Mail Stop 0407
March 22, 2005
Via U.S. Mail and Fax (610-825-9266)
Mr. David C. Bryan
President and Chief Executive Officer
Integrated Data Corp.
625 W. Ridge Pike, Suite C-106
Conshohocken, PA 19428
RE: Integrated Data Corp.
Form 10-K for the fiscal year ended June 30, 2004
Filed September 28, 2005
Form 10-Q for the quarterly period ended December 31,
2004
File No. 0-31729
Dear Mr. Bryan:
We have reviewed the above referenced filings and have the
following comments. We have limited our review to only your
financial statements and related disclosures and will make no
further
review of your documents. As such, all persons who are
responsible
for the adequacy and accuracy of the disclosure are urged to be
certain that they have included all information required pursuant
to
the Securities Exchange Act of 1934. Please address the following
comments in future filings. If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a future
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.
Form 10-K for the fiscal year ended June 30, 2004
Managements Discussion and Analysis
Year Ended June 30, 2003 vs. Year Ended June 30, 2002, page 19
Liquidity and Capital Resources, page 21
1. We note on page 21 that Integrated Technologies & Systems Ltd.
has
committed to fund your working capital requirements for the fiscal
year 2005. Please tell us and disclose in your liquidity section
more detailed information regarding this commitment including the
terms of the loan and your ability to repay the loan. Also,
revise
to provide a discussion of the current loan balance of $887,000
due
to IT&S as discussed on page F-22.
Critical Accounting Policies, page 22
Impairment of Long-Lived Assets, page 23
2. We note that an impairment loss in the amount of $1,844,000 was
recorded at June 30, 2004 to reduce the net carrying value of the
DataWave International License to fair market value based on a
valuation by an independent party. Please tell us and disclose
significant assumptions used in determining fair value of the
license, including the cash flows utilized if applicable. Please
provide a quantitative as well as a qualitative sensitivity
analysis
with regard to your asset impairment testing in critical
accounting
policies.
3. In addition, we note on page 15 of your Form 10-Q for the
quarterly period ended December 31, 2004 that you recorded an
additional impairment loss in the amount of $457,000 to reduce the
net carrying value of the DataWave International License to fair
market value based on the purchase price to be paid by DataWave
for
the license. Tell us how your assumptions have changed in the
last
six months. Tell us how you considered your related party
association with DataWave when you determined that the purchase
price
paid by DataWave is the fair market value of the technology.
Consolidated Statement of Operations, page F-4
4. We note that you have classified fiscal year 2003 and 2002 gain
on
discharge of indebtedness as extraordinary. Tell us how you
applied
FAS 145 and APB 30 in determining that the discharge of
indebtedness
should be extraordinary.
5. It appears that the caption "cost of revenues" excludes
depreciation and amortization for property and equipment directly
attributed to the generation of revenue. Please revise your
presentation in future filings to comply with SAB 11:B.
Otherwise,
please advise.
Consolidated Statement of Cash Flows, page F-9
6. Explain to us why you classified cash flows from deferred
rental
inducements as an investing activity as this amount appears to be
a
non-cash transaction. Otherwise please revise in future filings
as
required by SFAS 95.
Note 2. Summary of Significant Accounting Policies
Foreign currency translation, page F-11
7. We note that most of DataWave`s assets are held and most of its
revenues are earned in Canada. Tell us your functional currency
for
this subsidiary and how it was determined. Also, tell us how you
applied the guidance of SFAS 52 addressing each of the criteria of
paragraph 42 in your response.
Revenue and Cost Recognition, page F-11
8. We note that "sales of DataWave or custom branded cards where
DataWave incurs inventory risk...are recognized on the gross
basis..." Explain to us how you applied EITF 99-19 in determining
that it is appropriate to recognize this revenue on a gross basis.
Address each of the indicators provided by EITF 99-19 in your
response, including your consideration of paragraphs 15 and 16.
9. Further, give us a better understanding of what you mean by the
"full obligation to the phone service provider is fixed and
determinable". Explain to us when the full obligation is fixed
and
determinable and when it is not fixed and determinable, and why
the
revenue recognition policy is different for each scenario. Refer
to
all pertinent authoritative GAAP accounting literature in your
response.
Advertising costs and sales incentives, page F-13
10. Give us a better understanding of the joint advertising and
promotional incentives. Describe and quantify these expenditures.
Tell us with whom control is shared. Give us an understanding of
the
terms of the joint control and explain to us why you account for
these costs as part of cost of sales. Please refer to your basis
in
the accounting literature in your response.
Note 14. Commitments and Contingencies, page F-25
11. Tell us how you account for cash inducements for leasehold
improvements and inducements for free rent. Describe for us the
terms of these incentives. Tell us the amounts involved and refer
to
all pertinent authoritative accounting literature in your
response.
Item 9A. Controls and Procedures, page 27
12. Supplementally confirm that there were no changes (as opposed
to
no significant changes) in your internal control over financial
reporting that occurred during your fourth fiscal, and during the
fiscal quarter ended September 30, 2004, that has materially
affected, or is reasonably likely to materially affect (as opposed
to
significantly affect) your internal control over financial
reporting.
See Item 308(c) of Regulation S-K. In addition, confirm that you
will provide the disclosure required by Item 308(c) of Regulation
S-K
in all future periodic reports.
* * * *
Please respond to these comments within 10 business days or
tell us when you will provide us with a response. Please furnish
a
letter that keys your responses to our comments and provides any
requested supplemental information. Please file your response
letter
on EDGAR.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings 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 filings;
* 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
* 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 filings or
in
response to our comments on your filings.
You may contact Inessa Berenbaum, Staff Accountant, at (202)
824-5288 or Kyle Moffatt, Accountant Branch Chief, at (202) 942-
1829
if you have questions regarding comments on the financial
statements
and related matters. Please contact me at (202) 942-1990 with any
other questions.
Sincerely,
Larry Spirgel
Assistant Director
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Mr. David C. Bryan
Integrated Data Corp.
March 22, 2005
Page 5
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE