No, it wasn't a bankruptcy. The IRS code applies to the cost basis on reverse mergers. FHAL never filed bankruptcy, either way.

Hi 53chevy, looks like you're in this one. I haven't pulled the trigger but I'm checking it out. If you get a chance, a quick summary DD would be appreciated.

Kapone, this is the reason:

"As a result of the agreement noted in Item 1.01, the Company has concluded that it is the primary beneficiary of Conversion Solutions, Inc. as defined by FIN 46(R) and, therefore, will consolidate The FrontHaul Group, Inc and Conversion Solutions, Inc. financial results at the filing of the Company's Fourth quarter June 30, 2006 10KSB of fiscal 2005."

FIN 46 Revised:

(FASB) has issued Interpretation No. 46, Consolidation of Variable Interest Entities. Many variable interest entities have commonly been referred to as special-purpose entities or off-balance sheet structures, but the guidance applies to a larger population of entities.

In general, a variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. A variable interest entity often holds financial assets, including loans or receivables, real estate or other property. A variable interest entity may be essentially passive or it may engage in research and development or other activities on behalf of another company.

The objective of Interpretation 46 is not to restrict the use of variable interest entities but to improve financial reporting by companies involved with variable interest entities. Until now, one company generally has included another entity in its consolidated financial statements only if it controlled the entity through voting interests. Interpretation 46 changes that by requiring a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity's residual returns or both. A company that consolidates a variable interest entity is called the primary beneficiary of that entity.

Consolidation by a primary beneficiary of the assets, liabilities and results of activities of variable interest entities will provide more complete information about the resources, obligations, risks and opportunities of the consolidated company. To further assist financial statement users in assessing a company’s risks, the Interpretation also requires disclosures about variable interest entities that the company is not required to consolidate but in which it has a significant variable interest.

The consolidation requirements of Interpretation 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established.

I think some of it revolved around Georgia Aerospace. It seems that their website and email have been down for over a week due to non-payment to network solutions hosting. No one has answered the phone at GA, nor returned messages left on voicemail. There was also an email posted on hsm with Mensah blasting Rufus but it doesn't look like it was authentic.

Clearing up the 8K, 10K issue:

"As a result of the agreement noted in Item 1.01, the Company has concluded that it is the primary beneficiary of Conversion Solutions, Inc. as defined by FIN 46(R) and, therefore, will consolidate The FrontHaul Group, Inc and Conversion Solutions, Inc. financial results at the filing of the Company's Fourth quarter June 30, 2006 10KSB of fiscal 2005."

FIN 46 Revised:

(FASB) has issued Interpretation No. 46, Consolidation of Variable Interest Entities. Many variable interest entities have commonly been referred to as special-purpose entities or off-balance sheet structures, but the guidance applies to a larger population of entities.

In general, a variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. A variable interest entity often holds financial assets, including loans or receivables, real estate or other property. A variable interest entity may be essentially passive or it may engage in research and development or other activities on behalf of another company.

The objective of Interpretation 46 is not to restrict the use of variable interest entities but to improve financial reporting by companies involved with variable interest entities. Until now, one company generally has included another entity in its consolidated financial statements only if it controlled the entity through voting interests. Interpretation 46 changes that by requiring a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity's residual returns or both. A company that consolidates a variable interest entity is called the primary beneficiary of that entity.

Consolidation by a primary beneficiary of the assets, liabilities and results of activities of variable interest entities will provide more complete information about the resources, obligations, risks and opportunities of the consolidated company. To further assist financial statement users in assessing a company’s risks, the Interpretation also requires disclosures about variable interest entities that the company is not required to consolidate but in which it has a significant variable interest.

The consolidation requirements of Interpretation 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established.

Thanks for your opinion. I posted it out there for exactly that. I'm hoping others will also share their thoughts.

I agree. I was just saying that they're touts, that's all. :)

They're paid stock touts, just so you know.

Sorry but you don't go after "shorty" when you're private to begin with. lol

That's expensive publicity, though. Wouldn't you agree? If the equity is what they say, that's really really expensive to just throw out there like that. See what I'm saying? tia.

Here's a simple question to start some discussion:

What does Conversion Solutions Holdings, Inc. gain by going public? An IPO is a way of raising capital through an underwriter and public markets (paid in capital). It's also a way of gaining funding using shares as collateral.

But what does Conversion gain by dividing up it's capital base by the shares of stock? Why even do that? If the mission is to collateralize assets for funding towards joint ventures and subsequent acquisitions, what does a public stock really mean to you a company?

