Mail Stop 4561
January 23, 2006
Linda Bryson
President
Triad Industries, Inc.
122 East Grand Avenue
Escondido, CA 92025
Re: Triad Industries, Inc.
Form 10-KSB/A for the Fiscal Year ended December 31,
2004
Forms 10-QSB/A for Fiscal Quarters ended March 31, 2005 and June
30,
2005
Form 10-QSB/A for the Fiscal Quarter ended September 30, 2005
File No. 000-28581
Dear Ms. Bryson:
We have reviewed your response letter dated October 31, 2005
and have the following additional comments. 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 ask you to provide us with information so we may better
understand
your disclosure. 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 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-KSB/A for the year ended December 31, 2004
General
1. We note your response to number five. Please provide us with a
detailed explanation as to why you believe that the segments
previously reported in your filings do not qualify for segment
reporting under paragraphs 10-24 of SFAS 131.
Item 3 - Legal Proceedings, page 8
2. You disclose in your 2004 10-KSB/A that you paid Kevin Smith
$11,000 to settle part of the original complaint pertaining to the
re-issuance of stock without its restrictive legend. You also
disclose in your 10-QSB for the quarter ended March 31, 2005 that
4,500 shares of your common stock were reacquired from Kevin Smith
in
connection with this settlement and that the entire $11,000 was
recorded as treasury stock.
* We note that your common stock was listed on the OTCBB at
between
$0.12 and $0.16 per share during the first quarter of 2005. In
this
regard, please tell us how you determined that the entire amount
paid
to Kevin Smith should be allocated to the purchase of treasury
shares
and that no amount should be allocated to expense for the legal
settlement. Please cite the accounting guidance you relied upon
to
determine the proper treatment of this transaction.
* It is unclear when this transaction occurred. Please tell us
the
legal settlement date of this part of the original complaint, when
the $11,000 was paid to Kevin Smith, and also when the shares were
reacquired.
Consolidated Statements of Operations, page 21
3. After reading your response to comment five, it is still
unclear
to us if your 2003 revenue and administrative expenses were
overstated. Your 2003 income statement reported $227,171 of
revenue
and $418,288 of operating costs for the year ended December 31,
2003.
The segment disclosure in your original 2004 10-KSB and amended
2003
10-KSB also reported the same amount of total revenue and
operating
costs, respectively; however, you noted that the segment data for
2003 does not include an elimination entry of $90,000. In this
regard, please tell us how your 2003 segment data, which does not
include the $90,000 elimination, could equal the total revenue and
operating expenses on your income statement, which does include
the
$90,000 intercompany elimination.
4. We note your response to comment six. Please tell us if the
party
that cancelled the debt was a related party.
Note 2 - Summary of Significant Accounting Policies
i. Revenue Recognition and Deferred Revenue, page 28
5. We note that you have not adequately responded to comment nine,
nor have you revised your disclosure in the 10-KSB/A filed on
October
31, 2005. In our previous comment, we asked you to expand upon
your
revenue recognition policies in future filings to comply with
paragraph 12 of APB 22. We also asked you to provide us with the
disclosure you will include in future filings and to clarify how
you
determined that the policy complied with SAB 101 if not readily
apparent. Please provide us with your proposed additional
disclosure
and also include the clarification previously requested.
Note 9 - Trading Securities, page 35
6. We note that you have changed the list of trading securities
held
at December 31, 2004 in your amended 10-KSB for the year ended
December 31, 2004. The sum of the securities` fair market values
does
not agree to the total presented on page 35 or to your balance
sheet.
The revised list appears to represent the list of trading
securities
held at December 31, 2003 totaling $135,207. Please revise your
filing to disclose the correct list of trading securities.
Item 8a - Controls and Procedures, page 41
7. We note that you have not adequately responded to comment 11.
Additionally, we note that there was another error in your 10-QSB
for
the period ended September 30, 2005 that caused you to amend your
filing. Please provide a detailed response to comment 11 of our
previous letter dated September 29, 2005.
Forms 10-QSB/A for the quarters ended March 31, 2005 and June 30,
2005
Item 1 - Consolidated Financial Statements, page 5
8. We note that you have properly marked the 2005 interim
information
as unaudited in these quarterly reports, but did not mark the 2004
interim information as unaudited. Please revise these filings and
be
sure to label all of the interim information as unaudited.
Consolidated Statements of Operations, page 5
9. We note that you have removed the diluted loss per share
presentation in your amended Form 10-KSB and did not include it in
your Form 10-QSB for the quarter ended September 30, 2005;
however,
your Forms 10-QSB for the quarters ended March 31, 2005 and June
30,
2005 still present diluted loss per share. To the extent that
these
filings are amended in the future, please revise to remove the
presentation of diluted loss per share.
Form 10-QSB/A for the quarter ended September 30, 2005
10. You disclose in your explanatory note on page one of your
filing
that the correction of the error did not affect net income, but
did
affect reported revenues; however, net loss increased by $24,128
and
revenues did not change for the nine months ended September 30,
2005
in your amended filing compared to your original 10-QSB. Please
revise your disclosure appropriately.
Forms 10-QSB/A for the quarters ended March 31, 2005, June 30,
2005,
and September 30, 2005
Consolidated Statements of Cash Flows
11. We note that you have properly presented purchases of trading
securities as operating cash flows in your amended 10-KSB for the
year ended December 31, 2004, but have continued to present cash
flows used for purchases of trading securities as an investing
cash
flow in your 2005 Forms 10-QSB. Please amend your 2005 10-QSBs in
order to classify these cash flows properly.
Exhibit 31
12. We note that the 302 certifications filed in your Forms 10-QSB
for each of the quarters in fiscal 2005 are still not in the
proper
form. The required certifications must be in the exact form
prescribed; the wording of the required certifications may not be
changed in any respect. Certain portions of the certifications
relating to internal control over financial reporting may be
omitted
as stated in Section III.E of SEC Release No. 33-8238.
Accordingly,
please file amendments to your Forms 10-QSB for quarters ended
March
31, June 30 and September 30, 2005 that include the entire filing
together with the certification of your current CEO and CFO in the
form currently set forth in Item 601(b)(31) of Regulation S-B.
As appropriate, please amend your filing 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 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 filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment 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 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 filing.
You may contact Jessica Barberich at (202) 551-3782 or me at
(202) 551-3429 if you have questions regarding comments on the
financial statements and related matters.
Sincerely,
Kristi Beshears Staff Accountant
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Ms. Linda Bryson
Triad Industries, Inc.
January 23, 2006
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