HOST VENTURES INC.
9544 South Chesapeake Street
Highlands Ranch, Colorado
USA 80126
August 22, 2005
U.S. Securities and Exchange Commission
Division of Corporate Finance
450 Fifth Street, N. W.
Washington, D. C. 20549
Mail Stop 4-6
Attention: Rebekah J. Toton
Dear Sirs:
Re: Host Ventures Inc.
Registration Statement on Form SB-2
File No. 333-126504
We provide the following responses to your letter dated August 10, 2005:
Table of Contents
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1. The table of contents should reference the page numbers of the
various sections of the prospectus. In this regard, please revise to
delete the references to the page numbers of each subheading in the
risk factors section. See Item 502(a) of Regulation S-B. Please also
ensure that each page of your amended prospectus includes page numbers.
We have removed the references to the page numbers of each subheading
in the risk factors section and have ensured that each page of our
amended prospectus is numbered.
Summary
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2. Please provide the definition of "exploration stage
corporation" set forth in Guide 7(a)(4)(i) to the Securities Act
Industry Guides. Provide similar disclosure under the subheading "In
General" in the Business section and in Plan of Operation.
We have provided the definition of "exploration stage corporation" in
the "Summary" and "Description of Business" sections.
3. Please revise to state that you have no revenues, have achieved
losses since inception, have no operations and currently rely upon the
sale of your securities to fund operations. Provide similar disclosure
under the subheading "In General" in the Business section.
We have revised our "Summary" and "Description of Business" sections to
disclose that we have no revenues, have achieved losses since
inception, have no operations and currently rely upon the sale of our
securities to fund operations.
4. In the first paragraph where you discuss your interest in the
Scadding West mineral exploration claim, please disclose the annual
expenditures required to maintain this claim.
We have disclosed our annual expenditure obligation in the first
paragraph where we discuss our interest in the Scadding West claim.
5. In this summary section, please also revise to disclose the
approximate costs to conduct the proposed mineral exploration
activities, your estimated total expenditures over the next 12 months,
and your current cash on hand. In addition, please disclose that, aside
from your sole director who also serves as your sole executive officer,
you currently have no employees. Finally, please disclose that, aside
from your cash holdings and the interest in the Scadding West mineral
exploration claim, you have no other assets, such as plant, property or
equipment or other tangible or intangible assets.
We have added the requested information to the "Summary" section.
Risk Factors
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6. Revise to discuss your lack of capital and the fact that you do
not have the capital to fund significant exploration operations or to
fund more than two phases of exploration and expenditures beyond the
next 12 months. The risk that you may need to sell additional shares to
fund such operations and that those shares may be sole on terms that
dilute the interests of investors in this offering should be described.
We have added the following risk factor:
"BECAUSE WE ONLY HAVE SUFFICIENT CAPITAL FOR INITIAL EXPLORATION OF THE
SCADDING WEST CLAIM, WE MAY NEED TO SELL ADDITIONAL SHARES TO FUND
OPERATIONS, WHICH WILL DILUTE THE INTERESTS OF INVESTORS IN THIS
OFFERING.
Our current capital is only sufficient to cover the initial two phases
of exploration on the Scadding West claims, as well as a portion of
anticipated administrative expenses over the next 12 months. We will
likely have to sell additional shares of our common stock in order to
fund future operations. Any sale of shares will result in dilution to
existing shareholders, which may have a negative impact on the value of
their investment."
7. You state that if your exploration program is unsuccessful you will
not be able to continue operations. This should be clearly articulated
in this section and throughout the document. If your business plan is
to explore solely for mineralized materials on this property, this
should be prominently and clearly conveyed to investors. In that
regard, we note your statement in the "Plan of Operations" section
that it is "doubtful" that you will enter into commercial production
on the Scadding West claim. A more thorough discussion of exactly what
will happen to the Company should no mineralized material be found on
the property should be explained in the document, along with proper
risk factor disclosure. You should also clearly state how you would
respond to any other business opportunities offered to the Company.
We have clarified throughout the prospectus that if exploration on the
Scadding West claim is unsuccessful, we intend to acquire an interest
in a different mineral property.
