SecProbe.io

CORRESP
1
filename1.htm

corresp

    ATTORNEYS AT LAW

    Broomfield, CO

720 566-4000

Palo Alto, CA

    One Maritime Plaza

    650 843-5000

    20th Floor

    Reston, VA

    San Francisco, CA

    703 456-8000

    94111-3580

    San Diego, CA

    Main 415 693-2000

    858 550-6000

    Fax   415 951-3699

    www.cooley.com

    GIAN-MICHELE A MARCA

    (415) 693-2148

    gmamarca@cooley.com

June 30, 2005

Via EDGAR, Fax and Federal Express

Mr. John Reynolds

Assistant Director

Office of Emerging Growth Companies

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549

    Re:

    Ad.Venture Partners, Inc.

    Registration Statement on Form S-1

    SEC File No. 333-124141

Dear Mr. Reynolds:

     On behalf of our client, Ad.Venture Partners, Inc. (the “Company”), we are transmitting to you
this letter in response to comments received from the staff (the “Staff”) of the Securities and
Exchange Commission (the “Commission”), by letter dated June 24, 2005, with respect to the
Registration Statement on Form S-1, File No. 333-124141 (the “Registration Statement”), filed with
the Commission on April 18, 2005.

     The numbering of the paragraphs below corresponds to the numbering of the comments, which, for
the Staff’s convenience, have been incorporated into this response letter. Page references in the
text of this response letter correspond to the page numbers of Amendment No. 2 to the Registration
Statement (the “Amendment”).

Prospectus Summary, page 1

     1. We note your response to comment seven of our letter dated May 20, 2005 that neither the
company, affiliates, nor any representatives have had either contacts or discussions with any
targets. Please revise to clarify here and throughout the prospectus if you, any affiliate,
attorney, agent or other representative of the company has taken any direct or indirect measures to
locate a target business.

June 30, 2005

Page Two

     Response:
The Company has revised the disclosure on pages 7, 24, 26 and 27 of the
prospectus in response to the Staff’s comment.

     2. We note your response to comment 16 that “out-of-pocket expenses” that exceed the amount of
proceeds not placed in trust will only be reimbursed after the completion of a business
combination. In the use of proceeds section, please revise to discuss the nature of the excess out
of pocket expenses. Is it structured as a loan so that it is a liability that follows the company
and must be repaid following a business combination, or does the resulting company have latitude
regarding such repayments? To the extent that repayment of excess expenses are discretionary, it
appears that there is an inherent conflict of interest as those who incur the excess expenses may
view targets that do not offer to repay them in an unfavorable light. If applicable, please revise
to discuss such conflict under the caption “conflicts of interests” on page 39.

     Response:
The Company has revised the disclosure on pages 20 and 41 of the prospectus in
response to the Staff’s comment. In addition, the Company has added risk factor disclosure on page
11 to explain the potential conflict of interest arising out of the potential for excess
expenses.

Use of Proceeds, page 19

     3. Please clarify whether the funds not held in trust could be used as a down payment,
deposit, or lockup in a proposed business combination. To the extent they can, explain how ongoing
expenses will be satisfied and include appropriate line item disclosure in this section. We may
have further comment.

     Response: The Company has revised the disclosure on pages 3, 16 and 20 of the
prospectus in response to the Staff’s comment. The Company respectfully notes the likelihood, size
or impact of any potential down payment, deposit or lockup cannot be presently ascertained.

Proposed Business, page 26

     4. We note your response to comment 21. The response letter indicates that you believe you
will receive unsolicited responses because members of management “frequently receive” such
proposals. Please revise to clarify such experience in the document as it is the basis for your disclosed anticipation of unsolicited proposals. Also clarify if you have
received any unsolicited proposals that could lead to the identification of a target company.

     Response: The Company has revised the disclosure on page 27 of the prospectus in response
to the Staff’s comment.

