SICHENZIA ROSS FRIEDMAN FERENCE LLP 1065
Avenue of the Americas, 21st Flr.
New York, NY 10018
Telephone: (212) 930-9700
Facsimile: (212) 930-9725
July 15, 2005
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Attn: Peggy Fisher, Esq.
Jay Mumford, Esq.
Ms. Tara Harkins
Ms. Michele Gohlke
Re: Thomas Equipment, Inc.
Registration Statement on Form SB-2
Amendment No. 2
File No. 333-124217
Ladies and Gentlemen:
We are counsel to Thomas Equipment, Inc., a Delaware corporation (the
"Company"), which has today filed Amendment No. 2 to its Registration Statement
on Form SB-2, Registration No. 333-124217 (as amended, the "Registration
Statement"). This letter responds to your letter dated July 8, 2005, relating to
comments of the Staff in connection with the above-referenced submission.
The responses to the Staff's comments are numbered to relate to the
corresponding comments in your letter. Where applicable, the revised pages or
sections of the Registration Statement have been referenced. Unless otherwise
indicated, all page references contained herein are to the pages of the
Registration Statement. For your convenience, four copies of the Registration
Statement, marked against the initial filing of the Registration Statement, have
been forwarded to the Staff.
Prospectus Cover Page
1. Quantify the number of shares that are currently outstanding and the
number of shares that could be issued upon conversion of debt securities
and upon exercise of warrants and options. Please confirm to us that all
the debt securities, warrants and options are outstanding, and confirm
the total amount of cash you have received from Laurus.
Response
The Prospectus cover page has been amended accordingly.
General
Securities and Exchange Commission
July 15, 2005
Page 2 of 17
2. Revise throughout the filing to consistently use the correct titles of
the various debt securities held by Laurus. Your current disclosure uses
a variety of different names for the securities throughout the filing and
is confusing.
Response
The titles of all debt securities securities held Laurus have been
conformed.
3. In the second paragraph, specify the number of shares that could be
issued (1) upon conversion of convertible debentures; (2) upon exercise
of warrants and the warrant exercise prices; and (3) upon exercise
options and the option exercise prices.
Response
The number of shares issuable upon conversion of debentures or exercise
of options and warrants has been included.
Summary of Recent Transactions, page 4
4. We note your additional disclosure in the summary regarding your recent
transactions. In your description of the reorganization of Maxim Mortgage
Corporation, please identify the investors from Thomas Equipment 2004 and
Thomas Ventures, Inc. Quantify the percentage of shares held by your
officers and directors after this reorganization. Explain how the sales
prices for the Common stock were determined.
Response
We have identified all principal stockholders from Thomas Equipment 2004
and Thomas Ventures. We do not believe the disclosure of those investors
who had 100,000 shares or less is material to an investor. We have also
quantified shares held by officers and directors and described how the
sales price was determined.
5. Please update this section with the transactions described in your Form
8-K filed on June 15, 2005.
Response
We have updated this section and MD&A to include the information
contained in the Company June 15, 2005 Form 8-K.
Securities and Exchange Commission
July 15, 2005
Page 3 of 17
Acquisition of Operating Assets from Predecessor Business-Thomas Equipment
Limited, page 4
6. Briefly explain here and discuss in more detail later in the filing the
background of this acquisition. For example, how did you identify this
acquisition opportunity? How was the sales price determined? Who was
involved in negotiating the transaction? What was the business reason for
the acquisition? How did this acquisition fit with the subsequent
acquisition of Pneutech? At the time you completed the Thomas Equipment
acquisition, were you also contemplating the Pneutech acquisition as part
of your business plan?
Response
We have added the requested disclosure about the background of the
acquisiton in the summary and in MD&A.
Risk Factors, page 10
We Have Recently Entered into a Supply Agreement with Hyundai....,page 12
7. Reconcile your response to comment 12 from our May 20, 2005 letter, which
quantifies backlog as $70 million, with your disclosure on page 43, which
states that backlog is $50 million. Also, clarify in the disclosure
whether orders you have already received from Hyundai can be cancelled by
Hyundai, given that there are no minimum purchase requirements.
Response
The $50 million backlog relates to Thomas Equipment 2004 Inc. The
remaining $20 million backlog relates to Pneutech We have clarified under
the Backlog section that orders, once placed, are not cancelable.
8. Please add a risk factor to discuss the nature of your expansion of your
manufacturing facilities to address your backlog as you describe on page
43.
Response
We have included a new risk factor to address the expansion of
manufacturing operations and the risk should such facilities not be
available when needed.
Management's Discussion and Analysis of Financial Conditions and Results of
Operations, page 18
9. We note your additional disclosure in response to our comment 14. Please
respond to our prior comments as described below
o Please disclose the average share price paid by those who received
the 16.945 million shares in the reorganization.
Securities and Exchange Commission
July 15, 2005
Page 4 of 17
o Quantify the number and percentage of shares of Thomas equipment,
Inc., held by officers, directors, and affiliates after the
reorganization described on page 19 and the total amount paid for
them.
Response
We have added the additional disclosure as requested to MD&A.
Results of Operations for the Three Months Ended March 31, 2005 Compared to
March 31, 2004, page 28
10. We note that you have compared the successor's result of operations for
the three months ended March 31, 2005 to the predecessor's results of
operations for the three months ended March 31, 2004. Predecessor
financial statements and successor financial statements are not
comparable. Revise your MD&A to separately discuss your successor and
predecessor's historical results of operations for the three months
ended March 31, 2005 and 2004.
Response
We have separated the successor and predecessor discussions.
11. In the introductory paragraph where you discuss the acquisition of
Thomas Equipment Limited. Explain that Thomas Equipment Limited was a
wholly owned subsidiary of McCain Foods Limited.
Response
We have disclosed that Thomas Equipment Limited was a subsidiary of
McCain Foods Limited.
Pro Forma Results of Operations for the Nine Months Ended March 31, 2005
Compared to March 31, 2004, page 30
12. Please refer to prior comment 18. Revise to remove your MD&A discussion
for the pro forma combined results of operations for the nine month
ended March 31, 2005 and 2004 and include a separate discussion of your
historical operating results for the Predecessor for the period July 1,
2004 to September 30, 2004 and the Successor for the period October 1,
2004 to March 31, 2005.
Response
We have removed the proforma discussion and provided separate
discussions for the six months ended March 31, 2005, three months ended
September 30, 2004 and nine months ended March 31, 2004.
Securities and Exchange Commission
July 15, 2005
Page 5 of 17
Fiscal 2005 Forward Looking Information, page 33
Revenues, page 33
13. Please refer to prior comment 21. You state that the supply arrangement
with Hyundai does not stipulate any minimum amount of purchases that
must be made during the two-year term. In this regard, revise your
filing to include management's expectation as to the impact on operating
results of the supply arrangement with Hyundai or delete the sentence
that you expect to achieve significant increases in revenue.
Response
We have deleted the sentence that we expect to achieve significant
increases in revenue.
14. We note your disclosure that you expect to make further changes in your
dealer relationships that you believe should have an effect on your
expense structure. However, we note from your disclosure that you do not
expect to have any significant changes to your gross margin or selling
expenses in fiscal 2005. Revise your filing to clarify the nature and
impact that changing your dealer relationships will have upon your
expense structure in 2005 or beyond.
Response
We have modified our disclosure to clarify that dealers will have to
purchase and maintain a higher inventory level than currently held
by the average dealer, thus reducing our inventory levels and
consequently reducing our interest expenses.
Description of Business, page 42
15. We note your response to comment 28. Given that your press release states
that you anticipate $12.5 million in annual revenue from the contract and
your pro forma financial statements on page P-85 disclose that revenues
would be $97,559,000 for 2004, explain in further detail why you do not
anticipate that sales to W.L. Gore will exceed 5% of revenues.
