Mail Stop 4561
May 4, 2006
Bryan Abboud
Chief Executive Officer
Global Entertainment Holdings/Equities, Inc.
703 Waterford Way, Suite 690
Miami, FL 33126
Re: Global Entertainment Holdings/Equities, Inc.
Preliminary Schedule 14A
Filed on April 13, 2006
File No. 0-27637
Dear Mr. Abboud:
We have limited review of the above-referenced filing to the
matters identified below and have the following comments. If you
disagree, we will consider your explanation as to why our comments
are inapplicable or a revision is unnecessary. Please be as
detailed
as necessary in your explanation. In some of our comments, we may
ask you to provide us with supplemental information so we may
better
understand your disclosure. After reviewing this information, we
may
or may not raise additional comments.
Please understand that 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. We 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.
Schedule 14A
General
1. Please refer to Question 6 in Section H of the fourth interim
supplement to the publicly available telephone interpretations of
the
Division of Corporation Finance (July 2001) for guidance regarding
the financial statements that must be provided with respect to
asset
sale transactions. Note that in addition to the pro forma
information for the sale of assets and the audited financial
information for the company, which you have provided, you must
provide as well unaudited financial statements for the business
being
sold for the last two fiscal years and interim periods. In
addition,
you must provide pro forma financial information that complies
with
the requirements of Article 11 of Regulation S-X.
Specifically,
ensure that your disclosure conforms to the form and content as
prescribed by Article 11-02(b) and note that the pro forma income
statement must be provided for the same periods covered by the
historical financial statements. Please revise accordingly.
2. Please revise the presentation to include in the proxy
statement
the historical financial information presented in Appendix F and
the
unaudited financial statements for the business being sold per our
comment above. Because the financial statements are material to
investors` understanding of the proposed transaction, they should
form part of the proxy statement.
3. Please eliminate the phrase that appears frequently throughout
the
proxy statement that the summary you provide is "qualified in its
entirety" to the more detailed information contained in the proxy
statement and in the attached appendices. The information you
provide in the prospectus must be materially complete and the
words
"in its entirety" suggest that the prospectus summary may not be
materially complete. It is inappropriate to disclose that the
summary of the Asset Purchase Agreement referenced on page 18 or
of
the Share Exchange referenced on page 19 "is not a complete
statement" or "does not purport to be" a complete statement of the
agreement terms. The same is true regarding the summary of the
fairness opinion beginning on page 28, the tax consequences
described
on page 35 and of dissenters` rights on page 62. Disclaimers of
this
type appear to be inconsistent with the requirement that all
material
information be provided in your proxy material.
Security Ownership of Certain Beneficial Owners and Management,
page
iii
4. The information on pages iii and iv appear to be redundant with
the information on pages 16 and 17. As such, please delete the
duplicative information from pages iii and iv.
Summary Term Sheet, page 1
5. Please revise the summary term sheet to include an
appropriately
titled subheading that addresses what the impact of the
transaction
on current shareholders of Global Entertainment will be. Among
the
matters to be concisely addressed include the facts that current
Global Entertainment shareholders will no longer have an ownership
interest in the entertainment software development business, will
not
receive any stock or consideration in connection with the proposed
transactions and their share ownership in the new business will be
reduced from 38.8% ownership of the business to a 1.5% ownership
interest.
6. Under the subheading Exchange and Capitalization, please
include
where you state the number of shares to be issued to Bayshore
shareholders that this number represents 98.2% of the company.
7. Disclose that Bayshore has had no revenues and earnings for the
last two fiscal years and has incurred cumulative losses of over
$700,000 and, according to the fairness opinion, requires a $30
million capital injection to realize its business plan, which, if
such capital injection did not occur, would be detrimental to non-
affiliated shareholders.
8. We note in the discussion under "Dissenters` Rights" your
mention
of the removal of shareholder preemptive rights. Please explain
in
better detail, with an appropriate heading or subheading to
highlight
this issue, any plans to remove any existing shareholder
preemptive
rights.
Questions and Answers, page 4
"How was the fairness of the share exchange and sale of assets
determined by the Global Entertainment Board of Directors?"
9. Please revise the last sentence in this paragraph to clarify
how
the board used the fairness opinion. As drafted, it is unclear
what
the board concluded after reviewing the opinion.
Proposal I: Sale of Assets, page 18
General
10. Your discussion of Proposal I requires significant revision.
The
disclosure in this section is devoted largely to a discussion of
the
terms of the share exchange and provides investors with little
information regarding how the terms of the asset sale were
negotiated
and agreed upon. Please revise this section to describe more
fully
the background to the asset sale and how it was determined to sell
the historical business to members of management and their
affiliates. In your discussion, please explain the statement on
page
20 that, "Having determined that it no longer has a ready means by
which to fund future growth central to its business plan, the
board
of directors has determined that it is in Global Entertainment`s
best
interests to dispose of all or substantially all of Global
Entertainment`s current operations." Explain why the failure to
fund
future growth supports a sale of all the company`s current
operations, rather than supporting a decision to merely engage in
the
share exchange.
11. In revising this section, please include a materially complete
discussion of the negotiation of the terms of the sale agreement.
For example, when and how was the sale of substantially all of
Global
Entertainment`s assets to members of current management first
raised
and by whom? What were the initial terms proposed and who
proposed
them? Discuss in relevant detail the significant proposals and
counter-proposals made by the selling and purchasing parties. For
example, explain how the purchase price and payment terms varied
between the proposals and describe the basis on which each set of
terms was selected. Your discussion of the transaction should
compare the terms of the initial agreement entered into and
clarify
how the terms of the current agreement vary from the initial
terms.
See Item 14(b)(7) of Schedule 14A and Item 1005(b) of Regulation
M-A.
Similar to the comment above, please be sure to provide disclosure
regarding the asset sale that is separate and distinct from the
discussion relating to the share exchange.
12. What was the extent of the participation of management members
of
the group of 13 in the negotiations of the share exchange in light
of
the concurrent asset sale? In light of the apparent conflict of
interest of senior management, were any specific measures taken?
For
example, did any members of management recuse themselves at any
point
from the negotiations relating to the reverse merger? Please
advise.
13. Expand the discussion regarding the reasons for the asset sale
to
clarify in a concise and understandable manner why the sale is
taking
place at this time rather than at some other time in the company`s
existence. It appears that you address the reasons for the asset
sale in part in your discussion of the reasons for the merger and
share exchange on page 5.
14. Expand the discussion under the "Asset Purchase Agreement"
subsection on page 18 to disclose that the purchasers will pay
approximately 61% of Global Entertainment`s outstanding common
stock
and will receive 100% of the company`s business. Please discuss
the
value of any other consideration to be received in the asset sale,
and the basis of any such valuation. In that regard, we note your
discussion in the second full paragraph on page 32.
15. Please expand the discussion under the "Interests of Certain
Entities" subsection on page 19 to disclose that the 13 persons
named
therein, in addition to being shareholders of the company, will be
the recipients of the sale of the assets which is the subject of
this
Proposal One. Provide the same disclosure in your Q&A on page 9
regarding the interests of the affiliates of Global Entertainment
and
Bayshore.
Share Exchange Agreement, page 20
16. Please revise the discussion of representations and warranties
by
the parties to remove the list of representations, warranties and
covenants made by the parties on pages 21-22. Include instead
specific reference to any non-customary terms and a brief
reference
to the customary representations. Highlighting company-specific
and
non-customary terms while defining the parameters of the agreement
will prove more useful to shareholders than merely reciting all of
the terms of the agreement.
