SEC Company Response from ABLE ENERGY INC (CIK 0001065728) — Sep 9, 2005
ABLE ENERGY INC (CIK 0001065728)
Date: Sept. 9, 2005 · CIK: 0001065728 · Accession: 0001188112-05-001632
AI Filing Summary & Sentiment
Letter
PO BOx 630 Rockaway, NJ 07866 (973) 625-1012 Fax (973) 586-9866 Website: www.ableenergy.com September 8, 2005 Mr. William Choi, Branch Chief Securities Exchange Commission Division of Corporation Finance Washington, D.C. 20549
RE: ABLE ENERGY, INC. FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 2004 FILED SEPTEMBER 28, 2004 FILE NO. 1-15035
Dear Mr. Choi:
We have reviewed the four (4) comments that were contained in your letter to us dated August 24, 2005 regarding the Company's Form 10-K for the fiscal year ended June 30, 2004. Please find herein below the Company's responses to the questions set forth in your letter.
For your convenience, we have incorporated into this response letter your original requests and the Company's responses in italics, as follows:
FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 2004
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME, PAGE F-5
1. We have reviewed your response to prior comment 19 and continue to believe the June 30, 2003 weighted average number of common shares outstanding and the weighted average number of common shares assuming dilution presented on your consolidated statement of income has been reversed. You currently show the weighted average number of common shares outstanding as 2,051,700, which is more than the 2,012,708 that is shown for the weighted number average number of common shares outstanding assuming dilution.
<PAGE>
THE CONSOLIDATED STATEMENT OF INCOME FOR THE PERIOD ENDING JUNE 30, 2004 (PAGE F-5) FROM THE PREVIOUSLY FILED FORM 10-K IS ATTACHED TO THIS LETTER. AS CAN BE SEEN ON THE YEAR COLUMN HEADED "2003", THE WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING IS LISTED AS 2,012,708 AND THE WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, ASSUMING DILUTION IS LISTED AS 2,051,700. WE BELIEVE THAT THIS HAS BEEN LISTED CORRECTLY.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTANGIBLE ASSETS, PAGE F-10
2. We have reviewed your response to prior comment 24 and reissue our prior comment. Your response did not address how you determined that your customer list has an indefinite useful life and how it will generate cash flows indefinitely. As noted in your response, an independent party appraised your customer list at approximately $10 million. We presume that this appraisal was based upon an estimate of the present value of the net cash flows expected to be recovered from these customers over a finite time period. Furthermore, we would expect that the assumed cash flow periods used in the independent appraisal considered the historical life experience of similar customer accounts. Absent persuasive evidence to the contrary, we believe that you should revise your financial statements to record your customer list as a definite lived intangible asset being amortized over a useful life.
IN ACCORDANCE WITH OUR UNDERSTANDING WITH FASB 142, AN INTANGIBLE ASSET WITH AN INDEFINITE USEFUL LIFE IS NOT AMORTIZED. WE BELIEVE THAT THE CUSTOMER LIST THAT IS AT ISSUE IN THIS QUESTION HAS AN INDEFINITE USEFUL LIFE BASED UPON OUR HISTORICAL AND CURRENT DATA. THE CUSTOMER LIST THAT IS IN QUESTION WAS PURCHASED IN OCTOBER 1996 (NORTHWEST PETROLEUM ACQUISITION) AND IS NOW ALMOST NINE (9) YEARS OLD. AT THIS POINT IN TIME, WE ARE CONTINUING TO SERVICE 96% OF THE ORIGINAL CUSTOMER LIST. THE DETERMINATION OF THE CONTINUATION OF CUSTOMERS BEING SERVICED IS BASED UPON HOMES WITH TANKS THAT ARE DELIVERED TO AT ADDRESSES, NOT NECESSARILY NAMES OF HOMEOWNERS. THE IDEA BEING THAT THE HOMES AND TANKS ARE REALISTICALLY PERMANENT CUSTOMERS WHILE HOMEOWNERS MOVE IN AND OUT.
FAIR VALUE OF FINANCIAL INSTRUMENTS, PAGE F-12
3. We have reviewed your response to prior comment 25 and Note 6 of your financial statements. It does not appear that you have disclosed the fair value of your long- term debt in accordance with SFAS 107. Your current presentation appears to disclose only the carrying value. If you have determined that the carrying value of your long-term debt approximates fair value, please disclose this fact.
WE BELIEVE THAT CARRYING VALUE OF OUR LONG-TERM DEBT APPROXIMATES FAIR VALUE WHICH WE WILL DISCLOSE IN OUR FORM 10-K FOR PERIOD ENDING JUNE 30, 2005 .
<PAGE>
NOTE 15, STOCK OPTION PLANS, PAGE F-30
4. We have reviewed your response to prior comment 30. In addition to elaborating on your accounting policy for stock options, please confirm to us that you will also disclose all of the items required by paragraphs 47 and 48 by SFAS 123. Please ensure that you disclose the number of options exercisable at the end of the year, and for each range of options described in paragraph 48 of SFAS 123, disclose the number, weighted average exercise price, weighted average remaining contractual life of options outstanding as well as the number and weighted average exercise price of options currently exercisable.
WE WILL DISCLOSE ALL REQUIRED ITEMS BY PARAGRAPHS 47 AND 48 OF SFAS 123 IN OUR FORM 10-K FOR THE PERIOD ENDING JUNE 30, 2005 IN A FINANCIAL STATEMENT NOTE.
Please contact the undersigned or Gregory Frost, Esq. with any questions or comments on the above.
Sincerely,
Christopher P. Westad, President
Show Raw Text
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[LOGO] ABLE ENERGY
Heating Oil > Diesel > HVAC
PO BOx 630 Rockaway, NJ 07866 (973) 625-1012 Fax (973) 586-9866
Website: www.ableenergy.com
September 8, 2005
Mr. William Choi, Branch Chief
Securities Exchange Commission
Division of Corporation Finance
Washington, D.C. 20549
RE: ABLE ENERGY, INC.
FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 2004
FILED SEPTEMBER 28, 2004
FILE NO. 1-15035
Dear Mr. Choi:
We have reviewed the four (4) comments that were contained in your letter
to us dated August 24, 2005 regarding the Company's Form 10-K for the fiscal
year ended June 30, 2004. Please find herein below the Company's responses to
the questions set forth in your letter.
For your convenience, we have incorporated into this response letter your
original requests and the Company's responses in italics, as follows:
FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 2004
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME, PAGE F-5
1. We have reviewed your response to prior comment 19 and continue to
believe the June 30, 2003 weighted average number of common shares
outstanding and the weighted average number of common shares assuming
dilution presented on your consolidated statement of income has been
reversed. You currently show the weighted average number of common
shares outstanding as 2,051,700, which is more than the 2,012,708 that
is shown for the weighted number average number of common shares
outstanding assuming dilution.
<PAGE>
THE CONSOLIDATED STATEMENT OF INCOME FOR THE PERIOD ENDING JUNE 30,
2004 (PAGE F-5) FROM THE PREVIOUSLY FILED FORM 10-K IS ATTACHED TO
THIS LETTER. AS CAN BE SEEN ON THE YEAR COLUMN HEADED "2003", THE
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING IS LISTED AS
2,012,708 AND THE WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING, ASSUMING DILUTION IS LISTED AS 2,051,700. WE BELIEVE THAT
THIS HAS BEEN LISTED CORRECTLY.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTANGIBLE ASSETS, PAGE F-10
2. We have reviewed your response to prior comment 24 and reissue our
prior comment. Your response did not address how you determined that
your customer list has an indefinite useful life and how it will
generate cash flows indefinitely. As noted in your response, an
independent party appraised your customer list at approximately $10
million. We presume that this appraisal was based upon an estimate of
the present value of the net cash flows expected to be recovered from
these customers over a finite time period. Furthermore, we would
expect that the assumed cash flow periods used in the independent
appraisal considered the historical life experience of similar
customer accounts. Absent persuasive evidence to the contrary, we
believe that you should revise your financial statements to record
your customer list as a definite lived intangible asset being
amortized over a useful life.
IN ACCORDANCE WITH OUR UNDERSTANDING WITH FASB 142, AN INTANGIBLE
ASSET WITH AN INDEFINITE USEFUL LIFE IS NOT AMORTIZED. WE BELIEVE THAT
THE CUSTOMER LIST THAT IS AT ISSUE IN THIS QUESTION HAS AN INDEFINITE
USEFUL LIFE BASED UPON OUR HISTORICAL AND CURRENT DATA. THE CUSTOMER
LIST THAT IS IN QUESTION WAS PURCHASED IN OCTOBER 1996 (NORTHWEST
PETROLEUM ACQUISITION) AND IS NOW ALMOST NINE (9) YEARS OLD. AT THIS
POINT IN TIME, WE ARE CONTINUING TO SERVICE 96% OF THE ORIGINAL
CUSTOMER LIST. THE DETERMINATION OF THE CONTINUATION OF CUSTOMERS
BEING SERVICED IS BASED UPON HOMES WITH TANKS THAT ARE DELIVERED TO AT
ADDRESSES, NOT NECESSARILY NAMES OF HOMEOWNERS. THE IDEA BEING THAT
THE HOMES AND TANKS ARE REALISTICALLY PERMANENT CUSTOMERS WHILE
HOMEOWNERS MOVE IN AND OUT.
