SEC Company Response from HydroGen CORP (CIK 0001124394) — Sep 19, 2005
HydroGen CORP (CIK 0001124394)
Date: Sept. 19, 2005 · CIK: 0001124394 · Accession: 0001144204-05-029125
AI Filing Summary & Sentiment
Letter
VIA EDGAR AND FEDERAL EXPRESS Securities and Exchange Commission Washington, DC 20549 Re: HydroGen Corporation Form 10QSB for the Quarter ended June 30, File No. 0-32065
Dear Ms Dicker:
On behalf of HydroGen Corporation (“HydroGen”), we respond as follows to the Staff’s comments received on September 9, 2005 relating to the above-captioned quarterly report on Form 10-QSB. Please note that for the Staff’s convenience, we have recited each of the Staff’s comments and provided the responses to each comment immediately thereafter.
Financial Statements of Hydrogen, LLC for Six Months Ended June 30,
Note 4. Convertible Notes and Capital Structure
1.
Tell us how you determined the value of the membership units issued with the $2 million convertible debt. Additionally, tell us how you determined whether there was a beneficial conversion feature embedded in the convertible debt. Refer to EITF 98-5 and ETIF 00-27.
The membership units issued with the $2 million convertible debt were valued by allocating the amount paid by the investors between the debt and equity based on their relative fair values. The fair value of a membership unit was based on the membership unit price derived from the HMR Option Agreement described in the third paragraph of Note 1. Based on the transaction, the fair value of a membership unit was $86,186. The notes were convertible into membership units at the rate of $222,222 per unit. Accordingly, no beneficial conversion feature existed on these notes.
Ms. Lynn Dicker
September 19, 2005
Page
Note 5. Subsequent Events
2.
We note that in order to encourage conversion of your convertible notes, you reduced the conversion rate from $222,222 per membership unit to $125,000 per membership unit. Tell us how you will account for the modification to the conversion terms as an inducement for the debt holder to convert. Refer to SFAS 84.
Disclosure will be added to all future filings to indicate the following, “Upon conversion, the Company will incur a charge of approximately $875,000 related to the fair value of the additional membership units issued to the debt holders in relation to the reduced conversion rate used to encourage the debt holders to convert.”
HydroGen acknowledges that:
(i) HydroGen is responsible for the adequacy and accurate of the disclosure in the Form 10QSB filing referred to above;
(ii) 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
(iii) HydroGen may 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.
If you have any further questions please do not hesitate to contact the undersigned.
Sincerely,
/s/ Andrew
D. Hudders
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filename1.htm
Graubard
Miller
The
Chrysler
Building
405
Lexington
Avenue
New
York,
N.Y. 10174-1901
(212)
818-8800
facsimile
direct
dial
number
(212)
818-8881
(212)
818-8614
email
address
ahudders@graubard.com
September
19, 2005
VIA
EDGAR AND FEDERAL EXPRESS
Ms.
Lynn
Dicker
Reviewing
Accountant
Securities
and Exchange Commission
Mail
Stop
6010
100
F.
Street, N.E.
Washington,
DC 20549
Re:
HydroGen Corporation
Form 10QSB for the Quarter ended June
30,
2005
File No. 0-32065
Dear
Ms
Dicker:
On
behalf
of HydroGen Corporation (“HydroGen”), we respond as follows to the Staff’s
comments received on September 9, 2005 relating to the above-captioned quarterly
report on Form 10-QSB. Please note that for the Staff’s convenience, we have
recited each of the Staff’s comments and provided the responses to each comment
immediately thereafter.
Financial
Statements of Hydrogen, LLC for Six Months Ended June 30,
2005
Note
4. Convertible Notes and Capital Structure
1.
Tell
us how you determined the value of the membership units issued
with the $2
million convertible debt. Additionally, tell us how you determined
whether
there was a beneficial conversion feature embedded in the convertible
debt. Refer to EITF 98-5 and ETIF
00-27.
The
membership units issued with the $2 million convertible debt were valued
by
allocating the amount paid by the investors between the debt and equity based
on
their relative fair values. The fair value of a membership unit was based
on the
membership unit price derived from the HMR Option Agreement described in
the
third paragraph of Note 1. Based on the transaction, the fair value of a
membership unit was $86,186. The notes were convertible into membership units
at
the rate of $222,222 per unit. Accordingly, no beneficial conversion feature
existed on these notes.
Ms.
Lynn
Dicker
September
19, 2005
Page
2
Note
5. Subsequent Events
2.
We
note that in order to encourage conversion of your convertible
notes, you
reduced the conversion rate from $222,222 per membership unit
to $125,000
per membership unit. Tell us how you will account for the modification
to
the conversion terms as an inducement for the debt holder to
convert.
Refer to SFAS 84.
Disclosure
will be added to all future filings to indicate the following, “Upon conversion,
the Company will incur a charge of approximately $875,000 related to the
fair
value of the additional membership units issued to the debt holders in relation
to the reduced conversion rate used to encourage the debt holders to
convert.”
HydroGen
acknowledges that:
(i) HydroGen
is responsible for the adequacy and accurate of the disclosure in the Form
10QSB
filing referred to above;
(ii) 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
(iii) HydroGen
may 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.
If
you have any further questions please do not hesitate to contact
the
undersigned.
Sincerely,
/s/ Andrew
D. Hudders
Andrew
D. Hudders
ADH:kab
Enclosure