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SHEPARD INC.
318 - 470 Granville Street
Vancouver, BC V6C 2B3
Telephone: (604) 719-8129
Facsimile: (604) 688-8872
July 7, 2005
United States Securities and Exchange Commission
100F Street, N.E.
Washington, D.C. 20005
Attention: Anita Karu
Dear Sirs:
Re: Shepard Inc. - Registration Statement on Form SB-2
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Amendment No. 1 - File No. 333-124632
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We have received your letter dated June 2, 2005 containing comments on the
initial filing of our SB-2 registration statement. We respond to those comments
as follows:
General
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1. Your disclosure indicates that you have not commenced business
operations nor realized any revenues from your planned operations. It
therefore appears that your proposed business may be commensurate in
scope with the uncertainty ordinarily associated with a blank check
company. Accordingly, please revise your disclosure throughout your
registration statement to comply with Rule 419 of Regulation C or
provide us with an explanation of why Rule 419 does not apply.
While we have not commenced business operations or realized any
revenues from operations, we hold a significant asset and have a
specifically defined business plan based upon the recommendations of an
independent, professional geologist. We intend to commence exploration
of our mineral property during the current summer and will complete
follow up exploration in the fall.
Rule 419 of Regulation C only applies to companies that has no specific
business plan, or merely creates the appearance that it has a specific
business plan.
2. It appears your fiscal year end is December 31. Please clearly
disclose your fiscal year end
We have disclosed our fiscal year end as December 31 in various places
in the amended registration statement.
Prospectus Cover Page
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3. We note that you intend for your common stock to be quoted on the OTC
Bulletin Board. Please clarify that, to be quoted on the OTC Bulletin
Board, a market maker must file an application on your behalf in order
to make a market for your common stock.
<page>
We have clarified that to be quoted on the OTC Bulletin Board, a market
maker must file an application on our behalf in order to make a market
for our common stock.
Summary, Page 5
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4. To provide balance to the summary, please state that you have received
no revenues from operations to date and, as a result, you have received
a going concern opinion from your auditors. Also disclose that
management has no experience and that your president only spends 20% of
his time on the business.
We have disclosed the following:
"We have not received any revenue since our inception and, as a result,
our auditors have expressed doubt about our ability to continue as a
going concern. In addition, our management has no technical experience
in geology or mineral exploration and only devotes 20% of his business
time to our affairs."
The Offering, page 5
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5. Please add a separate paragraph that briefly explains how the
absence of a public market for the common shares impacts share
liquidity.
We have added a paragraph to our offering summary that explains how the
absence of a public market for our common stock impacts share
liquidity.
Plan of Distribution, page 11
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6. Please alert investors at the beginning of this section that there is
currently no market for any of your shares, and that you cannot give
any assurance that the shares offered will have a market value, or that
they can be resold at the offered price if and when an active secondary
market might develop, or that a public market for your securities may
be sustained even if developed.
We have added the following paragraph in this section:
"There is currently no market for our common stock and we cannot give
any assurance that the shares offered will have a market value. In
addition, there is no guarantee that our shares may be resold at the
offered price if and when an active secondary market might develop or
that a public market for our shares may be sustained, even if
developed."
7. In this regard, please provide comprehensive disclosure as to how and
when you expect to have your shares listed or traded. For example, if
you anticipate being quoted on the OTC Bulletin Board, then disclose
that a market maker must file an application on your behalf in order to
make a market for your common stock. Clarify how long this takes and
whether you have engaged a market maker to apply for quotation on the
OTC Bulletin Board on your behalf. Explain what effect quotation on the
OTC Bulletin Board will have on your liquidity.
We have provided the following disclosure:
"We expect to make application to have our shares quoted for trading
following the effective date of our registration statement. We must
retain a market maker to file such an application on our behalf and
address any comments from the NASD regarding the submission before our
shares will be quoted for trading. While this process typically takes
two to three months from the date the application is filed, there is no
guarantee that we will be successful in obtaining the quotation.
<page>
We have not engaged a market maker to apply for quotation on the OTC
Bulletin Board and can provide no assurance that we will find a market
maker who will file the application.
While a quotation on the OTC Bulletin Board should increase our
liquidity, there is no guarantee that stockholders will be able to sell
our shares for an acceptable price."
Interests of Named Experts and Counsel, page 15
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8. In accordance with Item 509 of Regulation S-B, please include a
reference to the geological consultant whose consent is filed as an
exhibit to your filing.
We have referenced the geological consultant in this section.
Description of Business, page 16
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9. Please revise throughout the Business section to more clearly explain
industry terms such as "turbidites" and "grab samples" on page 17.
