[LETTERHEAD OF RED GIANT ENTERTAINMENT, INC.]
April 12, 2013
Securities and Exchange Commission
450 Fifth Street NW
Washington, DC 20549
Re: Red Giant Entertainment, Inc. (formerly Castmor Resources Ltd)
Form 8-K [Amendment Number 2]
Filed June 18, 2012
File No. 001-34039
Dear Mr. Dobbie:
This is in reference to Red Giant Entertainment, Inc. (formerly Castmor
Resources Ltd) and that certain letter of July 13, 2012 addressed to us and the
request by the Securities and Exchange Commission that the registrant respond to
those comments.
As you are aware, the Staff had reviewed our Form 8-K initially filed on June
18, 2012. On November 6, 2012 we filed an amendment to the Form 8-K (Amendment
Number 1). The Staff has not reviewed this Form 8-K/A file in response to these
comments and indicated that the amendment may still be defective in (i) that
certain requested financial statements were not included, (ii) that we did not
file a letter indicating the changes that were made, and (iii) that the filed
copy was not marked by our EDGAR filer to reflected the changes from the
original to facilitate the Staff's review of the Form 8-K/A. This current filing
addresses the Staff's comments.
To facilitate your review of the filing, we have repeated and numbered your
questions followed by the responsive language to the comment. As is indicated in
our response to number 1, we are separately submitting by email, a marked copy
of the Form 8-K to facilitate the review of all of the changes.
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 2
Please be informed as follows:
1. Please significantly revise the Form 8-K to present a realistic picture of
your business as it is today by clarifying the anticipatory nature of your
proposed operations. Currently, you appear to substitute "plans" for a
description of your actuality. You may include a description of your aspirations
but they should be accompanied both by a factual description of your current
state and the steps necessary to achieve your aspirations in terms of effort,
additional financial resources and time.
We have completely revised the Form 8-K to what we believe is a realistic
portrayal of our Company and business we have attempted to provide an accurate
and not misleading description of our goals and objectives, with only factual
related aspirations. We are or we will be separately submitting by email, a
marked copy of the Form 8-K to facilitate the review of the changes.
2. Please revise throughout to clarify that Mr. Powell is your sole officer,
director and employee. We note references throughout your filing to your
officers, your management team and employees. For example, on page 6, you
reference editorial staff, including an editor-in-chief, a proofreader, a
production manager, an art director and a publisher.
We have revised the Form 8-K to clearly reflect that Benny Powell was the
sole officer, director and employee. [Subsequent filings do reflect the changes
in this disclosure.]
Risk Factor 6 on page 19 emphasizes the risk of a then sole officer and
director.
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 3
Cover Page
Special Note Regarding Forward Looking Statements
3. Please revise to remove the reference to the safe harbor provision of the
Private Securities Litigation Reform Act of 1995 here and throughout as the safe
harbor does not apply to forward-looking statements made with respect to the
business or operations of an issuer that issues penny stock. We also note that
you include the forward looking statements disclaimer three times. Please
eliminate any unnecessary redundancy.
We have revised the special note regarding forward-looking statements and
have clearly indicated that the safe harbor provisions of said Act do not apply
to an issuer that issues penny stock and we have removed the reference to the
safe harbor provisions and removed the related unnecessary redundancy.
The special note reads in full as follows:
"This Amended Current Report on Form 8-K contains forward-looking
statements. All statements other than statements of historical fact are
"forward-looking statements." Any statements that are not statements of
historical fact (including but not limited to statements containing the words
"will," "believes," "plans," "anticipates," "expects," "look forward",
"estimates" and similar expressions) should be considered to be forward-looking
statements and the safe harbor provisions of said Act do not apply to an issuer
that issues penny stock. Actual results may differ materially from those
indicated by such forward-looking statements as a result of various important
factors including, among others, competition, market demand, technological
change, strategic relationships, recent acquisitions, international operations
and general economic conditions. We do not assume any obligation to update any
forward-looking statements. [Emphasis added.]"
4. Please revise to remove the statement here and throughout that your
disclosure discusses "some of the risks and uncertainties that can affect [you]"
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 4
and clarify that your disclosure discusses all of the material risks known to
you.
