SEC Company Response from GLOBAL BUSINESS SERVICES INC (CIK 0001082431) — Jul 22, 2005
GLOBAL BUSINESS SERVICES INC (CIK 0001082431)
Date: July 22, 2005 · CIK: 0001082431 · Accession: 0001090002-05-000209
AI Filing Summary & Sentiment
Referenced dates: July 18, 2005
Letter
Division of Corporation Finance United States Securities and Exchange Commission Global Business Services, Inc. Form 10-KSB for the year ended June 30, 2004 Forms 10-Q for the quarters ended September 30 and December 31, 2004 File No. 0-28587
Dear Mr. Jacobs:
This letter is in response to your letter dated July 18, 2005 regarding Global Business Services, Inc.’s financial statements and related disclosures.
Form 10-KSB for the year ended June 30, 2004
Notes to Consolidated Financial Statements
Note 1 – Summary of Accounting Policies
Franchise Fee Recognition – pages F-9
1.
When franchise fee revenue is recognized.
Franchise fee revenue and all deferred revenue are not recognized until the actual opening date of a store.
Area Franchise Fee Recognition, page F-10
1.
Are there any contingencies that question the recognition of revenue?
There are NO conditions or contingencies for the Recognition of Area
Franchise Fees. The entire amount is recognized upon sale (executed contract). In the event of an installment or contract purchase, there is NO refund as agreed to by contract and if payment(s) not made or cannot be offset by royalty payments from the Area, the sale is rescinded, without refund & would be reflected in the current filing period.
2.
Recording revenue - cash versus accrual basis.
Revenue is recorded on an accrual basis.
213 South Robertson Boulevard, Beverly Hills, CA 90211
310-288-4585
Fax: 310.360-7676
GLOBAL BUSINESS SERVICES, INC.
Store Build-out Revenue Recognition, page F-10
3.
Restatement of financial statements regarding recognition of revenue and corresponding expense recorded with the build-out of franchise stores.
We are confident of our method of statement complies with Paragraph 16 of SFAS45, therefore no restatement is necessary.
Form 10-QSB for the quarter ended September 30, 2004
Notes to Consolidated Financial Statements
Note 2 – Convertible Note Payable and Warrants
4.
Restatement of Forms 10-QSB for the first three quarters of fiscal 2005 and accounting for the detachable stock warrants.
We are in the process of amending Forms 10-QSB for the first three quarters of fiscal 2005 to comply with EITF 98-5 for the fair market value of the $160,000 convertible note and detachable warrants. The calculation will be based on the Black Sholes model by assigning a fair value. This will also be reflected in the year-end Form 10-K for the year ended June 30, 2005.
Sincerely,
Paul T. Robinson
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CORRESP 1 filename1.htm GLOBAL BUSINESS SERVICES, INC RESPONSE TO SEC LETTER GLOBAL BUSINESS SERVICES, INC. July 22, 2005 Steven Jacobs Senior Staff Accountant Division of Corporation Finance United States Securities and Exchange Commission 400 Fifth Street, N.W. Washington, D.C. 20549 Re: Global Business Services, Inc. Form 10-KSB for the year ended June 30, 2004 Forms 10-Q for the quarters ended September 30 and December 31, 2004 File No. 0-28587 Dear Mr. Jacobs: This letter is in response to your letter dated July 18, 2005 regarding Global Business Services, Inc.’s financial statements and related disclosures. Form 10-KSB for the year ended June 30, 2004 Notes to Consolidated Financial Statements Note 1 – Summary of Accounting Policies Franchise Fee Recognition – pages F-9 1. When franchise fee revenue is recognized. Franchise fee revenue and all deferred revenue are not recognized until the actual opening date of a store. Area Franchise Fee Recognition, page F-10 1. Are there any contingencies that question the recognition of revenue? There are NO conditions or contingencies for the Recognition of Area Franchise Fees. The entire amount is recognized upon sale (executed contract). In the event of an installment or contract purchase, there is NO refund as agreed to by contract and if payment(s) not made or cannot be offset by royalty payments from the Area, the sale is rescinded, without refund & would be reflected in the current filing period. 2. Recording revenue - cash versus accrual basis. Revenue is recorded on an accrual basis. 213 South Robertson Boulevard, Beverly Hills, CA 90211 310-288-4585 Fax: 310.360-7676 GLOBAL BUSINESS SERVICES, INC. Store Build-out Revenue Recognition, page F-10 3. Restatement of financial statements regarding recognition of revenue and corresponding expense recorded with the build-out of franchise stores. We are confident of our method of statement complies with Paragraph 16 of SFAS45, therefore no restatement is necessary. Form 10-QSB for the quarter ended September 30, 2004 Notes to Consolidated Financial Statements Note 2 – Convertible Note Payable and Warrants 4. Restatement of Forms 10-QSB for the first three quarters of fiscal 2005 and accounting for the detachable stock warrants. We are in the process of amending Forms 10-QSB for the first three quarters of fiscal 2005 to comply with EITF 98-5 for the fair market value of the $160,000 convertible note and detachable warrants. The calculation will be based on the Black Sholes model by assigning a fair value. This will also be reflected in the year-end Form 10-K for the year ended June 30, 2005. Sincerely, Paul T. Robinson CFO 213 South Robertson Boulevard, Beverly Hills, CA 90211 310-288-4585 Fax: 310.360-7676