April 18, 2007
VIA FEDERAL EXPRESS AND EDGAR
United States Securities and Exchange Commission
Mail Stop 3561
Washington, D.C. 20549
Re: INTER-ATLANTIC FINANCIAL, INC.
REGISTRATION STATEMENT ON FORM S-1
FILED FEBRUARY 13, 2007
FILE NO. 333-140690
Ladies and Gentlemen:
On behalf of Inter-Atlantic Financial, Inc. (the "Company"), we are
electronically transmitting hereunder a conformed copy of Amendment No. 1
("Amendment No. 1") to the Registration Statement on Form S-1 filed on February
13, 2007 (the "Registration Statement"). Marked copies of this filing are being
sent via overnight mail to John Reynolds and Timothy Geishecker.
This letter is being filed in response to the Securities and Exchange
Commission's ("SEC's") comments dated March 29, 2007.
In this letter, we have listed the SEC's comments in italics and have
followed each comment with the Company's response.
General
1. Prior to effectiveness of the company's registration statement, please
advise us as to whether NASD has cleared the amount of compensation
allowable or payable to the underwriters.
RESPONSE: Prior to the effectiveness of the Company's Registration
Statement, the Company will provide the SEC with a copy of the NASD
clearance letters stating that the NASD has finished its review and has no
additional concerns regarding the underwriting arrangements in this
offering.
2. Please explain the basis for your disclosure that you anticipate that the
units will be listed on the American Stock Exchange. Please explain how the
company will satisfy each criterion for at least one of the listing
standards on the exchange. Please include a discussion of all of the
quantitative standards, e.g., number of public shareholders. We may have
further comment.
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 2
RESPONSE: Upon consummation of the offering, the Company believes it will
meet the requirements set forth in Section 101(c) of the Amex Company Guide
"Initial Listing Standard 3." The Company anticipates that it will have
shareholders' equity of over $4,000,000; a total value market
capitalization of over $50,000,000; an aggregate market value of publicly
held shares of over $15,000,000; and a minimum public distribution of over
1,000,0000 shares together with a minimum of 400 public shareholders. In
addition, the Company will meet the corporate governance listing standards
as described in the Registration Statement on pages 64 to 66 of the
Registration Statement.
Prospectus Summary, page 1
3. We note you identify criteria and areas of focus in financial technology
that you will use in evaluating prospective target businesses. You also
state that the company may decide to enter into a business combination that
is not limited to a particular industry. Given that the company may not
follow the noted criteria, please provide clear disclosure throughout the
prospectus and remove the more detailed information about the financial
services industry throughout, including industry specific risk factors,
since you are not limited to this industry. Also, the focus on the
competitive advantages relating to this industry should be removed.
RESPONSE: Pursuant to the SEC's comment, we have revised the disclosure on
page 1 of the Registration Statement and throughout the Registration
Statement to state that the Company will be limited to companies in or
related to financial services industry.
4. We note the statement that you do not have any specific business
combination under consideration and you have not had any discussions with
any target business regarding a possible business combination. Please
disclose whether the company, its officers and directors or affiliates have
been contacted by any companies regarding a potential business combination.
Also, clarify whether any officers, directors or affiliates, directly or
indirectly, have taken any steps in furtherance of a business combination.
RESPONSE: The Company and its officers, directors and affiliates have not
been contacted by any companies regarding a potential business combination,
nor has the Company and its officers, directors and affiliates, directly or
indirectly, taken any steps in furtherance of a business combination.
Pursuant to the SEC's comment, we have clarified the disclosure on pages 1,
17 and 45 of the Registration Statement.
5. Please remove the statement that "officers and directors believe that there
are significant opportunities for appropriately sized acquisitions in the
financial services industry." Given the lack of activities in furtherance
of your business plan, it does not appear that there is a basis for this
statement.
RESPONSE: Pursuant to the SEC's comment, we have deleted the disclosure on
pages 1 and 45 of the Registration Statement.
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 3
6. We note that the target business you acquire "must have a fair market value
equal to at least 80% of your net assets." Please revise to clarify how the
satisfaction of this requirement is determined. Clarify if you could base
the value on the whole business even if you do not acquire 100% of such
business. We may have further comment.
RESPONSE: The 80% of net assets requirement will be determined based on the
board of directors' assessment of the valuation of the target company at
the time of the acquisition when the price is being negotiated at an arm's
transaction between two unaffiliated parties. Pursuant to the SEC's
comment, we have revised the disclosure on pages 3 and 52 of the
Registration Statement to state that if the Company acquires less than 100%
of a target business in its initial business combination, the aggregate
fair market value of the portion of the business the Company acquires must
equal at least 80% of its net assets at the time of such initial business
combination. In no instance will the Company acquire less than majority
voting control of a target business. However, in the case of a reverse
merger or other similar transaction in which the Company issues a
substantial number of new shares, the Company's stockholders immediately
prior to such transaction may own less than a majority of our shares
subsequent to such transaction.
7. We note the disclosure on page 5 that "through their work with
Inter-Atlantic Group our officers and directors have acquired substantial
knowledge about private financial services companies with revenues of $150
million or less." Clarify whether this knowledge includes companies that
are looking to be acquired or that are looking for a vehicle to become
public, and what role the current knowledge of officers and directors will
play in the search for a target business. Clarify whether existing
shareholders are aware of any business opportunities that may be presented
to the company after the completion of the IPO. We may have further
comment.
RESPONSE: The Company's officers and directors have no current knowledge of
companies looking to be acquired or that are looking for a vehicle to
become public. Pursuant to the SEC's comment, the Company has deleted the
language on pages 5 and 48 of the Registration Statement regarding the
revenue of the private financial services companies that the Company's
officers and directors have knowledge about. Existing shareholders are not
aware of any business opportunities that may be presented to the Company
after completion of the initial public offering.
8. Please revise to indicate that there is no limit on the reimbursement of
out-of-pocket expenses.
RESPONSE: Pursuant to the SEC's comment, we have revised the disclosure on
page 4 to state that there is no limit on the amount of these out-of-pocket
expenses and there will be no review of the reasonableness of the expenses
by anyone other than the Company's independent and disinterested members of
its board of directors, or a court of competent jurisdiction if such
reimbursement is challenged.
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 4
9. We note the disclosures here and in your Item 101 of Regulation S-K
disclosure that no one has "on your behalf" engaged in any efforts to
locate a target. Considering the background of your management members, is
it possible they are aware of possibilities in their separate capacities
which they may direct to you afterwards? Considering you are selling your
plan to acquire a business and nothing more, your initial shareholders
knowledge and motivations in taking part in this company are material to
the public's understanding of your company. Please revise to disclose all
material knowledge in this document.
RESPONSE: No members of the Company's management are aware of possibilities
in their separate capacities to acquire target businesses. As such, the
Company does not believe there is any additional disclosure required in the
Registration Statement.
10. We note the statement regarding the purchase of a total of 1.8 million
warrants prior to the closing of this offering. If this is a private
placement that will occur before the IPO, provide clear disclosure
throughout the prospectus. This would include a mention of the private
placement on the prospectus cover page, a discussion in the summary, etc.
In addition, clarify those individuals, and their designees, that will make
these purchases. Please make sure the agreements have been filed as
exhibits.
RESPONSE: The private placement of the 1,800,000 founders' warrants will
occur prior to the initial public offering. Pursuant to the SEC's comment,
we have clarified the disclosure throughout the prospectus. In addition, we
have added additional disclosure with respect to the founders' warrants on
the cover page and on page 7 of the Registration Statement. We have also
stated that our officers, directors and affiliates and their designees will
be purchasing the private placement warrants. Prior to going effective, we
will file executed warrant purchase agreements which will disclose which
individuals are purchasing the founders' warrants and the amount of each
purchase.
11. We note the disclosure regarding the portfolio company investments most
similar to the company's financial technology acquisition strategy. Please
explain the relevance of this disclosure or remove. Are these potential
target opportunities for the company? We may have further comment.
RESPONSE: The Company has disclosed the portfolio company investments most
similar to the Company's financial technology acquisition strategy because
such disclosure is relevant to management's expertise in this industry.
Management is not currently considering investing in any of these companies
because it is not currently contemplating any business combinations until
completion of the initial public offering. The Company believes it is in
the best interests of investors to retain the disclosure because the
disclosure is relevant in terms of management's ability to evaluate
potential target businesses after completion of the initial public
offering.
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 5
12. Please revise the reference to "certain limited exceptions" to the
restriction on transferability of these insider units or warrants to
clearly state those situations that would allow the transferability of
these securities.
RESPONSE: Pursuant to the SEC's comment, the Company has removed the
reference to "certain limited exceptions" and has clarified the disclosure
on page 9 of the Registration Statement as well as added additional
disclosure on page 7 of the Registration Statement.
13. We note that the conversion rights are available up to 29.99% of the common
stock in the IPO. Provide clear disclosure regarding the reasons for this
change in the conversion so that investors can understand the company's
position when making an investment. Provide clear disclosure throughout the
prospectus that this is different from the terms of a traditional SPAC and
add a risk factor. In addition, add an additional risk factor at the
beginning of the risk factors section discussing the risks associated with
this change. Provide clear disclosure throughout that this will make it
easier for a business combination to be approved. We may have further
comment.
RESPONSE: The Company has elected to proceed with a business combination if
public stockholders holding less than 30% of the shares sold in the initial
public offering exercise their redemption rights in order to remain
competitive with other blank check offerings currently on the market that
have added a similar redemption threshold. In addition, the Company
believes that the 30% threshold will reduce the risk that a small group of
stockholders will be able to exercise control over the process for approval
of a business combination. Pursuant to the SEC's comment, the Company has
provided additional disclosure on pages 18, 27 and 53 of the Registration
Statement, including the addition of a Risk Factor on page 18, which
discusses the risk that the Company may not be able to consummate a
business combination if the redemption leaves the Company with funds less
than the fair market value equal to at least 80% of the amounts held in
trust. In such event, the Company will have to seek out additional
financing in order to consummate the business combination. The Company has
also retained its disclosure on page 54 of the Registration Statement which
discusses this risk.
14. In the proposed business section, we note that you continue to have the 80%
threshold for the value of any business interest you acquire. Please revise
to discuss the logistics of any acquisition in light of the revision to
your conversion threshold.
RESPONSE: As discussed in the response to comment 13, the Company has
provided additional disclosure on pages 18, 27 and 53 of the Registration
Statement, including the addition of a Risk Factor on page 18, which
discusses the risk that the Company may not be able to consummate a
business combination if the redemption leaves the Company with funds less
than the fair market value equal to at least 80% of the amounts held in
trust. In such event, the Company will have to seek out additional
financing in order to consummate the business combination. The Company has
also retained its disclosure on page 54 of the Registration Statement which
discusses this risk.
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 6
15. Clarify whether there are any specific requirements for exercising the
redemption rights of shareholders voting to reject a business combination,
such as requiring the shares be tendered prior to the shareholder meeting.
RESPONSE: Pursuant to the SEC's comment, the Company has added disclosure
on page 54 of the Registration Statement to disclose that "stockholders
will not be requested to tender their shares of common stock before a
business combination is consummated. If a business combination is
consummated, redeeming stockholders will be sent instructions on how to
tender their shares of common stock and when they should expect to receive
the redemption amount. In order to ensure accuracy in determining whether
or not the redemption threshold has been met, each redeeming stockholder
must continue to hold their shares of common stock until the consummation
of the business combination. The Company will not charge redeeming
stockholders any fees in connection with the tender of shares for
redemption."
16. We note that the revolving line of credit is subordinate to the public
stockholders receiving a minimum of $7.76 per share. Clarify how this
works. Will the line of credit be used to reach this minimum amount, if
funds are available pursuant to the line of credit?
RESPONSE: The Company will not have access to the funds held in trust prior
to the consummation of a Business Combination, and as a result, subject to
any claims of creditors, the public stockholders will receive $7.76 per
share. The revolving line of credit, which will have no recourse against
the funds held in trust, will be used strictly for working capital
expenditures to the extent the funds held outside of trust are not
sufficient to cover working capital expenditures prior to completion of a
business combination.
17. Provide as an example, the federal funds rate as of a recent date.
RESPONSE: Pursuant to the SEC's comment the Company has added disclosure on
the federal funds rate on pages 15, 23, 34, 37 and 67 of the Registration
Statement. The federal funds rate is 5.25% as of March 21, 2007.
18. We note the statement that "in the event we liquidate our trust account,
our public stockholders will receive $7.76 per unit." It does not appear
that there is a guarantee that they will receive this amount. Please advise
or revise the disclosure throughout the prospectus. We may have further
comment.
RESPONSE: The Company respectfully submits that it has provided sufficient
disclosure on pages 14, 19, 55 and 61 of the Registration Statement stating
that the ability of stockholders to receive $7.76 per share is subject to
any valid claims of creditors (which the Company believes is highly
unlikely, as is discussed on page 56 of the Registration Statement) which
are not covered by either amounts held outside of our trust account or the
indemnities provided by our officers and directors, excluding Mr. Galasso.
As indicated above, and as is stated on page 56 of the Registration
Statement, because the Company is "obligated to have all vendors and
service providers and all prospective target businesses execute agreements
with the Company waiving any right, title, interest or claim of any kind
they may have in or to any monies held in the trust account", the Company
believes that it is highly unlikely that the funds in the trust account
will be subject to any valid claims.
19. We note the statement that you believe you will have sufficient funds
available outside the trust to pay the estimated costs of dissolution and
liquidation. Please provide the basis for this statement. Also, clarify to
explain how such expenses will be paid if there are not sufficient funds
available outside of the trust.
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 7
RESPONSE: The Company has clarified the disclosure on pages 15, 21 and 55
of the Registration Statement to state that the Company expects to cover
the costs of dissolution and liquidation (which is anticipated to be
approximately $15,000) from interest earned on the trust account and monies
available pursuant to the Company's subordinated line of credit. To the
extent the funds are not available, the Company's officers and directors,
excluding Mr. Galasso, have agreed to indemnify the Company. However, the
Company has disclosed that it cannot give assurances that the officers and
directors will be able to satisfy these obligations.
20. Please explain why you will only seek approval regarding dissolution in
conjunction with a proxy if it is within 90 days of the 24 months. The
company may only extend the 18-month time period for the specific
transaction covered by the letter of intent; therefore, if that transaction
is not approved it would appear the company must at that point seek
dissolution and liquidation.
RESPONSE: The Company has revised the disclosure throughout the
Registration Statement, including on pages 13 and 54 of the Registration
Statement, to state that Company's corporate existence will cease to exist
except for the purpose of winding-up its affairs and liquidating if it does
not enter into a business combination within the 24 month deadline. The
Company has revised the Fifth Article of its amended and restated
certificate of incorporation to reflect the limited life duration and, as a
result, the Company will not have to seek approval in connection with a
dissolution and liquidation.
21. In addition, explain the dissolution and liquidation plans if you do not
enter into a letter of intent or definitive agreement by the 18-month
deadline.
RESPONSE: As discussed in the response to comment 20, the Company has
revised the disclosure throughout the Registration Statement, including on
pages 13 and 54 of the Registration Statement, to state that Company's
corporate existence will cease to exist except for the purpose of
winding-up its affairs and liquidating if it does not enter into a business
combination within the 24 month deadline. The 18-month deadline is no
longer applicable.
22. Briefly address the steps the company has taken to determine whether your
officers and directors will be able to pay the claims of target businesses
or claims of vendors or other entities that are owed money.
RESPONSE: The Company does not believe the funds held in trust will be
reduced by potential claims because (i) these claims have been reserved for
from funds not held in trust; (ii) the directors and officers, excluding
Mr. Galasso, have agreed to indemnify the Company in the event of such
claims in the form of insider letters; and (iii) the Company is obligated
to obtain waivers from vendors and prospective target businesses in order
to reduce the likelihood of any claims. Management has also carefully
reviewed the funds available to it outside of the trust and believes it has
sufficient funds to satisfy any obligations of creditors given the low
likelihood of such claims and the low cost of
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 8
undertaking a formal liquidation process. In addition, the Company has
obtained representations from its indemnifying officers and directors that
they have sufficient funds to cover any claims to the extent the Company is
unable to obtain valid and enforceable waivers. While the Company does not
believe the funds held in trust will be reduced by potential claims, the
Company has disclosed throughout the Registration Statement that it cannot
assure shareholders that they will be not be liable to creditors where the
Company has not obtained waivers and the reserve for liabilities is
insufficient.
Risk Factors, page 17
23. In the last sentence of the first risk factor, please delete the statement
in parentheses regarding interest income from the proceeds of your
offering, as any interest income would be classified as non-operating
income rather than revenue.
RESPONSE: Pursuant to the SEC's comment, we have deleted the parenthetical.
24. Revise risk factor four to clarify the approximate number of companies that
are currently in registration, as they will also be competing for target
businesses. Also, add the number of companies that have or are in the
process of liquidating and dissolving.
RESPONSE: Pursuant to the SEC's comment, the Company has revised risk
factor four to clarify the approximate number of companies that are
currently in registration and has added the number of companies that have
or are in the process of liquidating and dissolving.
25. We note the disclosure in risk factor five that as a result of a particular
negotiation of a business combination, the 29.99% may be reduced. Provide a
more detailed discussion of the resultant risk to the company and
investors. In addition, provide clear disclosure throughout the prospectus.
RESPONSE: As discussed in the responses to comments 13 and 14, the Company
has provided additional disclosure on pages 18, 27 and 53 of the
Registration Statement, including the addition of a Risk Factor on page 18,
which discusses the risk that the Company may not be able to consummate a
business combination if the redemption leaves the Company with funds less
than the fair market value equal to at least 80% of the amounts held in
trust. In such event, the Company will have to seek out additional
financing in order to consummate the business combination. The Company has
deleted the right of the board of directors to lower the redemption
threshold below 29.99%. As a result, the Company does not believe further
discussion is necessary.
26. We note the statement in risk factor seven that creditor claims "could take
priority over the claims of our public stockholders." Please provide an
analysis as to when the claims of shareholders would take priority over the
claims of creditors.
RESPONSE: Claims of shareholders will not take priority over claims of
creditors. Accordingly, the Company has revised risk factor seven to
clarify the language.
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 9
27. Revise risk factor seven to specifically name the directors and executive
officers that have agreed to indemnify the trust. Provide clear disclosure
of the material terms of this agreement. Clarify whether there are any
limitations on this indemnification.
RESPONSE: The Company has revised risk factor seven and the disclosure on
page 55 to state that all of the Company's directors and officers,
excluding Stephen Galasso, have agreed to indemnify the Company in order to
protect the amounts held in trust. As discussed on page 14 and elsewhere,
the Company's directors and officers, excluding Mr. Galasso, have agreed to
indemnify the Company from any loss, liability, claim, damage and expense
to the extent necessary to ensure that the proceeds in the trust account
are not reduced.
28. Provide the basis for your belief that "the likelihood of these directors
and executive officers having to indemnify our trust account is minimal" or
remove.
RESPONSE: The Company does not believe it is likely that the funds held in
trust will be reduced by potential claims because these claims will be
reserved for from funds not held in trust and the Company is obligated to
obtain waivers from vendors and prospective target businesses in order to
reduce the likelihood of any claims. The Company has clarified the
disclosure on pages 19 and 56 of the Registration Statement accordingly.
29. Clearly state whether management intends to remain associated with the
business following a business combination. Specifically name those
individuals that may remain with the company. Clearly disclose throughout
the prospectus the potential conflicts of interest. We note that these
individuals will likely obtain compensation for their continued association
with the company following a business combination and that it is likely
that such compensation will be negotiated at the time the merger agreement
is entered into. Discuss the resultant conflicts of interest and the impact
this may have upon which business opportunity to pursue.
RESPONSE: The officers and directors of the Company do not know whether
they intend to remain associated with the business following a business
combination because whether current management will remain with the Company
following the business combination will depend on a variety of factors,
including the experience and skill set of the target business' management
and the industry and location of the business post-business combination.
The Company has clarified the disclosure on page 67 of the Registration
Statement to better account for the risk that management may resign. In
addition, the Company respectfully believes that it has disclosed the risk
and conflict of interest with respect to management's compensation for
their continued association with the Company following a business
combination in the first full risk factor on page 23 of the Registration
Statement and in the first bullet point on page 67 under "Conflicts of
Interest."
30. Please revise to include a separate risk factor, if applicable, that the
existing shareholders who purchased warrants privately may be able to
exercise their warrants at times that the purchasers in the IPO may not.
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 10
RESPONSE: Existing shareholders who purchased warrants privately will not
be able to exercise their warrants at times that the purchasers in the
initial public offering cannot. Thus, the Company has not included the
additional risk factor.
31. Revise the subheading of risk factor 14 to clarify that the warrants may
expire worthless.
RESPONSE: Pursuant to the SEC's comment, the Company has revised the risk
factor accordingly.
32. Please explain the statement in risk factor 25 that any fairness opinion
obtained would not be provided to shareholders unless requested. A fairness
opinion is required to be provided, if obtained, in connection with the
proxy statement.
RESPONSE: Pursuant to the SEC's comment, the Company has deleted the
disclosure stating that a fairness opinion would be provided to
shareholders only if requested.
33. Clarify whether the company may consider as a target business a company
affiliated with officers, directors or existing shareholders. If so, add
appropriate risk factor disclosure. We may have further comment.
RESPONSE: Following consummation of the offering, the Company may consider
as a target company a company affiliated with officers, directors or
existing shareholders, provided the Company obtains an opinion from an
independent investment banking firm. The Company, however, is not currently
contemplating a business combination with an affiliate or any other entity
prior to consummation of the business combination. We have revised the
first risk factor on page 27 to reflect this risk.
Use of Proceeds, page 28
34. Please revise to indicate that there is no limit on the amount of the
out-of-pocket expenses and that there is no review of the reasonableness of
the expenses by anyone other than your board of directors.
RESPONSE: As discussed in the response to comment 8, the Company has
revised the disclosure on page 4 to state that there is no limit on the
amount of these out-of-pocket expenses and there will be no review of the
reasonableness of the expenses by anyone other than the Company's
independent and disinterested members of its board of directors, or a court
of competent jurisdiction if such reimbursement is challenged.
35. Disclose the material terms of the line of credit, including whether
interest will be paid.
RESPONSE: Pursuant to the SEC's comment, the Company has revised the
disclose on page 12 and throughout the Registration Statement to disclose
the material terms of the line of credit, including the interest which will
be paid at the federal funds rate (5.25% as of March 21, 2007).
Proposed Business, page 45
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 11
36. Clarify the role of Inter-Atlantic Group in your business plan. Also,
disclose whether you may target businesses that Inter-Atlantic Group either
currently or in the past, had an interest. Also, clarify the availability
of information to Inter-Atlantic Group regarding potential targets and
whether and how such information may be used by the company. We may have
further comment.
RESPONSE: As discussed in the response to comment 33, following
consummation of the offering, the Company may consider as a target company
a company affiliated with officers, directors or existing shareholders,
provided the Company obtains an opinion from an independent investment
banking firm. This may include a target business that Inter-Atlantic Group
either currently has, or in the past had, an interest, provided an opinion
from an independent investment bank is obtained. The Company, however, is
not currently contemplating a business combination with an affiliate or any
other entity prior to consummation of the business combination. The Company
has revised the first full risk factor on page 27 to reflect this risk.
Inter-Atlantic Group's only role in the Company's business plan is to
provide administrative services and financing to the Company. Additionally,
to minimize any conflicts, or the appearance of conflicts, subject to their
respective fiduciary obligations, each of Inter-Atlantic Group and Messrs.
Lerner, Daras, Baris, Lichten and Hammer has granted the Company a right of
first refusal, effective upon the consummation of the offering, with
respect to any company or business in or related to the financial services
industry with a fair market value at least equal to 80% of the net amount
in the Company's trust account. The Company has disclosed the necessary
risk factor and conflict of interest on pages 20 and 67 of the Registration
Statement and the right of first refusal on pages 6, 49 and 67 of the
Registration Statement.
37. In the paragraph "Sources of target businesses," we note the disclosure
that unaffiliated sources will inform you of potential target businesses
and that such information will be either "solicited or unsolicited." Please
revise to discuss how you will solicit proposals and how unsolicited
parties would become aware of your search. Clarify whether any solicited or
unsolicited sources have contacted you regarding potential business
opportunities.
RESPONSE: Pursuant to the SEC's comment, we have revised our disclosure
in the paragraph "Sources of target businesses." The Company will not
communicate with any potential sources of target businesses with respect to
a business combination prior to the consummation of the offering.
38. Clarify whether any of your existing shareholders, officers or directors
has had any discussions or communications regarding your company with any
potential sources.
RESPONSE: As discussed in the Company's response to comment 37 above, the
Company has not communicated with any potential sources with respect to an
acquisition and will not do so until consummation of the offering.
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 12
39. Clarify whether you have had any contact with professional firms,
preliminary or otherwise, regarding engaging their services in searching
for a target business.
RESPONSE: The Company clarified its disclosure on page 51 of the
Registration Statement to state that the Company has not had any contact
with professional firms, preliminary or otherwise, regarding engaging their
services in searching for a target business.
40. Add a risk factor discussing the potential payment to the underwriters or
Scura, Rise & Partners for services that may be provided after the business
combination. Clarify whether either party has taken any steps, directly or
indirectly, in the search for a target business and whether they have had
any contact or communications with potential sources or potential target
businesses. We may have further comment.
RESPONSE: The Company has provided an additional risk factor on page 24 of
the Registration Statement and additional disclosure on page 67 of the
Registration Statement to reflect the possibility that the underwriters or
Scura, Rise & Partners LLC may provide services for the Company after this
offering for compensation. The Company has disclosed throughout the
Registration Statement that neither the Company nor its affiliates,
directly or indirectly, is in the process of searching for a target
business, nor have they had any contact or communications with potential
sources or potential target businesses.
Dissolution and liquidation if no business combination, page 54
41. We note here and elsewhere in the prospectus that you will seek to have the
vendors and service providers whom you engage and prospective target
businesses to execute agreements with you waiving any right, title,
interest or claim of any kind in or to any monies held in the trust account
for the benefit of our public stockholders. Please revise to specify what
claims are covered and what claims, if any, are excluded. Please also
revise to state how you determine if the parties have sufficient funds to
cover the claims.
RESPONSE: The Company has clarified the disclosure on page 56 of the
Registration Statement and elsewhere to state that the Company is obligated
to have the vendors and service providers it engages and prospective target
businesses execute agreements with the Company waiving any and all right,
title, interest or claim of any kind in or to any monies held in the trust
account for the benefit of our public stockholders. All claims are covered
and no claims will be excluded. In addition, the Company has obtained
representations from its officers and directors, excluding Mr. Galasso,
that they have sufficient funds to cover any claims to the extent the
Company is unable to obtain valid and enforceable waivers. Notwithstanding
the foregoing, the Company has provided disclosure throughout the
Registration Statement that the Company cannot provide assurance that such
officers and directors will be able to satisfy those obligations.
42. We note your statement that on page 55, "we will seek to have all vendors,
prospective target businesses or other entities we engage execute
agreements with us waiving any right, title, interest or claim of any kind
in or to any funds held in the trust account for the
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 13
benefit of our public stockholders." We also note your statement that
"certain of [y]our directors and executive officers will be personally
liable to ensure that the proceeds in [y]our trust account are not reduced
by the claims of various vendors." Please clarify whether the
indemnification covers prospective target businesses given the limitation
that the claims are for services rendered and goods sold.
RESPONSE: Pursuant to the SEC's comment, the Company has revised the
disclosure on page 19 and 55 of the Registration Statement to clarify that
certain officers and directors will be personally liable to pay debts and
obligations to vendors, prospective target businesses or other entities
that are owed money by the Company for any reason, including services
rendered or products sold to the Company in order to protect the amounts
held in trust.
Management, page 62
43. Please remove the more specific information regarding particular
transactions of management, such as reference to the "$1 billion credit
card business," "revenues grew significantly from 2001 to 2004," etc., as
these are not relevant to this transaction and may imply that the target
business, which the company has not even commenced a search for, will
achieve similar results.
RESPONSE: Pursuant to the SEC's comment, the Company has removed the
requested references.
Board Committees, page 65
44. Please revise to complete omitted information in compliance with Item 407
of Regulation S-K. For example, please fill in the independent directors,
and the members of the committees.
RESPONSE: The Company will complete the omitted information in compliance
with Item 407 prior to completion of the offering. The Company is still in
the process of selecting its independent directors and determining which
directors will serve on which committees.
45. Describe the registrant's policy, if any, with regard to board members'
attendance at annual meetings as required by Item 407(a)(2) of Regulation
S-K.
RESPONSE: The Company's policy is that all of its board members will attend
the annual meeting and it has revised the disclosure accordingly.
46. Please provide the disclosure required by Item 407(e) of Regulation S-K. If
the company does not have a compensation committee, state the basis for the
view of the board of directors not to have such a committee. See Item
407(e)(1).
RESPONSE: The Company does not have a compensation committee because it
believes that its independent directors will provide sufficient oversight
on the Company's compensation issues and it has revised the disclosure
accordingly.
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 14
Executive Compensation, page 66
47. We note that you state, "[n]o executive officer has received any cash
compensation for services rendered." Please revise to clarify whether any
other form of compensation, including options, stock, non-equity
incentives, etc., has been provided to the executive officers of the
company. Refer to Item 402 of Regulation S-K.
RESPONSE: Pursuant to the SEC's comment, the Company has revised the
necessary disclosure.
Principal Stockholders, page 68
48. Specifically name the promoters and clarify that they "are" your promoters.
RESPONSE: Pursuant to the SEC's comment, the Company has clarified the
disclosure regarding the Company's promoters.
Certain Relationships and Transactions, page 70
49. We note your loan from Inter-Atlantic Group. Please revise to provide the
information required by Item 404(a) of Regulation S-K, such as the amount
of interest and the interest rate.
RESPONSE: The $250,000 loan from Inter-Atlantic-Group will be interest-free
and payable upon consummation of the offering. The Company has provided the
necessary disclosure in the last paragraph on page 71 of the Registration
Statement.
Financial Statements, page F-1
50. We note that the consent of the independent accountant was dated prior to
the audit opinion date. Please provide a currently dated consent of the
independent accountant in any amendment and ensure that the financial
statements are updated as required by Rule 3-12 of Regulation S-X.
RESPONSE: Pursuant to the SEC's comment, the Company has provided a
currently dated consent of the independent account as exhibit 23.1 to the
Registration Statement. In addition, all financial statements will be
updated as required by Rule 3-12 of Regulation S-X.
Note E - Commitments, page F-9
51. Please revise your disclosure to discuss the accounting treatment for the
underwriter purchase option (UPO) in accordance with EITF 00-19. We note
that your disclosure states that there will be no net cash settlement of
the warrants included in the UPO, but not does not address whether cash
settlement can occur with respect to the UPO itself. If true, state that:
(i) the UPO may expire unexercised and unredeemed if there is no effective
registration statement and (ii) that there are no circumstances under which
you will be required to net cash settle the UPO.
RESPONSE: Pursuant to the SEC's comment, we have added disclosure on F-11
to state that in no event shall the holder of the UPO be entitled to net
cash settlement of the unit purchase option, and in the event there is no
effective registration statement, the UPO may expire unexercised and
unredeemed.
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 15
52. We note that a four year expected life was used to value the UPO, although
it appears that the contractual life of the UPO is five years. When equity
instruments are issued to non-employees, we believe that the contractual
life should be used as the expected term assumption. Please advise and
revise your disclosure as appropriate.
RESPONSE: Please note that the inconsistentcy with the four and five year
expected life of the UPO was a typographical error. We have revised the
disclosure accordingly.
53. We note your disclosure regarding your expected volatility of 33.8%. Please
provide us with the name, market capitalization and calculated volatility
for each of the identified companies. Also, please tell us whether you
believe that the disclosed value represents fair value or calculated value
under SFAS 123(R). Revise your disclosures as appropriate.
RESPONSE: Pursuant to the SEC's comment, please see Exhibit A attached
hereto which outlines the 15 smallest companies in terms of market
capitalization's with five years of trading history from the S&P Microcap
Financial Services Index and their respective volatilities and market
capitalizations. The Company has disclosed on F-10 that it has used the
fair value.
Part II
Item 15. Recent Sales of Unregistered Securities, page II-3
54. Please add disclosure regarding the private placement warrant purchase and
the exemption relied upon.
RESPONSE: Pursuant to the SEC's comment, the Company has added disclosure
on the aggregate number of warrants to be purchased prior to the closing of
the offering. The warrants will be sold pursuant to the exemption from
registration contained in Section 4(2) of the Securities Act. The actual
number of warrants to be purchased by each officer and director will be
disclosed in the executed warrant purchase agreements to be filed as
exhibits to the Registration Statement prior to the closing of the
offering.
Item 16. Exhibits, page II-4
55. Please include all exhibits, including the legality opinion, in your next
filing. They are subject to review and the staff will need time to review
them.
RESPONSE: Pursuant to the SEC's comment, the Company has filed the form of
insider letter and the legality opinion. Executed agreements of all
exhibits will be filed prior to the closing of the offering.
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 16
56. Please file executed agreements.
RESPONSE: Pursuant to the SEC's comment, the Company will file executed
agreements prior to the closing of the offering.
Item 17. Undertakings, II-5
57. Please revise to include the undertaking as set forth in Item 512(c) of
Regulation S-K.
RESPONSE: Pursuant to the SEC's comment, the Company has included the
undertaking as set forth in Item 512(c) of Regulation S-K.
*****
If you have any questions, please contact the undersigned at 212-335-4998.
Sincerely,
----------------------------------------
William Haddad
cc: Mr. Andrew Lerner
Inter-Atlantic Financial, Inc.
Inter-Atlantic Financial, Inc.
April 18, 2007
Page 17
Volatility Calculation as of 02/05/07
Company Name Ticker Market Cap ($MM) Volatility
------------ ------ --------------- ---------
LTC Properties Inc. LTC $661.9 27%
Irwin Financial Corp. IFC 657.7 27%
First Financial Bancorp FFBC 640.9 25%
Anchor Bancorp Wisconsin, Inc. ABCW 636.0 22%
Presidential Life Corp. PLFE 626.5 38%
Tradestation Group Inc. TRAD 581.8 55%
LaBranche & Co. Inc. LAB 561.8 51%
Wilshire Bancorp Inc. WIBC 518.3 34%
Independent Bank Corp. IBCP 517.0 24%
Nara Bancorp Inc. NARA 500.0 34%
Dime Community Bancshares Inc. DCOM 481.6 24%
First Indiana Corp. FINB 394.4 27%
Sterling Bancorp STL 356.5 29%
SCPIE Holdings Inc. SKP 246.6 38%
Rewards Network Inc. IRN 173.3 53%
Average $503.6 33.8%