We have removed and revised the disclosure, as requested, See also response
to 3 above.
Item 1.01, page 1
5. Please clarify if you both entered into and closed the Share Exchange
Agreement with Red Giant Entertainment, Inc. on June 11, 2012. It is not clear
whether you entered into and also completed the Share Exchange on June 11, 2012
or subsequent thereto. Also, please file as an exhibit to the Form 8-K, a copy
of the Share Exchange Agreement.
We have disclosed that on June 6, 2012, Castmor Resources Ltd., a Nevada
corporation entered into and completed a transaction contemplated by a Share
Exchange Agreement (the "Share Exchange Agreement") with Red Giant Entertainment
Inc., a Florida corporation ("RGE") and Benny Powell (sometimes "Powell"), who
owned 100% of the issued and outstanding shares in RGE.
The Date of the Report for the earliest event reported relates to entering
into the Share Exchange Agreement. Item 1.01 on page 3 has the June 6 date, Item
2.02 on page 4 has this date, reference to this date is in Item 3.02 on page 4
and the beneficial ownership of the stock on page 6 is as of June 6, and the
overview section in Item 5.6 refers to this date.
Share Exchange Agreement of June 6, 2012 was filed and incorporated therein
by reference to Amendment Number 1 for the Form 8-K, filed November 6, 2012. It
has again been incorporated by reference into Amendment Number 2 as Exhibit 10.1
6. Also, under the heading of Security Ownership of Certain Beneficial Owners
and Management on page 25, we note that Mr. Benny Powell, the owner of Red Giant
Entertainment, Inc., held 40 million shares of common stock of the company just
prior to and just after the acquisition. Please expand to clarify the fact, if
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 5
true, that Mr. Powell held five million shares of common stock in Red Giant
Entertainment, Inc. just prior to the merger and that he received the 40 million
shares of Castmor Resources Ltd. in exchange for his shares.
As is indicated in subsequent filings, in addition to the 240,000,000
(40,000,000 pre-split) shares of common stock acquired by Mr. Powell pursuant to
the Share Exchange Agreement described hereinabove, Mr. Powell acquired
11,860,00 shares of common stock in private transactions with other
shareholders.
7. We note your reference on page 3 to an Acquisition of Assets section in Item
5.01 of your Form 8-K. However, we are unable to locate such section. Similarly,
we note your reference on pages 15 and 31 to a Recent Sales of Unregistered
Securities section in Item 5.01. We are unable to locate this section. Please
revise accordingly.
We have revised and corrected as requested. Please be informed that Item
5.01 appears on page 5 of this Form 8-K/A and Item 3.02 on page 4 refers to the
unregistered sales of our securities.
RGE Company Overview, page 4
8. Please discuss the importance to the business of all patents, trademarks,
intellectual property and licenses held. In this regard, we note your disclosure
in Note 6 on page F-9 of Exhibit 10.2.
We have discussed the importance of patents, trademarks, intellectual
property and licenses in the filing. Your attention is directed to an entire
section on page 9 and the reliance on intellectual properties permeates this
Form 8-K/A.
9. Please discuss the specific types of revenues you have generated to date.
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 6
We have disclosed that Castmor had not realized any revenues from
operations prior to the date of our agreement on page 4, and that our total
revenue from inception is $91,972 on page 12. In the Management's Discussion and
Analysis of Financial Condition and Results of Operations, on page 11, we
further disclose the revenues by period. As disclosed on page 11, the acquired
entity is a newly formed entity and we have had revenues of only $91,972 since
inception.
10. Please revise to disclose here your revenue and net income for the most
recent fiscal year and interim stub. In addition, please revise to disclose that
your independent auditor's report expresses substantial doubt about your ability
to continue as a going concern.
See response to 9 above and Management's Discussion and Analysis of
Financial Condition and Results of Operations, on page 11.
We have also disclosed on page 17, as part of our Risk Factor 3, that our
auditor in its report on our financial statements, our auditors expressed an
opinion that there is substantial doubt about our ability to continue as a going
concern. Our financial statements do not include any adjustments that may result
from the outcome of this uncertainty.
