Mail Stop 3561
October 25, 2005
Mr. James H. Disher, President
Banner Resources Inc.
c/o 3990 Warren Way
Reno, NV 89509
Re: Banner Resources Inc.
Registration Statement on Form SB-2
Filed September 26, 2005
File No. 333-128586
Dear Mr. Disher:
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
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 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 that you have provided in several sections of your
prospectus repetitive disclosures. For example, your disclosures
"Proposed Business", "Acquisition of Chita Claims", "Location and
Access" and "Physical Features" contain repetitive and overlapping
information. Please revise throughout your prospectus to delete
repetitive disclosures and to provide a concise, but thorough,
presentation of the information in a logical order.
Prospectus Cover Page
2. Please revise your disclosure here and throughout your
prospectus
to clarify that to be quoted on the OTC Bulletin Board, a market
maker must file an application on your behalf in order to make a
market for your common stock. You can not file an application to
be
quoted.
Prospectus Summary, page 5
3. Prominently disclose that your auditors have raised substantial
doubt as to your ability to continue as a going concern.
4. We note that on page 13 you state that if you find mineralized
material that you intend to raise additional capital to determine
if
development of the property for mining operations is warranted.
Please expand you summary to include this fact.
5. Also, expand this section to clearly state your mineral claims
will expire on July 25, 2006 unless extended by performing
approximately $11,600 in work on the claims. In addition,
disclose
that you have royalty obligations to meet in order to avoid
forfeiting your mineral claims to the prior owner.
6. We note your statement that you will update your registration
statement during the term of the offering. Expand your disclosure
to
also state that you will have continuing disclosure obligations
under
the Securities Exchange Act of 1934.
The Offering of 3,000,000 shares by Banner, page 5
7. Please revise here and in your selling shareholders offering
disclosure to include the disclosure that your stock will be
considered penny stock and the impact of your stock being
considered
penny stock.
Risk Factors, page 8
8. In general, descriptions of risks that describe circumstances
that
could apply equally to other businesses that are similarly
situated
are generic risks that should not be included in your risk factor
section. Please either eliminate these generic risks, or revise
them
to state specific material risks to your company or to the
purchasers
in this offering. For example, we note that the following risk
factors appear to contain generic disclosures:
a. "Our directors and officers shall be indemnified..." page 8
b. "As we will be subject to compliance with government
regulations..." page 8
c. "Because there is no public trading market for our common
stock..." page 9
In addition, revise your risk factors to get to the risk as
quickly
as possible and provide only enough detail to place the risk in
context. The actual risk you are trying to convey does not stand
out
from the details you provide. See as examples, "You have no
benefit
of an underwriter`s...." page 11 and "Possible depressive
effect..."
on page 10.
Please note these are examples only. Review your entire risk
factor
section and revise as necessary.
Native Land Claims
9. We note your disclosure of the possibility of native land
claims
affecting title to your mineral claims. This appears to be a
material risk to your company and should be addressed by a risk
factor.
Use of Proceeds, page 11
10. You state that there is no minimal amount you will raise.
Please
revise to clearly state your planned business operations if you
sell
less than 25% of the offering. How will this scenario affect your
operations and do you have other sources of financing?
Determination of Offering Price, page 13
11. Please revise to more clearly disclose how you determined the
offering price. The existing disclosure states that it was
arbitrarily determined. Please clarify what factors you
considered
in setting your offering price. For example, disclose whether
your
recent private placements contributed to your offering price
determination, the amount of funds you will need to properly
capitalize your business efforts or any other factors that were
considered.
Selling Security Holders, page 15
12. We note that you have listed the beneficial owners of the
securities indicated. Please more clearly disclose the natural
person(s) or public company that has the ultimate voting or
investment control over the shares held by each selling security
holder. See Interp. I.60 of Telephone Interp. Manual (July 1997)
and
Interp.4S of Reg. S-K section of 3/99 Supp. to Manual.
Plan of Distribution, page 17
13. Please alert investors at the beginning of this section that
there is currently no market for any of your shares, and that you
cannot give any assurance that the shares offered will have a
market
value, or that they can be resold at the offered price if and when
an
active secondary market might develop, or that a public market for
your securities may not be sustained even if developed.
14. In addition to clarifying that a market maker must file an
application on your behalf in order to make a market for your
common
stock, please discuss how long this takes and whether you have
engaged a market maker to apply for quotation on the OTC Bulletin
Board on your behalf. Explain what effect quotation on the OTC
Bulletin Board will have on your liquidity.
Shares Offered by Selling Shareholders, page 20
15. Please revise to explain that the selling security holders may
sell their shares in privately negotiated transactions by means of
Rule 144 or other available exemption, and briefly explain how
Rule
144 works.
Executive Officers and Directors, page 23
16. We note that you have provided a general description of the
business experience of Messrs. Disher and Krause. In accordance
with
of Item 401 of Regulation S-B, please provide more specifically
the
last 5 years of business experience for Messrs. Disher and Krause.
17. We note that certain of your disclosures are as of March 31,
2005, instead of June 30, 2005. Please revise your disclosures
for
your next amendment to present information such as Executive
Compensation on pages 24 and 25 as of June 30, 2005, or the most
recent quarterly reporting period.
Description of Securities, page 26
18. You state that the common stock upon subscription of the
offering
will be, when issued in accordance with the terms of the offering,
fully paid and non-assessable. This is a legal conclusion that
only
your counsel may make. Please revise.
Certain Relationships and Related Party Transactions, page 28
19. Disclose whether the transactions and agreements with related
parties were comparable to terms you could have obtained from
unaffiliated third parties. Disclose the business purpose of the
transactions. Further, please file any agreements as an exhibit.
Business, page 29
20. Please include a discussion in your disclosure concerning the
limits on the amount of time your officers and directors have to
spend on your business affairs and operations.
21. In your disclosure you have provided a glossary of industry
specific jargon. Please revise your disclosure to eliminate the
glossary. In addition, please revise your disclosures to avoid
the
use of jargon and where you determine you can not avoid using
jargon,
please provide the context for these terms so a reader not
familiar
with your industry can understand your use of these terms. For
example, in your Geology disclosure on page 36 you use the terms
ppm
u and IP halo.
Plan of Operations, page 38
22. Please note that Item 303(b)(1) of Regulation S-B requires, as
applicable, a discussion of any known trends, or uncertainties
that
are reasonably likely to have a material effect on the company`s
net
sales or revenues, income from continuing operations,
profitability,
liquidity or capital resources, or that would otherwise cause
reported financial information not necessarily to be indicative of
future operating results or financial condition. For example, you
could discuss whether the recent increases in fuel prices will
increase your cost of exploration. Please revise to discuss any
known trends or uncertainties. For additional guidance, please
refer
to SEC Releases 33-6835, 33-8056, and 33-8350.
Liquidity and Capital Resources, page 39
23. In a separately captioned section, please disclose any off-
balance sheet arrangements that have or are reasonably likely to
have
a current or future effect on your financial condition. Your
discussion should include all of the information that in now
required
by Item 303(a)(4) of Regulation S-B. If there are none, please
state
this in your revised disclosures.
Consolidated Financial Statements
General
24. Please revise your presentation to update your financial
statements to comply with the requirements of Item 310(g) of
Regulation S-B.
Consolidated Statement of Operations, page F-3
25. Please separately disclose the amount of expenses included in
each line item that you paid using shares of your common stock for
each period presented.
26. Please revise to include weighted average number of shares as
of
June 30, 2005. Refer to SFAS 128.
Notes to the Consolidated Financial Statements
Note 1. Exploration Stage Company, page F-6
27. We note your disclosure regarding the continuation of the
Company
as a going concern. Your current disclosure suggest that perhaps
your only plan to implement your business plan is to raise capital
through an offering even though there is not guarantee such
offering
will be successful. Section 607.02 of the financial reporting
codification requires appropriate and prominent disclosure of a
registrant`s financial difficulties and viable plans to overcome
such
difficulties. Please indicate whether these are management`s sole
plans with respect to alleviating substantial doubt regarding you
continuing as going concern and ensure that all bullet points
contained in AU 341.10 have been addressed including possible
discontinuance of operations.
Note 2. Summary of Significant Accounting Policies, page F-6
General
28. We note that you disclose in your statement of changes in
stockholders` deficit amounts for donated services. Please
disclose
your accounting policy used to determine these amounts, including
the
method used to calculate the amount of donated services.
Note 3. Mineral Properties, page F-8
29. You disclose your acquisition of a 100% interest in seven
mineral
claims consisting of 70 mineral claim units located in Clinton
Mining
Division, British Columbia, Canada for 320,000 shares of your
common
stock. Please disclose your purchase price allocation of the cost
of
the assets acquired. Please also explain to us the nature and
terms
of the 2.5% royalty fee and who it is payable to and your
accounting
treatment for these fees at the time of acquisition of the assets
and
your basis in GAAP for this treatment. Further, please also
provide
us support for your accounting treatment of the contingent
consideration of $25,000 annual advance royalties commencing
February
1, 2008. Is the $25,000 a fixed amount, or will the amount of the
fee vary according to revenue volume or another similar operating
measure? How long will you have to pay the $25,000 fee and does
the
annual fee effectively represent a compensation arrangement for
the
prior owner of the mineral claims? Explain to us how these
royalties
differ from the 2.5% Net Smelter Return royalty. Tell us your
calculation of the total cost of the acquired assets and why.
Refer
to paragraphs 20 through 23, and paragraphs 25 through 28 of SFAS
141.
Note 5. Loans Payable, page F-9
30. It appears that the $15,000 received is a demand note and
whereby
payment maybe requested at any time. Please disclose who loaned
you
$15,000 in February 2005 and reclassify these amounts to current
liabilities as of each period presented, or explain to us why it
is
not appropriate to do so.
*****
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 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 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 Milwood Hobbs, Staff Accountant, at (202)
551-
3241 or in his absence, Mike Moran, Accounting Branch Chief, at
(202)
551- 3841 if you have questions regarding comments on the
financial
statements and related matters. Please contact Scott Anderegg,
Staff
Attorney, at (202) 551-3342 or me at (202) 551-3720 with any other
questions.
Sincerely,
H. Christopher Owings
Assistant Director
cc: David Smalley
Fraser and Company LLP
Via Fax (604) 669-5791
James H. Disher
Banner Resources Inc.
October 25, 2005
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