MAIL STOP 3561
January 5, 2006
Mr. Laurence S. Levy
Chief Executive Officer
Rand Acquisition Corporation
450 Park Avenue, 10th Floor
New York, New York 10022
RE: Rand Acquisition Corporation
Preliminary Proxy Statement on Schedule 14A
Amendment No. 1 Filed December 20, 2005
File No. 0-50908
Dear Mr. Levy:
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.
General
1. We reissue comment one from our letter of December 2, 2005.
Please provide an analysis as to the materiality of the decrease
in
conversion limits from 20% (as disclosed in the Company`s S-1) to
5%
(as disclosed in the Company`s Preliminary Proxy Statement). It
still appears to the Staff that an investor could have rested his
or
her investment decision on disclosure asserting that Rand would be
able to effect a business combination with four times as many
shareholders electing conversion than is currently provided in the
plans currently set forth by company`s management. Stated
differently, an investor could have purchased shares in Rand`s IPO
with the understanding that every one in five IPO shareholders
would
have to elect conversion in order for the business combination to
fail, whereas the Company`s pre-effective proxy statement now
states
that only one holder in twenty electing conversion would cause a
business combination to fail.
We note the statement contained in your response letter that you
"do
not view the disclosure contained in the Company`s Form S-1 and
cited
by the Staff in comment No. 1 as a guarantee, assurance or
suggestion
that every business combination would be structured to accommodate
conversions of up to 19.99%." However, we continue to note the
unequivocal statement contained on page F-8 of Rand`s S-1
(unaddressed in your response letter) as well as the presentation
of
Rand`s pro forma net tangible book value upon the conversion of
19.99% of the shares sold in its IPO.
Accordingly, we can not agree with your position that the
disclosure
contained in Rand`s S-1 is not "a guarantee, assurance or
suggestion
that every business combination would be structured to accommodate
conversions of up to 19.99%."
For your convenience, we again note the following disclosure
contained in the Company`s S-1 (we have underlined the portions
selectively addressed in your response and added the disclosure
immediately preceding the passage already cited on page F-8 in
order
to place it in better context):
* "We will not proceed with a business combination if public
stockholders owning 20% or more of the shares sold in this
offering
vote against the business combination and exercise their
conversion
rights. Accordingly, we may effect a business combination if
public
stockholders owning up to approximately 19.99% of the shares sold
in
this offering exercise their conversion rights. If this occurred,
we
would be required to convert to cash up to approximately 19.99% of
the 4,000,000 shares sold in this offering, or 799,600 shares of
common stock, at an initial per-share conversion price of $5.16,
without taking into account interest earned on the trust fund."
(p.
7)
* "For purposes of presentation, our pro forma net tangible book
value after this offering is approximately $4,125,936 less than it
otherwise would have been because if we effect a business
combination, the conversion rights to the public stockholders may
result in the conversion into cash of up to approximately 19.99%
of
the aggregate number of the shares sold in this offering..." (p.
20)
*
"With respect to the first Business Combination which is approved
and
consummated, any Public Stockholder who voted against the Business
Combination may demand that the Company convert his or her shares.
The per share conversion price will equal the amount in the Trust
Fund as of the record date for determination of stockholders
entitled
to vote on the Business Combination divided by the number of
shares
of common stock held by Public Stockholders at the consummation of
the Proposed Offering. Accordingly, Public Stockholders holding
19.99% of the aggregate number of shares owned by all Public
Stockholders may seek conversion of their shares in the event of a
Business Combination." (F-8)
With a view towards disclosure, please specifically address each
of
the passages reproduced in the three bullet points above with
respect
to why no reasonable investor would have purchased shares in
Rand`s
IPO with the understanding that every one in five IPO shareholders
would have to elect conversion in order for the business
combination
to fail. Additionally, please address why, if an investor did
purchase in Rand`s IPO with the understanding just noted, the
change
to a conversion ratio whereby one holder in twenty electing
conversion would cause a business combination to fail would not be
material to such investor.
2. We reissue comment two from our letter of December 2, 2005.
Please disclose the manner and priority of payments by which funds
will be disbursed from the trust account. We note your response
that
you "have added disclosure as to the manner and priority by which
funds will be distributed from the trust account in the sections
[beginning on pages 8, 11, and 110]" but we are unable to locate
any
such added disclosure.
3. Provide additional disclosure in appropriate places to clarify
as
to the ability of a stockholder to exercise his/her conversion
rights
in accordance with the company`s treatment of broker non-votes and
abstentions. Such disclosure should include, but not be limited
to,
the means required in order to exercise such rights as well as any
timing considerations and/or requirements involved.
Series A Convertible Preferred Stock, page 80
4. With respect to our previous comment 24, we note the analysis
you
provided us. You state that the preferred stock is perpetual with
no
maturity and thus resembles equity. However, you also duly
address
the cumulative dividends on the stock and the liquidation
preferences
that are consistent with debt contracts. Based on these facts and
the other features discussed in your response letter to us, it is
not
clear to us why you determined that the preferred stock is more
closely related to equity as opposed to debt. Please provide us
with
further clarification as to how you arrived at your conclusion.
Management`s Discussion and Analysis
Liquidity and Capital Resources, page 106
5. We reissue our previous comment 35 as the amount of cash flows
from operations as of September 30, 2005, disclosed on this page,
does not agree with the balance per the statement of cash flows.