As disclosed on page 11, we are a newly formed entity and we have had
revenues of only $91,972 since inception. Our continuation as a going concern is
dependent upon including our ability to raise additional capital and to generate
positive cash flows.
We added on page 13 that he financial statements included in our filings
have been prepared in conformity with generally accepted accounting principles
that contemplate the continuance of our Company as a going concern. We further
added on the bottom of page 13, that management may use borrowings and security
sales to mitigate the effects of its cash position; however, no assurance can be
given that debt or equity financing, if and when required, will be available. We
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 7
disclose that the financial statements do not include any adjustments relating
to the recoverability and classification of recorded assets and classification
of liabilities that might be necessary should we be unable to continue
existence.
11. Please revise to disclose here your monthly "burn rate" and the amount of
time your present capital will last at this rate. In addition, please revise to
disclose the amount of capital needed to accomplish your business goals and
whether you currently have any plans to raise such funds.
We have disclosed on page 7 that we have not established a timeline to
reflect the anticipated plan of operations and we have not established any
anticipated operational milestones and added a Risk Factor 2 on page 16 relating
to this risk. Further Risk Factors discuss need to secure financing and the
limited working capital. See Risk Factors 3 and 4 on page 17.
12. Please revise to clarify what you mean by "transmedia propagation" in the
first sentence in this section on page 4.
This reference has been deleted.
13. Please revise to clarify whether you own the forty online and print graphic
properties that you reference on page 4. In addition, please revise to provide
additional disclosure regarding your plans to develop these properties into
other media, including, if possible, a timeline and budget. Please also include
a more detailed discussion of what these properties are.
On page 7, we now disclose that we are an intellectual property development
company that intends to develop content for itself and for use on the internet
and on various multiple media platforms. We have eliminate the reference to the
forty on line properties in that our intellectual properties consist of
internally developed graphic novel artwork and it may be misleading to
individually number the properties in the event we combine them within
themselves. The cost of our internal generated properties was $29,250 and the
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 8
method of calculation is disclosed on page 7. We disclose on page 7 that we have
not established a timeline to reflect the anticipated plan of operations and we
have not established any anticipated operational milestones. We also have a Risk
Factor 2, on page 16 that indicates that we have not established a timeline to
reflect the anticipated plan of operations, we have not established an
anticipated operational milestone, and we face the challenge of successfully
implementing our business plan without an established timeline that reflects
operational milestones.
14. Please provide the basis for your statement on page 4 that the readership of
these publications is "in the millions globally," your statement on page 4 that
your online publications have "page views in the tens of millions," your
statement on page 8 that "[your] own reach extends to over 52 million readers
annually" and all similar statements regarding your audience and sales.
We have deleted this reference although the statistics are available from
Google Analytics as supplemented by our internal server.
15. Please revise to clarify what you mean by "cornerstone content provider" in
the second paragraph of this section on page 4.
We have deleted the reference to cornerstone provider.
16. Please revise the second sentence in the second paragraph of this section on
page 4 to state as a belief and please provide the basis for your statement that
the referenced web portal is the "largest online web portal to comic books" and
that you are the "cornerstone content provider" for this website.
We have changed the disclosures, now appearing on page 8, to address
Electronic Book Distribution. We have disclosed our relationship with
Keenspot.com to host the internet web versions of our projects and the digital
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 9
application and mobile media distribution channels. We are informed and believe
that Keenspot.com currently has comic properties which include a network of more
than four dozen Keenspot - exclusive - web comic sites, in addition to the
user-generated comics site ComicGenesis.com, which hosts over 10,000 independent
web comics. Google Analytics support the proposition that the Keenspot sites
have over 2 million unique visitors monthly. They also produce animated shorts
under the Keentoons label which are distributed internationally.
17. Please revise to clarify what you mean by the "creative talent and staff are
not new names to the industry" by providing qualitative and quantitative
information regarding the experience of your staff. In addition, your disclosure
regarding your "creative talent and staff" seems to contradict your disclosure
on page 10 that you "currently do not have any employees." Please revise
accordingly.
