September 29, 2005
Mail Stop 4561
By U.S. Mail and facsimile to (403) 290-1266
Douglas N. MacDonald
President and Chief Executive Officer
Westsphere Asset Corporation, Inc.
2140 Pegasus Way, NE
Calgary, Alberta Canada T2E 8M5
Re: Westsphere Asset Corporation, Inc.
Form 10-KSB for Fiscal Year Ended December 31, 2004
Filed April 15, 2005
File No. 0-32051
Dear Mr. MacDonald:
We have reviewed the above referenced filing and have the
following comments. We have limited our review to those issues we
have addressed in our comments. Please provide us with the
requested information so we may better understand your disclosure.
After reviewing this information, we may raise additional
comments.
Please provide disclosures in your future filings that clarify the
issues addressed in our 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.
Financial Statements
General
1. We note the presented amounts for Intellectual Property in the
Consolidated Balance Sheets and that you recognized a significant
impairment loss related to this asset in 2004. Please revise to
disclose your accounting policy for your intangible assets, and
goodwill if any, and include in a separate footnote disclosures
required by paragraphs 44 to 47 of SFAS 142.
Consolidated Balance Sheets - page F-3
2. We note that the amounts presented in stockholders` equity
section
are different from those presented in the Consolidated Statement
of
Stockholders` Equity on page F-5. Please revise to present the
corrected amounts.
Note 2 - Summary of Significant Accounting Policies
Revenue Recognition, page F-8
3. Please tell us and revise to clarify how you recognize revenues
from leased cash vending machines.
4. Please revise to include all disclosures about your leased
assets
required by paragraph 23 of SFAS 13.
Note 4 - Investments, page F-10
5. We note that you completed your acquisition of TRAC P.O.S.
Processing, Inc. (TRAC POS) in July 2004. Please revise to include
disclosures required by paragraphs 51 to 56 of SFAS 141 or tell us
why these disclosures are not required.
6. Please describe to us the nature of the intellectual property
acquired in the TRAC POS step-acquisition and clarify how you
determined its assigned fair value of $593,679 at the acquisition
date.
7. Please describe to us the facts and circumstances leading to
the
impairment loss of $491,205 related to TRAC POS intellectual
property
from the time of its acquisition in July 2004 to its impairment in
December 2004.
Note 8 - Acquisition of Kan-Can Resorts Ltd., Sale of Head Lease
and
Mortgage Receivable, page F-12
8. We note that you acquired Kan-Can Resorts Ltd in October 2001.
Please clarify how you determined that you were not required to
record the head lease at its estimated fair market value, citing
the
authoritative accounting literature you relied upon and explaining
your consideration of paragraphs 36 to 46 of SFAS 141. Provide us
with a purchase price allocation table in your response.
9. Please tell us how you accounted for the sale of the head lease
in
November 2001, citing the authoritative accounting literature you
relied upon. Provide us recorded journal entries to support your
accounting.
Note 9 - Income Taxes, page F-12
10. We note that you do not record a deferred tax asset for
estimated
tax benefits resulting from U.S. net operating loss carryforwards
of
$435,828 since they are fully offset by a reserve. Please tell us
how
you concluded that a similar reserve for estimated tax benefits
resulting from Canadian net operating loss carryforwards was not
required.
Note 10 - Stock Based Compensation, page F-13
11. We note that the presented option information does not appear
to
include options issued to executives that are disclosed on page
30.
Please revise to provide all disclosures required by paragraphs 45
- -
48 of SFAS 123 with respect to all issuances of options.
12. We further note that options issued to executives had exercise
prices significantly lower than the historical market price of
your
shares. Please tell us and revise to disclose whether any stock
compensation expense was recorded for these issuances, and if so,
the
amounts recorded in each of the periods presented.
Note 11 - Commitments and Contingencies, page F-13
13. On page 16 you state that you are involved in material
litigation
that could have a material consequence on your financial
condition.
Please revise to include disclosures about loss contingencies
arising
from threatened and pending litigation required by paragraphs 9 to
12
of SFAS 5 and FIN 14.
Note 12 - Related Party transactions, page F-14
14. We note several mentions of related party transactions
throughout
the filing including the face of the financial statements but
minimal
disclosures about these transactions in this footnote. Please
revise
to provide the disclosures required by paragraphs 2-4 of SFAS 57.
15. Please revise Item 12 - Certain Relationships and Related
Transactions, on page 33 to provide the disclosures required by
Item
404 of Regulation S-B.
* * * *
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter 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
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing 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 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
* 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 filing or in
response to our comments on your filing.
You may contact Isa Farhat at (202) 551-3485 or me at (202)
551-3423 if you have questions regarding our comments.
Sincerely,
Amit Pande
Assistant Chief Accountant
Donald N. MacDonald
Westsphere Asset Corporation, Inc.
September 29, 2005
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