(Cascade Letterhead)
July 21, 2005
U.S. Securities and Exchange Commission
Office of Emerging Growth Companies 450
Fifth Street, N.W.
Washington, D.C.20549
To: John Reynolds
Assistant Director, Office of Emerging Growth Companies
CC: Susann Reilly
Angela Halac
Re: Cascade Technologies Corp.
Registration Statement on Form SB-2
File No. 333-124284
Filed April 25, 2005
Dear Mr. Reynolds:
We have reviewed your comments and have responded in the following format; we
listed your comments first and then our responses. Hopefully this will assist
the Company in meeting compliance with the applicable disclosure requirements.
Also attached, please find a redline copy of the SB-2/A.
GENERAL
1. Please provide a current accountant's consent in any amendment.
RESPONSE
A current consent has been appropriately attached.
2. The Report of Independent Certified Public Accountants references Note 9 to
the financial statements. However, there is no Note 9. Please advise
supplementally or request revision of the report.
RESPONSE
The note has been properly revised.
COVER PAGE
3. Highlight the cross-reference to the risk factors section on the prospectus
cover and the risk factor headings in bold-faced type or other means.
RESPONSE
The cross-reference has been appropriately capitalized and bolded.
4. Please specify the extension of the offering period "by the board of
directors"..
RESPONSE
This statement was added in the event the board of directors wished to extend
the period for resale under this prospectus. At this time, however, the Company
does not feel we will require an extension so the statement has been
appropriately removed.
PROSPECTUS SUMMARY
5. Section (a) (2) of Rule 419 defines a blank check company as a company that
is issuing penny stock that is "a development stage company that has no specific
business plan or purpose or has indicated that its business plan is to engage in
a merger or acquisition with an unidentified company or companies, or other
entity." In discussing this definition in the adopting release, the Commission
stated that it would "scrutinize...offerings for attempts to create the
appearance tat the registrant...has a specific business plan, in an effort to
avoid the application of Rule 419." See Security Act Release No. 33-6932 (April
28, 1992).
Your disclosure indicates that you are a development stage company, with no
assets other than cash, no revenues, no options or contracts with suppliers to
further your proposed business. In view of the foregoing, your business is
commensurate in scope with the uncertainty ordinarily associated with a blank
check company. Accordingly, please revise your disclosure throughout your
registration statement to company with Rule 419 of Regulation C.
RESPONSE
In response to this comment, the Company discloses on a supplemental basis that
they are not a blank check company under Section (a)(2) of Rule 419 of the
Securities Act of 1933. The Company does have a specific business plan and plan
of operation, which is to sell semiconductors, electro-mechanical and passive
components. The Company has taken steps to implement their business plan. On
November 15, 2004, the Company entered into an agreement with Frank Ludtke, an
experienced web developer based in Port Moody, Canada, to perform the initial
site development work. Furthermore, the President, Bruce Hollingshead made a
trip to China from April 14 2005 to April 22 2005 in order to interact with and
solicit potential suppliers. The Company's Officers and Directors have numerous
years of experience in the field of semiconductor and related component sales
and are fully capable of successfully implementing Cascade's business plan. The
Company exists for the purpose of pursuing the business plan set forth in the
registration statement. The Company's management believes that by being a
reporting company, they have a better opportunity to obtain the financing
required to complete their plan of operations. It is not the intention of the
Company nor have they indicated anywhere in the registration statement that the
Company's plan is to engage in a merger or acquisition with an unidentified
company or companies. As a result, we believe it is inaccurate to describe the
Company as a blank check company under Section (a)(2) of Rule 419 of the
Securities Act of 1933.
6. Please define "non-franchised stocking distributor".
RESPONSE
The summary section has been revised and now reads as follows:
"We are a development stage company who plans to be a non-franchised stocking
distributor who buys and sells semiconductors, electro-mechanical and passive
components. Generally, a non-franchised stocking distributor is one who buys and
sells parts independent of the parts manufacturer. We are not an authorized
distributor for the parts we plan to sell nor do we plan to engage in a formal
franchise agreement with any manufacturer. To date, we have only been in the
organizational stages. We have had limited operations to date."