FAIR VALUE OF FINANCIAL INSTRUMENTS, PAGE F-12
3. We have reviewed your response to prior comment 25 and Note 6 of your
financial statements. It does not appear that you have disclosed the
fair value of your long- term debt in accordance with SFAS 107. Your
current presentation appears to disclose only the carrying value. If
you have determined that the carrying value of your long-term debt
approximates fair value, please disclose this fact.
WE BELIEVE THAT CARRYING VALUE OF OUR LONG-TERM DEBT APPROXIMATES FAIR
VALUE WHICH WE WILL DISCLOSE IN OUR FORM 10-K FOR PERIOD ENDING JUNE
30, 2005 .
<PAGE>
NOTE 15, STOCK OPTION PLANS, PAGE F-30
4. We have reviewed your response to prior comment 30. In addition to
elaborating on your accounting policy for stock options, please
confirm to us that you will also disclose all of the items required by
paragraphs 47 and 48 by SFAS 123. Please ensure that you disclose the
number of options exercisable at the end of the year, and for each
range of options described in paragraph 48 of SFAS 123, disclose the
number, weighted average exercise price, weighted average remaining
contractual life of options outstanding as well as the number and
weighted average exercise price of options currently exercisable.
WE WILL DISCLOSE ALL REQUIRED ITEMS BY PARAGRAPHS 47 AND 48 OF SFAS
123 IN OUR FORM 10-K FOR THE PERIOD ENDING JUNE 30, 2005 IN A
FINANCIAL STATEMENT NOTE.
Please contact the undersigned or Gregory Frost, Esq. with any questions or
comments on the above.
Sincerely,
Christopher P. Westad, President
cc: Gregory D. Frost, Esq.
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<TABLE>
<CAPTION>
ABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED JUNE 30,
2004 2003 2002
--------------------------------------------------
<S> <C> <C> <C>
NET SALES $42,882,327 $43,409,488 $24,851,039
COST OF SALES 37,267,469 36,905,395 20,577,220
----------- ----------- -----------
GROSS PROFIT 5,614,858 6,504,093 4,273,819
----------- ----------- -----------
EXPENSES
Selling, General and Administrative Expenses 6,433,697 5,105,584 5,099,208
Depreciation and Amortization Expense 1,152,906 1,070,046 1,027,144
----------- ----------- -----------
Total Expenses 7,586,603 6,175,630 6,126,352
----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS (1,971,745) 328,463 (1,852,533)
----------- ----------- -----------
OTHER INCOME (EXPENSES):
Interest and Other Income 149,803 112,543 199,351
Interest Expense (576,578) (435,992) (281,994)
Directors' Fees - (24,000) (20,400)
Gain on Insurance Recovery (Note 24) - 215,140 -
Other Income (Expense) (Note 22) - - -
Legal Fees Relating to Other Expense (261,862) (90,050) -
----------- ----------- -----------
Total Other Income (Expense) (688,637) (222,359) (103,043)
----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES (CREDIT) (2,660,382) 106,104 (1,955,576)
PROVISION FOR INCOME TAXES (CREDIT) 39,720 52,782 (8,037)
----------- ----------- -----------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS (2,700,102) 53,322 (1,947,539)
----------- ----------- -----------
DISCONTINUED OPERATIONS:
Income (Loss) from Discontinued Operations (57,630) 148,830 425,284
Gain on Sale of Subsidiary Operating Assets 2,668,490 - -
----------- ----------- -----------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS 2,610,860 148,830 425,284
----------- ----------- -----------
NET INCOME (LOSS) $ (89,242) $ 202,152 $(1,522,255)
=========== =========== ===========
BASIC EARNINGS (LOSS) PER COMMON SHARE
Income (Loss) from Continuing Operations $ (1.34) $ .03 $ (.97)
=========== =========== ===========
Income (Loss) from Discontinued Operations $ 1.30 $ .07 $ .21
=========== =========== ===========
DILUTED EARNINGS (LOSS) PER COMMON SHARE
Income (Loss) from Continuing Operations $ (1.34) $ .03 $ (.97)
=========== =========== ===========
Income (Loss) from Discontinued Operations $ 1.30 $ .07 $ .21
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 2,013,250 2,012,708 2,001,332
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING,
ASSUMING DILUTION 2,013,250 2,051,700 2,001,332
=========== =========== ===========
See Accompanying Notes and Auditors' Report
F-5
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