Mail Stop 4561
February 8, 2007
John P. Yeros, Chairman
MPC Corporation
906 E. Karcher Road
Nampa, ID 83687
Re: MPC Corporation, f/k/a HyperSpace Communications, Inc.
Form S-3/A
Filed on January 12, 2007
File No. 333-138529
Forms 10-KSB and 10KSB/A for the fiscal year ended December
31,
2005
Filed on March 31, 2006 and April 28, 2006, respectively
Form 10-QSB for the quarter ended September 30, 2006
File No. 001-32306
Dear Mr. Yeros:
We have reviewed the above-captioned filings and have the
following additional comments.
Form S-3
General
1. We refer you to prior comment 1 and note your response.
However,
your response provides no support for the company`s continued
belief
that this is a transaction that pertains only to securities
offered or
sold solely by or on behalf of a person or persons other than the
registrant and is eligible to be made on a shelf basis under Rule
415(a)(1)(i). In this regard, it appears as though your
registration
statement is registering approximately 27 million shares of common
stock on behalf of affiliates of MPC, which is significantly
greater
than the number of shares of common stock that were outstanding as
of
December 31, 2005. Accordingly, your transaction appears to be a
primary offering. Therefore, it appears appropriate to file a
registration statement for the resale of common stock underlying
your
convertible debentures and warrants at the time of each conversion
because it does not appear that the company is eligible to conduct
a
primary offering on a delayed or continuous basis under Rule
415(a)(1)(x). Also, the company must register the underlying
securities on a form it is eligible to use to register the
transaction
as a primary offering (e.g. Form SB-2 or Form S-1), identify the
selling security holders as underwriters in the registration
statement
and include the price at which the underwriters will sell the
securities.
2. Upon filing a registration statement on a form that MPC is
eligible
to register the transaction as a primary offering, please disclose
the
following additional information:
* tabular disclosure of the dollar amount of each payment
(including
the value of any payments to be made in common stock) in
connection
with the transaction that you have made or may be required to make
to
any selling shareholder, any affiliate of a selling shareholder,
or
any person with whom any selling shareholder has a contractual
relationship regarding the transaction (including any interest
payments, liquidated damages, payments made to "finders" or
"placement
agents," and any other payments or potential payments). Please
provide footnote disclosure of the terms of each such payment.
Please
do not include any repayment of principal on the convertible notes
in
this disclosure. Also, please disclose the net proceeds to the
issuer
from the sale of the convertible notes and the total possible
payments
to all selling shareholders and any of their affiliates in the
first
year following the sale of convertible notes.
* tabular disclosure comparing:
* the number of shares outstanding prior to the convertible note
transaction that are held by persons other than the selling
shareholders, affiliates of the company, and affiliates of the
selling
shareholders;
* the number of shares registered for resale by the selling
shareholders or affiliates of the selling shareholders in prior
registration statements;
* the number of shares registered for resale by the selling
shareholders or affiliates of the selling shareholders that
continue
to be held by the selling shareholders or affiliates of the
selling
shareholders;
* the number of shares that have been sold in registered resale
transactions by the selling shareholders or affiliates of the
selling
shareholders; and
* the number of shares registered for resale on behalf of the
selling
shareholders or affiliates of the selling shareholders in the
current
transaction.
In this analysis, the calculation of the number of outstanding
shares
should not include any securities underlying any outstanding
convertible securities, options, or warrants.
* a description of the method by which the company determined the
number of shares it seeks to register in connection with this
registration statement. In this regard, please ensure that the
number
of shares registered in the fee table is consistent with the
shares
listed in the "Selling Shareholders" section of the prospectus.
3. We note that your initial registration statement included the
registration of 34,729,590 shares of common stock. However, we
note
that your amended Form S-3 is registering 38,995,167. Please
advise
of the circumstances resulting in this change. Were the private
placements of the shares of common stock and the warrants
completed
prior to the filing of the initial registration statement?
4. We refer you to prior comment 3. Although we understand that
the
matters proposed in the proxy statement have already been approved
by
the Company`s shareholders, please advise of the basis for your
belief
that the definitive proxy statement, as filed on EDGAR and
delivered
to security holders, met the requirements of the proxy rules and
Schedule 14A. In responding to this comment, please address the
comments issued to the company regarding your preliminary proxy
statement on December 4, 2006.
Selling Shareholders, page 16
5. We refer you to prior comment 5. Although it appears as though
you
have identified the natural person or persons who exercise voting
and/or dispositive power over the shares held of record by most of
the
non-natural persons disclosed in your selling shareholder table,
it
does not appear that you have provided this disclosure for all
non-
natural selling shareholders. For example, while you state that
Stewart Flink, Robert Hoyt and Daniel Warsh have delegated
authority
regarding the portfolio management decisions of Crestview
Partners, it
is unclear whether they exercise voting and/or dispositive power
over
the shares held of record by Crestview Capital Master, LLC.
Please
revise to clarify. Similar disclosure should be provided
regarding
the natural person disclosure of Rockmore Investment Master Fund
Ltd.
6. We note that you separately disclose the beneficial ownership
of
Enable Growth Partners LP and Enable Opportunity Partners LP.
However, according to your footnotes, Mitch Levine has sole voting
and
dispositive power over the shares held of record of both entities.
Please advise why the shares held by Enable Growth Partners LP and
Enable Opportunity Partners LP have not been
aggregated for the purposes of disclosing beneficial ownership or
revise your disclosure.
Part II, page II-1
Item 28. Undertakings, page II-8
7. We note that your registration statement includes the
undertaking
in Item 512(a)(4). Please advise of the basis for your belief
that
this undertaking is appropriate or remove it. In this regard, we
note
that this undertaking contemplates the initial distribution of
securities in a primary offering.
Form 10-KSB for the year ended December 31, 2005
Item 6. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations
Results of Operations, page 28
8. We note your response to prior comment number 2 with respect to
your use of the EBITDA non-GAAP measure in your results of
operations
discussion. Please address the following comments with respect to
your response.
* Your disclosure states that you use non-GAAP financial measures
to
analyze your "core business operations." Explain why you believe
that
your core business operations do not include the expenses that are
excluded from your non-GAAP results when such items generally
represent recurring expenses that result from your operating
activities. Address why you believe that excluding certain non-
cash
charges is a proper reflection of your core business. Note that
Question 8 of the Frequently Asked Questions Regarding the Use of
Non-
GAAP Financial Measures states, "companies must meet the burden of
demonstrating the usefulness of any measure that excludes
recurring
items." Therefore, you must either demonstrate the usefulness of
your
non-GAAP measures or eliminate such measures from your disclosure
based on this guidance. In this respect, clarify whether you
reasonably believe it is probable that the financial impact of the
depreciation and amortization or stock-based compensation will
become
immaterial within a near-finite period.
* We note that you eliminate stock-based compensation in your non-
GAAP
financial measure. It is not clear how management uses this non-
GAAP
information to conduct or evaluate its business in each of the
areas
of operations. Stock-based compensation is a form of compensation
similar to cash and is viewed as compensation by the recipients.
If
this form of compensation was removed from the recipient`s overall
compensation package, then how does management determine that an
employee`s performance would remain unchanged such that it would
not
affect the Company`s overall operations. For instance, would the
performance of an employee responsible for sales and marketing be
changed if a portion of his or her compensation package were
eliminated? If so, then why would management exclude this
compensation in analyzing your business performance?
* Your response indicates that you use the EBITDA non-GAAP measure
to
evaluate the financial covenants of your credit facility.
Therefore,
it appears your EBITDA non-GAAP measure is an operating cash flow
measure. If this is correct, Item 10(e)(i)(B) of Regulation S-B
would
require that such measure be reconciled to cash flows from
operations.
Please advise.
Item 8A. Controls and Procedures, page 39
9. We refer you to the draft disclosure provided as a result of
prior
comment 14. More specifically, we note your proposed disclosure
on
page 4 of your response letter that you "maintain a set of
disclosure
controls and procedures designed to ensure that information
required
to be disclosed by us in reports that we file or submit under the
Securities Exchange Act of 1934 is recorded, processed, summarized
and
reported within the time periods specified in Securities and
Exchange
Commission ("SEC") rules and Forms" and on page 6 of your response
letter that "[b]ased upon the evaluation of Disclosure Controls
described above, [y]our CEO and CFO have concluded that [y]our
Disclosure Controls were effective to provide reasonable assurance
that material information relating to MPC Corporation is made
known to
management, including the CEO and CFO, so that required
disclosures
have been included in this report on Form 10-KSB." Item 307
requires that your chief executive officer and chief financial
officer
evaluate the effectiveness of your disclosure controls and
procedures
as specifically defined by paragraph (e) of 13a-15 or 15d-15. In
this
regard, your proposed text suggests that the disclosure controls
and
procedures that will be evaluated by your chief executive officer
and
chief financial officer are different than the disclosure controls
and
procedures defined by paragraph (e) of rules 13a-15 and 15d-15.
Accordingly, revise your proposed disclosure to clarify that MPC
will
evaluate its disclosure controls and procedures as required by the
above referenced rules or otherwise advise.
10. We refer you to the proposed disclosure regarding the
company`s
internal control over financial reporting on page 5 of your
response
letter and note that it suggests that the company has conducted an
evaluation of its internal control over financial reporting. To
the
extent that you include this language in your filed documents,
please
revise to explain, if true, that although you include a discussion
regarding the company`s internal control over financial reporting,
the
company is not subject to the requirements of evaluating its
internal
control over financial reporting and that the company has not done
everything required to comply with such requirements. Also, your
disclosure should be clarified to explain what type of evaluation,
if
any, has been done versus what will be required in a true
assessment
of the company`s internal control over financial reporting.
Further,
it may be helpful to investors to discuss where the company is in
the
process of preparing to fully comply with Item 308(a) and (b) of
Regulation S-B or Regulation S-K, as applicable.
Note 3 - Summary of Significant Accounting Policies and Use of
Estimates
Revenue Recognition, 53
11. Your response to prior comment number 4 indicates that you
apply
the fair value provisions of EITF 00-21 to determine the fair
value of
your extended/enhanced warranty element. Clarify whether this
element
is in the scope of FTB 90-1. If so, clarify why you are using the
separation guidance of EITF 00-21 to allocate fair value to this
element as opposed to the separation guidance of FTB 90-1; we
refer
you to paragraph 4.a.ii of EITF 00-21. If this element is not in
the
scope of FTB 90-1, tell us how you applied EITF 03-5 when
determining
that this element is not a software-related element.
12. Your response to prior comment number 4 indicates that you
"refer
to list prices to determine the fair value of the various
components
in a sale" to establish VSOE of the software and software-related
elements in your arrangements. However, a price list, in and of
itself, does not qualify as VSOE of fair value. Thus, in the
absence
of renewal rates, VSOE of fair value should be based on the actual
amount charged to specific groups of customers when the element is
sold separately. Therefore, please clarify whether your separate
sales of PCS supports of your conclusion that the list price is
representative of VSOE of fair value. As part of your response,
tell
us whether the prices charged in separate PCS sales vary from
customer
to customer and if so, how you determined the separate prices are
supportive of using the list price as VSOE of fair value.
13. Your response to prior comment 5 indicates that you apply the
residual method pursuant to paragraph 6.b of SOP 98-9 when you
have
not established VSOE of your delivered elements. However, your
response to prior comment number 4 indicates that you have
established
VSOE of fair value of all elements in your arrangements, including
the
delivered software and hardware elements. Please clarify whether
you
have established VSOE of fair value of the delivered elements in
your
arrangements and whether or not you apply the residual method to
allocate fair value in your arrangements.
14. Your response to prior comment number 6 states that you "take
title to a product before that product is ordered by a customer
(if
the product is in inventory)." This indicates that there may be
situations that you do not maintain the product in inventory.
Clarify
whether you have unmitigated general inventory risk based on the
guidance of paragraph 8 of EITF 99-19 in all of your reseller
arrangements. As part of your response, clarify whether you
maintain
the product in inventory before the product is ordered by the end
customer in all of your sales arrangements. In addition, clarify
whether your arrangements provide any provisions that allow you
the
right to return unsold products to the supplier or receive price
protection from the supplier.
15. Your response to prior comment number 6 also indicates that
you
sell third-party services in connection with the sales of the
products. Please further clarify how you have determined that you
are
the primary obligator for the services that you resell. Tell us
the
nature of the services that you sell on behalf of third parties
and
your role in fulfillment of these services.
Note 11 - Segment Information, page 69
16. Your response to prior comment number 7 states that you
believe
providing the pro-forma segment disclosure in lieu of providing
segment disclosure of your actual results of operations as
reported
provides more meaningful information and enhances the usefulness
to
the user of the financial statements. However, providing segment
disclosures on a pro-forma basis does not comply with the
disclosure
requirements of SFAS 131 as your segment disclosures should be
based
on your financial results as reported in your statement of
operations.
Please advise how you plan to comply with the segment disclosure
guidance of SFAS 131.
17. We note that you have changed the composition of your
reportable
segments in fiscal year 2006 to exclude certain corporate and
other
expenses from your segment operating income (loss) measure. Since
you
have changed the composition of your reportable segments in fiscal
year 2006, the corresponding information for earlier annual
periods
incorporated by reference into your registration statement should
be
recast; see paragraphs 34 and 35 of SFAS 131. That is, the
segment
disclosures included in your Form 10-KSB for the fiscal year ended
December 31, 2005 need to be recast to correspond to your new
reportable segment disclosures. We refer you to Section II.L.4 of
the
Current Accounting and Disclosure Issues in the Division of
Corporation Finance released on November 30, 2006.
Form 10-KSB/A for the year ended December 31, 2005
18. We refer you to prior comment 17 and note your amended 10-KSB
filed on January 17, 2007. Although this amended filing contains
the
certifications that were filed in incomplete form in Amendment No.
1
to the Company`s 10-KSB filed on April 28, 2006, it does not
appear
that this amendment contains the Part III information previously
filed. Because the certifications should relate to the entire
amended
Form 10-KSB filed on April 28, 2006, please file an amended Form
10-
KSB with Part III information, not just the exhibit list and
signature
pages. See Question 17 to the Division of Corporation Finance:
Sarbanes-Oxley Act of 2002 - Frequently Asked Questions of
November 8,
2002 and revised on November 14, 2002.
Form 10-QSB for the Quarterly Period Ended September 30, 2006
Prepaid Maintenance and Warranty Costs, page 10
19. Your response to prior comment number 10 indicates that you
recognize maintenance and warranty expense proportionately and
over
the same period that deferred revenue is recognized as revenue
pursuant to SAB Topic 13, Section A.f, Question 5. However, this
guidance states that such expenses may be expensed as incurred or
accounted for in accordance with paragraph 4 of Technical Bulletin
90-
1 or paragraph 5 of Statement 91. Since it does not appear you
are
not expensing costs as incurred, it does not appear you are
applying
the guidance of SAB Topic 13. Therefore, please clarify if these
costs relate to revenue that is in the scope of FTB 90-1. If so,
you
would be required to apply the provisions of paragraph 4 of FTB
90-1
to account for these costs. If not, please clarify whether you
are
applying the provisions of Technical Bulletin 90-1 or SFAS 91 to
account for these costs. Please clarify how your accounting
policy
fully complies with the literature that you are applying.
Note 4 - Impairment of Acquired Intangibles and Goodwill, page 12
20. Your response indicates that you have not tested for goodwill
impairment at the reporting unit level because you have not
allocated
goodwill by reportable segment. However, paragraph 34 of SFAS 141
requires you to assign all goodwill acquired in a business
combination
to one or more reporting units for the purpose of testing goodwill
impairment. Therefore, please clarify how your policy complies
with
paragraphs 30 through 35 of SFAS 141. We refer you to the
guidance in
paragraph B121 of SFAS 141.
Note 8 - Segment Information, page 18
21. Your response to prior comment number 9 indicates that your
"management routinely reviews operating performance by segment
gross
margin." Clarify whether your gross margin measure is reported to
your chief operating decision maker. If so, clarify how your
chief
operating decision maker uses this information. In addition,
please
clarify why you believe this information is useful to investors.
We
refer you to questions 8 and 20 of the Frequently Asked Questions
Regarding the Use of Non-GAAP Financial Measures.
22. If you conclude that your non-GAAP segment operating income
(loss)
measure is useful to investors, please ensure to include all
disclosures required by Item 10(e) of Regulation S-K and Question
8 of
the Frequently Asked Questions Regarding the Use of Non-GAAP
Financial
Measures. It does not appear that your disclosure complies with
this
guidance as you have not identified the measure of a non-GAAP
measure,
provided a reconciliation between your GAAP and non-GAAP measure,
or
any of the disclosures required by Question 8. Please advise how
you
plan to fully comply with this disclosure guidance.
Closing
As appropriate, please amend your registration statement and
respond to the comments relating to your Exchange Act filings
within
10 business days or tell us when you will provide us with a
response.
You may wish to provide us with marked copies of the amendment to
expedite our review. Please furnish a cover letter with your
amendment that keys your responses to our comments and provides
any
requested information. Detailed cover letters greatly facilitate
our
review. Please understand that we may have additional comments
after
reviewing your amendment and responses to our comments.
We direct your attention to Rule 461 regarding requesting
acceleration of a registration statement. Please allow adequate
time
after the filing of any amendment for further review before
submitting
a request for acceleration. Please provide this request at least
two
business days in advance of the requested effective date.
You may contact Chris White at (202) 551-3461 or Stephen
Krikorian at (202) 551-3488 if you have questions regarding
comments
on the financial statements and
related matters. Please contact Jeffrey Werbitt at (202) 551-3456
or
me at (202) 551-3735 with any other questions.
Sincerely,
Barbara C. Jacobs
Assistant Director
cc: Patrick Simpson, Esquire
Sonny Allison, Esquire
Perkins Coie LLP
1899 Wynkoop Street, Suite 700
Denver, Colorado 80202
John P. Yeros
MPC Corporation
February 8, 2007
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0303
DIVISION OF
CORPORATION FINANCE