July 11, 2005
By facsimile to (518) 487-7777 and U.S. Mail
Mr. Benjamin A. Shepherd
Vice President - Finance and Chief Financial Officer, Vice
President
- - Corporate Development, and Secretary
Lincoln Logs Ltd.
5 Riverside Drive
Chestertown, NY 12817
RE: Lincoln Logs Ltd.
Revised Preliminary Information Statement on Schedule 14C
Amendment 1 to Transaction Statement on Schedule 13E-3
Filed June 24, 2005
File Nos. 0-12172 and 5-37488
Dear Mr. Shepherd:
We reviewed the filings and have the comments below.
Pre14C
1. We note your response to comment 1 and continue to understand
that
securityholders affiliated with the company and holding
approximately
82% of your outstanding shares have indicated their intention to
vote
in favor of the reverse stock split. How are these affiliated
securityholders voting? Why are they not being solicited by this
public filing given the definition of solicitation found in Rule
14a-
1(l)(1)(iii)? Note in this respect that the filing of Schedule
14C
is a solicitation within the meaning of Rule 14a-1(l) even if you
believe the vote approving the reverse stock split assured. We
believe Lincoln Logs is engaged in a solicitation within the
meaning
of Rule 14a-1(l) of Regulation 14A and should be filing under
cover
of Schedule 14A and not Schedule 14C.
Notice to Shareholders
2. We note your statement that you are not requesting proxies from
your securityholders but that the attendance and participation of
those security holders at the special meeting are welcome. Advise
us, with a view toward revised disclosure, of the meaning of
"participation" as used in this context. On a related matter,
advise
us how unaffiliated securityholders are expected to participate in
the special meeting when no ballot or means to participate are
provided.
3. We note your response to comment 5 and the corresponding
amended
disclosure. Please clarify how the market makers to which you
referred will make a market.
What Are the Federal Income Tax Consequences of the Reverse Split
Transaction for Shareholders?, page 4
4. Revise the disclosure here to conform to that in the second
paragraph on page 47 by changing the words "should not" in the
second
sentence to the words "will not."
Procedural Fairness, page 15
5. We note your response to comment 12. It appears that the
filing
persons approved the reverse stock split notwithstanding the lack
of
procedural fairness as measured by Items1014(c)-(f) of Regulation
M-
A. If true, please expressly acknowledge that the procedural
fairness determination was made in the absence of those factors.
See
Q&A No. 21 in Exchange Act Release 17719 (April 13, 1981).
Opinion of Value, page 18
6. Refer to prior comment 14. Explain briefly the nature and
purpose
of the valuation services provided by Empire Valuation
Consultants,
LLC or Empire during 2003 and 2004.
Summary of the Opinion of Value, page 19
7. We reissue comment 19. Please disclose in the information
statement the fiscal year 2006 projections provided to Empire.
8. We note that at the end of the third paragraph of this section
you
deleted disclosure that stated that Empire relied on management
representations regarding changes in the
company`s financial position and outlook. Please advise us why
this
disclosure was deleted.
Summary Historical Financial Information, page 35
Summary Unaudited Pro Forma Financial Information, page 36
9. Please provide the ratio of earnings to fixed charges as
required
by Item 1010(b)(2) and (c)(4) of Regulation M-A.
Legal Proceedings, page 44
10. Indicate whether a date for the arbitration has been set.
Also
summarize briefly the representations and warranties allegedly
breached by the Harts.
Dissenters` Appraisal Rights, page 48
11. Given that unaffiliated securityholders are not being provided
the means to "participate" in the special meeting, please clarify
your reference to securityholders from whom a "written objection"
is
not required by expressly identifying that constituency of
securityholders. Does the fact that unaffiliated securityholders
will not receive a ballot or other form of authorization mean that
all unaffiliated securityholders will receive the written notice
of
authorization necessary to exercise their appraisal rights?
Closing
File a revised Pre14C and an amendment to the 13E-3 in
response
to these comments. To expedite our review, you may wish to
provide
us three marked courtesy copies of the filings. Include with the
filings a cover letter tagged as correspondence that keys the
responses to the comments and any supplemental information
requested.
If you think that compliance with any of the comments is
inappropriate, provide the basis in the letter. We may have
additional comments after review of the filings, the responses to
the
comments, and any supplemental information.
We urge all persons responsible for the accuracy and adequacy
of
the disclosures in the filings reviewed by us to make certain that
they have provided all information that investors require for an
informed decision. Since Lincoln Logs and its management are in
possession of all facts relating to the disclosures in the
filings,
they are responsible for the adequacy and accuracy of the
disclosures
that they have made.
When responding to our comments, provide a written statement
from Lincoln Logs acknowledging that:
* Lincoln Logs is responsible for the adequacy and accuracy of the
disclosures in the filings.
* Our comments or changes to disclosures in response to our
comments
do not foreclose the Commission from taking any action on the
filings.
* Lincoln Logs may not assert our comments as a defense in any
proceedings initiated by the Commission or any person under the
United States` federal securities laws.
The Commission`s Division of Enforcement has access to all
information that you provide us in our review of the filings or in
response to our comments on the filings.
You may direct questions on comments and other disclosure
issues to Edward M. Kelly, Senior Counsel, at (202) 551-3728 or me
at
(202) 551-3767.
Very truly yours,
Jennifer R. Hardy
Legal
Branch Chief
cc: Leslie M. Apple, Esq.
Patricia A. Franchini, Esq.
Whiteman Osterman & Hanna LLP
1 Commerce Plaza
Albany, NY 12260
Mr. Benjamin A. Shepherd
July 11, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE