SEC Comment Letter for Gener8xion Entertainment, Inc. (CIK 0000803034) — Jun 21, 2005
Gener8xion Entertainment, Inc. (CIK 0000803034)
Date: June 21, 2005 · CIK: 0000803034 · Accession: 0000000000-05-031407
AI Filing Summary & Sentiment
File numbers found in text: 000-15382
Letter
June 22, 2005 Via US Mail and Facsimile Ms. Marilyn Beaubien Gener8xion Entertainment, Inc. 3400 W. Cahuenga Blvd. Hollywood, CA 90068
Re: Gener8xion Entertainment, Inc. Form 10-KSB for the year ended October 31, 2004 Commission File Number: 000-15382
Dear Ms. Beaubien:
We have reviewed your June 7, 2005 response letter and have the following comments. Where expanded or revised disclosure is reque sted, you may comply with these comments in future filings. If you disagree, we will consider your explanation as to why our comments are inapplicable or a revision is unnecessary. We also ask you to provide us with supplemental information so we may better understand your disclosu re. Please be as detailed as necessary in your explanation. We look forward to worki ng with you in these respects and welcome any questions you may have about any aspects of our review.
* * * * * * * * * * *
1. We have reviewed your response to our prev ious comment 1, includ ing the contractual agreements you have provided. We understand, fr om your response, that the true “intent of the parties” may not be apparent from the “form of the agreements.” However, for purposes of your financial statements, we would expect you to value a nd account for these transactions in a manner consistent with the terms of the contracts by which you are legally bound. Accordingly, please revise your financial statements to comply with GAAP. The amended Form 10-QSB should include note disclosures in conformity with pa ragraph 37 of APB 20.
We note, from Section 3.3 of the Employment Ag reement, that you have determined the fair market value of the shares to be three cents per share for income tax purposes. It appears that these shares should be valued at a minimum of three cents per share for financial statement purposes as well. Consideration should be given to whether any di scounts applied when
Ms. Marilyn Beaubien Gener8xion Entertainm ent, Inc. June 22, 2005 Page 2
valuing the shares for tax purposes are also appropriate to apply for financial statement purposes. Further, if any cash payments have been made or will be made pursuant to the “gross-up payment” these amounts should be included in your valuation as well.
It appears, from the Section 5.3 (a) of th e Employment Agreement, the employee may terminate the agreement at any time and wit hout cause or penalty by giving thirty days written notice. If our understand ing is correct, the value of th e shares should be recognized as an immediate charge to the income statement. If our understanding is not correct or if the shares, or some portion thereof, would be forfeited upon voluntary termination by the employee, it may be appropriate to recognize the cost of the shares in the income statement over time. Please consider this fact or when recording the transaction.
* * * * * * * * * * *
As appropriate, please amend your filing and respond to these comments within 10 business days or tell us when you will provide us with a response. You may wish to provide us with marked copies of the amendment to expedite our review. Please furn ish a cover letter with your amendment that keys your responses to our comments and pr ovides any requested supplemental information. Detailed cover letters greatly facilitate our review. Please understand that we may have additional comments after reviewing your amendment and responses to our comments.
We urge all persons who are responsible fo r the accuracy and adequ acy of the disclosure in the filing reviewed by the staff to be certain that they have provided all information investors require for an informed decision. Since the comp any and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the acc uracy and adequacy of the disclosures they have made.
In connection with responding to our comme nts, please provide, in writing, a statement from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclo sure in the filing;
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federa l securities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all information you provide to the sta ff of the Division of Corporati on Finance in our review of your filing or in response to our comments on your filing.
You may contact Amy Geddes at 202- 551-3304 or Margery Reich at 202-551-
Ms. Marilyn Beaubien Gener8xion Entertainm ent, Inc. June 22, 2005 Page 3
3347 if you have questions regarding comments on th e financial statements and related matters. Please contact me at 202-551-3816 with any other questions.