7. Update the November dates.
RESPONSE
The dates have been appropriately updated to June 29, 2005.
YOUR RELIANCE ON INFORMATION CONTAINED IN THIS PROSPECTUS, PAGE 1
8. This information should be removed from the prospectus summary.
RESPONSE
This information has been appropriately removed from the Prospectus Summary and
inserted on page 8.
RISK FACTORS, PAGE 2
BECAUSE WE ARE A DEVELOPMENT STAGE COMPANY, OUR BUSINESS HAS A HIGH RISK OF
FAILURE, PAGE 2
9. Remove this risk factor which merely duplicates the first one..
RESPONSE
The risk factor has been appropriately removed.
SHOULD THE OPEN MARKET PRICE OF CERTAIN PARTS WE CHOSE TO INVENTORY DROP, WE
WILL BE EXPOSED TO FINANCIAL RISK, PAGE 3
10. This is a risk shared by businesses generally. Explain why it is
particularly applicable to your business or remove it..
RESPONSE
We have removed this statement.
BECAUSE OUR AUDITOR HAS ISSUED A GOING CONCERN OPINION REGARDING OUR COMPANY,
THERE IS AN INCREASED RISK ASSOCIATED WITH AN INVESTMENT IN OUR COMPANY, PAGE 3
11. Please include in this risk factor that you have losses and will require
financing in the next twelve months.
RESPONSE
We believe we have appropriately stated that we have losses and require
financing. Please advise as to how specifically you wish us to complete this
disclosure. WE ARE IN A COMPETITIVE INDUSTRY AND OUR COMPETITORS MAY BE MORE
SUCCESSFUL IN ATTRACTING AND RETAINING CUSTOMERS WHICH COULD HARM OR LIMIT OUR
ABILITY TO ATTRACT AND RETAIN CUSTOMERS OR EXPAND OUR BUSINESS, PAGE 3
12. This risk factor is generic and not material and should be deleted..
RESPONSE
The risk factor has been appropriately deleted.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS, PAGE 5
13. Please reference the last sentence of this section: "We are under no duty to
update any of the forward-looking statements after the date of this prospectus
to conform these statements to actual results." Please note that if new
information or certain events arise that would make your disclosure materially
misleading, you would need to update it as required by federal securities law.
Please revise your disclosure accordingly.
RESPONSE
This section has been appropriately revised and now reads as follows:
"We are under no duty to update any of the forward-looking statements after the
date of this prospectus to conform these statements to actual results, unless
certain events or circumstances arise that would cause information in this
prospectus to be deemed materially misleading."
PLAN OF DISTRIBUTION, PAGE 11
14. Please remove the reference to "pledges, donees, assignees and
successors-in-interest...". Persons using this prospectus must be named as
selling shareholders. Include the Item 507 information..
RESPONSE
The reference has been appropriately deleted.
15. Estimate the cost of the offering to be borne by the company..
RESPONSE
The following section has been added under Plan of Distribution"
"We will pay all expenses incident to the registration, offering and sale of the
shares of common stock to the public hereunder other than commissions, fees and
discounts of underwriters, brokers, dealers and agents. We will receive no
proceed in connection with the sales of securities in this prospectus. We
estimate the costs for this offering to be approximately $31,000.00."
16. Please disclose that the selling shareholders and any broker-dealers that
act in connection with the sale of shares might be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, and any commissions
received by such broker-dealers and any profit on the resale of shares sold by
them while acting as principals might be deemed to be underwriting discounts or
commissions under the Securities Act..
RESPONSE
The following has been added under Plan of Distribution:
"The selling shareholders and any broker-dealers that act in connection with the
sale of shares might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commissions received by such
broker-dealers and any profit on the resale of shares sold by them while acting
as principals might be deemed to be underwriting discounts or commissions under
the Securities Act."
LEGAL PROCEEDING, PAGE 11
17. We reference your first sentence which begins: "We are not a party to any
material pending legal proceedings..." Please note that Item 103 of Regulation
S-B requires information if you are a party to any pending legal proceeding, not
only material pending legal proceedings. Please revise.
