statements of the
accounting acquiree, OPUS, should be presented after the
registrant`s
financial statements. Also, if applicable, it appears to us that
the
December 31, 2003 audited financial statements of the registrant
should be presented before its 2004 interim financial statements.
Report of Independent Auditors for OPUS Resource Group, Inc. and
BlastGard Technologies, Inc.
55. We note that both of these reports indicate that they were
audited "in accordance with auditing standards generally accepted
in
the United States of America." Tell us how you determined that
you
did not need to include auditors` reports that refer to the
"standards of the Public Company Accounting Oversight Board" in
the
SB-2. Refer to our Release 33-8422 and to Auditing Standard No. 1
of
the Public Company Accounting Oversight Board.
OPUS Resource Group. Inc. December 31, 2003 Financial Statements
Note 11. Subsequent Events
56. Disclose the amount of accounts payable and accrued
liabilities
that were settled during January 2004. If the amount settled was
not
substantially all the liabilities outstanding, tell us if the
remaining liabilities are reflected in BlastGard International
Inc.`s
interim financial statements.
BlastGard International, Inc. September 30, 2004 Financial
Statements
Condensed Statement of Changes in Shareholders` Deficit
57. Revise the statement of shareholders` deficit to include each
equity issuance since inception. It appears that you should
include
all transactions since September 26, 2003. Refer to paragraph
11(d)
of SFAS 7.
58. Revise all the historical and pro forma financial statements
to
reflect retroactively all stock splits. All share and per share
disclosures for BlastGard International, Inc. throughout the
registration statement should be restated for the reverse stock
splits that occurred during January and March 2004. All share and
per share disclosures for OPUS throughout the registration
statement
should be restated for the reverse stock split that occurred on
September 8, 2003. We do not think it is appropriate to disclose
any
share or per share amounts on a pre-split basis.
Earnings per Share
59. Provide the disclosures required by paragraph 40(c) of SFAS
128.
Note 5. Shareholders` Deficit
Options Granted to Non-Employees
60. We note the discussion of vested and unvested stock options
granted to non-employee consultants during 2004. Tell us the
period
over which these services are being provided to BlastGard. Tell
us
BlastGard`s basis for recognizing the expense for these services
based on the vesting schedule of the options.
61. Based on the vesting of employee stock options, it is unclear
to
us how BlastGard determined its pro forma disclosures. Advise or
revise.
Other
62. Refer to notes 6 and 8 of the December 31, 2003 financial
statements of OPUS. Also refer to BlastGard`s rollforward of
outstanding options and warrants for the nine months ended
September
30, 2004. It appears that BlastGard had several warrants issued
to
former officers and directors of OPUS that expired during February
2004. Tell us if these warrants are included in the 250,000
warrants
shown as outstanding at December 31, 2003, and, if so, explain to
us
where this expiration is reflected on the rollforward. Reconcile
the
outstanding options and warrants for OPUS as of the date of the
reverse acquisition with the subsequent disclosures in the interim
financial statements.
BlastGard Technologies, Inc. December 31, 2003 Financial
Statements
Report of Independent Auditors
63. We note BlastGard`s independent accountant, Cordovano and
Honeck,
P.C., is duly registered and in good standing to practice in
Colorado. However, Cordovano and Honeck, P.C. is not currently
licensed in Florida where BlastGard is located. Tell us why
BlastGard selected a Colorado based accounting firm to audit the
financial statements of a Florida based company. Tell us if the
audit was physically performed in Colorado or Florida. Confirm to
us
that the operations and assets of BlastGard are physically located
in
Florida. It is BlastGard`s responsibility to provide financial
statements audited by an auditor who meets the requirements of
Rule
2-01(a) of Regulation S-X. Tell us how BlastGard has met the
requirements of Rule 2-01(a) of Regulation S-X. Also tell us what
consideration BlastGard gave to Florida state laws governing
audits
of Florida companies performed by accountants licensed by other
states.