This disclosure has been completely revised to reflect that we retain
freelance artists and writers who generally are paid on a per-page basis. This
is included in the new section on page 7 which is labeled and addresses the
Creative and Production Process.
18. Please revise to replace the words "upper echelon" and "fan favorites" as
these terms are subjective.
These words have been deleted in connection with the rewrite and
rearrangement of the contents of the Form 8-K/A.
19. Please revise to clarify what you mean by "at 1 million throughout a
network." In addition, please revise to clarify that there is no guaranty that
attempting to target a different audience demographic will "increase [the]
overall scope of reach and breadth of audiences."
The quoted section and related words have been deleted in connection with
the rewrite and rearrangement of the contents of the Form 8-K/A. O page 7, we
indicate that the digital distribution of content provides an opportunity to
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 10
reach a wider and more diverse audience for original stories and for the
creation of modern myths provides the audience an interactive entertainment
experience and also serves as a platform for advertising and merchandise.
20. If you have a website, please disclose.
We have disclosed on page 7 that we have a website and our website is
www.redgiantentertainment.com. The contents of the website are not made a part
of this filing and we consider it to be a website under development.
Industry History, page 4
21. Please provide the basis or sources for the information disclosed in this
section.
Although completely revised in the Form 8-K/A, the source of the
information previously disclosed is from the footnotes supporting a Wikipedia
article on the subject.
22. Please revise the second sentence in the second to the last paragraph of
this section to state as a belief and remove the words "hungry for."
This has been removed.
23. Please revise the first sentence in the last paragraph of this section to
state as a belief.
We have removed this sentence and carefully addressed our so-called
"belief" disclosures throughout the Form 8-K/A.
24. Please revise to remove the reference to "super-heroes" in the last sentence
in the last paragraph of this section. In addition, please revise the last
sentence in the last paragraph to state as a belief and revise to clarify that
there is no guaranty that you will be able to create a resurgence in comic book
readership.
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 11
This has been removed.
Products and Services, page 5
25. Please revise to identify the "groundwork that has already begun," including
a timeline and budget for your plans. In addition, please revise to clarify what
you mean by "proof of concept" and provide quantitative information to clarify
what you mean by "has long been established."
We have added a section on page 7 as an introduction to subsequent
disclosures to reflect that we intend to initially engage in three areas of
distribution, initially licensing, and thereafter, in direct production to the
mass market retail book reader, to those who collect books and to those who read
using the internet as a source of product. Our products and services may also be
adapted for video games and application entertainment.
Mass Market Book Distribution, page 5
26. Please revise to clarify how frequently you intend to publish your four main
titles.
We have added, commencing on page 8, various sections which address and
disclose the publishing (posting on the internet) and distribution of our
product(s).
Electronic Book Distribution, page 6
27. Please revise to remove your disclosure on page 6 that "the print book
distribution accomplishes this beautifully" as this description is subjective.
This subject assertion has been removed.
28. Please revise to remove the statement on page 6 that "a current proven
business model is the use of the Internet and other electronic media to
disseminate content on a global scale" as this statement is subjective and does
not help investors understand your business plans.
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 12
This has been removed.
29. Please revise to describe the material terms of your partnership with
Keenspot.com. In addition, please file your agreement with Keenspot.com as an
exhibit to your Form 8-K pursuant to Item 601 of Regulation S-K or tell us why
this is not required.
On page 8, we have corrected the disclosure to reflect that we have a
strategic relationship with Keenspot.com to host the internet web versions of
various projects as well as handle the digital application and mobile media
distribution channels as well. Keenspot.com currently has comic properties which
includes a network of more than four dozen Keenspot - exclusive - webcomic
sites, in addition to the user-generated comics site ComicGenesis.com, which
hosts over 10,000 independent webcomics. Keenspot sites have over 2 million
unique visitors monthly. They also produces animated shorts under the Keentoons
label which are distributed internationally by ThunderSquid to mobile phone
carriers worldwide including Verizon V-CAST (U.S.) and O2 (U.K.). The
relationship is oral.
