April 4, 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.
Pre-effective Amendment 3 to Registration Statement on Form
SB-2
Filed March 17, 2005
File No. 333-121455
Amendment 1 to 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. Except
for
the financial statements and their notes, our page references
below
are to the courtesy copy of the SB-2/A3.
SB-2/A3
1. If applicable, comments on the SB-2 are comments on the 10-KSB
and
subsequent Exchange Act reports and vice versa.
2. We note the response to prior comment 5; however, you have not
explained why 150% of the amount of shares currently issuable is
your
good faith estimate of the number of shares that will actually be
issuable upon the notes` conversion. Explain why this is your
good
faith estimate. The fact that you have an agreement to register
that
number of shares does not address why this is your good faith
estimate. We note that the notes` conversion price of $1.50 per
share will only be adjusted upon a stock split, combination, or
dividend which could be covered by Rule 416. It is unclear also
why
the calculation of interest at 8% per year would cause you to have
to
sell 50% more shares that you would issue upon conversion of the
notes` principal amount.
3. We note the response to prior comment 6; however, the first
paragraph on page 31 and the last paragraph on page II-4 continue
to
state that Andrew Garrett, Inc., the placement agent, received a
warrant to purchase 4,870 shares at an exercise price of $3.00 per
share. Revise. Further, disclosure in the first paragraph on
page
49 that BlastGard issued warrants to acquire 82,834 and 4,970
shares
of its common stock to Andrew Garrett, Inc. is inconsistent with
disclosures in the third paragraph on page F-12 that BlastGard
issued
warrants to acquire 77,000 and 4,620 shares of its common stock to
the placement agent. Disclosure in the fifth paragraph on page F-
12
that BlastGard granted a total of 696,955 warrants is inconsistent
with disclosures in the table and the first paragraph on page 49
that
BlastGard granted a total of 703,139 warrants. Reconcile, and
provide consistent disclosure throughout the prospectus and
financial
statements.
4. Refer to prior comment 10, and revise also the seventh
paragraph
on the prospectus` outside front cover page and the third
paragraph
on page 2 to remove references to information incorporated by
reference in the prospectus.
Risk Factors, page 3
5. Based on disclosures in the first paragraph on page 33 and
elsewhere, clarify in the fourth risk factor that BlastGard`s
product
performance is based only on R&D testing and that BlastGard`s
product
mix consists currently only of two completed and finished
products.
Description of Business
Company History, page 8
6. Refer to prior comment 25. In the last paragraph on page 8,
identify the third party from whom BlastGard, Inc. held licenses,
and
clarify whether BlastGard Technologies, Inc. or BlastGard
International has any continuing relationship with the licensor
with
whom BlastGard, Inc. had its license agreement, or any continuing
dispute arising out of that license. Also, in the first paragraph
on
page 9, identify the three key principals of BlastGard, Inc. that
formed BlastGard Technologies, Inc., and disclose the nature of
any
continuing relationship that they have to BlastGard International.
7. Clarify whether the reorganization in which BlastGard
Technologies, Inc. was acquired was a reverse acquisition. In
other
words, did the former shareholders of BlastGard Technologies,
Inc.,
including the three principals, have a controlling interest in
BlastGard International after the reorganization and reverse stock
split were complete? Clarify which company experienced the
"change
of control" that you refer to in the first paragraph on page 9.
8. Explain why BlastGard, Inc. owed you $45,000 when you forgave
this
debt in exchange for BlastGard Inc.`s intellectual property and
goodwill.
9. Refer to prior comment 25. Disclosure in the last paragraph on
page 8 and in the fifth paragraph on page 41 that BlastGard, Inc.
could not perform under its agreement with OPUS Resources Group,
Inc.
or OPUS because it did not retain its licensing agreement to use
patents owned by a third party appears inconsistent with
disclosure
in the fifth paragraph on page F-10 that BlastGard, Inc. could not
meet the funding requirements under the agreement. Further, it is
unclear in the last paragraph on page 8 to what the phrase "Due to
complications surrounding BlastGard, Inc.`s licensing agreement"
is
referring. Please revise.
10. Refer to prior comment 25. Disclosure in the second full
paragraph on page 9 states that Messrs. John L. Waddell, Jr., and
James F. Gordon assigned their BlastWrap patent application to
BlastGard Technologies, Inc. in January 2004 in consideration of
the
reorganization agreement. Disclose the value assigned to the
patent
application received by BlastGard Technologies, Inc. as
consideration
for the reorganization agreement.
Key BlastWrap Benefits, page 12
11. Disclosure in the third paragraph that the performance of
BlastWrap proprietary blast mitigation technology is "independent
of
scenario and environment" appears inconsistent with disclosure in
the
second paragraph on page 10 that blast mitigation reduction is
accomplished through physical and chemical processes, "the
proportion
of each determined by the explosive material and circumstances of
a
particular blast." Reconcile the disclosures.
Existing Finished BlastWrap Products, page 13
12. Refer to prior comments 22 and 26. Based on disclosure in the
last paragraph on page 16 that BlastGard has only two products
that
it considers to be completed and finished products, revise the
caption or heading to reflect that fact. As drafted, the caption
or
heading can be read to imply that BlastGard has completed and
finished products for all of the product lines.
