SEC Company Response from CASCADE TECHNOLOGIES CORP (CIK 0001324344) — Oct 28, 2005
CASCADE TECHNOLOGIES CORP (CIK 0001324344)
Date: Oct. 28, 2005 · CIK: 0001324344 · Accession: 0001227528-05-000169
AI Filing Summary & Sentiment
File numbers found in text: 333-124284
Referenced dates: May 20, 2005, May 20, 2005
Letter
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.
Prospectus Cover
1. Please specify the expiration date of the offering. Also note that any extension of the offering expiration would require a full update and distribution of the prospectus in accordance with the understanding made in Part II of the registration statement.
RESPONSE
We have appropriately revised the offering and set a date of August 30, 2006 for the expiration of the offering. The duty to update the prospectus should we change the expiration date is noted.
Prospectus Summary, page 5
1. Concerning comment number five of our prior letter dated May 20, 2005 letter, include your response in its entirety in this section of the prospectus.
RESPONSE
The following section has been added under the prospectus summary:
"We feel that we are not a blank check company under Section (a)(2) of Rule 419 of the Securities Act of 1933. We have a specific business plan and plan of operation, which is to sell semiconductors, electro-mechanical and passive components. We have also taken steps to implement our business plan. On November 15, 2004, we entered into an agreement with Frank Ludtke, an experienced web developer based in Port Moody, Canada, to perform the initial site development work. Furthermore, our 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. Our Officers and Directors have numerous years of experience in the field of semiconductor and related component sales and are fully capable of successfully implementing our business plan. We exist for the purpose of pursuing the business plan set forth in the registration statement. Our management believes that by becoming a reporting company, we have a better opportunity to obtain the financing required to complete our plan of operations. It is not our intention, nor have we indicated anywhere in this registration statement, that our plan is to engage in a merger or acquisition with an unidentified company or companies. As a result, we believe we are not a blank check company under Section (a)(2) of Rule 419 of the Securities Act of 1933."
2. We note your response to comment number six of our prior letter dated May 20, 2005. Please disclose whether there will be a material difference between the warranties and other legal rights that you and your customers will have with regard to the products you sell and the warranties and legal rights of an authorized distributor of the product or a distributor with a formal franchise agreement with the manufacturer. In addition, consider whether it is appropriate to repeat, in a risk factor the definition of a "non-franchised stocking distributor" who buys and sells semiconductors and all related disclosure that we are requesting in this comment.
RESPONSE
The prospectus summary has been revised and now reads as follows:
"As a non-franchised distributor, our customers will be required to deal directly with us in relation to warranties on defective parts and will not have any rights or warranties with the original manufacturer. We have negotiated with our suppliers, however, warranty agreements similar to those issued by the manufacturer for the return of defective products by our clients. Therefore, we will be able to offer our customers a similar warranty."
Please note that due to the fact that we have, or will have, agreements with our suppliers for the return of defective parts sold to our customers, we do not believe the risk is material to us at this point. Please note revisions made to our business plan detailing our warranty policy.
Your Reliance on Information Contained in the Prospectus, page 8
3. Please remove or revise the last two sentences of this section in view of the fact that you are required to amend the registration statement to reflect any material changes.
RESPONSE
The following sentence has been added to the end of this section:
"However, should we experience any material changes to our company, we will be required to amend this prospectus to reflect the material changes."
Directors, Executive /Officers, Promoters and Control Persons, page 16
4. Indicate with what company Christine Thomas was a sales executive from July, 1998 to February 2003.
RESPONSE
This section has been clarified to show that Ms. Thomas is a sales executive with Pioneer Standard Electronics.
5. Please disclose when Christine Thomas' employment with Pioneer Standard Electronics began.
RESPONSE
The disclosure has been clarified to reflect that Ms. Thomas has worked with Pioneer Standard Electronics from 1998 till February of 2003.
Business Overview, page 21
6. This section of the prospectus, in many respects, appears promotional, rather than factual, and should be revised to remove all promotional statements, particularly in view of the absence of any operations, supply arrangements or business of any kind of this company since inception. We refer, primarily, to the disclosure on page 22 under "The Market." This information may not be appropriate under the circumstances of this company and we strongly suggest that it be removed.