Response
The contract with WL Gore has been filed as exhibit 10.13 to this filing.
Security Ownership of Certain Beneficial Owners and Management, page 52
16. Expand footnote 4 to disclose the number of shares Mr. Crivello and his
IRA contributed to the fund. Also, since "Frank Crivello, SEP IRA" is
listed as a selling shareholder with 9.5% of the outstanding common
stock, expand to identify that beneficial holder here.
Securities and Exchange Commission
July 15, 2005
Page 6 of 17
Response
Footnote 4 has been revised to include the additional information about
Mr. Crivello's holdings.
Certain Relationships and Related Transactions, Page54
17. We reissue comment 32. Expand to discuss here the share issuances to
officers, directors, and five-percent holders in connection with the
reorganization and acquisition of Thomas Equipment Limited and the
consideration paid. The fact that this is discussed in another part of
the filing does not negate the need to disclose it here. It is relevant
information to current and potential investors to see the consideration
paid last year by officers, directors, and five percent holders for their
equity interests.
Response
We have added all of the requested disclosure related to the
reorganization to the Certain Relationships section.
18. Revise the disclosure to state the total amount of shares and cash Mr.
Rhee received for all his direct and indirect ownership interests in
Pneutech. Were there any other owners of the preference shares or the
special shires? Disclose how the amount paid for those shares was
calculated. Disclose whether he received any warrants or payments in
connection with the redemption of Pneutech warrants or on the repayment
of Pneutech debt.
Response
We have revised the disclosure to include the additional information
requested about Mr. Rhee and the subject transactions.
19. We note your additional disclosure about Mr. Rhee's conflict of interest
being disclosed to the shareholders of Pneutech. Expand to disclose that
at the time of this transaction, he was also president, secretary and
director of Thomas Equipment, Inc., and what steps were taken to disclose
the conflict of interest to shareholders of Thomas Equipment.
Response
We have expanded the disclosure to describe that Mr. Rhee was also
president and a director of Thomas Equipment. Since the transaction was
not approved by shareholders of Thomas Equipment, we could not provide
disclosure of Mr. Rhee's conflict of interest. The Board of Directors of
Thomas was made aware of the conflict before the transaction and
disclosure as been added accordingly. In addition, Mr. Rhee's positions
with Pneutech were disclosed in the Form 8-K filed in connection with the
transaction.
Securities and Exchange Commission
July 15, 2005
Page 7 of 17
Selling Stockholders, page 56
20. The amounts in footnote (1) exceed the total amount being registered
for resale by this selling shareholder. Please revise.
Response
The amounts in footnote (1) represent all shares issuable to Laurus.
Not of all of such shares are being registered hereunder.
Index to Financial Statements, page F-1
Interim Financial Statements
Unaudited Consolidated Financial Statements of Thomas Equipment, Inc. page F-3
Notes to Consolidated Financial Statements, page F-9
Note 2. Acquisitions, page F-9
Acquisitions of Assets of Thomas Equipment Limited, page F-9
21. Please refer to prior comment 42. Reference is made to your disclosure
of the consideration paid. Revise to discuss in significant detail each
of the items given as consideration so the reader understands how you
funded the entire acquisition price of $37.2 million and reference to
the footnote where you discuss the funding that was obtained. For
example, please discuss what you mean by "deferred payable to vendor"
and specifically identify the vendor.
Response
We have revised the disclosure in note 2 which now summaries the
sources of financing by source.
22. We note that you have updated the fair values previously assigned to
fixed assets and inventory acquired. For any purchase price allocation
that has not been finalized, that fact and reasons why the purchase
price allocation has not been finalized should be disclosed. In
subsequent periods, you should disclose the nature and amount of any
material adjustments made to the initial allocation. In this regard,
revise this note to disclose the following:
o how you determined the fair values assigned to the assets acquired
o if the purchase price allocation is finalized and if not, indicate
the items subject to change
o the nature and amount of any material adjustments made from the
previous allocation
o contingent payment; options, or commitments specified in the
purchase agreement and the accounting treatment for these future
items
Securities and Exchange Commission
July 15, 2005
Page 8 of 17
Refer to paragraph 51 of SFAS 141.
