VIA FACSIMILE
August 19, 2005
Robert F. Gruder
Chief Executive Officer
Stinger Systems, Inc.
1901 Roxborough Road, Suite 118
Charlotte, North Carolina 28211
Re: Stinger Systems, Inc.
Form S-1 Amendment No. 3
File Nos. 333-122583
Filed July 20, 2005
Dear Mr. Gruder:
We have reviewed your filings and have the following
comments.
Feel free to call us at the telephone numbers listed at the end of
this letter.
General
1. In your next amendment please file on Edgar a properly redlined
registration statement that clearly highlights all additions and
deletions made to the prior version of the registration statement.
2. We note that your cover page and registration fee table
disclose
that you are registering 9,763,500 shares of common stock but your
legal opinion covers "the 16,153,500 shares of common stock to be
sold
by the selling shareholders." Please clarify the discrepancy.
Cover Page
3. Because you are attempting to register shares that may be
issued
pursuant to an employee stock option and bonus plan, we reissue
comment 2 of our June 23, 2005 letter. Please provide a
supplemental
legal analysis supporting your apparent belief that you may
register
the resales of these shares on this registration statement, or
remove
these shares from the registration statement. In addition, it
appears
that you are attempting to register common stock issuable upon the
exercise of securities that you have not granted or issued under
your
plan. Please advise.
4. Tell us supplementally of the basis for the fixed price of
$10.00
per share. We note that the last reported sale price of your
common
stock was $5.60 per share.
Risk Factors, page 7
5. We note from page 36 that selling stockholders may sell short.
Please add risk factor disclosure regarding the downward pressure
on
the market price of your common stock that could result as selling
security holders exercise warrants and sell material amounts of
your
common stock. In addition, please discuss the fact that this
downward
pressure could encourage short sales by selling security holders
or
others. Finally, please explain short selling and its likely
impact
on the market price of your common stock.
We have received a "Wells Notice" from the SEC, page 9
6. Please clarify who allegedly made the representations about the
company and disclose the nature of the representations. Please
disclose what aspect of the private placements is subject to the
investigation.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page 13
Executive Summary, page 13
7. We note your supplemental response to comment 7 of our June 23,
2005 letter. However, the prospectus continues to refer to "EDT
patents." Please refer to the second sentence on page 14.
Therefore,
we reiterate that because EDT appears not to own any patents but
rather has patent applications pending, please remove all
implications
of owning patents her and elsewhere as appropriate. We also note
the
reference to negotiating agreements to patents on page 15.
Clarify
whether you have purchased or leased the rights to each of your
products` patents and patent applications. Disclose in the chart
on
page 25 the cost of purchasing or licensing each right as well as
the
party from whom these rights were obtained and file any patent
purchase or licensing agreements as exhibits.
Our Business, page 22
8. Please disclose the material terms of your agreements with the
distributors and manufacturers` representative groups with whom
you
have contracts.
9. We note your response to prior comment 22 of our June 23, 2005
letter. Please tell us supplementally the names of your third
party
manufacturers. Also tell us why based upon the small number of
manufacturers, their identity which could give insight on any
supply
interruptions is not material to investors. Please disclose the
number of third-party manufacturers that you currently utilize and
whether any are single source suppliers for any key component
parts of
your products. We note that the information that you deleted from
the third-party manufacturer risk factor on page 8 appears to be
material to investors. Please revise to re-include this
information
or tell us why you deleted it.
Our Properties, page 29
10. We note that your plan to move your Ohio facility to a yet as
to
be determined location in Tampa, Florida. However, we partially
reissue comment 30 of our June 23, 2005 letter. Please disclose
whether you will be changing third-party manufacturers and/or have
your own proprietary manufacturing facilities.
Legal Proceedings, page 29
11. Please update this section to the latest practicable date.
Certain Relationships and Related Transactions, page 31
12. Please disclose the interest rate of the note payable issued
in
the EDT acquisition.
Selling Stockholders, page 35
13. We reissue comment 36 with respect to Pomona College, Christ
Episcopal Church, and Castilleja School Foundation.
14. Please include a line that adds up the total aggregate number
of
shares selling stockholders may sell.
15. We note that the introduction states the table discloses the
way
in which the stock was acquired, however it appears that
information
is not included. Please revise to disclose.
16. Please disclose any office, position or other material
relationship each selling stockholder has had with you or your
predecessors or affiliates within the past three years.
Where you can find more information, page 40
17. Please note that pursuant to Item 502(b) of Regulation S-K,
the
dealer prospectus delivery obligation disclosure must appear on
the
outside back cover page of the prospectus. Please move the last
paragraph on this page accordingly.
Updated financial statements
18. Please provide updated financial statements and disclosures as
required by Rule 3-12 of Regulation S-X. Additionally, provide
updated auditor`s consents with your amendment.
Intangible assets, page 18
19. We have reviewed your response to our prior comment 39. Based
on
the guidance provided in paragraph 8 of SAFS 144, it appears to us
that you are required to perform an impairment test. Please
provide
us with the impairment analysis including the significant
assumptions
you used in performing the analysis.
Consolidated Financial Statements - Stinger Systems
Report of Independent Registered Public Accounting Firm
20. We note your response to prior comment 40. In the event of
noncompliance with North Carolina and/or Ohio state licensing
requirements, you should consider the need for disclosure in the
filing regarding the potential violation of state licensing laws
and
potential ramifications, if any. You may also want to consider
obtaining services from a different practitioner.
Consolidated Statements of Stockholders` Equity, page F-6
21. We note your response to our prior comment 44. Please tell us
why
Mr. McNulty originally provided the note payable and when it was
cancelled. Additionally, please tell us when you began
discussions
with him regarding the acquisition of the patent.
Note 11 - Acquisitions, page F-21
22. We reviewed your response to our prior comment 46. You
indicate
that there were working prototypes; however, we note that you have
experienced production problems with these prototypes. Please
provide
additional support regarding management`s opinion that there is no
in-
process R&D.
Report of Independent Registered Public Accounting Firm, page F-34
23. We note your response to our prior comment 50. If the
inventory
was written off because it had no value, the disclosure should
indicate that fact rather than implying that it was written off
because it was not observed. Please advise or revise.
Exhibits
24. With respect to the Killoy severance agreement, please refer
to
Staff Legal Bulletin No. 1 (February 28, 1997) relating to the
procedures for requesting confidential treatment.
Closing Comments
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 that is filed on EDGAR 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 Melinda Hooker, Staff Accountant, at (202)
824-
5459 or in her absence Anne Marie McConnell at (202) 942-1795, who
supervised the accounting review, if you have questions regarding
comments on the financial statements and related matters. Please
contact Craig Slivka, Staff Attorney, at (202) 942-7470 or, in his
absence, me at (202)942-1950 with any other questions.
Sincerely,
Jennifer Hardy
Branch Chief
cc: Gary R. Henrie, Esq.
Fax: (435) 753-1775
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Robert F. Gruder
Stinger Systems, Inc.
Page 1 of 6
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0404
DIVISION OF
CORPORATION FINANCE