Brian F. Faulkner
A PROFESSIONAL LAW CORPORATION
27127 CALLE ARROYO, SUITE 1923 . SAN JUAN CAPISTRANO, CALIFORNIA 92675
T: 949.240.1361 . F: 949.240.1362 . C: 714.608.2125
E: BRIFFAULK@AOL.COM
VIA EDGAR AND MAIL
January 8, 2009
Daniel L. Gordon, Branch Chief
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20 549
Re: City Capital Corporation
File No. 33-5902
Form 10-KSB for the year ended December 31, 2007
Form 10-Q's for the quarters ended March 31, 2008, June 30, 2008,
and September 30, 2008
Dear Mr. Gordon:
The letter is in response to your letter of November 21, 2008
with regard to the Form 10-KSB for the year ended December 31, 2007,
and the Form 10-Q's for the quarters ended March 31, 2008, June 30,
2008, and September 30, 2008 for City Capital Corporation, a Nevada
corporation ("Company"). Each comment in your letter will be
addressed below.
1. The audited financial statements of St. Clair Superior
Apartment, Inc. and related pro forma financial information as
required by Regulation 8-05 of Regulation S-X are contained in a Form
8-K being concurrently filed with the SEC.
2. During the second quarter of 2008, the Company re-focused
its business strategy within the real estate market to aggressively
market its credit investor program. This program assists buyers in
finding properties for purchase from partnering lenders.
The Company considers the core line of business during 2008 to be
revenues from the real estate renovation and sales and rental revenue.
Once the Company's bio-diesel subsidiary, Goshen Energy Inc., is
placed into production, bio-diesel revenue will become a core line of
business and revenue reclassified appropriately. Any other revenue
not associated with the core line of business has been classified as other
revenue in 2008. As a result, revenue earned during 2007 has been
re-classified to conform to the current presentation in 2008.
Other revenues for the Company consist of the following:
- The Company's CEO was contracted with a third party to organize
and hold speaking engagements in which the CEO spoke to investors
about the Company's credit investor program. The contracted
third party provided monthly statements to the Company in which
revenue was recorded on the last day of the month for the month
earned.
- During 2007, the Company's subsidiary, Goshen Energy Inc.
received a total of $37,704 in royalties from a gas line that was
leased out to a third party. The contract with the third party
was terminated in the third quarter of 2007. No additional
revenue has been generated subsequent to September 30, 2007.
- Miscellaneous revenue consists of all other revenue not
classified as one of the core business of the Company during 2008.
To ensure that revenue is recognized in the correct period,
subsequent cash receipt testing was done at period end. All of the
revenue generating items above are not the Company's core business,
and therefore, have been reclassified as of September 30, 2008 as
other revenue to conform to our 2008 presentation.
Below is the proposed revenue recognition revision for future
fillings:
Revenue Recognition.
Revenue for the Company is generated primarily from the
commissions earned through the credit-investor relations program
and rent revenue from the St. Clair Superior Apartment Complex.
The Company assists buyers in finding properties for purchase
from partnering lenders. Revenue from commissions are recognized
and earned upon the closing of escrow, at which time the Company
receives a percentage of the proceeds.
Rental revenue from the St. Clair Superior Apartment complex is
recognized and earned on the straight-line basis over the lease
term as it becomes receivable according to the provisions of the
lease. Security deposits are taken into income in accordance with
the lease contract in the event of default by the tenant.
Home inventory revenue and related profit are generally
recognized at the time of the closing of the sale, when title to
and possession of the property are transferred to the buyer.
Buyers are required to obtain independent financing for purchase
of our real estate properties.
All revenues that are not generated through real estate
renovation and sales or rental revenue are classified as other
revenue and recognized when the earning process is complete based
on the accrual method in accordance with generally accepted
accounting principals.
In the Company's Form 10-Q for the quarter ended September 30,
2008, the Company has re-classified certain revenues in the prior
period financial statements to conform to the current position of the
Company. The Company has stated its reclassification disclosure in
Note 1 of the Form 10-Q for the quarter ended September 30, 2008.
Below is the proposed reclassification disclosure for future
filings.
Reclassifications.
Certain reclassifications, which have no effect on net loss, have
been made in the prior period financial statements to conform to
the current presentation. Specifically, $70,000 of notes payable
with related accrued interest of $3,345 at December 31, 2007 was
determined to be long term in nature and reclassified to long
term liabilities on the Company's balance sheets. Revenue during
the prior period has been reclassified on the Statement of
Operations to conform to the current core line of business during
2008. Additionally, the Company reclassified revenue and cost of
revenue related to City Capital Rehabilitation which was
discontinued in 2007.
In the Company's Form 10-K for the year ending December 31, 2008,
the Company expects to present the following Statement of Operations
for the year ended December 31, 2007 as reclassified to conform to our
2008 presentation:
For the Year Ended
December 31, 2007
Commission revenue $ 7,705
Rental revenue 35,659
Other revenue 120,083
Total revenue $ 163,447
Other Revenue Reconciliation:
Goshen royalties $ 37,704
Speaking engagements 55,379
Miscellaneous revenue 27,000
Total $ 120,083
For the Quarter Ended
September 30, 2007
Commission revenue $ 7,705
Rental revenue --
Other revenue 69,856
Total revenue $ 77,561
Other Revenue Reconciliation:
Goshen royalties $ 37,511
Speaking engagement 27,345
Miscellaneous revenue 5,000
Total $ 69,856
We hope that the information contained in this letter
satisfactorily addresses the comments by the Staff. Should you have
any additional comments or questions, please feel free to contact me.
Thank you for your continued cooperation in this matter.
Sincerely,
/s/ Brian F. Faulkner
Brian F. Faulkner
cc: Ephren W. Taylor II, City Capital Corporation