SEC Comment Letter for SELECTIS HEALTH, INC. (GBCS) (CIK 0000727346) (GBCS) — May 3, 2010
SELECTIS HEALTH, INC. (GBCS) (CIK 0000727346)
Date: May 3, 2010 · CIK: 0000727346 · Accession: 0000000000-10-024009
AI Filing Summary & Sentiment
Referenced dates: March 22, 2010
Letter
Mail Stop 3561 May 3, 2010 Via Fax & U.S. Mail Mr. Clifford L. Neuman President Global Casinos Inc. 1507 Pine Street Boulder, Colorado 80302
Re: Global Casinos Inc. Form 10-K for the year ended June 30, 2009 Filed September 28, 2009 File No. 0-15415
Dear Mr. Neuman:
We have reviewed your response letter date d April 22, 2010 in re sponse to our letter dated March 22, 2010, and have the following additional comments.
Please respond to confirm that such comments w ill be complied with, or, if certain of the comments are deemed inappropriate, advise th e staff of your reas on. Your response should be submitted in electronic form, under the label “corresp” with a copy to the staff. Please respond within ten (10) business days. Note 1. Organization and Summary of Significant Accounting Policies,
Goodwill
1. We note your response to our prior comment s 3 and 4. In l ight of the fact that cash flows from Doc Holliday as of June 30, 2009 were not sufficient to fund its operations and necessary capital improvements, the sustained unfavorable economic environment that existed throughout 2009 and continued into 2010 and its dramatic impact on the gaming indus try, the negative operating results experienced by the Company through December 31, 2009, the most recent interim period reported, the percentage by which the Doc Holiday’s reporting unit exceeded its carrying value appears somewhat high. In light of this factor, please expand your future disclosure and supplementally provide us with your calculations and assumptions that support th e fair value of the Doc Holiday casino reporting unit being 61% greater than its carrying value at the date of your most
Mr. Clifford L. Neuman Global Casinos Inc. May 3, 2010 Page 2 recent goodwill impairment analysis in June 2009. As part of your response, please provide the following information:
• Description of the methods and key assumptions used and how the key assumptions were determined; • Discussion of the degree of uncertainty associated with the key assumptions; and • Description of potential events and/or changes in circumstances that could reasonably be expected to negativ ely affect the key assumptions. • A comparison between actual results and projections included in your analysis. We may have further comment upon reviewing your response. 2. Furthermore, we note that you do not belie ve that m arket capitalization is an accurate reflection of value since the public trading market has been sporadic and volatile. Even though we generally would not disagree with your statement, given the extended period of time that the trad ing prices of your common stock have been depressed, and in combination with all other unfavorable economic factors impacting the gaming industry and the company in particular, we believe that the stock value provides additional evidence that the company’s value may have declined since the date of its most recent goodwill impairment analysis. Considering all the aforementioned unfavorable factors, as well as the fact that the company’s current market capitaliza tion of approximately $1.5 million (as indicated by the recent trading prices of the Company’s common shares of $.25 per share), is less than half of stockholde r’s equity, we believe that an interim goodwill impairment analysis pursuant to ASC Topic 350-20-35-30 should be performed since it appears that there has been an adverse change in the business climate. Please perform an impairment an alysis and provide us with the results. This impairment analysis should be accompanied by narrative disclosures explaining the significant assumptions used in preparing the impairment analysis along with management’s basis or rationale for the assumptions used. We may have further comment upon reviewing your response.
Mr. Clifford L. Neuman Global Casinos Inc. May 3, 2010 Page 3 You may contact Effie Simpson at (202) 551-3346, or the undersigned if you have questions regarding comments on the financial statements and related matters. Please contact the undersigned at (202) 551-3750 with any other questions.
Sincerely,
Linda Cvrkel Branch Chief
Via Fax: Todd Huss, CFO (303) 449-1045
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Mail Stop 3561 May 3, 2010 Via Fax & U.S. Mail Mr. Clifford L. Neuman President Global Casinos Inc. 1507 Pine Street Boulder, Colorado 80302 Re: Global Casinos Inc. Form 10-K for the year ended June 30, 2009 Filed September 28, 2009 File No. 0-15415 Dear Mr. Neuman: We have reviewed your response letter date d April 22, 2010 in re sponse to our letter dated March 22, 2010, and have the following additional comments. Please respond to confirm that such comments w ill be complied with, or, if certain of the comments are deemed inappropriate, advise th e staff of your reas on. Your response should be submitted in electronic form, under the label “corresp” with a copy to the staff. Please respond within ten (10) business days. Note 1. Organization and Summary of Significant Accounting Policies, Goodwill 1. We note your response to our prior comment s 3 and 4. In l ight of the fact that cash flows from Doc Holliday as of June 30, 2009 were not sufficient to fund its operations and necessary capital improvements, the sustained unfavorable economic environment that existed throughout 2009 and continued into 2010 and its dramatic impact on the gaming indus try, the negative operating results experienced by the Company through December 31, 2009, the most recent interim period reported, the percentage by which the Doc Holiday’s reporting unit exceeded its carrying value appears somewhat high. In light of this factor, please expand your future disclosure and supplementally provide us with your calculations and assumptions that support th e fair value of the Doc Holiday casino reporting unit being 61% greater than its carrying value at the date of your most Mr. Clifford L. Neuman Global Casinos Inc. May 3, 2010 Page 2 recent goodwill impairment analysis in June 2009. As part of your response, please provide the following information: • Description of the methods and key assumptions used and how the key assumptions were determined; • Discussion of the degree of uncertainty associated with the key assumptions; and • Description of potential events and/or changes in circumstances that could reasonably be expected to negativ ely affect the key assumptions. • A comparison between actual results and projections included in your analysis. We may have further comment upon reviewing your response. 2. Furthermore, we note that you do not belie ve that m arket capitalization is an accurate reflection of value since the public trading market has been sporadic and volatile. Even though we generally would not disagree with your statement, given the extended period of time that the trad ing prices of your common stock have been depressed, and in combination with all other unfavorable economic factors impacting the gaming industry and the company in particular, we believe that the stock value provides additional evidence that the company’s value may have declined since the date of its most recent goodwill impairment analysis. Considering all the aforementioned unfavorable factors, as well as the fact that the company’s current market capitaliza tion of approximately $1.5 million (as indicated by the recent trading prices of the Company’s common shares of $.25 per share), is less than half of stockholde r’s equity, we believe that an interim goodwill impairment analysis pursuant to ASC Topic 350-20-35-30 should be performed since it appears that there has been an adverse change in the business climate. Please perform an impairment an alysis and provide us with the results. This impairment analysis should be accompanied by narrative disclosures explaining the significant assumptions used in preparing the impairment analysis along with management’s basis or rationale for the assumptions used. We may have further comment upon reviewing your response. Mr. Clifford L. Neuman Global Casinos Inc. May 3, 2010 Page 3 You may contact Effie Simpson at (202) 551-3346, or the undersigned if you have questions regarding comments on the financial statements and related matters. Please contact the undersigned at (202) 551-3750 with any other questions. Sincerely, Linda Cvrkel Branch Chief Via Fax: Todd Huss, CFO (303) 449-1045