[LETTERHEAD OF ADVANCED COMMUNICATIONS TECHNOLOGIES]
March 29, 2006
VIA EDGAR CORRESPONDENCE FILE
Mr. Thomas Flinn
Staff Accountant
Division of Corporation Finance
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Dear Mr. Flinn:
Re: Advanced Communications Technologies, Inc.
Form 10-KSB for the Fiscal Year Ended June 30, 2005
Form 10-QSB for the Quarter Ended September 30, 2005
File No. 0-30486
The following are your comments reproduced, along with our responses in
connection with your March 15, 2006 comment letter, which reviews our Form
10-KSB for the fiscal year ended June 30, 2005 and Form 10-QSB for the quarter
ended September 30, 2005.
Note 9 - Notes and Loan Payable, page F-1A
COMMENT 1 We note your response to our previous comment four. Please address the
following comments:
o Tell us if the deferred finance fees were costs incurred to
enter into the loan transaction (e.g., lawyer fees,
accountant fees, etc.) or a fee charged by Cornell Capital
Partners LP to borrow the money over the life of the loan.
o Explain to us the basis for your assertion to the effect
that the promissory note was issued in connection with the
equity line of credit; tell us the expiration date of the
equity line of credit.
o We note that the loan was originally payable in six months,
would become interest-bearing at the lower of 24% or the
highest rate permitted by law if not paid when due, and was
subsequently modified. Please explain to us how you
considered EITF 96-19 in determining how to account for
these modifications.
RESPONSE The following responses correspond to Comment 1:
o The deferred financing fees in the amount of $171,000
represent financing fees charged by Cornell Capital
Partners, L.P. to borrow funds over the life of the loan. It
does not represent loan transaction costs such as
professional fees for lawyers and accountants.
o The Equity Line of Credit agreement was effective in July
2003 and still remains in effect. It is scheduled to expire
in February 2007 unless extended by mutual agreement. The
promissory note was issued in connection with the Equity
Line of Credit transaction because by its terms, the note
was to be repaid either in cash or from the issuance of
common stock. The maturity of the note preceded the
expiration of the Equity Line of Credit.
o When we modified the unsecured promissory note in February
2005, we considered the application of EITF 96-19 and
determined that the change in terms was not a substantial
modification of the debt instrument because the present
value of the cash flows under the terms of the new
instrument is not at least 10% different from the present
value of the remaining cash flows under the terms of the
original instrument. This present value computation took
into account those attributes stipulated by the EITF in its
discussion.
In connection with its response to the comments of the SEC staff regarding the
above referenced 10-KSB and 10-QSB, Advanced Communications Technologies, Inc.
(the "Company") acknowledges that:
o the Company is responsible for the adequacy and accuracy of the
disclosure in the filings;
o 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
o 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.
* * * * *
Very truly yours,
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/s/ Wayne I. Danson
President and CEO
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