     5. We note your response to comment 21 seeking clarification “if any unaffiliated parties
providing proposals will receive a fee and how that fee would be determined.” Our

June 30, 2005

Page Three

comment was aimed at solicited and unsolicited proposals from sources that are not considered “professional
firms” specializing in business acquisitions. Please revise accordingly.

     Response: The Company has revised the disclosure on page 27 of the prospectus in response
to the Staff’s comment.

     6. We note that management and/or initial shareholders may be retained following a business
combination. We also note your additional disclosure on page 29 that you “will not request that
the resignation or retention of current management be included as a condition” in any business
combinations. There appears to be an inherent conflict of interests in that management and/or
initial shareholders may view target companies that offer any such individuals a continuing
relationship (whether in a management, consultant or other role) in a more favorable light. Please
revise to discuss such conflict under the caption “conflicts of interests” on page 39.

     Response:
The Company has revised the disclosure on page 40 of the prospectus in response
to the Staff’s comment.

     7. Please add disclosure to explain the seventh and eighth bullets under “Amended and Restated
Certificate of Incorporation.”

     Response: The Company has revised the disclosure on page 32 of the prospectus in response
to the Staff’s comment. While the Company will enter into letter agreements with its initial
stockholders prior to the offering for various reasons, many of which are explained throughout the
prospectus, the Company acknowledges that the currently effective Amended and Restated Certificate
of Incorporation that was filed as Exhibit 3.1 to Amendment No. 2 to the Registration Statement
does not specifically contemplate the execution of these letter agreements. Accordingly, the
Company has removed the eighth bullet under “Amended and Restated Certificate of Incorporation” on
page 32.

Management, page 36

     8. We note your additional disclosure regarding the creation of an Audit Committee. Please
clarify when you intend to have such committee in place.

     Response: The Company advises the Staff on a supplemental basis that it has established an
Audit Committee. Accordingly, the Company has revised the disclosure
on page 38.

     9. We note your additional disclosure regarding Tom Rogers, your special advisor. Please
revise to discuss his rights and duties as special advisor and clarify if he owes you the same
fiduciary duties as those owed by your members of management.

June 30, 2005

Page Four

     Response:
The Company has revised the disclosure on page 39 of the prospectus in response
to the Staff’s comment.

Certain Relationships and Related Transactions, page 38

     10. We note your response to comment 35. You have disclosed all of your private share
issuances and that you “believe” several individuals are your promoters. Item 404(d) of Regulation
S-K requires that you identify promoters and discuss all transactions involving such persons.
Please review Rule 405 of Regulation C and revise to identify your promoters without qualifying the
disclosure.

     Response: The
Company has revised the disclosure on page 40 of the prospectus in response
to the Staff’s comment. The Company advises the Staff on a supplemental basis that all
transactions between the Company and Messrs. Balter and Slasky have been disclosed in the
prospectus.

     11. We note that Ken Jacquin, William Margiloff, and Hillel Weinberger collectively paid
$45.00 for their 150,000 shares. Please clarify if they will participate in your business plan or
if they have some preexisting relationship with any of the other initial shareholders.

     Response: Each of Ken Jacquin and William Margiloff have agreed with the Company to be
special advisors and, accordingly, the Company has revised the
disclosure on page 39 of the
prospectus. The Company advises the Staff on a supplemental
basis that Mr. Balter has known Mr. Weinberger for approximately five years and that Mr. Weinberger was allowed to invest as an initial
investor on the basis of his relationship with Mr. Balter. Mr. Weinberger had no
role in the organization or formation of the Company and will have no formal role with the
Company.

Principal Stockholders, page 36

     12. We note your response to comment 38. The comment was seeking disclosure in the prospectus
of the purpose of these mandatory warrant purchases. The response letter indicates that the
company “believes” that the primary purpose is to align Messrs. Balter and Slasky’s interests with
those of public stockholders. Considering the warrant purchases was a condition that you
negotiated, please disclose why you are not able to definitively disclose the purpose without
qualifying it. According to exhibit 10.13, the warrant purchase agreement was entered into to in order to “induce the [c]ompany to engage in the IPO.” Please revise to
explain the inducement or benefit you received from this agreement.

Further, it is not clear to us how having “certain designees” purchase warrants would align Messrs.
Balter and Slasky’s interests. It would also appear that Messrs. Balter and Slasky’s ability to
pledge both their shares and purchased warrants as collateral, would mitigate the capital that they
are “placing at risk.” Please explain in your disclosure.

June 30, 2005

Page Five

     Response:
The Company has revised the disclosure on page 43 explaining the purpose of the
mandatory warrant purchases. In addition, the Company advises the Staff on a supplemental basis
that the Company was advised by Wedbush Morgan Securities Inc.,
("Wedbush") the representative of the
underwriters for the Company’s present offering, that market expectations for special purpose
acquisition companies required the inclusion of a warrant purchase commitment as a demonstration of
confidence by management in the Company’s ability to consummate a
business combination. As a result, the benefit to the Company
of the mandatory warrant purchases was to allow it to proceed with its initial public offering.
Accordingly, the Company has revised the recitation of consideration in the warrant purchase
agreements.

The Company further advises the Staff on a supplemental basis that the warrant purchase structure
allows for management to place a significant amount of capital at risk in a manner that provides
for a potential return on such capital that is
commensurate with such risk while minimizing any additional dilution to the
other stockholders.

The Company further advises the Staff on a supplemental basis that the terms of the mandatory
warrant purchases, including the ability to allow for the purchases to be made by affiliates and
designees and the ability to pledge shares and warrants as collateral, were the subject of extensive
negotiations among Messrs. Balter and Slasky, the Company and Wedbush.
Notwithstanding the flexibility granted to Messrs. Balter and Slasky, the Company notes that
Messrs. Balter and Slasky remain the primary obligors in respect of the warrant purchase
obligations and, as such, their ability to mitigate any risk associated with those obligation is
limited.

     13. In paragraph 6.2 of the Underwriting agreement, we note that if a default of over 10% of
the “Firm Units” occur, and neither party is able to find a suitable purchaser to cover the default
amount that this agreement “may be terminated.” Please advise how language that states the
offering “may be terminated” ensures that this offering will not proceed if more than 10% of the
units are defaulted. If an amount greater than 10% of the units were defaulted and neither the
issuer nor the underwriters elect to terminate the offering (since they “may”), please advise as to
the consequence.

     Response: The Company has revised Section 6.2 of the form of Underwriting Agreement in
response to the Staff’s comment.

     14. In schedule 2 to exhibit 10.13, we note that the Representative will purchase certain
amounts at certain times “in its sole discretion.” Please explain how purchases on Messrs. Balter
and Slasky’s behalf (or other yet to be identified persons) will be carried out.

     Response: The Company advises the Staff on a supplemental basis that the language “in its
sole discretion” is intended to remove any discretion from Messrs. Balter and Slasky such that the
warrant purchase agreement can qualify as binding contract, instruction or written plan pursuant to
Rule 10b5-1(c) under the Securities Exchange Act of 1934.
Wedbush has advised the Company that it will effect any warrant
purchases pursuant to the warrant purchase obligation on the open
market using its discretion to obtain the best price and execution
for Messrs. Balter and Slasky. Any such purchases would be made in
compliance with applicable rules and regulations.

June 30, 2005

Page Six

*      *      *

     Please do not hesitate to call me at (415) 693-2148 if you have any questions or would like
any additional information regarding this matter.

Sincerely,

/s/     Gian-Michele a
Marca

         Gian-Michele
a Marca

    cc:

    Howard S. Balter (Ad.Venture Partners, Inc.)

    Ilan M. Slasky (Ad.Venture Partners, Inc.)

    Kenneth L. Guernsey (Cooley Godward LLP)

    Floyd I. Wittlin (Bingham McCutchen LLP)