Room 4561
June 16, 2005
Mr. T. Curtis Holmes, Jr.
President and Chief Executive Officer
MetaSolv, Inc.
5556 Tennyson Parkway
Plano, Texas 75024
Re: MetaSolv, Inc.
Post-effective Amendment No. 1 to Registration Statement on
Form
S-3
Filed May 18, 2005
File No. 333-67428
Form 10-K for the year ended December 31, 2004
Form 10-Q for the quarter ended March 31, 2005
File No. 0-28129
Dear Mr. Holmes:
This is to advise you that we have limited our review of the
above post-effective amendment and periodic filings to the matters
addressed in the comments below. No further review of the post-
effective amendment and periodic filings has been or will be made.
All persons who are by statute responsible for the adequacy and
accuracy of the registration statement are urged to be certain
that
all information required under the Securities Act and Exchange Act
has been included.
Where indicated, we think you should revise your document in
response to these comments. If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a 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 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 year ended December 31, 2004
Item 9A. Controls and Procedures
1. You indicate that your disclosure controls and procedures were
not
effective at year end, because of a material weakness in internal
controls over financial reporting related to your accounting for
estimated income tax exposure and foreign income taxes. Explain
the
basis for your assertion that the "material weakness did not
impact
2004 revenue, cash flow or any other significant performance
indicator." This statement appears inconsistent with disclosure
that
you have "a control deficiency that results in more than a remote
likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected on a timely
basis by management." In light of a control deficiency that
results
in more than a remote likelihood of a "material misstatement of
the
income tax accounts and disclosures in the annual or interim
consolidated financial statements," it is unclear how you can
conclude the deficiency did not affect any "performance
indicator."
2. Disclose whether management has a plan to employ personnel with
adequate expertise in matters related to tax accounting, with a
view
towards eliminating the control deficiency that has been
identified.
If you have a plan to address the deficiency, clarify the steps
you
believe you need to take and describe where you are in the process
of
implementing the remedial measures. Additionally, you should
discuss
the costs of implementing any changes and how those costs will
affect
your operations, as material.
3. Your executive`s conclusion with respect to the effectiveness
of
your disclosure controls and procedures is that the disclosure
controls and procedures were not effective in "alerting [your
chief
executive officer and chief financial officer] on a timely basis
to
material information...required to be included in [y]our periodic
SEC
reports." The language used is narrower than the definition of
disclosure controls and procedures in Rule 13a-15(e) of the
Exchange
Act. In your response letter, clarify whether your chief
executive
and chief financial officer concluded that your disclosure
controls
and procedures were not effective to ensure that information
required
to be disclosed is recorded, processed, summarized and reported on
a
timely basis and whether such information is made known to your
officers to allow timely decisions regarding required disclosure.
Please consider this comment in the preparation of future periodic
reports.
Form 10-Q for the quarter ended March 31, 2005
Item 4. Controls and Procedures
4. Your statement that the chief executive officer and chief
financial officer concluded that the company`s controls and
procedures were "designed to provide reasonable assurance that
material information is made known . . ." is confusing and
seemingly
inconsistent with the statement that the disclosure controls and
procedures "are not yet reportable as effective." Revise to state
unambiguously whether the required executives concluded that the
disclosure controls and procedures, as defined in Rule 13a-15(e),
were effective.
5. We note your disclosure with respect to the remediation steps
you
are "implementing" to address the material weakness relating to
accounting for income tax estimates and foreign income taxes.
Consistent with the preceding comment on the Form 10-K, please
clarify the steps management plans to take to address the weakness
you identified. Also describe which of those steps have been
implemented, whether those actions took place in the quarter ended
March 31, 2005, or in the subsequent period to the date the Form
10-Q
was filed, and the additional actions that you believe are needed
to
address the deficiency.
6. Although you concluded that at March 31, 2005 your disclosure
controls and procedures were not effective and also state that
there
was no change in your internal control in financial reporting
during
the quarter, you disclose that management believes that "the steps
taken to date are sufficient to provide reasonable assurance that
information required to be disclosed...is recorded, summarized and
reported within the time period specified." Please reconcile the
apparent inconsistencies between these statements. If changes
that
address the deficiencies were made after the end of the quarter,
please indicate this. The intended meaning of the statement that
management believes the "steps taken to date are sufficient to
provide reasonable assurances" is unclear with respect to
management`s assessment as to the effectiveness of your disclosure
controls and procedures.
* * * *
As appropriate, please amend your filings and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
the amendment to expedite our review. Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested supplemental information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
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 related to your disclosure, they are
responsible for the accuracy and adequacy of the disclosures they
have made.
Prior to our declaration of the effective date of the
pending
post-effective amendment pursuant to Section 8(c) of the
Securities
Act, the company should furnish a letter acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert the staff comments and the
declaration
of effectiveness 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 connection with our review of
your
filing or in response to our comments on your filing.
You may contact Daniel Lee at (202) 551-3477 with any
questions. If you need further assistance, you may contact me at
(202) 551-3462.
Sincerely,
Mark P. Shuman
Branch Chief - Legal
cc: Via Facsimile
Jonathan K. Hustis
MetaSolv, Inc.
Telephone: (972) 403-8300
Facsimile: (972) 403-8333
Jeffrey A. Chapman
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Telephone: (214) 220-7700
Facsimile: (214) 220-7716