United States securities and exchange commission logo
October 16, 2020
Steve Smith
Chief Executive Officer
DecisionPoint Systems, Inc.
8697 Research Drive
Irvine, California 92618
Re: DecisionPoint
Systems, Inc.
Amendment No. 1 to
Registration Statement on Form S-1
Filed September 21,
2020
File No. 333-245695
Dear Mr. Smith:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Amendment No. 1 to Form S-1 filed September 21, 2020
Cover Page
1. Please disclose on the
prospectus cover page that the Selling Stockholders will sell the
shares at a fixed price
of $1.50 per share until your common stock is quoted on the
OTCQB market, at which
time they may be sold at prevailing market prices or at privately
negotiated prices.
Risk Factors
Our application for the PPP loan, page 13
2. You disclose that you
received proceeds from loans pursuant to the Paycheck Protection
Program of the CARES
Act in April and May 2020. Please disclose the amounts received
under this program.
Steve Smith
FirstName LastNameSteve
DecisionPoint Systems, Inc.Smith
Comapany
October 16,NameDecisionPoint
2020 Systems, Inc.
October
Page 2 16, 2020 Page 2
FirstName LastName
Selling Security Holders, page 21
3. Footnote (8) indicates that certain selling stockholders' beneficial
ownership amounts and
shares being offered include shares of common stock underlying
warrants. Please revise
to quantify the amount of such shares underlying warrants for each of
these selling
stockholders.
4. It appears that some of the selling stockholders are broker-dealers or
affiliates of broker-
dealers, including Michael Taglich, Robert Schroeder and Robert
Taglich. Please identify
any selling stockholders who are broker-dealers or affiliates of
broker dealers. For any
broker-dealers, disclose how they obtained their securities, including
whether they
received their securities as underwriting compensation. For any
affiliates of broker-
dealers, disclose whether they purchased their securities in the
ordinary course of business
and, at the time of the purchase, had any agreements or
understandings, directly or
indirectly, with any person to distribute the securities.
Management, page 52
5. Please revise the biographies of your executive officers and director
to disclose each
person's principal occupation and employment during the most recent
five years and the
name and business of any corporation or other organization in which
such occupation and
employment were carried on. Refer to Item 401(e) of Regulation S-K.
Director Independence, page 54
6. Please clarify the number of your independent directors. We note your
statement that
Messrs. Schroeder, Guttilla, Jaworski, Bravman and Taglich are
"independent directors"
as defined under the Listing Rules of the Nasdaq Stock Market. We also
note your
disclosure that your Board is comprised of six directors, four of whom
are independent
directors.
Certain Relationships and Related Party Transaction, page 60
7. Please also disclose any related party transactions during fiscal year
2018. Refer to
Instruction 2 to Item 404(d) of Regulation S-K.
Index to Consolidated Financial Statements
Note 2: Basis of Presentation and Summary of Significant Accounting Policies
Revenue Recognition, page F-9
8. You state that revenue from software license sales is recognized on a
gross basis. Please
clarify whether this includes the resale of specialized independent
software vendor
(ISV) applications. If so, tell us how you determined that you are the
principal in these
transactions and ensure you address those arrangements in which any
tailoring of the
technology is provided by the ISV. Refer to ASC 606-10-55-36 through
55-40.
Steve Smith
FirstName LastNameSteve
DecisionPoint Systems, Inc.Smith
Comapany
October 16,NameDecisionPoint
2020 Systems, Inc.
October
Page 3 16, 2020 Page 3
FirstName LastName
9. Please tell us how you determined that certain third-party delivered
assurance services are
critical or essential to the core functionality of the software
license such that the software
license and assurance services are accounted for as a single
performance obligation. Refer
to ASC 606-10-25-19 and 25-21. In your response, tell us the amount of
revenue
recognized from these arrangements for each period presented.
10. Please explain further how you determined that you control your
drop-ship products prior
to the transfer to your client. Clarify for us your responsibilities
as it relates to fulfillment
and product acceptance and how this compares to the obligations of
your suppliers, if
any. Also, tell us whether any inventory risks are mitigated by the
terms of the supplier
agreements. Lastly, tell us the amount of revenue recognized from
these arrangements for
each period presented.
11. Please describe for us the services offered under each of the OEM
hardware maintenance
support arrangements, the internal hardware maintenance plans, the
software maintenance
support arrangements and the third-party software assurance plans, and
tell us whether the
software maintenance support plans are offered by third-parties, the
company or both.
Also, explain how the internal hardware maintenance services differ
from the OEM plans
and how any internal software maintenance support services differ from
the third-party
software assurance or any other third-party maintenance plans. With
regards to each of
the third-party plans, please further explain how you determined that
you are principal in
these transactions. Refer to ASC 606-10-55-36 through 55-40. Lastly,
explain how these
arrangements relate to the customer-related third-party extended
hardware and software
maintenance services that are paid in advance and capitalized on the
balance sheets as
deferred costs.
12. Please tell us when the performance obligations are satisfied for each
of your professional
services. For performance obligations that are satisfied over time,
disclose the methods
used to recognize revenue for both your time and materials and fixed
fee contracts and
explain how such methods are a faithful depiction of the transfer of
goods or services.
Refer to ASC 606-10-50-18.
13. Revise to disclose the aggregate amount of the transaction price
allocated to the
performance obligations that are unsatisfied as of the end of the
reporting period as well as
an explanation of when you expect to recognize such revenue. Refer to
ASC 606-10-50-
13.
Concentration of Risk, page F-11
14. You state that two customers accounted for 35% of your revenue for the
year ended
December 31, 2019 and 62% for the six months ended June 30, 2020.
Please disclose the
total revenues from each customer that provided 10% or more of your
revenues for each
period presented. Refer to ASC 280-10-50-42. Also, please identify
these customers in
the forepart of the filing and disclose the material terms of your
agreements with them.
Refer to Item 101(c)(vii) of Regulation S-K.
Steve Smith
DecisionPoint Systems, Inc.
October 16, 2020
Page 4
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Megan Akst, Staff Accountant, at (202) 551-3407 or
Kathleen Collins,
Accounting Branch Chief, at (202) 551-3499 if you have questions regarding
comments on the
financial statements and related matters. Please contact Michael C. Foland,
Attorney-Advisor, at
(202) 551-6711 or Kathleen Krebs, Special Counsel, at (202) 551-3350 with any
other questions.
Sincerely,
FirstName LastNameSteve Smith
Division of
Corporation Finance
Comapany NameDecisionPoint Systems, Inc.
Office of Technology
October 16, 2020 Page 4
cc: Peter F. Waltz, Esq.
FirstName LastName