Mail Stop 0308
January 21, 2005
VIA U.S. MAIL AND FACSIMILE
Mr. Peter Vaisler
Chief Executive Officer and President
Alliance Recovery Corporation
#390 - 1285 N. Telegraph Road
Monroe, MI 48162-3368
Re: Alliance Recovery Corporation
Registration Statement on Form SB-2
File No. 333-121659
Filed on December 27, 2004
Dear Mr. Vaisler:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
General
1. Section (a)(2) of Rule 419 defines a blank check company as a
company issuing penny stock that is "a development stage company
that
has no specific business plan or purpose or has indicated that its
business plan is to engage in a merger or acquisition with an
unidentified company or companies, or other entity." In
discussing
this definition in the adopting release, the Commission stated
that
it would "scrutinize . . . offerings for attempts to create the
appearance that the registrant . . . has a specific business plan,
in
an effort to avoid the application of Rule 419." See Securities
Act
Release No. 6932 (April 13, 1992).
Your disclosure indicates that you are a developmental stage
company
issuing penny stock. As of September 30, 2004, your primary asset
was cash in the amount of $157,885 and you had no revenues, no
employees working for you, no executive officer compensation, no
completed rubber waste conversion units, no customers, no
contracts,
and no rights to your vital technology. To date, it appears as if
you have taken few substantive steps in furtherance of a business
plan.
In view of the foregoing, it appears that your proposed business
may
be commensurate in scope with the uncertainty ordinarily
associated
with a blank check company. Accordingly, please revise your
disclosure throughout your registration statement to comply with
Rule
419 of Regulation C or supplementally provide a detailed
explanation
as to why Rule 419 does not apply to this offering.
2. We note that the compensation terms of the Mirador Consulting
Agreement, filed as exhibit 10.3, enable Mirador to purchase two
100,000 share tranches of your "publicly Traded common stock,
without
any restrictive legend or other restriction on the transfer
Thereof,
from the Company[.]" In other words, it appears you have granted
purchase rights for future registered primary offerings in the
form
of Tranche A and Tranche B shares. Please be aware of our view
that
an offering that commenced privately must be completed privately.
Accordingly, to conform with the requirements of Section 5 of the
Securities Act, the Trance A or B shares may not be issued in a
registered primary offering. Please confirm your understanding of
our view. The issuance of the Tranche A and B shares must be made
based upon an available exemption, and any subsequent resale by
the
shareholders must be registered or be made in reliance upon an
available exemption.
Also, because the agreement seemingly contemplates delivery of
registered securities to Mirador, will the failure to do so
subject
you to breach of contract or other potential claims of the
holders?
If so, please provide appropriate disclosure.
3. We note your independent accountants, Webb & Company P.A., are
located in Florida while the company is located in Michigan.
Please
have your accountants confirm to us that they are registered to
practice in Michigan.
4. Please review your disclosure and ensure that you identify the
source for the industry and scientific data that you provide.
Currently, you include many factual statements, but you do not
always
indicate whether the source of this information is based upon
management`s belief, industry data, scientific reports, general
articles or any other source. For example, we note the following:
* "Although similar process furnaces are operating at numerous
locations around the world . . . ." Risk Factors, Several factors
could result in our facility not operating . . . , page 7.
* "We believe that the effective implementation of our business
plan
will result in our position as a leading provider of community
based
waste to energy." Management`s Discussion and Analysis, Overview,
page 11.
* "We believe there are several sources of capital that can be
exploited." Management`s Discussion and Analysis, Overview, page
11.
* "All communities in the United States are being encouraged by
state
and federal officials to be more environmentally responsible."
Management`s Discussion and Analysis, Plan of Operations, page 13.
* "In 2001, 292 million scrap tires were generated in the United
States." Business, About Us, page 14.
These are only examples. The Business section in particular
contains
a number of other examples. If the statements are based upon
management`s belief, please indicate that this is the case and
include an explanation for the basis of such belief.
Alternatively,
if the information is based upon reports or articles, please
supplementally provide these documents to us appropriately marked
and
dated. We may have further comments.
Front Cover Page of Prospectus, page 3
5. The top of the cover page states that you are offering
"4,169,156
selling security holder shares of common stock[.]" Item 501(a)(2)
of
Regulation S-B requires you provide the title of the offered
shares,
which here is shares of common stock. Including references to
"selling security holder" shares may improperly imply that there
is
some distinct class of common stock owned by the selling security
holders. Also, describing the shares as held by selling security
holders is unnecessary given the descriptive disclosure that
appears
elsewhere on the cover page. Accordingly, please revise to delete
any reference to "selling security holder" at the top of the cover
page. Further, please combine the 4,169,156 shares of common
stock
and the 2,253,929 shares of the common stock issuable in
connection
with the conversion of warrants to read that you are registering
6,423,085 shares of common stock.
6. Also, we note that the subsequent paragraph that begins with
"Our
selling security holders are offering to sell . . ." is repetitive
of
the penultimate paragraph on the cover page. Please revise to
eliminate unnecessary repetition.
7.
Please state that there has been no public market for your common
stock before this offering, and that your shares currently are not
traded on any exchange or market. See Item 501(a)(4) of
Regulation
S-B in this regard. Additionally, we note your statement on page
9
that you intend to apply for a quotation of your shares of common
stock on the OTC bulletin board. Even so, please add a sentence
briefly highlighting that purchasers in this offering may be
receiving an illiquid security.
8. Given that no market currently exists for your shares, it is
our
position that the selling security holders must offer the shares
being registered at a fixed price. Based upon the registration
statement fee table, it appears that the relevant initial offering
price of the shares is $0.50. Once your shares are traded, then
the
selling shareholders may sell the registered shares at the
prevailing
market price. Please accordingly revise your cover page and the
remainder of the prospectus.
9. Please note that if this prospectus will be used before the
effective date of the registration statement, you must prominently
provide the required Item 501(a)(10) of Regulation S-B statement
on
the prospectus cover page. It appears that you have provided this
information on the registration statement facing page. Therefore,
please either revise your filing and place this statement on your
prospectus cover page, or confirm that the statement appears in
the
proper location.
10. Please provide the dealer prospectus delivery obligation
statement on either the inside front or outside back cover of your
prospectus, as required by Item 502(b) of Regulation S-B. If you
believe that this statement is not required, please tell us why
you
have not included it.
About Us, page 5
11. Please consider changing your title of this section from
"About
Us" to "Summary" or "Summary Information."
12. Please delete the defined terms in this section and in your
Risk
Factors section. For example, your readers will understand,
without
resorting to a definition, the meaning of "ARC," "Alliance," "we,"
"our," "us," and the "Company".
13. Also, we remind you that a summary should provide a brief
overview of you in a balanced manner. In this regard, please
consider the following:
* Please state that you have received a going concern opinion from
you auditors.
* Please disclose that your shares currently are not traded on any
market or exchange, and briefly explain how this impacts share
liquidity.
* Please disclose that 400,000 shares being registered in this
offering are owned by affiliates of the company. Furthermore,
officer-directors Peter Vaisler and David Williams will own the
majority of your registered shares, allowing them control your
company.
* Please better clarify the current status of your business rather
than what you intend your business to do and receive.
These are only examples. Revise accordingly. We may have further
comments based upon your revisions.
Risk Factors, page 5
14. Please revise your Risk Factors section generally to write
each
risk factor in plain English and avoid using "boilerplate" risk
factors. We believe a discussion of risk in generic terms does
not
tell your readers how the risk may affect their investment in you.
Further, you should place risk factors in context so your readers
can
understand the specific risk as it applies to you. See SEC
Release
No. 33-7497. As examples, please consider the following risk
factors:
* "Our success is dependent on our ability to raise additional
financing in the future."
* "The operation of our facility may result in liability claims
against us resulting in possible damages about our insurance
limits
and negatively affecting our profitability."
* There is presently no public trading market for our securities
and
this can affect the resale of your shares."
15. As your first risk factor, please discuss the fact that you
have
received a going concern opinion from your auditor, what a going
concern opinion means, and the risks that result.
16. Please include a risk factor that discloses the risks
associated
with "penny stocks" similar to your discussion of penny stocks on
page 10.
We have a limited operating history..., page 6
17. It appears that the second paragraph of this risk factor is
repetitive of the risk factor that follows, "Our success is
dependent
on our ability to raise additional financing in the future."
Please
revise to avoid unnecessary repetition. In addition, to place
this
risk in context, please disclose the amount of financing you
require
to implement your business plan and the amount of cash you require
over the next twelve months.
If we are unable to procure needed permits..., page 7
18. Although you state that you have worked with Mr. Vaisler to
obtain the necessary permits and that unforeseen changes in
environmental regulations could make it difficult to comply with
regulations, please discuss any industry or regulatory risks
presented by the current regulations of any state agency, U.S.
agency, or agency of a foreign government.
We may not be able to successfully develop a market..., page 8
19. Based upon the size of your business to date, please tell us
why
you believe it is appropriate to discuss expanding into Europe.
Other energy companies and disposal companies with more
experience..., page 9
20. Please clarify your statement that you have "no direct
competitors," when you list other firms that are in the business
of
"disposal and processing of scrap tires" in the subsequent
sentence,
and you discuss tire derived fuel as an alternative to your
process
on page 15.
There is presently no public trading market..., page 9
21. Please revise to more clearly discuss the risks that result
from
the lack of a trading market for your shares. Also, in a distinct
risk factor, please discuss the risks that result given that the
offering price was arbitrarily determined and that the price bears
no
relation to your assets, earnings, book value, or other criteria
of
value.
Use of Proceeds, page 9
22. Please disclose the exercise prices of the various warrants
related to the common shares you are registering in this offering,
and the possible proceeds that may result. Please also discuss
the
possible proceeds in the Management`s Discussion and Analysis
section, as the exercise of the warrants represent a possible
source
of liquidity to you. Similarly, disclose the exercise price of
the
warrants in the Description of Securities section.
23. Please disclose who will pay the offering expenses. In doing
so,
please disclose whether selling shareholders have agreed to
contribute additional capital to fund the offering expenses or
whether the expenses will be paid directly by you. If there is an
agreement that obligates you or the selling shareholders to pay
offering expenses, please describe the terms of the agreements,
and
file those documents as material agreements.
Determination of the Offering Price, page 9
24. Please revise this section to clearly disclose how you
determined
the offering price of the shares. Because there is no established
public market for your common shares, please provide all of the
factors that you considered in determining the offering price.
See
Item 505(a) of Regulation S-B. Please consider whether your
recent
private placements at $0.50 per share contributed to the
calculation
of the offering price.
25. Also, as reflected in comment 8 above, you may not simply
"estimate" your offering price. The initial offering price
apparently is $0.50 per share. Only once your shares are listed
or
traded may the selling shareholders sell at prevailing market
prices.
Market for Common Equity and Related Stockholder Matters, page 9
26. Please indicate the amounts of common equity that could be
sold
pursuant to Rule 144 under the Securities Act, that you have
agreed
to register under the Securities Act for sale by security holders,
and that you proposed or are proposing to be publicly offered that
could have a material effect on the market price of your common
equity. See Item 201(a)(2) of Regulation S-B.
Management`s Discussion and Analysis or Plan of Operation, page 11
27. At the beginning of this section, please disclose that you
received a going concern opinion from your auditors.
28. Please expand this section to discuss known material risks,
trends, and uncertainties that will have or are reasonably likely
to
have a material impact on your revenues, operations, liquidity, or
income over the short and long terms, and the actions you are
taking
to address them. In doing so, please discuss the industry-wide
factors relevant to your business and the risks and uncertainties
related to the development of your products to the extent
necessary
to commence operations and for the foreseeable future.
Additionally,
please discuss your ability to secure sources of supply and
customers, generate revenues, raise additional financing, and
manage
other significant risks and uncertainties that are material to
your
plan of operations and business. See SEC Release No. 33-8350 and
Item 303 of Regulation S-B.
29. Please rewrite this section in a clear and concise manner and
avoid using terms or phrases that an ordinary investor would not
understand. Additionally, please provide support for any
conclusions
you make or timelines you use. For example, although this comment
is
not limited to only these instances, please revise the following
phrases and conclusions:
* "utilization of specific existing distribution channels and
disposal infrastructure;"
* "installation through construction, completion, training, start-
up
and commercial acceptance based upon engineering performance
verification;" and
* "overall fabrication and installation timeframe is approximately
365 days."
30. Please clarify and disclose if applicable, whether you have
any
off balance sheet arrangements. See Item 303(c) of Regulation S-
B.
Plan of Operations, page 12
31. We note that you intend to raise funds of $20 million to
complete
the construction of the first showcase facility. However, it
appears
uncertain that this will occur in the near term. Therefore, it is
unclear how you plan to fulfill your cash obligations for the next
12
months. Please disclose the specific plan you have in place to
meet
your cash requirements in the next 12 months including how you
will
pay for the expenses of this offering. See Item 303(a)(1)(i) of
Regulation S-B.
32. Please describe your options and most likely course of action
over the next twelve months if you are unable to obtain $20
million
in capitalization.
33. In this regard, it is unclear why you cite your relationships
with several corporate finance entities, given that your shares
are
not nor in the immediate future appear likely to be "publicly
traded
on a recognized stock exchange[.]" Please revise accordingly, and
generally revise to be more clear about the current status of your
attempts to obtain necessary financing. Also, clarify whether the
standard of "being traded on a recognized stock exchange" includes
being listed on the OTC Bulletin Board.
34. Please provide more information about your discussions with
supplier and operators who have expressed an "interest" in
participating in your overall business. Additionally, please
expand
upon your discussions with these entities pertaining to the
exchange
of your shares for "all, or part, of the value of the turnkey."
35. Please describe your "targeted marketing initiatives" for the
sale of your rubber waste, carbon black, scrap steel, hot water,
and
steam that you plan to conduct while your construction and
installation phases are being conducted.
36. Please revise your disclosure to discuss information about
your
preliminary discussions with hydroponics greenhouse operators,
especially the basis for your conclusion that the availability of
reliable, yet discounted, heat is an attractive solution to their
current consumption of non-renewable resources.
Business, page 14
37. Please thoroughly revise your disclosure in this section and
throughout your prospectus to clarify the current status of your
operations and your proposed business operations. To the extent
that
you discuss future services, provide the status of development and
indicate the timeframe for which you anticipate offering these
services and the basis of your conclusions. We may have further
comments after reviewing your revised disclosure.
38. Please disclose the information about your reports to security
holders that you are required to provide under Item 101(c) of
Regulation S-B. See Item 16 of Form SB-2.
About Us, page 14
39. Please begin this subsection with a discussion about your
organizational form and your organization`s chronological history.
See Item 101(a)(1) of Regulation S-B.
40. Please describe your "one-step manufacturing process" and
explain
how it improves upon existing processes.
41. With respect to your rubber waste conversion process, please
disclose the development activities required to sufficiently
increase
the process` technical aspects for use in operations within 30
days
from completion of the offering. See Item 101(b)(1) of Regulation
S-
B.
42. Please describe how you plan to distribute your electrical
energy, carbon black, steel, and steam and/or hot water to your
customers. See Item 101(b)(2) of Regulation S-B.
43. Please revise to more clearly explain tire derived fuel and
how
it will impact the development of your business. See Item
101(b)(4)
of Regulation S-B.
Management Team, page 16
44. Please disclose the names of your "corporate management team
of
highly qualified and experienced executives, [who are] familiar
with
successful commercialization of leading edge technologies" and
have
been responsible for your research and development efforts thus
far.
Further, please estimate the amount of time you spent during the
last
two fiscal years on research and
development activities, and the extent to which the cost of such
activities will be borne directly by your customers. See Item
101(b)(10) of Regulation S-B.
45. We note your disclosure that "A Controller will be hired once
it
is monetarily feasible. Our accountants will carry out accounting
and financing functions on an interim basis." We assume you are
referring to Webb & Company, your independent auditors, based on
the
fact that you have no employees and do not mention any other
accountants in the registration statement. If our understanding
is
correct please elaborate, as it appears that your independent
accountants may be performing non-audit services - as that term is
defined by Rule 2-01(4) of Regulation S-X - which may impair their
independence. Please advise us in detail as to what specific
functions they are performing and why each function is
permissible.
Financing, page 16
46. Please disclose who your third party, seasoned financial
experts
are, and define what you mean by "stewardship required to complete
our overall financial objectives."
Expansion, page 16
47. Please state your plans if you are unable to obtain enough
tires
to meet your needs, and list alternative suppliers of your rubber
needs, if any. See Item 101(b)(5) of Regulation S-B.
Product, Markets, & Services, page 17
48. Please disclose how you determined that the addition of oil
burning reciprocating engines to make electricity will provide you
with an additional $3 million in net revenues.