Fairness Opinion, page 28
17. Please explain who the "IGW Group" is.
18. Please disclose whether you received an opinion as to the
fairness of the asset sale transaction, separate and apart from an
opinion as to the fairness of the reverse merger transaction. If
so,
please discuss this fairness opinion separately. If not, please
discuss management`s decision to enter into the asset sale and
management`s determinations as to the fairness of the 4,624,953
shares of common stock and the options to be relinquished as
consideration for the sale of substantially all the assets of the
company. In your discussion, explain why you used a valuation of
approximately $0.20 per share to value the reverse merger (see
page
31), and then used a valuation of approximately $0.40 per share to
value the consideration to be received in the asset sale (see page
32).
19. We note your brief discussion in the second full paragraph on
page 32 regarding the valuation of the total consideration to be
received in the asset sale. As indicated in the comment above,
please provide a basis for your use of the $0.40 per share value
of
the common stock. Please also provide a basis for the $0.10 per
share value of the options to be relinquished. Finally, as the
Asset
Sale Agreement does not mention the employment agreements, please
explain why these amounts have been added to the approximate
"total
consideration," and explain how these amounts were derived. For
example, explain the company`s obligations to Messrs. Bryan and
Snyder under their employment agreements, and why $120,000 and
$30,000 would be owed to these persons, respectively.
20. We note that in arriving at its fairness opinion, Stenton
Leigh
relied upon the Independent Fair Value Report prepared on November
14, 2005 on Bayshore by Evans & Evans, Inc. and the Independent
valuation of the common shares of Global Entertainment at August
31,
2005, issued on September 16, 2005 by Trugman Valuation
Associates,
Inc. Please provide a discussion of the Evans and Trugman
valuations. Discuss the qualification of these entities, the
analyses they undertook, and the bases for their conclusions
regarding the valuation of the company.
21. Please identify the companies used in the comparable company
analysis. Tell us whether any additional companies fit within the
criteria used to identify the "comparable companies" but were not
analyzed, and if so, why not. Explain in better detail how the
enterprise value range and equity value range for each of Global
Entertainment and Bayshore were derived from the selected multiple
ranges of the comparable companies.
22. Please state the results of each analysis undertaken with
regard
to whether the present transaction is considered favorably or
unfavorably under the analysis. For instance, what is the
conclusion
of Stenton Leigh under the Bayshore Comparable Company Analysis?
Proposal II:
Amendment to Articles of Incorporation to Increase Authorized
Shares
of Common Stock
23. Please disclose here information regarding your existing
capital
structure. The information should be presented in a table or
similar
format for both your existing and proposed capital structure, the
number of shares your common stock that will be: (i) issued and
outstanding; (ii) authorized and reserved for issuance; and (iii)
authorized but unreserved. Provide a separate table that shows
the
effect of the asset sale in the event it is approved by
shareholders
and consummated.
24. Please revise the statement, "Global Entertainment and
Bayshore
currently have no plans to issue additional shares of common stock
(except as provided herein)" to specifically disclose that you
have
plans to issue 191,922,442, or approximately 98% of the Global
Entertainment common stock outstanding.
25. Refer to SEC Release 34-15230 and discuss the possible anti-
takeover effects of the increase in authorized shares. For
example,
what other provisions of your articles, bylaws, or other governing
documents have material anti-takeover consequences? Are there any
plans or proposals to adopt other provisions or enter into other
arrangements that may have material anti-takeover consequences?
Inform holders that management might use the additional shares to
resist or frustrate a third-party transaction providing an above-
market premium that is favored by a majority of the independent
shareholders.
In view of our limited review, all persons who are by statute
responsible for the adequacy and accuracy of the filing are urged
to
be certain that all information required pursuant to the
Securities
Act of 1933 has been included.
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
the amendment to expedite our review. Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested supplemental information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. 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 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.
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.
Please direct any questions you may have to Maryse Mills-
Apenteng at 202-551-3457 or, in her absence, to Anne Nguyen at
202-
551-3611. If you need further assistance, please contact the
undersigned at 202-551-3730.
Sincerely,
Barbara C. Jacobs
Assistant Director
cc: Via facsimile: 954-713-7715
Brian Pearlman, Esq.
Arnstein & Lehr LLP
Bryan Abboud
Global Entertainment Holdings/Equities, Inc.
May 4, 2006
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