Response
We have revised note 2 which now address the final adjustments to the
assets values and the basis for determining the fair values of the
assets. The purchase price has been finalized and there are no
contingent payments, options, commitments or future items.
o The fair values assigned to the assets acquired were allocated based
on an analysis completed by an independent third party valuation
firm plus an allocation of transaction costs.
o During the third quarter the purchase price was finalized which
resulted in an increase to inventory of $2,425 and increase to fixed
assets of $948. The adjustments related to the finalization of the
inventory balances based on the final inventory count and the
allocation of transaction costs.
o See bullet above.
o The purchase price has been finalized and there are no contingent
payments, options, commitments or future items..
23. Revise your purchase price allocation schedule to reflect any
liabilities assumed at the date of acquisition. For instance, it appears
that your purchase price allocation schedule should include the capital
lease obligation of $5.3 million that you assumed from Thomas Equipment
Limited.
Response
The capital lease was not assumed in the transaction. In a separate
agreement to the purchase and sale agreement the two parties entered
into a two year lease agreement for the manufacturing facilities and a
sales office. See revised disclosure in note 2 and 9.
24. We note that on page 35 you indicate that the capital lease obligation
was assumed from Thomas Equipment and that you disclose that a different
discount rate was used when recording the capital lease obligation.
Revise your filing to disclose the discount rate utilized in determining
your capital lease obligation as well as the reason why you are using a
different rate.
Response
Securities and Exchange Commission
July 15, 2005
Page 9 of 17
Page 35 states that we entered into a lease agreement and does not make
reference to us assuming the lease in the acquisition. Note 2 previously
had a reference to a capital lease assumed, but this disclosure has been
clarified.
25. Please refer to prior comments 16 and 56. Revise This note to disclose
that the shares issued were valued based on the market price of your
common stock on the date the terms of the acquisition were agreed to and
announced and indicate such date.
Response
We revised Note 2 accordingly.
26. Please refer to prior comments 57 and 58. It appears from your disclosure
on page 4 that you acquired 100% of the common stock of Pneutech and its
subsidiaries through the issuance of 1,082,641 of shares of common stock
and warrants to purchase 211,062 shares of common stock and assumed
certain liabilities of Pneutech. In this regard, it appears that you
refinanced such debt of Pneutech with financing obtained from Roynat
Capital and Roynat US. We also note from your response that you redeemed
Pneutech's special shares, preference shares, outstanding debentures,
accrued dividends, and common stock warrants and included such amounts as
consideration paid for the acquisition. We further note that you included
the 167,359 common shares issued to redeem Pneutech's debt to an
unrelated party also as part of the consideration paid, It appears that
you have assumed liabilities of Pneutech, including the outstanding
special and preference shares, as part of the business combination and
then Immediately repaid or redeemed these transactions shortly after
closing of the acquisition. As such, tell us why you believe these
transactions should be disclosed as part of the consideration paid for
the Pneutech acquisition. It would appear to us that the common stock
exchanged and liabilities assumed would be reflected as consideration and
the refinancing and redemption of Pneutech's debt would be disclosed
separately. Please advise us or revise accordingly.
Response
We have revised the disclosure in Note 2 to reflect the refinancing
transaction previously shown as consideration paid to liabilities
assumed. The refinancing transactions have been disclosed after the
details of the acquisition.
27. We note that you assigned $5.6 million to long4emi debt and other
liabilities assumed in your summary of the net assets acquired from
Pneutech. Tell us and revise your filing to disclose the nature of the
liabilities and long-term debt assumed from the acquisition.
Response
We have revised Note 2 to break out the working capital and we have
separated the long tern debt and other liabilities.