30. Please revise to provide the basis for your statement on page 6 that
ConicGenuis.com is "the #1 user-generated comics site" and your statement that
"Keenspot sites welcome more than 2 million unique visitors monthly." In
addition, please revise to clarify that there is no guaranty that your
partnership with Keenspot.com will help you reach your goal of generating
viewers.
Although we are generating unique visitors, predicated upon the lack of
compete data from Google Analytics, we have appropriate revised our assertions
to merely making reference to the number of known visitors to the site on a
monthly basis from available Google Analytics data.
31. Please revise to revise to clarify what you mean by "major" and "the
ancillary monetization has been proven to be substantial" and whether you are
describing your business or your industry in general. In addition, please revise
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 13
to remove the words "heavy-hitters (of which we will be one)" on page 6 as this
appears to be marketing language.
This has been removed.
32. We note your disclosure in the second to last paragraph of this section that
"the heavy-hitters (of which will be one) are currently generating six-to-seven
figure revenue for each of their top titles." Please revise to provide the basis
for this statement. In addition, please revise to clarify that there is no
guaranty that you will generate any revenue from Web projects in the future.
This has been removed.
Production, page 7
33. Please revise to clarify what you mean by "mid-tier publishers" and by "our
talent" in paragraph 1 of this section. In addition, please revise to clarify
whether you currently have contracts with "[your] talent" and, if you do, please
revise to describe the material terms of such contracts.
Please see response to number 17 above (and related comments) and the full
and new disclosures commencing on page 7 relating to our business.
34. We note your disclosure on page 7 in paragraph 1 of this section that "[a]ny
new product development will [be] done in conjunction with Red Giant Media."
Please revise to disclose here you relationship with Red Giant Media.
This has been removed.
35. Please revise to clarify what you mean by "when ,,sales? books enter the
equation" in paragraph 2 on page 7.
This has been removed.
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 14
36. We note your disclosure regarding the costs of shipping and printing in
paragraph 2.a and 2.b on page 7. Please advise as to whether these costs reflect
your current costs or if these costs are anticipatory of the costs you expect to
have in the future. To the extent that these costs are anticipatory, please
revise to clarify.
The overall presentation, to include, but not limited to the complete
distribution discussion, eliminates the references to cost and discloses the
areas that we will be required to make payments to others (talent, etc.).
Marketing Plan, Page 7
37. Please provide us with a copy of the data used throughout your Form 8-K for
statistics and conclusions regarding your industry. For example, you state in
your first paragraph in your Marketing Plan section on page 7 that "[a]11 of
this research has the same conclusion, comic books have never been more popular,
yet strangely the books themselves are selling less than ever before," in the
second paragraph in your Marketing Plan section on page 7 that "now more than
ever before attention is focused on the American comic book industry," and in
the last paragraph on the Readership Profile section on page 8 that comic books
reach "an audience of over 30 million each month." In addition, please revise to
clarify that all the conclusions discussed in your Marketing Plan and Marketing
Trends sections are your beliefs.
The revisions to the Form 8-K remove the statistics and conclusions
obtained from others, to include, Google Analytics and our internal server.
Readership Profile, page 8
38. Please revise your statement in the first sentence of this paragraph that
"[c]omics produced by Red Giant Entertainment deliver quality entertainment" to
include a statement that is not subjective. Finally, please provide the basis
for your projection of the size of the comic book industry and state the year in
which the comic book industry is projected to reach that size.
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 15
We have attempted to carefully address the fact that we are an intellectual
property development company for the comic book industry and other related
multiple media platforms that are delivered in printed material or distributed
over the internet. As more fully disclosed throughout the revised Form 8-K/A,
the Company believes that the digital distribution of content provides an
audience for original stories and for the possible creation of modern myths
applicable to interactive entertainment experience. If people view the content,
visitors to the websites are exposed to the advertisers to include the seller of
merchandise.
39. Please revise to clarify what you mean by "covering the entire comic book
industry of genres" and "new, untouched areas" in the first paragraph of this
section. In addition, please provide the basis for your statement on page 8 that
"[your] comics appeal to fans of all ages, genders and ethnic backgrounds."
Alternatively, please revise to remove this statement.
This has been removed.
