BellaVista Capital, Inc.
420 Florence Street Suite 200
Palo Alto, CA 94301
March 9, 2007
BY EDGAR
Daniel L. Gordon
Branch Chief
Division of Corporation Finance
Securities and Exchange Commission
Washington, D.C. 20549
Re: BellaVista Capital, Inc. (the "Company")
Form 10-KSB for the Year Ended September 30, 2006
Filed 1/22/07
SEC File No. 0-30507
Dear Mr. Gordon:
We are responding to the comments in your letter dated February 20,
2007 regarding the above-referenced filing. Set forth below are our supplemental
responses numbered to correspond to your numbered comments.
1. This will confirm that the Company's future periodic reports will
include footnote disclosure concerning gains on legal settlements. Set forth
below are the details of reported gain in the format we will use for future
disclosure.
For the year For the nine
ended months ended
September 30, September 30,
2006 2006
Gain net of $99,000 and $0 in collection
costs during the year ended September 30,
2006 and the nine months ended September
30, 2005, respectively, resulted from the
settlement totaling $900,000 of a lawsuit
to collect on a personal guarantee of
repayment from the principals of a borrower
who defaulted on payment of its loan. As of
September 30, 2006 no further payments were 801,000 --
remaining related to the settlement.
Gain net of $11,500 and $5,500 in collection
costs during the year ended September 30, 2006
and the nine months ended September 30, 2005,
respectively, relates to payments received
from the settlement totaling $200,000 of a
lawsuit against a borrower for fraud and
misappropriation of loan funds. As of
September 30, 2006 no further payments were
remaining related to the settlement. 133,500 44,500
Gain, net of $19,250 and $2,500, during the year
ended September 30, 2006 and the nine months
ended September 30, 2005, respectively in
collection costs, relates to payments
received from the settlement totaling
$200,000 of a lawsuit against a borrower for
fraud and misappropriation of loan funds. As
of September 30, 2006 no further payments were
remaining related to the settlement. 155,750 22,250
Gain, net of $0 and $130,000 in collection
costs during the year ended September 30, 2006
and the nine months ended September 30, 2005,
respectively, relates to payments received from
a settlement totaling $2,350,000 of a lawsuit
against a borrower for fraud and misappropriation
of loan funds. As of September 30, 2006 no further
payments were remaining related to the settlement. -- 1,170,000
Totals $1,090,250 $1,236,750
2. As disclosed in the referenced footnote, the San Francisco branch of
the SEC sent the Company a letter of informal inquiry in April 2004 requesting a
wide variety of documents and the Company provided documents in response to that
inquiry. The Staff subsequently conducted two interviews with a former officer
and the undersigned in June 2004. As an apparent follow up to those document
requests and interviews, the Staff requested further documents in January 2005
and we responded. The SEC did not provide the Company with any explanation of
any basis or reason for its inquiry and has not had any further communication
regarding the status of the inquiry. It was our understanding from the Staff
that no such explanation or status information would be forthcoming. We elected
to include a brief summary, as the existence of an informal inquiry could
reflect some Staff concern about compliance. But the referenced risk factor will
likely be removed from future filings unless we become aware of some further
development in this regard.
3. Direct Investments in Real Estate Developments represent development
projects that the Company has obtained through foreclosure of its mortgage loans
or by direct purchase, and relate to real properties for which the Company is
the sole or majority owner. In the case of projects obtained through
foreclosure, the Company's basis in the project is the carrying amount of the
project at the time of loan foreclosure. In the case of projects obtained
through purchase, the Company's basis is determined in accordance with FAS 67.
The statement of operations category labeled REO and non-recurring
expenses consist of carrying costs, such as real estate taxes, of REO projects
that have been completed and are on the market for sale, plus non-recurring
expenses related to REO projects that have been sold, such as litigation costs
and extraordinary repair costs.
4, Set forth below is the litigation footnote disclosure with proposed
revisions. We would propose to include these footnotes in our Form 10-QSB to be
filed for our second fiscal quarter ending March 31. Added language is
underlined and deleted language is stricken.
As of December 31, 2006, the Company was involved in the following
litigation in which claims for damages would be material if the
plaintiff prevailed and there is at least a reasonable possibility that
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a loss may have occurred:
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Steven Mayer v BellaVista Capital, Inc. et al. A lawsuit by a
shareholder seeking damages totaling approximately $2.1 million for
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alleged securities law violations. The company has tendered defense of
this case to its insurance carrier which has agreed to accept the
tender with a reservation of rights. The case was submitted to binding
arbitration in accordance with the terms of the Company's stock
subscription agreement with the shareholder. The arbitration hearing
was conducted during the period from September through December 2006.
Both parties will submit closing arguments during February 2007 with a
ruling expected by April 2007. While the Company believes it has
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adequate defenses to these claims, the range of potential loss is $0 to
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approximately $2.1 million.
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Robert Allen et al v BellaVista Capital, Inc. et al. A lawsuit by
several shareholders holding a total of 207,599 shares [seeking
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damages] alleging securities law violations was served on the Company
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in April 2006. The shareholders are seeking damages of $10 per share
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plus special and punitive damages. The Company believes it has strong
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and viable defenses and plans to vigorously defend the allegations.
Because of the early stage of this action, the Company cannot estimate
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the range of possible loss regarding this claim as of the date hereof.
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5. We note your comment and, in certifying all future periodic report
filings, the Company will refer to "report" rather than to "annual report" or
"quarterly report" and will identify the Company as the "small business issuer"
rather than the "registrant."
The Company hereby acknowledges with respect to the above referenced
matter that
o the Company is responsible for the adequacy and accuracy of the
disclosure in this filing;
o staff comments or changes to disclosure in response to staff comments
in the filings reviewed by the staff do not foreclose the Commission
from taking any action with respect to the filing; and
o the Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
BellaVista Capital, Inc.
By: /s/ MICHAEL RIDER
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Michael Rider, President