Securities and Exchange Commission
July 15, 2005
Page 10 of 17
Note 3. Basis of Presentation and Summary of Significant Accounting Policies,
page F-11
Revenues Recognition, page F-12
28. Please refer to prior comment 45. You state that sales incentives are
given at the time of sale. Describe to us the nature of these sales
incentives and how you account for them. Refer to the guidance provided
in EITF 01-09.
Response
We have revised the revenue recognition policy accordingly.
29. Please refer to prior comment 46. Revise your riling to disclose at what
point title and risk of ownership are transferred to the independent
dealers, OEM customers, and retail customers.
Response
We have revised the revenue recognition policy accordingly.
30. Tell us what you mean by "except under limited local laws no right of
return on sales of equipment exists". Tell us how you account for these
rights of return. Refer to the guidance provided in SPAS 48.
Response
That statement probably provided more confusion then necessary as during
the past five years our predecessors had been required to accept a
return due to state or provincial laws. The insignificance of this
amount leads us to believe that disclosure of those instances is not
meaningful. As a result we have deleted this reference and just state
that offer no right of return.
31. We note that you have recognized sales of $31.5 million for the
six-month period October 1, 2004 to March 31, 2005 and that you reflect
on page F-3 accounts receivable of $25.3 million as of March 31, 2005.
In addition on page 35, you state that you have experienced negative
cash flows in the first six months of operations which is likely to
continue until such time as the receivables become due and their
collection will begin to offset the cash used. In order to enhance a
reader's understanding, revise to disclose the payment terms of your
outstanding receivables and tell us in detail how you determine that
collectibility is reasonably assured at the time of sale in accordance
with SAB 104.
Response
Securities and Exchange Commission
July 15, 2005
Page 11 of 17
We have added an additional sentence to our liquidity discussion on page
35 which states the negative cash flows related to the Thomas Equipment
Inc. operations and were the direct result of sales in the first quarter
of operations and then having to wait until the normal credit terms
offered to customers started to come due.
We have also: (i) further disclosed in note 2 the amount of receivables
acquired in the Pneutech acquisition, (ii) disclosed in the revenue
recognition policy the terms of our receivables, and (iii) disclosed in
the revenue recognition policy how we determine collectibility is
reasonably assured.
Trade-ins and Used Equipment, page F-13
32. Please refer to prior comment 51. Tell us if the arrangements at the
time of sale with your customers include a trade-in allowance for the
used equipment on future sales. If so, tell us and revise this note to
disclose the nature of the trade-in allowance and how you account for
the impact of the trade-in on the recognition of the sale of the new
equipment.
Response
We have revised this policy note to disclose that we do not accept
trade-ins for credit on future sales.
Net loss per share, page F-15
33. Revise this note to indicate that common stock equivalents, such as
options and warrants that are exercisable for little or no cash
consideration, are considered outstanding common shares and included in
the computation of basic net income per share., unless they would be
anti-dilutive. Also, revise to disclose the number of potential shares
resulting from outstanding stock options and warrants that could
potentially dilute basic earnings per share but that were not included
in the computation of diluted earnings per share for the periods
presented because to do so would be anti-dilutive for the periods
presented. Refer to the requirements of paragraph 40 (c) of SFAS 128.
Response
We have added the requested disclosure.
Note 6. Long-term debt, page F-17
34. Revise this note here and notes 7 and 8, as applicable, to explain for
each debt issuance the following:
o Describe in detail the purpose of each financing including how the
proceeds of the debt was used and the significant terms of the debt
such as the maturity date, collateral, and debt covenants
o If warrants or options were attached, describe the terms of these
equity instruments here and how you are accounting for these equity
instruments.
o Describe how any debt discount or premium arose, if any, and your
accounting treatment for these discounts or premium. Present each
premium and discount separately for each financing. If you were
subject to a 3% penalty for cash payments of principal and interest,
please clarify the nature of this penalty and describe in detail
your accounting for such penalty.