40. Please revise the third, fourth, fifth, sixth and seventh sentences in the
first paragraph of this section and the last two sentences in the second
paragraph of this section to state as a beliefs and provide the basis for such
beliefs. In addition, please remove the words "as no other company can" from the
third sentence in the first paragraph and the words "appealing to everyone" in
the first sentence in the second paragraph of this section.
This has been removed.
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 16
Competition, page 8
41. Please provide support that all of your competitors operate in the manner
described in this section.
We have added an expanded and detailed section on Competition on page 9.
42. Please provide the basis for your disclosure in the first two sentences of
this section and the last sentence in the third paragraph regarding the 100%
guaranty.
We have revised our disclosures accordingly in the completely revised Form
8-K/A. The original basis for the assertion was that fact that the viewer to the
website does not pay to view.
43. Please revise to clarify what you mean by your disclosure that you have
"access" to over 3,500 retailers "across the country." For example, disclose
whether these retailers currently sell your products.
This disclosure has been removed as the retailers may be the unique
visitors to the content on the websites.
44. We note your disclosure that you plan to have over 6,500 outlets in major
entertainment stores and bookstores. Please revise to clarify what you mean by
"outlets" and provide a timeline for your plan to establish such outlets. In
addition, please revise to clarify what you mean by "major neighborhood" in the
last paragraph on page 8. Also provide the basis for your statement regarding
the number of screens that movies open with or remove this statement.
This has been removed.
45. Please revise to clarify what you mean by utilizing your books "as
"incentives" for their services" in the first paragraph on page 9.
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 17
This has been removed. The original disclosure was intended to address the
fact that free internet comic books may result in new devotees to comic books
and visit to the comic book retailer - potential sales.
46. Please revise to remove the word "unprecedented" from the second paragraph
on page 9 or explain your basis for this statement. Also revise to clarify what
you mean by your "new approach to comic books."
47. Please revise the second sentence and the second to last sentence in the
second paragraph on page 9 to state as beliefs. Also replace the words "true
stars of this show" from the last sentence in the second paragraph on page 9 to
better explain what you mean.
This has been removed.
48. Please revise to clarify what you mean by your disclosure on page 9 that you
are at a four million base.
Reference to the base has been removed.
49. Please revise your chart on page 9 so that investors that are not in your
industry will be able to understand the significance of the data. For example,
please revise to define the term CPM. In addition, it appears that you provide
the chart so that investors can compare your advertising rates with those of
your competitors. However, your disclosure that your average CPM will be roughly
$33 does not appear to allow for a useful comparison to the chart.
This has been removed.
Properties, page 10
50. We note your reference to your leased properties on pages 18 and 20. Please
revise to discuss such properties and leases here.
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 18
Management's Discussion and Analysis of Financial Condition and Results of
operations, page 11
Results of Operations, page 12
51. Please revise the first paragraph discussion to discuss separately, your
sales, cost of sales, and gross profit for the periods presented. In this
regard, we note your current discussion of net sales actually represents the
amount of your gross profit. You may choose, however, to provide a discussion of
sales and gross profit. Please revise.
Commencing on page 11, we believe that we have revised the section to
properly respond to your comment.
52. Refer to the third paragraph. Please clarify that your cash provided by
financing activities during the period was from cash contributions from your
shareholders, if true. In addition, we note the amount disclosed as cash in bank
does not agree with the amount shown in the interim balance sheet. Please ensure
consistency of all amounts and disclosures.
Commencing on page 11, we believe that we have revised the section to
properly respond to your comment.
Liquidity and Capital Resources, page 12
53. Refer to the second paragraph. Please clarify, if true, that no cash has
been provided by, or used in, investing activities during the most recent fiscal
year and subsequent interim period. Your current disclosure refers to financing
activities, for which we note you have had cash activities as shown in the
statements of cash flows.
Commencing on page 12, we believe that we have revised the section to
properly respond to your comment.
54. Refer to the fifth paragraph. As you have no debt shown in your balance
sheet, nor any borrowings or repayments shown in your statements of cash flows,
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 19
please revise the second sentence to delete that you have historically met your
capital requirements through borrowings, or explain to us how these borrowings
are reflected in the financial statements.
