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March 8, 2007
Kevin L. Vaughn
Branch Chief
United States Securities and Exchange Commission
Division Of Corporation Finance
Washington, D.C. 20549
VIA Fax (202) 772-9218
RE: Sparta Surgical Corporation
Forms 10-KSB for the fiscal years ended February 28, 2005 and 2006
Forms 10-QSB for the quarters ended May 31 and August 31, 2006
Your File No: 1-11047
Dear Mr. Vaughn:
In response to your comment letter dated January 9, 2007, we respond as follows:
Comment number 1 You noted that the Forms 10-KSB and 10-QSB's between February
28, 2002 and February 28, 2004 have not been filed.
Response to comment number 1: The Company has been dormant since 2003 and,
accordingly, financial information earlier than the last 2 years is not believed
to be material to investors. For that reason we have limited the audited
financial statements to the last two calendar years.
Comment number 2 You noted that the CPA firm did not sign their firm name as
the name registered with the Public Company Accounting Oversight Board.
Response to comment number 2: Their report has been revised to reflect to name
registered with the Public Company Accounting Oversight Board.
Kevin Vaughn, Branch Chief
United States Securities and Exchange Commission
March 8, 2007
Page 2
Comment number 3 You noted that the CEO provides office space and other
services at no charge and requested the footnote be revised to disclose the fair
value of such services and also address how this accounting complies with SAB
Topic 1B.
Response to comment number 3: The footnote has been revised as follows:
Note 4
Office Space
The Company's uses office space located in its Chief Executive Officer's office.
The Company estimates the fair value of these services to be $1,200 per year and
these amounts have not been recorded in the financial statements.
Based on our interpretation of SAB Topic 1B, we believe that the office expense
is not material to the financial statements and therefore it is acceptable not
to record these contributed services.
Comment number 4 You noted a gain on extinguishment of debt of $307,709
related expiration o f the statue of limitations on our trade payables and
requested that we revise the footnotes to describe this gain and also address
the impact of applicable escheat laws.
Response to comment number 4: We added footnote 7 as follows:
Note 7 - Gain on extinguishment of debt
The Company obtained an opinion letter in connection with whether the collection
of accounts payable is barred by the statute of limitations. This opinion was
based upon the application of California Code of Civil Procedure sections 337,
337a, and 344 and determined that the statute of limitations concerning these
accounts payable has expired and is no longer collectable against the Company.
As such, the Company recognized a gain of $307,709 on the extinguishment of debt
during the fiscal year ended February 28, 2006.
Comment number 5 You noted that the loss per share should be to the nearest
cent.
Response to comment number 5: This has been corrected
Comment number 6 You noted that the statement of cash flows does not foot and
did not agree to the balance sheet.
Kevin Vaughn, Branch Chief
United States Securities and Exchange Commission
March 8, 2007
Page 3
Response to comment number 6: This has been corrected.
Comment number 7 You noted that the Revolving Credit Facility states that
92,538,046 shares of common stock will be issued and requested how we accounted
for this obligation since we do not have enough shares authorized to satisfy
this liability.
Response to comment number 6: Per review of EITF 00-19, paragraph 19, we have
determined that we are not in control of the settlement process due to the need
to obtain shareholder approval to increase authorized shares and to issue these
shares. However, since the Company is not liquid, has no trading activity and a
portion of the shares will be issued to a related party (also a majority
shareholder), we believe the shares have a nominal value and have disclosed the
value in footnote 1.
Comment number 8 You noted that the Revolving Credit Facility Agreement was not
attached as an exhibit.
Response to comment number 8: This agreement has been attached as Exhibit 13.1.
Comment number 9 You noted that the cumulative preferred dividends payable
relating to the Series A and Series AA were not recorded in the financial
statements.
Response to comment number 9: While the cumulative preferred dividends payable
were recorded in the August 31, 2006 Form 10-QSB; we have amended the Forms
10-KSB for the fiscal years ended February 28, 2006 and 2005. We have also
amended the Forms 10-QSB for the periods ended May 31, 2006 and August 31, 2006
to reflect the cumulative preferred dividends payable.
Comment number 10 You noted the certifications for both the Form 10-KSB and
Forms 10-QSB were deficient.
Response to comment number 10: Certifications have been corrected to be in
compliance with Regulation S-B.
Comment number 11 You noted the Form 10-KSB for the fiscal year ended February
28, 2005 has the same financials for the fiscal year ended February 28, 2006.
Response to comment number 11: We have filed an amended Form 10-KSB for the
fiscal year February 28, 2005 with the financial statements required by Item 310
of Regulation S-B.
3
Kevin Vaughn, Branch Chief
United States Securities and Exchange Commission
March 8, 2007
Page 4
In making this response to your comments, the Company acknowledges that:
1. it is responsible for the adequacy and accuracy of the disclosure
in its filings;
2. staff comments or changes to disclosure in response to staff
comments do not foreclose the Securities and Exchange Commission
from taking any action with respect to the filing; and
3. the Company may not assert staff comments as a defense in any
proceeding initiated by the Securities and Exchange Commission or
any person under the federal security laws of the
country-regionplaceUnited States.
Please do not hesitate to contact the undersigned with any additional comments
you may have.
Sincerely,
SPARTA SURGICAL CORPORATION
By: /s/ Allan J. Korn
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Allan J. Korn
Chief Executive Officer and
Chief Financial Officer
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