Competitive Advantages and Strategy for Success, page 18
49. It is not necessary for you to repeat your business operations
in
this subsection because it is redundant and does not aid an
understanding your business. In this subsection, rather, please
only
provide a discussion of your competitive business conditions and
competitors. See Item 101(b)(4) of Regulation S-B.
Environmental Impacts of Products and Production Processes, page
18
50. Please tell us what you mean by your statement that "[m]any of
these efforts simply change the shape of the problem into a
consumer
product that is ultimately disposed of at conventional dump
sites."
It appears that you mean current tire recycling efforts turn
rubber
into consumer products that will be discarded later. If this is
true, please explain how your process will not lead to the same
outcome with the energy and steel you will produce.
51. Please disclose why your process does not qualify as federally
regulated source of emissions. Further, please provide the effect
of
the probable state and local government regulations on your
business.
See Item 101(b)(9) of Regulation S-B.
52. Please disclose any other federal regulations, beyond
emissions
regulations, with which you must comply. See Item 101(b)(9) of
Regulation S-B.
Tipping Fees, page 19
53. Please describe how you estimated the average tipping fees in
large, urban cities to be as much as $3.00 to $5.00 per tire, and
why
you budgeted tipping fees at $0.85 per tire. Also, please explain
the discrepancy between the $3.00 to $5.00 maximum and the $0.85
you
budgeted.
Sale of Manufactured Carbon Black, page 20
54. Please disclose how you determined that you would be able to
manufacture approximately 14 million pounds of commercial grade
carbon black annually.
55. Please use a carbon black price quotation that is later than
April 1, 2002. You say that the price of carbon black is directly
related to the price of a barrel of oil, and the price of a barrel
of
oil is very volatile. Therefore, using a 2002 price projection is
not necessarily reflective of today`s price.
Sale of Steam and/or Hot Water, page 20
56. Please provide or reference a more detailed discussion about
your
possible sale of steam and/or hot water. For example, please
discuss
your options for delivering hot water and steam, those who
purchase
and/or use hot water and steam, discussions you may have had with
purchasers, and any other fact you consider to be material about
your
ability to sell your hot water and steam.
Consulting Agreement with Mirador Consulting, Inc., page 20
57. Please state, in more detail, your dealings with Mirador
Consulting, Inc. Please discuss their business operations, the
services they have performed for you to issue them 200,000 shares
of
your stock, when you will begin to pay them $4,000.00 per month,
and
for what services will they be retained. If Mirador is a
broker-dealer and a selling shareholder, it must be listed as an
underwriter of this offering.
Intellectual Property, page 20
58. Please provide a discussion as to why your process may or may
not
be patentable, as you stated on page 14, and how your company
would
fare if you are able or unable to receive a patent. See Item
101(b)(7) of Regulation S-B.
59. Please disclose the terms and provisions of the contracts that
allow Mr. Vaisler to retain ownership of the technology upon which
your business relies while he owns 42.33% of the shares to be
registered in this filing. Also, please provide more detail about
the option to purchase, for a one-time fee, the technology from
Mr.
Vaisler if he ever ends his employment with you. Furthermore, you
state that Mr. Vaisler worked with others to develop this process,
therefore please describe the ownership rights the others have on
this process. Finally, please provide any other provisions in
your
agreements that negatively affect you. See Item 101(b)(7) of
Regulation S-B.
Employees, page 20
60. You state that you have no full-time employees. However, in
your
Employment Agreement subsection on page 23, you state that you
have a
five-year employment agreement with Mr. Vaisler to act as your
President and Chief Executive Officer on a full-time basis that
begins the day this registration statement becomes effective.
Please
include the fact that Mr. Vaisler will be a full-time employee as
of
this registration statement`s effective date in this section.
Also,
please include anyone else with whom you have such an agreement.
See
Item 101(b)(12) or Regulation S-B.
61. Please state why you expect to employ approximately 25 people
on
a full-time basis at your installation and 6 people in your
corporate
office. Please provide a general description of their duties.
Furthermore, please state or reference all the individuals who
perform the tasks necessary to start your business, how much time
they devote to this endeavor, and the manner of their
compensation.
See Item 101(b)(12) or Regulation S-B.
Description of Property, page 20
62. You state that Mr. Vaisler uses his home office and the office
of
his legal counsel to conduct your business operations. Please
describe any limitations of this arrangement. See Item 102(a) of
Regulation S-B.
