Correspondence 0001683168-22-008456 from Community Redevelopment Inc. (CRDV) (CIK 0001084551) (CRDV)
Community Redevelopment Inc. (CRDV) (CIK 0001084551)
Date: Dec. 15, 2022 · CIK: 0001084551 · Accession: 0001683168-22-008456
AI Filing Summary & Sentiment
File numbers found in text: 000-26439
Letter
Office of Real Estate & Construction Form 10-K for fiscal year ended December 31, 2021 Filed April 1, 2022 Form 10-Q for the interim period ended June 30, Filed August 29, 2022 File No. 000-26439
Re: Community Redevelopment Inc.
Dear Ms. Rakip,
We are in receipt of your letter dated November 14th, 2022, regarding the issuer and the aforementioned filing. Below please find our respective responses:
Form 10-K for fiscal year ended December 31, 2021 General
1. We note your response to comment 1 and reissue the comment in part. We remain unclear as to how you have accounted for all elements of the agreement dated September 21, 2021, between the company and Red Hills Capital Advisors, LLC during the period in which the agreement was fully valid and enforceable, and the subsequent rescission, including the accounting literature relied upon. Please specifically address the following:
• As of and for the portion of the fiscal year ended December 31, 2021, for which the agreement was fully valid and enforceable, tell us how you will present the assets and liabilities, and results of operations. In your response, specifically discuss whether you plan to restate any previously issued financial statements and the basis for your conclusion.
• Specific to the accounting upon entry into and subsequent rescission of the Agreement between you and Red Hills Capital Advisors, tell us what discussions the company had with its auditor (and any other advisor) regarding the accounting pertaining to each stage of the company's' involvement prior to, under, and subsequent to the rescission of the agreement;
• Address why you believe the rescission of the agreement between you and Red Hills Capital Advisors is not considered a discontinued operation pursuant to ASC 205-20-40. In your response, specifically address the criteria considered therein in reaching your conclusion.
RESPONSE: The assets of the company were minority interests in real estate under development. In accordance with ASC 805, the company has determined that it has significant influence and thus the investments were properly recorded using the equity method. As the properties were under development, there were no results of operations; although had there been, we would pick-up our share of the income / expense in the P&L under Income from member interests.
RESPONSE: Restatement of Financials - In our responses to date, we have noted several restatements which we concur are obligatory for us to make, namely; 1) to Amend our 10-K per Item 308(a)(3) of Regulation S- K to read that our internal control over financial reporting was not effective as of such date given such date differs from the assessment date disclosed; 2) to Amend our 10-K to affirmatively opine on the financial statements for the years ended December 31, 2021 and 2020; 3) Rule 5-03.12 et seq.,3) we will revise the statement of operations and other comprehensive income to include the unrealized loss on investment as part of net loss for the year in conformity with Rule 5-03.12 of regulation S-X; 4) Regarding changes in capital structure (the reverse split), SEC Staff Accounting Bulletin Topic 4C changes in the capital structure must be given retroactive effect in the balance sheet. As our balance sheet went from 3 Billion to 500,000,000 in May of 2021, we will revise the financial statements to reflect the reverse stock split retroactively along with supporting disclosures.
RESPONSE: Discussions with Accountants & Auditor - Regarding the accounting upon entry into and subsequent rescission of the Agreement between Community Redevelopment and Red Hills Capital Advisors, the discussions the company had with its auditor (and any other advisor) regarding the accounting pertaining to each stage of the company's involvement prior to, under, and subsequent to the rescission of the agreement were as follows. The board and staff, at the time, of the acquisition engaged an accountant and an internal staff person to help with the transaction. It was the understanding these parties had knowledge sufficient to guide us through the acquisition of Red Hills. Our accountants were aware of the determination to acquire and provided professional guidance as we navigated the recession preparing our financials accordingly as part of the restructuring specifically disclosed in our 10-Q. Community Redevelopment staff, at the time, diligently worked to maintain independence of our auditor through this process and only upon our financials being sent to him for review did we engage in any dialog regarding either transaction.
RESPONSE: ‘Discontinued Operations’ - In our previous response to the issue of discontinued operations, we incorrectly stated that it was not discontinued operations. As stated in our original filing of the 10-Q, the term discontinued operations was in fact correct and the correct accounting was applied to the financial statements. Our original usage of that term in our 10-Q was based on ASC 205-20-45-1B, whereby the recission of the Red Hills contract amounted to a “strategic shift that has (or will have) a major effect on operations and financial results.” In addition, ASC 205-20-45-1C further provides for use of this term where there is an exit of “a major line of business, a major equity investment method or other major parts of an entity”.
2. We note your response to our prior comment 2 and your removal of the term “Cash Equivalents” from your financial statements. In order to assist us in our review of your status under the Investment Company Act of 1940, please state what comprises “Other Current Assets” and provide a dollar amount and percentage for each type of asset.
RESPONSE:
Our Other Current Assets consists of the following items:
As of June 30, 2022:
Prepaid D&O Insurance $ 59,033 70%
Good Faith Deposits $ 25,000 30%
Total Other Current Assets $ 84,033
In conclusion, the Company acknowledges that the Company is responsible for the adequacy and accuracy of the disclosure in the filing, the 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 does not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Should you have any questions or comments, please do contact me at any time. Thank you for your time in this matter.
Sincerely yours,
David E. Price,
Esq.
Show Raw Text
CORRESP
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filename1.htm
December 15th, 2022
US Securities & Exchange Commission
Corporate Finance Division
Office of Real Estate & Construction
Washington, DC 20549
Attn: Mr. Mark Rakip
Re:
Community Redevelopment Inc.
Form 10-K for fiscal year ended December 31, 2021
Filed April 1, 2022
Form 10-Q for the interim period ended June 30,
2022
Filed August 29, 2022
File No. 000-26439
Dear Ms. Rakip,
We are in receipt of your
letter dated November 14th, 2022, regarding the issuer and the aforementioned filing. Below please find our respective responses:
Form 10-K for fiscal year ended December 31, 2021
General
1. We note your response to comment 1 and reissue the comment in part. We remain unclear
as to how you have accounted for all elements of the agreement dated September 21, 2021, between the company and Red Hills Capital Advisors,
LLC during the period in which the agreement was fully valid and enforceable, and the subsequent rescission, including the accounting
literature relied upon. Please specifically address the following:
• As of and for the portion of the fiscal year ended December 31, 2021, for which the agreement was fully
valid and enforceable, tell us how you will present the assets and liabilities, and results of operations. In your response, specifically
discuss whether you plan to restate any previously issued financial statements and the basis for your conclusion.
• Specific to the accounting upon entry into and subsequent rescission of the Agreement
between you and Red Hills Capital Advisors, tell us what discussions the company had with its auditor (and any other advisor) regarding
the accounting pertaining to each stage of the company's' involvement prior to, under, and subsequent to the rescission of the agreement;
• Address why you believe the rescission of the agreement between you and Red Hills
Capital Advisors is not considered a discontinued operation pursuant to ASC 205-20-40. In your response, specifically address the criteria
considered therein in reaching your conclusion.
RESPONSE: The assets of the company were minority interests in real estate under development. In accordance with ASC 805, the company has determined that it has significant influence and thus the investments were properly recorded using the equity method. As the properties were under development, there were no results of operations; although had there been, we would pick-up our share of the income / expense in the P&L under Income from member interests.
1
RESPONSE: Restatement of
Financials - In our responses to date, we have noted several restatements which we concur are obligatory for us to make, namely; 1)
to Amend our 10-K per Item 308(a)(3) of Regulation S- K to read that our internal control over financial reporting was not effective
as of such date given such date differs from the assessment date disclosed; 2) to Amend our 10-K to affirmatively opine on the financial
statements for the years ended December 31, 2021 and 2020; 3) Rule 5-03.12 et seq.,3) we will revise the statement of operations
and other comprehensive income to include the unrealized loss on investment as part of net loss for the year in conformity with Rule 5-03.12
of regulation S-X; 4) Regarding changes in capital structure (the reverse split), SEC Staff Accounting Bulletin Topic 4C changes in the
capital structure must be given retroactive effect in the balance sheet. As our balance sheet went from 3 Billion to 500,000,000 in May
of 2021, we will revise the financial statements to reflect the reverse stock split retroactively along with supporting disclosures.
RESPONSE: Discussions with
Accountants & Auditor - Regarding the accounting upon entry into and subsequent rescission of the Agreement between Community
Redevelopment and Red Hills Capital Advisors, the discussions the company had with its auditor (and any other advisor) regarding the
accounting pertaining to each stage of the company's involvement prior to, under, and subsequent to the rescission of the agreement were
as follows. The board and staff, at the time, of the acquisition engaged an accountant and an internal staff person to help with the
transaction. It was the understanding these parties had knowledge sufficient to guide us through the acquisition of Red Hills. Our accountants
were aware of the determination to acquire and provided professional guidance as we navigated the recession preparing our financials
accordingly as part of the restructuring specifically disclosed in our 10-Q. Community Redevelopment staff, at the time, diligently worked
to maintain independence of our auditor through this process and only upon our financials being sent to him for review did we engage
in any dialog regarding either transaction.
RESPONSE: ‘Discontinued
Operations’ - In our previous response to the issue of discontinued operations, we incorrectly stated that it was not discontinued
operations. As stated in our original filing of the 10-Q, the term discontinued operations was in fact correct and the correct accounting
was applied to the financial statements. Our original usage of that term in our 10-Q was based on ASC 205-20-45-1B, whereby the recission
of the Red Hills contract amounted to a “strategic shift that has (or will have) a major effect on operations and financial results.”
In addition, ASC 205-20-45-1C further provides for use of this term where there is an exit of “a major line of business, a major
equity investment method or other major parts of an entity”.
2. We note your response to our prior comment 2 and your removal of the term “Cash
Equivalents” from your financial statements. In order to assist us in our review of your status under the Investment Company Act
of 1940, please state what comprises “Other Current Assets” and provide a dollar amount and percentage for each type of asset.
RESPONSE:
Our Other Current Assets
consists of the following items:
As of June 30, 2022:
Prepaid D&O Insurance
$ 59,033
70%
Good Faith Deposits
$ 25,000
30%
Total Other Current Assets
$ 84,033
In conclusion, the Company
acknowledges that the Company is responsible for the adequacy and accuracy of the disclosure in the filing, the 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 does not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities
laws of the United States.
Should you have any questions
or comments, please do contact me at any time. Thank you for your time in this matter.
Sincerely yours,
David E. Price,
Esq.
Corp Secretary &
Counsel
DEP/mc
Encl.
cc: Board of Directors
2