Mail Stop 3561
August 25, 2005
Donald C. Harms, Esq.
McKenzie Bay International, Ltd.
37899 Twelve Mile Road
Suite 300
Farmington Hills, MI 48331
Re: McKenzie Bay International, Ltd.
Post-Effective Amendment No. 2 to Registration Statement on Form
SB-2
Filed July 25, 2005
File No. 333-119493
Form 10-KSB for Fiscal Year Ended September 30, 2004
Filed January 13, 2005
File No. 0-49690
Dear Mr. Harms:
We have limited our review of your filing to the issues
addressed in our 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 information so we may better understand
your
disclosure. After reviewing this information, we may 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.
Post-Effective Amendment No. 2 to Registration Statement on Form
SB-2
General
1. It appears that the warrants issued on September 7, 2004 and
the
warrants that Spencer Clarke LLC will receive reflect an exercise
price tied to the market price of the underlying common shares.
Please be aware that you may not register common shares underlying
warrants exercisable at a price based upon the trading value of
those
common shares. See Part 3S in the Securities Act Sections of our
March 1999 Supplement to the Division of Corporation Finance`s
Manual
of Publicly Available Telephone Interpretations, available at
www.sec.gov. Instead, once the warrants have been exercised and
the
common shares are issued, you then may register the common shares
for
resale. Please revise or advise.
2. We note that you are registering common shares underlying
securities with market-conversion features. As a result, the
number
of common shares to be issued on conversion may depend on the
price
of the common stock at the time of conversion. Accordingly,
please
confirm to us as follows:
* the shares of common stock you have registered is a good faith
estimate of the maximum number of shares you may issue upon
conversion;
* you will not rely on Rule 416 if the conversion price results in
your having insufficient shares; and
* you will file a new registration statement to cover the resale
of
any additional shares in the event that the number of shares
actually
issued exceeds the number of shares that you have included in the
registration fee table.
Facing Page of Registration Statement
3. Please add a statement to this page indicating that the
offering
is being made pursuant to Rule 415, and check the box which
follows
that statement. See Part D.36 to the Division of Corporation
Finance`s Manual of Publicly Available Telephone Interpretations.
Prospectus Cover Page
4. Please revise your disclosure to limit the front cover of the
prospectus to one page. We remind you that the prospectus cover
page
should consist only of information required by Item 501 of
Regulation
S-B and otherwise key to an investment decision. The prospectus
cover page should not act as a substitute for the summary.
Prospectus Summary, page 6
5. Please specify here the number of shares being registered that
have already been issued to Cornell Capital Partners. Also,
identify
the creditor to whom you issued the 65,000 shares.
6.
Please revise here and in The Standby Equity Distribution
Agreement
and Related Transactions section to more clearly describe the
transactions relating to the convertible promissory notes and
warrants as well as the material terms of those financial
instruments. As currently drafted, the disclosure is difficult to
read, particularly as to how the notes relate to the standby
equity
distribution agreement.
Certain Terms of the Equity Distribution Agreement Explained, page
61
7. Please revise to replace terms such as "certain conditions" and
"certain provisions" with a brief description of those conditions
and
provisions to the extent material.
Form 10-KSB for Fiscal Year Ended September 30, 2004
Item 8A. Controls and Procedures, page 46
8. Item 307 of Regulation S-B requires that your certifying
officers
disclose their conclusions regarding the effectiveness, not
adequacy,
of your disclosure controls and procedures "as of the end of the
period covered by the report." Please amend accordingly here and
revise in all future periodic reports.
9. Please revise your disclosure regarding changes to internal
controls and procedures over financial reporting to identify "any
changes," not just "significant" changes, that have materially
affected, or are reasonably likely to materially affect, your
internal controls and procedures over financial reporting. See
Item
308(c) of Regulation S-B. Please also revise in future periodic
reports.
Report of Independent Registered Public Accounting Firm, page F-1
10. We note that the report makes reference to another auditor
regarding the cumulative period through September 30, 2002.
Please
amend your filing to include the report of the other auditor.
* * * * *
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
letter with your amendment that keys your responses to our
comments
and provides any requested information. Detailed 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 filing to be certain that the
filing includes all information required under the Securities Act
of
1933 and that they have provided all information investors require
for an informed investment 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 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 Michael Moran, Accounting Branch Chief, at
(202) 551-3841 if you have questions regarding
comments on the financial statements and related matters. Please
contact Howard Baik, Attorney-Advisor, at (202) 551-3317, David
Mittelman, Legal Branch Chief, at (202) 551-3214, or me at (202)
551-
3720 with any other questions.
Sincerely,
H. Christopher Owings
Assistant Director
cc: Jonathan B. Reisman, Esq.
Reisman & Associates, P.A.
Fax: (928) 569-8195
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Donald C. Harms, Esq.
McKenzie Bay International, Ltd.
August 25, 2005
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