Mail Stop 3561
March 17, 2006
J. Stephen Chandler, President
The Forsythe Group
6038 Rose Valley Drive
Charlotte, North Carolina 28210
Re: The Forsythe Group
Registration Statement on Form SB-2
Filed February 16, 2006
File No. 333-131882
Dear Mr. Chandler:
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. Please revise to limit the information provided on the
prospectus
cover page to only that required by Item 501 of Regulation S-B.
For
example, please remove the information regarding Rule 3a51-1(d).
Also, there should not be any cross-references in the forepart of
the
prospectus other than the cross-reference to the risk factors
section
on the cover page of the prospectus. Please remove the cross-
reference to "Investors Rights and Substantive Protection Under
Rule
419" from the cover page of the prospectus.
2. Highlight the cross-reference to the risk factors section as
required by Item 501(a)(5) of Regulation S-B.
Outside Back Cover Pages of Prospectus
3. On the outside back cover page of the prospectus, please
provide
the legend required by Item 502(b) of Regulation S-B. Indicate
that
the dealer`s prospectus delivery obligation shall not terminate
until
90 days after the date funds and securities are released from the
escrow account. See Rule 174(g) of the Securities Act.
Prospectus Summary
4. Please delete the cross-reference to the risk factors section
as
that section immediately follows the summary.
5. Please revise your document throughout to state that, pursuant
to
Rule 419, the securities and proceeds of this offering may be
released from escrow only upon the closing of an acquisition
representing at least 80 percent of the maximum offering proceeds,
the filing and effectiveness of the post-effective amendment, and
the
re-confirmation of a sufficient number of purchasers in the
investment. See Rule 419(e) of Regulation C.
6. Please summarize the terms of the escrow, including the name of
the escrow agent.
7. Please clarify to state that the proceeds shall not remain in
escrow for more than 18 months after the effective date of the
initial registration statement.
High Risk Factors, page 2
8. In your introductory paragraph, please add a statement to
indicate
that all of the material risk factors have been addressed here.
9. Please expand the subheading in risk factor one to indicate the
potential risk or harm as a result of new management not being
able
to successfully manage a public company.
10. We note the disclosure in risk factor four that "you will not
get
interest on your refunds" and that "investors` funds may remain in
the escrow account, which is non-interest bearing" along with
disclosure in provision 1.1 of the escrow agreement that "the
parties
shall establish a non-interest bearing escrow account." However,
we
also note the disclosure on page 10 that "[f]unds held in escrow
will
be invested in a certificate of deposit, interest bearing savings
account or in short-term government securities" and the disclosure
on
page 22, under the heading "Escrow," that "[i]f the time period
elapses, the remaining funds in escrow, plus interest, will be
returned to the investors." Please revise as appropriate to
accurately reflect whether the funds will be placed in an interest
bearing escrow account.
11. With respect to your seventh risk factor, please make clear
the
potential risk or harm. Could the company miss some potential
opportunities?
12. Risk factors 4 and 15 appear to be duplicative. Please
combine
these risk factors.
Investors` Rights and Substantive Protection under Rule 419, page
6
Deposit of Offering Proceeds and Securities, page 6
13. Disclose all material terms of the escrow agreement. For
instance, clarify that these funds are to be deposited into and
FDIC
insured depository institution. Also, clarify, if true, that no
interest or dividends will be earned on the escrowed funds by
either
investors or the company. See also the indemnification provision
and
the fees and expenses to be paid to the escrow agent.
Dilution, page 8
14. Please revise your disclosure to correct the dilution per
share
to new investors, which appears to be inconsistent with your risk
factor disclosure on page 4. Also, please revise the date
reference
in the second sentence of your disclosure to be consistent with
the
financial statement date.
Shareholders, page 9
15. Please compare the offering price per share to the price paid
by
officers, directors, promoters and affiliated persons. See Item
506(a) of Regulation S-B.
Use of Proceeds, page 9
16. Please clarify the use of proceeds from this offering. Please
discuss whether the funds could be used to pay individuals for
their
securities in order for the company to acquire another business.
Also indicate whether the working capital referenced on page 10
refers to the working capital of the company after a business
combination.
17. Please discuss how the company will pay finders` fees to a
third
party if the company consummates a business combination. Also
disclose whether officers, directors or affiliates of the company
could receive finders` fees.