Note 3. Income Taxes
64. We read that a valuation allowance has been established for
deferred tax assets for which there is "no assurance" of recovery.
Revise the disclosure to indicate that the valuation allowance
offsets deferred tax assets for which it is "more likely than not"
that the deferred tax assets will not be realized. Refer to
paragraph 17(e) of SFAS 109.
Pro Forma Financial Statements
65. Since the interim historical balance sheet reflects the
reverse
acquisition, delete the pro forma balance sheet.
Recent Sales of Unregistered Securities, page II-1
66. Expand the disclosure to include this information required by
Item 701(c) of Regulation S-B:
* Under 2, the value of the 20 million shares of BlastGard`s
common
stock issued in the exchange on February 5, 2002.
* Under 2, the value of the 9.3 million shares of BlastGard`s
common
stock issued in the exchange on May 9, 2002.
* Under 2, the value of the up to 10 million shares of BlastGard`s
common stock issued in the reorganization.
* Under 4, the value of the 500,000 shares of BlastGard`s common
stock issued to SBI Securities, Inc.
* Under 8, the value of the 1.5 million shares of BlastGard`s
common
stock issued to Localtoolbox Corporation.
* Under 9, the value of the 745,250 shares of BlastGard`s common
stock issued in settlement of outstanding salary and consulting
fees.
* Under 9, the value of the 442,050 shares of BlastGard`s common
stock issued in settlement of outstanding loans, expenses, and
interest.
* Under 10, the value of the 91 million shares of BlastGard`s
common
stock issued in the reorganization.
* Under 11, the value of the 300,000 shares of BlastGard`s common
stock issued to Prisma Capital Markets, LLC or Prisma. Further,
clarify whether Prisma has returned to BlastGard the certificates
representing the common stock and the warrants.
67. Under 3, 6, 7, and 9, identify the persons or class of persons
to
whom BlastGard sold the securities. See Item 701(b) of Regulation
S-
B.
68. Under 6, describe the services performed in exchange for the
shares of BlastGard`s common stock. See Item 701(c) of Regulation
S-
B.
69. It appears that the disclosures made in the second, third, and
fourth entries under 11 repeat the disclosures made under 9 and 10
and in the first entry under 11. Revise or advise.
70. It is unclear why BlastGard omits disclosure here of the
December
2004 $1,420,000 financing transactions in which investors received
secured convertible notes and common stock purchase warrants. See
Item 701 of Regulation S-B, and revise.
71. Refer to note 5 in the quarterly report on Form 10-QSB for
March
31, 2004. It is unclear why BlastGard omits disclosure here of:
* The sale of 29,120,000 shares (5,824,000 post-split) of its
common
stock during January 2004.
* The issuance of 3,520,000 shares (704,000 post-split) of its
common
stock in exchange for business consulting services on March 30,
2004.
* The issuance of 16,000 shares of its common stock to settle a
disputed contract on March 31, 2004.
See Item 701 of Regulation S-B, and revise.
72. Refer to note 5 in the quarterly report on Form 10-QSB for
June
30, 2004. It is unclear why BlastGard omits disclosure here of:
* The issuance of 300,000 shares of its common stock in exchange
for
business consulting services on May 26, 2004.
See Item 701 of Regulation S-B, and revise.
73. For each transaction where BlastGard relied upon the exemption
under the Securities Act`s section 4(2), state specifically
whether
the purchasers were accredited or sophisticated investors. If the
latter, outline the access to information given to them. See Item
701(d) of Regulation S-B.
Exhibits
74. File the employment agreement of Mr. Kevin J. Sharpe as an
exhibit to the registration statement. See Item 601(b)(10)(ii)(A)
of
Regulation S-B.
Signatures, page 70
75. BlastGard`s controller or principal accounting officer also
must
sign the registration statement. Further, any person who occupies
more than one of the specified positions, for example, principal
financial officer and controller or principal accounting officer,
must indicate each capacity in which he signs the registration
statement. See instructions 1 and 2 for signatures on Form SB-2,
and
revise.
