SEC Company Response from Giant Oil & Gas Inc. (CIK 0001327926) — Sep 7, 2005
Giant Oil & Gas Inc. (CIK 0001327926)
Date: Sept. 7, 2005 · CIK: 0001327926 · Accession: 0000939802-05-000635
AI Filing Summary & Sentiment
File numbers found in text: 333-12581
Letter
David Lubin & Associates
92 Washington Avenue
Cedarhurst, NY 11516
Telephone: (516) 569-9629
Facsimile: (516) 569-5053
September 5, 2005
Via EDGAR
Securities and Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, D.C. 20549-0406
Attention: John Reynolds, Assistant Director
Re:
Giant Oil & Gas Inc.
Registration Statement on Form F-1
filed on May 31, 2005, SEC File No. 333-12581
Ladies and Gentlemen;
Giant Oil & Gas Inc. (the “Company”) herewith files with the Securities and Exchange Commission (the “Commission”) an amended registration statement on Form F-1 (the “Amended Registration Statement”) in response to the Commission’s comments, dated June 30, 2005 (the “Comment Letter”), with reference to the Company’s registration statement on Form F-1 (the “Registration Statement”) filed with the Commission on May 31, 2005.
The Company appreciates your review to assist to enhance the overall disclosure in their Exchange Act filings.
In addition to the Amended Registration Statement, the Company supplementally responds to all the Commission’s comments as follows:
Form F-1
General
1. Comment: Many of the following comments apply to disclosure that appears in more than one place. In addition, we often raise more than one point within one numbered comment. To avoid the need for us to issue repetitive comments or to reissue similar comments in future letters, please ensure that you fully respond to every point we raise in each numbered comment. Key your letter of response to our numbered
Securities and Exchange Commission
September 5, 2005
Page 2
comments, and indicate precisely where in the marked version of the amendment you have made corresponding changes.
Response: The Company will fully respond to every point raised by the Staff in each numbered comment and we will provide the page numbers in the marked version of the Amended Registration Statement where the Company’s changes appear, in accordance with this item 1 of the Comment Letter.
2. Comment: Because there is no market for your stock, you will need to include in the final prospectus the price per share at which the stock will be offered and sold until such time, if ever, that the shares trade on the OTCBB.
Response: After the Registration Statement is declared effective, the Company will find market makers to file a Form 15c21l with the OTCBB in order that the Company’s common stock will become eligible for trading on the OTCBB board. The Company will add the pricing information to its final prospectus, in accordance with this item 2 of the Comment Letter.
3. Comment: The company is responsible for the accuracy and completeness of all disclosure that appears in its filings with the Commission. In that regard, the registration statement includes a number of inconsistencies, as well as disclosure that fails to properly convey the business that you propose to conduct and your current lack of any meaningful operations. We will cite individual examples, but you need to review all disclosure carefully to ensure that you have prepared a document that is complete, internally consistent and accurate. We may have additional comments upon review of the amended Form F-1.
Response: The Company has made a concerted effort to correct the inconsistencies found through out the Registration Statement in response to this item 3 of the Comment Letter.
4. Comment: Most of your disclosure relates to business operations that you conceivably could engage in at some unknown future time. Revise the document in general to provide a more apt description of your business as currently constituted and to make clear the absence of meaningful prospects. The extent of the disclosure you include regarding possible future operations and potential business considerations could obscure the following points, all of which need to appear prominently in the place near the front of your document:
•
“We have not, as yet, determined if we will exercise our option on the Well.” [Page 17.] It appears as though you are essentially a blank check company. We refer you to Securities Act Rule 419. Ensure that your document accurately describes your business plan.
•
“We do not have any plan to generate revenue” [Page 22.]
Securities and Exchange Commission
September 5, 2005
Page 3
•
“At this time, we definitely have no natural gas reserves on our leases.” [Page 17.] And make clear that your only business asset is the right to acquire a working interest and net revenue interest in a well that is not currently in production.
