SecProbe.io

CORRESP
1
filename1.htm

    corresp_1300164.htm

    September
5, 2008

    Via
EDGAR and U.S. Mail

    Mr.
Stephen Krikorian

    Assistant
Director

    United
States Securities and Exchange Commission

    100 F
Street, N.E.

    Washington,
D.C.  20549

              Re:

              Access
      Integrated Technologies, Inc.

              Form
      10-K for the fiscal year ended March 31, 2008

              Filed
      on June 16, 2008

              Form
      10-K/A for the fiscal year ended March 31, 2008

              Filed
      on June 26, 2008

              Form
      8-K

              Filed
      on June 12, 2008

              Definitive
      Proxy Statement on Schedule 14A

              Filed
      on July 28, 2008

              File
      No. 000-51910

    Dear Mr.
Krikorian:

    On behalf of Access Integrated
Technologies, Inc. (“AccessIT” or the “Company”), set forth below are the
Company’s responses to your letter of comment dated August 6, 2008 to Mr. A.
Dale Mayo, President and Chief Executive Officer of the Company.  The
numbered responses of the Company and related captions contained in this letter
correspond to the numbered paragraphs and related captions in the letter of
comment.  The responses provided below relate to the Company’s Annual
Report on Form 10-K for the fiscal year ended March 31, 2008, (the “Form 10-K”),
the Company’s Amendment No. 1 to Form 10-K on Form 10-K/A (the “Form 10-K/A”),
the Company’s Form 8-K filed on June 12, 2008 (the “Form 8-K”), and the
Company’s

            Mr.
Stephen Krikorian

            September
5, 2008

            Page
Two

    Definitive
Proxy Statement on Schedule 14A filed on July 28, 2008 (the “Form DEF 14A”), as
applicable.

    Form 10-K for the fiscal
year ended filed March 31, 2008

    Item 1. Business, page
1

              1.

              You
      disclose that five customers each represented 10% or more of AccessIT DC’s
      revenues and AccessIT DC’s customers comprised 78.7% of Media Services’
      revenues.  In addition, you disclose that Overture Films, Summit
      Entertainment, and 20th Century Fox each comprised approximately 41.9%,
      12.4%, and 11.8%, respectively, of AccessIT SW’s revenues for the fiscal
      year ended March 31, 2008. Please disclose whether any of your customers
      represented 10% or more of the company’s consolidated revenues. Discuss
      your relationship with any such customers and provide us with an analysis
      as to why you have determined that your agreements, if any, with these
      customers do not need to be filed pursuant to Item 601(b)(10) of
      Regulation S-K.

    RESPONSE:

    The
Company advises the United States Securities Exchange Commission staff (the
“Staff”) that none of the Company’s customers represented 10% or more of the
Company’s consolidated revenues for the year ended March 31, 2008.

    The
Company does not have any specific relationships with its
customers.  The Company’s customer agreements with its customers were
not filed pursuant to Item 601(b)(10) of Regulation S-K as they were made in the
ordinary course of business and are not material to the Company on a
consolidated basis.

    Other, page
11

              2.

              Please
      consider adding a corporate organization chart that provides a graphic
      representation of the company’s business and its three reporting segments.
      To the extent material, please include the company’s subsidiaries to show
      the relationship between the company and the entities you discuss in this
      section.

    RESPONSE:

    The
Company agrees with the Staff that a corporate organization chart would be
helpful to readers of its financial information. The Company has added the
suggested

            Mr.
Stephen Krikorian

            September
5, 2008

            Page
Three

    organization
chart to the Form 10-Q for the quarter ended June 30, 2008 (the “Form 10-Q”),
and it will continue to include this chart in future filings as
necessary.

    Item 5.  Market
for Common Equity, Related Shareholder Matters and Issuer Purchases of Equity
Securities

    Sales of Unregistered
Securities, page 21

              3.

              For
      the sale of unregistered securities you disclose on page 21, disclose the
      identity of persons or class of persons as to whom the securities were
      sold in accordance with Item 701 of Regulation
  S-K.

    RESPONSE:

    The
persons referred to on page 21 were the purchasers of the Company’s senior notes
issued in August 2007 (referred to as the 2007 Senior Notes).  The
shares so described were issued as payment of interest on the 2007 Senior
Notes.  The discussion regarding the sale of unregistered securities
on page 21 will be revised in future filings, to more clearly provide the
required disclosure in future filings.

