[LETTERHEAD OF DILL DILL CARR STONBRAKER & HUTCHINGS]
CHRISTOPHER W. CARR
DANIEL W. CARR
JOHN J. COATES
KEVIN M. COATES
H. ALAN DILL
ROBERT A. DILL
455 SHERMAN STREET, SUITE 300 THOMAS M. DUNN
DENVER, COLORADO 80203 JOHN A. HUTCHINGS
PHONE: 303-777-3737 STEPHEN M. LEE
FAX: 303-777-3823 FAY M. MATSUKAGE*
ROBERT S. McCORMACK
ADAM P. STAPEN
JON STONBRAKER
DILL DILL CARR STONBRAKER & HUTCHINGS, P.C. PATRICK D. TOOLEY
*Also licensed in Nevada
May 24, 2006
Mark P. Shuman
Branch Chief
Securities and Exchange Commission
Mail Stop 4561
100 F Street, N.E.
Washington, D.C. 20549
RE: TITANIUM GROUP LIMITED
REGISTRATION STATEMENT ON FORM S-1
AMENDMENT FILED ON APRIL 28, 2006
FILE NO. 333-128302
Dear Mr. Shuman:
On behalf of Titanium Group Limited (the "Company"), Amendment No. 6 to the
registration statement on Form S-1 is being filed.
The comments of the Staff in its letter dated May 22, 2006, have been addressed
in this filing pursuant to your request. The comments are set forth below,
together with the Company's responses, which refer to the EDGAR page, which
contains revised disclosure.
To assist the staff in its review of this Amendment, we are sending two hard
copies of this letter, together with two hard copies of the Amendment, marked to
show all of the changes.
GENERAL
1. PLEASE UPDATE YOUR FINANCIAL INFORMATION CONTAINED IN YOUR REGISTRATION
STATEMENT PURSUANT TO RULE 3-12(D) OF REGULATION S-X AS NECESSARY.
RESPONSE: Rule 3-12(d) requires that the age of the registrant's most
recent audited financial statements included in a registration
statement filed under the Securities Act of 1933 shall not be more than
one year and 45 days old at the date the registration becomes effective
if the registration statement relates to the security of an issuer that
was not subject, immediately prior to the time of filing the
registration statement, to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934. Since audited financial
statements for the fiscal year ended December 31, 2005 are included in
the registration statement, the requirements of Rule 3-12(d) have been
met.
Mark P. Shuman
Branch Chief
Securities and Exchange Commission
May 24, 2006
Page 2
Additionally, the Company has updated the financial information
contained in the registration statement so that it includes information
as of and for the three months ended March 31, 2006, as required by
Rule 3-12(a) of Regulation S-X.
2. PLEASE PROVIDE THE DISCLOSURE REQUIRED BY ITEM 502(D) OF REGULATION
S-K.
RESPONSE: The Company has assumed that the intended reference was to
Item 502(b) of Regulation S-K. The dealer prospectus delivery
obligation language has been added to the back page of the prospectus.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, PAGE 11
3. WE NOTE YOUR REVISIONS IN RESPONSE TO OUR PRIOR COMMENT 2 OF OUR LETTER
DATED APRIL 19, 2006 AND WE REISSUE A PART OF THE COMMENT. YOUR
SUPPLEMENTAL RESPONSE PRIMARILY ADDRESSES THE ADVANTAGES OF KEEPING
"OFFERING PROCEEDS" IN A SEGREGATED BANK ACCOUNT YET DOES NOT ADDRESS
THE REASONS WHY OVERDRAFTING THE CHECKING ACCOUNT, RATHER THAN USING
CASH RESOURCES, ALLOWS THE COMPANY TO "BETTER TRACK THE PERFORMANCE
OF YOUR OPERATIONS." SINCE THE COMPANY IS NOT IN RECEIPT OF THE
PROCEEDS FROM THIS OFFERING, YOUR RESPONSE REGARDING THE BENEFITS OF
KEEPING THESE FUNDS IN A SEPARATE ACCOUNT DOES NOT EXPLAIN WHY
MANAGEMENT CHOOSES TO OVERDRAW THE CHECKING ACCOUNT AND WHY THIS
ENABLES YOU TO BETTER TRACK PERFORMANCE. PLEASE REVISE GIVING
APPROPRIATE CONSIDERATION, IF APPLICABLE, TO THE COMPANY'S LEVERAGE
STRATEGY AS REQUESTED IN THE PRIOR COMMENT.
RESPONSE: It should be clarified that the offering referred to was the
private offering completed in August 2005. The proceeds from that
August 2005 private offering were deposited in a segregated U.S. dollar
account of the parent entity, Titanium Group Limited.
Its operating subsidiary, Titanium Technology, has a checking account
maintained in Hong Kong dollars (the "Operating Account"). The only
funds deposited into the Operating Account are funds directly related
to operations, such as revenues generated from sales and government
grant income. Amounts paid from the Operating Account are also directly
related to operations. Therefore, the Operating Account gives
management a quick snapshot of the financial health of the Company's
operations.
Management of the Company decided to deposit the proceeds from the
August 2005 private placement into a U.S. dollar account that would be
separate from the Operating Account since all of the proceeds from that
private placement were originally transmitted to the Company in US.
dollars. A significant portion of the proceeds from the August 2005
private placement was allocated for expenses to be incurred in
connection with the Company's plan of becoming a public company. Most
of these expenses will be paid to the Company's professionals, several
of which are located in the United States. Had the August 2005 offering
proceeds been deposited into the Operating Account, which is kept in
Hong Kong dollars, the Company would have had to convert U.S. funds
into Hong Kong currency when the offering proceeds were originally
deposited and then convert funds back into U.S. dollars
Mark P. Shuman
Branch Chief
Securities and Exchange Commission
May 24, 2006
Page 3
when paying its professionals. By keeping the funds in the U.S. dollar
account, the Company saves expenses that it might otherwise incur for
the currency conversion.
The Company's use of leverage, or borrowing under this overdraft
arrangement, does not result in significant interest expense. The
Company has noted on page 19 that the overdraft situation does not
exist for any significant lengths of time. The Company incurred
US$2,845 (HK$22,188) of interest expense for the 2005 fiscal year, and
the weighted average rate charged during 2005 was 8.5% per annum. The
annual facility fee charged by the bank for 2005 was US$321 (HK$2,500)
and is US$962 (HK$7,500) for 2006. The Company believes that the
benefit of being able to better monitor the performance of its
operating subsidiary and avoiding the costs of converting currency from
US dollars to Hong Kong dollars outweighs these borrowing costs.
SELLING SHAREHOLDERS, PAGE 45
4. WE NOTE THAT THE NUMBER OF SHARES REGISTERED FOR RESALE ON BEHALF OF
CATHERINE LEUNG CHANGED IN AMENDMENT 1. PLEASE PROVIDE US WITH A
COMPLETE DISCUSSION OF HOW THE ADDITIONAL SECURITIES WERE ACQUIRED BY
MS. LEUNG.
RESPONSE: Public Securities, Inc. has submitted a Form 211 to the NASD
so that the Company's stock will be quoted on the OTC Bulletin Board
after this registration statement has been declared effective and
selling shareholders have sold some of their shares. The NASD has
issued comments on the Form 211 filing and some of the comments have
questioned the role of Edward H. Price, Inc. PS Plan (the "Plan"). The
Plan was one of the original purchasers in the August 2005 private
placement. Edward H. Price, the beneficial owner of the Plan, was
sanctioned by the Commission in 2005 and the NASD expressed concerns
about the role of Mr. Price as a selling shareholder in the
registration statement. Mr. Price decided to have the Plan sell the
shares and warrants that it had purchased in the private placement so
that his role as a selling shareholder would not affect the Company
adversely. When Mr. Price expressed the Plan's desire to sell the
shares and warrants it had purchased in the private placement, Spencer
Edwards, Inc., which solicited investors for the August 2005 private
placement, put Mr. Price in touch with Catherine Leung. Ms. Leung was
an investor in the private placement who had expressed an interest in
increasing her ownership interest.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
RECENT SALES OF UNREGISTERED SECURITIES
5. WE NOTE THAT YOU HAVE FILED A FORM D, NOTICES OF SALES OF SECURITIES
PURSUANT TO REGULATION D, ON MARCH 30, 2006. PLEASE ADVISE US OF THE
DATE OF THE SALES OF THE SECURITIES COVERED BY THE FORM D. IF THESE
SALES ARE NOT DESCRIBED IN YOUR ITEM 15 DISCLOSURE, REVISE AS
APPROPRIATE.
RESPONSE: The Company filed its Form D late. The sales of the
securities covered by the Form D were completed in August 2005, as
described in Item 15.
Mark P. Shuman
Branch Chief
Securities and Exchange Commission
May 24, 2006
Page 4
Please contact the undersigned with any additional questions or comments you may
have.
Sincerely,
/s/ FAY M. MATSUKAGE
Fay M. Matsukage
Enclosures
Cc: Titanium Group Limited
Zhong Yi (Hong Kong) C.P.A Company Limited