SEC Company Response from AMERICAN SOUTHWEST HOLDINGS INC (CIK 0001001516) — Sep 1, 2005
AMERICAN SOUTHWEST HOLDINGS INC (CIK 0001001516)
Date: Sept. 1, 2005 · CIK: 0001001516 · Accession: 0001076542-05-000218
AI Filing Summary & Sentiment
File numbers found in text: 000-27947
Referenced dates: August 16, 2005
Letter
VIA EDGAR AND FEDERAL EXPRESS Securities and Exchange Commission Division of Corporation Finance Mr. Juan Migone Re: American Southwest Holdings, Inc. Form 10-KSB for the Year Ended December 31, 2004 File 000-27947
Dear Mr. Migone:
On behalf of American Southwest Holdings, Inc. (the “Company”), set forth below are the Company’s responses to the Staff’s comment letter dated August 16, 2005, with respect to the above-referenced Form 10-KSB of the Company. We have reproduced the Staff’s comments and have followed each comment with the Company’s response. References in this letter to “we,”“our” or “us” mean the Company or its advisors, as the context may require.
Form 10-KSB for the Fiscal Year Ended December 31, 2004
Item 5 - Market for the Companies Common Equity and Related Stockholder Matters, page
Comment
1.
Trading prices listed on Yahoo-Finance may not be a reliable source of information. Unless sufficient supportable evidence exists regarding trading prices of your stock, this disclosure should be deleted. See item 201(a) of Regulation S-B.
Response
The disclosure regarding trading prices reported on Yahoo-Finance has been deleted from page 9 of the Form 10-KSB.
Securities and Exchange Commission
Division of Corporation Finance
September 1, 2005
Page
Item 7 - Financial Statements
Note 1 - Significant Accounting Policies and Use of Estimates
Goodwill - Mining Rights, page F-13
Comment
2.
According to your disclosures, you acquired the rights to mine various mineral sands tenements, held in the South West territory of Western Australia, through the acquisition of Metal Sands Inc. Therefore, in substance, this transaction may represent the purchase of an asset (i.e., mineral rights) instead of the acquisition of a business. As such please support your approach with specific accounting guidance or revise your financial statements. For guidance, refer to paragraph 6 of EITF 98-3.
Response
The Company entered into an agreement with Metal Sands that provided for the issuance of 33,100,000 shares of common stock of the Company in exchange for all of the outstanding capital of Metal Sands. The Company has accounted for the transaction as a business combination pursuant to paragraph 9 of SFAS 141 which states “For purposes of applying this Statement, a business combination occurs when an entity acquires net assets that constitute a business or acquires equity interests of one or more other entities and obtains control over that entity or entities.” As the Company acquired control of Metal Sands we believe that the transaction meets the definition of a business combination.
Note 8 - Acquisition of Metal Sands Limited, page F-21
Comment
3.
On page 3, you state that you issued 33,000,000 shares valued at $.04 per share. Supplementally tell us how you determined this value per share in light of the fact that there was no trading of your stock in 2003 or 2004 (as discussed on page 9) and that the trading price of the stock was nil per share on December 30, 2004 (as stated on page 15).
Response
During the year ended December 31, 2004 the Company entered into various private placements of their equity. During November and December 2004, the Company sold 9,000,000 shares of common stock through private placements at $.04 per share, which was then used in the valuation of the equity transaction for the Metal Sands acquisition.
Securities and Exchange Commission
Division of Corporation Finance
September 1, 2005
Page
Paragraph 5 of Item 1 - Business on page 3 of the Form 10-KSB has been revised to read as follows:
“On December 15, 2004, the Company completed its acquisition of Metal Sands Limited, an Australian company (“Metal Sands”), which as of the completion of the acquisition had six exploration licenses, and had filed 10 exploration license applications and 11 prospecting license applications for mining properties throughout the Scott Coastal Plain in Western Australia. The Company issued 33,100,000 shares of its common stock to the shareholders of Metal Sands in exchange for all of the outstanding shares of Metal Sands. The stock was valued at $0.04 per share, based on private offerings of the Company’s common stock sold in November and December 2004. Currently, the Company is in the exploration stage.”
Comment
4.
Even if the Metal Sands transaction constituted a business combination, the lack of a quoted market price for your stock suggests that it may be appropriate to value this transaction at the fair value of the net assets acquired. Please refer to paragraph 23 of SFAS 141 and revise your financial statements, as appropriate.
Response
As the Company did not have a valuation of the mining rights at the date of acquisition, it relied on paragraph 6 of SFAS 141 which states “if the consideration given is not in the form of cash (that is, in the form of noncash assets, liabilities incurred, or equity interests issued), measurement is based on the fair value of the consideration given or the fair value of the asset (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable.”
Based on the equity transaction during the year ended December 31, 2004, and more specifically the transactions entered into during November and December 2004, the Company believes that the value of the equity transactions was more clearly evident and therefore has used same to value the transaction.
Comment
5.
Further, even if the Metal Sands transaction constituted a business combination, it appears that most, if not all, of the purchase price would be allocated to the contractual or other legal rights to mine various mineral sands tenements held in the South West of Western Australia. This intangible asset should be recognized as an asset apart from goodwill. See paragraph 39 of SFAS 141. Also, see paragraph of SFAS 142 for guidance in determining the useful life of an intangible asset
Response
The financial statements and notes thereto have been revised, as follows:
1. Page F-4 - Consolidated Balance Sheets, Line 4 under Assets, has been revised to read as follows:
Securities and Exchange Commission
Division of Corporation Finance
September 1, 2005
Page
AMERICAN SOUTHWEST HOLDINGS, INC.
(An Exploration Stage Company)
Consolidated Balance Sheets
December 31,
ASSETS
Cash & cash equivalents
$
205,493
$
4,579
Receivables
3,065
—
Total current assets
208,558
4,579
Property and equipment, net
4,202
—
Mining rights
1,880,274
—
Total assets
$
2,093,034
$
4,579
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and accrued liabilities
$
147,937
$
122,581
Due to related parties
334,714
—
Loans payable to related parties
41,495
36,980
Total current liabilities
524,146
159,561
Common stock
$.001 par value, 100,000,000 shares authorized, 82,150,806 and 28,163,950 shares issued and outstanding at December 31, 2004 and 2003, respectively
82,151
28,164
Paid in capital
14,525,117
12,464,174
Common stock subscribed
67,095
—
Deficit accumulated during development stage
(13,099,597
)
(12,647,320
)
Foreign currency translation adjustment (Note 1)
(5,878
)
—
Total shareholders’ equity
1,568,888
(154,982
)
Total liabilities and shareholders’ equity
$
2,093,034
$
4,579
The accompanying notes are an integral part of the financial statements.
F-4
Securities and Exchange Commission
Division of Corporation Finance
September 1, 2005
Page
2. The first section of Note 1 on page F-13 of the Notes to Consolidated Financial Statements has been revised to read as follows:
“Mining Rights:
Through the acquisition of Metal Sands, the Company acquired the rights to mine various mineral sands tenements held in the South West territory of Western Australia. The mining rights will be amortized on a units of production basis. As of December 31, 2004, the total units of production have not been determined and no amortization has been recorded.”
3. The first paragraph of Note 8 on page F-21of the Notes to Consolidated Financial Statements has been revised to read as follows:
“During the year ended December 31, 2004, the Company purchased Metal Sands Limited in exchange for 33,100,000 shares of the Company’s common stock, valued at $1,324,000 and paid $38,937 in professional fees in connection with the acquisition. The Company received net liabilities of $194,999 and recorded Mining Rights in the amount of $1,561,936.”
We hope that the information contained in this letter satisfactorily addresses the comments by the Staff. If you have no further comments, these changes will be made in a Form 10-KSB amendment and corresponding changes in a Form 10-QSB amendment in a few days. Please direct any questions, requests for additional documentation or comments to the undersigned by telephone at (480) 443-9657, or by facsimile at (480) 443-1908.
Very
truly yours,
Michael
K. Hair, P.C.
Show Raw Text
CORRESP
1
filename1.htm
Unassociated Document
Michael
K. Hair, P.C.
Attorney
at Law
7407
E. Ironwood Court
Scottsdale,
Arizona 85258
Telephone:
(480) 443-9657
September
1, 2005
VIA
EDGAR AND FEDERAL EXPRESS
Securities
and Exchange Commission
Division
of Corporation Finance
100
F
Street, N.E.
