Letterhead of
Goldstein & DiGioia LLP
45 Broadway - 11th Floor
New York, New York
Tel. No.: 212-599-3322
Fax No.: 212-557-0295
October 24, 2005
Via Fax and EDGAR
Mr. Thomas Flinn
Securities and Exchange Commission
Division of Corporate Finance
100 F Street, N.W.
Washington, D.C. 20549
Re: Primary Business Systems, Inc.
Form 10-KSB For Fiscal Year ended December
31, 2004 Form 10-QSB for Quarterly Period
Ended March 31, 2005 Form 10-QSB for
Quarterly Period Ended June 30, 2005 File
0-25523
Sir:
We have been requested by our client, PBS Holding, Inc. (formerly Primary
Business Systems, Inc.) to respond to Staff's comment letter of September 28,
2005. We thank you for your grant of an extension to provide our response.
Further, please note that the Company has changed its name to PBS Holding, Inc.
effective September 29, 2005.
We respond following the sequence to your numbered comments.
Comment 1
Form 10-KSB for the fiscal year Ended December 31, 2004 Note 1 -
Organization and Nature of Business, page F-9
Please tell us how you valued the restricted shares that were issued for the
acquisition of AHJR Inc in 2003 at a price of $.0001 per share. We note other
restricted stock issuances in 2003 were valued at $.05 per share.
Response
The transaction to which you refer was completed in year 2003, as you noted. The
actual transaction value was $7,240. Because of the share par value, the
stockholders equity "value" was $72,400. In the Statement of Stockholders'
Equity you will note this value, with an amount due under Additional Paid-In
capital of $65,160.
With respect to other sales of stock, these transactions were negotiated by the
Company with third parties at various times. The Company's Common Stock during
such period was (and continues to be) thinly traded, with prices hovering at the
$.05 figure. However, the AHJR transaction was with the principal shareholders
of the Company who would be receiving restricted shares. Unlike the transactions
with non-affiliated parties who could eventually sell these securities under
Rule 144, these shares would continue to be restricted under Rule 144. In the
opinion of the sellers of AHJR, Inc. these restrictions dictated a lesser value
to the shares being issued than "fair market value" of market traded securities
or securities which could be sold under Rule 144. The Board of Directors agreed
to this valuation.
Comment 2
Form 10-KSB December 31, 2004
Note 4 - Goodwill, page F-13
Please explain to us which acquisitions resulted in the goodwill recorded in
your financial statements. To the extent goodwill results from the combinations
with shell companies, please advise us why you accounted for these transactions
as business combinations rather than as recapitalizations.
Response
The two acquisitions involved are:
Acquisition of 100% interest in Primary Business
Systems LLC $550,000
Acquisition of 100% interest in AHJR, Inc. 7,240
--------
Total $557,240
========
Acquisition of 100% interest in Primary Business Systems LLC ("PBS LLC")
In the case of the acquisition of 100% interest in PBS LLC, the Company had
previously experienced a majority change in ownership and control. Ownership and
control had passed from Pine Services, Ltd. to the individual members of PBS
LLC. This first transaction pursuant to agreements was entered into in
September, 2002 between the owners of PBS LLC with a majority shareholder of the
Company. In November 2002, the individual members of PBS LLC in a separate
transaction sold their interests in PBS LLC to the Company in exchange for
shares of common stock in the Company. PBS LLC became a wholly-owned subsidiary
of the Company.
The Company evaluated the market and industry of PBS LLC and its Board of
Directors arrived at a fair value. All parties concurred in the fair value of
PBS LLC at an amount of $550,000 in
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excess of all other assets, net of liabilities, of PBS LLC.
The Company took the position that these transactions were a business
combination and thus fell under the guidelines of FASB 141. In the opinion of
management and the Company's auditors, they believe that the nature of these
transactions meet more of the criteria of a business combination than one of a
recapitalization. The Company recognizes this as a reverse acquisition for
financial reporting purposes even though it recognized goodwill in the
transaction because of the extenuating circumstances of the debt and stock
commitments that were part of the transaction.
Following the guidelines of FASB 141 dealing with business combinations, the
Company recognized goodwill on the books and records at $550,000 in the
acquisition of PBS LLC. Further, following the also recently enacted guidelines
of FASB 142 dealing with goodwill and other intangible assets, the Company
determined the goodwill has an indefinite life and nothing has been amortized or
written off because it does not fall under amortization guidelines and the fair
value has not been impaired.
Acquisition of AHJR.
The stock issued for the purchase of the assets of AHJR, Inc. (d/b/a Concord
Staffing) was for the net book value which approximated the fair market value of
this entity at the date of purchase. The total fair market value and book value
of AHJR Inc. was $7,240. In connection with the issuance of the shares as the
purchase price, the issuance of the common stock had to be recorded at par
($72,400) and the offset was to additional paid in capital of a negative amount
of $65,160 and to goodwill for $7,240.
Comment 3.
Signatures Page F-18.
Please amend the signature page to update Amanda Sinclair's signature page to
2005.
Response
Please note we filed an amendment to the Form 10-KSB on October 5, 2005 to make
the requested correction.
Comment 4.
Exhibit 32.
Please amend this certification to reference the annual report for the year
ended December 31, 2004.
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Response
Please note we filed an amendment to the Form 10-KSB on October 5, 2005 to make
the requested correction.
Comment 5.
Form 10-QSB for the Quarterly Period Ended March 31, 2005
Please amend this certification to reference the quarterly report for the period
ended March 31, 2005.
Response
We expect to file an amendment within the next few days in response to your
comment. Please advise whether we file the entire 10-QSB or just the
certification.
On behalf of the Company, we have been authorized by management to confirm to
Staff the following:
1. The Company is responsible for the adequacy and accuracy of the disclosure
in the Company's filings with the Commission under the Securities Exchange
Act;
2. Staff comments or changes to disclosure in response to Staff comments do
not foreclose the Commission from taking any action with respect to the
filings; and
3. 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.
We will also file this letter via EDGAR.
Should you have any further questions or comments, please do not hesitate to
contact the undersigned.
Sincerely,
/s/ Brian C. Daughney
Brian C. Daughney
cc: Mr. Rick Matthews (via email)
Mr. Richard Sellers (via email)
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