6. On the table on page 108, we note the $10,600,000 in long term
obligations due after 2010. Please update "Liquidity and Capital
Resources" to disclose the material terms and conditions of this
long
term obligation. Also, if this amount relates to the convertible
preferred notes, provide a footnote to the table disclosing this
fact
and explain the variance from the amount of $10,060,000 reported
on
the September 30, 2005 balance sheet.
Audit Report, page F-10
7. We note the independent auditor`s report no longer includes a
signature from Deloitte and Touche LLP. Please revise to file the
audit report with a signature in accordance with Rule 302 of
Regulation S-T.
Financial Statements
Balance Sheet, page F-11
8. With respect to our previous comment 43, we note your
revisions.
In accordance with Article 5-02.19 of Regulation S-X, we reiterate
our request for you to separately state accrued interest on the
face
of the balance sheet.
Note 2 - Significant Accounting Policies
Capital Assets, page F-16
9. In your response to our previous comment 46, you discuss the
various factors you considered in determining the vessels`
depreciable lives. In your response to us and on page 89, you
state
that management`s view was affected by the fact that the vessels
will
not be contributing positively to revenues and cash flows because
of
the future costs associated with aging vessels. However,
depreciation of the cost of an asset should be allocated over the
period services are obtained from the use of the asset (paragraph
5
of ARB 43, Chapter 9C). Please explain to us in further detail
how
your use of 10 to 15 years complies with authoritative guidance.
Since the cost of major repairs is apparently included in
drydocking
costs and amortized over the period until the next expected
drydocking, it is not clear how expected repair costs relates to
the
depreciation period for the cost of the asset.
10. Expand Note 2 to disclose the specific nature of the various
components of capitalized drydock expenditures.
Form 10-KSB as of December 31, 2004
Financial Statements (Note 2 - Initial Public Offering), page F-9
11. With respect to our previous comment 60, we note your revision
to
the Management`s Discussion and Analysis in the Schedule 14A and
your
detailed response to us. Please continue your revisions to page
114
to discuss all significant terms of the underwriter purchase
options,
including but not limited to the composition of the units
underlying
the options, the exercise prices of the options and underlying
warrants, the terms of any net settlement features, the timing of
issuance, and the expiration dates of the options and underlying
warrants. Also discuss any future effect the issuance of the
options
is expected to have on your financial condition and results of
operations.
12. We reiterate our request for you to revise the Form 10-KSB to
include all of the disclosures requested in our previous comment
60.
Form 8-K filed September 7, 2005
13. In your response to our previous comment 59, you state the
financial statements in this Form were in accordance with Canadian
GAAP, whereas the financial statements in the Schedule 14A are in
accordance with U.S. GAAP. We note your explanation that the most
significant differences in revenues were due to two income
statement
classification issues. Please clarify why the revenue reported in
the Canadian GAAP financial statements is $7.2 million less than
U.S.
GAAP revenue while the operating expenses in Canadian GAAP are
only
$0.678 million less than U.S. GAAP operating expenses. Explain to
us
why these differences exist and provide us with a schedule
reconciling the differences as necessary.
14. For each of the three significant accounting differences
discussed in your response to comment 59, please clarify whether
you
believe the treatment in the historical financial statements
provided
in the Form 8-K is consistent with Canadian GAAP or whether it is
considered an error.
15. Your response to our previous comment 59 provides three
explanations for differences in historical financial information
considered "the most significant." Please provide us with
explanations for all material differences between the information
presented in the Form 8-K and the financial statements in the
Schedule 14A. Quantify and explain the nature of each difference.
Explain whether each material difference is due to the use of
Canadian GAAP or represents a mistake in the financial statements
in
the Form 8-K.
16. The financial statements included in Exhibit 99.1 do not
disclose
the use of Canadian GAAP or that they are unaudited. Please tell
us
why you believe an amended Form 8-K is not required to provide
these
disclosures and to reconcile the amounts in the presentation.
Exhibits
17. We note your response to comment 61 from our letter of
December
2, 2005. It would appear to the Staff that the materials covered
by
your request for confidential treatment under Rule 83 should have
been filed as exhibits evidencing material agreements in your Form
10-QSB for the period ending September 30, 2005. Additionally, we
note that Rule 83(b) states: "The provisions of this section
shall
apply only where no other statute or Commission rule provides
procedures for requesting confidential treatment respecting
particular categories of information (see, e.g., 17 CFR 240.24b-
2)..." Accordingly, it appears that confidential treatment should
have been requested under the procedures outlined in Rule 24b-2
(substantively different from Rule 83). Please amend your Form
10-
QSB for the period ending September 30, 2005 to include such
materials as exhibits or provide an analysis as to why such
materials
should not have been included as exhibits to the above-referenced
Form 10-QSB and why confidential treatment should not have been
requested pursuant to Rule 24b-2.
18. In connection with the preceding comment, Staff comments, if
any,
on the related application for confidential treatment will be
provided by separate letter. Please be aware that the clearance
of
the proxy statement is dependent on, among other things, the
successful resolution of any issues relating to the confidential
treatment application.
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.
You may contact Babette Cooper at (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
John
Zitko at (202) 551-3399, or Mike Karney, who supervised the review
of
your filing, at (202) 551-3847.
Sincerely,
John Reynolds
Assistant Director
cc: Todd J. Emmerman (by facsimile)
212.894.5873
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Laurence S. Levy
Rand Acquisition Corporation
January 5, 2006
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