LAW OFFICES OF
EHMANN, VAN DENBERGH & TRAINOR, P.C.
TWO PENN CENTER PLAZA, SUITE 220 TELEPHONE: (215) 851-9800
1500 JOHN F. KENNEDY BOULEVARD DIRECT DIAL: Ext. 222
PHILADELPHIA, PENNSYLVANIA 19102 FAX: (215) 851-9820
February 13, 2006
VIA FAX AND EDGAR
- -----------------
Securities and Exchange Commission
Division of Corporate Finance
Office of Small Business Review
450 Fifth Street, N.W.
Washington, D.C. 20549-00405
ATTN: Donna Levy
Fax No: 202-772-9220
Re: Daleco Resources Corporation
File No: 0-12214
Gentlemen,
We reference the Staff's letter of February 8, 2006 regarding Proposals 3
and 4 of the Registrant's Preliminary Proxy Statement on Schedule 14A.
In response to the Staff's letter, the Respondent would note as follows:
Proposal 3--Increase in Authorized Number of Shares, page 11.
1. The Registrant proposes to add the following sentence at the end of
the fourth paragraph under the heading, "Discussion."
"The Company has no current plans, proposals or arrangements,
written or otherwise, to engage in any business or investment
opportunity utilizing the increase in the authorized shares of
Common Stock, other than the issuance of shares upon the exercise of
existing options and warrants if and as necessary. Rather the
Company desires to be in the position to be able take advantage of
such business or investment opportunity when and if such an
opportunity becomes available."
EHMANN, VAN DENBERGH & TRAINOR, P.C. Page 2
A copy of the amended page is attached hereto at Exhibit 1 for your
reference.
Proposal 4--Ratification of Stock Award to Special Committee of the Board of
Directors, page 13.
2 & 3 The Registrant has elected to remove any reference to compensation
of directors for future services. Thus, the proposal will deal with only one
issue, the ratification of the award already made to the Special Committee of
the Board of Directors.
Attached hereto as Exhibit 2 are the amended pages of the Proxy Statement
showing the deleted portions of the text. Parallel changes will be made in the
Registrant's Notice of Annual Meeting and Proxy.
We believe that the above fully addresses the Staff's comments. Should you
wish to discus the foregoing, please feel free to contact the undersigned
(215-851-1660) or the Registrant's President, Gary J. Novinskie (610-429-1258).
Sincerely,
/s/ C. Warren Trainor
C. Warren Trainor
CWT:mta
cc: Gary J. Novinskie, President & CFO (via Fax)
EHMANN, VAN DENBERGH & TRAINOR, P.C. Page 3
EXHIBIT 1
endeavor. The intent and purpose of the Company's proposal is to provide the
Company the flexibility to act or react immediately if the opportunity or need
arises. The Company has no current plans, proposals or arrangements, written or
otherwise, to engage in any business or investment opportunity utilizing the
increase in the authorized shares of Common Stock, other than the issuance of
shares upon the exercise of existing options and warrants. Rather the Company
desires to be in the position to be able take advantage of such business or
investment opportunity when and if such an opportunity becomes available.
Management recommends that the Stockholders vote FOR the resolution to
increase the authorized shares of Common Stock from 50,000,000 to 100,000,000.
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has selected the accounting
firm of Vasquez & Company, LLP, to be the Company's Independent Registered
Public Accountant to audit the books and records of the Company and its
subsidiaries for the 2006 fiscal year. This firm replaced the Company's previous
auditor, Jay Shapiro, who resigned as the Company's Auditor on September 9, 2004
due to the expense of complying with the certification process required under
the Sarbanes Oxley Act of 2002 and the Public Company Accounting Oversight Board
("PCAOB"). Mr. Shapiro had audited the books and records of the Company
commencing in fiscal 1998 through 2003. Vasquez & Company, LLP, has been then
the Company's auditors since that time and has prepared the audits for its 2003,
2004 and 2005 fiscal years. Other than providing audit services, there is no
material relationship between Vasquez & Company, LLP, and the Company. Vasquez &
Company, LLP, is certified by the PCAOB as required under the Sarbanes Oxley Act
of 2002 and is considered well qualified.
In Fiscal Years 2004 and 2005, the Company paid Vasquez & Company, the
following compensation.
============ ================ ============================================== ========================= =============
Financial Information System All Other Fees (1) Total
Year Audit Fee Design and Implementation Fees
- ------------ ---------------- ---------------------------------------------- ------------------------- -------------
2004 $51,000 0 $0 $51,000
- ------------ ---------------- ---------------------------------------------- ------------------------- -------------
2005 $45,000 0 $24,086 $69,086
============ ================ ============================================== ========================= =============
(1) The Company paid Vasquez & Company the following fees in addition to its
fee for the Annual Audit of the Company: (i) $21,000 for its review of the
EHMANN, VAN DENBERGH & TRAINOR, P.C. Page 4
EXHIBIT 2
RATIFICATION OF STOCK AWARD TO
SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS
On April 29, 2005, the Board of Directors appointed Lord Gilbert, Mr. H.
Paul Pryor and Mr. Alfonso Knoll as a Special Committee of the Board of
Directors ("Special Committee") to identify and recruit additional persons to
act as officers and independent directors of the Company. As consideration for
their services, the Board voted to grant each member of the Special Committee
300,000 shares of Common Stock ("Award"). Since the Company's announced policy
has been not to compensate its directors, other than for reimbursement of costs
associated with a director's performance of his duties, the Company believes
that the award of these Shares requires Stockholders approval. The Company is
seeking Stockholder approval of these awards^. Mr. Pryor resigned as a Director
on May 17, 2005. The Special Committee consisting of Mr. Knoll and Lord Gilbert
continued in existence though August 2005 when Mr. Benediktson and Mr. Trynin
agreed to join the Company. The Board believes that the members of the Special
Committee are entitled to the Award for their additional services and efforts on
behalf of the Company and the Stockholders.
Required Vote
The shares represented by the enclosed proxy will be voted at the meeting
as directed. If no choice is specified in the proxy, the shares represented by
the enclosed proxy will be voted "FOR" the ratification of the Award. A majority
of the shares voting at the meeting is required for the ratification of the
Award and the approval to compensate directors for special services rendered in
the future by granting awards of Common Stock.
The Board of Directors recommends a vote "FOR" the proposal to ratify the
Award.
CODE OF ETHICS
On December 9, 2005, the Board of Directors passed a Code of Ethics for
the Company. A copy of the Company's Code of Ethics was filed as Exhibit 14.1 to
the Company's Annual Report on Form 10-KSB filed with the Securities and
Exchange Commission on January 13 2006. A copy of the Code of Ethics is attached
hereto as Schedule 2.
The Company will, at no charge to its Stockholders, provide additional
copies of the Code of Ethics to any one whom so requests. Any request should be
sent to the Company's Secretary at the following address:
Daleco Resources Corporation
Attention: Corporate Secretary
120 North Church Street