We believe that we have appropriately revised and corrected this
disclosure.
55. We note your disclosure on page 13 regarding your "mineral properties." This
disclosure appears to contradict your disclosure on page 10 where the only
property you disclose is your office. Similarly, we note your disclosure on page
18 that "the economic situation could have an impact on the properties leased
and controlled by the company in that it may be impossible to secure additional
capital to finance development of the properties" and your disclosure on page 20
that "[you] are solely dependent on the expertise of [your] management to
conduct comprehensive exploration and to evaluate the economic viability of your
leased properties." Please revise to address these inconsistent references to
your prior business plan and your existing properties and operations.
These errors and inconsistencies have been corrected (by removal) and by
the complete revision of the Form 8-K/A.
Recently Issued Accounting Pronouncements, page 15
56. Please clarify the last two paragraphs to refer to ASU 2010-17, issued in
April 2010 and ASU No. 2010-06, issued in January 2010. Your current disclosures
reflect issuances of these ASU?s in 2011 rather than 2010. Please also revise
disclosures in Note 1 to the December 31, 2011 audited financial statements.
This typographical error has been corrected.
Item 3.02, page 16
57. We note your disclosure that, on June 11, 2012, you issued 40,000,000 shares
of your common stock to Red Giant Entertainment Inc. and that they own a
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 20
controlling interest in CASL. However, based on your disclosure on page 26 it
appears that you issued the shares of common stock to Mr. Powell in exchange for
the outstanding shares of Red Giant Entertainment Inc. Please reconcile the
inconsistency.
Please be informed that effective as of June 6, 2012, pursuant to the terms
of the Share Exchange Agreement described in Items 1.01, 2.01 and 5.01 of the
Form 8-K/A, we issued 40,000,000 shares of our common stock to Benny Powell, the
sole shareholder of Red Giant Entertainment, in exchange for all of the issued
and outstanding capital stock owned by him. This inconsistency, we believe, has
been address throughout the Form 8-K/A.
Item 5.01, page 16
58. Please revise to disclose any related party transactions pursuant to Item
404 of Regulation S-K. In this regard we note your disclosure in Note 3 on page
F-9 of Exhibit 10.2.
We have added a section, on page 23, called Certain Relationships and
Related Transactions and provided the disclosures therein.
59. Please revise to describe your securities pursuant to Item 202 of Regulation
S-K.
We have added details concerning our securities, commencing on page 24.
Risk Factors, page 16
Risks Related to Our Company, page 18
60. Please revise to include a risk factor that addresses the risk that, because
your sole officer and director will determine his salary and perquisites, funds
may not be available for net income.
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 21
On pages 17 and 18, we have added risk factors 7 and 8 to address the
control of Powell.
61. Please revise to include a risk factor that addresses the effects that the
added costs of being a public company could have on your business and include an
estimate of such costs.
On page 19, we have added risk factors 11, 12 and 13 that indicate that
Powell has no experience related to public company management and as a result,
we may be unable to manage our public reporting requirements; we will incur
professional fees in connection with being a reporting company under the
Securities Exchange Act of 1934; and our failure to comply with the internal
control evaluation and certification requirements of Section 404 of
Sarbanes-Oxley Act could harm our operations and our ability to comply with our
periodic reporting obligations.
The market price of our common stock is volatile, page 22
62. Please revise to remove the fourth bullet point regarding out-sourced
contracting companies for exploration services as this does not appear to be
related to your business.
This has been deleted.
No assurance of a liquid public market for securities, page 24
63. We note your disclosure that your shares of common stock are "currently
eligible for quotation on the OTC Bulletin Board and the Pink Sheets." This
seems to contradict your disclosure on page 30 that your shares are quoted on
the OTC Bulletin Board. Please revise accordingly.
We have corrected this to reflect that our common stock was listed on the
OTC Bulletin Board of the National Association of Securities Dealers ("NASD") on
March 4, 2008 then under the symbol "CASL."