10-KSB
76. Since BlastGard is a penny stock issuer, the Private
Securities
Litigation Reform Act of 1995`s safe harbor for forward looking
statements is inapplicable. See section 21E(b)(1)(C) of the
Exchange
Act, and revise the first paragraph under "Management`s Plan of
Operation" and elsewhere in future filings.
Exhibits 31.1 and 31.2
77. Since the certifications filed as exhibits 31.1 and 31.2
include
the introductory language in paragraph 4 that refers to the
certifying officers` responsibility for establishing and
maintaining
internal controls over financial reporting for the company and
paragraph 4(b), we would expect to see all the disclosures
required
by Item 308 of Regulation S-K. Alternatively, we would expect to
see
the modifications to the certifications as discussed in Release
33-
8238, section III.E. Advise and amend the 10-KSB and all
subsequent
10-QSBs.
Signatures
78. BlastGard`s controller or principal accounting officer also
must
sign the 10-KSB. Further, any person who occupies more than one
of
the specified positions, for example, principal financial officer
and
controller or principal accounting officer, must indicate each
capacity in which he signs the 10-KSB. See General Instruction
C.2.
of Form 10-KSB, and revise in future filings.
Closing
File an amendment to the SB-2 and amendments to the 10-KSB
and
subsequent 10-QSBs in response to the comments. To expedite our
review, you may wish to provide us three marked courtesy copies of
the amendments. Include with the filings any supplemental
information requested and a cover letter tagged as correspondence
that keys the responses to the comments. If you think that
compliance with any of the comments is inappropriate, provide the
basis in the letter. We may have additional comments after review
of
the amendments, the responses to the comments, and any
supplemental
information.
We urge all persons responsible for the accuracy and adequacy
of
the disclosure in the registration statement reviewed by us to
ensure
that they have provided all information investors require for an
informed decision. Since BlastGard and its management are in
possession of all facts relating to the disclosure in the
registration statement, they are responsible for the adequacy and
accuracy of the disclosures that they have made.
If BlastGard requests acceleration of the registration
statement`s effectiveness, BlastGard should furnish a letter at
the
time of the request, acknowledging that:
* Should the Commission or the staff acting by delegated authority
declare the registration statement effective, it does not
foreclose
the Commission from taking any action on the filing.
* The action of the Commission or the staff acting by delegated
authority in declaring the registration statement effective does
not
relieve BlastGard from its full responsibility for the adequacy
and
accuracy of the registration statement`s disclosures.
* BlastGard may not assert the action of the Commission or the
staff
acting by delegated authority in declaring the registration
statement
effective as a defense in any proceedings initiated by the
Commission
or any person under the United States` federal securities laws.
The Commission`s Division of Enforcement has access to all
information that you provide us in our review of the registration
statement or in response to our comments on the registration
statement.
We will consider a written request for acceleration of the
registration statement`s effectiveness under Rule 461 of
Regulation C
under the Securities Act as confirmation that those requesting
acceleration are aware of their responsibilities under the
Securities
Act and the Exchange Act as they relate to the proposed public
offering of the securities specified in the registration
statement.
We will act on the request and by delegated authority grant
acceleration of the registration statement`s effectiveness.
You may direct questions on accounting comments to Jennifer
K.
Thompson, Staff Accountant, at (202) 824-5259 or Anne M.
McConnell,
Senior Staff Accountant, at (202) 942-
1795. You may direct questions on other comments and disclosure
issues to Edward M. Kelly, Senior Counsel, at (202) 942-1978 or me
at
(202) 942-1950.
Very truly yours,
Pamela A. Long
Assistant Director
cc: Troy Young, Esq.
Futro & Associates, P.C.
1401 17th Street, Suite 1150
Denver, CO 80202
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Mr. Michael J. Gordon
January 19, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE