SEC Company Response from Global General Technologies, Inc. (CIK 0001092455) — Jun 16, 2005
Global General Technologies, Inc. (CIK 0001092455)
Date: June 16, 2005 · CIK: 0001092455 · Accession: 0000939802-05-000449
AI Filing Summary & Sentiment
File numbers found in text: 000-28417
Letter
Re: Knowledge Transfer Systems, Inc. Form 10-KSB for the year ended December 31, 2004 Filed April 13, 2005 File No. 000-28417
David Lubin & Associates 92 Washington Avenue Cedarhurst, NY 11516 Telephone: (516) 569-9629 Facsimile: (516) 569-5053
June 16, 2005
Securities and Exchange Commission Division of Corporate Finance Station Place 100 F St. NE, Washington DC 20549 Attention: Josh Forgione, Staff Accountant
Ladies and Gentlemen:
On behalf of Knowledge Transfer Systems, Inc. (the "Company"), we hereby file this letter in response to the comments of the Securities and Exchange Commission (the "Commission"), dated May 25, 2005 (the "Comment Letter"), with reference to the Company's Form 10-KSB for the year ended December 31, 2004, file number 0-28417.
1. We read your response to comment 1. Please tell us why you estimated the fair value of services provided based on the par value of your stock. In addition, tell us how you determined that the fair value of consideration received is more reliably measurable than the fair value of stock issued. Refer to SFAS 123 and EITF 96-18.
Response:
As we stated in our previous response, the estimated value of the services provided was based upon 2% of the value of the liabilities of $111,034, amounting to $2,220.68, which was the agreed upon value of the services. As this was less than par value, par value was used since stock cannot be issued for less than par value.
Also, there was very little trading of the stock prior to the measurement date, October 12, 2004. Moreover, although the closing price of the stock on said date was $0.11, there was no trading on October 12, 2004. Also, because the Company had negative equity, no assets, no revenue source, and no financing source to pay liabilities (prior to the change in control), the stock was not believed to be worth more than stated or par value.
2. We note on page 2 and in your stock purchase agreement, that Messrs. Shneibalg and Bingaman assumed or paid debts of the Company in the amount of $150,000 as consideration for the shares. Please tell us how you accounted for this consideration. In your response, please also summarize the relevant provisions of the stock purchase agreement and reconcile your disclosure on page 2 with the disclosure on pages F-10 and F-12 with regard to the consideration received in exchange for the shares issued.
Response:
As previously described (in our response to comment 1 to your May 3, 2005 comments), the 2,293,224 shares were issued for the services of raising sufficient capital to pay the debts of the Company. This was accomplished through the Global General Technology agreement, whereby the Company received an advance of $200,000, which is being recorded as a liability. Please see response to comment 5 from the May 3, 2005 comments.
Messrs. Shneibalg and Bingaman did not assume or pay any debts of the Company from their personal funds. The funds came from the Global General Technology agreement. The shares were issued to the Company's officers for the service of raising capital sufficient to pay the outstanding debts of the Company. The Company agrees that this issue will be clarified and more clearly enunciated in the Company's next filing.
3. In your response to comment 2, we note that you discontinued consolidating KT Solutions upon the change in control which occurred in October 2004. Please tell us why you do not continue to account for your investment in KT Solutions under the cost method of accounting. In addition, since you have a negative investment in KT Solutions, please tell us how you considered the following when making the determination to recognize your negative investment in earnings:
a) Continuing involvement with the subsidiary;
b) Debt or any other obligation guaranteed by you or another subsidiary, if any: and
c) Whether you obtained a legal opinion that provides a high level of assurance, such as a "would" opinion, that KT Solutions creditors will not be able to pierce the corporate veil.
Response:
We have not continued to account for the investment in KT Solutions under the cost method of accounting because KT Solutions was determined to be worthless, due to its lack of operations, lack of liquidity, and the fact that it filed for bankruptcy.
The Company does not intend to have any further involvement with the subsidiary, and has not had any involvement with KT Solutions for over one year. Furthermore, the Company does not, to the best of its knowledge, have any obligations with regards to the debts of the subsidiary. Although the Company did not obtain a legal opinion as to whether or not KT Solutions' creditors would be able to pierce the corporate veil and reach the parent Company, when the change of control was effectuated Messrs. Shneibalg and Bingaman received assurances from the seller and the Company that the Company had no debts or obligations.
4. Please tell us the status of the bankruptcy proceeding including the date when the bankruptcy proceeding concluded, the outcome of the proceeding and whether there have been any changes in the bankruptcy proceeding since that date.
Response:
In September 2003, a voluntary bankruptcy petition pursuant to Chapter 7 of the U.S Bankruptcy Code was filed by KT Solutions in California. Current management has not received any notices or any further correspondence or any other information regarding the bankruptcy proceeding. Accordingly, the Company believes that the bankruptcy has been discharged; however, phone calls to the attorneys representing the subsidiary have been unreturned.
The Company respectfully submits via EDGAR the foregoing responses to the Commission as requested by the Commission. Please note that we are also submitting via facsimile a copy of this letter in order to help expedite your review process.
Please address any further questions or comments to the undersigned at the above-referenced telephone and fax numbers. Thank you very much.
Very truly yours,
David Lubin
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David Lubin & Associates
92 Washington Avenue
Cedarhurst, NY 11516
Telephone: (516) 569-9629
Facsimile: (516) 569-5053
June 16, 2005
Securities and Exchange Commission
Division of Corporate Finance
Station Place
100 F St. NE, Washington DC 20549
Attention: Josh Forgione, Staff Accountant
Re: Knowledge Transfer Systems, Inc.
Form 10-KSB for the year ended December 31, 2004
Filed April 13, 2005
File No. 000-28417
Ladies and Gentlemen:
On behalf of Knowledge Transfer Systems, Inc. (the "Company"), we
hereby file this letter in response to the comments of the Securities and
Exchange Commission (the "Commission"), dated May 25, 2005 (the "Comment
Letter"), with reference to the Company's Form 10-KSB for the year ended
December 31, 2004, file number 0-28417.
1. We read your response to comment 1. Please tell us why you estimated
the fair value of services provided based on the par value of your
stock. In addition, tell us how you determined that the fair value of
consideration received is more reliably measurable than the fair value
of stock issued. Refer to SFAS 123 and EITF 96-18.
Response:
As we stated in our previous response, the estimated value of the
services provided was based upon 2% of the value of the liabilities of
$111,034, amounting to $2,220.68, which was the agreed upon value of
the services. As this was less than par value, par value was used since
stock cannot be issued for less than par value.
Also, there was very little trading of the stock prior to the
measurement date, October 12, 2004. Moreover, although the closing
price of the stock on said date was $0.11, there was no trading on
October 12, 2004. Also, because the Company had negative equity, no
assets, no revenue source, and no financing source to pay liabilities
(prior to the change in control), the stock was not believed to be
worth more than stated or par value.
2. We note on page 2 and in your stock purchase agreement, that Messrs.
Shneibalg and Bingaman assumed or paid debts of the Company in the
amount of $150,000 as consideration for the shares. Please tell us how
you accounted for this consideration. In your response, please also
summarize the relevant provisions of the stock purchase agreement and
reconcile your disclosure on page 2 with the disclosure on pages F-10
and F-12 with regard to the consideration received in exchange for the
shares issued.
Response:
As previously described (in our response to comment 1 to your May 3,
2005 comments), the 2,293,224 shares were issued for the services of
raising sufficient capital to pay the debts of the Company. This was
accomplished through the Global General Technology agreement, whereby
the Company received an advance of $200,000, which is being recorded as
a liability. Please see response to comment 5 from the May 3, 2005
comments.
Messrs. Shneibalg and Bingaman did not assume or pay any debts of the
Company from their personal funds. The funds came from the Global
General Technology agreement. The shares were issued to the Company's
officers for the service of raising capital sufficient to pay the
outstanding debts of the Company. The Company agrees that this issue
will be clarified and more clearly enunciated in the Company's next
filing.
3. In your response to comment 2, we note that you discontinued
consolidating KT Solutions upon the change in control which occurred in
October 2004. Please tell us why you do not continue to account for
your investment in KT Solutions under the cost method of accounting. In
addition, since you have a negative investment in KT Solutions, please
tell us how you considered the following when making the determination
to recognize your negative investment in earnings:
a) Continuing involvement with the subsidiary;
b) Debt or any other obligation guaranteed by you or another
subsidiary, if any: and
c) Whether you obtained a legal opinion that provides a high
level of assurance, such as a "would" opinion, that KT
Solutions creditors will not be able to pierce the corporate
veil.
Response:
We have not continued to account for the investment in KT Solutions
under the cost method of accounting because KT Solutions was determined
to be worthless, due to its lack of operations, lack of liquidity, and
the fact that it filed for bankruptcy.
The Company does not intend to have any further involvement with the
subsidiary, and has not had any involvement with KT Solutions for over
one year. Furthermore, the Company does not, to the best of its
knowledge, have any obligations with regards to the debts of the
subsidiary. Although the Company did not obtain a legal opinion as to
whether or not KT Solutions' creditors would be able to pierce the
corporate veil and reach the parent Company, when the change of control
was effectuated Messrs. Shneibalg and Bingaman received assurances from
the seller and the Company that the Company had no debts or
obligations.
4. Please tell us the status of the bankruptcy proceeding including the
date when the bankruptcy proceeding concluded, the outcome of the
proceeding and whether there have been any changes in the bankruptcy
proceeding since that date.
Response:
In September 2003, a voluntary bankruptcy petition pursuant to Chapter
7 of the U.S Bankruptcy Code was filed by KT Solutions in California.
Current management has not received any notices or any further
correspondence or any other information regarding the bankruptcy
proceeding. Accordingly, the Company believes that the bankruptcy has
been discharged; however, phone calls to the attorneys representing the
subsidiary have been unreturned.
The Company respectfully submits via EDGAR the foregoing responses to
the Commission as requested by the Commission. Please note that we are also
submitting via facsimile a copy of this letter in order to help expedite your
review process.
Please address any further questions or comments to the undersigned at
the above-referenced telephone and fax numbers. Thank you very much.
Very truly yours,
David Lubin
Cc: Shmuel Shneibalg
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