Legal Proceedings, page 20
63. Please remove the qualifier, "we do not believe," from your
disclosure about any legal proceedings involving your directors,
officers, affiliates, or beneficial owners. Please state
affirmatively whether these individuals are involved in legal
proceedings as a party adverse to you or have a material interest
adverse to yours.
Directors, Executive Officers, page 21
64. Please disclose for whom Mr. Vaisler was working or his
funding
sources from 1995 to 2001 when he was working with a team of third
party engineers and scientists to develop the ARC Unit.
Additionally, please state for whom Mr. Vaisler worked from 1979
to
1985 and 1986 to 1989.
65. Please provide the terms of office for your directors. See
Item
401(a)(3) of Regulation S-B.
66. Please state if Mr. Williams is still working for Beutel,
Goodman, and Company. If he is not still working for them, please
state when he stopped. Also, please state when Mr. Williams began
managing Roxborough Holdings, Inc. See Item 401(a)(4) of
Regulation
S-B.
67. Please state Mr. Martin`s business experience from 2002 to the
present. See Item 401(a)(4) of Regulation S-B. Also, please
identify the other directorships he held in reporting companies.
See
Item 401(a)(5) of Regulation S-B.
68. You have not stated whether you have any significant employees
within the scope of Item 401 of Regulation S-B. However, earlier
in
your registration statement, you indicated dependence on key
employees, engineers, consultants, and contractors. Additionally,
you cited Michael E. Fiore, John L. Combs, and third party
engineers
and scientists who helped Mr. Vaisler develop your process.
Please
disclose all of your significant employees that have made or are
expected to make significant contributions to your business. See
Item 401(b) of Regulation S-B.
Principal Stockholders, page 24
69. Of the number of shares owned by each individual in the table,
state in a footnote to the table, the amount of shares that the
listed beneficial owner has the right to acquire within sixty days
from options, warrants, rights, conversion privileges, or similar
obligations. Please state if there are none of these
arrangements.
See Instruction 1 to Item 403 of Regulation S-B.
70. Your table indicates that Suzy Jafine`s shares are held in
trust.
If this is a voting trust or similar agreement, please provide the
information required by Instruction 2 to Item 403 of Regulation S-
B.
If this is not a voting trust, please state that in your table or
in
a footnote to your table. See Instruction 2 to Item 403 of
Regulation S-B. Additionally, please disclose the beneficial
owner
of shares held by Saul Brothers Partnership.
Selling Stock Holders, page 24
71. Please identify the beneficial owner that has the ultimate
voting
or investment control over the shares listed in your selling
shareholder table for the following entities: 1064055 Ontario,
Inc.;
Saul Brothers Partnership; Mirador Consulting, Inc.; Brawley
Cathers
Limited; Ruby Chicks Investment, Inc.; 874297 Ontario, Ltd.;
823284
Ontario, Inc.; Eagle Visions Securities Corp.; Cridon Investments
Limited; Elle Lee, Inc.; 1571469 Ontario, Inc.; Envo Tech, Inc.;
and
1451624 Ontario, Inc. See Interpretation 60 under Section I.
Regulation S-K in the Division of Corporation Finance`s Manual of
Publicly Available Telephone Interpretations (July 1997).
72. Please tell us whether any of the selling shareholders are
broker-dealers or affiliated with broker-dealers. For all selling
shareholders that are broker-dealers, disclose that they are
"underwriters" within the meaning of the Securities Act of 1933.
You
should revise this section and the Plan of Distribution section to
state the names of the selling shareholders who are broker-
dealers,
and to state that they are also underwriters with respect to the
shares that they are offering for resale.
73. For selling shareholders who are affiliates of broker-dealers,
disclose, if true, that:
* The seller purchased the shares in the ordinary course of
business,
and
* At the time of the purchase of the securities to be resold, the
seller had no agreements or understandings, directly or
indirectly,
with any person to distribute the securities.
If these statements are not true for any selling shareholder, then
the prospectus must state that the selling shareholder is an
underwriter.
Plan of Distribution, page 29
74. Please disclose who "Nationwide" is, and disclose why the
selling
shareholders have agreed to indemnify that entity.
75. Please disclose the Commission`s position of indemnification
for
Securities Act liabilities required by Item 510 of Regulation S-B.
See Item 14 of Form SB-2 and Item 510 of Regulation S-B.