RESPONSE
The section has been revised and now reads as follows:
"We are not a party to any pending legal proceedings and, to the best of our
knowledge, no such action by or against the Company has been threatened."
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, PAGE 12
18. Please provide the names of the companies for which your three principals
have worked during the past five years and, also, the dates of employment as
required by Regulation S-B, Item 401.
RESPONSE
This section has been revised and now reads as follows:
BRUCE HOLLINGSHEAD --PRESIDENT/DIRECTOR
Bruce Hollingshead has 15 years of extensive experience with semiconductor
companies and start ups in Canada. Included in his experience are a variety of
senior sales positions in the top 3 global distribution companies of
semiconductor products. From June 2000 to March 2003, Mr. Hollingshead was a
Project Manager for Pioneer Standard Electronics, company based in Ohio. His
duties included the negotiation of prices of 10 different key product lines with
factories on behalf of 50 different customers. From March 2003 to the present,
Mr. Hollingshead has held the position of Strategic Account Manager with Future
Electronics, a Canadian company. His current responsibilities include managing
the South East Asian market as well as other emerging accounts. Mr. Hollingshead
attended Douglas College in New West B.C for two years before leaving to pursue
a career in the semiconductor industry.
CHRISTINE THOMAS -- CORPORATE SECRETARY, TREASURER
Christine Thomas has over 25 years experience in the semiconductor, passive and
electro-mechanical industry. Ms. Thomas has held various senior sales positions
within the top 10 semiconductor distribution companies in the world including
Avnet, Wyle Electronics, Anthem Electronics and Arrow Electronics. From July of
1998 to February of 2003, Ms. Thomas a Sales Executive for original equipment
manufacturer accounts in British Colombia. Ms. Thomas currently holds the
position of Sales Executive with Pioneer Standard Electronics for original
equipment manufacturer accounts in British Colombia and Alberta. Ms. Thomas has
had no post secondary education
SHANNON MACQUARRIE -- DIRECTOR
Shannon MacQuarrie has 15 years of experience in the brokerage securities
business with several different companies. The last two companies that she
worked for were Midland Walwyn now CIBC Wood Gundy and First Marathon Securities
now National Bank. In working with these companies Ms. MacQuarrie has held
several different positions in the securities department and trading department.
From 2000 to the middle of 2002, Ms. MacQuarie was self employed as an
independent investor. From 2002 to present, Ms. MacQuarrie has been a part owner
and manager/administrator for SRM Enterprises Inc, a real estate development
Company. Also, since 2002, Ms. MacQuarrie has consulted as a
manager/administrator for Buena Vista Properties Inc., a real estate development
Company. Ms. MacQuarrie has had no post secondary education.
EXECUTIVE COMPENSATION, PAGE 13
19. Please fill in the blanks in the table..
RESPONSE
The blanks have been appropriately replaced with zeros.
DIVIDENDS, PAGE 15
20. In the third paragraph of this section, please use more precise terminology.
It is not clear what you mean by "a distribution of revenues" and "a
distribution of the investee's securities." Clarify whether or not you are
discussing dividends, a spin-off, etc.
RESPONSE
This section has been revised for clarity. It now reads as follows:
"Stock dividends of Cascade stock will be made only when, in the judgment of
Cascade's Board of Directors, it is in the best interest of Cascade's
stockholders to do so. The Board of Directors will review, among other things,
the tax consequences of the distribution as well as the market effects of an
initial or broader distribution of such securities."
OUR BUSINESS, PAGE 16
21. Please provide the disclosure which Item 101 (c) of Regulation S-B of the
Securities Act requires.
RESPONSE
The following section has been added on page 28.
"REPORTS TO SECURITY HOLDERS
After the effective date of this document, we will be subject to the reporting
requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934 and
will file quarterly, annual and other reports with the Securities and Exchange
Commission. Our annual report will contain the required audited financial
statements. We are not required to deliver an annual report to security holders
and will not voluntarily deliver a copy of the annual report to security
holders. The reports and other information filed by us will be available for
inspection and copying at the public reference facilities of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549.