Washington
DC, 20549
Attn.:
Mr.
Juan Migone
Re:
American
Southwest Holdings,
Inc.
Form
10-KSB for the Year Ended December
31, 2004
File
000-27947
Dear
Mr.
Migone:
On
behalf
of American Southwest Holdings, Inc. (the “Company”), set forth below are the
Company’s responses to the Staff’s comment letter dated August 16, 2005, with
respect to the above-referenced Form 10-KSB of the Company. We have reproduced
the Staff’s comments and have followed each comment with the Company’s response.
References in this letter to “we,”“our” or “us” mean the Company or its
advisors, as the context may require.
Form
10-KSB for the Fiscal Year Ended December 31, 2004
Item
5 - Market for the Companies Common Equity and Related Stockholder Matters,
page
9
Comment
1.
Trading
prices listed on Yahoo-Finance may not be a reliable source of
information. Unless sufficient supportable evidence exists
regarding
trading prices of your stock, this disclosure should be deleted.
See
item 201(a) of Regulation S-B.
Response
The
disclosure regarding trading prices reported on Yahoo-Finance has been
deleted
from page 9 of the Form 10-KSB.
Securities
and Exchange Commission
Division
of Corporation Finance
September
1, 2005
Page
2
Item
7 - Financial Statements
Note
1 - Significant Accounting Policies and Use of
Estimates
Goodwill
- Mining Rights, page F-13
Comment
2.
According
to your disclosures, you acquired the rights to mine various mineral
sands
tenements, held in the South West territory of Western Australia,
through
the acquisition of Metal Sands Inc. Therefore, in substance, this
transaction may represent the purchase of an asset (i.e., mineral
rights)
instead of the acquisition of a business. As such please support
your
approach with specific accounting guidance or revise your financial
statements. For guidance, refer to paragraph 6 of EITF
98-3.
Response
The
Company entered into an agreement with Metal Sands that provided for the
issuance of 33,100,000 shares of common stock of the Company in exchange
for all
of the outstanding capital of Metal Sands. The Company has accounted for
the
transaction as a business combination pursuant to paragraph 9 of SFAS 141
which
states “For purposes of applying this Statement, a business combination occurs
when an entity acquires net assets that constitute a business or acquires
equity
interests of one or more other entities and obtains control over that entity
or
entities.” As the Company acquired control of Metal Sands we believe that the
transaction meets the definition of a business combination.
Note
8 - Acquisition of Metal Sands Limited, page F-21
Comment
3.
On
page 3, you state that you issued 33,000,000 shares valued at $.04
per
share. Supplementally tell us how you determined this value per
share in
light of the fact that there was no trading of your stock in 2003
or 2004
(as discussed on page 9) and that the trading price of the stock
was nil
per share on December 30, 2004 (as stated on page
15).
Response
During
the year ended December 31, 2004 the Company entered into various private
placements of their equity. During November and December 2004, the Company
sold
9,000,000 shares of common stock through private placements at $.04 per share,
which was then used in the valuation of the equity transaction for the Metal
Sands acquisition.
Securities
and Exchange Commission
Division
of Corporation Finance
September
1, 2005
Page
3
Paragraph
5 of Item 1 - Business on page 3 of the
Form 10-KSB has been revised to read as follows:
“On
December 15, 2004, the Company
completed its acquisition of Metal Sands Limited, an Australian company
(“Metal
Sands”), which as of the completion of the acquisition had six
exploration licenses, and had filed 10 exploration license
applications and
11 prospecting license applications for mining properties throughout
the Scott
Coastal Plain in Western Australia. The Company issued 33,100,000
shares of its
common stock to the shareholders of Metal Sands in exchange for all
of the
outstanding shares of Metal Sands. The stock was valued at
$0.04 per
share, based on private offerings of the Company’s
common stock
sold in November and December 2004. Currently, the Company
is in the
exploration stage.”
Comment
4.
Even
if the Metal Sands transaction constituted a business combination,
the
lack of a quoted market price for your stock suggests that it may
be
appropriate to value this transaction at the fair value of the
net assets
acquired. Please refer to paragraph 23 of SFAS 141 and revise your
financial statements, as appropriate.