RESPONSE
We have attempted to remove all promotional language. We have also removed, in its entirety, the section titled "the Market".
Our Business, page 21
7. We repeat comment 22 of our prior letter dated May 20, 2005, which stated:
"Please resolve all discrepancies between the disclosure in the prospectus and that on your website, beginning with which sentence states: `Cascade Technologies is a worldwide, 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."
For example, the first sentence under the "Company" section of the website has not been changed, even though your most recent filing states, in the second paragraph under "Business": "We are a development stage company who plans to be a non-franchised stocking distributor{ellipsis}."
RESPONSE
The website has been appropriately revised.
The Market, page 22
8. We are unable to access the website, https://sia- online.org/downloads/SummaryNovember 2004.pdf, which you have referenced several times in the registration statement, including, but not limited to, the end of the first and third paragraphs of this section. We are also unable to access the website, http://wsts.www5.kcom.at/public/pressrelease/pr03-10.doc, which you have referenced in the second paragraph of this section. Please complete the following regarding each reference to each of the websites:
- In your response to this letter explain why we are unable to access the sites, and revise the registration statement, as appropriate;
- Disclose in the prospectus the specific location on the website of the information you have referenced;
RESPONSE
Please note that the section titled "The Market" has been removed from prospectus. However, the following link: (https://sia-online.org/downloads/Summary_November2004.pdf) remains in the prospectus under industry overview. This link is assessable by us. We are unsure if, perhaps, the document may not be viewable by all networks. Therefore, the following has been added in the prospectus next to the link. "Please contact us for a paper copy of the Forecast Summary should you be unable to access the website." A copy of the Forecast Summary is hereby attached at the end of the response sheet. Also note that the information contained in the Forecast Summary is easily assessable as the summary sheet is only 2 pages long.
Industry Overview, page 22
1. Disclose in detail how you anticipate that you will manage each of the risks involved in dealing with European and Asian sources, which risks you describe in the third and fourth paragraphs of this section. Discuss any guarantees you will provide and discuss your potential liabilities in connection with your sales of electronic components. RESPONSE
This section has been revised and now reads as follows:
As an independent distributor, we will be forced to face the risks associated in dealing with Asian and European sources. We therefore plan on taking steps to manage those risks. Most Asian suppliers require payment before shipping or require a deposit at the time of the order. We have verbal agreements, however, with 6 different suppliers in Asia so that we will be able to obtain 30 day payment terms with no required deposit. There is no guarantee, however, that we will be able to obtain these favorable terms with other suppliers. Furthermore, as our agreements are verbal, there is no guarantee that these suppliers will honor our agreements. Should we be unable to obtain these terms, we may be forced to pay the deposit ourselves. This may result in an 8 -10 week period where our deposit will be tied up.
We will also have to deal with the risks involved with purchasing counterfeit parts. We plan on implementing steps to manage this risk. First, we plan on buying a vast majority of our parts directly from the manufacturer or a franchised distributor. We believe this will greatly lessen, if not eliminate, the risk of purchasing counterfeit parts. We also plan on taking steps to insure that other suppliers in our supply chain have purchased directly from manufacturers or from franchised distributors. For those suppliers that are not the manufacturer or a franchised distributor, we plan on negotiating 30 days terms with the supplier so that we have an opportunity to view and inspect the parts prior to purchase, and in some cases, allow our customers to install the parts prior to payment. Despite implementing these steps, we may still unwillingly purchase counterfeit parts which we would not be able to resell. Should this happen, the financial impact would be substantial as the components in this industry have a high average selling price. Such occurrence may, in fact, cause our business to fail.
As a non-franchised distributor, our customers will have no rights or warranties with the original manufacturer and will be required to deal directly with us on all warranty issues. We plan on having agreements with all our suppliers in regards to the return of defective parts that we plan on purchasing and reselling to our customers. This will allow us to issue a warranty on the products we plan on selling. At the present, we have negotiated warranties with 6 different suppliers in regards to the return of defective products. The terms of the warranty given by our suppliers, and the warranty we can subsequently issue to our customers is as follows: a 1 year warranty, from the date of purchase, guarantying that the parts are in good working condition and are free from any defects. This warranty will only cover the cost of the components. The warranty does not cover any labor costs associated with assembling the product or removing or replacing the defective component. This warranty is similar to those issued by franchised distributors and original manufacturers. As we are issuing the warranty directly, there is a chance that the supplier will refuse or be unable to honor the warranty. Should that happen, we will bear the risk and be responsible for the replacements costs of the defective parts in their entirety.
