Room 4561
December 21, 2005
Mr. Robert M. Lewis
Chief Financial Officer
Imergent, Inc.
754 East Technology Avenue
Orem, UT 84097
Re: Imergent, Inc.
Form 10-K for Fiscal Year Ended June 30, 2004
Form 8-K Filed August 12, 2005
File No. 000-32277
Dear Mr. Lewis,
We have reviewed your response letter dated November 22,
2005
and have the following additional comments. We may ask you to
provide us with supplemental information so we may better
understand
your disclosure. Please be as detailed as necessary in your
explanation. After reviewing this information, we may 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 comment 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 Fiscal Year Ended June 30, 2004
Note 2. Summary of Significant Accounting Policies
(o) Revenue Recognition, page 50
1. We note that you refer to Attachment 2 that includes detailed
revenue recognition policies that appear to be integral to your
response to our comments. However, this information does not
appear
to have been filed on EDGAR. Please submit this information
electronically via EDGAR. To the extent you intend to request
confidential treatment for this information, ensure that the
nature
and form of your request complies with the Commission`s
Confidential
Treatment Procedure Under Rule 83. See our website at
http://www.sec.gov/foia/conftreat.htm.
2. We have read your response to prior comment number 3 and note
that
you are considering all hosting arrangements entered into with
your
customers within one year of the initial license arrangement as
part
of single, multiple-element arrangements. Please explain to us
how
you have determined that one year represents the "short time
frame"
referred to in AICPA Technical Practice Aid 5100.39.
3. We have read Attachment 2 to your response letter regarding
your
arrangements that do not include extended payment terms. We do
not
believe that you have established VSOE of fair value for the
development hosting services that are offered to your customers as
part of the initial license fee. In this regard, it does not
appear
appropriate to use the renewal rate of your publishing hosting
services as a surrogate price in establishing VSOE for your
development hosting services. It appears that the development
hosting services are substantively different from the publishing
hosting services and the development services do not appear to be
sold separately. The publishing hosting services clearly include
additional benefits that are not offered in the development
hosting
such as a website that is accessible by potential customers over
the
Internet and unspecified upgrades and enhancements to the
software.
Lack of VSOE for these services would require you to recognize
revenue in accordance with paragraph 12 of SOP 97-2 rather than as
your response proposes.
4. It is unclear to us why you believe that the development
hosting
service element is only present when customers choose to access
the
software on your server. Clarify for us whether your arrangements
obligate you to make this service available to customers that
download the software. If customers retain the right to use the
development hosting when the software is initially downloaded,
explain to us why you do not consider this to be a separate
element
in all of your arrangements.
5. Please explain to us how you concluded that each of the various
estimates (e.g., length of development service period, etc.) used
were appropriate in determining the historical revenue that should
have been recognized for purposes of your restatement. Please
tell
us how you determined that the amounts calculated using these
estimates accurately represents amounts that would have been
recognized had each contract been accounted for individually.
Form 8-K filed August 12, 2005
6. We note that you have entered into an agreement to sell your
domestic trade receivables on an ongoing basis. In addition, we
note
that you have transferred receivables to third parties in prior
periods. Please explain to us how, in your restatement, you will
consider the guidance in paragraph .08 of SOP 01-6 regarding
classifying trade receivables as held for sale. Please note that
trade receivables that are classified as held for sale should be
separately reported on the balance sheet at the lower of cost or
fair
value.
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please submit all correspondence and supplemental materials on
EDGAR
as required by Rule 101 of Regulation S-T. You may wish to
provide
us with marked copies of any amendment to expedite our review.
Please furnish a cover letter with any amendment that keys your
responses to our comments and provides any requested information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
any
amendment and your responses to our comments.
You may contact Mark Kronforst at (202) 551-3451, Marc D.
Thomas at (202) 551-3452 or me at (202) 551-3489 if you have any
questions regarding these comments.
Very truly yours,
Brad Skinner
Accounting Branch Chief
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Robert M. Lewis
Imergent, Inc.
December 21, 2005
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