We have revised the business section to more clearly explain industry
terms in plain language.
10. Please refer to Biographical Information on page 13. You state that Mr.
Eyre does not have any professional training or technical credentials
in the exploration, development and operations of mines. Please
indicate here in the Business section whether he has undertaken any
measures to familiarize himself with your business, albeit
non-professional.
We have disclosed that one of our directors, Glen Macdonald, is a
professional geologist and will be able to assess the recommendations
of our independent geologist. We have also disclosed that while our
president, Michael Eyre, does not have any professional training or
technical credentials in mineral exploration, he is familiar with the
industry as an investor.
11. We also note that Mr. MacDonald is on the boards of eight other mining
companies. Please discuss here in the Business section potential
conflicts of interest in this regard.
We have added a separate "Conflict of Interest" subsection that
discloses that Mr. Macdonald is a director or officer of eight other
mineral exploration companies and discuss our procedure for addressing
potential conflicts of interest.
Exploration History, page 17
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12. In the second paragraph, please identify the owner of the CB-1 claim.
It is not clear if you are referring to yourself or another party.
Also, state the date the owner retained Mr. Timmins.
We have clarified that the vendor of the property, WGT Consultants
(NWT) Ltd., retained Mr. Timmins in May 2005.
<page>
Plan of Operations, page 19
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13. You indicate that your plan for the next twelve months is to complete
the recommended phase one and two exploration programs on the CB-1
claim. Please enhance your disclosure to provide a more in-depth
discussion of these programs including the details of your expected
spending of $5,000 on Phase 1 and $20,000 on Phase 2. Also, please
provide more detail on the types of general and administrative costs
included in the additional $15,000 you expect to spend.
We have provided a breakdown and discussion of the exploration
programs, as well as anticipated administrative costs.
14. We note you do not have any verbal or written agreement regarding the
retention of any qualified engineer or geologist for this exploration
program. Please describe your plans in this regard. Explain what is
required and how difficult it might be to find those persons.
We have disclosed that Mr. William Timmins, the author of the geology
report on the CB-1 claim has indicated that he is willing to oversee
the exploration programs on the property.
Stockholders of our Common Shares, page 20
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15. It appears that the number of shareholders shown here should be 32,
rather than 31, since the selling shareholder table lists 32
individuals and the recent sales of unregistered securities shows 32
shareholders. Please advise or revise.
We have revised our disclosure to indicate that we have 34 shareholders
(ie. the 32 selling shareholders and our two directors).
Financial Statements, page 22
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16. Please ensure your update your financial statements to include the
quarter ended March 31, 2005. Refer to Item 310(g) of Regulation S-B
We have updated our financial disclosure to March 31, 2005.
Statements of Operations
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17. Earnings per share should be rounded to the nearest cent, in order not
to imply a greater degree of precision than exists. Please revise your
filing accordingly.
We have revised our earnings per share figure from ($0.001) to ($0.01).
2. Summary of Significant Accounting Policies, page 24
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d) Foreign Currency Translation, page 25
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18. You disclose that you functional currency is the U.S. dollar. Please
tell us where the impact of translating foreign currency transactions
during the period and period end account balances into U.S. Dollars is
reflected in your financial statements. If you had no transactions in
a currency other than the U.S. Dollar, please confirm our
understanding. Otherwise, please advise us of your accounting.
<page>
The impact of translating foreign currency transactions is reflected in
our office and sundry costs. We have disclosed in note 2 to our
financial statements that "gains or losses on foreign currency
translation are included in the statement of operations."
Outside Back Cover Page
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19. Please refer to the second full paragraph on page 34. Please confirm
that the dealer prospectus delivery obligation will appear on the
outside back cover page. This is unclear based upon the present
formatting of your preliminary prospectus. In addition, please be aware
that only information permitted by Item 502 of Regulation S-B should
appear on the outside back cover page. Accordingly, please also confirm
that the Item 304 information will not appear on the outside back cover
page.
We confirm that the dealer prospectus delivery obligation will appear
on the outside back cover page and that the Item 304 information will
not appear on the outside back cover page.
Exhibit 5, Legality Opinion
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20. We note your disclaimer in the last sentence of the first paragraph of
your opinion. Please tell us how counsel is able to give the opinion
without reviewing the registration statement.
Our legal counsel has provided us with an opinion that our shares are
duly authorized, legally and validly issued, fully paid and
non-assessable and, when sold, will be legally issued, fully paid and
non-assessable. They are able to provide this opinion without reviewing
the registration statement.
Yours truly,
/s/ Michael Eyre
Shepard Inc.
Michael Eyre, President