VIA EDGAR SUBMISSION AND FACSIMILE
June 26, 2009
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: Mr. Daniel L. Gordon
Branch Chief
RE: Gilman Ciocia, Inc.
Form 10-K for the year ended June 30, 2008
Filed September 26, 2008
File No. 000-22996
Dear Mr. Gordon:
This letter is being furnished in response to the comments contained in the
letter dated June 19, 2009 (the "Letter") from Daniel L. Gordon, Branch Chief,
of the Staff (the "Staff") of the United States Securities and Exchange
Commission (the "Commission") to Mr. Michael Ryan, Chief Executive Officer of
Gilman Ciocia, Inc. (the "Company"). The Letter was in response to the Company's
letter dated June 11, 2009 sent in response to the Commission's comments in a
letter dated May 28, 2009. The comments of the Staff and the Company's responses
are set forth below and are keyed to the sequential numbering of the comments
and the headings used in the Letter.
Form 10-K for the year ended June 30, 2008
Note 2. Summary of Significant Accounting Policies, page F-8
Revenue Recognition, page F-10
1. We note your response to comment 1. It appears that your independently
owned offices are franchises, but it does not appear that you have
recognized any franchise fees for the periods presented. Based upon your
response and disclosure, it appears that you are recording 100% of the
revenue generated by independently owned offices. Please tell us in your
response and disclose in future filings how you record revenue generated
from independently owned offices, whether you are obligated to pay
operating expenses of the independently owned offices, how the staff of
these offices are compensated, and your basis for such accounting
treatment.
The Company records 100% of the revenue generated by the independently
owned offices to the extent such revenues relate to the purchase and sale
of investment company shares, other securities and investments offered by
the Company. Our independently owned offices are not franchises, but are
independent contractors as supported by the following factors:
a. Each independently owned office is responsible for its own
operating expenses.
b. The staff of these offices is compensated by the independently
owned office.
c. The Company enters into a Registered Representative Agreement
with each independent representative solely as an independent
contractor to solicit for the purchase and sale of investment
company shares, other securities and investments on behalf of
the Company.
d. The Company provides the independent office with necessary
back office and others services to process the transactions
relating to the Company's products and services only. The back
office services provided are largely to ensure controls and
compliance over the proper execution of such transactions.
e. The Company pays the independent representative a commission
in accordance with the Registered Representative Agreement.
f. There is no "agent" relationship as defined in SFAS 45
"Accounting for Franchise Fee Revenue" whereby the Company
engages in transactions in which the Company is an agent for
the independent office. In fact, it is the opposite. The
independent offices offer the Company's products and services,
but may also offer products and services of other unrelated
enterprises. The Company pays a commission to the independent
representative equal to a percentage of the revenues paid to
the Company.
g. There is never a receivable or fees recorded by the Company
from the independent office, but receivables are recorded from
the companies with which securities and investments are
directed by the independent offices. Once such receivables
from the companies are paid to the Company, the independent
office is remitted its portion pursuant to the terms of the
Registered Representative Agreement.
h. The independently owned offices do not use the Company name.
i. The independently owned offices do not participate in or
benefit from any Company marketing
j. The independently owned offices are free to change their
affiliation to another firm without penalty
k. The independently owned offices do no pay or remit any fees to
the Company for any services.
The Company will more fully describe in future filings (i) how its
revenues are generated and recorded for each type of office and (ii) the
accounting basis for the recognition of revenue, and will clarify that the
independent offices pay their own expenses and compensate their own staff
members.
Note 9. Fair Value Measurements, page F-15
2. To the extent that certain accounts payable are presented at fair value,
please confirm to us that you will comply with the presentation and
disclosure requirements of paragraphs 15, 18 and 21 of SFAS 159 in future
filings.
The Company will comply with the presentation and disclosure requirements
of paragraphs 15, 18 and 21 of SFAS 159 in future filings.
Note 17. Related Party Transactions, page F-21
3. We note your response to comment 6. Please confirm to us that you will
more fully describe this transaction in future filings as you have done in
your response to us.
The Company will more fully describe this transaction in future filings as
we have done in our response to you.
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.
If you have any questions regarding our responses above, please feel free to
contact me at 845-485-3338.
Sincerely,
/s/ Michael P. Ryan
Chief Executive Officer
Gilman Ciocia, Inc.
cc: Kristi Marrone, Staff Accountant, United States Securities and Exchange
Commission (via facsimile)
Laurie A. Cerveny, Bingham McCutchen LLP
Joseph D'Arelli, Sherb & Co. LLP