2. The final paragraph under Industry Overview is industry jargon and should be deleted.
RESPONSE
This section has been appropriately deleted.
Our Products and Services, page 23
3. We repeat comment number 25 of our prior letter dated May 20, 2005.
RESPONSE
The following paragraph has been inserted:
"The manufacturers we intend to source products from generally have 2 or 3 authorized franchised distributors per continent. In some cases, these distributors are global companies and have worldwide franchises from these manufacturers. In Asia, where the market is much more competitive, a manufacturer may have 5-6 franchised distributors for there products. Generally, these manufacturers try to discourage their franchised distributors from selling parts to non-franchised distributors as they feel adds no value in the supply channel. Ultimately, however, they cannot control who the distributor decides to sell the parts to. Most of the time, the franchised distributor will sell to non-franchised distributors even though they are aware that his non-franchised distributor will turn around and sell the parts for a profit."
4. Disclose your response to comment number 26 of our prior letter dated May 20, 2005, that you have no written contracts.
RESPONSE
The following has been added:
"To date, we have no written contracts with any party."
Government Regulation, page 26 Compliance with EAR, page 26
5. Clarify the effect on your business of not purchasing any products that require a license from the Bureau of Industry and Security, U.S. Department of Commerce.
RESPONSE
The following paragraph has been revised and reads as follows:
"We believe that approximately 1-2 percent of products requested from our customers may require a license. At this time, however, we 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. Most of the components that require a license to export are military in nature. We do not plan on marketing to, or soliciting orders from, foreign governments or military organizations that would purchase such components. We may receive requests for certain components that are deemed "dual use" c
Show Raw Text
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CASCADE TECHNOLOGIES CORP.
255 Newport Drive, Suite 358
Port Moody, BC V3H 5K1
October 24, 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.
Prospectus Cover
1. Please specify the expiration date of the offering. Also note that any
extension of the offering expiration would require a full update and
distribution of the prospectus in accordance with the understanding made
in Part II of the registration statement.
RESPONSE
We have appropriately revised the offering and set a date of August 30, 2006
for the expiration of the offering. The duty to update the prospectus should we
change the expiration date is noted.
Prospectus Summary, page 5
1. Concerning comment number five of our prior letter dated May 20, 2005
letter, include your response in its entirety in this section of the
prospectus.
RESPONSE
The following section has been added under the prospectus summary:
"We feel that we are not a blank check company under Section (a)(2) of Rule 419
of the Securities Act of 1933. We have a specific business plan and plan of
operation, which is to sell semiconductors, electro-mechanical and passive
components. We have also taken steps to implement our business plan. On
November 15, 2004, we entered into an agreement with Frank Ludtke, an
experienced web developer based in Port Moody, Canada, to perform the initial
site development work. Furthermore, our 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. Our Officers and Directors have numerous years of
experience in the field of semiconductor and related component sales and are
fully capable of successfully implementing our business plan. We exist for the
purpose of pursuing the business plan set forth in the registration statement.
Our management believes that by becoming a reporting company, we have a better
opportunity to obtain the financing required to complete our plan of
operations. It is not our intention, nor have we indicated anywhere in this
registration statement, that our plan is to engage in a merger or acquisition
with an unidentified company or companies. As a result, we believe we are not
a blank check company under Section (a)(2) of Rule 419 of the Securities Act of
1933."
2. We note your response to comment number six of our prior letter dated
May 20, 2005. Please disclose whether there will be a material
difference between the warranties and other legal rights that you and
your customers will have with regard to the products you sell and the
warranties and legal rights of an authorized distributor of the
product or a distributor with a formal franchise agreement with the
manufacturer. In addition, consider whether it is appropriate to
repeat, in a risk factor the definition of a "non-franchised stocking
distributor" who buys and sells semiconductors and all related
disclosure that we are requesting in this comment.
RESPONSE
The prospectus summary has been revised and now reads as follows:
"As a non-franchised distributor, our customers will be required to deal
directly with us in relation to warranties on defective parts and will not have
any rights or warranties with the original manufacturer. We have negotiated
with our suppliers, however, warranty agreements similar to those issued by the
manufacturer for the return of defective products by our clients. Therefore, we
will be able to offer our customers a similar warranty."
Please note that due to the fact that we have, or will have, agreements with
our suppliers for the return of defective parts sold to our customers, we do
not believe the risk is material to us at this point. Please note revisions
made to our business plan detailing our warranty policy.
Your Reliance on Information Contained in the Prospectus, page 8
3. Please remove or revise the last two sentences of this section in view
of the fact that you are required to amend the registration statement
to reflect any material changes.
RESPONSE
The following sentence has been added to the end of this section:
"However, should we experience any material changes to our company, we will be
required to amend this prospectus to reflect the material changes."
Directors, Executive /Officers, Promoters and Control Persons, page 16
4. Indicate with what company Christine Thomas was a sales executive
from July, 1998 to February 2003.
RESPONSE
This section has been clarified to show that Ms. Thomas is a sales executive
with Pioneer Standard Electronics.
5. Please disclose when Christine Thomas' employment with Pioneer
Standard Electronics began.
RESPONSE
The disclosure has been clarified to reflect that Ms. Thomas has worked with
Pioneer Standard Electronics from 1998 till February of 2003.
Business Overview, page 21
6. This section of the prospectus, in many respects, appears
promotional, rather than factual, and should be revised to remove all
promotional statements, particularly in view of the absence of any
operations, supply arrangements or business of any kind of this
company since inception. We refer, primarily, to the disclosure on
page 22 under "The Market." This information may not be appropriate
under the circumstances of this company and we strongly suggest that
it be removed.
RESPONSE
We have attempted to remove all promotional language. We have also removed, in
its entirety, the section titled "the Market".
Our Business, page 21
7. We repeat comment 22 of our prior letter dated May 20, 2005, which
stated:
"Please resolve all discrepancies between the disclosure in the
prospectus and that on your website, beginning with which sentence
states: `Cascade Technologies is a worldwide, 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."
For example, the first sentence under the "Company" section of the
website has not been changed, even though your most recent filing
states, in the second paragraph under "Business": "We are a
development stage company who plans to be a non-franchised
stocking distributor{ellipsis}."
RESPONSE
The website has been appropriately revised.
The Market, page 22
8. We are unable to access the website, https://sia-
online.org/downloads/SummaryNovember 2004.pdf, which you have
referenced several times in the registration statement, including,
but not limited to, the end of the first and third paragraphs of this
section. We are also unable to access the website,
http://wsts.www5.kcom.at/public/pressrelease/pr03-10.doc, which you
have referenced in the second paragraph of this section. Please
complete the following regarding each reference to each of the
websites:
- In your response to this letter explain why we are
unable to access the sites, and revise the
registration statement, as appropriate;
- Disclose in the prospectus the specific location on
the website of the information you have referenced;
RESPONSE
Please note that the section titled "The Market" has been removed from
prospectus. However, the following link:
(https://sia-online.org/downloads/Summary_November2004.pdf) remains in the
prospectus under industry overview. This link is assessable by us. We are
unsure if, perhaps, the document may not be viewable by all networks.
Therefore, the following has been added in the prospectus next to the link.
"Please contact us for a paper copy of the Forecast Summary should you be
unable to access the website." A copy of the Forecast Summary is hereby
attached at the end of the response sheet. Also note that the information
contained in the Forecast Summary is easily assessable as the summary sheet is
only 2 pages long.
Industry Overview, page 22
1. Disclose in detail how you anticipate that you will manage each of
the risks involved in dealing with European and Asian sources, which
risks you describe in the third and fourth paragraphs of this
section. Discuss any guarantees you will provide and discuss your
potential liabilities in connection with your sales of electronic
components.
RESPONSE
This section has been revised and now reads as follows:
As an independent distributor, we will be forced to face the risks associated
in dealing with Asian and European sources. We therefore plan on taking steps
to manage those risks. Most Asian suppliers require payment before shipping or
require a deposit at the time of the order. We have verbal agreements, however,
with 6 different suppliers in Asia so that we will be able to obtain 30 day
payment terms with no required deposit. There is no guarantee, however, that we
will be able to obtain these favorable terms with other suppliers. Furthermore,
as our agreements are verbal, there is no guarantee that these suppliers will
honor our agreements. Should we be unable to obtain these terms, we may be
forced to pay the deposit ourselves. This may result in an 8 -10 week period
where our deposit will be tied up.
We will also have to deal with the risks involved with purchasing counterfeit
parts. We plan on implementing steps to manage this risk. First, we plan on
buying a vast majority of our parts directly from the manufacturer or a
franchised distributor. We believe this will greatly lessen, if not eliminate,
the risk of purchasing counterfeit parts. We also plan on taking steps to
insure that other suppliers in our supply chain have purchased directly from
manufacturers or from franchised distributors. For those suppliers that are
not the manufacturer or a franchised distributor, we plan on negotiating 30
days terms with the supplier so that we have an opportunity to view and inspect
the parts prior to purchase, and in some cases, allow our customers to install
the parts prior to payment. Despite implementing these steps, we may still
unwillingly purchase counterfeit parts which we would not be able to resell.
Should this happen, the financial impact would be substantial as the components
in this industry have a high average selling price. Such occurrence may, in
fact, cause our business to fail.
As a non-franchised distributor, our customers will have no rights or
warranties with the original manufacturer and will be required to deal directly
with us on all warranty issues. We plan on having agreements with all our
suppliers in regards to the return of defective parts that we plan on
purchasing and reselling to our customers. This will allow us to issue a
warranty on the products we plan on selling. At the present, we have negotiated
warranties with 6 different suppliers in regards to the return of defective
products. The terms of the warranty given by our suppliers, and the warranty we
can subsequently issue to our customers is as follows: a 1 year warranty, from
the date of purchase, guarantying that the parts are in good working condition
and are free from any defects. This warranty will only cover the cost of the
components. The warranty does not cover any labor costs associated with
assembling the product or removing or replacing the defective component. This
warranty is similar to those issued by franchised distributors and original
manufacturers. As we are issuing the warranty directly, there is a chance that
the supplier will refuse or be unable to honor the warranty. Should that
happen, we will bear the risk and be responsible for the replacements costs of
the defective parts in their entirety.
2. The final paragraph under Industry Overview is industry jargon and
should be deleted.
RESPONSE
This section has been appropriately deleted.
Our Products and Services, page 23
3. We repeat comment number 25 of our prior letter dated May 20, 2005.
RESPONSE
The following paragraph has been inserted:
"The manufacturers we intend to source products from generally have 2 or 3
authorized franchised distributors per continent. In some cases, these
distributors are global companies and have worldwide franchises from these
manufacturers. In Asia, where the market is much more competitive, a
manufacturer may have 5-6 franchised distributors for there products.
Generally, these manufacturers try to discourage their franchised distributors
from selling parts to non-franchised distributors as they feel adds no value in
the supply channel. Ultimately, however, they cannot control who the
distributor decides to sell the parts to. Most of the time, the franchised
distributor will sell to non-franchised distributors even though they are aware
that his non-franchised distributor will turn around and sell the parts for a
profit."
4. Disclose your response to comment number 26 of our prior letter dated
May 20, 2005, that you have no written contracts.
RESPONSE
The following has been added:
"To date, we have no written contracts with any party."
Government Regulation, page 26
Compliance with EAR, page 26
5. Clarify the effect on your business of not purchasing any products
that require a license from the Bureau of Industry and Security, U.S.
Department of Commerce.
RESPONSE
The following paragraph has been revised and reads as follows:
"We believe that approximately 1-2 percent of products requested from our
customers may require a license. At this time, however, we 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. Most of the components that
require a license to export are military in nature. We do not plan on
marketing to, or soliciting orders from, foreign governments or military
organizations that would purchase such components. We may receive requests for
certain components that are deemed "dual use" c