MAIL STOP 3561
July 22, 2005
Howard Balter, Chief Executive Officer
Ad. Venture Partners, Inc.
18 W. 18th Street, 11th Floor
New York, NY 10011
Re: Ad. Venture Partners, Inc.
Amendment No. 2 to Registration Statement on
Form S-1
Filed June 30, 2005
File No. 333-124141
Dear Mr. Balter,
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.
Prospectus Summary, page 1
1. Disclose here, and elsewhere as appropriate, whether the
redemption of the warrants by the company would include the
warrants
held by the underwriters as a result of the exercise of their
purchase option. If such warrants are not included, discuss the
reasons why such warrants are not included later in your
prospectus.
Risk Factors, page 7
2. Please add a separate risk factor utilizing publicly available
information to address the number of "blank check firm commitment"
offerings currently in the market place, disclose the number of
such
transactions which have found business combination candidates and
have consummated such transactions, respectively, and discuss the
impact that competition with such entities could have on your
ability
to locate a target and successfully complete a business
combination.
In addition, please address the aggregate amount of offering
proceeds
currently in escrow with respect to these offerings.
Use of Proceeds, page19
3. We note your response to comment three of our letter dated June
24, 2005 that you can not presently ascertain the size of any
potential deposit or lockup payment. In the event such payment is
needed and utilizes a substantial portion of your non-trust funds,
please revise to clarify how you will fund the expenses attendant
to
consummating a business combination.
Certain Relationships and Related Transactions, page 40
4. The last paragraph on page 42 appears speculative. Because the
transactions discussed in that paragraph will occur in the future,
we
do not understand how you could assert that the terms will be "no
less favorable" than those available from unaffiliated third
parties.
Please advise or revise to explain how you will ensure the terms
are
no less favorable than terms from unrelated parties.
Principal Stockholders, page 43
5. We note your response to comment 12 that the warrant purchases
"if
any" are meant to align the interest of Messrs. Balter and Slasky
with those of public shareholders. Please revise to clarify in
the
prospectus, how allowing Messrs. Balter and Slasky to employ
"designees" to purchase shares would serve to align their
interest.
Also, please clarify the use of the qualifier "if any" in the
additional disclosure discussing the purpose of the warrant
purchases.
6. In the document, please revise to discuss how the ability to
use
the warrants and initial shares as collateral for loans to make
the
public market warrant purchases does not mitigate the capital
Messrs.
Balter and Slasky are "placing at risk." Substantiate your
response
that such mitigation that would result from the pledge of shares
and
warrants is limited.
Underwriting, page 51
7. Tell us whether Wedbush Morgan Securities or any members of the
underwriting syndicate will engage in any electronic offer, sale
or
distribution of the shares and describe their procedures to us
supplementally. If you become aware of any additional members of
the
underwriting syndicate that may engage in electronic offers, sales
or
distributions after you respond to this comment, promptly
supplement
your response to identify those members and provide us with a
description of their procedures. Briefly describe any electronic
distribution in the filing, and confirm, if true, that the
procedures
you will follow with respect to any electronic distribution will
be
consistent with those previously described to and cleared by the
Office of Chief Counsel.
8. Tell us whether you or the underwriters have any arrangements
with
a third party to host or access your preliminary prospectus on the
Internet. If so, identify the party and the website, describe the
material terms of your agreement, and provide us with a copy of
any
written agreement. Provide us also with copies of all information
concerning your company or prospectus that has appeared on their
website. Again, if you subsequently enter into any such
arrangements, promptly supplement your response.
9. We note your disclosure on page 47 regarding your directed unit
program. Please advise us of the mechanics of how and when these
units were or will be offered and sold to investors in the
directed
unit program for this offering. For example, tell us how the
prospective recipients and number of reserved units is determined.
Tell us how and when the company and underwriter notified or will
notify the directed unit investors, including the types of
communications used. Discuss the procedures these investors must
follow in order to purchase the offered units, including how and
when
any communications are sent or received or funds are received by
the
underwriters or you. How do the procedures for the directed unit
program differ from the procedures for the general offering to the
public? Provide us with copies of all written communications with
prospective purchasers about the directed share program.
Financial Statements
Note C - Proposed Offering, page F-8
10. Please expand Note 2 to disclose the significant terms of the
underwriter`s purchase option, including the material terms
discussed
on the cover page, as well as any net settlement provisions.
Disclose how you intend to account for the underwriter`s purchase
option and include the estimated fair value of the UPO and the
major
assumptions used to value it. In regards to these assumptions, we
believe that a volatility assumption should be used that is in
accordance with the principle outlined in paragraph 23 of FAS
123R,
and that the use of a minimum value method would not be
appropriate.
Lastly, please tell us exactly how you would propose to record the
initial issuance of the UPO, in conjunction with the sale of the
stock and warrants in the initial public offering. As applicable,
please expand MD&A to discuss the transaction and the likely
future
effect on your financial condition and results of operations.
Part II
Exhibits
11. We note your response to comment 14 and the fact that the
representatives have sole discretion to determine the timing of
such
purchases. We also note that the timing of such purchases would
involve obtaining the best price and execution. Based on the
language in exhibit 10.12 (formerly 10.13), it would appear that
the
warrant purchases are not mandatory, since the representatives are
not required to purchase all 3,000,000 warrants during the
allotted
time even if the price never exceeds $0.70 while in search for the
"best price and execution." Please advise and revise your
disclosure
on pages 43 and 44 to reflect the application of the language in
this
agreement.
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 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.
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 Babette Cooper (202) 551-3396 if you have
questions regarding comments on the financial statements and
related
matters. Questions on other disclosure issues may be directed to
Duc
Dang at (202) 551-3386.
Sincerely,
John Reynolds
Assistant Director
Cc: Gian-Michele aMarca
Fax # (415) 951-3699
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Howard Balter, Chief Executive Officer
Ad.Venture Partners, Inc.
July 22, 2005
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