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      Response to SEC Comments

    434
      Fayetteville Street, Suite 600, Raleigh, NC 27601

    November
      8, 2005

    United
      States Securities and Exchange Commission

    Washington,
      D.C. 20549

    Attn:
      Daniel
      L.
      Gordon, Branch Chief

    Eric
      McPhee

            Re:

              Response
                of Summus, Inc. (File No. 0-29625) to Comment Letter of September
                15,
                2005

    Ladies
      and Gentlemen:

    In
      this
      letter below, we have addressed the issues in your comment letter of September
      15, 2005, relating to our Form 10-K for the fiscal year ended December 31,
      2004.

    Comment
      No. 1:

    Management’s
      Discussion and Analysis, page 14

    In
      future
      filings, please include a tabular disclosure of contractual obligations. Refer
      to Item 303(a)(5) of Regulation S-K.

    Response
      to Comment No. 1:
      We will
      make this disclosure in our future filings.

    Comment
      No. 2 :

    Note
      2. Summary of Significant Accounting Policies, page F-15

    Wireless
      Applications and Contracts, page F-15

    Please
      tell us how you evaluated the criteria in EITF-99 to determine that revenues
      from your wireless applications and contracts should be recorded on a gross
      basis (please note that a thorough analysis should address each of the
      indicators within 99-19).

    Response
      to Comment No. 2 :

    In
      determining the appropriate revenue recognition for wireless applications and
      contracts, the Company evaluated the criteria in EITF 99-19, Reporting
      Revenue Gross as a

          1

    Principal
      versus Net as an Agent,
      and
      Staff Accounting Bulletin 104, Revenue
      Recognition
      (“SAB
      104”). SAB 104 references EITF 99-19 as the authoritative guidance in accounting
      for revenues on a gross as a principal or net as an agent basis.

    The
      Company concluded that the revenues from wireless applications and contracts
      should be reported on a gross basis. This conclusion was primarily based on
      the
      fact that the Company is the primary obligor in the arrangement, and is
      responsible for developing the product, establishing the pricing, and assumes
      credit risk from the carriers.

    EITF
      99-19 sets forth several indicators of gross revenue reporting and several
      indicators of net revenue reporting. The literature also acknowledges that
      making a determination of whether a company should recognize revenue based
      on a
      gross amount billed to a customer or the net amount retained is a matter of
      judgment and depends on the relevant facts and circumstances in each case.

    The
      following summary example of an existing contract illustrates in detail the
      sale
      of an application utilizing the content provided by a content provider:

              ·

              The
                Company enters into an agreement with a content provider to provide
                the
                content to the end users through the Carriers. Summus agrees to provide
                the content provider 50% of the cash it receives as consideration
                for the
                content provider’s content.

              ·

              Summus
                develops a software application so that wireless handset users can
                download the content provider’s content for viewing, and manipulate it to
                use as a screen saver, wallpaper or as an application. The application
                resides on Summus’ or the Carriers’ servers once developed. Potential
                functionality included in the application developed by Summus may
                include:

              o

              Navigation
                Menus

              o

              Auto-Scrolling
                between pictures

              o

              Favorites
                List

              o

              Monthly
                refresh of new content delivered
                monthly

              ·

              Summus
                also has to modify and crop the content (e.g. pictures) so that they
                are
                compatible with various wireless devices.

              ·

              The
                application is then tested to ensure it complies with the requisite
                wireless standards.

              ·

              Once
                the application is approved, the Company will enter into an agreement
                with
                a Carrier to offer the content provider’s application to its subscribers.
                The end users can then download the branded content.

              ·

              Summus
                determines the amount to charge the Carrier (either on a subscription
                or
                per-download basis).

          2

              ·

              The
                Carrier determines the retail amount to charge the end user (generally
                a
                35% markup).

              ·

              The
                Carrier monitors the applications downloaded from the Summus servers
                by
                the end users and identifies the number of the applications
                purchased.

              ·

              The
                Carrier collects the retail price to the end user. Out of this amount,
                the
                Carriers generally retain 35%. By way of example, if a Carrier charges
                an
                end user $1.99 for the download of an application, the Carrier receives
                $0.70 (0.35 x $1.99) and the remainder ($1.29) is sent to the Company.
                The
                Company then computes the content partners’ revenue share and pays the
                content partner once the cash is collected. In the above example,
                the
                content provider would receive approximately $0.65 (0.50 x $1.29).

    The
      Company has analyzed the following indicators of gross revenue reporting and
      the
      indicators of net revenue reporting as set forth in EITF 99-19.

    Gross
      Revenue Reporting Indicators:

              ·

              The
                Company is the main obligor in the
                arrangement.

    Company’s
      analysis:

    In
      the
      Company’s contracts with the wireless carriers, the Company is the obligor in
      the arrangement. The Company is responsible for the development and testing
      of
      the application and for the delivery of the service to the Carrier, in a form
      that can be delivered over a mobile device. The applications typically reside
      on
      the Company’s servers, and the Company is solely responsible for fulfilling each
      sale (from the perspective of the Carrier). In addition, the Company is
      responsible for addressing any problems in the delivery of this service to
      the
      Carrier. In some cases, the Company may deliver the application to the Carriers
      to reside on their servers for download. In all cases, the Company maintains
      the
      rights of ownership to the application.

          3

      This
        indicator supports the Company’s conclusion that wireless application and
        contract revenues should be reported on a gross basis.

              ·

              The
                Company has general inventory risk (before customer order or upon
                customer
                return).

    Company’s
      analysis:

    This
      does
      not apply to the Company, since the sale is subscription-based software, and
      not
      an inventoried product.

              ·

              The
                Company has latitude in establishing
                price.

    Company’s
      analysis:

    The
      Company has the authority to negotiate and establish a price with the Carriers.
      The Carrier may have input in that the Carrier has the best knowledge of the
      end-user market. The Company may solicit input from the content provider on
      establishing the price.

    This
      indicator supports the Company’s conclusion that wireless application and
      contract revenues should be reported on a gross basis.

              ·

              The
                Company changes the product or performs part of the
                service.

    Company’s
      analysis:

    Once
      the
      Company licenses content, whether it is news, information, pictures, or a game,
      the Company takes this content and make the necessary changes or application
      development so that the content is ready for a handset wireless device. This
      may
      entail developing a new application, or modifying the original source code
      of
      the content. Some of the applications sold by the Company are games for use
      on
      wireless devices. The Company sublicenses the game from a content provider
      (these games are often games that have been developed for a PC) but has to
      make
      substantial modifications so that this game can be played on a wireless device.
      This might involve using compression technology due to memory constraints;
      changing graphics to compensate for being on a wireless device rather than
      a PC;
      making code changes due to limitations in space, memory and the like; or in
      some
      cases developing a new application for this game. In every case, the Company
      must perform substantial modification to the content’s source code or develop a
      new application so that an end-user is able to download the content.

    This
      indicator supports the Company’s conclusion that wireless application and
      contract revenues should be reported on a gross basis.

          4

                ·

                The
                  Company has discretion in supplier
                  selection.

    Company’s
      analysis:

    The
      Company has the latitude to license content from any provider. There are not
      any
      clauses in the Company’s agreement with any Carrier that designate certain
      suppliers. In addition, the applications that are developed by the Company
      may
      be used with additional content providers.

    This
      indicator supports the Company’s conclusion that wireless application and
      contract revenues should be reported on a gross basis.

              ·

              The
                Company is involved in the determination of product or service
                specifications.

    Company’s
      analysis:

    The
      Company is the developer of the end product. As discussed above, the Company
      must perform substantial modification to the content’s source code or develop
      new applications for users to download content.

    This
      indicator supports the Company’s conclusion that wireless application and
      contract revenues should be reported on a gross basis.

              ·

              The
                Company has physical loss inventory risk (after customer order or
                during
                shipping).

    Company’s
      analysis:

    This
      indicator does not apply to the Company in that the Company does not carry
      inventory.

              ·

              The
                Company has credit risk.

    Company’s
      analysis:

    The
      Company does bear credit risk for all sales. In the event cash is not received
      by the Carrier, the Company would not receive any consideration from the
      Carrier. Although a weaker indicator of gross reporting, the Company does assume
      credit risk from the sale of its applications. In addition, some of the
      contracts the Company has with content providers require monthly minimum
      payments that the Company is obligated to pay regardless of the level of
      sales.

          5

      This
        indicator supports the Company’s conclusion that wireless application and
        contract revenues should be reported on a gross basis.

    Net
      Revenue Reporting Indicators:

              ·

              The
                content provider (not the Company) is the primary obligor in the
                arrangement.

    Company’s
      analysis:

    As
      discussed above, the Company is the primary obligor in the arrangement. Once
      the
      content is licensed to the Company, the content provider is not part of the
      arrangement, except to receive their royalties from the Company.

    This
      indicator supports the Company’s conclusion that wireless application and
      contract revenues should be reported on a gross basis.

              ·

              The
                amount the Company earns is fixed.

    Company’s
      analysis:

    As
      noted
      above, the Company is primarily responsible for establishing the price with
      the
      Carrier. For most agreements, the Company “shares” revenue with a content
      provider and earns a fixed percentage of the amount collected from the end
      user.
      However, the amount of revenue ultimately earned by Summus is dependent upon
      the
      cash eventually received from the Carrier and the price negotiated by Summus.

    This
      indicator does not support either gross or net basis of revenue
      recognition.

              ·

              The
                content provider (and not the Company) has credit
                risk.

    Company’s
      analysis:

    As
      noted
      above, in the event cash is not received by the Carrier, the Company would
      not
      receive any consideration from the Carrier. Although a weaker indicator of
      gross
      revenue reporting, the Company assumes credit risk for the amounts due from
      the
      Carriers. In some cases, the content provider also assumes credit risk, in
      that
      it does not collect any revenue unless the Company collects cash. In some cases,
      the content provider does not assume credit risk if there are minimum payments
      that the Company is required to pay the content provider regardless of sales.

    This
      indicator supports the Company’s conclusion that wireless application and
      contract revenues should be reported on a gross basis.

          6

    In
      summary, based on the indicators above the Company has concluded that wireless
      applications and contract revenues should be reported on a gross
      basis.

    Comment
      No. 3:

    Note
      10. Common Stock and Warrants, page F-25

    Please
      tell us how you accounted for the re-pricing of previously issued warrants
      during 2003. In your response, cite the specific accounting literature that
      you
      relied on.

    Response
      to Comment No. 3:

    Over
      the
      course of the past several years, the Company has raised capital through the
      sale of unregistered shares of its common stock, along with warrants to purchase
      shares of unregistered common stock in private sales to accredited investors.
      These sales have typically been negotiated individually with each investor,
      resulting in terms (i.e. price of unregistered shares and exercise price of
      warrants) that vary from investor to investor. In general, the price of the
      unregistered shares is at a discount to the price of the Company’s freely
      trading shares in recognition of the lack of liquidity of the unregistered
      shares. Transactions were not entered into with current holders of the Company’s
      common stock unless the transactions resulted in capital being raised for the
      Company in one of the two