Securities and Exchange Commission
July 15, 2005
Page 12 of 17
Response
We have revised notes 7 and 8 to address all points.
Note 7. Convertible long term debt, page F-17
35. Please refer to prior comment 52. We reissued our prior comment 52 hilts
entirety. We note that you have a note payable to Thomas Equipment
Limited and a term loan with Laurus Master Funds Ltd ("Laurus")
reflected on your consolidated balance sheet at March 31, 2005. Tell us
and revise your filing to disclose if these loans were assumed in the
acquisition or entered into subsequent to October 1, 2004. If subsequent
to October 1, 2004, clearly disclose the nature and terms of the loans.
Also, disclose how such loans were originally recorded by you including
why a premium/discount was recorded and how you are accounting for such.
Response
We have revised notes 7 and 8.
Note 8. Convertible credit facility-related party and other credit facilities,
page F-18
36. Please refer to prior comment 53. You state that the beneficial
conversion feature was not reflected. Please revise to account for such
transactions to comply with EITF 98-5 and EITF 00-27.
Response
o We have added a policy note regarding convertible debt to discuss
the recording of beneficial conversion features (BCF").
o We have revised the Notes 7 and 8 to provide reasonable disclosure
of the BCF discount that related to the two issuances during the
quarter. Our prior response discussed the allocation of debt
proceeds on the $4 million credit increase assuming we received the
entire $4 million in proceeds when in fact we received substantially
less. As a result the discount related to this credit facility was
considerably less.
o We have revised throughout the financials and the prospectus the
numbers and disclosures that were impacted by this revision.
o We have included a restatement not under accounting policies and
marked the various statements as restated.
Securities and Exchange Commission
July 15, 2005
Page 13 of 17
Note 10. Redeemable preferred shares, pages F-19
37. Please refer to prior comment 54. Tell us and revise your filing to
address the following related to your redeemable preferred shares:
o How you specifically determined the fair value of the preferred
shares at the date of issuance.
o How you account for the difference between the redemption value and
the carrying value. Refer to the guidance in E1TP Topic 0-98.
o Please revise as appropriate to comply with SAB Topic 5-Q.
Response
We have revised this note to better describe the fair value
determination and we have included in the carrying value the accrued but
unpaid dividends.
Note 11. Common stock, page F19
38. Please refer to prior comment 1. We note from page F.20 that you issued
16,945,000 shares of common stock 1o your founders at an average price
of 5.14 per share for $2.5 million in cash. We also note from page F-6
that you reflected an increase to stockholders' equity of $2.5 million
related to this transaction. Revise this note to indicate for the reader
the difference between the gross proceeds of $2.5 million and $2.1
million as reflected in the consolidated statement of stockholders
equity.
Response
We have revised Note 11 F-20 to reflect the $2,451 in consideration
includes the non cash contributions of $322.
39. Also, in connection with this transaction. We note that you recognized a
stock compensation charge of 5.5 million. Tell us and revise your filing
to address the following:
o Specifically tell us how you determined that the fair value of your
common stock was $30. Explain in more detail and revise your
disclosure to state what you mean by "analysis of the market price
of the stock immediately after the reorganization."
Securities and Exchange Commission
July 15, 2005
Page 14 of 17
o Tell us how you computed the stock compensation charge of$5.5
million. Based on the information in the note, we calculate a charge
of $6.1 million.
Response
We have revised the disclosure in note 11 to include the supporting
details for the calculation. We have revised the wording "Analysis of
the market price of the stock immediately after the reorganization" to
"compared the market price of the stock immediately subsequent to the
public announcement of the reorganization".
Note 12. Stock options and warrants, page F-20
40. We note that you issued warrants to Redwood Consultants for investor
relations services rendered. Tell us and revise to indicate if the value
of the warrants was determined based on the fair value of the services
received or the fair value of the warrants issued. Refer to paragraph 8
of SPAS 123.
Response
Note 12 has been revised accordingly. We believe the value of redwood's
services could not be reliably measured and used the fair value of the
warrants to measure the services.
