MAIL STOP 3561
September 27, 2005
Stephen Hughes, Chief Executive Officer
Boulder Specialty Brands, Inc.
6106 Sunrise Ranch Drive
Longmont, CO 80503
Re: Boulder Specialty Brands, Inc.
Amendment No. 1 to Registration Statement on
Form S-1
Filed on August 26, 2005
File No. 333-126364
Dear Mr. Hughes,
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 Cover Page
1. We note that Roth Capital Partners (Roth) will receive an
advisory
fee of one percent of the total consideration paid if a business
combination is consummated. Please discuss the applicability or
inapplicability of Regulation M to the contingent nature of the
underwriter compensation arrangements. Please address in your
discussion when any applicable restricted period would end.
Prospectus Summary, page 1
2. We note the discussion here and later in the document that,
prior
to filing this registration statement, you were in discussion with
several companies about the possibility of acquiring such
companies.
Please revise to identify these companies, discuss the status of
such
negotiations, and discuss the possible terms of each such
transaction. In the alternative, please provide us with an
explanation and analysis as to why such disclosure should not be
included in this document. Please refer to Instruction 6 to Item
504
of Regulation S-K.
3. We note your response to comment seven of our letter dated
August
8, 2005. We note the additional statement that you decided to
make
Messrs. Hughes and Lewis` warrants (purchased in the open market)
non-redeemable "due to the restriction on resales of the warrants
purchased by them until following a business combination." Please
explain the noted disclosure. Are you allowing them to obtain a
larger gain than public warrant holders because the risk they bear
due to the resale restriction? If so, please clarify.
4. Please revise to explain how you will be able to differentiate
between the warrants purchased in the offering and those in the
open
market.
Risk Factors, page 10
5. We note the response to comment 12 that any expenses are likely
to
be insignificant compared to the "value of the common stock held
in
us by [your] officers and directors." Please revise to provide
the
basis for any estimated "value" of these shares and clarify that
existing shares were purchased at a nominal price.
Use of Proceeds, page 28
6. Please revise to include a discussion of the one percent
advisory
fee in this section.
7. We note your response to comment 21. Considering the "in-
depth"
due diligence is not undertaken until after a negotiation and
letter
of intent is signed, we do not understand how you are able to
estimate the amount needed to satisfy necessary expenses. Please
clarify.
Proposed Business, page 38
8. We note your response to comment 26 citing statistics from the
years 2000 - 2002 as your basis for the statement that there is
currently a "favorable environment" for to consummating a business
combination. We do not understand how statistics from over three
years ago are able to substantiate a claim made about the present
conditions. Please revise to clarify.
9. Please revise the disclosure on pages 39 and 40 to discuss the
industry and opportunities as they relate to your business plans.
10. We note your response to comment 29 that the "research was not
used to determine the amount of proceeds to be raised in this
offering." Tell us the factors you considered in determining to
value this offering at $136,000,000 and offer the units at $8.00
per
unit. What factors did you consider when determining that you
might
need $122,400,000 in the trust fund to effect the business
combination contemplated by the registration statement? It does
not
appear as though the determination to value the offering at this
amount is an arbitrary decision and we would like to know the
specific factors and motivations behind the valuation. Given
management`s extensive and high-level experience in the food and
beverage industries, the precise nature of their knowledge about
their ability to effect a combination with a company whose fair
market value is equal to at least 80% of the company`s net assets
may
be material information for which appropriate disclosure is
required.
11. We note your response to comment 31 and the removal of the
quoted
term. Please clarify how Messrs. Hughes and Lewis became aware of
the current method and decided to use this form of financing
instead.
12. We note your response to comment 32 and that any payments "are
typically, although not always, calculated as a percentage of the
dollar value of the transaction." Please revise to discuss how
you
will calculate any finder`s fees. Will you use a percentage of
the
transaction value? If so, what percentage will you use?
Principal Stockholders, page 66
13. We note your response to comment 36 that you will amend the
registration statement prior to the time confirmations are sent.
Will investors who have indicated they will purchase in this
offering
be notified of the further dilution by you or the underwriters?
If
not, does that mean there is a risk the only notification
investors
who express early interest will receive is the confirmation of
sale?
Please clarify.
14. We note your response to comment 37 that the purchases by
"Messrs. Hughes and Lewis and or their affiliates or designees is
expected to align the interest of the initial stockholders."
Please
revise to clarify how purchases by "designees" would align the
interest of initial stockholders.
15. Please address the applicability or inapplicability of
Regulation
M in the context of the warrant repurchase agreements contained
discussed in this section.
Certain Transactions, page 69
16. We note that there are several stockholders who do not have
positions in the company. Please clarify if they will participate
in
your business plan or if they have some preexisting relationship
with
any of the other initial shareholders.
Financial Statements
17. We note your response to prior comment 43 and have the
following
additional comments regarding the UPO:
* Please clarify your disclosure regarding the timing of the
issuance
of the UPO, including whether the issuance of the UPO is dependent
on, or in any way related to, the effectiveness of the
registration
statement. For example, you may elect to modify your disclosure
to
state that upon the completion of the proposed offering, the UPO
will
be issued to the underwriter for $100, if this statement is
accurate.
* Please tell us why you used a stock price of $6.00 and an
exercise
price of $7.50 to value the UPO. If the UPO is being valued as a
whole, it would appear that a stock price of $8.00 and an exercise
price of $10.00 would be the appropriate assumptions.
Alternatively,
if your valuation is based on the sum of the valuations of the
underlying common stock and warrants, please tell us how you
determined the relative fair values of the common stock and
warrants,
and disclose the major assumptions used for the valuation of each
component.
* Please delete the reference to valuing the UPO at May 31, 2005
in
both Note 6 and MD&A, or update the valuation as of the most
recent
practical date, and tell us why you believe the date of the
valuation
is material to investors. We note that the major assumptions used
to
estimate the fair value of the UPO are based on the terms of the
UPO
and the proposed offering, and as such, the date of the valuation
would not appear to be significant.
Part II
Exhibits
18. In paragraph 6.2 of the Underwriting agreement, we note that
if a
default of over 10% of the "Firm Units" occur, and neither party
is
able to find a suitable purchaser to cover the default amount that
this agreement "may be terminated." Please advise how language
that
states the offering "may be terminated" ensures that this offering
will not proceed if more than 10% of the units are defaulted. If
an
amount greater than 10% of the units were defaulted and neither
the
issuer nor the underwriters elect to terminate the offering (since
they "may"), please advise as to the consequence.
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 Carlton Tartar (202) 551-3387 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: Robert Walter
Fax # 425-586-6613
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Stephen Hughes, Chief Executive Officer
Boulder Specialty Brands, Inc.
September 27, 2005
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