SEC Comment Letter 0000000000-25-002440 to Rivulet Entertainment, Inc. (RIVF)
Rivulet Entertainment, Inc.
Date: March 5, 2025 · CIK: 0001342936 · Accession: 0000000000-25-002440
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 000-52390
Letter
March 5, 2025 Walter Geldenhuys Chief Financial Officer Rivulet Entertainment, Inc. 7659 E. Wood Drive Scottsdale, AZ 85260 Re:Rivulet Entertainment, Inc. Form 10-KT for the Transition Period ended June 30, 2024 Filed November 12, 2024 File No. 000-52390 Dear Walter Geldenhuys: We have reviewed your February 26, 2025 response to our comment letter and have the following comments. Please respond to this letter within ten business days by providing the requested information or advise us as soon as possible when you will respond. If you do not believe a comment applies to your facts and circumstances, please tell us why in your response. After reviewing your response to this letter, we may have additional comments. Unless we note otherwise, any references to prior comments are to comments in our February 19, 2025 letter. Form 10-KT for the Transition Period ended June 30, 2024 Financial Statements Note 7 - Asset Purchase Agreement, page 19 We note your response to prior comment one explaining that shares transferred to Rivulet Media, Inc. were recognized as a prepayment for the pending transaction, although without addressing the inconsistency between the $29,894,641 value ascribed to the prepayment shares and the value that would reflect the combined equity or deficit of the entities acquired, as would result in accounting for a reverse recapitalization using the recorded amount with no step-up in basis.
We would generally expect that any asset recognized under these circumstances would be offset in equity, following the guidance in FASB ASC 505-10-45-2 and SAB Topic 4.E, regarding receivables that arise upon issuing capital stock. Please 1.
March 5, 2025 Page 2 explain to us how you propose to address this anomaly in depicting the transaction in the pro forma information that you include with the Form 8-K, and in accounting for the transaction in your interim report for the quarter ended September 30, 2024.
On a related point, if you believe that an amendment to correct the presentation is unnecessary or should not be required based on your assessment of materiality please explain to us how you considered materiality and the timeframe necessary to resolve the current and periodic reporting deficiencies in formulating your view.
2.We note your response to prior comment two indicating that activities of the subsidiaries acquired comprise "virtually all of the business, operations and financial results of Rivulet Media, Inc." and representing that there would be "no material difference" between the carve-out and consolidated financial statements.
However, we believe that a distinction will need to be apparent in the financial presentation as to legal structure and composition, to include identifying any parent- subsidiary relationships among the entities acquired, providing a description of any assets acquired and liabilities assumed that were not held within any of the entities acquired, and clarifying that you did not acquire the ownership interests of former parent, i.e. Rivulet Media, Inc. Please also describe any changes to the relationships that comprise the legal structure among the entities acquired that were instituted in connection with the acquistion or subsequently.
Given that a reverse merger recapitalization would ordinarily entail recasting historical share activity of the accounting acquirer based on the ratio of equity interests exchanged, please clarify how you intend to report such activity for the carve-out or combined equity interests and describe your rationale.
Please contact John Cannarella at 202-551-3337 or Karl Hiller at 202-551-3686 if you have questions regarding comments on the financial statements and related matters. Sincerely, Division of Corporation Finance Office of Energy & Transportation
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March 5, 2025
Walter Geldenhuys
Chief Financial Officer
Rivulet Entertainment, Inc.
7659 E. Wood Drive
Scottsdale, AZ 85260
Re:Rivulet Entertainment, Inc.
Form 10-KT for the Transition Period ended June 30, 2024
Filed November 12, 2024
File No. 000-52390
Dear Walter Geldenhuys:
We have reviewed your February 26, 2025 response to our comment letter and have
the following comments.
Please respond to this letter within ten business days by providing the requested
information or advise us as soon as possible when you will respond. If you do not believe a
comment applies to your facts and circumstances, please tell us why in your response.
After reviewing your response to this letter, we may have additional comments.
Unless we note otherwise, any references to prior comments are to comments in our February
19, 2025 letter.
Form 10-KT for the Transition Period ended June 30, 2024
Financial Statements
Note 7 - Asset Purchase Agreement, page 19
We note your response to prior comment one explaining that shares transferred to
Rivulet Media, Inc. were recognized as a prepayment for the pending transaction,
although without addressing the inconsistency between the $29,894,641 value
ascribed to the prepayment shares and the value that would reflect the combined
equity or deficit of the entities acquired, as would result in accounting for a reverse
recapitalization using the recorded amount with no step-up in basis.
We would generally expect that any asset recognized under these circumstances
would be offset in equity, following the guidance in FASB ASC 505-10-45-2 and
SAB Topic 4.E, regarding receivables that arise upon issuing capital stock. Please 1.
March 5, 2025
Page 2
explain to us how you propose to address this anomaly in depicting the transaction in
the pro forma information that you include with the Form 8-K, and in accounting for
the transaction in your interim report for the quarter ended September 30, 2024.
On a related point, if you believe that an amendment to correct the presentation is
unnecessary or should not be required based on your assessment of materiality please
explain to us how you considered materiality and the timeframe necessary to resolve
the current and periodic reporting deficiencies in formulating your view.
2.We note your response to prior comment two indicating that activities of the
subsidiaries acquired comprise "virtually all of the business, operations and financial
results of Rivulet Media, Inc." and representing that there would be "no material
difference" between the carve-out and consolidated financial statements.
However, we believe that a distinction will need to be apparent in the financial
presentation as to legal structure and composition, to include identifying any parent-
subsidiary relationships among the entities acquired, providing a description of any
assets acquired and liabilities assumed that were not held within any of the entities
acquired, and clarifying that you did not acquire the ownership interests of former
parent, i.e. Rivulet Media, Inc. Please also describe any changes to the relationships
that comprise the legal structure among the entities acquired that were instituted in
connection with the acquistion or subsequently.
Given that a reverse merger recapitalization would ordinarily entail recasting
historical share activity of the accounting acquirer based on the ratio of equity
interests exchanged, please clarify how you intend to report such activity for the
carve-out or combined equity interests and describe your rationale.
Please contact John Cannarella at 202-551-3337 or Karl Hiller at 202-551-3686 if you
have questions regarding comments on the financial statements and related matters.
Sincerely,
Division of Corporation Finance
Office of Energy & Transportation