•
“There is no commercially viable resource on our leases.” [Page 18.]
•
“Our only intention thus far is to participate as an owner of interests in properties such that we are not involved in the actual operation of the extraction operations.” [Page 19.] But even this appears to overstate your plans and current “operations,” since you indicate on page 20 that you “have not begun to research or identify ether potential acquisitions, but expect to do so within the next twelve months.”
•
“No member of our management team is presently employed by us.” [Page 20.]
•
Neither of your officers, and none of your three directors receives any compensation. In that regard, make clear that your director serves entirely as a volunteer; we note that he is listed as owning no shares. And advise us why he has agreed to serve without compensation and without any share ownership or :their benefits
•
No one devotes more than a day per week to your business, and both officers have direct conflicts of interest due to their positions with other resource exploration companies,
•
It is remote that you will obtain any meaningful revenues from the only property in which you have a potential interest. You disclose at page 21 that the well has had only “sporadic production.” Also provide enhanced disclosure regarding the Liming and rates of production.
•
Potential purchasers should only consider the purchase of your shares with full knowledge of the risks and the likelihood that they might lose their entire investment. If you believe that this is not accurate, advise us why.
Response: The Company has made the following revisions in the Amended Registration Statement in response to this item 4 of the Comment Letter:
•
“We have not, as yet, determined if we will exercise our option on the Well.” [Page 17.] It appears as though you are essentially a blank check company. We refer you to Securities Act Rule 419. Ensure that your document accurately describes your business plan. Response: The Company has added
Securities and Exchange Commission
September 5, 2005
Page 4
further description of the business plan. Additionally, the Company does not consider itself a blank check company as the term is defined in Rule 419 of Regulation C, because it does not intend to merge with or acquire another company in the foreseeable future and it does intend to raise additional capital and acquire full or partial interests in oil and gas producing wells, directly or through options.
•
“We do not have any plan to generate revenue” [Page 22.] Response: This statement has been deleted from the Amended Registration Statement.
•
“At this time, we definitely have no natural gas reserves on our leases.” [Page 17.] And make clear that your only business asset is the right to acquire a working interest and net revenue interest in a well that is not currently in production. Response: This statement has been deleted from the Amended Registration Statement and the Company has added its plan for future acquisition of interests in oil and gas wells on page ___ of the Amended Registration Statement.
•
“There is no commercially viable resource on our leases.” [Page 18.] Response: This statement has been deleted from the Amended Registration Statement and the Company has added its plan for future acquisition of interests in oil and gas wells on pages 22 - 25 of the Amended Registration Statement.
•
“Our only intention thus far is to participate as an owner of interests in properties such that we are not involved in the actual operation of the extraction operations.” [Page 19.] But even this appears to overstate your plans and current “operations,” since you indicate on page 20 that you “have not begun to research or identify ether potential acquisitions, but expect to do so within the next twelve months.” Response: This statement has been revised in the Amended Registration Statement to reflect the Company’s plan for future acquisition of interests in oil and gas wells appearing on pages 21 - 25 of the Amended Registration Statement.
•
“No member of our management team is presently employed by us.” [Page 20.] Response: The Company has added an explanation following this disclosure that it expects to hire additional consultants to meet the demands of its business plan.
•
Neither of your officers, and none of your three directors receives any compensation. In that regard, make clear that your director serves entirely as a volunteer; we note that he is listed as owning no shares. And advise us why he has agreed to serve without compensation and without any share ownership or :their benefits. Response: The Company’s two founding Directors have purchased common shares of the Company. The Company’s third Director, Mr. Duncan Budge is serving on the Company’s Audit Committee and has contributed a
Securities and Exchange Commission
September 5, 2005
Page 5
minimum amount of his time to the Company. It is the intention of the Company to compensate Mr. Budge with common share options in the future.
