SEC Comment Letter for Gener8xion Entertainment, Inc. (CIK 0000803034) — Aug 23, 2005
Gener8xion Entertainment, Inc. (CIK 0000803034)
Date: Aug. 23, 2005 · CIK: 0000803034 · Accession: 0000000000-05-043477
AI Filing Summary & Sentiment
File numbers found in text: 000-15382
Letter
August 23, 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 July 17, 2005 response le tter 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. As discussed in our earlier telephone conversation, we have reviewed your most recent response. Based upon that review, it is our positi on that the fair value of the shares received by Mr. Crouch under the employment agreemen t should be recorded as compensation and valued at your best estimate. Based upon the tr ading prices of your shar es and the fact that Mr. Crouch obtained control of the company, fair value appear s to fall into a range of between $0.03 and $0.20 per share. In no event do we believe that the fair value should be estimated at less than the $0.03 per share va luation established in Section 3.3 of the Employment Agreement. While we agree with your conclusion that economic substance should be considered in record ing these transactions, based up on the facts and circumstances, we believe that the service agreement clearly has value that should be reflected. Please revise your financial statements accordingly. Your amended filings should include note disclosures in conformity with paragraph 37 of APB 20.
As a related matter, we understand from pr evious discussions, that the employment agreement is not difficult to terminate without si gnificant penalty. Therefore, it appears that its value should be immediately expensed. Ho wever, if you have reason to believe that Mr.
Ms. Marilyn Beaubien Gener8xion Entertainm ent, Inc. August 23, 2005 Page 2
Crouch is likely to retain the position for at le ast one year, we would not object if you prefer to amortize the charges over a period not greate r than one year with accompanying disclosure of the reasons for that determination. * * * * * * * * * * *
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 adequacy 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- 3347 if you have questions regarding comments on th e financial statements and related matters. Please contact me at 202-551-3211 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
August 23, 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 July 17, 2005 response le tter 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. As discussed in our earlier telephone conversation, we have reviewed your most recent
response. Based upon that review, it is our positi on that the fair value of the shares received
by Mr. Crouch under the employment agreemen t should be recorded as compensation and
valued at your best estimate. Based upon the tr ading prices of your shar es and the fact that
Mr. Crouch obtained control of the company, fair value appear s to fall into a range of
between $0.03 and $0.20 per share. In no event do we believe that the fair value should be
estimated at less than the $0.03 per share va luation established in Section 3.3 of the
Employment Agreement. While we agree with your conclusion that economic substance
should be considered in record ing these transactions, based up on the facts and circumstances,
we believe that the service agreement clearly has value that should be reflected. Please
revise your financial statements accordingly. Your amended filings should include note disclosures in conformity with paragraph 37 of APB 20.
As a related matter, we understand from pr evious discussions, that the employment
agreement is not difficult to terminate without si gnificant penalty. Therefore, it appears that
its value should be immediately expensed. Ho wever, if you have reason to believe that Mr.
Ms. Marilyn Beaubien
Gener8xion Entertainm ent, Inc.
August 23, 2005
Page 2
Crouch is likely to retain the position for at le ast one year, we would not object if you prefer
to amortize the charges over a period not greate r than one year with accompanying disclosure
of the reasons for that determination.
* * * * * * * * * * *
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 adequacy 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-
3347 if you have questions regarding comments on th e financial statements and related matters.
Please contact me at 202-551-3211 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