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Mintz Levin
Neil H. Aronson | 617 348 1809 | nharonson@mintz.com
One Financial Center
Boston, MA 02111
617-542-6000
617-542-2241 fax
www.mintz.com
July 26, 2006
VIA EDGAR AND FACSIMILE (202-772-9202)
Jeff Jaramillo, Esq.
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: Mooney Aerospace Group, LTD.
Form 10-KSB for the Fiscal Year Ended December 31, 2005
Form 10-KSB for the Fiscal Year Ended December 31, 2004
Form 10-QSB for the Quarterly Period Ended June 30, 2005
Form 10-QSB for the Quarterly Period Ended September 30, 2005
File No. 000-21749
Dear Mr. Jaramillo:
The following responses address the comments you made in telephone
conversations with Barry Hodkin, Chief Financial Officer for Mooney Aerospace
Group, LTD. (the "Company"), and Glenn Davis on June 28, 2006 and with Barry
Hodkin, Jim Wilcox and Glenn Davis on July 7, 2006 regarding the Company's
letter dated June 26, 2006 responding to comments of the reviewing Staff of the
Commission.as set forth in a letter dated June 13, 2006 addressed to Gretchen L.
Jahn. On behalf of the Company, we respond as follows:
Form 10-KSB for the fiscal year ended December 31, 2005
Note 8. Stockholders' Deficiency
Cancellation and Re-issuance of Stock
1. Based upon a careful review of the Company's Amended Plan of
Reorganization and Amended Disclosure Statement that were approved
by the United States Bankruptcy Court in December 2004 and
discussions with the attorneys who represented the Company in the
bankruptcy proceedings, the Company determined that its previous
disclosures in Note 8 ("Stockholders' Deficiency") of Notes to
Consolidated Financial Statements concerning the issuance and
valuation of 9,997,773 shares of new common stock in the reorganized
Company were not accurate. The Company has revised Note 8 of the
Notes to its Consolidated Financial Statements to reflect the
following:
Jeff Jaramillo, Esq.
Division of Corporation Finance
Securities and Exchange Commission
July 26, 2006
Page 2
a. The value assigned to the 400,000 shares of new common stock
issued in exchange for all of the issued and outstanding
shares of Series A Preferred Stock and the Class A Common
Stock was changed to agree with the par value of the Series A
Preferred and Class A Common Stock on December 14, 2004, the
date the Company's Amended Plan of Reorganization was
approved. The values that were previously shown were incorrect
since they represented the stated or par value of the Series A
Preferred and Class A Common Stock on December 31, 2003.
b. The 4,597,773 shares issued to the Company's general unsecured
creditors were comprised of 3,809,590 shares issued to the
Company's secured debenture holders and their affiliates and
788,183 shares issued to other unrelated general unsecured
creditors.
The 3,809,000 shares issued to the Company's secured debenture
holders and their affiliates were exchanged for $18,802,000 of
indebtedness that was forgiven. Because the secured debenture
holders have been deemed to be related parties, the shares
issued to them were valued at an amount equal to the
liabilities forgiven and accounted for as a contribution to
capital.
The 788,183 shares issued to the Company's other general
unsecured creditors were exchanged for $9,738,000 of
indebtedness that was forgiven. The new shares issued were
valued at $4.51 per share based upon the last reported sale
price of the Company's Class A Common Stock on December 14,
2004. In its restated Statement of Operations for the year
ended December 31, 2004, the Company has reported a gain from
the forgiveness of debt of $6,183,295 representing the
difference between the value of the new shares issued
($3,554,705) and the value of the indebtedness forgiven
($9,738,000).
c. The 5,000,000 shares of new common stock in the reorganized
Company that were issued to Allen Holding & Finance Ltd.
("Allen") to re-acquire the shares of Mooney Airplane Company
("MAC") have been valued at MAC's historical net book value at
December 14, 2004.
In order to reflect the changes described above, the Company has
restated its Consolidated Statements of Operations, Cash Flows and
Changes in Stockholders' Deficiency for the year ended December 31,
2004, its Consolidated Balance Sheet at December 31, 2005 and the
Notes to its Consolidated Financial Statements.
Jeff Jaramillo, Esq.
Division of Corporation Finance
Securities and Exchange Commission
July 26, 2006
Page 3
Note 1. Organization and Significant Accounting Policies
Principles of Consolidation
- ---------------------------
Transfer of Shares to and from Allen Holding & Finance Ltd.
- -----------------------------------------------------------
2. The Company has revised its Consolidated Statement of Changes in
Stockholders' Deficiency for the year ended December 31, 2004 to
reflect the transfer of MAC at historical net book value to Allen on
May 28, 2004 and the re-acquisition of MAC from Allen on December
14, 2004 at historical net book value.
Other
3. In addition to the changes resulting from the matters described
above, the Form 10-KSB/A the Company plans to file for the year
ended December 31, 2005 includes the following changes:
a. The risk factors discussed in Part I, Item 1 have been updated
to reflect recent developments.
b. The legal proceedings described in Part I, Item 3 have been
updated to provide improved disclosures.
c. The stock prices previously set forth in Part I, Item 5 had
not been adjusted to reflect the 3,223 for 1 reverse stock
split of the Company's Class A Common Shares on December 14,
2004. This inadvertent error has been corrected in the Form
10-KSB/A.
In order to expedite your review I have enclosed a marked copy of the
revised pages from our 2005 Form 10-KSB/A that we plan to file. Please let us
know if we have fully addressed all of your concerns.
In connection with the foregoing responses we hereby acknowledge the
following on behalf of the Company:
o the Company is responsible for the adequacy and accuracy of the
disclosure in the 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
Jeff Jaramillo, Esq.
Division of Corporation Finance
Securities and Exchange Commission
July 26, 2006
Page 4
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.
Should you have any further questions, please do not hesitate to contact
the undersigned at (617) 348-1809.
Sincerely,
Neil H. Aronson
Enclosure
cc: Gretchen L. Jahn, CEO
Barry Hodkin, CFO
Steven Karol, Chairman
James Wilcox, Audit Committee