Copies of such material may be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Information on the operation of the Public Reference Room may
be obtained by calling the SEC at 1-800-SEC-0330. In addition, the Commission
maintains a World Wide Website on the Internet at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission."
BUSINESS OVERVIEW, PAGE 16
22. Please resolve all discrepancies between the disclosure in the prospectus
and that on your website, beginning with the first sentence under the "Company"
section of the website, which sentence states: "Cascade Technologies is a
world-wide, independent distributor of electronic components, semi-conductors
and other related products." Throughout the website revise the verb tense if it
gives an incorrect impression regarding whether or not you have begun specific
activities. We will review the entire website after your revisions. At that time
we may have further comment.
RESPONSE
We have appropriately revised the website.
THE MARKET, PAGE 16
23. Disclose the basis for each assertion throughout this section which is not
self-evident. If applicable, support your statements by supplementally providing
us with copies of, or excerpts from, reports or publications which you
reference. If you do not have appropriate independent support for a statement,
please revise the language to make clear that this is the belief of the
registrant based on its experience in the industry.
RESPONSE
The business plan has been appropriately revised.
24. Provide the omitted pie chart in your amended registration statement.
RESPONSE
The pie chart originally included has been omitted from this registration
statement as we felt the information reflected in the pie chart was outdated.
OUR PRODUCTS AND SERVICES, PAGE 18
25. Disclose whether the manufacturers you have named have restrictions
regarding distributors and how those restrictions might affect your opportunity
to source products from them.
RESPONSE
Please note answer to question 6. We do not buy directly from the manufacturer.
The manufacturers do no control non-franchised distributors selling of parts.
26. Discuss in detail any negotiations you have engaged in with any companies
and whether you have any contracts. Please file as exhibits all contracts..
RESPONSE
To date, we have no written contracts.
GOVERNMENT REGULATION, PAGE 20
27. You have limited your discussion to the U.S. export administration
regulations ("EAR"). Please comply fully with Items 101 (b)(8), (9) and (11) as
applicable.
RESPONSE
The following sections have been added under "Governmental Regulations"
In order to export certain items, you are required to obtain a license. Licenses
can be applied for at the Bureau of Industry and Security ("BIS") U.S Department
of Commerce. However, the ability to successfully obtain an export license is
not guaranteed and is dependent upon various factors, including the country of
export and the end use of the product. A majority of the rules and regulations
involving the EAR can be found on their website at http://www.bxa.doc.gov/. We
believe that approximately 1-2 percent of products may require a license. At
this time, plan on turning down any orders that require a license for export as
we feel that filling such orders is cost prohibitive and time consuming.
Environmental Regulation
We believe that there are future environmental regulations that will be in place
by July 2006 that may impact our business. Listed below is a brief summary of
the upcoming environmental regulations. The majority of these regulations
concern the use of lead in the production of electronic components and systems.
The following key regulatory activities are driving the move to lead free parts
o The European Council Directive on "Waste from Electrical and
Electronic Equipment" (WEEE) proposes restrictions on the use of
lead among other materials in electronic products. On October 10,
2002 the European Council and European Parliament reached an
agreement to set a target date of July 1, 2006 for a ban on
hazardous materials including lead.
o In addition to the Environmental Directorate's two proposals, the
Enterprise Directorate has released a draft for a new directive
concerning Electrical and Electronic Equipment (EEE). The Enterprise
Directorate believes this document offers a new approach in
addressing materials currently used in electrical and electronic
equipment that the WEEE might consider banning.
o The Japanese Ministry of International Trade has set the following
targets:
o In April of 1997, the amount of Pb used for automobiles, except for
batteries:
|X| End of 2000, be reduced "to half compared to 1996 by the end
of 2000".
|X| End of 2005, be reduced to one third.
o Introduced legislation promoting the recycling of household electric
appliances, to reclaim all Pb used starting in 2001.
|X| Household electric appliances manufacturers are already
working towards the creation of completely Pb Phase-out
products.
o U.S. EPA announced on July 29, 1999, a proposed rule to drastically
lower reporting thresholds for Pb and Pb compounds to the Toxic
Release Inventory from 10,000 lbs. to 10 lbs.
