June 29, 2005
Mail Stop 4561
Wayne A. Schellhammer
President and Chief Executive Officer
American Caresource Holdings, Inc.
8080 Tri-Star Drive
Irving, Texas 75063
Re: American Caresource Holdings, Inc.
Amendment No. 2 to Registration Statement on Form SB-2
Filed June 15, 2005
File No. 333-122820
Dear Mr. Schellhammer:
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 any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
General
1. We note from your response to Comment 1 that your decision to
change accountants was made on January 31, 2004. Given that your
decision to change accountants was made during your two most
recent
fiscal years, please provide the disclosure required by Item 304
of
Regulation S-B or tell us why you believe this disclosure is not
required.
2. We have reviewed your response to Comment 24 in which you state
that, "the resale of all shares listed in the table are being
registered." This does not appear to be consistent with the
disclosure found throughout the prospectus, including on the
facing
page, the cover page and the selling stockholders section. For
example, your disclosure on the cover page specifically refers to
the
resale of shares held by Patient InfoSystems ("PATY") only. If
you
intend to register for resale all of the shares being distributed
to
stockholders of Patient InfoSystems, or certain stockholders of
PATY
in addition to the shares being registered for resale held by
Patient
InfoSystems, please substantially revise your disclosure to
reflect
this. In connection with this, please add a footnote to the
"Calculation of Registration Fee" table to reflect this, revise
the
cover page and add all of the shareholders of Patient InfoSystems
who
will be selling their shares pursuant to this registration
statement
to the Selling Shareholders table.
Facing Page
3. We note your response to Comment 2. Please check the box on
the
facing page indicating that a portion of the proposed offering is
being conducted pursuant to Rule 415.
Cover Page
4. Please include a fixed price at which selling shareholders will
sell their shares pursuant to this registration statement.
Summary Financial Information, page 6
Balance Sheet Data as of December 31, 2004 and 2003
5. The balance sheet information presented as of December 31, 2003
reflects the financial position of American Caresource Holdings,
Inc.
and not that of American CareSource Corporation. As such, please
remove the term predecessor from that section.
Risk Factors, page 6
ACS may incur increased expenses if the Transitional Services
Agreement with Patient InfoSystems is terminated, page 12
6. You state that pursuant to the Transitional Services Agreement,
Patient InfoSystems will provide you with services "for no fee in
the
initial term of the agreement, and if the Transitional Services
Agreement is extended, $12,000 per annum for a second term, and,
$24,000 per annum for a third term and subsequent terms." Please
revise to indicate how long a "term" is and when each of the terms
noted about would expire.
Future sales of ACS common stock , or the perception that these
sales
may occur, could depress the price of ACS` common stock, page 13
7. You state that "the issuance of a substantial number of
additional
shares may be extremely dilutive to ACS shareholders and require
substantial and material charges to earnings which will impact net
loss attributable to common shareholders." Please advise us as to
how the issuance of additional shares could cause a material
charge
to earnings.
Management`s Discussion and Analysis or Plan of Operations
Liquidity and Capital Resources, page 17
8. Please disclose all material terms of the credit line you
entered
into with Wells Fargo Bank including, but not necessarily limited
to,
the information found in Note 3 to your financial statements.
Legal Proceedings, page 24
9. We note that you have removed disclosure regarding your former
employee who filed a lawsuit against you. Please advise us as to
why
you struck this disclosure and as to the status of the case (i.e.
- -
whether it was dropped, dismissed or settled).
Management
Employment Agreements, page 27
10. Please summarize the material terms of the employment
agreements
you have with Messrs. Schellhammer and Boone, such as
salaries/bonuses, termination and change in control provisions.
We
note, for example, that you have committed to pay them salaries of
$250,000 and $200,000 respectively. We refer to Item 402(g) of
Regulation S-B.
Financial Statements
Intangible Assets, page F-11
11. We note your response to comment 29. Please disclose your
estimated useful life for provider contracts as a critical
accounting
policy within Management`s Discussion and Analysis or Plan of
Operations. Refer to interpretative guidance in SEC Release 33-
8350.
12. Please help clarify for us how you were able to establish an
estimated life significantly in excess of the underlying
contractual
life using the guidance in EITF 03-9. In addition, specifically
address the following in your response:
* Clarify if you account for your provider contracts on an
individual
basis or as a pool of contracts.
* Tell us your accounting treatment upon cancellation of an
individual provider contract.
* Explain why you believe a straight-line amortization methodology
reflects the pattern in which the provider contracts contribute an
economic benefit to your Company. How does your historical
attrition
data support a straight-line methodology?
Line of Credit, page F-27
13. Disclose how you will account for the warrants issued to Mr.
Schaffer and Mr. Pappajohn for the purchase of 974,950 shares of
common stock at a strike price of $0.45 per share. Advise us of
your
basis in GAAP for your accounting treatment of the warrants and
their
amortization and specifically address the $190,657 amount recorded
to
Unearned Debt Issuance Cost at March 31, 2005.
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 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 Howard Efron, Accountant, at (202) 551-3439
or
Cicely Luckey, Senior Accountant, at (202) 551-3413 if you have
questions regarding comments on the financial statements and
related
matters. Please contact David Roberts, Staff Attorney, at (202)
551-
3856 or the undersigned at (202) 551-3694 with any other
questions.
Sincerely,
Owen Pinkerton
Senior Counsel
cc: Jeffrey A Baumel, Esq. (via facsimile)
McCarter & English, LLP
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American Caresource Holdings, Inc
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