Mail Stop 3561
May 26, 2006
Charles Sander, President
Catcher Holdings, Inc.
39526 Charlestown Pike
Hamilton, VA 20158-3322
RE: Catcher Holdings, Inc. ("the company")
Registration Statement on Form SB-2
Filed April 27, 2006
File No. 333-133579
Dear Mr. Sander:
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. Please revise to include summary financial data for all periods
presented in the financial statements.
Prospectus Cover Page
2. Please disclose the expiration date of the offering here and
later
in the plan of distribution section. If any extension(s) are
possible, this should be made clear together with the latest
outside
expiration date if extensions are made.
Prospectus Summary
Overview, page 1
3. The third bullet under "Our History" indicates Catcher has
obtained FCC equipment authorization to permit sales in the U.S.
Later disclosure indicates the authorization covers only the
prototype, not production units. Please revise as appropriate.
Further, later in your filing, please explain the process,
including
principal steps, timing and costs, to obtain further
authorization.
4. You disclose that a series of accessories to support the
product
are being developed. In another appropriate section, please
provide
further detail to describe these and disclose the timeframe in
which
they will be available for purchase.
The Offering, page 4
5. Please indicate in a note any commitments for the company to
issue
stocks, options, or warrants.
Risk Factors, page 8
6. In the fourth risk factor, please revise to clarify the
reference
to "it" in the sentence beginning, "If Scanz or its licensee made
any
such claims, . . . ." If "it" refers to Catcher, please clarify.
7. Reference is made to your eleventh and twelth risk factors.
Please advise us regarding the applicability of this Division`s
letter dated January 21, 2000 to Ken Worm of the NASD.
8. In regard to the twelth risk factor, please tell us whether the
company may face the potential for rescission liability to
purchasers
in the S-8 offerings. If yes, please revise this risk factor and
other appropriate disclosures in the prospectus.
Management`s Discussion and Analysis of Financial Condition...
Plan of Operation, page 16
9. Please file the agreements with EPS and CGI as mentioned in the
paragraph at the top of page 16. See Item 601(b)(10) of
Regulation
S-B. If you do not believe these agreements need to be filed,
please
explain.
10. Please disclose each principal activity which you plan to
conduct
in the next 12 months and explain how you will conduct that
activity,
quantify the expected costs involved and also disclose your source
of
funds.
Comparison of the Three Months Ended March 31, 2006 and 2005...,
page
17
11. We further note your statement, "[W]e expect revenue on the
first
production units towards the end of the second quarter and
increasing
throughout 2006." (emphasis added) Please provide the basis for
this belief and make clear, if true, that this is management`s
opinion.
Liquidity and Capital Resources, page 20
12. Disclose the cash balance as of a recent date.
Company Overview, page 25
13. If true, please clarify the third paragraph to indicate that
your
device has not passed Military Standard 810F. Clarify your
summary
as well. Further, in other disclosure, please explain the
significance of this standard to your business activities and
disclose the process for passing this standard, including
principal
steps, time frame and costs.
14. Please clarify the meaning of the term "watermarking
technology"
in the fourth paragraph.
15. We note that the prototype was completed in August, 2005 and
that
you have secured initial purchase orders and have commenced
initial
production of the CATCHER device. We also understand from the
disclosure that you require additional FCC authorization before
beginning sales. Please disclose the impact of the additional
authorization upon the commencement of sales of your device.
Strategy, page 26
16. We note from the third paragraph that the company is in
"various
stages of contract negotiations with numerous VARs". We further
note
that the company has "started the process of becoming an "approved
vendor" to government integrators who are not under a VAR
agreement".
Please expand your disclosure to provide more specific information
on
these transactions and arrangements, to the extent possible.
Competition and Market Risks, page 27
17. Please expand this section or provide another to address the
potential market for the CATCHER device.
18. Here or elsewhere as appropriate, please describe your
intended
marketing activities for the next 12 months together with the
associated costs, providing as much detail as possible.
19. Please revise this section to provide more details about
competition in the security industry now and expected. In this
regard, we note your statement, "[W]e believe that there will be
significant competition in the security market for products having
functionality similar to the CATCHER device."
Intellectual Property, page 27
20. Please explain "non-final rejection" of the 7/6/04 patent
application and disclose the potential ramifications to the
company.
21. We reiterate the staff`s previous comment #59 from our letter
dated September 2, 2005 which was issued on the company`s previous
registration statement, file number 333-127077. Please discuss
the
"Verna Application" that is referred to on page 6 of this
registration statement or advise.
22. Please provide updated disclosure with respect to the status
of
Ira Tabankin`s provisional patent application which was signed
over
to the company in March, 2006.
Legal Proceedings, page 28
23. Please file the written agreement with PPC as an exhibit to
the
registration statement or explain why filing is not necessary
under
Item 601 of Regulation S-B.
Selling Stockholders, page 44
24. The percentage amounts shown in the "Shares Beneficially Owned
Prior to the Offering" for Agile Partners, L.P., London Family
Trust,
and Sandor Capital Master Fund, L.P. do not agree with the
percentage
amounts shown in the "Security Ownership of Certain Beneficial
Owners
- - 5% Stockholders" table on page 39. Please revise to make the
disclosure consistent or advise.
Changes In And Disagreements With Accountants on Accounting and
Financial Disclosure, page 60
25. Item 304(a)(1)(iv)(A) of Regulation S-B requires you to
disclose
whether there were disagreements between the Company and the
former
accountant for the two most recent fiscal years and any subsequent
interim period through the date of dismissal. Please revise the
disclosure in the registration statement and include an updated
Exhibit 16 letter from your former accountant.
Financial Statements
Consolidated Statement of Operations, F-5
26. We noted the disclosure of $2,028,129 in acquired research and
development for the year ended December 31, 2005. Please tell us
in
detail if this was acquired during the purchase of U.S. Telesis or
another transaction, how you have accounted for the acquisition of
the research and development, and cite the specific authoritative
literature you used to support your accounting treatment. Please
note, if your disclosure and related accounting treatment relates
to
the elimination of the accumulated deficit of US Telesis (the
public
shell company), it is not appropriate to charge such amounts
through
the statement of operations. Please advise or revise.
Note 3 - Asset Purchase, F-14
27. We noted the disclosure that Catcher acquired certain assets
and
assumed certain liabilities of $836,000 of LCM in April 2005 prior
to
the merger between Catcher, Inc. and U.S. Telesis Holdings, Inc.
It
appears at the time of the transaction Catcher and LCM were shell
companies with no operations. Please clarify the following:
* Explain the business purpose of this transaction and what the
benefit is to the Company and the shareholders.
* The disclosure states that Ira Tabankin was the sole shareholder
of
LCM and owned approximately 36% of Catcher at the date of the
asset
purchase. Clarify if LCM was insolvent at the time of the
transaction and clarify who owned the assets to LCM at the time of
the transaction. In addition, please provide a detail of the
shareholders and their ownership interest in Catcher prior to the
acquisition of LCM.
* Tell us how you arrived at the conclusion that this transaction
was
a reverse acquisition. It appears from the asset purchase
agreement
that Catcher acquired the assets of LCM for the assumption of the
outstanding liabilities and no stock was exchanged resulting in no
change in control.
Note 7 - Manufacturing Agreement, F-18
28. We noted that you capitalized production startup costs for
tooling and non-recurring engineering costs which were paid to a
supplier under a manufacturing agreement. Consistent with the
principles of SFAS 2, design and development costs (e.g. for
molds,
dies, and other tools) involving new technology, should be
expensed
as incurred. Please cite the specific authoritative literature
you
used to support your accounting treatment that such costs should
be
capitalized and not expensed. Please advise or revise as
necessary.
Note 9 - Equity Transactions, F-19
March 2006 Private Placement (unaudited), F-21
29. The disclosure of the net proceeds of $6,111,000 from the sale
of
common stock and Series D warrants does not appear to reconcile to
the statement of shareholders` equity. Please clarify and revise.
Part II
Item 26. Recent Sales of Unregistered Securities, page II-2
30. The introductory paragraph of this section states all
unregistered issuances of securities were exempt from registration
under Section 4(2) and/or Rule 506 of Regulation D. You also
state
that "[a]ll recipients had adequate access through their
relationships with us..." (emphasis added) For each transaction,
please set forth the facts supporting the availability of the
private
placement exemption. For each transaction, please describe the
relationship of the purchaser to the issuer and address the
financial
sophistication or accredited investor status of purchasers. See
Item
701(d) of Regulation S-B in this regard.
General
31. We reiterate comment #95 from our comment letter dated
September
2, 2005 pertaining to the previous registration statement filed by
Catcher. All of the securities issued while U.S. Telesis was a
blank check company and all securities held by management and
principal shareholders, including their affiliates, of U.S.
Telesis
while it was a blank check company would appear to be subject to
this
Division`s letter to NASD Regulation, Inc., dated January 21,
2000.
Further, under the Division`s letter, other U.S. Telesis
securities
issued before the Catcher acquisition may be subject to that
letter.
Please disclose the Division`s position and explain how it
relates
to your securities. If there is uncertainty, please explain in
your
disclosure. If true, disclose that all such shares have been
registered for sale under this registration statement. If that is
not the case, please advise.
Closing 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 this action as 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 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.
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
provide 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.
Please contact Angela Halac at (202) 551-3398 with any accounting
related questions, and Janice McGuirk at (202) 551-3395 with any
other questions.
Sincerely,
John Reynolds
Assistant Director
cc: Jeremy D. Glaser, Esq.
(858) 720-5125