S i n c e r e l y ,
David R. Humphrey B r a n c h C h i e f
Show Raw Text
June 22, 2005
Via US Mail and Facsimile
Ms. Marilyn Beaubien
Gener8xion Entertainment, Inc.
3400 W. Cahuenga Blvd.
Hollywood, CA 90068
Re: Gener8xion Entertainment, Inc.
Form 10-KSB for the year ended October 31, 2004
Commission File Number: 000-15382
Dear Ms. Beaubien:
We have reviewed your June 7, 2005 response letter and have the following comments.
Where expanded or revised disclosure is reque sted, you may comply with these comments in
future filings. If you disagree, we will consider your explanation as to why our comments are
inapplicable or a revision is unnecessary. We also ask you to provide us with supplemental
information so we may better understand your disclosu re. Please be as detailed as necessary in
your explanation. We look forward to worki ng with you in these respects and welcome any
questions you may have about any aspects of our review.
* * * * * * * * * * *
1. We have reviewed your response to our prev ious comment 1, includ ing the contractual
agreements you have provided. We understand, fr om your response, that the true “intent of
the parties” may not be apparent from the “form of the agreements.” However, for purposes of your financial statements, we would expect you to value a nd account for these transactions
in a manner consistent with the terms of the contracts by which you are legally bound.
Accordingly, please revise your financial statements to comply with GAAP. The amended Form 10-QSB should include note disclosures in conformity with pa ragraph 37 of APB 20.
We note, from Section 3.3 of the Employment Ag reement, that you have determined the fair
market value of the shares to be three cents per share for income tax purposes. It appears that
these shares should be valued at a minimum of three cents per share for financial statement
purposes as well. Consideration should be given to whether any di scounts applied when
Ms. Marilyn Beaubien
Gener8xion Entertainm ent, Inc.
June 22, 2005
Page 2
valuing the shares for tax purposes are also appropriate to apply for financial statement
purposes. Further, if any cash payments have been made or will be made pursuant to the
“gross-up payment” these amounts should be included in your valuation as well.
It appears, from the Section 5.3 (a) of th e Employment Agreement, the employee may
terminate the agreement at any time and wit hout cause or penalty by giving thirty days
written notice. If our understand ing is correct, the value of th e shares should be recognized
as an immediate charge to the income statement. If our understanding is not correct or if the shares, or some portion thereof, would be forfeited upon voluntary termination by the
employee, it may be appropriate to recognize the cost of the shares in the income statement
over time. Please consider this fact or when recording the transaction.
* * * * * * * * * * *
As appropriate, please amend your filing and respond to these comments within 10
business days or tell us when you will provide us with a response. You may wish to provide us
with marked copies of the amendment to expedite our review. Please furn ish a cover letter with
your amendment that keys your responses to our comments and pr ovides any requested
supplemental information. Detailed cover letters greatly facilitate our review. Please understand
that we may have additional comments after reviewing your amendment and responses to our
comments.
We urge all persons who are responsible fo r the accuracy and adequ acy of the disclosure
in the filing reviewed by the staff to be certain that they have provided all information investors
require for an informed decision. Since the comp any and its management are in possession of all
facts relating to a company’s disclosure, they are responsible for the acc uracy and adequacy of
the disclosures they have made.
In connection with responding to our comme nts, please provide, in writing, a statement
from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclo sure in the filing;
staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federa l securities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the sta ff of the Division of Corporati on Finance in our review of your
filing or in response to our comments on your filing.
You may contact Amy Geddes at 202- 551-3304 or Margery Reich at 202-551-
Ms. Marilyn Beaubien
Gener8xion Entertainm ent, Inc.
June 22, 2005
Page 3
3347 if you have questions regarding comments on th e financial statements and related matters.
Please contact me at 202-551-3816 with any other questions.
S i n c e r e l y ,
David R. Humphrey
B r a n c h C h i e f