[LETTERHEAD OF DILL DILL CARR STONBRAKER & HUTCHINGS, PC]
Christopher W. Carr
Daniel W. Carr
John J. Coates
Kevin M. Coates
H. Alan Dill
455 Sherman Street, Suite 300 Robert A. Dill
Denver, Colorado 80203 Thomas M. Dunn
Phone: 303-777-3737 John A. Hutchings
Fax: 303-777-3823 Stephen M. Lee
www.dillanddill.com Fay M. Matsukage*
Robert S. McCormack
Dean M. Smurthwaite
Adam P. Stapen
Jon Stonbraker
Patrick D. Tooley
*Also licensed in Nevada
June 20, 2007
Mark P. Shuman
Branch Chief - Legal
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
RE: TITANIUM GROUP LIMITED
AMENDMENT NO. 1 TO REGISTRATION STATEMENT ON FORM S-1
FILE NO. 333-142578
Dear Mr. Shuman:
On behalf of Titanium Group Limited (the "Company"), Amendment No. 1 to the
registration statement on Form S-1 is being filed.
The comments of the Staff in its letter dated June 4, 2007, 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. The numbers circled in the margin correspond to the
number of the comment.
GENERAL
1. PLEASE UPDATE THE FINANCIAL STATEMENTS PURSUANT TO RULE 3-12 OF
REGULATION S-X PRIOR TO EFFECTIVENESS.
RESPONSE: Complied. Unaudited financial statements for the three months
ended March 31, 2007 are included in this amendment to the registration
statement. Also, the summary financial data and "Management's
Discussion" sections have been updated to reflect this information. See
pages 4, 5, 10, 11, 12, 16, 17, 19, and F-1 through F-9.
2. WE NOTE YOUR DISCUSSION ON PAGE 45 REGARDING THE DUTIES THAT DIRECTORS
OF A BRITISH VIRGIN ISLANDS COMPANY OWE TO ITS SHAREHOLDERS AND THE
RISK FACTOR DISCLOSURE ON PAGE 8. PLEASE EXPAND YOUR DISCLOSURE IN THE
PROSPECTUS TO ADDRESS MORE PRECISELY THE EXTENT OF THE DIFFERENCES
BETWEEN THE STANDARD OF CONDUCT IMPOSED ON DIRECTORS UNDER BVI AND USA
CORPORATE LAW, AND THE POTENTIAL EFFECT OF THE DIFFERENCES TO THE
ORDINARY INVESTOR. YOUR
Mark P. Shuman
Branch Chief - Legal
Securities and Exchange Commission
June 20, 2007
Page 2
DISCUSSION OF THE NATURE AND EXTENT OF FIDUCIARY DUTIES OF THE BVI
DIRECTORS, AS WELL AS THE POTENTIAL RELIEF AVAILABLE IF THE DIRECTORS
DO NOT ADHERE TO THE APPLICABLE STANDARD OF CONDUCT, SHOULD BE CLEAR,
CONCISE AND READILY ACCESSIBLE TO INVESTORS.
RESPONSE: The Company believes that it has accurately set forth the
statutory provisions pertaining to the standard of care imposed under
the laws of the British Virgin Islands and under the laws of the state
of Delaware. To compare the potential effect of the differences under
the laws of each jurisdiction would require a case with virtually
identical facts decided in each jurisdiction. This is impossible for
the Company to obtain. The Company believes that the second risk factor
appearing on page 8 accurately describes the risks to investors.
The third and fourth risk factors appearing on page 8 apply in any
situation where the issuer is a foreign company and/or where the
officers and directors of the issuer are not resident in the United
States. They are not specific to British Virgin Island issuers.
3. THE 10,826,666 SHARES YOU PROPOSE TO REGISTER FOR RESALE CONSTITUTE
APPROXIMATELY 83% OF THE SHARES CURRENTLY OUTSTANDING HELD BY
NON-AFFILIATED HOLDERS. IN YOUR RESPONSE LETTER, EXPLAIN THE BASIS ON
WHICH YOU CONCLUDE THAT THE SALES BY THE SELLING STOCKHOLDERS DO NOT
INVOLVE A PRIMARY OFFERING BY THE ISSUER. IN PARTICULAR, TELL US WHY
YOU BELIEVE THAT THE OFFERING IS NOT "BY OR ON BEHALF OF THE
REGISTRANT," AS THAT PHRASE IS USED IN SUB-PARAGRAPHS (A)(1)(i) AND
(A)(4) OF RULE 415.
RESPONSE: The Company believes that all of the shares registered for
resale under the Registration Statement are covered by Rule
415(a)(1)(i) because all the securities will be offered or sold solely
by security holders of the Company and not by the Company; and (ii)
none of the security holders is acting on behalf of the Company.
Staff Interpretation No. D.29 of the Division of Corporation Finance's
Manual of Publicly Available Telephone Interpretations sets forth six
factors to be considered in determining whether an offering is in fact
a secondary offering. The Company believes that the facts involved in
this transaction support a conclusion that the transaction is not a
primary offering but a bona fide secondary offering.
o HOW LONG THE SELLING SHAREHOLDERS HAVE HELD THE SHARES - All
of the selling shareholders acquired their convertible
debentures and warrants on April 3, 2007. Since that date, the
selling shareholders have borne the full economic and market
risks for their ownership of such securities. In Item 3S of
the March 1999 Supplement to the Division of Corporation
Finance's Manual of Publicly Available Telephone
Interpretations, the staff stated that it would not view a
registration for resale of the common stock underlying
UNISSUED convertible securities as a valid secondary offering.
In this case, all of the selling shareholders purchased their
convertible debentures on April 3, 2007, prior to the filing
of this registration statement. Further, the debentures are
unsecured debt that does not mature until April 2010.
Mark P. Shuman
Branch Chief - Legal
Securities and Exchange Commission
June 20, 2007
Page 3
o THE CIRCUMSTANCES UNDER WHICH THEY RECEIVED THE SHARES - The
selling shareholders purchased the convertible debentures and
warrants for cash in a private placement to accredited
investors exempt from the registration requirements of the
Securities Act of 1933 pursuant to Section 4(2) thereof and
Regulation S. The terms of the convertible debentures and
warrants were determined by arm's length negotiations between
the Company and the investors.
o THE RELATIONSHIP OF THE SELLING SHAREHOLDERS TO THE ISSUER -
Neither at the time of the transaction in April 2007 nor at
any time since then have any of the selling shareholders been
an affiliate of the Company. None of the selling shareholders
has any right to designate a candidate for election to the
Company's board of directors or to approve or disapprove any
nominee for election. None of the Company's directors or
officers is affiliated with any of the selling shareholders.
The Company had no prior business relationship with any of the
investors.
o THE AMOUNT OF SHARES INVOLVED - Of the 10,826,666 shares being
registered for resale, only 5,993,333 shares are issuable upon
conversion of principal and interest under the convertible
debentures. The remaining 4,833,333 shares are issuable upon
the exercise of warrants. The 5,993,333 shares constitute
49.3% of the 12,165,000 shares currently outstanding held by
non-affiliates and will constitute 33% of the shares
outstanding held by non-affiliates after full conversion
(including interest) of the debentures.
o WHETHER THE SELLERS ARE IN THE BUSINESS OF UNDERWRITING
SECURITIES - None of the selling shareholders is involved in
the business of underwriting securities.
o WHETHER UNDER ALL THE CIRCUMSTANCES IT APPEARS THAT THE
SELLERS ARE ACTING AS A CONDUIT FOR THE ISSUER - The decision
to convert the debentures into shares is made at the option of
each holder. Also, the debentures are convertible at a fixed
price per share. The Company can force the conversion of the
debentures only if the trading for the stock exceeds $0.75 per
share for 30 consecutive trading days and other conditions
have been satisfied. The Company will not receive any proceeds
from the sale of the shares by the holders.
Accordingly, the Company believes that sales by the selling
shareholders do not involve a primary offering by the issuer.
4. PLEASE PROVIDE US, WITH A VIEW TOWARD DISCLOSURE IN THE PROSPECTUS,
WITH THE TOTAL DOLLAR VALUE OF THE SECURITIES UNDERLYING THE
CONVERTIBLE NOTE THAT YOU HAVE REGISTERED FOR RESALE (USING THE NUMBER
OF UNDERLYING SECURITIES THAT YOU HAVE REGISTERED FOR RESALE AND THE
MARKET PRICE PER SHARE FOR THOSE SECURITIES ON THE DATE OF THE SALE OF
THE CONVERTIBLE NOTE).
RESPONSE: The following disclosure appears on page 50 of the
prospectus:
Mark P. Shuman
Branch Chief - Legal
Securities and Exchange Commission
June 20, 2007
Page 4
DOLLAR VALUE OF UNDERLYING SECURITIES REGISTERED FOR RESALE IN THIS
PROSPECTUS
The total dollar value of the securities underlying the
convertible debentures and warrants that we have registered for resale
(using the number of underlying securities that we have registered for
resale and the market price per share for those securities on the date
of the sale of the convertible debentures and warrants) are as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
MARKET PRICE
OF TOTAL
INTEREST FOR SHARES MARKET PRICE NUMBER OF
LIFE OF TOTAL OF UNDERLYING PER SHARE ON SHARES UNDER-
CONVERTIBLE PRINCIPAL AND CONVERTIBLE DATE OF LYING CONVERTIBLE
AMOUNT OF DEBENTURE (8% INTEREST OF DEBENTURE SALE OF DEBENTURE
CONVERTIBLE PER ANNUM FOR 3 CONVERTIBLE FOR PRINCIPAL CONVERTIBLE REGISTERED
DEBENTURE YEARS) DEBENTURE AND INTEREST DEBENTURE FOR RESALE
- ------------------------------------------------------------------------------------------------------------------------------------
Crescent $1,000,000 $240,000 $1,240,000 4,133,333 $0.37 $1,529,333
International Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Chestnut Ridge $200,000 $48,000 $248,000 826,667 $0.37 $305,867
Partners, LP
- ------------------------------------------------------------------------------------------------------------------------------------
Whalehaven Capital $250,000 $60,000 $310,000 1,033,333 $0.37 $382,333
Fund Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Total $1,450,000 $348,000 $1,798,000 5,993,333 $2,217,533
- ------------------------------------------------------------------------------------------------------------------------------------
5. PLEASE PROVIDE US, WITH A VIEW TOWARD DISCLOSURE IN THE PROSPECTUS,
WITH TABULAR DISCLOSURE OF THE DOLLAR AMOUNT OF EACH PAYMENT (INCLUDING
THE VALUE OF ANY PAYMENTS TO BE MADE IN COMMON STOCK) IN CONNECTION
WITH THE TRANSACTION THAT YOU HAVE MADE OR MAY BE REQUIRED TO MAKE TO
ANY SELLING SHAREHOLDER, ANY AFFILIATE OF A SELLING SHAREHOLDER, OR ANY
PERSON WITH WHOM ANY SELLING SHAREHOLDER HAS A CONTRACTUAL RELATIONSHIP
REGARDING THE TRANSACTION (INCLUDING ANY INTEREST PAYMENTS, LIQUIDATED
DAMAGES, PAYMENTS MADE TO "FINDERS" OR "PLACEMENT AGENTS," AND ANY
OTHER PAYMENTS OR POTENTIAL PAYMENTS). PLEASE PROVIDE FOOTNOTE
DISCLOSURE OF THE TERMS OF EACH SUCH PAYMENT. PLEASE DO NOT INCLUDE ANY
REPAYMENT OF PRINCIPAL ON THE CONVERTIBLE NOTES IN THIS DISCLOSURE.
FURTHER, PLEASE PROVIDE US, WITH A VIEW TOWARD DISCLOSURE IN THE
PROSPECTUS, WITH DISCLOSURE OF THE NET PROCEEDS TO THE ISSUER FROM THE
SALE OF THE CONVERTIBLE NOTES AND THE TOTAL POSSIBLE PAYMENTS TO ALL
SELLING SHAREHOLDERS AND ANY OF THEIR AFFILIATES IN THE FIRST YEAR
FOLLOWING THE SALE OF CONVERTIBLE NOTES.
RESPONSE: The following disclosure appears on page 51 of the
prospectus:
Mark P. Shuman
Branch Chief - Legal
Securities and Exchange Commission
June 20, 2007
Page 5
PAYMENTS MADE IN CONNECTION WITH CONVERTIBLE DEBENTURE FINANCING
The following sets forth all payments made to the selling
security holders, any affiliates of the selling security holders, or
any persons with whom any selling security holders has a contractual
relationship regarding the transaction:
Total gross proceeds $ 1,450,000
Less cash fees disbursed by escrow agent:
First Montauk Securities Corp.(1) (144,997)
Cantara (Switzerland) SA(2) (21,750)
Feldman Weinstein & Smith LLP(3) (15,000)
Ellenoff Grossman & Schole LLP(4) (5,000)
Signature Bank(5) (2,500)
Less value of warrants issued to First Montauk
Securities Corp. and their designees(6) (139,996)
------------------
Total payments (329,243)
------------------
Net proceeds $ 1,120,757
==================
------------------
(1) Paid pursuant to the Selling Agent Agreement between Titanium
Group Limited and First Montauk Securities Corp. which
specified cash compensation equal to 10% of the aggregate
amount of debentures sold in the offering, less $3 to cover a
wire fee.
(2) In the Securities Purchase Agreement, the Company agreed to
pay Cantara (Switzerland) S.A., as an investment advisor to
Crescent International, a fee equal to 1.5% of the aggregate
subscription amounts of Crescent and the purchasers introduced
by Cantara.
(3) Feldman Weinstein & Smith LLP acted as counsel to Crescent
International Ltd. Payment of these fees was set forth in the
Securities Purchase Agreement.
(4) Ellenoff Grossman & Schole LLP acted as counsel to First
Montauk Securities Corp. Payment of these fees was set forth
in the Selling Agent Agreement.
(5) Paid pursuant to the Escrow Deposit Agreement among Titanium
Group Limited, First Montauk Securities Corp. and Signature
Bank for its services as escrow agent.
(6) The value of the warrants has been calculated using the
Black-Scholes valuation model with the following assumptions:
expected life of 7 years, volatility rate of 80.9%, dividend
rate of 0%, and risk-free interest rate of 5.04%
In the event we do not comply with certain provisions related
to the registration of the resale of the shares, we would have to pay
liquidated damages to the purchasers, up to a maximum of 18% of the
total amount invested ($261,000).
6. PLEASE PROVIDE US, WITH A VIEW TOWARD DISCLOSURE IN THE PROSPECTUS,
WITH TABULAR DISCLOSURE OF:
o THE TOTAL POSSIBLE PROFIT THE SELLING SHAREHOLDERS COULD
REALIZE AS A RESULT OF THE CONVERSION DISCOUNT FOR THE
SECURITIES UNDERLYING THE CONVERTIBLE NOTE, PRESENTED IN A
TABLE WITH THE FOLLOWING INFORMATION DISCLOSED SEPARATELY:
o THE MARKET PRICE PER SHARE OF THE SECURITIES UNDERLYING THE
CONVERTIBLE NOTE ON THE DATE OF THE SALE OF THE CONVERTIBLE
NOTE;
Mark P. Shuman
Branch Chief - Legal
Securities and Exchange Commission
June 20, 2007
Page 6
o THE CONVERSION PRICE PER SHARE OF THE UNDERLYING SECURITIES ON
THE DATE OF THE SALE OF THE CONVERTIBLE NOTE, CALCULATED AS
FOLLOWS:
- IF THE CONVERSION PRICE PER SHARE IS SET AT A FIXED
PRICE, USE THE PRICE PER SHARE ESTABLISHED IN THE
CONVERTIBLE NOTE; AND
- IF THE CONVERSION PRICE PER SHARE IS NOT SET AT A
FIXED PRICE AND, INSTEAD, IS SET AT A FLOATING RATE IN
RELATIONSHIP TO THE MARKET PRICE OF THE UNDERLYING
SECURITY, USE THE CONVERSION DISCOUNT RATE AND THE
MARKET RATE PER SHARE ON THE DATE OF THE SALE OF THE
CONVERTIBLE NOTE AND DETERMINE THE CONVERSION PRICE
PER SHARE AS OF THAT DATE;
o THE TOTAL POSSIBLE SHARES UNDERLYING THE CONVERTIBLE NOTE
(ASSUMING NO INTEREST PAYMENTS AND COMPLETE CONVERSION
THROUGHOUT THE TERM OF THE NOTE);
o THE COMBINED MARKET PRICE OF THE TOTAL NUMBER OF SHARES
UNDERLYING THE CONVERTIBLE NOTE, CALCULATED BY USING THE
MARKET PRICE PER SHARE ON THE DATE OF THE SALE OF THE
CONVERTIBLE NOTE AND THE TOTAL POSSIBLE SHARES UNDERLYING THE
CONVERTIBLE NOTE;
o THE TOTAL POSSIBLE SHARES THE SELLING SHAREHOLDERS MAY RECEIVE
AND THE COMBINED CONVERSION PRICE OF THE TOTAL NUMBER OF
SHARES UNDERLYING THE CONVERTIBLE NOTE CALCULATED BY USING THE
CONVERSION PRICE ON THE DATE OF THE SALE OF THE CONVERTIBLE
NOTE AND THE TOTAL POSSIBLE NUMBER OF SHARES THE SELLING
SHAREHOLDERS MAY RECEIVE; AND
o THE TOTAL POSSIBLE DISCOUNT TO THE MARKET PRICE AS OF THE DATE
OF THE SALE OF THE CONVERTIBLE NOTE, CALCULATED BY SUBTRACTING
THE TOTAL CONVERSION PRICE ON THE DATE OF THE SALE OF THE
CONVERTIBLE NOTE FROM THE COMBINED MARKET PRICE OF THE TOTAL
NUMBER OF SHARES UNDERLYING THE CONVERTIBLE NOTE ON THAT DATE.
IF THERE ARE PROVISIONS IN THE CONVERTIBLE NOTE THAT COULD RESULT IN A
CHANGE IN THE PRICE PER SHARE UPON THE OCCURRENCE OF CERTAIN EVENTS,
PLEASE PROVIDE ADDITIONAL TABULAR DISCLOSURE AS APPROPRIATE. FOR
EXAMPLE, IF THE CONVERSION PRICE PER SHARE IS FIXED UNLESS AND UNTIL
THE MARKET PRICE FALLS BELOW A STATED PRICE, AT WHICH POINT THE
CONVERSION PRICE PER SHARE DROPS TO A LOWER PRICE, PLEASE PROVIDE
ADDITIONAL DISCLOSURE.
RESPONSE: The following disclosure appears on pages 51 and 52 of the
prospectus:
Mark P. Shuman
Branch Chief - Legal
Securities and Exchange Commission
June 20, 2007
Page 7
POTENTIAL PROFITS ON CONVERSION OF THE CONVERTIBLE DEBENTURES
The following table shows the total possible profit that the
selling security holders could realize as a result of the conversion
discount for the securities underlying the convertible debentures.
- ------------------------------------------------------------------------------------------------------------------------------------
CONVERSION TOTAL POSSIBLE MARKET PRICE TOTAL POSSIBLE
MARKET PRICE PRICE PER SHARES OF THE TOTAL DISCOUNT TO THE
PER SHARE SHARE ON THE UNDERLYING NUMBER OF TOTAL POSSIBLE MARKET PRICE AS
ON DATE OF DATE OF THE THE PRINCIPAL SHARES SHARES OF THE DATE OF
SALE OF SALE OF THE AMOUNT OF UNDERLYING THE MULTIPLIED BY SALE OF THE
CONVERTIBLE CONVERTIBLE CONVERTIBLE CONVERTIBLE THE CONVESION CONVERTIBLE
DEBENTURE DEBENTURE NOTE DEBENTURE PRICE DEBENTURE
- ------------------------------------------------------------------------------------------------------------------------------------
Crescent $0.37 $0.30 3,333,333 $1,233,333 $1,000,000 $233,333
International Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Chestnut Ridge $0.37 $0.30 666,667 $246,667 $200,000 $46,667
Partners, LP
- ------------------------------------------------------------------------------------------------------------------------------------
Whalehaven Capital $0.37 $0.30 833,333 $308,333 $250,000 $58,333
Fund Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Total 4,833,333 $1,788,333 $1,450,000 $338,333
- ------------------------------------------------------------------------------------------------------------------------------------
7. PLEASE PROVIDE US, WITH A VIEW TOWARD DISCLOSURE IN THE PROSPECTUS,
WITH TABULAR DISCLOSURE OF:
o THE TOTAL POSSIBLE PROFIT TO BE REALIZED AS A RESULT OF ANY
CONVERSION DISCOUNTS FOR SECURITIES UNDERLYING ANY OTHER
WARRANTS, OPTIONS, NOTES, OR OTHER SECURITIES OF THE ISSUER
THAT ARE HELD BY THE SELLING SHAREHOLDERS OR ANY AFFILIATES OF
THE SELLING SHAREHOLDERS, PRESENTED IN A TABLE WITH THE
FOLLOWING INFORMATION DISCLOSED SEPARATELY:
o MARKET PRICE PER SHARE OF THE UNDERLYING SECURITIES ON THE
DATE OF THE SALE OF THAT OTHER SECURITY;
o THE CONVERSION/EXERCISE PRICE PER SHARE AS OF THE DATE OF THE
SALE OF THAT OTHER SECURITY, CALCULATED AS FOLLOWS:
- IF THE CONVERSION/EXERCISE PRICE PER SHARE IS SET AT A
FIXED PRICE, USE THE PRICE PER SHARE ON THE DATE OF THE
SALE OF THAT OTHER SECURITY; AND
- IF THE CONVERSION/EXERCISE PRICE PER SHARE IS NOT SET
AT A FIXED PRICE AND, INSTEAD, IS SET AT A FLOATING
RATE IN RELATIONSHIP TO THE MARKET PRICE OF THE
UNDERLYING SECURITY, USE THE CONVERSION/EXERCISE
DISCOUNT RATE AND THE MARKET RATE PER SHARE ON THE DATE
OF THE SALE OF THAT OTHER SECURITY AND DETERMINE THE
CONVERSION PRICE PER SHARE AS OF THAT DATE;
o THE TOTAL POSSIBLE SHARES TO BE RECEIVED UNDER THE PARTICULAR
SECURITIES (ASSUMING COMPLETE CONVERSION/EXERCISE);
Mark P. Shuman
Branch Chief - Legal
Securities and Exchange Commission
June 20, 2007
Page 8
o THE COMBINED MARKET PRICE OF THE TOTAL NUMBER OF UNDERLYING
SHARES, CALCULATED BY USING THE MARKET PRICE PER SHARE ON THE
DATE OF THE SALE OF THAT OTHER SECURITY AND THE TOTAL POSSIBLE
SHARES TO BE RECEIVED;
o THE TOTAL POSSIBLE SHARES TO BE RECEIVED AND THE COMBINED
CONVERSION PRICE OF THE TOTAL NUMBER OF SHARES UNDERLYING THAT
OTHER SECURITY CALCULATED BY USING THE CONVERSION PRICE ON THE
DATE OF THE SALE OF THAT OTHER SECURITY AND THE TOTAL POSSIBLE
NUMBER OF UNDERLYING SHARES; AND
o THE TOTAL POSSIBLE DISCOUNT TO THE MARKET PRICE AS OF THE DATE
OF THE SALE OF THAT OTHER SECURITY, CALCULATED BY SUBTRACTING
THE TOTAL CONVERSION/EXERCISE PRICE ON THE DATE OF THE SALE OF
THAT OTHER SECURITY FROM THE COMBINED MARKET PRICE OF THE
TOTAL NUMBER OF SHARES UNDERLYING SHARES ON THAT DATE.
RESPONSE: The following disclosure appears on page 52 of the
prospectus:
TOTAL POTENTIAL PROFIT FROM WARRANTS
The following table shows the total possible profit to be
realized as a result of any discounts for securities underlying
warrants of the Company issued in connection with the convertible
debenture financing that are held by the selling security holders.
- ------------------------------------------------------------------------------------------------------------------------------------
EXERCISE MARKET PRICE
PRICE PER TOTAL POSSIBLE OF THE TOTAL TOTAL TOTAL
MARKET PRICE SHARE ON THE SHARES NUMBER OF POSSIBLE POSSIBLE
PER SHARE DATE OF UNDERLYING SHARES ISSUABLE SHARES DISCOUNT TO THE
ON DATE OF THE SALE UPON EXERCISE UPON EXERCISE MULTIPLIED BY MARKET PRICE AS
SALE OF OF THE OF ALL OF ALL THE OF DATE OF SALE
WARRANTS WARRANTS WARRANTS WARRANTS EXERCISE PRICE OF THE WARRANTS
- ------------------------------------------------------------------------------------------------------------------------------------
Crescent $0.37 $0.50 3,333,333 $1,233,333 $1,666,667 $(433,334)
International Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Chestnut Ridge $0.37 $0.50 666,667 $246,667 $333,333 $(86,666)
Partners, LP
- ------------------------------------------------------------------------------------------------------------------------------------
Whalehaven Capital $0.37 $0.50 833,333 $308,333 $416,667 $(108,334)
Fund Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Total 4,833,333 $1,788,333 $2,416,667 $(628,334)
- ------------------------------------------------------------------------------------------------------------------------------------
8. PLEASE PROVIDE US, WITH A VIEW TOWARD DISCLOSURE IN THE PROSPECTUS,
WITH TABULAR DISCLOSURE OF:
o THE GROSS PROCEEDS PAID OR PAYABLE TO THE ISSUER IN THE
CONVERTIBLE NOTE TRANSACTION;
o ALL PAYMENTS THAT HAVE BEEN MADE OR THAT MAY BE REQUIRED TO BE
MADE BY THE ISSUER THAT ARE DISCLOSED IN RESPONSE TO COMMENT
FOUR;
o THE RESULTING NET PROCEEDS TO THE ISSUER; AND
o THE COMBINED TOTAL POSSIBLE PROFIT TO BE REALIZED AS A RESULT
OF ANY CONVERSION DISCOUNTS REGARDING THE SECURITIES
UNDERLYING THE CONVERTIBLE NOTES AND ANY OTHER WARRANTS,
Mark P. Shuman
Branch Chief - Legal
Securities and Exchange Commission
June 20, 2007
Page 9
OPTIONS, NOTES, OR OTHER SECURITIES OF THE ISSUER THAT ARE
HELD BY THE SELLING SHAREHOLDERS OR ANY AFFILIATES OF THE
SELLING SHAREHOLDERS THAT IS DISCLOSED IN RESPONSE TO COMMENT
FIVE AND SIX.
FURTHER, PLEASE PROVIDE US, WITH A VIEW TOWARD DISCLOSURE IN THE
PROSPECTUS, WITH DISCLOSURE - AS A PERCENTAGE - OF THE TOTAL AMOUNT OF
ALL POSSIBLE PAYMENTS AS DISCLOSED IN RESPONSE TO COMMENT FOUR AND THE
TOTAL POSSIBLE DISCOUNT TO THE MARKET PRICE OF THE SHARES UNDERLYING
THE CONVERTIBLE NOTE AS DISCLOSED IN RESPONSE TO COMMENT FIVE DIVIDED
BY THE NET PROCEEDS TO THE ISSUER FROM THE SALE OF THE CONVERTIBLE
NOTES, AS WELL AS THE AMOUNT OF THAT RESULTING PERCENTAGE AVERAGED OVER
THE TERM OF THE CONVERTIBLE NOTES.
RESPONSE: The following disclosure appears on page 52 of the
prospectus:
COMPARISON OF COMPANY PROCEEDS FROM CONVERTIBLE DEBENTURE FINANCING TO
POTENTIAL INVESTOR PROFIT
Gross proceeds from convertible debenture financing $ 1,450,000
Less payments made or required to be made to selling
Shareholders and any of their affiliates (329,243)
-------------
Resulting net proceeds $ 1,120,757
Combined total possible discount to market:
Convertible debentures $ 338,333
Warrants $ *
Total of payments made or to be made to selling
shareholders and combined total possible
discount to market price/net proceeds 59.6%
Percentage averaged over term of debentures
(3 years) 19.9%
------------------------
*Since the warrants are "out of the money", no value was ascribed to
them.
9. PLEASE PROVIDE US, WITH A VIEW TOWARD DISCLOSURE IN THE PROSPECTUS,
WITH TABULAR DISCLOSURE OF ALL PRIOR SECURITIES TRANSACTIONS BETWEEN
THE ISSUER (OR ANY OF ITS PREDECESSORS) AND THE SELLING SHAREHOLDERS,
ANY AFFILIATES OF THE SELLING SHAREHOLDERS, OR ANY PERSON WITH WHOM ANY
SELLING SHAREHOLDER HAS A CONTRACTUAL RELATIONSHIP REGARDING THE
TRANSACTION (OR ANY PREDECESSORS OF THOSE PERSONS), WITH THE TABLE
INCLUDING THE FOLLOWING INFORMATION DISCLOSED SEPARATELY FOR EACH
TRANSACTION:
o THE DATE OF THE TRANSACTION;
o THE NUMBER OF SHARES OF THE CLASS OF SECURITIES SUBJECT TO THE
TRANSACTION THAT WERE OUTSTANDING PRIOR TO THE TRANSACTION;
o THE NUMBER OF SHARES OF THE CLASS OF SECURITIES SUBJECT TO THE
TRANSACTION THAT WERE OUTSTANDING PRIOR TO THE TRANSACTION AND
HELD BY PERSONS OTHER THAN THE SELLING SHAREHOLDERS, AFFILIATES
OF THE COMPANY, OR AFFILIATES OF THE SELLING SHAREHOLDERS;
o THE NUMBER OF SHARES OF THE CLASS OF SECURITIES SUBJECT TO THE
TRANSACTION THAT WERE ISSUED OR ISSUABLE IN CONNECTION WITH THE
TRANSACTION;
Mark P. Shuman
Branch Chief - Legal
Securities and Exchange Commission
June 20, 2007
Page 10
o THE PERCENTAGE OF TOTAL ISSUED AND OUTSTANDING SECURITIES THAT
WERE ISSUED OR ISSUABLE IN THE TRANSACTION (ASSUMING FULL
ISSUANCE), WITH THE PERCENTAGE CALCULATED BY TAKING THE NUMBER OF
SHARES ISSUED AND OUTSTANDING PRIOR TO THE APPLICABLE TRANSACTION
AND HELD BY PERSONS OTHER THAN THE SELLING SHAREHOLDERS,
AFFILIATES OF THE COMPANY, OR AFFILIATES OF THE SELLING
SHAREHOLDERS, AND DIVIDING THAT NUMBER BY THE NUMBER OF SHARES
ISSUED OR ISSUABLE IN CONNECTION WITH THE APPLICABLE TRANSACTION;
o THE MARKET PRICE PER SHARE OF THE CLASS OF SECURITIES SUBJECT TO
THE TRANSACTION IMMEDIATELY PRIOR TO THE TRANSACTION (REVERSE
SPLIT ADJUSTED, IF NECESSARY); AND
o THE CURRENT MARKET PRICE PER SHARE OF THE CLASS OF SECURITIES
SUBJECT TO THE TRANSACTION (REVERSE SPLIT ADJUSTED, IF
NECESSARY).
RESPONSE: The following disclosure appears on page 53 of the
prospectus:
PRIOR SECURITIES TRANSACTIONS BETWEEN THE COMPANY AND THE SELLING
SECURITY HOLDERS
There have been no prior securities transactions between the
Company and the selling security holders, any affiliates of the selling
security holders, or any person with whom any selling security holder
has a contractual relationship regarding the transaction.
10. PLEASE PROVIDE US, WITH A VIEW TOWARD DISCLOSURE IN THE PROSPECTUS,
WITH TABULAR DISCLOSURE COMPARING:
o THE NUMBER OF SHARES OUTSTANDING PRIOR TO THE CONVERTIBLE NOTE
TRANSACTION THAT ARE HELD BY PERSONS OTHER THAN THE SELLING
SHAREHOLDERS, AFFILIATES OF THE COMPANY, AND AFFILIATES OF THE
SELLING SHAREHOLDERS;
o THE NUMBER OF SHARES REGISTERED FOR RESALE BY THE SELLING
SHAREHOLDERS OR AFFILIATES OF THE SELLING SHAREHOLDERS IN PRIOR
REGISTRATION STATEMENTS;
o THE NUMBER OF SHARES REGISTERED FOR RESALE BY THE SELLING
SHAREHOLDERS OR AFFILIATES OF THE SELLING SHAREHOLDERS THAT
CONTINUE TO BE HELD BY THE SELLING SHAREHOLDERS OR AFFILIATES OF
THE SELLING SHAREHOLDERS;
o THE NUMBER OF SHARES THAT HAVE BEEN SOLD IN REGISTERED RESALE
TRANSACTIONS BY THE SELLING SHAREHOLDERS OR AFFILIATES OF THE
SELLING SHAREHOLDERS; AND
o THE NUMBER OF SHARES REGISTERED FOR RESALE ON BEHALF OF THE
SELLING SHAREHOLDERS OR AFFILIATES OF THE SELLING SHAREHOLDERS IN
THE CURRENT TRANSACTION.
IN THIS ANALYSIS, THE CALCULATION OF THE NUMBER OF OUTSTANDING SHARES
SHOULD NOT INCLUDE ANY SECURITIES UNDERLYING ANY OUTSTANDING
CONVERTIBLE SECURITIES, OPTIONS, OR WARRANTS.
RESPONSE: The following disclosure appears on page 53 of the
prospectus:
Mark P. Shuman
Branch Chief - Legal
Securities and Exchange Commission
June 20, 2007
Page 11
COMPARISON OF REGISTERED SHARES TO OUTSTANDING SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES
REGISTERED
FOR RESALE
NUMBER BY THE SELLING NUMBER OF NUMBER OF
OF SHARES SECURITY HOLDERS SHARES SHARES
REGISTERED OR AFFILIATES THAT HAVE REGISTERED
FOR RESALE OF THE SELLING BEEN SOLD IN FOR RESALE ON
BY THE SELLING SECURITY HOLDERS REGISTERED RESALE BEHALF OF THE
NUMBER OF SECURITY HOLDERS THAT CONTINUE TRANSACTIONS SELLING SECURITY
SHARES OR AFFILIATES TO BE HELD BY THE SELLING HOLDERS OR
OUTSTANDING OF THE SELLING BY THE SELLING SECURITY HOLDERS AFFILIATES OF THE
PRIOR TO THE SECURITY HOLDERS SECURITY HOLDERS OR AFFILIATES SELLING SECURITY
CONVERTIBLE IN PRIOR OR AFFILIATES OF THE HOLDERS IN
DEBENTURE REGISTRATION OF THE SELLING SELLING SECURITY THE CURRENT
TRANSACTION (1)<F1> STATEMENTS SECURITY HOLDERS HOLDERS TRANSACTION
- ------------------------------------------------------------------------------------------------------------------------------------
Crescent International 12,165,000 0 0 0 7,466,666
Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Chestnut Ridge 12,165,000 0 0 0 1,493,334
Partners, LP
- ------------------------------------------------------------------------------------------------------------------------------------
Whalehaven Capital Fund 12,165,000 0 0 0 1,866,666
Limited
- ------------------------------------------------------------------------------------------------------------------------------------
- ----------------------
<FN>
(1)<F1> Excludes shares held by selling security holders, affiliates of the
Company and affiliates of the selling security holders.
</FN>
11. PLEASE PROVIDE US, WITH A VIEW TOWARD DISCLOSURE IN THE PROSPECTUS,
WITH THE FOLLOWING INFORMATION:
o WHETHER THE ISSUER HAS THE INTENTION, AND A REASONABLE BASIS TO
BELIEVE THAT IT WILL HAVE THE FINANCIAL ABILITY, TO MAKE ALL
PAYMENTS ON THE OVERLYING SECURITIES; AND
o WHETHER - BASED ON INFORMATION OBTAINED FROM THE SELLING
SHAREHOLDERS - ANY OF THE SELLING SHAREHOLDERS HAVE AN EXISTING
SHORT POSITION IN THE COMPANY'S COMMON STOCK AND, IF ANY OF THE
SELLING SHAREHOLDERS HAVE AN EXISTING SHORT POSITION IN THE
COMPANY'S STOCK, THE FOLLOWING ADDITIONAL INFORMATION:
- THE DATE ON WHICH EACH SUCH SELLING SHAREHOLDER ENTERED INTO
THAT SHORT POSITION; AND
- THE RELATIONSHIP OF THE DATE ON WHICH EACH SUCH SELLING
SHAREHOLDER ENTERED INTO THAT SHORT POSITION TO THE DATE OF
ANNOUNCEMENT OF THE CONVERTIBLE NOTE TRANSACTION AND THE
FILING OF THE REGISTRATION STATEMENT (E.G., BEFORE OR AFTER
THE ANNOUNCEMENT OF THE CONVERTIBLE NOTE TRANSACTION, BEFORE
THE FILING OR AFTER THE FILING OF THE REGISTRATION STATEMENT,
ETC.).
Mark P. Shuman
Branch Chief - Legal
Securities and Exchange Commission
June 20, 2007
Page 12
RESPONSE: The following disclosure appears on page 53 of the
prospectus:
ADDITIONAL INFORMATION
We intend to pay the convertible debentures according to their
terms. The debentures require quarterly payments of interest beginning
July 1, 2007. There is a balloon principal payment at maturity, which
is April 3, 2010. Based on our internal budgeting and forecasting, we
believe that we will have the financial ability to pay the convertible
debentures at maturity.
None of the selling security holders has an existing short
position in our common stock.
12. PLEASE PROVIDE US, WITH A VIEW TOWARD DISCLOSURE IN THE PROSPECTUS,
WITH:
o A MATERIALLY COMPLETE DESCRIPTION OF THE RELATIONSHIPS AND
ARRANGEMENTS THAT HAVE EXISTED IN THE PAST THREE YEARS OR ARE TO
BE PERFORMED IN THE FUTURE BETWEEN THE ISSUER (OR ANY OF ITS
PREDECESSORS) AND THE SELLING SHAREHOLDERS, ANY AFFILIATES OF THE
SELLING SHAREHOLDERS, OR ANY PERSON WITH WHOM ANY SELLING
SHAREHOLDER HAS A CONTRACTUAL RELATIONSHIP REGARDING THE
TRANSACTION (OR ANY PREDECESSORS OF THOSE PERSONS) - THE
INFORMATION PROVIDED SHOULD INCLUDE, IN REASONABLE DETAIL, A
COMPLETE DESCRIPTION OF THE RIGHTS AND OBLIGATIONS OF THE PARTIES
IN CONNECTION WITH THE SALE OF THE CONVERTIBLE NOTES; AND
o COPIES OF ALL AGREEMENTS BETWEEN THE ISSUER (OR ANY OF ITS
PREDECESSORS) AND THE SELLING SHAREHOLDERS, ANY AFFILIATES OF THE
SELLING SHAREHOLDERS, OR ANY PERSON WITH WHOM ANY SELLING
SHAREHOLDER HAS A CONTRACTUAL RELATIONSHIP REGARDING THE
TRANSACTION (OR ANY PREDECESSORS OF THOSE PERSONS) IN CONNECTION
WITH THE SALE OF THE CONVERTIBLE NOTES.
IF IT IS YOUR VIEW THAT SUCH A DESCRIPTION OF THE RELATIONSHIPS AND
ARRANGEMENTS BETWEEN AND AMONG THOSE PARTIES ALREADY IS PRESENTED IN
THE PROSPECTUS AND THAT ALL AGREEMENTS BETWEEN AND/OR AMONG THOSE
PARTIES ARE INCLUDED AS EXHIBITS TO THE REGISTRATION STATEMENT, PLEASE
PROVIDE US WITH CONFIRMATION OF YOUR VIEW IN THIS REGARD.
RESPONSE: The Company believes that it has provided a materially
complete description of the relationships and arrangements that have
existed in the past three years or are to be performed in the future
between the Company and the selling security holders, any affiliates of
the selling security holders, or any person with whom any selling
security holder has a contractual relationship regarding the
transaction. Further, the Company believes that it has filed as
exhibits to the registration statement all agreements between the
Company and the selling security holders, any affiliates of the selling
security holders, or any person with whom any selling security holder
has a contractual relationship in connection with the sale of the
convertible debentures.
Mark P. Shuman
Branch Chief - Legal
Securities and Exchange Commission
June 20, 2007
Page 13
13. PLEASE PROVIDE US, WITH A VIEW TOWARD DISCLOSURE IN THE PROSPECTUS,
WITH A DESCRIPTION OF THE METHOD BY WHICH THE COMPANY DETERMINED THE
NUMBER OF SHARES IT SEEKS TO REGISTER IN CONNECTION WITH THIS
REGISTRATION STATEMENT. IN THIS REGARD, PLEASE ENSURE THAT THE NUMBER
OF SHARES REGISTERED IN THE FEE TABLE IS CONSISTENT WITH THE SHARES
LISTED IN THE "SELLING SHAREHOLDERS" SECTION OF THE PROSPECTUS.
RESPONSE: On page 49 of the prospectus, the Company explains how it
determined the number of shares for which registration is sought:
"The number of shares covered by this prospectus, and as shown
in the table below, has been calculated as the total of the following:
o $1,450,000 principal amount of convertible debentures
divided by the current conversion price of $0.30;
o Three years of 8% annual interest on $1,450,000
principal amount of convertible debentures divided by
$0.30; and
o The total number of shares issuable upon exercise of
the warrants, as such warrants have been originally
issued. "
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