Frascona, Joiner, Goodman and Greenstein, P.C.
4750 Table Mesa Drive
Boulder, Colorado 80305
Ph: 303 494 3000
Fx: 303 494 6309
December 29, 2008
Ethan Horowitz
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549-7010
RE:
Basset Enterprises, Inc.
Form 10-KSB for Fiscal Year Ended
December 31, 2007
Filed March 13, 2008
File No, 000-51355
Dear Mr. Horowitz,
Please be advised that our law firm serves as legal counsel to Basset Enterprises, Inc., a Nevada corporation (the “Company”). Enclosed please find the Company’s responses to your written comment letter dated December 18, 2008.
Form 10-KSB for Fiscal Year Ended December 31, 2007
Audited Financial Statements for the Year Ended December 31. 2007
Report of Independent Registered Public Accounting Firm. page 11
1.
Please advise your independent accountant to revise the first and third paragraphs of their report to refer to each period for which audited statements of operations, cash flows, and stockholders’ equity have been included in your filing (i.e. for the fiscal years ended December 31, 2007 and 2006). Refer to AU 508.
In response to Comment 1, our auditor has revised the first and third paragraphs of their report to refer to each period for which audited statements of operations, cash flows, and stockholders’ equity have been included in our filing. A copy of the revised report was included in our amended Annual Report for the fiscal year ended December 31, 2007 on Form 10-K/A, which we filed with the Securities and Exchange Commission (“SEC”). Additionally, please note that in the Company’s amended Annual Report on Form 10-K/A, the Company has updated
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its Balance Sheet to include information for December 31, 2006.
Item 8A—Controls and Procedures. page 22
2.
It does not appear that management has performed its assessment of internal control over financial reporting as of December 31, 2007. Since you filed an annual report for the prior fiscal year, you are required to report on management’s assessment of internal control over financial reporting as of December 31, 2007 in accordance with Item 308T of Regulation S-B. Please revise. Please note that you must file on Form l0-K/A rather than Form l0-KSB/A and comply with all the related disclosure requirements (see SEC Release 33-8876 which became effective on February 4, 2008).
3.
Considering the preceding comment, please tell us how the exclusion of this required disclosure impacted your conclusions regarding the effectiveness of your disclosure controls and procedures as of December 31, 2007. If you continue to believe that disclosure controls and procedures were effective, please provide us with an explanation of the factors considered in reaching this conclusion. Alternatively, disclose management’s revised conclusion on the effectiveness of your disclosure controls and procedures as of December 31, 2007 along with any remediation plans that have been or will be enacted.
In response to comments 2 & 3, the Company’s management has performed its assessment of internal control over financial reporting. Additionally, management considered whether its failure to report on management’s annual report on internal control over financial reporting impacted its conclusions regarding the effectiveness of its disclosure controls and procedures as of the end of the period covered by the report. Management determined that its failure to report on management’s assessment of internal control over financial reporting did impact its conclusions regarding the effectiveness of its disclosure controls and procedures as of the end of the period covered by its report. Accordingly, in conjunction with its assessment, management has amended its annual report for the fiscal year ended December 31, 2007, and has included the following language in Item 9A(T) of its ame nded annual report on Form 10-K/A for the fiscal year ended December 31, 2007 which it filed with the SEC:
“ITEM 9A(T). CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its chief executive and chief financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. &nbs p;The Company maintains
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such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to chief executive and chief financial officers to allow timely decisions regarding disclosure.
As of the end of the period covered by this report, we initially carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and chief financial officer initially concluded that our disclosure controls and procedures were effective. Subsequently, we determined that we had a material weakness, as described below, in our disclosure controls and procedures. Therefore, in connection with the filing of this amended Annual Report on Form 10-K/A, our chief executive officer and chief financial officer re-evaluated the effectiveness of our disclosure controls and procedures and concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective.
In connection with the preparation and filing of the Form 10-KSB for the fiscal year ended December 31, 2007, we inadvertently failed to disclose the information required by Item 308T of Regulation S-B regarding management’s annual report on internal control over financial reporting. Based upon the Company’s failure to include the disclosures required by Item 308T, we determined that our disclosure controls and procedures were not effective to satisfy the objectives for which they are intended. Our plan to remediate the foregoing problem with our disclosure controls and procedures which existed as of December 31, 2007 is to closely monitor and stay abreast of changes and modifications that impact the Company’s reporting obligations, and respond accordingly.
Internal Control Over Financial Reporting
The management of the Company is responsible for the preparation of the financial statements and related financial information appearing in this amended Annual Report on Form 10-K/A. The financial statements and notes have been prepared in conformity with accounting principles generally accepted in the United States of America. The management of the Company also is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. A company's internal control over financial reporting is defined as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of r ecords that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the
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financial statements.
Management, including the chief executive officer and chief financial officer, does not expect that the Company's disclosure controls and internal controls will prevent all error and all fraud. Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives of the control system are met and may not prevent or detect misstatements. Further, over time control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.
With the participation of the chief executive officer and chief financial officer, our management evaluated the effectiveness of the Company's internal control over financial reporting as of December 31, 2007 based upon the framework in Internal Control –Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our management has concluded that, as of December 31, 2007, the Company's internal control over financial reporting was effective.
This amended annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this amended Annual Report on Form 10-K/A.
There were no changes in the Company's internal control over financial reporting that occurred during the last fiscal quarter, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.”
Attached to this correspondence, please find an acknowledgement by the Company whereby the Company acknowledges that:
·
the Company is responsible for the adequacy and accuracy of the disclosure in the filing;
·
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 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.
Please feel free to contact me with any questions relating to the foregoing information. Thank you for your time and assistance with this matter.
FRASCONA JOINER GOODMAN AND GREENSTEIN, P.C.
By: /s/ Gary S. Joiner, Esq.
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