Response
As
the
Company did not have a valuation of the mining rights at the date of
acquisition, it relied on paragraph 6 of SFAS 141 which states “if the
consideration given is not in the form of cash (that is, in the form of noncash
assets, liabilities incurred, or equity interests issued), measurement is
based
on the fair value of the consideration given or the fair value of the asset
(or
net assets) acquired, whichever is more clearly evident and, thus, more reliably
measurable.”
Based
on
the equity transaction during the year ended December 31, 2004, and more
specifically the transactions entered into during November and December 2004,
the Company believes that the value of the equity transactions was more clearly
evident and therefore has used same to value the transaction.
Comment
5.
Further,
even if the Metal Sands transaction
constituted a business combination, it appears that most, if not
all, of
the purchase price would be allocated to the contractual or other
legal
rights to mine various mineral sands tenements held in the South
West of
Western Australia. This intangible asset should be recognized as
an asset
apart from goodwill. See paragraph 39 of SFAS 141. Also, see paragraph
11
of SFAS 142 for guidance in determining the useful life of an intangible
asset
Response
The
financial statements and notes thereto have been revised, as
follows:
1. Page
F-4 -
Consolidated Balance Sheets, Line 4 under Assets, has been revised to read
as
follows:
Securities
and Exchange Commission
Division
of Corporation Finance
September
1, 2005
Page
4
AMERICAN
SOUTHWEST HOLDINGS,
INC.
(An
Exploration Stage Company)
Consolidated
Balance Sheets
December
31,
2004
2003
ASSETS
Cash
& cash equivalents
$
205,493
$
4,579
Receivables
3,065
—
Total
current assets
208,558
4,579
Property
and equipment, net
4,202
—
Mining
rights
1,880,274
—
Total
assets
$
2,093,034
$
4,579
LIABILITIES
AND SHAREHOLDERS’ EQUITY
Accounts
payable and accrued liabilities
$
147,937
$
122,581
Due
to related parties
334,714
—
Loans
payable to related parties
41,495
36,980
Total
current liabilities
524,146
159,561
Common
stock
$.001
par value, 100,000,000 shares authorized, 82,150,806 and
28,163,950 shares
issued and outstanding at December 31, 2004 and 2003,
respectively
82,151
28,164
Paid
in capital
14,525,117
12,464,174
Common
stock subscribed
67,095
—
Deficit
accumulated during development stage
(13,099,597
)
(12,647,320
)
Foreign
currency translation adjustment (Note 1)
(5,878
)
—
Total
shareholders’ equity
1,568,888
(154,982
)
Total
liabilities and shareholders’ equity
$
2,093,034
$
4,579
The
accompanying notes are an integral part of the financial
statements.
F-4
Securities
and Exchange Commission
Division
of Corporation Finance
September
1, 2005
Page
5
2. The
first section of
Note 1 on page F-13 of the Notes to Consolidated Financial
Statements has been revised to read as follows:
“Mining
Rights:
Through
the acquisition of Metal Sands, the Company acquired the rights to mine
various
mineral sands tenements held in the South West territory of Western
Australia. The mining rights will be amortized on a units of production
basis. As of December 31, 2004, the total units of production have
not
been determined and no amortization has been recorded.”
3. The
first paragraph
of Note 8 on page F-21of the Notes to Consolidated Financial Statements has
been
revised to read as follows:
“During
the year ended December 31, 2004, the Company purchased Metal Sands Limited
in
exchange for 33,100,000 shares of the Company’s common stock, valued at
$1,324,000 and paid $38,937 in professional fees in connection with the
acquisition. The Company received net liabilities of $194,999 and recorded
Mining Rights in the amount of $1,561,936.”
We
hope
that the information contained in this letter satisfactorily
addresses the
comments by the Staff. If you have no further comments,
these changes will
be made in a Form 10-KSB amendment and corresponding changes
in a Form 10-QSB
amendment in a few days. Please
direct any questions, requests for additional documentation or
comments to the
undersigned by telephone at (480) 443-9657, or by facsimile at
(480)
443-1908.
Very
truly yours,
Michael
K. Hair, P.C.
By:
/s/
Michael K. Hair
Michael
K. Hair,
President
cc:
Alan
Doyle, American Southwest Holdings, Inc.
Debby
Tutrone, Semple & Cooper LLP