SecProbe.io

CORRESP
1
filename1.htm

    corresp-1309848.htm

    October
21, 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-Q for the quarterly period ended June 30, 2008

              Filed
      on August 11, 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 September 26, 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 filed on June 16,
2008 and subsequently amended on June 26, 2008 and September 11, 2008 (the “Form
10-K”), and the Company’s Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2008 filed on August 11, 2008 (the “Form 10-Q”), as
applicable.

          Mr.
Stephen Krikorian

          October
21, 2008

          Page
Two

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

    General

              1.

              We
      note that you did not provide the acknowledgements that appear at the end
      of our prior comment letter.  Please submit the representations
      from the company in your next response
letter.

    RESPONSE:

    The representations are submitted
herewith.

    Item 1.
Business

              2.

              We
      note that your response to prior comment 23 does not address your
      consideration of Item 101(b) of Regulation S-K.  As stated in
      our previous comment, in your Business section, please disclose or provide
      a cross-reference to the notes to the financial statements of financial
      information regarding each of the company’s three reporting segments
      including revenues from customers, a measure of profit or loss and total
      assets for each of the last three
years.

    RESPONSE:

    In future
filings, a cross-reference will be added in the Business section to direct
readers to the relevant note(s) to the financial statements as
requested.

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

              3.

              We
      note that the entirety of your proposed disclosure in your response to
      prior comment 4 regarding Phase II deployment is not contained in the Form
      10-Q for the quarter ended June 30, 2008.  Further, your
      response regarding the financing that you intend to pursue and the course
      of action if you are unable to secure funding seems general.  In
      future filings, please provide as much specificity as possible regarding
      your future financing plans and discuss the alternatives that you will
      consider if none of your financing options are
  successful.

          Mr.
Stephen Krikorian

          October
21, 2008

          Page
Three

    RESPONSE:

    The
language in future periodic reports will be revised to include all of the
proposed disclosure in the Company’s response to prior comment
4.  Further, the Company regularly strives to provide investors with
as much specificity as possible, and to disclose material information as soon as
appropriate, in accordance with the rules and regulations of the federal
securities laws.  The Company has included some additional disclosure
in the Liquidity and Capital Resources section in the Form 10-Q for the
quarterly period ended June 30, 2008.  Currently, the Company believes
it would be premature to disclose specific details of proposed financing
arrangements that it is pursuing, but acknowledges that it will make such
disclosures, including alternatives to such plans, as appropriate in future
filings.  In addition, in future filings the Company will specifically
disclose that if the Company is not successful in securing funding for its Phase
II deployment from lenders, exhibitors and hardware vendors, such deployment
would have to be delayed and thereby significantly reduce revenue
growth.  The Company will update its disclosures to provide as many
specifics as possible on the actual and expected developments in this
area.

    Critical Accounting
Policies, page 23

              4.

              Your
      response to prior comment 5 indicates that you will add disclosures
      stating that you primarily rely upon third party valuation
      reports to estimate the fair value of goodwill and intangible
      assets.  Please describe the nature and extent of the specialist
      involvement in your determination of the fair value.  See
      Securities Act Rule 436 of Regulation
C.

    RESPONSE:

              The
      Company has engaged third party valuation firms (“firms”) for purposes of
      allocating the purchase price of assets acquired, including goodwill and
      intangible assets, and liabilities assumed in accordance with SFAS 141.
       The Company also utilizes these firms to assist in its periodic
      impairment testing of goodwill and intangible assets. The nature and
      extent of the firms’ involvement includes reviewing their qualifications,
      supplying relevant business combination transaction documents,
      management’s forecasts, cash flow analysis and other relevant data,
      discussing the valuation model and results with the firms, reviewing their
      results to determine if they are in line with management’s expectations of
      our business, market capitalization and other management considerations.
       The Company has ultimate responsibility for the values assigned to
      such assets and liabilities related to business combinations and
      conclusions on any goodwill or

          Mr.
Stephen Krikorian

          October
21, 2008

          Page
Four

                intangible
      asset impairment testing.  We will not reference reliance on third
      parties in future filings and will make the following disclosures with
      respect to these matters:

    GOODWILL
AND INTANGIBLE ASSETS

    The
Company adopted SFAS No. 142, “Goodwill and other Intangible Assets” (“SFAS No.
142”), which addresses the recognition and measurement of goodwill and other
intangible assets subsequent to their acquisition.  Carrying values of
goodwill and other intangible assets with indefinite lives are reviewed for
possible impairment in accordance with SFAS No. 142. The Company tests its
goodwill and other intangible assets with indefinite lives for impairment in
accordance with the applicable accounting literature annually and in interim
periods if certain events occur indicating that the carrying value of goodwill
may be impaired. The Company reviews the carrying value of its amortizing
intangible assets in accordance with SFAS No. 144, “Accounting for the
Impairment or Disposal of Long-Lived Assets” 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. The Company estimates the fair value of goodwill and intangible
assets resulting from business combinations by reference to estimates of the
discounted future cash flows of the associated products and services and by
referencing the market multiples of identified peer group companies. 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.

    Liquidity and Capital
Resources, page 28

              5.

              We
      note your response to comment 7 that you will provide an enhanced
      discussion of the primary drivers of the business in future
      filings.  It appears that the disclosure in the Liquidity and
      Capital Resources section of the Form 10-Q for the quarter ended June 30,
      2008 does not contain this enhanced disclosure.  Please
      advise.

    RESPONSE:

    As the
Company’s business is primarily driven by the emerging digital cinema
marketplace, the primary revenue driver will be the increasing number of
digitally equipped screens.  There are approximately 38,000 movie theater
screens in the United States and Canada, and approximately 107,000 screens
worldwide.  Approximately 5,200 of the domestic screens are equipped with
digital cinema technology, and 3,723 of those screens contain AccessIT’s
equipment and software.  We anticipate the vast majority of the industry’s
screens to be converted to digital in the next 5-7 years, and we have

          Mr.
Stephen Krikorian

          October
21, 2008

          Page
Five

    announced
plans to convert up to an additional 10,000 domestic screens to digital in our
“Phase II” deployment plan over the next three years.  For those screens
that are deployed by AccessIT, the primary revenue source will be virtual print
fees, with the number of digital movies shown per screen, per year being the key
indicator for earning and measuring the virtual print fees, since the studios
pay such fees on a per movie, per screen basis.  For all new digital
screens, whether or not deployed by AccessIT, the opportunity for other forms of
revenue also increases.  The Company may generate additional software
license fee revenue (mainly the Theater Command Center software which is used by
exhibitors to aid in the operation of their systems), alternative content
distribution fees (such as concerts and sporting events) from the Company’s
Bigger Picture unit, and fees from the delivery of content via satellite or hard
drive, may also result.  In all cases, the number of digitally-equipped
screens in the marketplace is the primary determinant of the Company’s possible
revenue streams, although the emerging presence of competitors for software and
content distribution and delivery may limit this growth.  The Company
was commencing the process of responding to the prior comment letter at the time
the Form 10-Q for the quarterly period ended June 30, 2008 was filed, and
anticipates providing further enhanced disclosure, including the factors stated
herein, in future filings.

    Notes to Consolidated
Financial Statements

    Note 2. Summary of
Significant Accounting Policies

    Revenue Recognition, page
F-14

              6.

              Your
      response to prior comment 13 indicates that the revenue recognition policy
      was revised to include more information regarding your major sources of
      revenues.  Consider providing additional disclosures to describe
      the timing of recognition and the basis for meeting the relevant revenue
      recognition criteria for each type of deliverable you
      offer.  Provides us with any proposed revisions to your
      disclosures describing how you recognize revenue.  Refer to SAB
      Topic 13B, Question 1.

    RESPONSE:

    The
Company added additional disclosure regarding the timing of and basis for
recognition of its major sources of revenue, including virtual print fees,
cinema advertising and digital content distribution fees, in its 10-Q filing for
the quarter ended June 30, 2008, to enhance the explanation of the Company’s
revenue recognition policy, in accordance with SAB Topic 13B, Question
1.  However, as virtual print fees (“VPF”)

          Mr.
Stephen Krikorian

          October
21, 2008

          Page
Six

    and
in-theater advertising revenue represent the Company’s two largest revenue
streams (with VPF and in-theater advertising revenue representing approximately
50% and 24% of consolidated revenues for the year ended March 31, 2008,
respectively), the Company recognizes that further enhanced disclosure regarding
the Company’s contractual arrangements with customers and the associated revenue
recognition policies for VPF and in-theater advertising revenue would be
useful.  Accordingly, the Company proposes to include additional
disclosure of VPF and in-theater advertising contractual arrangements and
revenue recognition policies, as follows:

    VPFs:

    “VPFs are
earned pursuant to long-term contracts with movie distributors and exhibitors,
whereby amounts are payable by the distributors to the Company according to a
fixed fee schedule, when the distributors’ movies are displayed on screens
utilizing the Company’s digital cinema equipment installed in movie
theaters.  The Company is entitled to one VPF for every movie title
displayed per screen.  The Company’s VPF revenue is therefore
dependent on the number of movie titles released and displayed on its equipment
in any given accounting period.  The Company recognizes VPF revenue in
the period in which the movie first opens for general audience viewing in that
digitally-equipped movie theater, as the Company’s performance obligation has
been substantially met at that time.”

    In-Theater
Advertising:

    “The
Company has contracts with exhibitors to display pre-show advertisements on
their screens, in exchange for certain fees paid to the
exhibitors.  The Company then contracts with businesses of various
types to place their advertisements in select theater locations, designs the
advertisement, and places it on-screen for specific periods of time, generally
ranging from three to twelve months.  The Company recognizes revenue
from in-theater advertising ratably over the period of time the advertisement is
displayed and earned.”

    In
addition to the above proposed additional disclosures, the Company evaluated the
revenue recognition policy disclosures related to all of its other revenue
streams and proposes to add the following disclosure with respect to the revenue
recognition policy for the Company’s 9-screen movie theater in Brooklyn, New
York (”the Pavilion Theater”):

    “Movie
theatre admission and concession revenues are generated at the Company’s
9-screen theater in Brooklyn, New York (“the Pavilion
Theater”).  Theater admission

          Mr.
Stephen Krikorian

          October
21, 2008

          Page
Seven

    revenues
are recognized on the date of sale, as the related movie is viewed on that date
and the Company’s performance obligation is met at that
time.  Concession revenues consist of food and beverage sales and is
also recognized on the date of purchase.”

    Other
than VPFs and in-theater advertising, no other revenue source accounts for more
than 10% of the Company’s consolidated revenue. The Company will continue to
periodically review its revenue recognition and other disclosures and add any
further information that may be helpful to readers.

              7.

              We
      note from your response to prior comment 14 that software licenses are
      accounted for in accordance with SOP 97-2, however, other services such as
      IT consulting and software maintenance services are accounted for in
      accordance with SAB 104 since they are covered by separate contractual
      arrangements.  Clarify why you do not consider these other
      services to be part of a single multiple-element
      arrangement.  Tell us how you considered each of the factors
      discussed in TPA 5100.39 in accounting for these other services as
      separate arrangements.  If after further consideration you
      determine that the other services should be included as part of a single
      multiple-element arrangement, tell us whether you are able to