•
No one devotes more than a day per week to your business, and both officers have direct conflicts of interest due to their positions with other resource exploration companies; Response: The Company expects its officers, directors and consultants to increase the amount of time spent on the Company’s business as the Company executes on its plan of operation and researches and acquires more interests, or options for interests, in undeveloped oil and gas properties. In particular, as noted on page 23, Mr. Coale is expected to increase the amount of time he devotes to the Company as the Company advances its business plan.
•
It is remote that you will obtain any meaningful revenues from the only property in which you have a potential interest. You disclose at page 21 that the well has had only “sporadic production.” Also provide enhanced disclosure regarding the Timing and rates of production. Response: The Company has added production information regarding the Well on pages 19, 20 and 23of the Amended Registration Statement.
•
Potential purchasers should only consider the purchase of your shares with full knowledge of the risks and the likelihood that they might lose their entire investment. If you believe that this is not accurate, advise us why. Response: The Company has added disclosure in boldface on page 1 of the Amended Registration Statement regarding the above statement in the Comment Letter.
5. Comment: Ensure that your disclosure is consistent, current and concise. Also make sure that you do not overstate the status of your business and prospects. The following, while not a complete list, are among the many apparent overstatements, inconsistencies and examples of outdated disclosure that we encountered during the course of our review:
•
The well “is utilized for the business purpose of producing natural gas.”“ [Page 4.] Disclosure elsewhere suggests that there may be no resources on the property.
•
You refer at more than one place to the maximum amount you could receive in the event that all warrants are exercised at the full price. But this appears to ignore that the warrants are not exercisable on their terms for another two years. It also ignores your discretionary authority to reduce the exercise price.
•
Disclose in necessary detail the plans you have with regard to moving forward the warrant exercise date and reducing the exercise price. Also make clear what factors you will consider in that regard, and disclose any agreements, tacit, explicit or otherwise, that you have with any warrantholders in that connection. And
Securities and Exchange Commission
September 5, 2005
Page 6
clarify that it is unlikely that you will obtain anything approaching the maximum exercise price proceeds for the foreseeable future. We may have additional comments,
•
“We may extend our option for one year by paying an additional USD $6,000....” But the next sentence makes clear that the payment has already occurred.
•
You indicate at page 24 and elsewhere that “office expenses” through December 31, 2004, were only $147, but you indicate at page 20 that your rental rate is CDN $125 per month. Clarify when you began making rent payments.
•
You refer to having a “minimal operating history” and having not generated “any meaningful revenues,” but even those characterizations appear to overstate your situation. It appears that you have not generated any revenues from operations. And explain what “exploratory drilling” you have already undertaken. [Page 8.]
•
“We compete with major and independent crude oil and natural gas companies for properties.” [Page 20.] It does not appear that you have had any meaningful operations, so the suggestion that you are in competition with large entities lacks proper balance.
•
You refer to needing $100,000 - apparently CDN -- to “maintain operations,” but it is unclear what operations you intend to cite. [Page 20.] Also the reference at page 21 to “expanding” your business during the next 12 months requires additional explanation. Similarly, it is unclear which “exploratory work” you are referring to at page 22 as having been completed.
•
“Our plan over the next twelve months is to exercise our option,” but this disclosure at page 20 is in conflict with the statement that appears at page 17.
•
The reference to a concurrent “primary offering” that you are registering at the same time requires additional explanation. [Page 21.]
•
Explain the reference to the Polischuk Property, which appears only at page 22.
•
You state that you “participate in the oil and gas industry through the optioning of oil and gas exploration and development projects.” [Page 24.] Provide us with support for this assertion. Also, clarify the references to “our properties” and “our mineral properties.”
•
If you retain the reference, explain why you refer to possible
Securities and Exchange Commission
September 5, 2005
Page 7
listing on the Nasdaq Small Cap Market at page 38. Also update the disclosure regarding the items voted upon at the June 16, 2005, meeting, including any changes to the Articles of Incorporation that resulted. File the amended Articles as an exhibit.
•
Explain to us why you include a glossary that includes many terms that do not appear in the document. [Page 41.] Your disclosure, includin
Show Raw Text
CORRESP
1
filename1.htm
David Lubin & Associates
92 Washington Avenue
Cedarhurst, NY 11516
Telephone: (516) 569-9629
Facsimile: (516) 569-5053
September 5, 2005
Via EDGAR
Securities and Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, D.C. 20549-0406
Attention: John Reynolds, Assistant Director
Re:
Giant Oil & Gas Inc.
Registration Statement on Form F-1
filed on May 31, 2005, SEC File No. 333-12581
Ladies and Gentlemen;
Giant Oil & Gas Inc. (the “Company”) herewith files with the Securities and Exchange Commission (the “Commission”) an amended registration statement on Form F-1 (the “Amended Registration Statement”) in response to the Commission’s comments, dated June 30, 2005 (the “Comment Letter”), with reference to the Company’s registration statement on Form F-1 (the “Registration Statement”) filed with the Commission on May 31, 2005.
The Company appreciates your review to assist to enhance the overall disclosure in their Exchange Act filings.
In addition to the Amended Registration Statement, the Company supplementally responds to all the Commission’s comments as follows:
Form F-1
General
1. Comment: Many of the following comments apply to disclosure that appears in more than one place. In addition, we often raise more than one point within one numbered comment. To avoid the need for us to issue repetitive comments or to reissue similar comments in future letters, please ensure that you fully respond to every point we raise in each numbered comment. Key your letter of response to our numbered
Securities and Exchange Commission
September 5, 2005
Page 2
comments, and indicate precisely where in the marked version of the amendment you have made corresponding changes.
Response: The Company will fully respond to every point raised by the Staff in each numbered comment and we will provide the page numbers in the marked version of the Amended Registration Statement where the Company’s changes appear, in accordance with this item 1 of the Comment Letter.
2. Comment: Because there is no market for your stock, you will need to include in the final prospectus the price per share at which the stock will be offered and sold until such time, if ever, that the shares trade on the OTCBB.
Response: After the Registration Statement is declared effective, the Company will find market makers to file a Form 15c21l with the OTCBB in order that the Company’s common stock will become eligible for trading on the OTCBB board. The Company will add the pricing information to its final prospectus, in accordance with this item 2 of the Comment Letter.
3. Comment: The company is responsible for the accuracy and completeness of all disclosure that appears in its filings with the Commission. In that regard, the registration statement includes a number of inconsistencies, as well as disclosure that fails to properly convey the business that you propose to conduct and your current lack of any meaningful operations. We will cite individual examples, but you need to review all disclosure carefully to ensure that you have prepared a document that is complete, internally consistent and accurate. We may have additional comments upon review of the amended Form F-1.
Response: The Company has made a concerted effort to correct the inconsistencies found through out the Registration Statement in response to this item 3 of the Comment Letter.
4. Comment: Most of your disclosure relates to business operations that you conceivably could engage in at some unknown future time. Revise the document in general to provide a more apt description of your business as currently constituted and to make clear the absence of meaningful prospects. The extent of the disclosure you include regarding possible future operations and potential business considerations could obscure the following points, all of which need to appear prominently in the place near the front of your document:
•
“We have not, as yet, determined if we will exercise our option on the Well.” [Page 17.] It appears as though you are essentially a blank check company. We refer you to Securities Act Rule 419. Ensure that your document accurately describes your business plan.
•
“We do not have any plan to generate revenue” [Page 22.]
Securities and Exchange Commission
September 5, 2005
Page 3
•
“At this time, we definitely have no natural gas reserves on our leases.” [Page 17.] And make clear that your only business asset is the right to acquire a working interest and net revenue interest in a well that is not currently in production.
•
“There is no commercially viable resource on our leases.” [Page 18.]