Description of Securities, page 30
76. You state that "All outstanding shares of common stock are
validly issued, fully paid and non-assessable." However, we note
that you have outstanding subscription receivables of $17,877 as
of
September 30, 2004. Please advise or revise.
Experts, page 30
77. Please remove the parenthetical phrase "which report expresses
an
unqualified opinion and includes an explanatory paragraph
referring
to our recurring losses from operation which raise substantial
doubt
about or ability to continue as a going concern."
Financial Statements
Note 2 - Stockholders Equity, page 7
(D) Common Stock Warrants, page 7
78. Please revise to apply the guidance in paragraphs 284-285 of
SFAS
123. Specifically, we note your use of a volatility assumption of
0%, which resulted in a fair value of zero. Since the minimum
value
method is not appropriate for public entities you must use a
reasonable volatility assumption. See the glossary to SFAS 123.
Item 24, Indemnification of Directors and Officers, page 31
79. In the first paragraph of this section, you state that neither
your articles of incorporation nor your bylaws provide for
indemnification of your directors, officers, employees, or agents.
However, Article X of your bylaws states that every one of your
directors, officers, employees, and agents "shall be indemnified
by
the Corporation to the fullest extent permitted by law." Please
revise or advise.
Item 25, Other Expenses of Issuance and Distribution, page 31
80. Please note that this table should include all the expenses of
your offering. Therefore, if true, please state that all your
expenses are accounted for here, and please be sure to include all
of
your expenses in your table. See Item 25 of Form SB-2 and Item
511(a) of Regulation S-B.
81. You state here that you are paying for all the expenses for
this
offering, and the selling shareholders are paying for none of the
expenses. However, on page 25 of the prospectus, you say that you
have agreed to "bear the reasonable expense of the registration of
the shares." If true, please make clear in all parts of the
registration statement that you are paying for all the expenses of
this offering.
Item 26, Recent Sales of Unregistered Securities, page 31
82. Please revise this section to better explain and provide more
facts as to why you determined that your unregistered sales of
securities were permitted by Section 4(2) of the Securities Act.
In
this regard, please tell us with a view towards disclosure how you
identified all the purchasers listed in the table on pages 33-34.
Did you or your officers have pre-existing relationships with
them?
Did Mirador Consulting locate them on your behalf?
83. Please reconcile your disclosure here with that in the Selling
Stockholders section of the prospectus. We note that some of
these
shareholders listed in the latter are not listed in the former.
For
example, we note in the Selling Stockholders section that Dora
Vaisler is selling 300,000 shares of your stock. However, she is
not
listed in your Recent Sales of Unregistered Securities section.
Additionally, we notice that Robert Lisser is selling 360,000
share
of your stock, but he is not listed here either. Please revise or
advise.
Item 27, Exhibits and Financial Statement Schedules, page 35
84. Please file and index an instrument defining the rights of
your
security holders. See Item 27 of Form SB-2 and Item 601(b)(4) of
Regulation S-B.
Item 28, Undertakings, page 36
85. Please revise your undertakings so the language that appears
in
the registration statement is identical to the disclosure set
forth
in Item 512(f) of Regulation S-B. See Item 28 of Form SB-2 and
Item
512(f) of Regulation S-B.
Signatures, page 37
86. Please revise your signature page so that the language and
format
are identical to the language and format set forth in the Form SB-
2.
More specifically, in your first paragraph, please add that you
have
reasonable grounds to believe that this registration statement
meets
all of the requirements of filing on Form SB-2. See Signatures
section of Form SB-2. Also, your controller or principal
accounting
officer must sign the registration statement. See Instruction 1
of
the Instructions For Signatures section of Form SB-2.
* * * * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert staff comments and the declaration of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact David DiGiacomo, Staff Accountant, at (202)
824-5493, or George Oshiek, Accounting Branch Chief, at (202) 942-
2905, if you have questions regarding comments on the financial
statements and related matters. Please contact John Fieldsend,
Staff
Attorney, at (202) 824-5505, David Mittelman, Legal Branch Chief,
at
(202) 942-1921, or me at (202) 942-1900 with any other questions.
Sincerely,
H. Christopher Owings
Assistant Director
cc: Richard I. Anslow, Esq.
Anslow & Jaclin, LLP
Via Fax: (732) 577-1188
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Alliance Recovery Corporation
January 21, 2005
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