These regulations may impact us should we purchase lead product that we are
unable to sell prior to the implementation of these regulations.
PLAN OF OPERATION, PAGE 22
28. In your plan of operations required by Item 303(a) of Regulation S-B, please
reconsider whether you have described all milestones necessary to take your
company to profitability, and add additional milestones if necessary. Also,
include more details on how you will accomplish your milestones, first for the
next twelve months and, then, to the point of generating revenues. In addition,
include a timeframe for completing each milestone in weeks or months and provide
the estimated costs associated with each milestone. Lastly, provide more detail
regarding your financing/liquidity needs. We may have additional comments after
reviewing the revision you make in response to this comment..
RESPONSE
We have appropriately revised the Plan of Operations.
POSSIBLE SALE OF COMMON STOCK PURSUANT TO RULE 144, PAGE 25
29. Pursuant to Item 201(a)(2)(ii) of Regulation S-B, indicate the amounts of
common equity that, at the time of effectiveness, could be sold pursuant to Rule
144 under the Securities Act or that the registrant has agreed to register under
the Securities Act for sale by security holders.
RESPONSE
The following section has been revised an now reads as follows:
"Shares Eligible for Future Sale
There are currently 52 shareholders of our securities. Upon effectiveness of
this registration statement, there will be 930,000 shares of common stock being
registered for resale in this offering that will be freely tradable without
restrictions under the Securities Act of 1933.
Cascade has previously issued shares of Common Stock that constitute "restricted
securities" as that term is defined in Rule 144 adopted under the Securities
Act. Subject to certain restrictions, such securities may generally be sold in
limited amounts one year after their acquisition. Cascade issued 10,000,000
shares of Common Stock to Cascade's founders in connection with its
organization. The shares of Common Stock issued to Cascade's founders are
restricted as to resale under Rule 144."
DESIGNATED SECURITY/PENNY STOCK, PAGE 24
30. In view of the $.10 sale price of the stock in this offering, please remove
the following because it implies that a price above $.5.00 is more likely than
it actually is: "no assurance can be given that the bid price for Cascade's
Common Stock will be above $5.00 per share following the Offering."
RESPONSE
This sentence has been appropriately deleted.
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS, PAGE 28
31. Please remove "disqualified in its entirety by references to our Bylaws to
the statutory provisions.".
RESPONSE
This sentence has been appropriately removed..
UNDERTAKING, PAGE 32
32. Fully provide the disclosure required by Item 512(a)(1)(ii)..
RESPONSE
The following section has been added under section titled "Undertaking"
"(d) To include any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed
that which was registered) and any deviation From the low or high
end of the estimated maximum offering range may be reflected in the
form of prospects filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in the volume and price represent
no more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement."
SIGNATURES
33. Your "principal financial officer" must sign the registration statement.
Please see Instruction 1 under "Signatures" in Form SB-2.
RESPONSE
The signatures have been revised to disclose the Principal Financial and
Accounting Officer.
EXHIBITS
34. Counsel should revise the legality opinion to indicate that it opines upon
Wyoming law including the statutory provisions, the rules and regulations
underlying those provision, all applicable provisions of the Wyoming
Constitution and reported judicial decisions interpreting those laws.
RESPONSE
An appropriate legal opinion has been included.
INTERIM FINANCIAL STATEMENTS (F-9 THROUGH F-13)
35. We noted your interim financial statements do not include the period from
January 16, 2004 (inception) through February 28, 2005. Please revise to include
the financial statements for this period in accordance with SFAS 7 (refer to
paragraphs 11-12).
RESPONSE
The financials have been appropriately revised.
GOVERNMENTAL REGULATION
36. The review of your registration statements has not been completed by all
Offices. We may have additional comments at a later date.
RESPONSE
Noted.
Should you have any other issues or questions in regards to the responses and
the amended SB-2, please do not hesitate to call Adam U. Shaikh, Esq. at (702)
296-3575.
Thank you for your prompt response.
Very truly yours,
Bruce Hollingshead
President