•
“Our only intention thus far is to participate as an owner of interests in properties such that we are not involved in the actual operation of the extraction operations.” [Page 19.] But even this appears to overstate your plans and current “operations,” since you indicate on page 20 that you “have not begun to research or identify ether potential acquisitions, but expect to do so within the next twelve months.”
•
“No member of our management team is presently employed by us.” [Page 20.]
•
Neither of your officers, and none of your three directors receives any compensation. In that regard, make clear that your director serves entirely as a volunteer; we note that he is listed as owning no shares. And advise us why he has agreed to serve without compensation and without any share ownership or :their benefits
•
No one devotes more than a day per week to your business, and both officers have direct conflicts of interest due to their positions with other resource exploration companies,
•
It is remote that you will obtain any meaningful revenues from the only property in which you have a potential interest. You disclose at page 21 that the well has had only “sporadic production.” Also provide enhanced disclosure regarding the Liming and rates of production.
•
Potential purchasers should only consider the purchase of your shares with full knowledge of the risks and the likelihood that they might lose their entire investment. If you believe that this is not accurate, advise us why.
Response: The Company has made the following revisions in the Amended Registration Statement in response to this item 4 of the Comment Letter:
•
“We have not, as yet, determined if we will exercise our option on the Well.” [Page 17.] It appears as though you are essentially a blank check company. We refer you to Securities Act Rule 419. Ensure that your document accurately describes your business plan. Response: The Company has added
Securities and Exchange Commission
September 5, 2005
Page 4
further description of the business plan. Additionally, the Company does not consider itself a blank check company as the term is defined in Rule 419 of Regulation C, because it does not intend to merge with or acquire another company in the foreseeable future and it does intend to raise additional capital and acquire full or partial interests in oil and gas producing wells, directly or through options.
•
“We do not have any plan to generate revenue” [Page 22.] Response: This statement has been deleted from the Amended Registration Statement.
•
“At this time, we definitely have no natural gas reserves on our leases.” [Page 17.] And make clear that your only business asset is the right to acquire a working interest and net revenue interest in a well that is not currently in production. Response: This statement has been deleted from the Amended Registration Statement and the Company has added its plan for future acquisition of interests in oil and gas wells on page ___ of the Amended Registration Statement.
•
“There is no commercially viable resource on our leases.” [Page 18.] Response: This statement has been deleted from the Amended Registration Statement and the Company has added its plan for future acquisition of interests in oil and gas wells on pages 22 - 25 of the Amended Registration Statement.
•
“Our only intention thus far is to participate as an owner of interests in properties such that we are not involved in the actual operation of the extraction operations.” [Page 19.] But even this appears to overstate your plans and current “operations,” since you indicate on page 20 that you “have not begun to research or identify ether potential acquisitions, but expect to do so within the next twelve months.” Response: This statement has been revised in the Amended Registration Statement to reflect the Company’s plan for future acquisition of interests in oil and gas wells appearing on pages 21 - 25 of the Amended Registration Statement.
•
“No member of our management team is presently employed by us.” [Page 20.] Response: The Company has added an explanation following this disclosure that it expects to hire additional consultants to meet the demands of its business plan.
•
Neither of your officers, and none of your three directors receives any compensation. In that regard, make clear that your director serves entirely as a volunteer; we note that he is listed as owning no shares. And advise us why he has agreed to serve without compensation and without any share ownership or :their benefits. Response: The Company’s two founding Directors have purchased common shares of the Company. The Company’s third Director, Mr. Duncan Budge is serving on the Company’s Audit Committee and has contributed a
Securities and Exchange Commission
September 5, 2005
Page 5
minimum amount of his time to the Company. It is the intention of the Company to compensate Mr. Budge with common share options in the future.
