VIA EDGAR CORRESPONDENCE AND
DELIVERED MAIL STOP 5546
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Office of Chief Accountant
Division of Corporation Finance
100 F Street, N.E.; Mail Stop 5546
Washington, D.C. 20549-5546
Attention: Mr. Stephen Jacobs
Dear Sirs/Mesdames:
OMNICITY CORP. - REQUEST FOR WAIVER OF AUDIT REQUIREMENTS ASSOCIATED WITH
BUSINESS ACQUISITIONS - FILE NO. 000-52827
We are furnishing to the Commission herewith, via the EDGAR system, this Waiver
of Audit Requirements Associated with the Company's Business Acquisitions in
accordance with Rule 11-01(d) and Rules 8-04 and 8-05 of Regulation SX.
After reviewing Rule 11-01(d) of Regulation SX with the Staff of the SEC it was
determined that the Company's Asset Purchase Agreements represented acquisitions
of businesses and not acquisition of assets due to the nature of the revenue
remaining unchanged before and after the acquisitions even though there was no
assurance of revenue continuing as no subscriber was under any contractual
obligation to continue as an Omnicity subscriber and in fact revenue has dropped
off dramatically being replaced by revenue from our own marketing initiatives.
As a preamble to our analysis, in the United States today there are several
thousand small wireless internet service providers (WISPS). Very few of these
businesses are profitable and would be classified by the industry as "hobby
businesses". Many have originated out of an individual proprietor interested in
radio communications (Often Ham Radio Operators) extending their interests to
become a WISP. We would like to point outoted that.
We completed our reverse merger on February 17, 2009 and filed an 8K on February
21, 2009. Contained in that 8K the Company disclosed four Asset Purchase
Agreements, 3 of which subsequently closed and one was abandoned. The three
Asset Purchase Agreements closed prior to fiscal year ending July 31, 2009 were
ND Wave, Forepoints Networks and North Central Communications. A lengthy
description of each of these acquisitions was contained in the 8K filing and
disclosed to the public. In accordance with the tests under Rule 8-04 and 8-05
of Regulation SX and in comparison with the Company's balance sheet and
operations as at and for the year ended July 31, 2008 these acquisitions
required two year or one year audits.
ANALYSIS OF EACH ACQUISITION CLOSED DURING FISCAL 2009:
NDWAVE
NDWave was Omnicity's first WISP acquisition and in accordance with Rule
8-04 and 8-05 of Regulation SX required a two year audit. At the closing of
NDWave's Asset Purchase Agreement, NDWave had no employees and was operated
as a sole proprietorship. The proprietor had operated as such co-mingling
the business funds and personal funds to get the owner's hobby off the
ground. NDWave grew rapidly to the point that it needed to invest heavily
to expand its network and market to households within range of its network.
The proprietor decided to sell the network assets and associated
subscribers to Omnicity. We did not consider the operation, at the time of
purchase, as a business. The owner could not provide a balance sheet or
income statement associated with the operation. The Asset Purchase
Agreement targeted the infrastructure which had the ability to service a
large surrounding area of which only 4% were signed up as subscribers.
Omnicity put considerable effort in collecting evidence of the actual
assets being purchased, but not into the profitability or the historical
record keeping of the proprietor's business or financial position.
The subsequent acquisitions after NDWave fit this same model. On their own
initiatives they were not profitable and each one, in its own way, lacked
the resources to clearly provide large enough scale to provide full-time
staff to handle accounting needs, thus making auditable records both
unavailable then, and impractical and extremely cost prohibitive now to
recreate.
FOREPOINTS NETWORKS AND NORTH CENTRAL COMMUNICATIONS
These Asset Purchases were done in the same manner as NDWave.
CUE CONNEX
No audit required due to size of acquisition in accordance with the
significance tests under Rule 8-04 and 8-05 of Regulation SX.
ANALYSIS OF EACH ACQUISITION CLOSED DURING THE PERIOD ENDED MARCH 31, 2010:
AAA WIRELESS, INC.
Not required for audit as it was Asset Purchase done through bankruptcy
court with very minimal revenues.
CLINTON COUNTY WIRELESS
No audit required due to size of acquisition in accordance with the
significance tests under Rule 8-04 and 8-05 of Regulation SX.
USPPP, INC.
No audit required due to size of acquisition in accordance with the
significance tests under Rule 8-04 and 8-05 of Regulation SX.
BRIGHT CHOICE
No audit required due to size of acquisition in accordance with the
significance tests under Rule 8-04 and 8-05 of Regulation SX.
In closing, the financial records associated with each Asset Purchase are
non-existent, incomplete or not available to the Company to have its auditors
perform audits. The cost of attempting to recreate auditable records would be
extremely prohibitive. In connection with audited information required to be
lodged in an 8K filing and looking back at the bundle of closed asset
acquisitions to date in comparison to the size of the consolidated assets and
revenues the Company has currently, each acquisition is relatively small in
comparison.
We hereby request a waiver with respect to the audit requirement pursuant to
Rule 11-01(d) of each acquisition requiring an audit.
We sincerely hope and trust that the foregoing is clear and satisfactory in this
matter. The Company has found the Staff of the SEC helpful in their guidance.
Should the Commission have any further comments or questions arising from any of
the same please do not hesitate to contact me at (604) 646-1563 at any time.
We thank the Commission for its prompt attention to and ongoing cooperation in
this matter, and we remain,
Yours very truly,
"Don Prest"
Don Prest, CFO
Omnicity Corp.