Proposed Business
Plan of Operation, page 11
18. Please describe in more detail the methods or sources
management
intends to use to find or identify a potential company for a
business
combination.
Evaluation of Business Combinations, page 12
19. It appears that the initial statement should be an additional
risk factor. Please revise.
Business Combinations, page 13
20. We note the statement on page 13 that "[w]e may acquire a
business in which our promoters, management or their affiliates
own a
beneficial interest." If there is a present potential for a
related
party transaction, please explain fully the circumstances under
which
such a transaction may occur. Please discuss fully the non-arms-
length nature of such transactions and disclose whether or not an
independent appraisal of the value of the business or company will
be
obtained in the event a related party transaction is contemplated.
Employees, page 15
21. We note the statement that "[w]e have allocated a portion of
the
offering proceeds for general overhead ... some portion of working
capital may be used to pay any part-time employees hired." Please
reconcile this statement with the disclosure on page 9, in the
"Use
of proceeds" section and elsewhere, that "10% of the deposited
funds
may be released to us from the escrow account. We do not intend
to
request the release of this 10%."
Facilities, page 15
22. We note that the company has not engaged in any business
activities, is presently using the office of the company`s
president
"at no cost," and has no employees. In this regard, please
disclose
the nature of the "office expense" of $14,137 as noted in the
financial statements on page 28.
Management, page 15
Biography, page 15
23. Please describe the type of consulting services provided by
Select Services. See Item 401(a)(4) of Regulation S-B.
24. Please describe Mr. Ryburn`s business experience during the
past
5 years as required by Item 401(a)(4) of Regulation S-B.
25. Please state the number of hours per week Messrs. Chandler and
Ryburn each plan to devote to the business of this company.
Prior Blank Check Companies, page 19
26. Please state whether or not the company`s officers and
directors
have been involved with any blank check companies or shell
companies
in the past.
Remuneration, page 16
27. Please describe in more detail the adopted policy referred to
in
this section. Is such policy in writing? If yes, please file a
copy
of the policy as an exhibit.
Certain Transactions, page 18
28. Please name the promoters and describe any transactions
between
the company and the promoters as required by Item 404(d) of
Regulation S-B. For example, were the promoter issued any of the
company`s common stock?
Plan of Distribution, page 21
29. We note statement that "we reserve the right to close the
offering at any time it is complete." However the escrow
agreement
does not consider such right when defining the offering period.
In
addition, the escrow agreement does not include the provision
regarding the termination date falling on a holiday. Please
advise
or revise.
30. Please revise to include that all securities issued in
connection
with the offering will be deposited directly into the escrow
account
promptly upon issuance. See Rule 419(b)(3)(i).
31. You should disclose the states in which the securities may be
sold in this primary offering. You should also identify the
states
in which you have applied to register your securities, or have
obtained or will seek to obtain an exemption from registration.
Further, please advise on the status of your state registration
and
please confirm with us that you have cleared all state comments
before effectiveness of the registration statement.
Where You Can Find More Information, page 23
32. Please update the address of the SEC which is: 100 F Street,
N.E. Room 1580, Washington, D.C. 20549.
Financial Statements, page 24
33. Please delete the reference to your independent registered
public
accounting firm on page 24. Note that the financial statements
should not appear on the accountants` letterhead because
management
is responsible for preparing the financial statements.
34. Update the financial statements as required by Item 310(g) of
Regulation S-B, and provide a currently dated consent of the
independent accountants in any amendment.
Part II.
Item 27. Exhibits
35. Please file a complete copy of the company`s articles of
incorporation and bylaws as required by Item 601(b)(3) of
Regulation
S-B.
36. We note that exhibit 5, Legal Opinion, will be provided later
by
amendment. Please file the opinion in the next amendment and upon
review, the staff may have comments.
Item 28. Undertakings
37. Please include the undertakings required by Item 512(a)(4) of
Regulation S-B.
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 response 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 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.
Please contact Raquel Howard at (202) 551-3291 with any
questions regarding accounting issues and you may contact Janice
McGuirk at (202) 551-3395 with any other questions.
Sincerely,
John Reynolds
Assistant Director
cc: Richard W. Jones, Esq.
Fax: (770) 804-0509