•
No one devotes more than a day per week to your business, and both officers have direct conflicts of interest due to their positions with other resource exploration companies; Response: The Company expects its officers, directors and consultants to increase the amount of time spent on the Company’s business as the Company executes on its plan of operation and researches and acquires more interests, or options for interests, in undeveloped oil and gas properties. In particular, as noted on page 23, Mr. Coale is expected to increase the amount of time he devotes to the Company as the Company advances its business plan.
•
It is remote that you will obtain any meaningful revenues from the only property in which you have a potential interest. You disclose at page 21 that the well has had only “sporadic production.” Also provide enhanced disclosure regarding the Timing and rates of production. Response: The Company has added production information regarding the Well on pages 19, 20 and 23of the Amended Registration Statement.
•
Potential purchasers should only consider the purchase of your shares with full knowledge of the risks and the likelihood that they might lose their entire investment. If you believe that this is not accurate, advise us why. Response: The Company has added disclosure in boldface on page 1 of the Amended Registration Statement regarding the above statement in the Comment Letter.
5. Comment: Ensure that your disclosure is consistent, current and concise. Also make sure that you do not overstate the status of your business and prospects. The following, while not a complete list, are among the many apparent overstatements, inconsistencies and examples of outdated disclosure that we encountered during the course of our review:
•
The well “is utilized for the business purpose of producing natural gas.”“ [Page 4.] Disclosure elsewhere suggests that there may be no resources on the property.
•
You refer at more than one place to the maximum amount you could receive in the event that all warrants are exercised at the full price. But this appears to ignore that the warrants are not exercisable on their terms for another two years. It also ignores your discretionary authority to reduce the exercise price.
•
Disclose in necessary detail the plans you have with regard to moving forward the warrant exercise date and reducing the exercise price. Also make clear what factors you will consider in that regard, and disclose any agreements, tacit, explicit or otherwise, that you have with any warrantholders in that connection. And
Securities and Exchange Commission
September 5, 2005
Page 6
clarify that it is unlikely that you will obtain anything approaching the maximum exercise price proceeds for the foreseeable future. We may have additional comments,
•
“We may extend our option for one year by paying an additional USD $6,000....” But the next sentence makes clear that the payment has already occurred.
•
You indicate at page 24 and elsewhere that “office expenses” through December 31, 2004, were only $147, but you indicate at page 20 that your rental rate is CDN $125 per month. Clarify when you began making rent payments.
•
You refer to having a “minimal operating history” and having not generated “any meaningful revenues,” but even those characterizations appear to overstate your situation. It appears that you have not generated any revenues from operations. And explain what “exploratory drilling” you have already undertaken. [Page 8.]
•
“We compete with major and independent crude oil and natural gas companies for properties.” [Page 20.] It does not appear that you have had any meaningful operations, so the suggestion that you are in competition with large entities lacks proper balance.
•
You refer to needing $100,000 - apparently CDN -- to “maintain operations,” but it is unclear what operations you intend to cite. [Page 20.] Also the reference at page 21 to “expanding” your business during the next 12 months requires additional explanation. Similarly, it is unclear which “exploratory work” you are referring to at page 22 as having been completed.
•
“Our plan over the next twelve months is to exercise our option,” but this disclosure at page 20 is in conflict with the statement that appears at page 17.
•
The reference to a concurrent “primary offering” that you are registering at the same time requires additional explanation. [Page 21.]
•
Explain the reference to the Polischuk Property, which appears only at page 22.
•
You state that you “participate in the oil and gas industry through the optioning of oil and gas exploration and development projects.” [Page 24.] Provide us with support for this assertion. Also, clarify the references to “our properties” and “our mineral properties.”
•
If you retain the reference, explain why you refer to possible
Securities and Exchange Commission
September 5, 2005
Page 7
listing on the Nasdaq Small Cap Market at page 38. Also update the disclosure regarding the items voted upon at the June 16, 2005, meeting, including any changes to the Articles of Incorporation that resulted. File the amended Articles as an exhibit.
•
Explain to us why you include a glossary that includes many terms that do not appear in the document. [Page 41.] Your disclosure, includin