    Management’ s Discussion and
Analysis of Financial Condition and Results of Operations

              4.

              Please
      consider expanding this section to include known trends, demands,
      commitments, events and uncertainties. This disclosure should provide
      material historical and prospective disclosure enabling investors to
      assess the financial condition and results of your operations, with
      particular emphasis on your prospects for the future. Disclosure should be
      based on financial, operational, and other information known to you as
      well as known trends and uncertainties and assessment of whether these
      trends and uncertainties will have, or are reasonably likely to have, a
      material impact on your liquidity, capital resources, or results of
      operations. See SEC Release No. 33-8350. For example, consider discussing
      the impact of the Phase II deployment and the working capital that you
      will need and expect to raise in order to implement the Phase II
      deployment. Discuss the financing that you intend to enter into and your
      course of action if you are unable to secure
  financing.

    RESPONSE:

    The
Company acknowledges the requirement to provide such information, and will make
additional Management’s Discussion and Analysis of Financial Condition and
Results of

            Mr.
Stephen Krikorian

            September
5, 2008

            Page
Four

    Operations
(“MD&A”) disclosures in future filings as necessary.  In the Form
10-Q the Company has made certain additional disclosures, for example, regarding
its Phase II deployment the Company has disclosed the following:

    “Our
Phase II Deployment would require the purchase of up to 10,000 digital cinema
projection systems, which together with installation and related costs, could
aggregate approximately $700 million.  The cost of such equipment is
expected to be funded with a combination of long term debt and payments from
exhibitors and other third parties.  The Company is currently pursuing
various financing options with private parties in connection with the proposed
Phase II Deployment.  If none of such options is successful, the
Company will reconsider alternatives.”

    As
further discussed in the response to Comment 7, the Company is operating in an
emerging industry area, and will also consider making additional disclosure of
key metrics and drivers in the businesses in which it operates, that are
expected to impact the Company’s financial condition.

    Critical Accounting
Policies, page 23

              5.

              Your
      critical accounting policies should describe your estimates and
      assumptions that are highly uncertain or susceptible to change and the
      related material impact on financial condition or operating performance.
      For instance, you should provide an enhanced discussion of the estimates
      and assumptions used in your customized software development contracts
      accounted for on a percentage-of-completion basis. Also, consider
      providing a discussion of impairment testing on goodwill, intangible
      assets and fixed assets since your disclosures on page F-10 appear to
      indicate these areas require significant estimates and judgment.
      Disclosure should be considered as to why these material accounting
      estimates and assumptions bear the risk of change, how you arrived at the
      estimate, the accuracy of the estimate/assumption in the past, how they
      have changed, and any reasonably likely future changes. We refer you to
      Section V of SEC Release No. 33-8350, Commission Guidance Regarding
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations.

    RESPONSE:

    The
Company notes the Staff’s comment and will expand its disclosure in future
filings for revenue recognition, goodwill and other items in accordance with
Section V of SEC Release No 33-8350, regarding estimates and assumptions
associated with such critical accounting policies.  The Company has
already made certain additions to the accounting

            Mr.
Stephen Krikorian

            September
5, 2008

            Page
Five

    policy
disclosure in the Form 10-Q.  The percentage of completion basis of
accounting relates to only one particular contract, for a custom software
application, which is not material to the Company as a whole.  The
Company will revise its disclosure in future filings to indicate this fact, and
it will provide details of the amounts involved.  An example of the
additional disclosure that the Company plans to add in future filings, in the
case of goodwill impairment testing and fixed assets, is as
follows:

    Goodwill and intangible
assets:  Carrying values of goodwill and other intangible
assets with indefinite lives are reviewed for possible impairment in accordance
with SFAS No. 142.  We test our goodwill for impairment in accordance
with the applicable accounting literature.  We test our goodwill for
impairment annually and in interim periods if certain events occur indicating
that the carrying value of goodwill may be impaired.  We review the
value of our fixed assets and intangible assets in accordance with SFAS No. 144
whenever events or changes in business circumstances indicate that the carrying
amount of the assets may not be fully recoverable or that the useful lives of
these assets are no longer appropriate.  We estimate the fair value of
goodwill and intangible assets resulting from business combinations, primarily
relying upon third party valuation reports which utilize discounted future cash
flows of the associated products and services.  It is possible that
the estimates and assumptions used in assessing the carrying value of these
assets, such as future sales and expense levels, may need to be reevaluated in
the case of continued market deterioration, which could result in impairment of
these assets.

    Fixed
Assets:  Useful lives are determined based on an estimate of
either physical or economic obsolescence, or both.  During the last
three fiscal years the Company has not made any revisions to estimated useful
lives, nor recorded any impairment charges on its fixed assets.

    Results of Operations, page
25

              6.

              We
      note instances where two or more sources of a material change have been
      identified, but the quantification of the amount that each source
      contributed to the change is not disclosed. As an example, your disclosure
      on page 25 indicates that the $30.3 million increase in revenues during
      fiscal 2007 was driven largely by the ACS Acquisition, VPF revenues,
      license fees earned for your TCC software and the Bigger Picture
      Acquisition offset by revenues from your IDCs. As another example, your
      disclosure on page 27 indicates that the $4.4 million increase in direct
      operating costs during fiscal 2008 was due to the acquisition of ACS,
      minimum guaranteed obligations under the theatre advertising agreements
      with exhibitors for displaying cinema adverting, the acquisition of The
      Bigger Picture and the IDC disposition. Tell us your consideration of
      quantifying

            Mr.
Stephen Krikorian

            September
5, 2008

            Page
Six

              each
      source that contributed to a material change pursuant to the requirements
      of the related interpretive guidance in Section III. D of SEC Release
      33-6835 Interpretation:  Management’s Discussion and Analysis of
      Financial Condition and Results of Operations when preparing your MD&A
      discussion.

    RESPONSE:

    The
Company notes the Staff’s comment, and will provide additional quantification of
changes in key financial statement items in future filings, in accordance with
SEC Release 33-6835.  For example, the Company has enhanced certain
disclosures to the Form 10-Q, as shown below.

    Results
of Operations for the Three Months Ended June 30, 2007 and 2008

    Revenues

              For
      the Three Months Ended June 30,

              ($
      in thousands)

              2007

              2008

              Change

              Revenues:

              Media
      Services

            $
            11,013

            $
            14,652

            33
            %

              Content
      & Entertainment

            6,802

            5,590

            (18
            )%

              Other

            331

            328

            (1
            )%

            $
            18,146

            $
            20,570

            13
            %

    Revenues
increased $2.4 million or 13%.  The increase in revenues was primarily
due to a 40% increase in VPF revenues, in the Media Service segment,
attributable to the increased number of Systems installed in movie theatres,
following the completion of our Phase I Deployment.  We also
experienced a 35% increase in revenues from delivery of movies to digitally
equipped theatres, due to the increase in the number of such theatres over the
last year.  The gains were partially offset by a 17% decline in
in-theatre advertising revenues, in the Content & Entertainment segment,
mostly attributable to the elimination of various under performing customer
contracts.  We also experienced a decline in software revenues, due to
one-time license fees from our Theater Command Center software realized during
the Phase I Deployment.  We expect these software license fees to
resume upon either an anticipated further domestic deployment of Systems (“the
Phase II Deployment”), or an international deployment of Systems. There were
2,692 Systems installed at June 30, 2007 compared to 3,723 Systems installed at
June 30, 2008.  We expect revenues to generally remain near current
levels until there is an increase in the number of Systems deployed from our
anticipated Phase II Deployment, due to the resultant VPFs and other revenue
sources including content delivery and distribution of alternative content
generated from digitally equipped movie theatres.

    The
Company also recognizes the requirement to further specify the dollar amount of
material changes and will do so in future filings in addition to a textual
discussion of the changes.

            Mr.
Stephen Krikorian

            September
5, 2008

            Page
Seven

    Liquidity and Capital
Resources, page 28

              7.

              Your
      discussion of cash used in operating activities appears to be a mere
      recitation of changes and other information evident from the financial
      statements. Your disclosures should focus on the primary drivers of and
      other material factors necessary to provide an understanding of your cash
      flows and the indicative value of historical cash flows. In addition,
      where there has been material variability in historical cash flows, your
      discussion should focus on the underlying reasons for the changes, as well
      as on th