ISA INTERNATIONALE INC.
2564 RICE STREET
ST. PAUL, MN 55113
SEC File No. 1-16423
July 8, 2011
U.S. Securities and Exchange Commission
Division of Corporation Finance
Washington, DC 20549
Attn: Mr. Andrew D. Mew
Accounting Branch Chief
Dear Mr. Mew:
We are responding to your letter dated July 6, 2011 concerning our
correspondence filed on June 24, 2011. This was a response to your third
letter dated June 7, 2011 concerning our correspondence filed on May 25, 2011
following your second letter dated April 27, 2011 and your original letter
dated March 2, 2011 with comments and questions about our Form 10-K
submission for our fiscal year ended 09/30/2010. Our response will correspond
to the points referenced in your letter.
The Company will be submitting a revised Form 10-K/A for the period ended
September 30, 2010 within the next 30 days and Form 10-Q/A for the period
ended December 31, 2010 and Form 10-Q/A for the period ended March 31, 2011.
The Registrant, ISA Internationale Inc., is referred to in this letter as the
"Company" or "ISAT".
Form 10-K for the Fiscal Year Ended September 30, 2010
Consolidated Financial Statement
Notes to Consolidated Financial Statements
Note 1. Nature of Business and Significant Accounting Policies
1(a) Nature of Business
1. We will properly file the Indemnification Agreement and Exhibit A with
our amended Form 10-K/A filing for the year ended September 30, 2010.
1(j) Financial Instruments
1. We reclassified our Finance Receivables from Level 2 to Level 3 fair
value hierarchy as originally filed and in accordance with your request. This
change will be reflected in our 10-K/A filing for September 30, 1010 along
with all subsequent filings.
Item 9A. Controls and Procedures
2. Section 9A - We have corrected the confusion relating to inconsistency
relayed in your letter.
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Item 9A. CONTROLS AND PROCEDURES
(a) Management's Conclusion Regarding the Effectiveness of Disclosure Controls
and Procedures
ISA Internationale Inc., under the direction, supervision, and participation
of our Chief Executive Officer and Chief Financial Officer and effected by
management and other personnel, has conducted an evaluation as of the end of
the period covered by this report, of the effectiveness of the design and
operation of disclosure controls and procedures (as defined in Rules 240.13a-
15(e) and 240.15d-15(e) of the Securities Exchange Act of 1934).
Based on this evaluation done during March 2011, our Chief Executive Officer
and Chief Financial Officer concluded that as of September 30, 2010, the
Company's disclosure controls and procedures were not effective due to
material weaknesses in its disclosure controls over financial reporting as of
the end of the period covered by this annual report on Form 10-K/A.
(b) Management's Annual Report on Internal Control Over Financial Reporting
The management of ISA Internationale Inc. is responsible for establishing and
maintaining adequate internal control over financial reporting, as such term
is defined in Exchange Act Rule 13a-15(f). Under the direction, supervision,
and participation of, our Chief Executive Officer and Chief Financial Officer
and effected by management and other personnel, our management and certifying
officers conducted an evaluation as of the end of the period covered by this
report, of the effectiveness of internal control over financial reporting
based on the framework in Internal-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO-
Framework).
Based on the results of this evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that as of September 30, 2010, our controls
were not effective.
Material weaknesses and errors were discovered in the reporting of collection
revenues and costs on our Company owned portfolios overstating income and
expense. Our required procedures to review accounting functions were
improperly managed. The procedures were in place but were not always adhered
to by management and accounting personnel.
As a result of these material weaknesses, the Company financial reports
contained in our original 10-K submission for the period ended September 30,
2010 contained errors overstating the reporting of Gross collections revenues
and Cost of Collections expense on our Company owned portfolios using the
cost recovery method. There were no errors in the reporting of our other
sources of revenue or General and Administrative Expenses. The net result
after correcting these errors produced a negative adjustment to our net
operating income of $12,423. Another correction was to record a legal
settlement expense accrued for $4,500 as of September 30, 2011. This amount
had been paid in the quarter ended December 31, 2011. This expense was
incorrectly reported on September 30, 2011, as a subsequent event.
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This Report does not include an attestation report of the Company's
registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission permitting the Company to provide only
the management report in this report.
Form 10-Q, for the Fiscal Quarter Ended March 31, 2011
Item 4. CONTROLS AND PROCEDURES
Management's Conclusion Regarding the effectiveness of Disclosure Controls
and Procedures
3. Although management believes that disclosure controls and procedures
were effective as of March 31, 2011, we understand your position, especially
as it pertains to the sufficiency of time for monitoring. Given this
position, management has decided to revise the conclusion to "not effective"
for the amended 10-Q/A as of the quarter ended March 31, 2011.
4. We understand your request and confirm that the partial definition will
be entirely removed. The following reflects the proposed changes as it
pertains to the 10-Q/A for the quarter ended March 31, 2011. Currently dated
certifications will also be included.
Disclosure Controls and Procedures
The management of ISA Internationale Inc., under the direction, supervision,
and participation of, our Chief Executive Officer and Chief Financial Officer
and effected by management and other personnel, has conducted an evaluation
as of the end of the period covered by this report, of the effectiveness of
the design and operation of disclosure controls and procedures (as defined as
defined in Rules 240.13a-15(e) and 240.15d-15(e) of the Securities Exchange
Act of 1934).
Based on this evaluation, our Chief Executive Officer and Chief Financial
Officer has concluded that as of March 31, 2011, the Company's disclosure
controls and procedures were not effective.
Acknowledgements:
The registrant hereby acknowledges that:
1. the Company is responsible for the adequacy and accuracy of the disclosure
in our filings;
2. staff comments or changes to disclosure reported to the SEC in response to
staff comments do not foreclose the SEC from taking any action with respect
to the filing; and
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3. 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.
We are attempting to fully comply with the reporting requirements of the SEC
and respectfully ask for your agreement with our conclusions in this
correspondence. Please contact me at 651-489-6941 or by fax at 651-484-9870
if you have additional comments or questions.
Sincerely,
/s/Bernard L. Brodkorb
President, CEO, and CFO
ISA Internationale Inc.