Jeffrey A. Baumel
973.639.5904
Fax 973.297.3814
jbaumel@mccarter.com
December 5, 2005
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Attn: David Roberts
Re: American Caresource Holdings, Inc. (the "Company" or the "Registrant")
Registration Statement on Form SB-2 filed February 14, 2005
File No. 333-122820
Dear Mr. Roberts:
Filed today is Amendment No. 9 to the above referenced registration
statement (the "Registration Statement") marked to show changes from the
registration statement filed with the Commission on December 2, 2005. This
letter responds to the Commission's letter to the Company, dated November 30,
2005 (the "SEC Letter"), regarding the Registration Statement. Set forth below
is the text of the comment contained in the SEC Letter and the Company's
response thereto. The heading and numbered paragraphs below correspond to the
headings and paragraph numbers in the SEC Letter. Page references in the
Company's responses to the SEC comments correspond to the page numbers in the
enclosed marked copy of the amended Registration Statement.
General
1. Please file as correspondence on EDGAR the response letter you submitted
to us on October 25, 2005.
In response to the Staff's comment above, the response letter submitted to
the Commission on October 25, 2005 has been filed as correspondence.
2. We note that 12,071,309 shares of ACS common stock will be distributed to
PATY stockholders, 1,705,756 of which will represent restricted shares
distributed to purchasers in PATY's private offering who became PATY
shareholders before the record date for the distribution of ACS stock was
set. Please advise us as to how this figure is consistent with your
disclosure that purchasers in PATY's private offering purchased an
aggregate of 3,411,512 shares of PATY common stock and that 547,244
additional shares of PATY common stock were issued in connection with the
Securities and Exchange Commission
December 5, 2005
Page 2
CareGuide acquisition, for an aggregate of 3,958,756 shares of PATY common
stock. Since one share of ACS common stock is being issued for every two
shares of PATY common stock outstanding, and after taking into account the
reverse stock split of 1-for-1.1246645 effective as of November 14, 2005,
it appears that approximately 1,759,971 shares of ACS common stock would
be issued privately as a result of these transactions. Please advise us to
how you determine that 1,705,756 is the correct figure.
In response to the Staff's comment above, we have revised the Registration
Statement to reflect the corrected number of shares. These revisions
include rounding related to fractional shares and, additionally the
previous filing did not exclude from the number of shares registered the
273,618 shares of common stock of ACS that would be issued in connection
with the CareGuide acquisition in lieu of accrued dividends on preferred
stock which should not have been included. We also noted that the
description of the 1.1246645 for 1 stock split effective November 14, 2005
has been modified to make more clear that the stock split was in fact a
forward split.
As a note, an aggregate of 12,071,309 shares are being distributed by the
Registrant, of which 10,091,899 shares are being distributed pursuant to
the Registration Statement and 1,979,410 shares are being issued privately
. Further approximately 300,000 shares are being retained by Patient
Infosystems, of which 146,482 shares are being registered for resale by
the Registrant from time to time. The Registration Statement now clearly
reflects these distinctions.
Shares to be issued privately include 1,705,792 shares to Patient
Infosystems private placement investors (issued on a one for two basis
from 3,411,512 PATY shares) and 273,618 shares to holders of shares issued
in lieu of PATY preferred stock dividends in connection with the Care
Guide Acquisition (issued on a one for two basis from 547,244 PATY shares)
for a total of 1,979,410 shares. Note that share amounts do not convert
exactly on a one for two basis due to rounding of fractional shares.
Liquidity and Capital Resources, page 22
3. We note you have amended this filing to increase the number of your shares
that Mr. Pappajohn, Dr. Schaffer and Mr. Kinley would receive in
connection with their warrants as well as a decrease in the exercise
prices of the warrants from $0.45 to $.40 per share from $.55 to $49 per
share. Please advise us as to the reason for the increase. If there have
been amendments to the Stock Purchase Warrant agreements, please file the
amended agreements as Exhibits.
The warrant agreements have not been amended. The stated exercise price
and number of warrants outstanding were adjusted to reflect the effect of
anti-dilution adjustments on the Warrants resulting from the 1.1246645 for
1 stock split effective November 14, 2005.
Securities and Exchange Commission
December 5, 2005
Page 3
Certain Relationships and Related Transactions, page 33
4. Please advise us as to why you removed disclosure from the prospectus
indicating that ACS used $1.45 million from its credit line to satisfy
intercompany indebtedness to PATY. If this did, in fact, occur, please
revise to include this disclosure. If not, please revise to disclose the
current balance due to PATY by ACS as well as the current amount of the
credit line that has been drawn down and the uses of the funds drawn from
the credit line.
In response to the Staff's comment above, the Registration Statement has
been revised at page 30. The disclosure was inadvertently deleted
including details with respect thereto.
Financial Statements
Notes to Unaudited Condensed Financial Statements for the Period Ended September
30, 2005
Issuance of Warrants, page F-25
5. We note that you plan on filing a registration statement for the benefit
of the holders of ACS common stock who acquire shares of Patient
Infosystems during the October 2005 offering. Advise us if you have any
requirements to also register the shares underlying the recent issuances
of warrants as part of that registration statement. Note paragraphs 14-18
of EITF 00-19, which discusses the accounting treatment when a contract is
not permitted to be settled in unregistered shares. In addition please
provide us with the general terms of the warrants. For example, please
advise us whether or not there is a cashless exercise option associated
with your warrants, which would permit the warrant holder to exercise the
warrant without paying cash and to receive the intrinsic value of the
warrants in an equivalent number of shares of common stock.
The warrant agreements do not contain any requirement to register the
shares underlying the warrants and therefore paragraphs 14-18 of EITF
00-19 regarding the accounting treatment when a contract is not permitted
to be settled in unregistered shares do not apply.
The general terms of the warrants include the following:
a. Term Five years from date of issuance
b. Exercise price and As specified in each stock purchase warrant. The
number of shares; number of shares and exercise price will be
restricted securities adjusted for stock splits, dividends and similar
transactions. The warrants are exercisable to
purchase restricted securities.
Securities and Exchange Commission
December 5, 2005
Page 4
c. Payment for shares May be paid by the warrant holder in cash or may
elect to receive shares in a "net exercise." The
warrant holder does not have the option to receive
any cash payments, except for the value of a
fractional share.
d. Anti-dilution The warrants contain a provision whereby the
provisions exercise price of the warrants and the number and
kind of securities purchasable under the warrant
may be adjusted in a number of circumstances which
would lead to the dilution of the warrant holder.
e. Notice provisions The warrant holders are entitled to notice when
certain corporate actions occur.
Part II
Item 26. Recent Sales of Unregistered Securities, page II-2
6. We reissue comment 3, from our Comment Letter dated October 11, 2005, in
part. Please break out your disclosure to discuss the specific issuances
of warrants made to each individual, including the dates of the issuances.
In response to the Staff's comment above, the specific issuances of warrants
made to each individual has been set forth in Item 26 including details
with respect thereto.
We appreciate your prompt response to our filing. If you have any
questions, or if we may be of any assistance, please contact the undersigned at
(973) 622-4444.
Very truly yours,
/s/ Jeffrey A. Baumel
Jeffrey A. Baumel
JAB:an