8. We note that you have only one director who discharges all of
the functions of all officers of this company. Please provide the name
of this director and provide more prominent and specific disclosure of
the risks that are posed by an organizational structure in which one
person has all managerial responsibilities. Address the possible
effects of having only one individual to create and maintain effective
disclosure and accounting controls and procedures, as well as the risk
to both the Company and investors that such individual may not possess
the requisite knowledge or skill to create and implement adequate
controls or procedures.
We have added the following risk factor:
"BECAUSE WILLIAM STEWART ACTS AS OUR SOLE DIRECTOR AND OFFICER, HE WILL
BE THE ONLY PERSON RESPONSIBLE FOR ALL ASPECTS OF OUR BUSINESS. IF HE
IS UNABLE TO ADEQUATELY MAINTAIN PROPER DISCLOSURE, CONTROLS AND
PROCEDURES, OUR OPERATIONS WILL SUFFER.
Our sole director and officer, Mr. William Stewart, will be the only
person responsible for our managerial responsibilities. As such, he
will have ultimate authority with respect to our business decisions,
our disclosure and our implementation of accounting controls and
procedures. If Mr. Stewart is unable to properly institution such
procedures and comply with reporting obligation requirements, our
operations may be adversely impacted."
9. Please revise the subheading and narrative of risk factor two to
highlight for investors the absence of any historical revenues or any
current prospects for future revenues.
We have revised the subheading and narrative as requested.
10. You indicate in the seventh risk factor that your sole director has no
significant technical training and/or experience in metals exploration
or mining. Please expand this risk factor discussion to more clearly
disclose your management's lack of technical training and experience
with exploring for, starting, and operating a mine. And with no direct
training or experience in these areas, your management may not be
fully aware of many of the specific requirements related to working
within this industry. Their decisions and choices may not take into
account standard engineering or managerial approaches mineral
exploration companies commonly use. Consequently, your operations,
earnings, and ultimate financial success could suffer irreparable harm
due to management's lack of experience in this industry.
We have expanded the risk factor to disclose Mr. Stewart's lack of
technical training and experience in the mineral exploration sector and
the resulting implications.
Selling Securityholders
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11. Revise your descriptions of the February and March private placements
to disclose the aggregate proceeds from each of those transactions
(i.e., $31,250 and $15,000, respectively).
We have included the aggregate private placement proceeds in the
description of each offering.
Plan of Distribution
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12. Supplementally confirm your awareness of the anti-manipulation rules
concerning securities offerings. Also provide a brief discussion of
the requirements of Regulation M.
We confirm our awareness of the anti-manipulation rules concerning
securities offerings. We have also provided a brief discussion of the
requirements on Regulation M.
Directors, Executive Officers, Promoters and Control Persons
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13. If Mr. Stewart intends to devote only 15% of his time to the
company, please disclose what he will be doing during the other portion
of his business time. To what extent are those other activities
potentially in conflict with the business activities that the company
will conduct?
We have disclosed that the remainder of his business time is devoted to
his positions with Arete Industries, Inc. and its subsidiary, Colorado
Oil and Gas, Inc. As these companies are solely involved in the oil and
gas business, there will not be a conflict between their business
activities and ours.
Business
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14. It is unclear what rights are conferred to the holder of a
mining claim under Canadian law. Please clarify if there is a surface
owner. We assume the Margaret is the surface owner to this property,
please confirm. Describe the rights conferred to each owner and provide
a description of any possible conflicts that might arise between the
two owners, especially with regards to your conducting mineral
exploration and extraction activities on the property.
Our interest in the Scadding West claim does not confer any real
property rights. We solely own the right to explore the Scadding West
claim for minerals and extract them from the surface and subsurface of
the property. The owner of the real property interest in the land
covered by the Scadding West claim is the government of Canada. Because
the land covered by our mineral claim is in a remote, undeveloped area,
we do not anticipate any conflict between our proposed exploration
activities and the government's interest.
15. Please define "economic mineral deposit."
An "economic mineral deposit" exists on a claim when an independent
geologist or engineer determines that the property contains sufficient
mineralization that mining operations would be profitable.
Description, Location and Access
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16. Please elaborate on the accessibility of your property. If
improvements are required at any of the exploration, technical,
development and/or removal stages, please disclose.
While the existing roads are sufficient for any anticipated exploration
on the Scadding West property, we would want to improve the roads, at
an approximate cost of $20,000, if we proceeded to the mining stage.
Mineralization
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17. Especially since you later state that no known exploration has
been conducted on the Scadding Wet claim, please provide a basis for
your statement that the igneous complex of rocks found in the area of
the Scadding West claim is "best known" for their content of gold,
nickel, copper, platinum and palladium. If you can not provide support
for this statement, please delete it.
We have deleted part of the noted statement as it refers to
mineralization in the vicinity of the Scadding West claim rather than
on it.
Geology Report
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18. We note your reference to an evaluation of the Scadding West
claim performed by Dr. Scott Jobin-Bevans. You should furnish us a copy
of this report pursuant to subsection (c)(2) of Industry Guide 7. Upon
what basis did Dr. Jobin-Bevans determine that the Scadding West claim
had "potential" to contain economic quantities of gold, nickel, copper,
platinum and palladium?
We enclose a copy of Dr. Jobin-Bevans's geological report on the
Scadding West property. The sections entitled "Economic Potential" and
"Conclusions" discuss the potential of the claim to contain economic
quantities of gold, nickel, copper, platinum and palladium.
19. Furthermore, it appears that Dr. Jobin-Bevans is an expert upon
whom you rely for the evaluation of the Scadding West claim. You
should obtain and file a consent from Dr. Jobin-Bevans to reference
him in the registration statement.
We will filed a consent from Dr. Jobin-Bevans as an exhibit to our next
amended registration statement.
Reports to Security Holders
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20. We note your statement that "the statements we have made in this
prospectus are qualified in their entirety by reference to these
additional materials." A qualification of this type appears to be
inconsistent with the requirement that all material information be
provided in the prospectus. Please revise.
We have removed the noted disclosure.
Plan of Operations
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21. You state that your "auditors believe that there is substantial
doubt that [you] will be able to continue as a going concern." Tell us
when and in what manner your auditors expressed this opinion, given
that the auditor's report contained in the registration statement
contains no going concern opinion. If you auditors did express such an
opinion, please update your risk factor disclosure accordingly.
We have removed the reference to a going concern opinion from the "Plan
of Operations" section.
Financial Statements
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22. The instruction to paragraph (a) of Industry Guide 7 states that
mining companies in the exploration stage should not refer to
themselves as development stage companies in the financial statements,
even though such companies should comply with FASB Statement No. 7, if
applicable. Please revise your financial statements accordingly. Refer
to Industry Guide 7.
We have revised our financial statements as requested.
23. Please note the updating requirements of Item 310(g) of Regulation S-B.
The financial statements contained in our amended registration
statement are in compliance with the updating requirements of Item
310(g) of Regulation S-B.
PART II
Recent Sales of Unregistered Securities
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24. You state that there are 3,125,000 shares of common stock were
issued as part of the February 28, 2005 private placement. However, it
appears that this offering was for a total of 2,825,000 shares. Please
revise or advise. You also state that this offering was completed on
February 28, 2005. In the selling securityholders section, you state
that this offering was completed on February 18, 2005. Please reconcile
this inconsistent disclosure.
We have revised our disclosure to indicate that 2,825,000 shares of
common stock were sold pursuant to the private placement and that it
was completed on February 18, 2005.
25. Please note that any agreements between the company and the
selling securityholders should be filed as exhibits to the registration
statement pursuant to Item 601(b)(10) of Regulation S-B. In this
regard, please file any written stock purchase agreements, or oral
agreements reduced to writing, between you and the selling
securityholders relating to the February 18 and Mach 31, 2005 private
placements with your next amendment.
We have filed the form of subscription agreement entered into between
us and each of the selling securityholders as an exhibit to our amended
registration statement.
Exhibit 5.1
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26. Revise the legality opinion by Bradford Lam to state, if true, that
the shares of common stock have a par value of $0.001 per share.
We have filed a revised legality opinion that states that the par value
of our common stock is $0.001 per share.
Exhibit 23
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27. A currently dated consent of the independent public accountant should
be provided in all amendments to the registration statement.
We have filed a currently dated consent of the independent public
accountant as an exhibit to our amended registration statement.
Yours truly,
Host Ventures Inc.
/s/ William Stewart