Note 13. Segment Information, page F-21
41. Revise this note to disclose the amount of revenue generated from any
single external customers that comprise 10% or more of your consolidated
revenues for each income statement period presented, if applicable.
Refer to paragraph 39 of SFAS 131.
Response
We have added an affirmative statement that during the periods presented
no single customer accounted for 10% of our sales. We believe that the
disclosure of recently signed supply agreements may have contributed to
the concern that we had customers that accounted for more than 10% of
our sales, when in fact substantial sales under these agreements will
not occur until later in 2005.
Audited Financial Statements of Pneutech, lnc.
42. Please update the audited financial statements of Pneutech, Inc. to
include their results for the three months ended January 31, 2005 if
your next filing is dated more than nine months from October 31, 2004.
Refer to Item 8(AXS) of Form 20-F for more information about the
updating requirements.
Securities and Exchange Commission
July 15, 2005
Page 15 of 17
Response
We understand the requirement and will work diligently to respond
quickly to all comments in the hope that we will not need provide the
update.
Pro Forma Financial Statements
Pro Forma Combined Condensed Statement of Operations, page F-84
43. Please revise your introductory paragraph to include a brief discussion
of the terms of each transaction that you are giving effect to in your
pro forma combined condensed statement of operations.
Response
Revised accordingly.
44. Please refer to prior continent 38. Please revise to include a pro forma
combined condensed statement of operations for the most recent interim
period. This statement should include separate columns for the historical
period of the predecessor for the period July 1, 2004 to September 30,
2004, the historical period of the successor for the period October 1,
2004 to March 31, 2005, and the historical period of Pneutech for the
period July 1, 2004 to March 31, 2005 (conformed) with pro forma
adjustments giving effect to the acquisition of Pneutech and the
acquisition of Thomas Equipment, Inc. as if these acquisitions had
occurred on July 1, 2004. The pro forma adjustments should be shown in
two columns to identify separately the adjustments for Thomas Equipment,
Inc. and Pneutech. Refer to the guidance provided in Item 310(d) of
Regulation S-B.
Response
Included as requested.
Pro Forma Combined Condensed Statements of Operations for the Year Ended June
30, 2004, page F-85
45. Please revise to include your earnings per share, basic and diluted, and
weighted average shares outstanding, basic and diluted for Pneutech for
the year ended October 31, 2004 and Thomas Equipment Limited
(Predecessor) for the year ended June 30, 2004 on a historical basis
Response
Revised accordingly.
Notes to Unaudited Pro Forma Combined Condensed Statements of Operations, page
F-86
Securities and Exchange Commission
July 15, 2005
Page 16 of 17
Note 2. Pro Forma Adjustments, page F-86
46. For each pro forma adjustment, revise to explain in detail the nature of
the adjustment and provide the reader with any supporting calculations
as to how the amounts were derived. For instance, reference is made to
adjustment d. Revise to explain why you are eliminating Thomas Equipment
Limited's dividend on its preferred stock.
Response
Revised accordingly.
47. Explain to the reader in a footnote to the pro forma combined condensed
statement of operations the basis for your effective tax rate on your
results on a pro forma combined basis.
Response
Note 4 has been added.
48. Revise to include a note to the pro forma combined condensed statement
of operations to show your computations of the weighted average shares
outstanding, basic and diluted, on a pro forma combined basis.
Response
Note 5 has been added.
49. Please file as exhibits the sale of Series A preferred stock financing
documents for your April 19, 2005 transaction.
Response
The documents in connection with the Series A preferred stock have been
filed as exhibits to this amendment.
**************************
Securities and Exchange Commission
July 15, 2005
Page 17 of 17
We appreciate your timely consideration of these matters in your review
of the filing referenced above. If you or others have any questions or would
like additional information, please contact me at 212-930-9700.
Very truly yours,
/s/ THOMAS A. ROSE
Thomas A. Rose
cc: David Marks,
Chairman