On page 24, we have revised the disclosure to reflect that our was listed
on the OTC Bulletin Board of the National Association of Securities Dealers on
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 22
March 4, 2008 under the then symbol "CASL" and there is a very limited sporadic
trading market for our common stock at present and there has been no established
trading market to date.
Security Ownership of Certain Beneficial Owners and Management, page 25
64. Based on its ownership prior to the consummation of the Share Exchange
Agreement, it appears that Ophion Management Ltd. would be a greater than 5%
owner of your common stock after the transaction. Please add them to the table
or confirm that they no longer own 10,080,000 shares of your common stock.
Please be informed that Ophion Management Ltd. no longer owns over 5% of
our the issued and outstanding common stock
65. Please revise to remove the words "to the best of our knowledge" on page 26
as it is inappropriate to limit or qualify the disclosure in this section. We
note that you are responsible for the disclosure in this filing. Similarly,
please revise to remove the words "to our knowledge" on page 27.
This has been removed.
Directors and Executive Officers, page 26
66. Please revise to briefly describe the business experience during the past
five years of Mr. Powell pursuant to Item 401(e)(1) of Regulation S-K and any
other directorships held, including any other directorships held during the past
five years, by Mr. Powell pursuant to Item 401(e)(2) of Regulation S-K.
Audit Committee and Financial Expert, page 28
67. Please revise to substantiate your statement regarding the "financial
experience of our officers" on page 28.
Our then sole officer had no substantial financial experience and the
reference has been removed.
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 23
Exhibit 10.2
December 31, 2011 Audited Financial Statements
Statements of Assets, Liabilities and Members` Equity, page F-3
68. Please give consideration to renaming the fixed assets heading to instead
reflect intangible assets with respect to your intellectual property. Also,
refer to Note 6. Please revise your financial statements to value the
intellectual property contributed by the Member to the company at the Member's
historical cost basis, as it appears you have instead valued the artwork using
fair value treatment. Refer to Staff Accounting Bulletin Topic 5G for guidance.
Further, in Note 6, please disclose the amount of contributions during fiscal
year 2011 that are cash versus non cash.
We believed that the incorporated by reference financial statements now
address and respond to your comments.
Note 1. Summary of Significant Accounting Principles, page F-6
Revenue Recognition
69. We note you generate revenues from advertising, publishing, and creative
services.
Please tell us, and consider separately disclosing, the amount of
publishing revenue, if material, from that of advertising and creative services
on the face of the statements of income. Also, tell us, and consider separately
disclosing the amount of cost of goods sold for each of these revenue sources.
In this regard, please provide a distinction between sales of products versus
those of services. We may have further comments upon review of your response.
We believed that the incorporated by reference financial statements now
address and respond to your comments.
70. For the Keenspot revenue recognition discussion, please expand to describe
what is meant by "earned on a net 90 basis." Also please describe the
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 24
measurement basis of cost per thousand. In this regard, disclose whether such
represents a revenue rate per verified impressions.
We believed that the incorporated by reference financial statements now
address and respond to your comments.
Exhibit 10.3
May 31, 2012 Unaudited Interim Financial Statements
71. In addition to the following, please revise the interim financial statements
and notes to reflect comments issued on the December 31, 2011 audited financial
statements, as applicable.
We believed that the incorporated by reference financial statements now
address and respond to your comments.
Note 1. Summary of Significant Accounting Principles, page F-4
72. Please expand the opening paragraph to disclose whether the interim
financial statements include all adjustments that, in the opinion of management,
have been made in order to make the financial statements not misleading.
We believed that the incorporated by reference financial statements now
address and respond to your comments.
We have or will separately file our written statement from Benny Powell
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
Securities and Exchange Commission
Mr. Dobbie
April 12, 2013
Page 25
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any other person under the
federal securities laws of the United States.
In addition, we understand that your review process is to assist us in
compliance with the applicable disclosure requirements and to enhance the
overall disclosures in our filings - we would like to think that the Form 8-K/A
now has the appropriate proper disclosures.
If you have any questions, or if you desire any additional information,
amendments or supplemental information, please do not hesitate to telephone me.
Sincerely,
RED GIANT ENTERTAINMENT, INC.
By /s/ Benny Powell
-----------------------------------
Benny Powell