It's not "the real deal". It's another story.

Yes he was listed before. But a subsequent filing on 9/2/2006 doesn't list Harris anymore.

I'd hate to be the mailman on that route. lol

As was your last post re: office space.

It's been proven that it's a virtual office from hq.com. They forward phones and mail. They also offer rent by the hour office services (conference rooms, equipment, etc).

www.hq.com

I know. I've done the same. I'd take the low end revenue number and divide in half for a more realistic view. lol

Check insider transactions here: http://finance.yahoo.com/q/it?s=CSHD.OB

It may not be all of them since it's a free list.

Charlie48: fwiw, Profile
Company Name GEORGIA AEROSPACE SYSTEMS MFG INC
Year Established 2000
Annual Sales US$2.5 Million - US$5 Million
Business Type Manufacturer,Service
Ownership Veteran owned,Minority owned

http://www.openfos.com/supply/GEORGIA-AEROSPACE-SYSTEMS-MFG-1943819/

Since they're private, it's difficult to tell. In this list, they're classified in the $2.5 - $5m range. I also found a state of georgia site where GA had received $0 in state contracts. Yet another site listed them as single location, meaning the offices they list are probably where other exec's are located and not necessarily manufacturing plants or anything. They never did buy the building in 2002 or use the bonds that were issued to help them and hire 200 - 1,000 employees.

None of the filers were required to file a form 4. Even then, most don't. It's not enforced. Paper 144 filings are good (for people selling) because they're usually done with before anyone can call them up on edgar. Compare the volume with the approximate filing dates.

They are current. For example, it would be like your tax return is late because it wasn't filed on 1/1. You have until 4/15. Furia/Fronthaul/Conversion has until 9/30, without extensions into October.

Everyone that filed a 144 sold even before the paper form was registered for everyone else to see. That's an unwritten law in pennystocks. By the time you see it, it's history.

It is. But a couple of drinks later and it won't matter.

I didn't call for a crash. It's not moving because no one is buying and there's a bunch of people holding. Look at the volume.

Where are the buyers then? tia

The simple question is,

why bother?

If there are shorts in the stock, and you're going to "reset the price" to some massive multiple of the current pps, why even bother? In fact, why does Rufus even care about the pps of the stock at this point?

They don't have a big headquarters. It's a virual office (aka phone forwarding, mail drop and conference room by the hour). When you call there, the call is redirected to cell phones.

Harris could put out an 8-K before the 10-K, no problem (and it wouldn't cost anything). So I think they'll delay until October. Who knows?

Shares? Depends on the day you ask. I'm on the sidelines right now.

Doubt it. Extension most likely.

lol. That's in the past.

I would've expected a 10-K for Fronthaul only since filings normally show the condition of a company as of a point in time (in this case 6/30, off calendar fiscal year end). Then, I would've expected an 8-K showing audited and merged financials post year end, since an 8-K is used for material events between filings (year end and 1Q).

That's funny, considering that it's a phone forwarding service.

Off the top of my head:

Tax free transaction (share swap)
Fast consumation, time to market
Cheap(er) than other ways
Existing shareholder base
Tax loss carry-forward

The fund(s) may be tax exempt (for example, muni's and such) but if they hypothecate (in other words securitize the asset) then net income (profit) would be taxable.

Not at all. They'll give fair market value for the asset. That's the role of the accountant/auditor.

lol. I won't speak for os.
That's just it, though. It's not supplied to the IRS. It's a journal entry in the companies books. Take a look at any balance sheet, then take a look at the income statement.

No. Like I said, it's a stock swap. There's no gain on the transaction so there's $0 tax liability to report. That's the advantage of a reverse merger. Taxes are generated when shares are sold.

Actually, assets don't come into play with the IRS. Taxes are generated on profits (revenue minus expenses).

In your example, you're saying $2 in income. That's not a good example. A better example would be an asset, such as your home. The IRS doesn't care about the asset, until you sell (and even then there's exemptions on the profit).

Assets do come into play when/if they sell (liquidate) the assets for a profit.

It's not really tax exempt. What they mean is that the acquisition is a stock swap, where there's no tax liability on the merger transaction itself. If it were a cash sale, it would generate tax liability.

They can also carry forward certain tax credits and depreciation.

Did you notice that Harris was removed from AISS when Mensah filed the annual registration on 9/2/2006?

Rufus - You need help. Seriously.

Banquet? Probably a bar.