Mail Stop 0305
September 2, 2004
James P. Doolin
Director and President
HANGMAN PRODUCTIONS, Inc.
1223 Wilshire Blvd. #912
Santa Monica, CA 90403
Re: HANGMAN PRODUCTIONS, Inc.
Form 10-SB filed August 6, 2004
File No. 000-50892
Dear Mr. Doolin:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
After reviewing this information, we may or may not raise
additional
comments.
The purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance
the overall disclosure in your filing. We look forward to working
with you in these respects and welcome any questions you may have
about our comments or on any other aspect of our review. Feel
free
to call us at the telephone numbers listed at the end of this
letter.
General
1. Please insert page numbers throughout the document.
2. In various sections of your filing you have disclosure
regarding
the resale of automobiles or your ability to generate brand
recognition among car buyers. These disclosures appear to be an
error since they do not appear related to your business. Please
correct these disclosures.
Item 1. Description of Business
Organization, Charter Amendments and General History
3. Please clarify whether the company engaged in any business
operations between August 1999 and November 2001 and discuss how
the
company used the $20,000 in proceeds from private offerings during
that time period.
4. Supplementally explain how the company was able to authorize
the
issuance of the 400,000 shares before its existence. Please
revise
your disclosure to provide additional information in this regard,
and
disclose the date of the stock issuance. We note from Part II,
Item
4, that the four investors acquired the stock in August of 1999.
Principal Products and Services
5. Refer to the second paragraph. Please disclose more
information
regarding the contests you are currently hosting, including the
start
date of those contests, the end date, the success of the contests
to
date, and more information regarding the structure of the
contests.
For example, who is judging the current competitions? We note
that
you only have 2 part-time employees. Has there been any
advertising
for the current competitions? We note from the third paragraph
that
the contests will generally be advertised through a variety of
Internet and print advertisements.
6. We note from your website that you will collect contest
entrance
fees of $25.00 or $35.00 from each screenwriter. Please provide
this
information in the document and also disclose, if true, that this
revenue currently represents your only source of expected income.
7. We note that your second objective is to develop relationships
with entertainment and management companies. However, based on
your
disclosure in Note 2 to the Notes to the Interim Financial
Statements, it appears you currently have no partnerships with
production or management companies. Revise to clarify this fact
in
the document.
8. We note from your statement in Note 2 to the financials that
management plans include finding a well-capitalized merger
candidate
to commence operations. Please consider whether that information
should also be included here, or in the MD&A section.
Status of New Products and Services
9. Please disclose the name of the management and production
company
to which you refer in the first paragraph, and provide additional
relevant details regarding the company if material.
10. We note that you are conducting your first screenplay "in
association" with the management and production company. Please
describe what this "association" entails. For example, disclose
whether you have a formal agreement or understanding with the
management and production company and if so, disclose the terms of
such agreement.
11. Furthermore, we also note your statement that the management
and
production company you are working with "has exclusive agreements
with two of the largest film studios in Hollywood." Revise to
explain the significance of that distinction, in addition to
describing the subject of such exclusive agreements, and the
relevance of those agreements to your company and the business
relationship you have with the management and production company.
Dependence on One or a Few Major Customers
12. Please provide the current state of the company`s dependence
on
customers, on both the content development side and the
distribution
side. You state that you "anticipate" a relatively large, diverse
number of customers, yet it appears you are currently working with
only one management and production company, and you have an
unstated
number of contestants enter your current contest. Please revise
to
further clarify and explain your current state of dependence on
customers, if any.
Risk Factors
13. Please revise the last sentence in the introductory paragraph
to
reflect that all material risks are described in this section.
Your
statement "Among the risk factors that you should consider..." is
not
appropriate.
14. Revise each subheading to ensure that each reflects the risk
addressed in the discussion that follows. Currently your
subheadings
merely state a fact or an incomplete thought about your business
(such as "Early Stage Development" or "Evolving Business Model").
Please expand each subheading to indicate why the stated fact is a
material risk to investors.
Fluctuations in Quarterly Operating Results and Margins;
Seasonality
of Business
15. Please revise this subheading and paragraph to delete
references
to "seasonality of business," "consumer interest rates; government
regulation and legal developments regarding the resale of
automobiles," and other risk factors that are not applicable to
your
business. In the alternative, tell us the relevance of these risk
factors to your business. The risk factor section should only
discuss risks that affect your particular business.
Evolving Business Model
16. Please revise the first sentence of the first paragraph of
this
section. Your statement that investors consider the "difficulties
frequently encountered by companies in an early stage of
development," may give the impression that you face risks that are
not specified in the Risk Factors section. Please confirm that
all
material risks to the company are identified in this section and
revise this sentence, as necessary, to clarify that there are no
unidentified material risks currently facing your company.
Competition; Low Barriers to Entry
17. Please revise to more specifically describe the structure of
your
business, why other competitors can enter your market easily, and
identify some of your current and future competitors, by name
and/or
type of company.
Executive Officer Maintain Significant Control
18. Consider revising to combine this risk with the risk regarding
concentration of stock ownership two pages later.
Potential Liability to Clients
19. The risk to investors is not clear. Please revise the heading
and discussion to explain, for example, what kind of claim for
damages might be made against the company for its failure to
properly
acquire content.
Government Regulation and Legal Uncertainties
20. Please reconsider whether this discussion represents a
material
risk to investors. The effect of any government regulation on
your
company appears speculative and the possible future changes to the
securities laws you describe also appear speculative. Please
include
only those risks that are material to investors, so that the
substantive risks are not obscured by extraneous information.
No Public Market for the Company`s Securities
21. Please delete the second bullet point in this risk factor, as
it
does not seem to be relevant to your business.
Limited Market Due to Penny Stock
22. Please clearly state what you believe to be the current market
price of your common stock, or why you believe it to be a penny
stock. Also, please streamline your discussion of the regulatory
restrictions associated with penny stock so that the risk is
readily
understandable by the average investor. Risk factors should
generally be one or two concise paragraphs in length.
Sale of Restricted Shares
23. Please revise to explain for investors the risk that will be
associated with possible sales of restricted shares when the
restriction on selling those shares ends. For example, disclose
the
date on which the shares from each offering because unrestricted,
and
also disclose the effect on your stock price these future sales by
insiders may have.
Item 2
Plan of Operation
24. Please revise to clarify the second sentence of the second
paragraph.
25. Your discussion regarding your plan of operations is vague and
incomplete. Please revise your discussion of your plan of
operations
to include disclosure with respect to:
* How many screenplay contests you plan to host in the next twelve
months;
* How many websites you plan to develop over the next twelve
months
for these contest, and what you expect will be the capital
requirements to support the development;
* How many of the future contests will be conducted in
"associations" with production and management companies;
* Whether you have entered into agreements with such production
and
management companies with regard to future contests;
* How long you can satisfy your cash requirements and whether you
will have to raise additional funds in the next twelve months;
* Any expected significant changes in the number of your
employees;
* Any expected purchase or sale of plant/or and significant
equipment;
* Summary of any product research and development that you will
perform for the term of the plan.
For further guidance refer to Item 303(a)(1) of Regulation S-B.
26. You say that you expect revenue from screenplay contest entry
fees to be in the range of $5,000.00 a month, and that it is
anticipated to provide the necessary liquidity to fund your
current
operations as well planned growth. Please revise your disclosure
to
explain how you determined that you would receive funding in the
range of $5,000.00 a month from screenplay contest entry fees. In
your revised disclosure, explain the consequence if your expected
revenue falls below this anticipated range.
27. In the business section of your filing, we note that you have
disclosed that you are currently hosting a screenplay contest.
Please revise your discussion of your plan of operations to
include a
robust discussion regarding the start-up of your operations. Your
discussion should be in such detail to disclose anticipated
revenue
from entry fees and expected expenses. In addition, you should
include a discussion regarding any cash prizes you plan to award
contestants and how you plan to obtain the funding to award such
cash
prizes.
28. Please describe the "aforementioned planned growth" mentioned
in
the second paragraph of this section. We cannot locate the
discussion you reference.
29. We note that $1500 of the compensation expense is recorded as
an
accrued liability. Please tell us and disclose when that
liability
is to be paid off.
Results of Operation
30. Your discussion regarding your results of operations is overly
general in that it does not include a discussion of the factors
responsible for the increase in your general and administrative
expenses during the periods presented in your financial
statements.
Please revise to include a discussion of the facts and
circumstances
responsible for the increase in general and administrative
expenses
during the periods presented in your consolidated statements of
operations. In addition, please revise your disclosure to show
the
major components of general and administrative expenses for all
periods presented in your financial statements.
Liquidity
31. Please expand upon your statement that the cash on hand of
$4,770
will be sufficient to allow the company to continue operations for
the next twelve months. We note that you pay at least $1600 a
month
for compensation expense, and that your average monthly
expenditures
are between $3000 and $5000. Supplementally advise and revise to
clarify.
32. In view of the uncertainties concerning your continued
existence
as a going concern, your filing should contain a reasonably
detailed
description of your specific viable plans intended to mitigate the
effect of such conditions and your assessment of the likelihood
that
such plans can be effectively implemented. The elements of the
plan
that are particularly significant or critical to overcoming your
present financial difficulties should be clearly identified and
discussed. Additionally, there should be a reasonably detailed
discussion of your ability (or inability) to generate sufficient
cash
to support your operations during the twelve-month period
following
the date of the most recent balance sheet presented. You should
describe the plan in both the management`s discussion and analysis
of
liquidity and the notes to the financial statements (Note 2 of
December 31, 2003 financials and Note 2 of the June 30, 2004
interim
financial statements). Also, note that you will need to update
this
discussion, as necessary, in future quarterly and annual filings
with
the Commission.
33. We note your statement that if your operations are not able to
generate sufficient income, and additional moneys are needed in
the
next twelve months, your management will advance the Company
monies
not to exceed $25,000.00 as loans to the Company. However, we are
unclear as to what your current future obligations are. Please
revise your filing to disclose your current future obligations and
any known trends, events or uncertainties that have or are
reasonably
likely to have a material impact on you short-term or long-term
liquidity. Also disclose all of your internal and external
sources
of liquidity. Refer to the guidance in Item 303 (b)(1).
Item 4. Security Ownership of Certain Beneficial Owners and
Management
Business Experience
34. Please identify the names of the investment banking firms Mr.
Doolin worked at, and whether his job from 1998-2001 was a full-
time
job, while also attending graduate school.
35. Please clarify whether Mr. Thueson graduated from Brigham
Young
University, and also identify the entertainment management
production
company Mr. Thueson worked for and disclose the years of his
employment. We note that the last sentence in his business
experience description is a speculative, forward-looking
statement,
and may be more appropriately placed somewhere else in the
document.
Please revise as necessary.
36. Please disclose the year Mr. Winchester started working for
Sony
Computer Entertainment America, Inc.
Item 6. Executive Compensation
Supplementally tell us why you provided compensation data for the
period ended June 30, 2004. We note that Item 402 does not
specifically require that information. Please consider including
a
footnote to the compensation table to clarify that the June 30,
2004
period is not the new end of your fiscal year, but instead the
period
was included to provide a better indication of current executive
compensation levels, if that is the case.
Item 7. Certain Relationships and Related Transactions
37. To the extent required by Item 404 of Regulation S-B, please
include disclosure regarding the loan to an officer and director
referenced in Note 5 of the Notes to Financial Statements December
31, 2003.
December 31, 2003 Financial Statements
Revenue Recognition
38. Please revise your revenue recognition policy to disclose your
policy regarding recognizing revenue from entry fees to your
screenplay contest and your policy regarding recognizing revenue
from
your brokering services. Refer to the guidance in SAB 104.
Note 1(b) - Income Taxes
39. Please expand your income tax accounting policy note to
describe
the accounting for recognition of a valuation allowance on
deferred
tax assets (e.g. net operating loss carry forwards, etc.).
Refer
to the guidance in paragraph 17(e) of SFAS No. 109.
Note 5 - Related Party Transactions
40. We note you loaned money to an officer who fully repaid the
loan
in fiscal year 2004. In accordance with the guidance in
paragraphs
18-20 of SFAS No. 95, please separately disclose the gross cash
inflows and cash outflows (i.e. issuance / repayment of loan) as
financing activities in the statement of cash flows.
Interim Financial Statements
41. Similar to the treatment in your annual financial statements,
please label all interim financial statements (including notes) as
the Company being a development stage enterprise. Refer to the
guidance in paragraph 12 of SFAS No. 7.
In addition, please disclose the accumulated deficit "during the
development stage" on the face of the balance sheet. Refer to
the
guidance in paragraph 11(a) of SFAS No. 7. Please revise
accordingly.
Interim Statement of Operations and Statement of Cash Flows
42. Please also furnish the statements of operations and cash
flows
for the comparable preceding fiscal 2003 interim period. Refer
to
the guidance in Item 310(b) of Regulation S-B.
Signatures
43. The controller or principal accounting officer, in addition to
the principal executive officer and principal financial officer,
must
sign the registration statement. If an individual who has already
signed the registration statement acts in that capacity, please
ensure you have indicated each capacity in which each individual
signs the registration statement.
Other
We urge all persons who are responsible for the accuracy and
adequacy
of the disclosure in the filings reviewed by the staff to be
certain
that they have provided all information investors require. Since
the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that
* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff 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.
In addition, please be advised that the Division of Enforcement
has
access to all information you provide to the staff of the Division
of
Corporation Finance in our review of your filing or in response to
our comments on your filing.
Closing
File an amendment in response to these comments. Provide a
cover letter keying your responses to the comments, and provide
any
requested supplemental information. If you believe complying with
these comments is not appropriate, tell us why in your letter. We
may have comments after reviewing your revised materials and your
responses. Address your response letter to the address on the
letterhead, using 20549-0305 as the zip code.
Please be aware that this Form 10-SB registration statement
is
a voluntary filing. As a result, the registration statement
automatically goes effective on October 5, 2004. You may wish to
withdraw this filing prior to effectiveness pursuant to Section
12(g)(1) of the Securities Exchange Act of 1934.
You may contact Patrick Kuhn, at (202) 942-1912 or Joseph
Foti,
Senior Assistant Chief Accountant, at (202) 942-1952, if you have
questions regarding comments on the financial statements and
related
matters. Please contact Messeret Nega at (202) 942-1891 or me at
(202) 942-2936 with any other questions.
Regards,
Sara W. Dunton
Special Counsel
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Hangman Productions, Inc.
File No. 000-50892
Page 1