13. Based on disclosure in the last paragraph on page 16 that
BlastGard is manufacturing and marketing the First Responder and
the
BlastGard mitigated trash receptacle as of March 1, 2005, expand
the
disclosure to describe in sufficient detail BlastGard`s
manufacturing
arrangements for the two products. You may wish to provide
disclosure of the arrangements under "Manufacturing" on page 16.
Marketing Strategy, page 26
14. Refer to prior comments 22 and 24. It is unclear what the
factual basis is for the second paragraph`s first sentence. If
the
information is not factually supportable, state that the
information
is BlastGard`s belief or remove the statement.
Executive Compensation, page 37
15. Disclosure in the second table under the column "Number of
Options/Warrants" on page 37 that Mr. Kevin J. Sharpe was granted
500,000 options is inconsistent with disclosures in the tables on
pages 38 and 39, the second full paragraph on page 40, and article
IV(A) of exhibit 10.6. Please revise.
Employment Contracts and Termination of Employment and Change-in-
Control Arrangements, page 39
16. Refer to prior comment 74. Disclosure in the second full
paragraph on page 40 that the agreement with Mr. Kevin J. Sharpe
provides an annual salary of $100,000 per year is inconsistent
with
disclosure in article III(B) of exhibit 10.6 that Mr. Sharpe will
receive a base salary of $125,000 for the first year. Please
revise.
17. Expand the disclosure in the second full paragraph on page 40
to
state that Mr. Kevin J. Sharpe is entitled under his employment
agreement to a 1% net profit bonus each year based on BlastGard`s
fiscal year December 31 financials.
Financial Statements of BlastGard International, Inc. for the year
ended December 31, 2003
18. Explain to us how you determined that BlastGard, Inc. is not a
predecessor of BlastGard Technologies, Inc., or provide their
historical financial statements for periods before BlastGard
Technologies, Inc.`s formation as required by Item 310 of
Regulation
S-B. We note your disclosures that BlastGard, Inc. used a
different
technology; however, we also note that BlastGard, Inc. and
BlastGard
Technologies, Inc. were in the same line of business, were under
common control, and BlastGard Technologies, Inc. acquired all of
BlastGard, Inc.`s intellectual property. Also provide us your
analysis of the significance of the acquisition of BlastGard, Inc.
under Item 310(c) of Regulation S-B.
19. We note that you removed the financial statements of OPUS from
the SB-2. Provide us your analysis of the significance of this
acquisition under Item 310(c) of Regulation S-B. Demonstrate to
us
that the financial statements of OPUS are not required as a
significant acquisition, or revise the SB-2 to include OPUS`
historical financial statements for the year ended December 31,
2003.
Report of Independent Auditors, page F-2
20. We note your response to prior comment 63 and have these
questions:
* Tell us where the physical assets and accounting function of
your
consolidated company were located at December 31, 2004.
* If the physical assets and accounting function of BlastGard were
primarily located in Colorado, tell us how you determined that
your
principal place of business is Clearwater, Florida.
* If the physical assets and accounting function of BlastGard were
primarily located in Florida, tell us how your auditors were able
to
audit your December 31, 2004 financial statements without
traveling
to Florida.
Note 4. Notes Payable, page F-11
21. We read that the convertible notes issued on December 2, 2004
were issued at a conversion price of $1.50 per share and may be
converted at any time at the option of the noteholders. Provide
us
your analysis of whether this transaction contains a beneficial
conversion feature, including consideration of the contingent
conversion feature and the warrants granted to the noteholders.
Refer to EITF 98-5 and EITF 00-27.
22. Disclose the effective interest rate of the convertible notes.
Note 5. Shareholders` Equity
Options Granted to Non-Employees, Accounted for under the
Fair
Value Method, page F-14
23. We note your response to prior comment 60. Because the
unvested
options would be cancelled if the consulting agreement was
cancelled,
explain to us how you determined that February 17, 2004 is the
measurement date for the unvested options. Refer to EITF 96-18.
Options Granted to Employees, Accounted for under the
Intrinsic
Value Method, page F-15
24. We note your response to prior comment 61. It remains unclear
to
us how you determined the amount of pro forma compensation expense
for the year ended December 31, 2004 based on the scheduled
vesting
of employee options. Revise or advise.
Recent Sales of Unregistered Securities, page II-1
25. Under 15, state the number of warrants issued by BlastGard to
Basic Investors, Inc. and the warrants` exercise price. We note
the
disclosure in the fourth paragraph on page 49.
Closing
File an amendment to the SB-2 in response to the comments.
To
expedite our review, you may wish to provide us three marked
courtesy
copies of the amendment. Include with the filing 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 amendment, 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 our comments or the declaration of the
registration statement`s effectiveness 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 A. Young, Esq.
Futro & Associates, P.C.
Alamo Plaza
1401 17th Street, Suite 1150
Denver, CO 80202
Mr. Michael J. Gordon
April 4, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE