SICHENZIA ROSS FRIEDMAN FERENCE LLP
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October 18, 2004
VIA FACSIMILE (202) 942-9544
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Attn: Barbara Jacobs, Assistant Director
Tangela Richter, Esq.
Re: Cintel Corp.
Registration Statement on Form SB-2
File No. 333-119002
Ladies and Gentlemen:
The following responses address the comments of the reviewing Staff of
the Commission as set forth in a comment letter dated October 13, 2004 relating
to the Registration Statement on Form SB-2 of Cintel Corp. (the "Company"). On
behalf of the Company, we respond as follows.
STANDBY EQUITY DISTRIBUTION AGREEMENT, PAGE 10
1. We do not understand certain provisions of the agreement that would
terminate Cornell Capital Partners' obligation to make advances under
certain circumstances. For example, we note that Cornell Capital
Partners' obligation is terminated if you fail to comply with a
provision restricting you from issuing or selling any contracts or
securities granting the holder the right to acquire shares of your
common stock without consideration or for consideration that is less
than the bid price of the common stock immediately prior to the
issuance. Describe with specificity the purpose and effect of this
provision. How is this provision consistent with Rule 10a-1 of the
Securities Exchange Act of 1934? Likewise, what is the purpose and
effect of the provision restricting you from filing a registration
statement on Form S-8 to register and issue in excess of two million
shares? We note that the provision also requires that you provide
notice to Cornell Capital Partners prior to the registration on Form
S-8 of the issuance of two million or fewer shares.
RESPONSE
We note the provisions you reference in Section 6.8 of the Cornell
Agreement, relating to restrictions on sale of capital stock. These
covenants are intended to prevent excessive numbers of free-trading
shares from reaching the market at a time when Cornell is obligated to
make significant purchases of stock from the Company. If the provisions
were not in place, large sales of new securities could have an
unanticipated depressive effect on the market price of the Company's
common stock, making it more difficult for Cornell to sell the
securities it purchases from the Company. It is a customary covenant
which many funding source require issuers to undertake at the time of
financing transactions. We do not believe these provisions are in any
way inconsistent with Rule 10a-1.
2. We note your disclosure throughout the registration statement that
Cornell Capital Partners will receive a two percent discount to the
market price of your common stock. However, we note also your
disclosure that you have agreed to pay them 5% of the proceeds that you
receive under the Equity Distribution Agreement. Under the
circumstances, it appears that your disclosure in Risk Factors and in
the table on page 10 that refers only to the 2% discount is
inappropriate. Please revise throughout to clarify that Cornell Capital
Partners will receive, in effect, a 7% discount to the market value of
your common stock.
RESPONSE
Under the Standby Equity Distribution Agreement, Cornell Capital
Partners will pay 98% of the lowest closing bid price of the common
stock during the five consecutive trading days immediately following a
notice date. Upon each advance, Cornell Capital Partners will be paid
5% of the gross proceeds of the advance in cash. This is in effect 5%
cash fee equal to 98% of the defined price. The two percent discount
affects the number of shares to be issued to Cornell, not any cash
payment to be made. Changing the discount to 7% would not accurately
reflect the discount which Cornell receives upon each advance. The
prospectus currently discloses the 5% cash payment following each
disclosure of the price that Cornell Capital Partners will pay for our
common stock. Accordingly, we do not believe that the prospectus should
be revised.
We trust that the foregoing appropriately addresses the issues raised
by your recent comment letter. Thank you in advance for your prompt review and
assistance.
Very truly yours,
/s/ David Schubauer
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David Schubauer